Mr. Michael Zakuta reports

PLAZA RETAIL REIT ANNOUNCES 2023 RESULTS

Plaza Retail REIT has released its financial results for the quarter and year ended Dec. 31, 2023.

"Looking back at 2023, I would like to highlight some of our accomplishments: (1) Plaza continued to deliver and launch new developments; (2) We successfully completed an equity issuance; (3) The REIT [real estate investment trust] was successful in selling certain non-core assets; and (4) We realized record-high leasing renewal spreads," said Michael Zakuta, president and chief executive officer. "Looking forward, we are well positioned to put the headwinds that have impacted real estate behind us and take advantage of strong demand for essential-needs retailers targeting non-discretionary spending."

Quarterly highlights:

• NOI (net operating income) was $17.4-million, down $154,000 (0.9 per cent) with the same period in 2022. The decrease in NOI is from an increase in operating expenses, and a decrease in NOI from properties sold in 2022 and 2023, partially offset by rent escalations in same-asset properties, acquisitions, developments and properties transferred to income-producing in 2022 and 2023.
• Profit (loss) and total comprehensive income for the current quarter was a loss of $3.8-million compared with profit of $14.2-million in the same period in the prior year. The decrease was mainly due to the change in the non-cash fair value of investment properties due to an increase in capitalization rates, along with changes in the non-cash fair value adjustments to share of profit from associates, interest rate swaps, the Class B exchangeable LP (limited partnership) units and convertible debentures.

Year-to-date highlights:

• NOI was $70.4-million, down $227,000 (0.3 per cent) with the same period in 2022. NOI was impacted by an increase in operating expenses, 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, offset by an increase in NOI from same-asset, acquisitions, developments and properties transferred to income-producing in 2022 and 2023.
• Profit and total comprehensive income for the current year to date were $20.3-million compared with $54.2-million in the same period in the prior year. The decrease was mainly due to a decrease in the non-cash fair value of investment properties of $20-million in the current year compared with a fair value increase of $8.2-million in the prior year. The fair value change was mainly due to an increase in capitalization rates. Profit was also impacted by an increase in administrative expenses and finance costs, an increase in investment and other income from development activity, along with changes in non-cash fair value adjustments relating to share of profit from associates, interest rate swaps, the Class B exchangeable LP units, and convertible debentures.

Quarterly highlights:

• FFO (funds from operations) and AFFO (adjusted fund from operations): For the three months ended Dec. 31, 2023, FFO per unit decreased by 0.9 cent (9.1 per cent) compared with the same period in the prior year. FFO was impacted by an increase in NOI from same-asset, acquisitions, developments and properties transferred to income-producing in 2022 and 2023, and a decrease in finance costs, offset by a decrease in investment and other income, an increase in administrative expenses, and a decrease in NOI from properties sold. AFFO per unit decreased by 1.4 cents (19.2 per cent) compared with the same period in the prior year, mainly due to the changes in FFO noted above, as well as increased maintenance capital expenditures.
• Same-asset NOI increased by $69,000 (0.4 per cent) due to rent escalations and renewals across the portfolio 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 12 months ended Dec. 31, 2023, FFO per unit decreased by 2.3 cents (5.7 per cent) compared with the prior year. FFO was impacted by an increase in NOI from same-asset, acquisitions, developments and properties transferred to income-producing properties in 2022 and 2023, an increase in investment and other income, 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 three cents (9.3 per cent) compared with the prior year, due to the changes in FFO noted above, as well as increased maintenance capital expenditures and leasing costs. Increased leasing costs are the result of leasing activity and repositioning of certain properties to improve the quality of the tenancy across the portfolio. Excluding the leasing costs related to these repositionings, AFFO for the 12 months ended Dec. 31, 2023, would have increased 2.2 per cent on a dollar basis and decreased (3.8 per cent) on a per-unit basis.
• Same-asset NOI increased by $717,000 (1.1 per cent) due to rent escalations and renewals across the portfolio 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 12 months ended Dec. 31, 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 REIT'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, president and chief executive officer, and Jim Drake, chief financial officer, will host a conference call for the investment community on Monday, Feb. 26, 2024, at 10 a.m. Eastern Time. The call-in numbers for participants are 1-416-764-8659 (local Toronto), 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 March 4, 2024. To access the replay, dial 1-416-764-8677 (local Toronto) or 1-888-390-0541 (passcode: 419586 followed by the pound key). 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 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's portfolio at Dec. 31, 2023, includes interests in 232 properties totalling approximately 8.9 million square feet across Canada, and additional lands held for development. Plaza's portfolio largely consists of open-air centres and stand-alone small-box retail outlets, and is predominantly occupied by national tenants with a focus on the essential needs, value and convenience market segments.

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