Plaza Retail REIT (PLZ.UN) Q3 2024 earnings summary

Executive summary

• Portfolio remains resilient with high-quality, essential needs retailers and strong fundamentals in the retail real estate sector.

• Achieved strong lease renewal spreads and same-asset NOI growth, with continued high demand for retail space and benefits from declining interest rates expected to continue into 2025.

• CEO Michael Zakuta announced this was his final earnings call as President and CEO.

Financial highlights

• Q3 2024 revenues rose 7.5% year-over-year to $30.4 million; nine-month revenues up 6.5% to $90.7 million.

• Q3 net operating income (NOI) increased 6.5% to $19.7 million; nine-month NOI up 6.0% to $56.1 million.

• FFO was consistent with last year despite higher interest rates; Q3 FFO was $11.4 million, flat year-over-year.

• AFFO rose 2% on a dollar basis and 1% per unit, aided by lower leasing costs; Q3 AFFO was $9.6 million, up 2.3%.

• Same Asset NOI grew 1.9% for the quarter and 2.8% year-to-date.

Outlook and guidance

• Same property growth expected to remain at current levels into 2025, with possible fluctuation of ±25-50 basis points.

• Management anticipates continued strong retailer demand and positive impact from lower interest rates through the remainder of 2024 and into 2025.

• Intensification opportunities within the portfolio are prioritized over new greenfield developments, with unlevered returns projected around 8% over the next 1-3 years.