Good morning. I would like to welcome everyone to the Plaza Retail REIT third quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If you have 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 Kim 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 Q3 2023 results conference call. Before we begin today, we are 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, which 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 forward-looking statements can be found in Plaza's most recent Annual Information Form for the year ended December 31, 2022, and Management's Discussion and Analysis for the nine months ended September 30, 2023, which are both available on our website at www.plaza.ca and on SEDAR+ at www.sedarplus.ca. 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 the trust. These financial measures do not have any standardized definitions prescribed by IFRS and may not be comparable to similar titled measures reported by other real estate investment trusts or entities.
They should be considered as supplemental in nature and not as a substitute for related financial information prepared in accordance with IFRS. For definitions of these financial measures and where to obtain reconciliations thereof, please refer to part seven of our MD&A for the nine months ended September 30, 2023, under the heading Explanation of Non-GAAP Measures. With that, I will now turn the call over to Michael Zakuta, Plaza's President and CEO. Michael?
Thank you, Kim. Good morning. Our business remains strong and our outlook positive. Plaza's portfolio continues to exhibit outstanding resilience. Our experienced and dedicated team has demonstrated its knowledge and determination that has enabled us to move our business forward and navigate successfully in these times of macroeconomic and geopolitical challenges. We are continuing with our business plan to grow through developments and redevelopments, active leasing, and recycling capital through disposition of non-core assets despite these challenges. I recently attended the Canadian ICSC conference in Toronto with our leasing team. We were surprised by the level of demand from major essential needs and value retailers. They're all looking to grow their Canadian brick-and-mortar store networks in the next five years. This creates new and compelling opportunities for Plaza, and I am confident in our ability to seize these opportunities and grow our business.
At the recent ICSC, we observed the important distinction between retailers in the discretionary versus non-discretionary sectors. The non-discretionary retailers were aggressively pursuing opportunities. We have been seeing this trend for some time as consumers focus on non-discretionary and value retailing, retail spending at the expense of discretionary spending. Another takeaway from our ICSC experience is the increase in barriers to entry for our business niche. These barriers have increased significantly in the past few years. We will continue to benefit from this trend for two reasons: First, the populations in the markets we serve have generally seen solid growth, mainly through immigration. Our disciplined approach to site selection has ensured that our properties are very well positioned within their individual markets. As populations grow in our communities, our retailers are able to serve more people and, in turn, lease more space and pay higher rent.
Our healthy leasing spreads are testament to both the quality of our real estate and the relationship we have with our retail, retailer customers. Second, delivering new projects to best-in-class retailers within set schedules and financial parameters has become increasingly complicated. Success requires the right combination of experience, entrepreneurship, discipline, and financial resources. As we have been continuously feeding our development pipeline throughout our history, we understand the complexities and have clearly demonstrated the ability to deliver both new development and redevelopment projects in Atlantic Canada, Quebec, and Ontario. Looking ahead, we remain committed to our ongoing program of recycling capital by selling non-core properties and deploying the sale proceeds in new developments anchored by Canada's leading essential needs retailers.
While uncertainties persist, our prudent financial management, exceptional customer service, combined with our experience in overcoming past challenges, provide confidence in our ability to weather any storm and continue driving unitholder value. I will now turn the call over to Jim Drake, Plaza CFO. Jim?
Thank you, Michael. Good morning, everyone. Our results for the quarter were positive, and we continue to set Plaza up for future growth. Total NOI for the quarter was up 1.7% over last year, with Same-Asset NOI up 2.8%. Lease up and rent escalations and incremental NOI from developments all contributed to this growth. FFO for the quarter was up CAD 660,000, or 6% versus last year, due to the NOI growth just mentioned, lower interest expense, partially offset by properties sold. FFO per unit for the quarter, at CAD 0.102, was generally consistent with last year. AFFO for the quarter was up CAD 1.1 million, or 14% versus last year, due to higher FFO and lower maintenance capital costs this year.
AFFO per unit for the quarter, at CAD 0.085, was also up 6% versus last year. Under our development program, during the quarter, we substantially completed a few projects, including the redevelopments of L'Axe in Chicoutimi, an 80,000 sq ft essential needs and value strip, and Northern Avenue in Sault Ste. Marie, a 180,000 sq ft grocery anchored strip. As a result, we transferred CAD 21 million to income producing properties during the quarter, bringing the net year-to-date completions to CAD 44 million. We also made significant progress on a number of other projects and anticipate additional completions over the next few quarters. These will all contribute to earnings growth going forward. On the leasing front, overall committed occupancy was 97.2% at quarter end, consistent with last year.
We leased 1 million sq ft across the portfolio year to date, comprised of approximately 300,000 sq ft of new leasing and 700,000 sq ft of renewals. We are continuing to see improvement in our lease renewal spreads at 6.7% year to date, or 8.4%, excluding the renewal of one enclosed mall tenant and an automatic renewal of an anchor tenant at the same terms. On the balance sheet, our debt to assets ratio remained generally consistent with last quarter, down significantly versus last year, at 50%, excluding land leases. At quarter end, we had only CAD 6 million of mortgages maturing for the remainder of this year, which have since been addressed, and a very manageable CAD 37 million rolling in 2024, with an overall loan to value of only 46%.
Although current interest rates remain volatile, the market for secured debt for a strong borrower like Plaza is healthy, and we continue to see significant interest in our mortgage offerings. We are currently seeing all-in fixed rates in the high 5s-6% range. Liquidity at quarter end totaled CAD 52 million, including cash, operating line, and unused development and construction facilities. We also had CAD 13 million of unencumbered assets at quarter end. For our disposition program, year to date, sales of non-core assets generated CAD 28 million of net proceeds. These proceeds were generally recycled into higher yielding new developments and redevelopments, which are anchored by grocery, other essential needs, and value retailers. The result is an improvement in the quality of our portfolio and future growth.
These dispositions were also at prices that exceeded IFRS values by over 15%, at a weighted average cap rate in the low 5% range. Regardless, we did record a CAD 11 million write-down this quarter based on increased cap rates, with our weighted average cap rates now at 6.8%. Those are the key points relating to the quarter. We will now open the 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 one on your touchtone phone. You will hear a one-tone prompt acknowledging your request. Your question will be pulled in order they are received. Once again, to register for a question, it's star followed by the one. Our first question comes from the line of Gaurav Mathur from Laurentian Bank Securities. Please go ahead. Your line is open.
Thank you, and good morning, everyone.
Good morning.
Just first question on the tenant base. You know, you've spoken about the positive immigration trends, which, you know, are a net positive for the asset base itself. But given that, you know, the Canadian consumer is also stretched, are you seeing any signs of concerns or distress amongst the current tenant base in your portfolio?
You know, our tenant base is very much essential needs and value-oriented. So we, yeah, we are seeing some stress for, again, as I mentioned, very discretionary products. And I can give you some color. You know, we met a retailer in the pet shop category, you know-
Mm-hmm.
Food sales are increasing very nicely, but all the other stuff, the toys for your pet, whatever, those sales have dropped significantly. So I think that really is a strong reflection of what's going on out there. So you're gonna feed your pet, but you're not gonna, you know, buy the latest toy. In the same way as you're gonna feed your family or you're gonna go to Dollarama and you're gonna buy some value stuff, but maybe you're not gonna buy, you know, a new sporting good element or something like that. So that's what we're seeing. Again, our portfolio very, very simple, very essential needs oriented.
So we don't see a lot of stress, but obviously, you know, we hear some different anecdotes, different stories about, you know, what's going on out there for the discretionary part of whatever our retailers sell.
Well, thank you for the color, and that leads me to my next question. You know, just given that backdrop, I take it you're not expecting any major or material vacancies in the portfolio over the next sort of 6-12 months?
No, I think the portfolio is very solid. And, as I said, I'm surprised by the level of demand, you know, and across the board.
Great. And then, just switching gears here to the balance sheet. You know, there's, there's a fairly sizable chunk of your mortgage bonds payable, coming up, you know, right about in January 2024, and then the remainder in June and July next year. You know, what's the conversation with the lenders and, and how you're thinking about addressing that, as you go ahead?
So the bondholders are individuals. We're starting those conversations now. We anticipate renewing those for another six months or a year, depending on the holder.
Fantastic. And then, are there any sort of discussions on where spreads are currently and what you're expecting on that front?
We're gonna set the rates shortly, and we think it's probably very similar to the maturing rates, and those mortgage bonds are currently at 6%.
Okay, great. Thank you for the call, gentlemen. I'll turn it back to the operator.
Thank you.
Thank you. As a reminder, to register for a question, please press the star key followed by one. The next question comes from Alexandre Eugeni from CIBC. Please go ahead. Your line is open.
Hey, everyone. Good morning.
Good morning.
Congratulations on the progress with your development pipeline. Looks like you guys are on track for another big completion next quarter as well. I was just wondering if you're still aiming to achieve that 7%-9% unlevered return on the, the pipeline, or if you had any color on where that's at now?
So it depends on when the project was started. So the stuff that was really pandemic oriented is at the low range, and the stuff that started a little bit later is higher, as we're able to achieve higher rents and better costs. So it's very project specific.
Okay. Sounds good. And, yeah, just one further thing. I just wanted to confirm your comment on the renewals. You said you're looking at the 5%-6% range, and I think that's fairly in line with your current renewal rates, right? So no big change there.
That's on the secured debt. So secured debt rolling next year is mid-fours or so. So it's a bit of uptick today, but I think the market is anticipating or possibly hoping that bond yields start to creep down next year. We're seeing some of that already over the last few weeks, and hopefully that continues.
Yeah. Okay. Sounds good. Yeah, thanks for taking my question, and pass it back.
Thank you.
Thank you. Mr. Zakuta, there are no further questions at this time.
Thank you, operator. We wish to thank all of our participants for joining us today, and we'll, we'll see you next quarter.
Thank you, ladies and gentlemen. This concludes the conference call for today. Thank you for participating. You may now disconnect your lines.