Plaza Retail REIT (PLZ.UN) Q1 2025 earnings summary

Executive summary

• Increased ownership in Tacoma Plaza from 50% to 100% and agreed to acquire full interest in three Shoppers Drug Mart locations, enhancing portfolio control and value creation opportunities.

• Ongoing conversion of 40,000 sq. ft. to grocery retail at Tacoma Plaza expected to add ~$600K in incremental NOI at share upon completion.

• Signed a new grocery store deal and preparing to develop excess land, targeting an additional ~$700K in incremental NOI (50% interest).

• Delivered robust leasing activity, high occupancy, and progress on intensification and optimization initiatives, including grocery conversions and new developments.

• Strategy focused on optimizing, intensifying, and consolidating assets, driving operational momentum.

Financial highlights

• Revenues rose 5.3% year-over-year to $31.1M for Q1 2025.

• Same property NOI increased 1.5% year-over-year, driven by leasing and expense management despite higher winter costs.

• Net operating income (NOI) increased 1.6% to $18.3M, driven by leasing and rent escalations, partially offset by higher operating expenses.

• AFFO per unit rose 12% year-over-year and increased 13.4% to $8.3M, benefiting from lower maintenance CapEx and leasing costs.

• FFO per unit, excluding minor restructuring costs, was consistent with last year; reported FFO decreased 1.5% to $9.8M and 1.1% per unit due to higher administrative and finance costs.

• Net debt-to-EBITDA (excluding land leases and restructuring) was 8.0x, down 60 bps year-over-year.

• Liquidity stood at CAD 64 million, supporting ongoing and future projects.

Outlook and guidance

• Anticipates continued positive impact on same property NOI as renewals take effect and intensification projects complete.

• Expects slightly stronger same asset NOI performance in coming quarters as seasonal costs normalize.

• Two grocery conversion projects expected to generate income by year-end, with double-digit yield on cost.

• New Longo's-anchored development in Welland, Ontario, on track for Q2 2026 delivery.

• Management expects continued strong retailer demand and positive impact from lower interest rates for the remainder of the year.