Plaza Retail REIT

For the first six months of 2026, NOI increased 3.4% to $38.7 million and same-asset NOI increased 2.3% to $38.5 million. FFO rose 7.8% to $22.6 million and AFFO rose 7.3% to $16.9 million; excluding certain timing items, FFO per unit would have increased 8.3% and AFFO 8%. Occupancy was 97.6% at June 30. On the balance sheet, debt-to-assets was 48.8% excluding land leases, down 210 bps year over year, and net debt to adjusted EBITDA was 8.7x, down 70 bps year over year. The company recorded a $5 million write-up on investment properties in the quarter, and its weighted average cap rate is 6.78%. Management did not provide formal next-quarter or full-year guidance beyond saying the balance of 2026 will focus on optimization, intensification, rent growth and disciplined capital allocation.

Jason Parravano said the first-half momentum from 2025 continued into Q2 and emphasized that the portfolio is performing as expected despite cautious consumers, uneven economic signals and elevated construction costs. He framed the strategy as unchanged: optimize and intensify the existing portfolio, use the fully internalized platform to move quickly, and focus on essential-needs, value and convenience retail. He also highlighted that growth is coming from rent escalations, renewals, cost recoveries, acquisitions and development, while stressing that the company does not need to take incremental risk to drive growth.

Jim Drake pointed to lease renewal spreads of about 12% in the first year of the renewal and 13% on average over the renewal term, with new leasing spreads near 51%, as evidence of the optimization program’s value. He said debt-to-assets improved to 48.8% excluding land leases and net debt to adjusted EBITDA improved to 8.7x, helped by EBITDA growth and debt reduction. He also noted the company replaced $12 million of 5.95% convertible debentures with mortgages at a weighted average rate just under 5%, repaid $2.7 million of mortgage bonds at 5.5% after quarter-end, and said Q2 year-to-date interest expense was slightly lower than last year despite a higher-rate environment. He added that $32 million of fixed-rate mortgages roll over for the rest of the year at a weighted average rate of 3.8%, and the company’s overall loan-to-value is under 40%.

Analysts asked about the strength of different markets and Parravano said Plaza is doing extremely well in its secondary markets, which make up the bulk of the portfolio, while the primary-market exposure is mostly limited to single-tenant Shoppers Drug properties. On joint ventures, he said discussions around partner buyouts have generally gone well, value has not often been debated, and more of those transactions can be expected, aided by lower debt and what he described as the best liquidity position in about five years. Another question focused on renewal timing: management said about 264,000 square feet rolls for the remainder of 2026, roughly 700,000 to 900,000 square feet renews annually, and around half of the remaining 2026 renewals had already been completed.