Plaza Retail REIT (TSE:PLZ.UN) executives said the trust delivered another year of growth in 2025, pointing to stable demand for essential-needs retail, strong leasing spreads, and continued value creation from portfolio optimization and intensification initiatives.
On the company’s fourth-quarter earnings call, President and CEO Jason Parravano described 2025 as a year marked by cautious consumers, uneven economic signals, and elevated costs of capital and construction, but said Plaza’s retail focus and internalized operating platform helped support results.
FFO growth, with one-time items noted
Management also discussed several items it said affected comparability. Parravano said that excluding C$123,000 of reorganization costs, C$425,000 related to a change in bonus accrual timing, and C$544,000 of bad debt tied to the Toys “R” Us insolvency in 2025—and excluding C$2.7 million in reorganization costs in 2024—FFO per unit would have increased about 4.5% year over year.
Chief Financial Officer Jim (last name not provided in the transcript) added that adjusted funds from operations (AFFO) per unit increased 4.9%. He said Plaza’s optimization program had a temporary impact on AFFO and included C$2.1 million of leasing costs, but characterized the spending as supporting improved asset quality and increased revenues over time.
Leasing and occupancy trends
Plaza highlighted robust leasing fundamentals. Parravano said blended leasing spreads were 13.4% over the renewal term, and negotiated renewals produced spreads of just over 18% over the renewal term. He said those figures demonstrate a favorable gap between in-place rents and market rents.
Occupancy also remained elevated. Parravano said committed occupancy reached an all-time high of 97.6% and noted an additional lease was pending a tenant condition that would lift committed occupancy to 98% in the coming days. Excluding enclosed malls, occupancy was described as near perfect at 99%.
During the Q&A, Parravano said he believes 2% to 2.5% same-property net operating income (NOI) growth is achievable “for the foreseeable future,” while noting timing impacts and potential unforeseen portfolio events.
He also provided an update on smaller-format vacancy, saying Plaza’s open-air strip portfolio has roughly 70,000 to 100,000 square feet of vacancy, with documents being prepared on about a third of that space and active leasing efforts underway for the rest. Parravano said Plaza typically has approximately 75,000 to 125,000 square feet of open-air strip space “constantly rolling,” largely tied to turnover among smaller “mom-and-pop” tenants.
Separately, management introduced what it called a “new leasing spread,” defined as year-one rent on a new lease compared to expiring rent for a previous tenant who had been in place within the last 12 months. Jim said the new leasing spread for the year was 82%, which he said highlights the impact of the optimization program.
NOI, same-asset performance, and development contributions
Parravano said total NOI for the year was C$77 million, up 2.7% from 2024. He also said Plaza’s intensification development and consolidation initiatives added approximately C$5.5 million of NOI in 2025.
Jim provided additional detail on same-asset results, stating same-asset NOI increased 1.1% in the quarter and 1.7% for the year. Excluding bad debt related to the Toys “R” Us insolvency, same-asset NOI would have increased 2.2% in the quarter and 2.5% for the year.
On the Toys “R” Us vacancy, Parravano told analysts the NOI impact is approximately C$1 million per year and said some of the impact would carry into Q1 and Q2 as Plaza works to re-lease the space, which totals about 35,000 square feet. He said there is demand for the box, but that leasing “doesn’t happen overnight,” and management is targeting straight-line rents by the end of 2026, “hopefully.”
Management also discussed projects expected to contribute more visibly in 2026 and beyond. Parravano said Plaza handed over multiple spaces to Loblaws and other key tenants during 2025 for fit-outs and construction, and said the contribution from those openings and stabilization should become more apparent through 2026.
When asked about the timing of developments, Parravano said Plaza is completing a greenfield project in Welland, Ontario, with space expected to be turned over to tenants after asphalt work, “probably closer to mid-April, end of April.” He also referenced the greenfield project in Galway, saying the trust is working through additions this summer and aims to build out a “final material phase” closer to 2028.
On expected incremental NOI, management pointed analysts to a chart in the MD&A (page 14, as stated on the call). Parravano said stabilized NOI from intensifications and acquisitions is about C$6.1 million, with another roughly C$600,000 from properties currently under development.
Balance sheet, capital allocation, and valuation
Jim said Plaza’s debt-to-assets ratio declined 60 basis points year over year to 50%, excluding land leases. Net debt to adjusted EBITDA was 8.9 times, down 20 basis points from last year, which he attributed to EBITDA growth and reorganization costs recorded in the prior year.
He also said the trust has a balanced mortgage maturity ladder, with C$63 million of fixed-rate mortgages maturing next year at a weighted average interest rate of 3.4% and an overall loan-to-value of 42%. Management said it continues to see strong interest in its mortgage offerings, citing all-in rates in the low 4% to low 5% range. In response to a question on secured financing, Jim said five-year terms are in the low-4% to mid-4% area.
On portfolio activity, Jim said Plaza sold 21 properties during the year, generally quick-service restaurants and small single-tenant assets. Under its consolidation program, Plaza replaced those with a 50% interest in a grocery-anchored property in Halifax and a 75% interest in three freestanding Shoppers Drug Mart properties in Ontario—adding that in both cases Plaza now owns 100% of the assets.
The company also noted valuation movement in the quarter. Jim said Plaza recorded a C$14 million fair value increase on investment properties during the quarter due to increased stabilized NOIs, new appraisals, and cap rate compression. He said Plaza’s weighted average cap rate is now 6.8%.
Looking to 2026, Parravano said Plaza’s priorities include continuing optimizations and intensifications already underway, driving leasing spreads where there is mark-to-market opportunity, and allocating capital prudently to the highest-return opportunities in the pipeline.
About Plaza Retail REIT (TSE:PLZ.UN)
Plaza Retail REIT is an open-ended real estate investment trust and is a retail property owner and developer, focused on Ontario, Quebec and Atlantic Canada. Plaza’s portfolio includes interests in approximately 268 properties totaling approximately 8.6 million square feet across Canada and additional lands held for development. Its portfolio largely consists of open-air centres and stand-alone small box retail outlets and is predominantly occupied by national tenants.
