Plaza Retail REIT

Thank you, operator. Good morning, everyone, and thank you for joining us on our Q4 2025 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, statements with respect to our plans, estimates and intentions, or statements 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.

Additional information on the risks that could impact our actual results and the expectations and assumptions we applied in making forward-looking statements, can be found in Plaza's most recent annual information form for the year ended December 31, 2024, and management's discussion and analysis for the fourth quarter ended December 31, 2025, 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.

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 7 of our MD&A for the fourth quarter ended December 31, 2025, 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?

Thank you, Jim, and good morning, everyone. 2025 was a year that reinforced why Plaza's strategy works.

In a market defined by cautious consumers, uneven economic signals and still elevated cost of capital and construction, our portfolio continued to demonstrate the durability of the essential needs retail backed by disciplined execution and fully internalized operating platform. We remained focused on optimization and intensification while continuing to benefit from steady operating fundamentals and a portfolio concentrated in nondiscretionary retail.

This combination delivered another year of growth. Total FFO increased to $44 million or $0.395 per unit compared to $40.5 million or $0.363 per unit in 2024, an 8.8% improvement.

There are a few onetime items that cloud those results, so I figured I would provide an explanation on how to normalize our solid performance for the year. If you exclude $123,000 of reorganization costs, $425,000 related to a change in bonus accrual timing and $544,000 of bad debt tied to Toys R Us insolvency in 2025 and exclude $2.7 million in reorganization costs of 2024, FFO per unit would have increased approximately 4.5% year-over-year.

This performance reflects the strength of our portfolio and the disciplined execution of our strategy, which we have been pursuing for the last year. The main driver behind this growth comes from higher NOI from same asset growth, which highlights our ability to complete many optimization projects as well as acquisitions and intensifications.

Leasing fundamentals remain robust with blended leasing spreads of 13.4% over the renewal term. Notably, our leasing spreads on negotiated renewals over the renewal term were just over 18%.

This underscores our ability to drive value from the existing portfolio and demonstrates the favorable delta between our in-place and market rents. Our committed occupancy remains at an all-time high of 97.6%.

We also have an active lease pending attending condition, which will increase that committed occupancy number to 98% in the coming days. Excluding enclosed malls, our occupancy rate is even higher and is near perfect at 99%.

These metrics continue to reflect all-time high performance levels, reinforcing sustained tenant demand and the strategic positioning of our portfolio in markets characterized by limited retail supply. As renewals continue to take effect during the year, we expect continued positive impact on same-property NOI, completed by contributions from intensification and optimization projects currently underway across the portfolio.

On the value creation side of the business, our intensification, development and consolidation initiatives added approximately $5.5 million of NOI in 2025, reinforcing our strategy of extracting embedded growth within the existing portfolio while maintaining capital discipline. Total NOI for the year was $77 million, representing growth of 2.7% compared to 2024.

We also advanced and completed several projects that should contribute more visibly in 2026 and beyond. During the year, we handed over multiple spaces to Loblaws and other key tenants for fit-ups and construction across select properties.

As these locations open and stabilize, we expect their contribution to become more apparent through 2026. As we have noted previously, optimization work can create timing-related noise in AFFO, but this work supports FFO growth and long-term value creation.

Stepping back, our portfolio today stands 191 properties totaling approximately 8.8 million square feet across Canada, with a strong concentration in open-air centers and small box format leased -- small box formats leased predominantly to national tenants serving the essential needs, value and convenience segment. This focus continues to underpin stable demand and attractive reinvestment opportunities across our markets.

In 2026, our priorities are clear: continue executing on optimizations and intensifications already in motion, drive leasing spreads where we see embedded mark-to-market and prudently allocate capital to the highest return opportunities within our pipeline. We remain disciplined.

We remain focused on retail. We know it well, and we remain committed to long-term value creation for our unitholders, our tenants and the communities we serve.

With that, I'll turn it over to Jim to take you through the financials in more detail.

Thank you, Jason. Good morning, everyone.

I will expand on a few of Jason's comments and highlight our results. Within the total NOI growth that Jason mentioned, same-asset NOI increased 1.1% for the quarter, 1.7% for the year.

Excluding bad debt related to the Toys R Us insolvency, same-asset NOI would have increased 2.2% for the quarter, 2.5% for the year. In addition to the FFO growth Jason noted, AFFO per unit also increased 4.9%.

Although our optimization program has a temporary impact on AFFO, which included $2.1 million of leasing costs related to that program, the result is improved asset quality and increased revenues. On the balance sheet, our debt-to-assets ratio is down 60 bps versus last year at 50%, excluding land leases.

Net debt to adjusted EBITDA was 8.9x, 20 bps lower than last year, given EBITDA growth and reorganization costs incurred last year. We maintain a balanced mortgage maturity ladder with $63 million of fixed rate mortgages maturing next year at a weighted average rate of 3.4% and overall loan-to-value of 42%.

We continue to see strong interest in our mortgage offerings with all-in rates in the low 4s to low 5% range. In addition to the lease renewal spreads Jason spoke about, we also introduced a new leasing spread.

The new leasing spread represents rent in year 1 of the new lease versus the expiring rent for the previous tenant if that previous tenant was in place within the last 12 months. The new leasing spread for the year was 82%.

This significant spread further highlights the impact from our optimization program. The optimization program also increases asset quality as does our noncore asset sales and consolidation programs.

We sold 21 properties during the year, generally QSRs and some small single-tenant assets and replaced them under our consolidation program with a 50% interest in a grocery-anchored property in Halifax and a 75% interest in 3 freestanding Shoppers Drug Marts in Ontario. In both cases, we now own 100% of the assets.

Finally, for the fair value of our investment properties, we took a $14 million write-up during the quarter on increased stabilized NOIs, new appraisals and cap rate compression. Our weighted average cap rate is now 6.8%.

Those are the key points for the quarter and year. We will now open the lines for any questions.

Operator?

Looking at the leasing spreads you achieved in the past year and the same property NOI growth you would have achieved not for the Toys R Us issues. Is it reasonable to expect that 2.5% is probably a good number to look at for this year and maybe just a general run rate that you could be achievable for the foreseeable future?

Mark, it's Jason. I believe 2% to 2.5% is achievable for the foreseeable future, taking into consideration timing impacts and any unforeseen that could happen in the portfolio.

But yes, that makes a lot of sense.

And in regards to the space that has been vacated recently, and obviously, it's not a huge number, but how is the leasing going? And should we expect anything notably different on the leasing spreads?

No. So again, with respect to like our optimization projects, that's a space that we would be forcing tenants to vacate and that would impact our new leasing spreads.

With respect to renewals or tenants that are in place, we currently have in our open-air strip portfolio, call it, somewhere around 70,000 to 100,000 square feet of vacancy. And with respect to that space, we're working towards signing documents on probably 1/3 of it while actively trying to lease the balance, and it's made up of a bunch of little units across the portfolio.

But I would say that where we're at today on an occupancy level is probably the highest you're going to get just given the fact that there's always space that's going to roll. And what we've seen as a trend over the last 2 years or so is we always have approximately 75,000 to 125,000 square feet in our open-air strips that's constantly rolling, and it's those mom-and-pop tenants that are in and out and replacing them with new ones.

Okay. Great.

And maybe just one more for me on the development projects. Is it reasonable to expect most of these projects get completed over the next year or so?

Some of them, I guess, are longer term, but maybe what's the timing of all that?

So we're in the process of completing a large development, greenfield development project right now as well in Ontario, and we're handing over space to the tenants. As soon as we complete asphalt, probably closer to mid-April, end of April, while we have other projects, notably our greenfield project in Galway, which we're working through a couple of additions this summer on space and working towards further building out that final phase of that project or the final material phase of that project closer to 2028.

Just quickly on the Toys vacancy. Can you remind us of the NOI impact there?

And if that was already fully felt in 4Q or if you'll feel a little bit of that or rather we should take a little bit off in Q1?

You're going to have to take off a bit of it in Q1 and Q2 as we work towards leasing it up. So that's approximately $1 million a year of NOI.

So that would be the base and the additional rents that were collected on that tenant. It's about 35,000 square feet.

Okay. And then just in terms of backfilling that, how is that progressing?

Working on a few options. There is demand for that space.

You can imagine the notable suspects who are approximately 30,000 to 35,000 square feet. It doesn't happen overnight.

So we're working towards hopefully leasing that up on the back end of 2026.

So do you think it can be -- you get straight-line rents there by the end of '26 or more of a '27?

Straight lines by the end of '26, hopefully.

All right. And then maybe just lastly, switching gears on the acquisition side.

I know you guys are focused on cleaning up some of these partnership agreements. What's the outlook for 2026?

How much do you think you can do?

So we increased our ownership slightly in one syndication earlier in -- sorry, at the end of January, and we're looking to consolidate at least one more syndication for sure, while we clean up some pieces on some other ones as opportunities come due throughout the course of the year as liquidity permits.

You've got about 4 expansions and redevelopments, I think, coming online over the course of the first half of the year. Do you have an estimate of how much incremental NOI you anticipate to achieve from those projects coming online?

I'll take that. Tal, there's a chart in the MD&A that talks about the developments, redevelopments, and it shows a stabilized NOI upon completion.

So the difference between what we have today versus what is stabilized is what we'll see over the next little while.

Okay. This is on Page 4?

Yes. So Page 14 of the MD&A, you'll see the chart providing details on NOI.

So stabilized NOI from intensifications acquisitions is about $6.1 million. And then there's another $600,000 or so from properties currently under development.

Okay. Perfect.

And then just looking at the change in net rental income from Q3 to Q4, it's down about $1.5 million. So I'm assuming some of that is the chose us bankruptcy write-off.

But I guess, is the balance mostly just the seasonality of your operating expenses?

I can take that, Jim. So we've got about $0.5 million there from the Toys R Us write-off.

Another maybe $200,000-or-so related to just normal course bad debt, which we would normally experience in the portfolio and the balance of it would be seasonality.

Okay. That's great.

And then just lastly, yields will keep moving all over the place a little bit. Just wondering your rough cost of secured financing right now for 5 years.

Jim?

Five years we would be in the low 4s to mid-4s.

All right. Well, thank you all for joining us today and 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.