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Plaza Retail REIT (PLZ-UN-T) had a relatively quiet but productive 2022 and president, CEO and trustee Michael Zakuta is optimistic about its robust development activities during the remainder of this year and into 2024.
“We're very active and leasing demand for essential needs and value retail remains very solid,” Zakuta told RENX.
Fredericton, N.B.-based Plaza closed on a bought deal public offering of 8.55 million units at $4.68 each for gross proceeds of approximately $40 million on March 28.
The underwriting syndicate for the offering was co-led by RBC Capital Markets and CIBC Capital Markets. The underwriters retain an over-allotment option to purchase up to an additional 1.28 million units, for up to 30 days after that March 28 closing.
Plaza’s units were at $4.13 in morning trading on April 6, between their respective 52-week highs and lows of $5.09 and $3.88. The REIT had a market cap of $466.76 million.
Plaza used the net proceeds from the offering, along with existing liquidity, to repay its Series E 5.1 per cent convertible subordinated unsecured debentures that matured on March 31.
Plaza is actively developing
Plaza's portfolio largely consists of open-air centres and stand-alone, small-box retail outlets and is predominantly occupied by national tenants.
It had interests in 251 properties totalling 8.84 million square feet across Canada, with additional lands held for development, at the end of 2022 when its committed occupancy rate was a record high 97.5 per cent.
Zakuta said Plaza is planning, developing and redeveloping properties in Newfoundland, New Brunswick, Nova Scotia, Quebec and Ontario. The projects total 1.28 million square feet and have anticipated completion dates ranging from this quarter into 2026 and estimated costs of approximately $160 million.
“We're in the period of the cycle where we're building and then we'll harvest it towards the end of the year and in 2024 as the stuff that's getting built comes online," he said. "We're very positive about the business.
"Our niche has held up very well and continues to perform.”
2022 acquisitions and dispositions
Plaza acquired three properties in 2022: the 19,578-square-foot Gibson Boulevard Plaza in Stewiacke, N.S. for $399,000 on June 9; a 50 per cent share in the 94,000-square-foot Niagara Street Plaza in Welland, Ont. for $9.58 million on July 28; and the 81,000-square-foot Dieppe Boulevard Plaza in Dieppe, N.B. for $3.24 million on Aug. 2.
The REIT disposed of non-core quick service restaurant properties in: Digby, N.S.; Hamilton, Ottawa and Wallaceburg, Ont.; and Brossard, Lachute, Montreal, Pierrefonds and Victoriaville, Que. The proceeds for those 2022 sales were $8.36 million. Plaza also sold its 50-per cent share in a non-core asset in Port Hope, Ont. for $3.99 million.
The retail transaction market has been pretty slow, in part due to the rising interest rate environment that began last year but has now levelled off. Zakuta, however, said Plaza has an appetite to do more and will continue to push forward and execute on its growth strategy.
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