Plaza Retail REIT (PLZ.UN)

Plaza Retail REIT (PLZ.UN)

Just picked this up today at 4.24. I bought 850 shares and will probably add to that when my dividends come in at the end of this month.

Plaza Retail REIT (PLZ.UN) is up 14.1% from its 52-week low of $3.68 set on December 24th, but it continues to offer a market-beating prospective distribution yield of 6.7% which is paid monthly. Plaza operates primarily in Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, and Ontario. A core focus of the REIT's business model is the development of open-air and enclosed retail projects for its own account. As of June 30th, the REIT had an interest in 277 properties including those under or held for development, representing 8.4 million gross leasable square feet.

As part of its strategy to deal with the Amazon (Rainy; AMZN) threat, Plaza is favouring open-air projects because it believes that market conditions favour unenclosed malls. It has four open-air projects under construction plus one open-air conversion underway with between a 20% and 50% ownership stake. It also has 12 open-air centres in the development or planning phases. Plaza is also involved with the construction of four expansion or single-use projects and has 13 such properties in the planning or development stages. Plaza appears to be gaining some momentum with its strategy of taking on Amazon out in the open air. According to Refintiv data, as of June 30th, EPS for the past 12 months was $0.40 per unit, up $0.21 from a year ago. 12-month trailing EBITDA was $0.61 per unit, up 10.9% from $0.55 a year ago. The REIT's 5-year EBITDA growth is 3.7%. Meanwhile, its net-interest coverage ratio comes in at 2.9 for the past 12 months. Importantly, Plaza CEO Michael Zakuta is demonstrating conviction about the REIT's future via share purchases. That stands in stark contrast to Amazon CEO Jeff Bezos who, along with other insiders, has been selling recently. We note that Plaza units are up 1.2% over the past year while Amazon stock is down 6.8%, and Amazon does not pay a dividend either.

Insider Activity

Over the past month, Plaza Retail REIT (PLZ) CEO Michael Zakuta has spent $469,880 buying a total of 112,000 units at an average price of $4.195. His most recent purchase was on September 23rd when he bought 10,000 units at $4.20. He is the largest insider beneficial unit holder with 12,373,065 units representing 12.1% of all units outstanding.

The company has also been repurchasing units. Over the last 6 months, it has reported repurchasing 441,424 units at an average price of $4.20.

Plaza Retail REIT has above median ownership (direct & indirect holdings) by Officers and Directors compared to other small-cap stocks in the Financials sector according to SEDI filings as of September 22nd, 2019.

The REIT holds a mostly sunny INK Edge outlook on the equally weighted V.I.P. criteria of valuations, insider commitment and price momentum which places it in the top 30% of all stocks ranked. INK outlook categories are designed to identify groups of stocks that have the potential to out- or under-perform the market. However, any individual stock could surprise on the up or downside. As such, outlook categories are not meant to be stock-specific recommendations. For background on our INK Edge outlook, please watch our short video or visit our FAQ #5 at INKResearch.com.

Ink Research Report, Sept 24, 2019

https://www.inkresearch.com/prelog/

Company Profile

Plaza Retail REIT (Plaza) is a Canada-based open-ended real estate investment trust. The Company's objective is to deliver a growing yield to unitholders from a diversified portfolio of retail properties. The Company develops, owns and manages retail real estate primarily in Atlantic Canada, Quebec and Ontario. The Company offers a business strategy that differs from various peers in the real estate industry. The Company's portfolio includes interests in approximately 310 properties totaling over 7.1 million square feet, which are predominantly occupied by national tenants and additional lands held for development. These include properties indirectly held by Plaza through its subsidiaries and through joint arrangements. The Company's properties are located in Alberta, Newfoundland and Labrador, New Brunswick, Nova Scotia, Manitoba, Ontario, Prince Edward Island and Quebec. The Company's subsidiaries include Plaza Master Limited Partnership and Scott's Real Estate Limited Partnership.

Observations from Stephen Takacsy circa January 28, 2019

Plaza Corp is a strong internalized developer of retail properties with holdings in Quebec, Ontario and the Maritimes. It has tenants resistant to e-commerce, like Shoppers Drug Mart (25 per cent of gross leasable area), KFC, Dollarama, Sobeys and Canadian Tire.

It has a strong pipeline of 25 projects, including acquiring old Sears sites for redevelopment. Plaza Corp is the only REIT to consistently increase AFFO/share and increase dividend every year for 15 years. Retail real estate is out of favor, so it’s a good time to buy this undervalued stock. Insiders own 21 per cent and are buying shares (Michael Zakuta). We recently bought more at $3.30. Nice safe dividend yield of 6.5 per cent.

Company’s Website

www.plaza.ca