Plaza Retail REIT (PLZ.UN) Q2 2024 earnings summary

Executive summary

• Core EPS for Q2 2024 was $1.23, with year-to-date Core EPS at $2.37, reaffirming 2024 Core EPS guidance of $4.75-$5.05.

• Achieved record high lease renewal spreads and same-asset NOI growth, with strong demand for retail space focused on essential needs and value retail properties.

• Load growth trends are materializing sooner than expected, with a 35% higher 10-year load growth forecast compared to prior estimates.

• System average rate increases through 2028 are projected to align closely with inflation, supporting affordability.

• Operational and financial risk profiles have improved significantly, driven by wildfire risk mitigation and grid hardening.

Financial highlights

• Q2 2024 core EPS grew by $0.22 year-over-year, mainly due to higher CPUC revenue, authorized rates of return, and a favorable CEMA decision.

• Q2 2024 revenues rose 7.8% year-over-year to $30.7 million; six-month revenues up 6.0% to $60.2 million.

• Q2 NOI increased 4.2% to $18.4 million; six-month NOI up 5.8% to $36.4 million.

• Q2 profit and total comprehensive income dropped to $2.4 million from $13.0 million year-over-year, mainly due to a $7.3 million decrease in fair value of investment properties.

• FFO per unit for Q2 was $0.095 (down 1.0%); AFFO per unit was $0.080 (up 14.3%).

Outlook and guidance

• 2024 Core EPS guidance reaffirmed at $4.75-$5.05, with confidence in achieving the target.

• Management expects continued strong retailer demand and ongoing progress in development programs.

• 2025 EPS guidance and a 5%-7% EPS CAGR through 2028 are underpinned by GRC outcomes and continued grid investments.

• Equity needs for 2025-2028 are only $400 million, supported by strong cash flow and disciplined financing.

• Forward-looking statements caution about risks from economic, retail, and capital market conditions, including interest rates and inflation.