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Plaza Retail REIT (TSE:PLZ.UN)
:PLZ.UN
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Plaza Retail REIT
(TSX:PLZ.UN)
73Outperform
Positive Factors
Leasing and occupancy
Plaza renewed a significant amount of leases at favorable leasing spreads and improved portfolio occupancy to 97.6%.
Market position
Plaza Retail REIT is expected to benefit from a growing demand-supply imbalance, positively impacting top-line growth.
Valuation
Plaza Retail REIT trades at a significant discount to its NAVPU estimate, which presents a compelling entry point for investors.
Negative Factors
Financial performance
Funds from operations (FFO) per diluted unit was down 16% year-over-year and below consensus.
Financing costs
Greater financing costs due to rising interest rates could impact the company's profitability, as the weighted average interest rate increased year-over-year.
Interest expenses
Interest expenses increased due to the rise in interest rates, impacting overall financial performance.
Plaza Retail REIT (PLZ.UN) vs. S&P 500 (SPY)
Market Cap
C$414.62M
Dividend Yield7.46%
Average Volume (3M)62.78K
Price to Earnings (P/E)16.7
Beta (1Y)0.33
Revenue Growth5.99%
EPS Growth20.38%
CountryCA
Employees98
SectorReal Estate
Sector Strength69
IndustryREIT - Retail
Share Statistics
EPS (TTM)0.22
Shares Outstanding110,418,304
10 Day Avg. Volume68,187
30 Day Avg. Volume62,782
Financial Highlights & Ratios
PEG Ratio0.82
Price to Book (P/B)N/A
Price to Sales (P/S)3.43
Price to Cash Flow (P/CF)7.40
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$4.19Price Target Upside11.44% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Plaza Retail REIT Business Overview & Revenue Model
Company DescriptionPlaza Retail REIT (PLZ.UN) is a Canadian real estate investment trust that specializes in owning, developing, and managing retail properties throughout Canada. The company focuses primarily on retail real estate, providing space for a variety of tenants, including national retailers, local businesses, and service providers. Plaza Retail REIT's portfolio consists of open-air centers and stand-alone retail buildings, strategically situated in urban and suburban markets.
How the Company Makes MoneyPlaza Retail REIT generates revenue primarily through the leasing of retail spaces within its property portfolio. The company earns money by collecting rent from tenants, which can include long-term lease agreements with national retailers as well as short-term leases with smaller, local businesses. In addition to rental income, Plaza Retail REIT may also benefit from property appreciation and development projects that increase the value of its assets. The company can also engage in strategic partnerships with retailers and developers to enhance its property offerings and maximize returns. Factors contributing to its earnings include the quality and location of its properties, tenant mix, and market demand for retail spaces in the areas where it operates.
Plaza Retail REIT Financial Statement Overview
Summary
Plaza Retail REIT exhibits stable financial health with moderate revenue growth and improved net profit margin. The balance sheet shows moderate leverage with a stable equity base, and effective cash flow management despite a slight decline in operating cash flow.Income Statement
The income statement shows a moderate growth trend in revenue from 2023 to 2024 (6.34%). Gross profit margin is stable at around 61.3%. However, the absence of EBIT in 2024 is a concern, potentially impacting profitability analysis. The net profit margin improved slightly to 20.65% from 17.69% in 2023, indicating better cost management or revenue growth.68
Positive
Balance Sheet
The balance sheet shows a stable equity position with a debt-to-equity ratio of approximately 1.22, indicating moderate leverage for a REIT. The equity ratio is 43.61%, reflecting a balanced asset structure. Return on equity increased to 4.63% in 2024, showing improved profitability relative to shareholder's equity.72
Positive
Cash Flow
Cash flow analysis reveals a decline in operating cash flow from 2023 to 2024 by 5.74%, which may indicate operational challenges. However, free cash flow remains stable, showing effective capital expenditure management. The operating cash flow to net income ratio is 1.59, suggesting efficient cash generation relative to earnings.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 121.28M | 114.06M | 111.25M | 110.63M | 106.90M | Gross Profit |
| 74.36M | 70.35M | 70.58M | 71.78M | 68.75M | EBIT |
| 0.00 | 65.35M | 55.07M | 35.64M | 35.51M | EBITDA |
| 57.32M | 64.63M | 81.34M | 70.51M | 64.48M | Net Income Common Stockholders |
| 25.05M | 20.19M | 53.89M | 99.61M | -14.94M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 8.87M | 10.87M | 7.26M | 8.06M | 8.27M | Total Assets |
| 1.24B | 1.26B | 1.27B | 1.21B | 1.14B | Total Debt |
| 657.22M | 672.47M | 708.14M | 679.24M | 681.13M | Net Debt |
| 648.35M | 661.60M | 700.88M | 671.18M | 672.85M | Total Liabilities |
| 696.37M | 714.49M | 747.71M | 716.94M | 712.23M | Stockholders Equity |
| 540.82M | 546.49M | 518.90M | 493.52M | 422.41M |
| Cash Flow | Free Cash Flow | |||
| 39.86M | 42.29M | 80.69M | 69.39M | 60.87M | Operating Cash Flow |
| 39.86M | 42.29M | 38.47M | 48.21M | 31.72M | Investing Cash Flow |
| 5.34M | -10.00M | -44.90M | -21.95M | -27.77M | Financing Cash Flow |
| -23.29M | -40.23M | 1.15M | -26.33M | -20.64M |
Plaza Retail REIT Technical Analysis
Positive
3.76
Price Trends
3.65
Positive
3.61
Positive
3.59
Positive
Market Momentum
0.04
Positive
54.87
Neutral
74.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PLZ.UN, the sentiment is Positive. The current price of 3.76 is above the 20-day moving average (MA) of 3.73, above the 50-day MA of 3.65, and above the 200-day MA of 3.59, indicating a bullish trend. The MACD of 0.04 indicates Positive momentum. The RSI at 54.87 is Neutral, neither overbought nor oversold. The STOCH value of 74.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:PLZ.UN.
Plaza Retail REIT Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | C$4.30B | 19.01 | 4.50% | 7.32% | 9.46% | -42.77% | |
73 Outperform | C$414.62M | 16.72 | 4.61% | 7.46% | 5.99% | 20.38% | |
69 Neutral | C$2.60B | ― | -0.22% | 6.30% | 8.82% | 92.79% | |
68 Neutral | $5.11B | 10.92 | 6.34% | 6.75% | 11.62% | 1120.60% | |
61 Neutral | $4.71B | 17.72 | -2.95% | 11.43% | 6.02% | -21.34% | |
53 Neutral | $333.22M | ― | -9.20% | 6.43% | 4.16% | -57.38% | |
53 Neutral | C$2.32B | ― | -5.79% | 11.33% | 4.98% | 19.54% |
* Real Estate Sector Average
Performance Comparison
TSE:PLZ.UN
Plaza Retail REIT
3.76
0.41
12.24%
TSE:REI.UN
RioCan Real Estate Investment
17.20
-0.25
-1.43%
TSE:D.UN
Dream Office Real Estate Investment
17.58
2.14
13.90%
TSE:AP.UN
Allied Properties Real Estate Investment Trust
16.61
0.80
5.07%
TSE:SRU.UN
SmartCentres Real Estate Investment Trust
25.26
3.81
17.76%
TSE:CRR.UN
Crombie Real Estate ate
14.12
1.24
9.63%
Plaza Retail REIT Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: 1.90% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance with record NOI growth, successful lease renewals, strategic development projects, and effective capital recycling. However, it also acknowledged challenges such as reorganization costs, enclosed mall performance, and property write-downs. Overall, the positive aspects outweighed the negatives, indicating a robust financial position and strategic progress.Highlights
Record Same-Asset NOI Growth
Plaza Retail REIT achieved record same-asset NOI growth of 4.8% for the quarter and 3.4% for the year due to asset repositioning and strong leasing spreads.
Exceptional Lease Renewal Spreads
Lease renewal spreads averaged 7.4%, or 11.8% excluding a specific theater tenant, demonstrating strong tenant demand and successful leasing strategies.
Successful Capital Recycling Program
The 2024 capital recycling program was successful in increasing property size, reducing asset age, and enhancing overall portfolio quality.
Strong Financial Metrics
Total NOI for the quarter increased by 8.5% over the previous year, with annual growth at 6.6%. Excluding reorganization costs, FFO per unit for the quarter was nearly 11% higher, and AFFO was 31% higher.
High Occupancy Rates and Strategic Footprint Expansion
Record occupancy rates and strategic expansion into known markets have positioned Plaza at the forefront of the retail sector in Eastern Canada.
New Development in Welland, Ontario
Launched construction of a new development project in Welland, Ontario, which will feature 100,000 square feet of retail space anchored by a 35,000 square foot grocery tenant.
Lowlights
Reorganization Costs Impact
Incurred $2.6 million in reorganization costs during the quarter for severances and write-offs of potential development projects that will not be pursued.
Enclosed Malls Impact on Portfolio
Enclosed malls, comprising 3% of NOI, may not significantly impact same-property NOI outlook, but optimization and leasing of vacant space are needed to maximize incremental NOI.
Write-Down of Investment Properties
A year-to-date write-down of $10.4 million in investment properties due to updated appraisals, despite a $1.8 million write-up during the quarter.
Company Guidance
During the Plaza Retail REIT Fourth Quarter 2024 Earnings Conference Call, several key financial metrics and strategic achievements were discussed. The company reported record same-asset NOI growth and lease renewal spreads, with an average leasing spread of 7.4% over the real term, which would have been 11.8% excluding a specific renewal. Plaza's total NOI for the quarter increased by 8.5% compared to the previous year, with annual NOI up by 6.6%. The company's efforts to enhance its portfolio through development projects and the sale of non-core properties contributed to an increase in per unit FFO and AFFO, which would have been 11% and 31% higher, respectively, excluding reorganization costs. Plaza's debt-to-assets ratio was 50.6%, and their net debt to EBITDA was 8x, showing a decrease from the previous year. The company undertook a successful capital recycling program with non-core asset sales at a weighted average cap rate of approximately 6%, enhancing liquidity to $69 million. These efforts reflect Plaza's strategic focus on optimizing and intensifying its existing portfolio while maintaining strong operational and financial performance.Plaza Retail REIT Corporate Events
Dividends
Plaza Retail REIT Declares March 2025 Distribution
Positive
Mar 17, 2025
Plaza Retail REIT announced its March 2025 monthly distribution of $0.02333 per unit, payable on April 15, 2025, to unitholders of record as of March 31, 2025. This announcement reflects Plaza’s ongoing commitment to providing consistent returns to its investors, reinforcing its strong position in the retail property sector across Canada.
Business Operations and StrategyFinancial Disclosures
Plaza Retail REIT Reports Robust 2024 Financial Results
Positive
Feb 27, 2025
Plaza Retail REIT reported strong financial results for 2024, showcasing record growth in same-asset net operating income (NOI) and lease renewal spreads, alongside high occupancy rates. The company’s strategic portfolio improvements, including development projects and the sale of non-core assets, have enhanced its resilience against macroeconomic challenges. The financial performance was bolstered by increased leasing revenue and rent escalations, although impacted by administrative costs related to reorganization and development project write-offs. Overall, Plaza’s robust results reflect its well-positioned portfolio in the retail real estate market.
DividendsBusiness Operations and Strategy
Plaza Retail REIT Announces February 2025 Distribution
Positive
Feb 18, 2025
Plaza Retail REIT has announced its February 2025 monthly distribution of $0.02333 per unit, which will be paid to unitholders on March 17, 2025. This announcement highlights Plaza’s ongoing commitment to providing value to its stakeholders, maintaining its position in the retail property industry, and reinforcing its focus on essential needs and convenience segments, which are crucial for its market strategy.
Financial Disclosures
Plaza Retail REIT Schedules Year-End 2024 Financial Results Call
Positive
Feb 3, 2025
Plaza Retail REIT announced its year-end 2024 financial results conference call scheduled for February 27, 2025, where senior management will discuss the company’s financial outcomes. The financial statements and analysis will be available prior to the call, indicating Plaza’s commitment to transparency and stakeholder engagement, potentially influencing its market position positively.
Plaza Retail REIT Announces January 2025 Distribution
Jan 17, 2025
Plaza Retail REIT announced a monthly distribution for January 2025, amounting to $0.02333 per unit, which translates to an annualized distribution of $0.28. This distribution will be paid to unitholders on February 18, 2025. The announcement underscores Plaza’s ongoing commitment to providing steady returns to its investors, highlighting its stable financial operations and potential impact on stakeholder confidence.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.