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

Executive summary

• Q1 2025 began with strong momentum, highlighted by increased ownership in Tacoma Plaza and robust leasing activity, with ongoing conversion of 40,000 sq. ft. to grocery retail expected to add ~$600K in incremental NOI at share upon completion.

• Strategic acquisitions included full ownership of Tacoma Plaza and pending full ownership of three Shoppers Drug Mart locations.

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

• Portfolio optimization and intensification initiatives are underway, including space conversions and new grocery 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 rose 1.5% year-over-year, driven by leasing and expense management.

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

• FFO per unit, excluding minor restructuring costs, was flat year-over-year; AFFO per unit increased 12% due to lower CapEx and leasing costs.

• AFFO increased 13.4% to $8.3M and 12.1% per unit, benefiting from lower leasing costs and maintenance capital expenditures.

Outlook and guidance

• Anticipates continued positive impact on same property NOI as renewals take effect.

• Expects slightly stronger same asset NOI performance in upcoming quarters due to seasonality.

• Ongoing and planned projects, including grocery conversions and new developments, are expected to generate incremental NOI by year-end.

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