Good morning. I would like to welcome everyone to the Plaza Retail REIT second quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to advise everyone that this conference is being recorded. I will now turn the conference over to Kimberly Strange, Plaza's General Counsel and Secretary. Please go ahead, Ms. Strange.
Thank you, operator. Good morning, everyone, and thank you for joining us on our Q2 2022 results conference call. Before we begin today, we are legally obliged to advise you that in talking about our financial and operating performance and in responding to questions today, we may make forward-looking statements, including statements concerning Plaza's objectives and strategies to achieve them, as well as statements with respect to our plans, estimates, and intentions, or concerning anticipated future events, results, circumstances, or performance that are not historical facts. These statements are based on our current expectations and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from the conclusions in these forward-looking statements.
Additional information on the risks that could impact our actual results and the expectations and assumptions we applied in making these forward-looking statements can be found in Plaza's most recent annual information form for the year ended December 31st, 2021, and management's discussion and analysis for the period ended June 30th, 2022, which are available on our website at www.plaza.ca and on SEDAR at www.sedar.com. We will also refer to non-GAAP financial measures widely used in the Canadian real estate industry, including FFO, AFFO, NOI, and Same-Asset NOI. Plaza believes these financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of Plaza. These financial measures do not have any standardized definitions prescribed by IFRS and may not be comparable to similarly titled measures reported by other entities.
For more information, please refer to paragraph seven of our MD&A for the period ended June 30, 2022. I will now turn the call over to Michael Zakuta, Plaza's President and CEO. Michael?
Thank you, Kim. Good morning. Plaza continues to be very active in pursuing value add opportunities across Ontario, Quebec, and Atlantic Canada. We are excited about our growth prospects and our robust pipeline, featuring grocery anchored and essential needs open air centers. We continue to benefit from the proven resilience of our portfolio and our well-conceived and conservative debt structure, both of which add to our confidence in our ability to navigate through current economic headwinds. Plaza's foundation is that we develop, redevelop, and own well-located retail properties in the best locations within sustainable markets. This allows us to attract and retain Canada's best essential needs and value retailers. We have a long track record of successfully reinventing challenged retail properties, developing new retail centers sourced from retailer demand, or making opportunistic acquisitions from owners looking to exit from retail properties.
47% of our portfolio consists of new developments, 42% from redevelopments, and 11% from opportunistic acquisitions. We had a successful second quarter and continued to make progress with our growth initiatives. During the quarter, we completed 310,000 sq ft of leasing of new space and renewals, including the backfilling of 63,000 sq ft of previously vacant space. Year to date, we have leased 706,000 sq ft, 460,000 sq ft of renewals, 100,000 sq ft of new space, and 145,000 sq ft of backfilling previously vacant space. Our development projects are progressing well despite supply chain challenges and retailer demand remains very strong for our properties.
You will find recent photos of a number of our projects posted in the Q2 2022 presentation in the financial report section of our website. I would like to draw your attention to five projects in particular that are highlighted in that presentation. First, we're nearing completion of the new Hogan Court Plaza in Bedford, Nova Scotia, which originated from an order from Loblaws for a new format super store. Second, we're well underway with the construction of our new project in Chicoutimi that has been leased to Princess Auto, Dollarama, SAQ, and TD Bank. Third, our transformation of Tri-City Centre in Cambridge, Ontario, is moving quickly. We have relocated Treasure Hunt and now under construction on a Dollarama anchored strip and a new pad for Wendy's. Fourth, in Sault Ste.
Marie, we have completed the lease-up of the former Lowe's store with Princess Auto, Dollarama, and Winners HomeSense. Construction is progressing, and these retailers are anticipating opening in 2023. Finally, we're under construction with new stores for The Brick and Dollarama at our project in Saint-Jérôme. Since our last call, we have purchased land in Stewiacke, Nova Scotia, Dieppe, New Brunswick, and Welland, Ontario. All three of these are new grocery anchor developments that we plan to build in the next two to three years, and all three of these were initiated by grocers looking to us for help. It's important to reiterate that a big part of our growth is driven by grocers and other essential needs retailers seeking new store openings.
Demand for new stores from Canada's leading essential needs retailers remains very strong, and we're confident in our ability to continue to source new projects. I will now turn the call over to Jim Drake, Plaza's CFO. Jim?
Thank you, Michael, and good morning, everyone. We had another good quarter, and our key indicators all provide evidence of that. Overall committed occupancy and same-asset committed occupancy are both at 96.6%, up 70 bps and 110 bps respectively over last year. Leasing demand and activity remains strong with overall renewal spreads year-to-date at 2.9%. Same-Asset NOI is also up 2.6% over last year, and our debt to total assets ratio has improved to 56%, down 300 bps over last year. When looking at the financial results, it is key to remember that we had CAD 3 million of lease buyouts last year, which increased NOI, FFO, and AFFO last year.
Excluding this and excluding bad debt from last year as well, FFO and AFFO per unit are up 3% for the quarter, with the resulting year-to-date payout ratios at 71% of FFO and 83% of AFFO. Under our development program, we continue to advance a number of our active projects, and we closed on a parcel of land in Stewiacke, Nova Scotia, a community just outside Halifax, for a grocery-anchored new development. As Michael mentioned, subsequent to quarter end, we also closed on land in New Brunswick and Ontario, both of which will also be grocery-anchored new developments. Our liquidity remains solid at a quarter-end total of CAD 53 million, including cash, operating line, and unused development and construction facilities. We also have CAD 17 million of unencumbered assets. For debt at quarter end, we had CAD 17 million of long-term mortgages maturing for the remainder of this year.
CAD 15 million of those mortgages relate to freestanding pharmacies, where the existing loan to value is 30% and the existing interest rate is 4.76%. We have commitments to refinance these mortgages at 65% loan to value to generate some capital and will close on these later this month. The rates on those new mortgages should be similar to or below the expiring rates. In 2023, we have CAD 29 million of mortgages maturing at a weighted average interest rate of 4.75%. The loan to value on these mortgages is 50%, so we are confident we will be renewing and again at rates that are likely similar to or below the maturing rates. We have always utilized a conservative debt management strategy, which will continue to mitigate our exposure to interest rate volatility.
We prefer to lock in fixed rates for longer term, always with an eye on matching lease terms and maintaining a balanced maturity ladder. Our individual mortgage amounts are relatively small, reducing interest rate risk on individual rolls. We have limited unsecured debt and our floating rate exposure is limited to our operating line and development and construction facilities. Finally, on cap rates and valuations, we were not overly aggressive with our IFRS valuations and cap rates were compressing. The current pressure on cap rates for some property types should have less of an impact on us. Our starting point, again, was relatively conservative. We also continue to see strong demand for essential needs and convenience assets such as ours.
Regardless, with the increase in Government of Canada bond yields we saw in the second quarter, we saw a nominal increase in cap rates as well and took a CAD 6 million write-down this quarter. Our weighted average cap rate is now 6.77%. Those are the key points relating to our results for the quarter and year to date. We will now open lines for any questions. Operator?
Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press the star key followed by the one on your touch tone phone. You will hear a one-tone prompt acknowledging your request. Your questions will be pulled in the order they are received. If you'd like to decline from the queuing process, please press the star key followed by two. Please ensure you lift the handset if you are using a speakerphone before pressing any keys. One moment please for your first question. Your first question comes from Jenny Ma, BMO Capital Markets. Please go ahead.
Hi. Good morning. Jim, thank you for all that color on the maturing mortgages. It's very helpful. My question is about the debenture, the convertible debentures that are going to be coming due in March. Just wondering what your thoughts are around that piece, just given the LTVs and the maturities and then the unencumbered debt doesn't quite add up to the CAD 47 million maturing. Just wondering what your thoughts are and whether or not you've started any negotiations or considerations for what to do with that or is it still a bit too early?
It's a bit early, but we're looking at different options. We have a few different options that we're analyzing now. We'll have some further information for you when we're a little bit closer, likely next quarter.
Okay, great. With regard to asset acquisition opportunities, I know that Plaza has historically picked up some enclosed mall opportunities that you could de-mall and redevelop. I'm just wondering, given the current environment, are you seeing any more of these opportunities pop up and whether or not pricing is getting more favorable for that?
We're seeing opportunities. We're always pursuing enclosed mall opportunities that we can convert to open air, but those deals are difficult. They have to be priced right. If they're not priced right, we can't do the transformation. We, you know, we always have our finger on a couple, and eventually they usually come to us. What we're seeing a little bit more of is just opportunistic deals where there's a lot of vacancy in the strip and you know, some investment and leasing effort is required. We're definitely seeing that. We're seeing a lot of demand though for new product, which means that we're buying greenfield space, we need land, or we're buying a building that's gonna be torn down.
Like we bought a bowling alley in Welland, Ontario. We're gonna tear it down. That's creating in effect a greenfield development. That's really what we're seeing. I haven't seen a flood of enclosed malls to strip opportunities. There's always, again, one or two sort of, you know, in our field of vision. Hopefully we'll be successful somewhere down the road.
Michael, if I'm hearing you correctly, it sounds like when you weigh enclosed mall conversions versus the strip teardowns and greenfield, that the enclosed malls probably still aren't the best opportunities as it stands, given-
No.
The commitment.
No.
Sorry. Yeah, please go ahead.
They're very good opportunities. Any of these redevelopment are interesting opportunities because you do have revenue while you're doing your work, whereas when you do a greenfield, you buy it, you've got to go through all the municipal processes and everything else, and you have to construct. That takes time. You know, we're very interested in the enclosed mall style opportunities, but it really has to be, repeating myself, has to be priced right. Again, you know, we chase some stuff and lots of back and forth, and when it's right, we're able to close. So
Okay.
Those opportunities are out there. Again, it's all a matter of timing and pricing.
Okay, great. Finally from me, considering what you're seeing with inflation, are you starting to see that factor filter into your lease negotiations? I guess particularly for some of the new builds, you know, whether or not we should expect to see some upward pressure on rent growth as a result of inflation.
We're definitely dealing with inflation, rent inflation. We're seeing higher rents from larger retailers because they recognize that the deals cannot be done unless rents are higher, and we're now able to command some higher rents on some of the existing product. Yeah, there's definitely rent inflation. No question about that. You know, we're seeing it and that's part of our business today.
Do you see it coming in through the base rent or do you see an expansion of the annual rent steps embedded in the leases, or both?
Well, it starts with base rent and we're. When we're doing a new development, we're very focused on, you know, what we're getting upfront. So we're. You know, again, you're seeing higher rents to start. We're asking for higher bumps going forward. In some cases, we do have a CPI formula on renewals. In the past, we would. We often like to fix the renewal rent so that there is no dispute with our customers. Today, we've backed off that a little bit and looking more at fair market value, even though that could put us in a dispute situation with our good customers, I think we have no choice.
Okay, great. Thank you very much. I'll turn it back.
Thank you, Jenny.
Ladies and gentlemen, if there are any additional questions at this time, please press star followed by the one. As a reminder, if you are using a speakerphone, please lift the handset before pressing the keys. Mr. Zakuta, there are no further questions at this time. Please go ahead.
Well, thank you, operator. This concludes our call.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.