Plaza Retail REIT Q3 2026 Earnings Results & Report

Plaza Retail REIT EPS Results

• Actual EPS: C$0.14
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Plaza Retail REIT Revenue Results

• Actual Revenue: C$32.15 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

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 June 30, 2026 includes interests in 189 properties totaling approximately 8.8 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.

Plaza Retail REIT Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Third-quarter same-asset NOI rose 3.5%, committed occupancy reached 98.3%, and FFO per unit increased 3.6% to CAD 0.115. Year-to-date FFO and AFFO per-unit growth was 6% and 6.8%, respectively, including costs that management said temporarily dampened comparisons.
• Positive Sentiment: Leasing spreads point to continued rent-growth potential: year-to-date negotiated renewal spreads averaged 13.5% over lease terms, or 20% excluding anchor tenants, while new leasing spreads were 50.3%.
• Positive Sentiment: Financial flexibility improved, with the FFO payout ratio falling to 66.2% from 70.3% a year earlier and net debt to adjusted EBITDA declining to 8.5x. Plaza reported roughly CAD 53 million of cash and operating-line availability at quarter-end.
• Positive Sentiment: Completed acquisitions and projects from 2025–2026 represent about CAD 3.7 million in annual stabilized NOI, with another CAD 1.2 million expected from projects underway. Management also sees scope for selective acquisitions and ownership consolidations.
• Neutral Sentiment: Plaza is under contract to sell its 50% interest in Tri-City Plaza, expecting about CAD 10 million in net proceeds after debt repayment, initially for reducing its operating line. Management described demand for open-air centres as somewhat softer amid fund formation, but said it had not seen lower pricing on assets it is selling.

Presentation

[Operator]

Good morning. I would like to welcome everyone to the Plaza Retail REIT Third Quarter 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference, please press star zero for an operator assistance at any time. I would like to advise everyone at this conference is being recorded. I will now turn the conference over to Kim Strange, Plaza's General Counsel and Secretary. Please go ahead, Ms. Strange.

[Kim Strange, General Counsel and Secretary at Plaza Retail REIT]

Thank you, operator. Good morning, everyone, and thank you for joining us on our Q3 2026 results conference call. Before we begin, we are obliged to advise you that in talking about our financial and operating performance, and in responding to questions today, we may make forward-looking statements, including statements concerning Plaza's objectives and strategies to achieve them, as well as statements with respect to our plans, estimates, and intentions, or concerning anticipated future events, results, circumstances, or performance that are not historical facts. These statements are based on our current expectations and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from the conclusions in these forward-looking statements.

[Kim Strange, General Counsel and Secretary at Plaza Retail REIT]

Additional information on the risks that could impact our actual results and the expectations and assumptions we applied in making these forward-looking statements can be found in Plaza's most recent annual information form for the year ended December 31, 2025, and management's discussion and analysis for the third quarter ended September 30, 2026, which are available on our website at www.plaza.ca and on SEDAR+ at www.sedarplus.ca. We will also refer to non-GAAP financial measures widely used in the Canadian real estate industry, including FFO, AFFO, EBITDA, adjusted EBITDA, NOI, and same-asset NOI. Plaza believes these financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the trust. These financial measures do not have any standardized definitions prescribed by IFRS and may not be comparable to similar titled measures reported by other real estate investment trusts or entities.

[Kim Strange, General Counsel and Secretary at Plaza Retail REIT]

They should be considered as supplemental in nature and not as a substitute for related financial information prepared in accordance with IFRS. For definitions of these financial measures and where to find reconciliations thereof, please refer to part VII of our MD&A for the third quarter ended September 30, 2026, under the heading "Explanation of Non-GAAP Financial Measures." I will now turn the call over to Jason Parravano, Plaza's President and CEO. Jason?

[Jason Parravano, President and CEO at Plaza Retail REIT]

Thank you, Kim, and good morning, everyone. Please be advised that we will not be commenting on the strategic review process, which is being conducted by the independent special committee of our board of trustees, or any matters related thereto during today's call. Our remarks and responses to questions will be focused on Plaza's Q3 2026 operating and financial results. The momentum we built through 2025 and the first half of the year continued through the third quarter. We delivered further growth in our earnings per unit, strong same-asset operating performance, and higher committed occupancy while continuing to improve the quality of our portfolio and strengthen our financial flexibility. As we look toward 2027, we feel good about where the business stands and the opportunities ahead of us. Our strategy remains consistent, and that is intentional.

[Jason Parravano, President and CEO at Plaza Retail REIT]

We are focused on optimizing the properties we own, advancing selective intensification opportunities, and allocating capital toward investments that improve the quality and earning capacity of the portfolio. Our concentration in essential needs, value, and convenience retail continues to provide a durable foundation for that strategy. These are properties that serve the day-to-day needs of their communities, and that continues to be reflected in tenant demand and our operating results. What stands out this quarter is the strength of the underlying operating performance. Same-asset NOI increased 3.5% compared with the third quarter of last year, supported by rent escalations, lease renewals, and improved cost recoveries. Through the first nine months, same-asset NOI increased 2.2%. These results reflect the cumulative impact of the work our teams have been doing across leasing and property operations. We are seeing that work translate into stronger cash flow from the assets we already own.

[Jason Parravano, President and CEO at Plaza Retail REIT]

Committed occupancy reached 98.3% at the end of September, compared with 97.6% at the end of June and 97.9% a year ago. That gives us a strong starting point as we head into 2027. Our space is well occupied, tenant demand remains healthy, and we continue to see opportunities to improve rents as leases renew and space turns over. At these occupancy levels, the opportunity increasingly comes from improving the income and performance of each property through leasing, recoveries, and disciplined management. Total NOI increased 1.5% in the quarter to CAD 20.8 million and 2.7% year to date to CAD 59.5 million. We achieved that growth while continuing to dispose of properties. The contributions from our existing portfolio, acquisitions, and completed projects more than offset the reduction in income from assets sold.

[Jason Parravano, President and CEO at Plaza Retail REIT]

That is an important point, because it demonstrates that we can improve the composition of the portfolio while continuing to grow the income it produces. That operating performance translated into continued growth on a per-unit basis. FFO per unit was CAD 0.115 for the quarter, up 3.6%, and CAD 0.317 for the first nine months, up 6%. AFFO per unit increased 6.5% for the quarter to CAD 0.082 and 6.8% year-to-date at CAD 0.234. The year-to-date comparisons also include severance costs associated with our strategic review and the timing of bonuses, which resulted in an overlapping of accruals in the period. Adjusting for those items, year-to-date FFO per unit growth would have been 8%, and AFFO per unit growth would have been 9.7%. Our payout ratios continue to improve as well.

[Jason Parravano, President and CEO at Plaza Retail REIT]

Through September, our FFO payout ratio was 66.2% compared with 70.3% last year, while our AFFO payout ratio declined to 89.9% from 96.1%. That improvement has practical benefits for the business. We are retaining more cash, strengthening distribution coverage, and increasing our ability to fund investments internally. As we head into 2027, that gives us greater flexibility in how we pursue growth. During the quarter, we completed the disposition of the Village Shopping Centre. This is an important step in aligning the portfolio with our strategy and concentrating our time, resources, and capital on our core standalone properties and open-air strip centres. For us, the benefit extends beyond the Sale proceeds. These types of properties we are focused on are where we believe our operating platform, tenant relationships, and leasing capabilities can create the most value. Simplifying the portfolio allows us to direct more attention towards those opportunities.

[Jason Parravano, President and CEO at Plaza Retail REIT]

It also brings greater consistency to the way we operate the business and make investment decisions. As we have discussed in previous quarters, capital recycling does involve timing differences. The income from a property stops when the Sale closes, while the contribution from reinvesting those proceeds builds as acquisitions close. We are comfortable with managing that transition when it improves the long-term position of the business. The objective is to redeploy capital into opportunities that strengthen the portfolio and generate attractive, sustainable returns per unit. Our development and intensification activity continues to add to the portfolio's income-producing capacity. Acquisitions and projects transferred to income-producing status during 2025 and 2026 represent approximately CAD 3.7 million in annual stabilized NOI. Additional projects under development and redevelopment represent CAD 1.2 million in annual stabilized NOI as they are completed and stabilized. There is a natural progression to this work.

[Jason Parravano, President and CEO at Plaza Retail REIT]

We invest capital, complete the space, deliver it to tenants, and then begin to see the income contribution. As those projects stabilize, they provide a stronger earning base for the business. That is one of the reasons we are positive about the outlook heading into 2027. We have opportunities already underway, supported by the capital and work that have already been committed. These initiatives also build on properties and markets we know well. We can use existing land, established tenant relationships, and our internal capabilities to create additional income. That remains an attractive way for us to grow, and we continue to see opportunities across the portfolio to add space, improve the tenant mix, and increase the productivity of our real estate. At the same time, we are in our strongest liquidity position in years.

[Jason Parravano, President and CEO at Plaza Retail REIT]

Combined with growing earnings and a lower payout ratio, that puts us in a good position to move forward. We have the flexibility to advance the opportunities within our existing portfolio and the capacity to consider additional investments as they arise. We are prepared to act when an opportunity aligns with our strategy and offers an attractive return for unitholders. That could include consolidating ownership interests in properties we already know, advancing an intensification, or pursuing selective acquisitions. Having that flexibility allows us to assess each opportunity on its merits and deploy capital where we believe it will create the most value. Looking towards 2027, the opportunity is to build on the progress already visible in our results. We have a well-occupied portfolio, contractual rent growth, opportunities to capture market rents on renewals, and projects moving towards stabilization.

[Jason Parravano, President and CEO at Plaza Retail REIT]

We also have the financial capacity, as I mentioned, to pursue additional opportunities with discipline. Taken together, those factors give us confidence in our ability to continue improving the business and growing cash flow per unit. Over the past two years, we have made deliberate changes to the portfolio and the way we operate. We have sold properties, strengthened financial flexibility, and continue to grow earnings per unit without relying on new equity issuances to fund that growth. Our payout ratios have improved, our core operating performance remains strong, and we believe that demonstrates the effectiveness of the strategy and gives us a solid foundation for the next stage.

[Jason Parravano, President and CEO at Plaza Retail REIT]

There is still work to do, but we are entering 2027 from a position of strength. Our priorities are clear, our team is focused, and we have both the opportunities and the financial flexibility to keep moving the business forward. We remain focused on translating that position into sustainable growth and long-term value for our unitholders. With that, I will turn it over to Jim to take you through the financials in more detail.

[Jim Drake, CFO at Plaza Retail REIT]

Thank you, Jason. Good morning, everyone. I will expand on a few of Jason's points and highlight our results. As Jason mentioned, our same-asset NOI growth year-to-date was 2.2%, with improved cost recoveries and increased revenue from lease renewals contributing. Lease renewal spreads were 12% overall in the first year of the renewal, 13.5% using the average rent over the renewal term. Our new leasing spread, which shows the value of our optimization program, was 50.3%. These leasing spreads will contribute to revenue growth going forward. On the balance sheet, as a result of our focused efforts, our debt ratios continue to improve. Debt to assets is down 270 basis points versus Q3 last year, now at 48.2% excluding land leases. Net debt to adjusted EBITDA was 8.5 times, 70 basis points lower than Q3 last year, given EBITDA growth and debt reduction this year.

[Jim Drake, CFO at Plaza Retail REIT]

Following repayment of convertible debentures in Q2, we repaid mortgage bonds on maturity in Q3. We have simplified our debt stack while managing interest expense, and these efforts are working. In a higher interest rate environment, our interest expense for Q3 year to date was slightly below last year. To further manage interest expense and mitigate risk, we have reduced our floating rate debt exposure and will continue to do so over the next few quarters as projects are stabilized and long-term fixed rate debt is placed.

[Jim Drake, CFO at Plaza Retail REIT]

We maintain a balanced mortgage maturity ladder with CAD 59 million of fixed rate mortgages rolling over the remainder of 2026 and 2027 at a weighted average rate of 4.4% and overall loan-to-value of 44%. We continue to see strong interest in our mortgage offerings with current all-in rates in the low to mid 5% range. Finally, for the fair value of our investment properties, we took a CAD 2.6 million write-up during the quarter on new appraisals and minor cap rate compression. Our weighted average cap rate is now 6.73%. Those are the key points for the quarter. We will now open the lines for any questions. Operator?

[Operator]

Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press the star key followed by one on your touchtone phone. You will hear a one-tone prompt acknowledging your request. Your questions will be polled in the order they are received. If you would like to decline from the polling process, please press pound. Please ensure you lift the handset if you are using a speakerphone before processing any keys. One moment, please, for your first question. Your first question comes from the line of Mark Rothschild with Canaccord Genuity. Please go ahead.

[Mark Rothschild, Analyst at Canaccord Genuity]

Thanks, and good morning, guys. Jason, in regards to the acquisition environment investments, bond yields clearly have risen, and your asset class is definitely somewhat in favor relative to other property types. Are you seeing any impact on pricing, and is this leading to perhaps some greater ability to acquire properties, which has been relatively slow?

[Jason Parravano, President and CEO at Plaza Retail REIT]

Hi, Mark. I think the volatility hasn't really impacted pricing a lot, but we are hearing about a lot of reprices in the market where people under contract to purchase properties. We have not experienced, even as a result of the increase in bond yields, we have not experienced any reduction in purchase prices associated with contracts that we are looking to actively dispose of.

[Mark Rothschild, Analyst at Canaccord Genuity]

Okay, great. Then maybe just one other small one from me. Were there any properties that were completed in the development portfolio in the quarter that were moved to income-producing?

[Jason Parravano, President and CEO at Plaza Retail REIT]

Jim?

[Jim Drake, CFO at Plaza Retail REIT]

Yeah, Mark, we completed, not full properties, but optimizations during the quarter. So we completed a TJX banner in Summerside, PEI, that moved to IPP.

[Mark Rothschild, Analyst at Canaccord Genuity]

That's the Granville Street Plaza?

[Jim Drake, CFO at Plaza Retail REIT]

Yes.

[Jason Parravano, President and CEO at Plaza Retail REIT]

Yes.

[Mark Rothschild, Analyst at Canaccord Genuity]

Okay, great. Thank you so much. That's it.

[Jim Drake, CFO at Plaza Retail REIT]

Thanks, Mark.

[Operator]

Your next question comes from the line of Zemin Liu with Desjardins. Please go ahead.

[Zemin Liu, Analyst at Desjardins]

Hi, good morning. Just on leasing spreads, I would like to get a better sense of rent growth across the portfolio outside of the anchor tenants. Could you provide some color on what leasing spreads look like, excluding anchors?

[Jason Parravano, President and CEO at Plaza Retail REIT]

Sure. The leasing spread during the quarter, well, sorry, the leasing spread year to date on the average rate during the term was 13.5% on negotiated renewals. Excluding anchors, that number jumps up to 20% on negotiated renewals.

[Zemin Liu, Analyst at Desjardins]

Okay. That is great. Yes. Another question is that, are there any additional dispositions in your pipeline? If so, could you comment on the potential size and timing of those sales, as well as how you would expect to use the proceeds, if any?

[Jason Parravano, President and CEO at Plaza Retail REIT]

We are currently under contract to sell our Tri-City Plaza in Cambridge, Ontario. That is a property that is anchored by Sail, the outdoor sporting goods store, and Crunch Fitness. Net proceeds, we own 50% of that property, so net proceeds, that is before repayment of debt, approximately CAD 20 million, and after repayment of debt, probably closer to CAD 10 million. In the short term, we are going to be using that to pay down our operating line.

[Zemin Liu, Analyst at Desjardins]

Okay, that is really helpful. Just last from me, how are you thinking about acquisitions heading into 2027? Could you discuss the opportunities you are seeing and your potential capacity to fund acquisitions?

[Jason Parravano, President and CEO at Plaza Retail REIT]

Yes, just at the end of the quarter, we are sitting on, call it, roughly CAD 53 million of cash and availability on our operating lines. That will give us some great financial flexibility to pursue some consolidation initiatives that we have been working on through the year. That will include, hopefully, the acquisition of our partner's share of some of the assets that we already own with them and manage.

[Zemin Liu, Analyst at Desjardins]

Okay, Mr. Kappel [uncertain] , I'll turn it back. Thank you.

[Jason Parravano, President and CEO at Plaza Retail REIT]

Thank you, Zemin.

[Operator]

Ladies and gentlemen, if there are any additional questions at this time, please press star followed by the one. As a reminder, if you are using a speakerphone, please lift the handset before pressing the keys. Your next question comes from Sumayya Syed with CIBC. Please go ahead.

[Sumayya Syed, Analyst at CIBC]

Thanks. Good morning. I wanted to ask a bit about the same property. I know NOI was fairly strong in the quarter. Can you talk about the drivers? I guess there were some recoveries and timing, and if you would expect a similar level going forward.

[Jason Parravano, President and CEO at Plaza Retail REIT]

Yeah, I will touch on it quickly, and maybe Jim, if you want to add a little bit of color as well. Q3 tends to be a stronger quarter for us, just as a result of no snow-related costs that impact our recoveries on some of our gross leases. In addition to that, we disposed of the Village Shopping Centre during the quarter as well, which had mostly gross leases in there, just being an enclosed mall. That was one of the big drivers for us. And obviously, with the impact of rental growth, contractual rental growth, whether it be fixed or negotiated lease renewal spreads on the existing properties, that was a big contributor to our same-asset NOI growth in the quarter.

[Jim Drake, CFO at Plaza Retail REIT]

Yeah.

[Sumayya Syed, Analyst at CIBC]

Okay

[Jim Drake, CFO at Plaza Retail REIT]

Maybe I will just add, last year was sort of a heavier year in Q3 on some op costs, so that did contribute to some of the higher growth this year. But year-to-date at 2.2% is sort of where we have been running, maybe slightly ahead of that, where we have been running historically.

[Sumayya Syed, Analyst at CIBC]

Right. Okay. Can you speak a bit to what you are seeing in private market transaction activity for open-air strip centres like yours, and if there is anything notable in terms of the profile of buyers or investors that have been active?

[Jason Parravano, President and CEO at Plaza Retail REIT]

Yeah, I think what we are seeing a lot is a lot of the funds out there that are buying these assets directly, they are running to the end of their, call it, committed capital, and people are setting up new funds to look at these similar types of assets. What does that mean? It means, I think demand is a little bit softer right now, just because there is a lot of funds that are being under fund formation, especially in Atlantic Canada and Quebec. That is my personal take on the matter. You are seeing institutional demand for these types of assets, and you are equally seeing a lot of private capital demand for these type of assets.

[Jason Parravano, President and CEO at Plaza Retail REIT]

In our experience, just given the price tag of our asset base, call it the properties under CAD 50 million, private capital is extremely active and a lot less sensitive to cap rates and returns that some institutional capital would be, or even the funds.

[Sumayya Syed, Analyst at CIBC]

Okay. In terms of the parties that are active, have you noticed a change? Is it mostly local or any, I guess, out-of-region interest that you have noted?

[Jason Parravano, President and CEO at Plaza Retail REIT]

No, we tend to have really good success with the local purchasers, the emotional purchasers, the people that like to drive by the assets on a daily basis. That is where a lot of the success on the smaller assets that we sold over the years, that is where the success on the sales comes from, is those types of purchasers. It is great for us because we are able to sell at cap rates that are lower than the implied cap rates on our IFRS basis.

[Sumayya Syed, Analyst at CIBC]

Great. Thank you.

[Jason Parravano, President and CEO at Plaza Retail REIT]

Thanks, Maya.

[Operator]

Mr. Parravano, there are no further questions at this time.

[Jason Parravano, President and CEO at Plaza Retail REIT]

Well, thank you all for joining us today and for your continued support and trust. We remain committed to creating long-term value for our unitholders, our tenants, and the communities they serve. We appreciate your time and look forward to the journey ahead. Take care and talk soon.

[Operator]

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your line.

Participants

Executives

• Kim Strange, General Counsel and Secretary
• Jason Parravano, President and CEO
• Jim Drake, CFO

Analysts

• Mark Rothschild, Analyst at Canaccord Genuity
• Zemin Liu, Analyst at Desjardins
• Sumayya Syed, Analyst at CIBC