Choice Properties Real Estate Investment Trust Reports Results for the Six Months Ended June 30, 2025

Executive Summary

• Choice Properties Real Estate Investment Trust reported its consolidated financial results for the three and six months ended June 30, 2025, highlighting a net loss driven by fair value adjustments on Exchangeable Units.
• The Trust reported Funds From Operations (FFO) per unit diluted of $0.265 for the quarter, representing a 3.9% increase year-over-year, while Same-Asset NOI on a cash basis increased by 1.4%.
• The company completed $427.1 million in transactions during the quarter, including acquisitions of industrial and mixed-use assets and dispositions of industrial sites, while maintaining strong liquidity and stable occupancy metrics.

Key Details

• Financial Performance (Q2 2025):
  • Reported a net loss of $154.2 million (compared to net income of $513.2 million in Q2 2024).
  • The loss was primarily due to a $364.1 million unfavourable fair value adjustment on Exchangeable Units.
  • FFO per unit diluted: $0.265 (up 3.9% from $0.255 in Q2 2024).
  • AFFO per unit diluted: $0.231 (down from $0.244 in Q2 2024).
  • Cash distributions declared: $0.193 per unit.
• Operational Metrics:
  • Period-end occupancy: 97.8% (Retail: 97.8%, Industrial: 98.0%, Mixed-Use & Residential: 95.4%).
  • Same-Asset NOI (Cash Basis) increased by 1.4% year-over-year.
  • Leasing spreads on long-term renewals: 13.2% for Retail and 38.9% for Industrial.
  • Industrial Same-Asset NOI growth was impacted by a bad debt provision reversal in the prior year; excluding this, industrial growth was 4.2%.
• Transactions ($427.1 million total):
  • Acquired an industrial distribution centre in Ajax, ON from Loblaw for $182.9 million (leased back to Loblaw).
  • Acquired eight industrial outdoor storage sites across Canada for $162.0 million.
  • Disposed of nine industrial sites in Calgary, AB for proceeds of $73.4 million.
  • Acquired a mixed-use parcel in Toronto, ON for $6.0 million.
  • Disposed of a retail property in Halifax, NS for $2.8 million.
  • Transferred $13.9 million of properties under development to income-producing status (approx. 30,900 sq ft new commercial GLA).
  • Invested $34.2 million in development projects.
• Balance Sheet & Liquidity:
  • Adjusted Debt to EBITDAFV: 7.2x.
  • Adjusted Debt to Total Assets: 40.8%.
  • Interest Coverage Ratio: 3.3x.
  • Available credit: ~$1.3 billion.
  • Unencumbered properties pool: $13.5 billion.
• Subsequent Events:
  • Renewed 39 of 41 leases expiring in 2026 with Loblaw, covering 2.52 million of 2.62 million square feet.
  • Weighted average spread on renewal: 8.6%.
  • Weighted average extension term: 5.0 years.
• 2025 Outlook:
  • Targeting stable occupancy and 2%-3% year-over-year growth in Same-Asset NOI.
  • Targeting Annual FFO per unit diluted in a range of $1.05 to $1.06.
  • Targeting Adjusted Debt to EBITDAFV below 7.5x.

Notable Quotes

• “Choice Properties delivered another solid quarter, reflecting the strength of our portfolio and disciplined financial strategy,” said Rael Diamond, President and Chief Executive Officer of the Trust. “Robust demand for our grocery-anchored retail and well-located industrial assets supported our performance, and we advanced our strategic priorities through $427 million in transactions that further strengthened our position.”