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Opinions Michael Missaghie
Plaza Retail REITPLZ.UN.TOHOLDJul 09, 2013
Stock price when the opinion was issued
As of Jun 12, 2026. Market Open.
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Most assets are in Quebec and the Maritimes. Strip plazas in smaller markets. Historically stable, not a lot of growth. Difficult to raise rents in these small markets, but high construction costs have prevented tenants from moving. So cashflow is growing faster than it has in a long time. Low-risk optionality to buy up minority interests of properties already invested in. Healthy yield.
PLZ.UN is an open-ended Canadian REIT whose portfolio largely consists of open-air centres and stand-alone small box retail outlets. It pays a distribution yield of 7.1%, sales growth has been improving recently, margins have stabilized, and its free cash flow is sufficient for its distribution payments. It trades at an OK valuation of 12X forward earnings, and it is trading below its book value. We think it is a slightly risky REIT due to its small size and minimal growth rates. We would consider it 'OK' as part of a basket of higher risk income names, but not overly attractive as a single holding.
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PLZ.UN is an open-ended Canadian REIT whose portfolio largely consists of open-air centres and stand-alone small box retail outlets. It pays a distribution yield of 7.1%, sales growth has been improving recently, margins have stabilized, and its free cash flow is sufficient for its distribution payments. It trades at an OK valuation of 12X forward earnings, and it is trading below its book value. We think it is a slightly risky REIT due to its small size and minimal growth rates. We would consider it 'OK' as part of a basket of higher risk income names, but not overly attractive as a single holding.
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Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. It has good growth expectations and has stable tenants. Should be able to increase rents in-line with inflation over time. Has large anchor tenants that helps with stability. This could also mean a bit less bargaining power to raise rates however. Unlock Premium - Try 5i Free
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Jeffrey F. Olin
Has followed this for quite some time but has not owned it because the size has been too small for his operations. Recently acquired Key REIT which was an owner of single tenant assets. Their largest tenant was Shoppers Drug Mart (SC-T) but also owned assets that are tenanted by Taco Bell, KFC and Pizza Hut. This transaction is accretive to free cash flow but also increases their leverage. From his perspective, it is not an upgrade to the quality of their portfolio. Going forward, they are going to have to integrate this portfolio into their current assets and they are going to have to bring down leverage. Yield is very stable. Trading close to its NAV but he wouldn’t be adding to it right now.