Plaza Retail REIT (PLZUN) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Plaza Retail REIT annual meeting. I would now like to hand the call over to your first speaker, Mr. Earl Brewer. Sir, please go ahead.

Hey, good morning, shareholders, directors. I'm Earl Brewer. I'm the Chairman of Plaza REIT. First of all, I'd like to thank the directors, and I'll just go through them quickly: Stephen Johnson; Denis Losier; Barbara Trenholm; and our latest appointment, Jane Marshall. Jane has been a top executive for 31 years in the retail and real estate world, mostly with Weston's. Thank you, Jane, and welcome. Your contribution is big. [indiscernible] to the Board. We work today in difficult times. There's lots of noise out there. So what's our focus? Our focus is the health of our people and our customers and the health of our business. So what are we doing on a day-to-day basis during this very strange times? We're working with our tenants in a constructive way. It's important when this passes that we have a good, solid relationship with our tenants, and that they're doing well and occupying space. We are working to keep our business healthy. We will come out of this with adequate liquidity and a strong balance sheet. The retail business is evolving. We will now move through our second quarter, and we will know more. And obviously, we will rely on our obvious strengths. Our tenants are open. Shoppers are in our stores. We are resilient. We have demonstrated resiliency in the past, and that's our ability to adopt to tenant needs and remain flexible. Going forward, our Board will assist management to maintain and improve our liquidity and our balance sheet, as mentioned before. We will remind ourselves that it's not about yesterday, it's about tomorrow. So we plan to capitalize on opportunities following these current events. I will now turn the meeting over to our Corporate Secretary, Kim Strange, for the formal part of the meeting.

Thank you, Mr. Chairman. Good morning, everyone. I will now call the meeting to order. In accordance with Plaza's Declaration of Trust, Earl Brewer will act as Chair of the meeting, and I will act as Secretary. Representatives of Broadridge Financial Solutions, Inc. will act as scrutineers. I would like to draw your attention first to the bottom right-hand side of your screen under Meeting Materials, where there is a link titled Forward-looking Information. This link contains information regarding forward-looking statements that may be made in the course of our remarks this morning or in the question-and-answer session that follows. Listeners are encouraged to please read them carefully. To facilitate the formal business of the meeting and in order to make the best use of our time today, I have asked Debora Lamont, a unitholder and in-house Corporate Counsel to Plaza, to move the formal motions this morning, and Annick Meilleur, a unitholder and Plaza's Director of Insurance Risk, to second them. At this time, and at any time during the formal business of the meeting, if you are a registered unitholder who has not already provided voting instructions or appointed a proxy holder and wish to vote your units, you may do so by clicking on the Vote Here button on your screen. Proxy holders may also vote at any time using the same method. I will pause after each agenda item to allow registered unitholders and duly appointed proxy holders to vote during the meeting. The polls will remain open until just before the conclusion of the formal business of the meeting. If you have voted your units prior to the start of the meeting today, your vote has been received by the scrutineers, and there is no need to vote those units during the meeting unless you wish to change or revoke your vote. If you are a unitholder or a proxy holder, you may ask questions at any time during the meeting by entering your question in the Ask a Question box on the bottom left-hand side of the screen and clicking Submit. During the formal business portion of the meeting, we will respond to questions received on items of business. Questions that are not related to the items of business will be addressed in the question-and-answer session, which will follow the President's remarks. If we do not have sufficient time to address your questions, we will post them and our responses on our website as soon as possible following the meeting. It may be necessary for me to pause from time to time during the business of the meeting to communicate with the moderator to determine if there are questions. If during the course of the meeting, we encounter any technical difficulties with the webcast, please remain logged on, and we will resume as soon as the issue is resolved. We will now proceed with the business of the meeting. A notice of meeting, form of proxy and voting instruction form were mailed to all unitholders of record as of the close of business on April 1, 2020, the record date for voting at the meeting. The management information circular for the meeting and 2019 annual report were delivered through the notice and access system of the Canadian Securities Administrators. These documents are available to all unitholders on the Investor Relations page of our website at www.plaza.ca and on SEDAR at www.sedar.com. Copies are also available on the bottom right-hand side of your screen under Meeting Materials. We received an affidavit from Broadridge as to the proper mailing of the notice of this meeting and form of proxy to unitholders. A copy of that affidavit will be kept with the minutes of the meeting. The scrutineers have provided a report regarding unitholder attendance today. Based on the preliminary tabulation of proxies received to date, the scrutineers report that there are more than 2 unitholders present or represented by proxy, holding or representing more than 10% in the aggregate of the total number of outstanding units of Plaza at the record date as required for quorum under Plaza's Declaration of Trust. Accordingly, I confirm there is a quorum present and that the meeting is properly constituted for the transaction of business for which it has been called. The scrutineers' report will be incorporated into the minutes of the meeting. The first item of business is for unitholders to receive Plaza's audited and consolidated financial statements for the year ended December 31, 2019, together with the auditor's report thereon, both of which are contained in our 2019 annual report, which I will place before the meeting. As previously noted, a copy is available on the bottom right-hand side of your screen under Meeting Materials. We will now proceed with the nomination for election of 6 trustees to the Board. The skills and experience that Plaza requires from the collective Board of Trustees are outlined on Page 22 of our management information circular, and Pages 15 through 20 of the circular contain detailed biographies setting out the professional qualifications and experience of the nominees. Each nominee has agreed to serve as a trustee, if elected. I will now call on Debora Lamont to make the nominations as set forth in the management information circular.

I nominate each of the following candidates: Earl Brewer, Stephen Johnson, Denis Losier, Jane Marshall, Barabara Trenholm and Michael Zakuta for election of the trustees of the trust, to hold office until the close of the next Annual Meeting of the Unitholders of the trust or until his or her successor is elected or appointed.

Thank you. I now call upon Annick Meilleur to second the nomination.

I second the nominations.

Thank you. Plaza's Declaration of Trust requires the nomination of trustees by unitholders to be received at least 30 days in advance of the meeting in order to be valid. As no further nominations were received from unitholders as such, the nominations are closed. It is now in order to elect each candidate nominated as a trustee, and I again call upon Debora Lamont to move that each of Earl Brewer, Stephen Johnson, Denis Losier, Jane Marshall, Barbara Trenholm and Michael Zakuta be elected as a trustee of the trust.

So moved.

And I will call upon Annick Meilleur to second the motion.

I second the motion.

I will now ask Denise Dearman, a Plaza employee acting as moderator today, if we have received any questions on this item of business.

No, we have not.

Thank you, Denise. As a reminder to unitholders and proxy holders voting at the meeting, to vote on this item of business, please click on Vote Here on the right-hand side of your screen, and under Item #1, you will find listed the names of the 6 nominees for election to the Board of Trustees. Unitholders have been asked to vote for trustees individually rather than for a full slate. Accordingly, for each nominee, you may vote for or withhold voting. If you have already provided voting instructions or submitted a proxy, you do not have to vote again on this matter, unless you wish to change your vote. I will now pause to give registered unitholders and duly appointed proxy holders an opportunity to vote. [Voting]

The next item of business on the agenda is the appointment of Plaza's external auditors for the next year at a remuneration to be fixed by the trustees. I will again turn to Debora Lamont to make the motion.

I move that KPMG LLP be and is hereby appointed auditor of the trust to hold office until the close of the next Annual Meeting of Unitholders or until its successors are appointed at a remuneration to be fixed by the trustees.

And I will ask a Annick Meilleur to second.

I second.

Thank you. Denise, have we received any questions relating to this item of business?

No, we have not.

To vote on this item of business, please click on Vote Here on the right-hand side of your screen and under Item #2, you may vote for or withhold from voting in respect of the motion. Again, if you have already provided voting instructions or submitted a proxy, you do not have to vote on this matter unless you wish to change your vote. I will again pause to give registered unitholders and duly appointed proxy holders an opportunity to vote. [Voting]

This concludes voting for today's meeting, and the polls are now closed for voting on all matters. I will now ask the scrutineers to compile the report regarding voting on all items of business, and I will ask the moderator to confirm once complete. The moderator has confirmed on behalf of the scrutineers that each of the trustee nominees has received a majority of votes cast in favor of his or her election as a trustee. Accordingly, I confirm that the 6 proposed nominees named in the management information circular have been duly elected as trustees of Plaza Retail REIT to hold office until the next Annual Meeting of Unitholders or until their successors are duly elected or appointed. Congratulations to you all. The moderator has also confirmed on behalf of the scrutineers that a majority of votes have been cast in favor of the motion to appoint the auditor. Accordingly, I confirm that KPMG LLP has been reappointed as auditor of the trust until the close of the next Annual Meeting of Unitholders or until its successors are appointed at a remuneration to be fixed by the trustees. I confirm that the final report on voting results provided by the scrutineers after the meeting will be incorporated into the minutes of the meeting. Detailed voting results on all matters voted on at the meeting today will also be filed on SEDAR in accordance with applicable securities legislation. Since there are no other matters to come before the formal part of the meeting, I will ask Debora Lamont for a motion to terminate the meeting.

I move that the meeting be terminated.

And I will ask Annick Meilleur to second the motion.

I second it.

With that, the formal portion of the meeting is terminated. Now I would like to turn things over to our President and CEO, Michael Zakuta. Following Michael's remarks, we will open the floor for unitholder questions. Michael?

Thank you, Kim. Good morning. I wish to touch on 2 themes this morning: one, retail real estate does have a future; and two, Plaza is in a position to prosper as we solely emerge from the crisis that has impacted us all. It is interesting to note that over 60% of our retailers continue to operate throughout the crisis period. These retailers offer essential services through very well-located community open air properties. Media headlines in North America highlight the woes of U.S. department stores, such as Macy's, JCPenney, Neiman Marcus and others. We cannot emphasize enough that our properties have absolutely nothing in common with this type of retail. We're all about community-centric properties featuring pharmacies, grocery stores, dollar stores, pet shops, basic services, quick-service restaurants with a strong value proposition and strong specialty and value retailers. The impact of e-commerce is also top of mind for investors looking at retail property REITs. It is becoming very clear for a wide variety of retailers that a multiple-channel offering is an essential part of ensuring their success. In many cases, our open-air property network is an important part of any retailer strategy to sell products through multiple channels that combine physical stores and online sales. There are a number of our retailers that operate businesses that cannot function online. And there are obviously a number of businesses that will not open physical stores. Between the 2 realities, there is an important group of retailers that are effectively combining physical stores with online offerings. The creation of our portfolio of essential needs and value retailers is directly related to our ability to adapt to change. For over 20 years, we demonstrated our adaptability as we develop relationships with successful and strong retailers who relied on our development and redevelopment skills to deliver them stores across our wide geography. We have recent successes that illustrate how we have exploited changes in retail. One example is our redevelopment of the former Sears store in Chicoutimi, Québec. We acquired the store from an investors group shortly after Sears' bankruptcy and closing. The investor group had held the property as an income-producing asset leased to Sears. Following the bankruptcy, the income stopped. That event created our opportunity as we quickly moved to redevelop the asset. We transformed the single-use department store into a multi-tenant, open-air center. The property is now fully leased to a variety of essential needs and value retailers, such as HomeSense, Giant Tiger, Dollarama, Sleep Country, Global and Bulk Barn. In Brockville, Ontario, we did the same transformation of an empty Sears store into an open-air center. And we transformed the enclosed mall portion of the property into an open-air center with pad locations out on the street. These are excellent recent examples of how we have adapted to changes in retail. We foresee more opportunities being available to Plaza post COVID versus pre COVID. We recognize that 2020 will be a year of significant challenges for Plaza. We believe that the foundation of our business is very strong. Our team is looking forward to emerging in the current situation and returning to the focus of profitably growing our business. Now we would like to open things up for unitholder questions.

And we have no questions at this time.

Thank you, Michael. We have no active unitholder questions. This concludes today's meeting, and we would like to thank everyone for attending.

Thank you for participating in today's conference call. You may now disconnect.