Mr. Michael Zakuta reports

PLAZA RETAIL REIT ANNOUNCES SECOND QUARTER 2023 RESULTS

Plaza Retail REIT has released its financial results for the three and six months ended June 30, 2023.

"We made significant progress on our robust development program during the quarter, which will contribute to Plaza's growth going forward," said Michael Zakuta, president and chief executive officer. "To fund these projects, provide additional financial flexibility and improve the quality of our portfolio, we sold select non-core assets at attractive prices. In addition to strong investor demand for our assets, we are also experiencing strong demand from our tenants, with continued record committed occupancy and healthy lease renewal spreads. We remain very optimistic about the future of our business of defensive retail, focused on essential needs, value and convenience offerings."

Quarterly highlights:

• Net operating income was $17.6-million, consistent with the same period in 2022. The increase in NOI from acquisitions, developments and properties transferred to income producing in 2022 and 2023 was offset by a decrease in NOI from properties sold.
• Profit and total comprehensive income for the current quarter was $13.0-million compared with $7.0-million in the same period in the prior year. The increase was mainly due to the change in the fair value of investment properties. The current-quarter change was driven by minor cost overruns on certain projects.

Year-to-date highlights:

• NOI was $34.5-million, down $377,000 (1.1 per cent) from the same period in 2022. NOI was impacted by an increase in NOI from acquisitions, developments and properties transferred to income producing in 2022 and 2023, offset by an allowance provided to a tenant in consideration of delayed delivery of premises at a development property, and a decrease in NOI from properties sold.
• Profit and total comprehensive income for the current year to date was $20.7-million compared with $32.8-million in the same period in the prior year. The decrease was mainly due to an increase in the fair value of investment properties of $447,000 in the current year compared with a fair value increase of $6.0-million in the same period in the prior year. The fair value change was mainly due to more significant fair value increases recognized in the prior year, compared with more stabilized values this year. Profit was also impacted by a decrease in the share of profit of associates relating to the non-cash fair value adjustment of the underlying properties in the current year, an increase in administrative expenses and finance costs, and an increase in investment and other income due to higher fees from additional leasing and development activity, along with changes in non-cash fair value adjustments relating to interest rate swaps, the Class B exchangeable limited partnership units and convertible debentures.

Quarterly highlights:

• Funds from operations and adjusted funds from operations: For the three months ended June 30, 2023, FFO per unit decreased by 0.4 cent (4.0 per cent) compared with the same period in the prior year. FFO was impacted by an increase in NOI from acquisitions, developments and properties transferred to income producing in 2022 and 2023, and an increase in investment and other income due to higher fees from additional leasing and development activity, offset by an increase in administrative expenses and a decrease in NOI from properties sold. AFFO per unit decreased by 1.1 cents (13.6 per cent) compared with the same period in the prior year due to the changes in FFO noted above, as well as increased leasing costs from additional leasing activity and increased maintenance capital expenditures.
• Same-asset NOI increased by $36,000, 0.2 per cent due to lease-up and rent escalations over the same period in the prior year, partially offset by an increase in operating expenses.

Year-to-date highlights:

• FFO and AFFO: For the six months ended June 30, 2023, FFO per unit decreased by 1.1 cents, 5.6 per cent compared with the same period in the prior year. FFO was impacted by an increase in same-asset NOI due to rent escalations and renewals across the portfolio, an increase in NOI from acquisitions, developments and properties transferred to income producing properties in 2022 and 2023, and an increase in investment and other income due to higher fees from additional leasing and development activity, offset by an allowance provided to a tenant in consideration of delayed delivery of premises at a development property, an increase in finance and administrative expenses, and a decrease in NOI from properties sold. AFFO per unit decreased by 2.1 cents (12.4 per cent) compared with the same period in the prior year due to the changes in FFO noted above, as well as increased leasing costs from additional leasing activity and increased maintenance capital expenditures.
• Same-asset NOI increased by $173,000 (0.5 per cent) due to lease-up and rent escalations over the same period in the prior year, partially offset by an increase in operating expenses.

FFO and AFFO per unit, for both the three and six months ended June 30, 2023, were also impacted by the issue of 8,548,000 trust units in March, 2023.

Further information

Information appearing in this press release is a select summary of results. A more detailed analysis of the real estate investment trust's financial and operating results is included in the REIT's management's discussion and analysis and consolidated financial statements, which can be found on the REIT's website or on SEDAR+.

Conference call

Mr. Zakuta, and Jim Drake, chief financial officer, will host a conference call for the investment community on Friday, Aug. 4, 2023, at 10 a.m. EDT. The call-in numbers for participants are 1-416-764-8659 (local Toronto) or 1-902-704-0254 (local Halifax) or 1-888-664-6392 (toll-free within North America).

A replay of the call will be available until Aug. 11, 2023. To listen to the replay, dial 1-416-764-8677 (local Toronto) or 1-888-390-0541 (passcode 259361). The audio replay will also be available for download on the REIT's website for 90 days following the conference call.

About Plaza Retail REIT

Plaza Retail is an open-ended real estate investment trust, and is a leading retail property owner and developer, focused on Ontario, Quebec and Atlantic Canada. Plaza Retail's portfolio at June 30, 2023, includes interests in 234 properties totalling approximately 8.8 million square feet across Canada and additional lands held for development. Plaza Retail's portfolio largely consists of open-air centres and stand-alone small-box retail outlets, and is predominantly occupied by national tenants.

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