Ladies and gentlemen, thank you for standing by, and welcome to Plaza Retail REIT Q1 2020 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Mr. Michael Zakuta. Please go ahead.
Thank you, operator. Good morning, thank you for joining us on our Q1 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's assumptions and beliefs. Please refer to Plaza's public filings for a discussion of these risk factors. While we are pleased with the results of our first quarter, we have to throw away our standard script approach for this call. As we entered 2020, we had strong growth built into our business and our projected numbers as we anticipated bringing projects on stream. Obviously, we have been slowed down as most of our development and construction has been paused, and we will be challenged to collect all of our rents in 2020.
Senior management and the leasing team, who are normally not involved in collections, have spent considerable time on the collection process. If we had this call a month ago, we would have been very evasive as we were facing so many unknowns. We are still facing many unknowns, but we are slowly seeing some clarity on the horizon. The Plaza team has adapted very well to the work from home environment, and we continue to operate smoothly. Leasing activity has obviously slowed but not stopped. Planning for projects under development is moving forward at a slower pace, but many municipalities have adapted to online submissions and planning processes. We are committed and in a position to carry on the projects presently under construction or scheduled to go under construction as soon as our regions reopen. We anticipate that the pace will be slower, but we will realize growth.
Timing for this growth remains fluid. We have terminated and/or delayed or paused deals under contract. We do anticipate that we'll be seeing a lot more new deal opportunities going forward as operating, leasing, and development expertise becomes more and more critical for retail property owners. We believe that Plaza's many years of experience in redeveloping challenged retail properties will create compelling opportunities as we look to the future. Our core portfolio of pharmacies, grocery stores, dollar stores, and other essential needs tenants has delivered as advertised. Our top 10 tenants, representing 54% of revenues, are solid. In our top 30, that represents 72% of revenues, 90% of that top 30 or 65% of our revenues should have no issues or will do well in the future.
In the top 30, we anticipate that tenants representing 7% of our revenues will be challenged, or we are unable to determine if they will be challenged. In this category, we find cinemas, fitness clubs, sit-down restaurants, and fashion stores. We believe that some of our fashion stores are the most challenged businesses in our portfolio. Two out of four of our cinemas and a number of our restaurants have ground leases. This places us in a significantly better position to collect rents versus a traditional lease structure. QSRs appear to be adapting to difficult operating environments. We do not anticipate having rental collections issues with financial institutions. We see our value retailers as being in a position to prosper as open-air retail reopens in a difficult economic environment.
In many cases, we see our open-air property network as an important part of any retailer's strategy to sell products through multiple channels. Our strategy of being diversified across a wide geography with open-air properties places us in a privileged position and allows us to work with our tenants in a very collaborative manner. We are very supportive of the CECRA. We estimate that the program will come at a cost that we cannot at this point in time determine. We do believe that this is an effective support mechanism for small business. We have taken a case-by-case approach to rent deferrals. We have pushed back and refused to grant deferrals to very large, well-capitalized corporations. We have quickly responded to the smaller retailer and offer full deferrals for April and May.
We have worked with those tenants that fall in between and organized half gross rent deferral programs as part of a collaborative process. We continue to build and offer a portfolio of defensive style assets anchored by essential needs and value-oriented retailers. 93% of our revenue is generated from open-air centers, with national tenants representing 91% of our revenue. While we know that 2020 will be a year of significant challenges for Plaza and all of our stakeholders, we believe that the foundation of our business is very strong. Our team is looking forward to emerging from the current situation and returning to focus of growing our business. I will now turn the call over to Jim Drake, Plaza's CFO. Jim?
Thank you, Michael. Overall, our results for the quarter were positive. Committed occupancy remains strong at 96.4%. We leased approximately 200,000 sq ft during the quarter, with renewal spreads of 2.6% for our core product open-air centers.
In Q1 last year, we signed two significant lease buyouts that had a material impact in that period. Excluding lease buyouts, NOI for the current quarter was up 6% over last year, with same-asset NOI up 2%. Also excluding the impact of lease buyouts, FFO and AFFO per unit were up 14% and 12%, respectively. Under our development program, we delivered a freestanding restaurant this quarter and transferred CAD 2.3 million of fair value to income-producing properties. We also added a few redevelopments of QSR buildings to active construction. On fair value, we recorded a CAD 19.9 million loss on investment properties as a result of adjusted valuation assumptions and increased cap rates, mainly associated with non-anchored properties and our three enclosed malls. Under our NCIB, we purchased 360,000 units during the quarter, and as of the date of filing, we have purchased approximately 1.1 million units in total.
Although the results for the quarter were positive, the market's focus has shifted to liquidity. We have sufficient liquidity to meet our current obligations, comprised of CAD 9 million of cash and CAD 20 million available on our operating line. We also have CAD 34 million of interim and construction financing facilities available to complete developments and redevelopments. For long-term debt, as of March 31st, we had CAD 60 million of mortgage maturities remaining in 2020.
Subsequent to quarter end, we refinanced CAD 5 million of that amount, leaving CAD 55 million of maturities for the remainder of the year. Only CAD 2 million of that is maturing in Q2, where a renewal is anticipated very shortly, with the remainder maturing in the latter part of Q3 and Q4. With an overall loan-to-value on these maturing mortgages at 55%, we are confident we can renew or refinance. Interest rates for secured debt also remain very attractive.
We closed two mortgages since quarter end at rates of 2.29% and 2.68% for 10-year terms. Finally, we have a CAD 6 million mortgage bond maturing in Q2, the renewal of which is underway. Now a quick update on rent collections. To date, we have collected 74% of April's gross rent and 68% of May, and anticipate additional collections over the next few weeks. We have also signed deferral agreements, as Michael mentioned, with certain tenants for 8% of April's rent and a similar level of May's rent. To continue to assist our tenants, Plaza will also participate in the government's Commercial Rent Assistance program, the CECRA. To mitigate the short-term cash flow impacts from uncollected rent, Plaza has undertaken a proactive cost management program to reduce general and admin expenses and property operating costs, and we have deferred elective capital expenditures.
We are also participating in government deferral programs such as property tax and HST payment deferrals, and have frozen or deferred salaries and 2019 bonuses for our staff. Those are the key points relating to our results for the quarter, as well as an update on liquidity and rent collections. We will now proceed to open the lines for any questions. Operator?
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. Please stand by while we compile the Q&A roster. Your first question is from Mike Markidis with Desjardins again. Please go ahead, your line is open.
Hey, guys. Good morning.
Morning, Mike.
Michael, you gave some detail on your top 10 and top 30 list. I just want to make sure if we could go back to that to make sure I have some of the detail correct. Top 10, 54% of revenue, that was easy. Then you've gone into the top 30 being 72%. I think from there you said that 90% of the 72%, which would be 65% of the total, you said should have no issue. I guess first thing, when you say should have no issue, what do you mean by that exactly?
Well, meaning that they're people that, it's Shoppers, it's Dollarama, it's Canadian Tire, it's Sobeys, it's tenants of that nature. Tenants that have paid rent, and we expect will continue to pay rent.
Okay. Not necessarily essential per se, but well-capitalized and strong tenants.
Well, yeah, in the top 10, all of them are close to essential except for, I guess, Staples, who we expect will actually do quite well coming out of this given their quasi-monopoly as the home office supplies provider. We expect that that trend is going to be real.
Okay
Our top 10's pretty solid.
Yep. Okay. Just sticking with the top 30 and then moving on.
Yep.
You had mentioned, I think it was 7%, and I don't know if that was 7% of the top of the 72% or if that was 7% of total.
It's 7% of total.
Of total. Okay.
Which is about 10% of the top 30.
Okay. Within that, you mentioned that they will be challenged or not sure if they'll be viable going forward, and you mentioned cinemas, fitness clubs, and fashion stores. Where do restaurants, not QSR, but where do casual dining fit into that for you?
Yeah. That is in that list.
It is? Okay.
Yeah. When I said, I also said sit-down restaurants, I believe.
Okay. Yeah, sorry, I missed that.
I think a large chunk of our sit-down restaurants, though, are ground leases, meaning we've delivered up a pad and the restaurant operator has spent all the capital to build the building. Typically, you're going to get paid under those circumstances much more easily than if you had all of the capital into the building. Certainly, that's been our experience over the years.
Okay. The ground lease payments, that's obviously factored into the 7% of total.
Yes.
Yeah. Okay.
That's correct.
Okay. Got it. Okay. Thanks for that. Just moving on. Jim, maybe with respect to the lending environment right now, could you maybe just talk, I know you did a CAD 5 million that you refinanced subsequent to quarter end. Maybe if you just give us a sense of how your discussions with lenders are going right now, and if there is a strong appetite to get deals done right now.
Sure. It was probably quiet for a few weeks, maybe in early April. It since picked up. We didn't have any renewals or refis to do over the last few weeks, so we haven't been active in the market. We've had lots of discussions and there's lots of capital, and we have closed, as I mentioned, two mortgages since quarter end. One was that CAD 5 million refi. Another was replacing interim debt. We placed two mortgages, 10-year terms, extremely low interest rates, and we are seeing increased interest in the debt market, interim market.
Okay, one was actually a refinancing, a straight refinancing. The other one was actually a new capital or new commitment.
Yes.
Okay. That's good to hear. Okay. Just lastly for me, and I realize it's early. Jim, can you give us any sense in terms of, if we just assumed notwithstanding the fact that things will get better and there's the CECRA program out there, but if we just assume that 74% was the collection rate for Q2 or just for any hypothetical quarter, what would be the approach on your provision for bad debt? How should we be thinking about what that could potentially look like as we progress through this next quarter or two?
A good chunk of that unpaid rent is from very well-capitalized national tenants that we have no concern that we will eventually get paid. The smaller tenants that may have not paid, we've already considered that in our allowance. It's a pretty minor component of our rent stream, though.
Did you take an additional provision in Q1?
We did take a provision in Q1 for some of those small tenants, yes.
Presumably, as things go on, even if it stayed at 70%, the provision would be on the smaller side. On the larger, well-capitalized side, probably wouldn't make a move in the short term. I don't know if it's a rules-based approach and there's an aging of receivables or how that works.
Yeah, I don't see a material increase in the allowance, especially on the national tenants.
Okay. That is very helpful. Thank you very much. I'll turn it back.
Thank you.
Again, if you would like to ask a question, please press star one on your telephone keypad. Your next question is from the line of Sumayya Syed with CIBC. Please go ahead.
Thanks. Good morning.
Good morning.
I just wanted to touch on the more near-to-completion development projects that already have commitments and if you're seeing any kind of retraction or delays in tenants wanting to move in.
Yes, we are seeing, obviously, delays. Tenants are just not capable of moving in. There have been some circumstances where we've had to delay possession date just because you can't get workers in, you can't move inventory, or you're having to organize yourself to work under the conditions that people have to work in. It's obviously not easy for certain types of businesses. We saw it in Quebec this week where they reopened non-essential retail, excluding restaurants and cinemas and stuff like that, and personal services outside of the Montreal region. It took some time for the tenants to get organized, to get revved up, get the employees squared away, prepare the store for social distancing. You put all that together, there certainly are delays.
Okay. That's fair. Jim, you touched on cost management measures. Any quantification or directionally how you guys are approaching that in terms of maybe modeling assumptions?
We're looking at all areas that make sense to reduce our short-term cash or capital requirements. Modeling, again, we don't release future earnings guidance, so it's a little tough to give you a number. Just suffice it to say that we are actively managing all costs on all fronts to help mitigate the impact of unpaid rent.
Okay, great. Thanks. I'll turn it back.
Again, if you would like to ask any further questions, please press star one o n your telephone keypad. There are no further audio questions at this time. I now turn the call back over to Mr. Zakuta for closing remarks.
Well, thank you, and stay safe, and we'll talk next quarter.
Thank you. This concludes today's conference call. You may now disconnect.