Good morning. I'd like to welcome everyone to the Plaza Retail REIT third quarter 2020 earnings conference call. At this time, all participants are in listen-only mode. Following indication we will conduct a question-and-answer session. Instructions will be provided if it's time for you to queue up. If anyone has any difficulties during the conference please press star zero for operator assistance anytime. I want to remind everyone that this conference is being recorded. I will now turn the conference over to Mr. Michael Zakuta, Plaza's Chief Executive Officer. Please go ahead, Mr. Zakuta.
Thank you, operator. Good morning. Thank you for joining us on our Q3 2020 results conference call. We are legally obliged to tell you that today's discussion includes forward-looking statements. We'd like to caution you that such statements are based on management assumptions and beliefs. Please refer to Plaza's public filings for a discussion of these risk factors. If we go back to April, as we were sitting in isolation in our home offices, we did not anticipate that we would bounce back as well as we have. We spent a tremendous amount of time and energy collecting rent, negotiating deferral deals with both large and small retailers in Q2. Today, we're looking at a dramatically improved environment as our rent collections for Q3 exceeded 97%.
Currently, 99% of our tenants are open for business, most of which are operating at or near full capacity. Our Atlantic Canadian properties have not experienced a subsequent wave of COVID-19. The strategic location of our properties in primary and strong secondary markets and the geographic diversity of our portfolio have allowed us to successfully weather this pandemic. Leasing activity has improved considerably over time. Our portfolio has proven its resilience. In Q3, we leased 238,000 sq ft, 45,000 sq ft of new leasing, and 193,000 sq ft of renewals. In Q2 and Q3, the period impacted by the pandemic, we've leased 485,000 sq ft, 121,000 sq ftof new leasing, and 363,000 sq ft of renewals. Of the 121,000 sq ft, 79,000 sq ft represents backfilling of vacant space. Our formula of open-air centers with essential needs and value retailers, often located in strong secondary markets, performed well.
Please refer to the Q3 presentation that is now posted on our website for an update of our top 30 tenants, our rent collection numbers, and photos of new projects and recent store openings. Our strategy is to continue to grow by taking advantage of opportunities. We foresee more opportunities post-COVID versus pre-COVID as retail has been challenging and will continue to be tough as we eventually put COVID behind us. We will continue to pursue new developments and redevelopment projects. It is still early on, and we do not expect to see interesting deals until the new year. The source of future opportunities will be, one, large property owners looking to reduce their retail holdings. Two, passive retail property owners that struggle to fill vacancies as they are poorly equipped to lease retail space.
Three, redevelopment opportunities that convert enclosed malls to strip centers, empty box stores to multi-tenant strips, or any asset that requires a serious right-sizing cure. Usually, a significant reset or redevelopment of retail space. Four, retailer demand for new space, whether it is for downsizing or upsizing. We foresee that we'll have less competition and therefore more development opportunities. As a small cap REIT, we are nimble enough to adjust to these changing market conditions. We are managing and allocating our capital carefully. We build what we lease, often in multiple phases, and are rewarded on our development program with attractive yields. We are successfully selling non-core assets well over NAV. These assets are typically an old KFC, whereby the highest and best use for the site is not a QSR.
These sales are made with a very low hurdle rate, and we reinvest the proceeds in higher yield and higher quality new projects. I do not believe that the market is recognizing a number of factors that favor Plaza. One, Plaza's highly engaged management team's capability to execute its business plan and its leasing and development team's ability to lease and develop high-quality projects. Two, Plaza's core portfolio of pharmacies, grocery stores, dollar stores, and other essential needs tenants that have delivered as advertised. Three, Plaza's value retailers who have shown that they can prosper in our open-air retail strips during difficult times. Four, Plaza's large retail network of properties that are an important part of any retailer strategy to sell products through multiple channels. Five, Plaza's strategy of being diversified across a wide geography with open-air centers that often dominate within their community.
We believe that the market will eventually recognize these factors and the stability of our portfolio and our growth prospects. The historically high spreads between retail REIT yields and 10-year Canada bond yields will eventually adjust, and retail REIT prices will recover and move closer to real NAV. As we look forward, we remain confident in our future as we continue to grow by adapting to change. Our portfolio and our business plan have remained relevant, and we believe that we have a solid foundation from which to build as Canada emerges from the pandemic. I will now turn the call over to Jim Drake, Plaza's CFO. Jim?
Thanks, Michael. Although COVID continued to impact our business during Q3, our results have improved over last quarter. First, our rent collections recovered significantly from 85.5% in Q2 to over 90% in Q3, with October collections to date at 98%. Rent deferrals and abatements also decreased significantly from 8% total in Q2 to less than 1% total in Q3. For deferred rent that required repayment in September and October, we collected 100% of September and 94% for October to date. We participated in the CECRA program extension during Q3 but utilized our own more rigorous process to determine tenant eligibility based on individual tenant need. Our CECRA write-off dropped from 1.5% in Q2 to 1% in Q3. In dollar terms, our total write-offs from CECRA, bad debt, and rent abatements for the quarter were CAD 492,000, bringing the year-to-date total to CAD 2.6 million.
Offsetting this was an increase in straight-line rent as required under lease modification accounting of CAD 442,000 for the quarter or CAD 723,000 year-to-date. FFO and AFFO per unit for the quarter also improved to CAD 0.091 and CAD 0.081 respectively, up 19% over the last quarter. In addition, excluding the previously mentioned write-offs as well as severance payments and the impact of lease buyouts, year-to-date FFO and AFFO per unit would have been up 7% and 12%, respectively, over last year. Our liquidity also improved over last quarter, and at September 30th totaled CAD 62 million, including cash, operating line availability, and unused development and construction financing facilities. We also had unencumbered assets with a value of approximately CAD 30 million. Subsequent to quarter end, we increased our operating line limit by CAD 2 million.
For long-term debt, as of September 30th, we had only CAD 17 million of mortgage maturities remaining in 2020, most of which relate to grocery or pharmacy-anchored properties. Subsequent to quarter end, we signed commitment letters to refi CAD 5 million of these mortgages and made significant progress on the remainder. With an LTV on the maturing debt of 65%, we are confident we will refi these mortgages. Regardless of the improvements in our rent collections and liquidity, we've continued with a proactive cost management program and during the quarter finalized an early retirement program that will result in administrative savings going forward. Under our development program, during the quarter, we completed the conversion of a previous QSR to a provincially-owned SQDC store in Quebec. We also closed on the previously announced acquisition of a grocery anchor strip in Ontario, which will be redeveloped over the coming months.
On asset sales, we sold a non-core QSR during the quarter and closed on the previously announced sale of a 50% non-managing interest in five Shoppers Drug Mart properties, which generated CAD 5 million of cash for Plaza. Finally, on fair value, we recorded a CAD 500,000 loss on investment properties during the quarter as a result of minor changes in underwritten NOI. Our weighted average cap rate increased by 2 basis points to 7.33% as a result of the acquisition in Ontario and a few appraisals obtained during the quarter. Those are the key points relating to our results for the quarter and year-to-date. We will now proceed to open the lines for any questions. Operator?
Thank you. Ladies and gentlemen, we will now conduct a question-and-answer session. If you have a question, please press the star key followed by one on your touchtone phone. You will hear a one tone confirming your request. Your questions will be queued as received. If you would like to decline from the polling, please press pound. Please ensure you lift a handset if you are using a speaker phone before pressing any key. One moment please for your first question.. Your f irst question comes from the line of Lorne Kalmar with iA Securities. Please go ahead. Your line is open.
Thank you, and good morning. Just referring to your earlier remarks regarding taking advantage of buying opportunities. I was just wondering if you could tell us what you're currently observing in terms of cap rates within your core markets, and are you seeing any interesting distressed situations or is it still too early to tell?
We're not seeing real distressed situations yet. I think it's very early, as I mentioned. I think that's something that you'll see in the new year. I think there's going to be more distress, more based on a specific property situation. For example, an enclosed mall with some very important chronic vacancies that needs to be reorganized. I think there's more opportunity in that type of deal versus higher cap rates. There may be some higher cap rate style opportunities. We definitely have not seen them yet. What we're observing is, aside from the enclosed malls, cap rates are still pretty advantageous for the owner or the vendor.
Okay, great. Just last one from me. At a high level, I'm just looking at your collection rates, they've improved. I was just wondering, just now amid this second wave of this pandemic, do you see this trend kind of stabilizing, or do you see the trend going in the near future and over basically just next couple of quarters?
Again, if you look at our geography. Atlantic Canada is not in the same situation as Quebec and Ontario in terms of number of COVID cases. It's much more business as usual for retailers. We don't expect a lot of problems in those markets. The only place you'll see a few issues, from our perspective, is obviously the soft areas, the cinemas and the gyms, and some of the sit-down restaurants. We do expect that in all three categories, we will collect our rents over time. You're going to see some issues where some of the small businesses, which is not that big a part of our business, though CECRA was relevant. You're going to see people that are not paying November or December because they're waiting for their CERS money. We don't have any details as to when CERS flows.
That's going to have a little bit of an impact, going to create some receivables. Those receivables should be settled with the CERS for those small businesses that are impacted. As you know, if a business is forced to close, they're good for 90%. The government is supporting them with 90% of the rent. That's going to be interesting. It's going to have a short-term impact, but we should see a pretty quick bounce back. Again, at our portfolio, we're not seeing a lot of problems in collections going forward. Our collections are pretty robust, and we're obviously happy with the results.
Okay, great. Thanks. I'll turn it back.
Thank you.
Ladies and gentlemen, if there are any additional questions at this time, please press the star followed by the one. As a reminder, if you are using a speakerphone, please lift the handset before pressing any keys. Our next question comes from the line of Brendon Abrams with Canaccord Genuity. Please go ahead, your line is open.
Hey, good morning. Maybe just touching on two of your projects. You recently acquired one in Sault Ste. Marie and then, The Shoppes at Galway in Newfoundland. Can you just maybe provide some color or elaborate on what you saw as the opportunity in the Sault Ste. Marie acquisition and maybe some of the plans going forward in terms of repurposing that asset? Secondly, adding the Princess Auto in The Shoppes at Galway, can you just provide a more broad update on the development or what's happening with that asset?
Okay. Sault Ste. Marie is, as people like to describe as a plaza deal. Very good dirt. Grocery anchored, the opportunity is that you have a 90,000 sq ft Lowe's, which is closed. Closed, paying rent. That's our opportunity, is to organize a buyout of the Lowe's lease and then redevelop the Lowe's into a number of units as we've done in many other situations across our portfolio. We've bought large box stores and created a multi-tenant strip out of it. In this case, the multi-tenant strip is there. We're just adding to it. We have solid retailer demand for the space, we're working away at it. Hopefully over the next 12 or 18 months, you'll see some very positive change in Sault Ste. Marie. In terms of Galway.
Galway is really, as I described our strategy, we build it as we lease. It's a phase by phase. We're adding pieces on an ongoing basis. Princess Auto was a recent phase. It's a great draw. It's a province-wide draw. It's the only Princess Auto in Newfoundland. We're seeing some serious momentum in the project. We have now a number of strong retailers open and obviously more to come. It's going to take time, and Newfoundland is a tougher market today, as we know. Again, everything that's opening is functioning well, and we continue to bring new people to the site.
Okay. Yeah, no, that's helpful. Last question from me. Just in terms of the more broad leasing environment and what you're seeing out there. Maybe you can just provide some color on leasing velocity or which tenants or types of tenants are looking to expand or actually add stores throughout this environment.
There is life in the leasing world. As you saw in our report, we did a fair amount of leasing. We also did some backfilling, which is sort of harder. That's when you're filling your vacancies. Leasing your new stuff is relatively easy. Leasing your vacant stuff is tougher work. I think we're pretty good at that, and we're proving it. There is decent retail demand. It's coming from certain categories. Obviously, it's coming from grocery, pharmacy, dollar stores, value retailers. QSR is very hot category. Very, very hot.
A number of categories that you've seen that have done well in the pandemic. Obviously, fashion is very slow, and you're not doing a gym deal or a cinema deal here for some time. There is life in the leasing world. We're seeing good activity. We expect it to obviously get better next year. We're not seeing the complete shutdown that we would've seen in early Q2. We're definitely seeing activity and demand. We're feeling very good about where we're sitting and our prospects for filling our spaces and launching new projects. Demand is definitely there.
Okay, that's helpful. I'll turn it over. Thank you.
Mr. Zakuta, there are no further questions at this time.
Thank you, operator.
I do have another question if you'd like to take it.
Sure.
This question comes from the line of Michael Markidis with BMO. Please go ahead. Your line is open.
Thank you. Good morning. I guess I just snuck in before the door closed. Michael, I think we've seen that there certainly is private capital demand for stabilized, grocery-anchored, essentials-type retail. You've proved that out with your sale of a portfolio, 90% non-managing interest in those five properties. I'm just curious, in the private capital side, what your expectations are, what you're seeing with respect to appetite for value-add opportunities, and as you go forward in 2021, if you see the potential opportunities that you think you're going to see in terms of increased volume. Is that something you could lean on a little bit more as opposed to recycling your asset, given capital is willing to take the value-add stuff?
Yeah. There's definitely a very solid appetite from private capital to participate in different types of transactions, whether it's finished product, which we did, or whether it's value add. In Sault Ste. Marie, it's a capital partner deal. We have a capital partner who's supplying a disproportionate amount of the equity that gets cleared up, post-redevelopment. That type of capital is certainly out there, and I'm sure we'll be working with that type of capital partner next year, as we take advantage of opportunities in the market.
Okay. That's great. Thank you.
Mr. Zakuta, there are no further questions at this time.
Well, thank you. Thank you everybody for participating.