Plaza Retail REIT (PLZ.UN:TSE) Fundamental Valuation Report

Plaza Retail REIT (PLZ.UN:TSE) Fundamental Valuation Report

Fundamental Valuation Report

Plaza Retail REIT(PLZ.UN:TSE)

Real Estate:REIT – Retail

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$3.99 (CAD) 05/07/2021

Weighted Valuation
$4.01 (CAD)

Overall Rating
Fairly valued to slightly Undervalued by 0.5%

Valuation Models Adjusted Book Value: $4.04 (CAD)
(in order of importance) Discounted Cash Flow: $4.42 (CAD)
Comparables: $3.09 (CAD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Fairly valued on an Asset Valuation
According to Analyst consensus at $4.04 this stock is Fairly valued

Company Overview (PLZ.UN:TSE CAD)

Price 3.99
Range 3.91 – 3.99
52 week 2.80 – 4.03
Open 3.91
Vol / Avg. 115661/52625
Mkt cap 406.21M
P/E 10.36
Div/yield 0.28/0.07
EPS -0.15
Shares 101.81M
Beta 1.05

Company Description

Plaza Retail REIT is an open-ended real estate investment trust and is a retail property owner and developer, focused on Ontario, Quebec and Atlantic Canada. Plaza’s portfolio includes interests in approximately 268 properties totaling approximately 8.6 million square feet across Canada and additional lands held for development. Its portfolio largely consists of open-air centres and stand-alone small box retail outlets and is predominantly occupied by national tenants.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for PLZ.UN:TSE

Using a discounted cash flow model we generated an intrinsic value of $4.42 (CAD) for PLZ.UN:TSE

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

PLZ.UN:TSE Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $4.42 1% 5% 1% 5%
WACC (or Ke) 7.00 $6.86 $2.80
Terminal Growth Rate 2.00 $2.95 $6.63
Tax Rate 0.27 $5.06 $3.79
Cash Flow 63,938,736 $3.99 $4.85
Capital Expenditures 6,533,000 $4.46 $4.38
Long Term Debt 545,943,000 $4.69 $4.15

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $5.92 (CAD) for PLZ.UN:TSE. We also generated a valuation of $3.09 (CAD) using other metrics and comparables.
The comparable companies were European Residential REIT (ERE.UN:TSE), Dream Impact (MPCT.UN:TSE), American Hotel Inc Props (HOT.UN:TSE), Firm Cap Prop Trust (FCD.UN:TSX) and Fronsac REIT (FRO.UN:TSX).

Company PLZ.UN:TSE End Date Value
Earnings/Share ($0.15) (CAD)
Book Value/Share $4.15 (CAD)
Sales/Share $1.05 (CAD)
Cash Flow/Share $0.31 (CAD)
EBITDA/Share $0.14 (CAD)
Price Based on Comps Adjustment Factor (%)
$0.00 (CAD) -51.3
$3.98 (CAD) -52.9
$7.61 (CAD) -41.7
$5.15 (CAD) 34.4
$7.88 (CAD) 22.4
PLZ.UN:TSE Ratios Used Average Values ERE.UN:TSE MPCT.UN:TSE HOT.UN:TSE FCD.UN:TSX FRO.UN:TSX
0.00 PE Ratio 17.17 0.00 27.05 0.00 12.81 11.64
0.96 PB Ratio 0.96 0.81 0.82 0.80 0.91 1.47
3.80 PS Ratio 7.25 9.27 12.02 1.56 4.55 8.82
12.81 PCF Ratio 37.99 15.66 69.82 76.88 9.08 18.52
77.01 EV to EBITDA 57.26 0.00 0.00 134.52 18.44 18.83

Multiples

Using a multiples approach we generated a valuation of  $3.66 (CAD) for PLZ.UN:TSE

Company PLZ.UN:TSE End Date Value
Earnings/Share ($0.15) (CAD)
Book Value/Share $4.15 (CAD)
Sales/Share $1.05 (CAD)
Cash Flow/Share $0.31 (CAD)
EBITDA/Share $0.14 (CAD)
Price Based on Comps Adjustment Factor
$0.00 (CAD) 0
$3.94 (CAD) 0
$4.33 (CAD) 0
$3.86 (CAD) 0
$2.52 (CAD) 0
Ratios Ratio Average
PE Ratio 17.40
PB Ratio 0.95
PS Ratio 4.12
PCF Ratio 12.39
EV to EBITDA 18.30

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  PLZ.UN:TSE for the last 10 years was  0.97

We ran the Adjusted Book Value for  PLZ.UN:TSE and generated a book value of  $4.15 (CAD)
By multiplying these we get an adjusted valuation of  $4.04 (CAD)

Analyst Data

In the Stockcalc database there are 6 analysts that provide a valuation for PLZ.UN:TSE. The 6 analysts have a concensus valuation for PLZ.UN:TSE for 2021 of $4.04 (CAD).

PLZ.UN:TSE Plaza Retail REIT

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 4 0 3.5000 Hold 2021-5-6

Current Price: 3.99 CAD

Analyst Consensus
CAD Millions 2021 2022
Mean EPS 0.35 0.36
# EPS Analysts 1 1
Mean Revenue 111.00 113.50
# Revenue Analysts 3 3
Mean Target Price 4.04
Mean Cash Flow 0.37 0.39
Mean EBITDA
Mean Net Income
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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