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Published Jul 18, 2024 • 23 minute read
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TORONTO — Choice Properties Real Estate Investment Trust (“Choice Properties” or the “Trust”) (TSX: CHP.UN) today announced its consolidated financial results for the three and six months ended June 30, 2024. The 2024 Second Quarter Report to Unitholders is available in the Investors section of the Trust’s website at www.choicereit.ca, and has been filed on SEDAR+ at www.sedarplus.ca.
“This was another solid quarter operationally, as we continued to operate at a high level of occupancy and delivered strong leasing and same asset NOI growth,” said Rael Diamond, President and Chief Executive Officer of the Trust. “We further strengthened our balance sheet, completing $788 million in financings with an average term of 9.6 years and an average interest rate of approximately 5.0%. We also received a credit rating upgrade, citing the strength of our grocery anchored retail properties and our strategic relationship with Loblaw.”
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2024 Second Quarter Highlights
- Reported net income for the quarter of $513.2 million as compared to net income of $535.7 million in the same prior year period.
- Reported FFO per unit diluted(1) of $0.255, an increase of 0.4% compared to the same prior year period.
- FFO per unit diluted(1) excluding certain non-recurring items and timing differences, increased by $0.014 or 5.7%.
- Period end occupancy was 98.0%.
- Retail at 97.7%, industrial at 98.8% and mixed-use & residential at 94.7%.
- Same-Asset NOI on a cash basis(1) increased by 4.4% compared to the same prior year period.
- Retail increased by 3.0%;
- Industrial increased by 11.8%; and
- Mixed-use & residential increased by 0.8%.
- Completed $113.5 million of transactions in the quarter, including:
- Acquisition of our partner’s interest in a retail property in Fort Saskatchewan, Alberta for $21.1 million, following which the Trust owns 100% of the property;
- Acquisition of a standalone retail property in midtown Toronto, Ontario for $12.0 million. Concurrent with the transaction, Choice entered into a lease with Loblaw for this property; and
- Disposition of our interest in four retail properties in Alberta and Saskatchewan for proceeds of $80.4 million on a proportionate share basis(1). Consideration included three vendor take-back mortgages totalling $11.1 million, bearing interest at an average rate of 6.81%.
- Completed $788.2 million of debt financing in the quarter, including:
- The issuance of $500.0 million Series U senior unsecured debentures, bearing interest at 5.03% with a 6.8-year term. Proceeds were invested in a GIC earning 5.50% interest;
- Completion of $243.0 million of mortgage financings at share secured by three industrial properties, with an average rate of 5.309% and an average term of 16.9 years. Proceeds were partially used to repay $71.7 million of construction loans secured by two of the properties.
- Assumption of $45.2 million of mortgages from our partner at an average rate of 3.407%, with an average remaining term of 2.7 years in connection with acquisition and disposition transactions completed in the quarter.
- Transferred $8.3 million of properties under development to income producing status, delivering approximately 44,000 square feet of new commercial GLA on a proportionate share basis(1) through retail intensifications.
- Invested $31.7 million of capital in development projects on a proportionate share basis(1).
- Received a credit rating upgrade from S&P Global Ratings to BBB+.
- Subsequent to the quarter end, Choice and Loblaw renewed 46 of a tranche of 48 leases expiring in 2025, comprising 3.08 million of 3.20 million square feet, at a weighted average spread of 8.4% and a weighted average extension term of 5.0 years. The 46 renewals included one industrial lease.
- Ended the quarter in a strong liquidity position with $1.5 billion of available credit under the Trust’s revolving credit facility, a $12.8 billion pool of unencumbered assets and Adjusted Debt to EBITDAFV(1) of 7.6x (net of cash 6.9x).
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|
(1) Refer to Non-GAAP Financial Measures and Additional Financial Information section. |
Summary of GAAP Basis Financial Results
|
($ thousands except where otherwise indicated) |
Three Months |
Six Months |
|||||||||||||||||||
|
June 30, 2024 |
June 30, 2023 |
Change $ |
June 30, 2024 |
June 30, 2023 |
Change $ |
||||||||||||||||
|
Net Income |
$ |
513,231 |
$ |
535,668 |
$ |
(22,437 |
) |
$ |
655,510 |
$ |
806,472 |
$ |
(150,962 |
) |
|||||||
|
Net income per unit diluted |
0.709 |
0.740 |
(0.031 |
) |
0.906 |
1.114 |
(0.208 |
) |
|||||||||||||
|
Rental revenue |
335,388 |
330,327 |
5,061 |
673,346 |
654,984 |
18,362 |
|||||||||||||||
|
Fair value gain on Exchangeable Units(i) |
372,039 |
375,997 |
(3,958 |
) |
439,323 |
470,986 |
(31,663 |
) |
|||||||||||||
|
Fair value gains (losses) excluding Exchangeable Units(ii) |
1,453 |
55,875 |
(54,422 |
) |
(28,772 |
) |
117,731 |
(146,503 |
) |
||||||||||||
|
Cash flows from operating activities |
136,282 |
152,032 |
(15,750 |
) |
277,874 |
285,059 |
(7,185 |
) |
|||||||||||||
|
Weighted average number of units outstanding – diluted(iii) |
723,659,539 |
723,656,668 |
2,871 |
723,664,669 |
723,668,276 |
(3,607 |
) |
||||||||||||||
|
(i) |
Exchangeable Units are required to be classified as financial liabilities at fair value through profit and loss under GAAP. They are recorded at their fair value based on the market trading price of the Trust Units, which results in a negative impact to the financial results when the Trust Unit price rises and a positive impact when the Trust Unit price declines. |
|
|
(ii) |
Fair value gains (losses) excluding Exchangeable Units includes adjustments to fair value of investment properties, investment in real estate securities, and unit-based compensation. |
|
|
(iii) |
Includes Trust Units and Exchangeable Units. |
Quarterly Results
Choice Properties reported net income of $513.2 million for the three months ended June 30, 2024 as compared to net income of $535.7 million in the same prior year period. The decrease of $22.4 million compared to the prior year was primarily due to a $58.0 million unfavourable change in the adjustment to fair value of investment properties, partially offset by the reversal of a $38.6 million transaction related provision that was determined to be no longer required.
Year-to-date Results
Choice Properties reported net income of $655.5 million for the six months ended June 30, 2024 as compared to net income of $806.5 million in the same prior year period. The decrease of $151.0 million compared to the prior year was primarily due to changes in the non-cash adjustments to fair value including:
- a $135.2 million unfavourable change in the adjustment to fair value of investment properties;
- a $31.7 million unfavourable change in the adjustment to fair value of the Trust’s Exchangeable Units due to the change in the Trust’s Unit price; and
- a $20.1 million decrease in income from equity accounted joint ventures primarily due to a fair value loss recognized in the current year.
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The changes described above were partially offset by the reversal of a $38.6 million transaction related provision that was determined to be no longer required.
Summary of Proportionate Share(1) Financial Results
|
As at or for the period ended |
Three Months |
Six Months |
||||||||||||||||||||||
|
June 30, 2024 |
June 30, 2023 |
Change $ |
June 30, 2024 |
June 30, 2023 |
Change $ |
|||||||||||||||||||
|
Rental revenue(i) |
$ |
358,252 |
$ |
350,612 |
$ |
7,640 |
$ |
719,660 |
$ |
697,236 |
$ |
22,424 |
||||||||||||
|
Net Operating Income (“NOI”), cash basis(i) |
256,568 |
243,530 |
13,038 |
508,201 |
487,582 |
20,619 |
||||||||||||||||||
|
Same-Asset NOI, cash basis(i) |
241,729 |
231,494 |
10,235 |
478,935 |
463,130 |
15,805 |
||||||||||||||||||
|
Adjustment to fair value of investment properties(i) |
25,542 |
85,921 |
(60,379 |
) |
21,982 |
177,752 |
(155,770 |
) |
||||||||||||||||
|
Occupancy (% of GLA) |
98.0 |
% |
97.4 |
% |
0.6 |
% |
98.0 |
% |
97.4 |
% |
0.6 |
% |
||||||||||||
|
Funds from operations (“FFO”)(i) |
184,714 |
183,590 |
1,124 |
371,903 |
360,481 |
11,422 |
||||||||||||||||||
|
FFO(i) per unit diluted |
0.255 |
0.254 |
0.001 |
0.514 |
0.498 |
0.016 |
||||||||||||||||||
|
Adjusted funds from operations (“AFFO”)(i) |
176,600 |
170,400 |
6,200 |
349,746 |
334,779 |
14,967 |
||||||||||||||||||
|
AFFO(i) per unit diluted |
0.244 |
0.235 |
0.009 |
0.483 |
0.463 |
0.020 |
||||||||||||||||||
|
AFFO(i) payout ratio – diluted |
77.9 |
% |
79.6 |
% |
(1.7 |
)% |
78.3 |
% |
80.7 |
% |
(2.4 |
)% |
||||||||||||
|
Cash distributions declared |
137,492 |
135,684 |
1,808 |
273,779 |
270,162 |
3,617 |
||||||||||||||||||
|
Weighted average number of units outstanding – diluted(ii) |
723,659,539 |
723,656,668 |
2,871 |
723,664,669 |
723,668,276 |
(3,607 |
) |
|||||||||||||||||
|
(i) |
Refer to Non-GAAP Financial Measures and Additional Financial Information section. |
|
|
(ii) |
Includes Trust Units and Exchangeable Units. |
Quarterly and Year-to-date Results
For the three and six months ended June 30, 2024, Same-Asset NOI, cash basis(1) increased by $10.2 million and $15.8 million, respectively, compared to the prior year, primarily due to increased revenue from higher rental rates on renewals, new leasing, contractual rent steps, and higher recoveries in the retail and industrial portfolios, in addition to a provision reversal in the industrial portfolio following the resolution of a tenant dispute. Excluding bad debt expense, Same-Asset NOI, cash basis(1) increased 3.7% and 3.2% for the three and six month periods, respectively.
FFO(1) increased by $1.1 million and $11.4 million for the three and six months ended June 30, 2024, respectively. The increase was primarily due to an increase in net operating income, partially offset by higher general and administrative expenses and an increase in interest expense net of an increase in interest income.
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FFO per unit diluted(1) for the three month period was relatively flat compared to the same prior year period primarily as a result of certain non-recurring items and timing differences, including lower lease surrender revenue of $7.2 million, restructuring costs of $3.3 million related to outsourcing a portion of the Trust’s operational accounting function, and a provision reversal of $1.7 million in the industrial portfolio following the resolution of a tenant dispute. Normalized for these non-recurring items and timing differences, FFO per unit diluted(1) for the three month period increased by $0.014 or 5.7% over the same prior year period.
For the six month period, income recognized in relation to the sale of residential inventory further contributed to the increase in FFO(1).
Outlook
We are focused on capital preservation, delivering stable and growing cash flows and net asset value appreciation, all with a long-term focus. Our high-quality portfolio is primarily leased to necessity-based tenants and logistics providers, who are less sensitive to economic volatility and therefore provide stability to our overall portfolio. We continue to experience positive leasing momentum across our portfolio and are well positioned to complete our 2024 lease renewals. We also continue to advance our development program, with a focus on commercial developments in the near term, which provides us with the best opportunity to add high-quality real estate to our portfolio at a reasonable cost and drive net asset value appreciation over time.
We are confident that our business model, stable tenant base, strong balance sheet and disciplined approach to financial management will continue to position us well for future success. In 2024, Choice Properties will continue to focus on its core business of essential retail and industrial, our growing residential platform and our robust development pipeline, and is targeting:
- Stable occupancy across the portfolio, resulting in 2.5%-3.0% year-over-year growth in Same-Asset NOI, cash basis;
- Annual FFO per unit diluted in a range of $1.02 to $1.03, reflecting 2.0%-3.0% year-over-year growth; and
- Strong leverage metrics, targeting Adjusted Debt to EBITDAFV below 7.5x.
Non-GAAP Financial Measures and Additional Financial Information
In addition to using performance measures determined in accordance with International Financial Reporting Standards (“IFRS” or “GAAP”), Choice Properties also measures its performance using certain non-GAAP measures, and provides these measures in this news release so that investors may do the same. Such measures and related per-unit amounts are not defined by IFRS and therefore should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Furthermore, the supplemental measures used by management may not be comparable to similar measures presented by other real estate investment trusts or enterprises. The non-GAAP measures included in this news release are defined and reconciled to the most comparable GAAP measure below. Choice Properties believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Trust for the reasons outlined below.
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Non-GAAP Measure |
Description |
|
Proportionate Share |
|
|
Net Operating Income (“NOI”), Accounting Basis |
|
|
NOI, Cash Basis |
|
|
Same-Asset NOI, Cash Basis and Same-Asset NOI, Accounting Basis |
|
|
Funds from Operations (“FFO”) |
|
|
Adjusted Funds from Operations (“AFFO”) |
|
|
AFFO Payout Ratio |
|
|
Earnings before Interest, Taxes, Depreciation, Amortization and Fair Value (“EBITDAFV”) |
|
|
Total Adjusted Debt |
|
|
Adjusted Debt to EBITDAFV, and Adjusted Debt to EBITDAFV, net of cash |
|
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The following table reconciles net income as determined in accordance with GAAP to net income on a proportionate share basis for the three and six months ended June 30, 2024:
|
Three Months |
Six Months |
|||||||||||||||||||||||
|
($ thousands) |
GAAP Basis |
Adjustment to Proportionate Share Basis(1) |
Proportionate Share Basis(1) |
GAAP Basis |
Adjustment to Proportionate Share Basis(1) |
Proportionate Share Basis(1) |
||||||||||||||||||
|
Net Operating Income |
||||||||||||||||||||||||
|
Rental revenue |
$ |
335,388 |
$ |
22,864 |
$ |
358,252 |
$ |
673,346 |
$ |
46,314 |
$ |
719,660 |
||||||||||||
|
Property operating costs |
(93,195 |
) |
(8,041 |
) |
(101,236 |
) |
(191,300 |
) |
(16,287 |
) |
(207,587 |
) |
||||||||||||
|
242,193 |
14,823 |
257,016 |
482,046 |
30,027 |
512,073 |
|||||||||||||||||||
|
Residential Inventory Income |
||||||||||||||||||||||||
|
Gross sales |
— |
— |
— |
11,268 |
— |
11,268 |
||||||||||||||||||
|
Cost of sales |
— |
— |
— |
(9,234 |
) |
— |
(9,234 |
) |
||||||||||||||||
|
— |
— |
— |
2,034 |
— |
2,034 |
|||||||||||||||||||
|
Other Income and Expenses |
||||||||||||||||||||||||
|
Interest income |
15,275 |
(6,147 |
) |
9,128 |
25,034 |
(8,075 |
) |
16,959 |
||||||||||||||||
|
Investment income |
5,315 |
— |
5,315 |
10,630 |
— |
10,630 |
||||||||||||||||||
|
Fee income |
625 |
— |
625 |
1,326 |
— |
1,326 |
||||||||||||||||||
|
Net interest expense and other financing charges |
(146,204 |
) |
(4,813 |
) |
(151,017 |
) |
(288,488 |
) |
(11,176 |
) |
(299,664 |
) |
||||||||||||
|
General and administrative expenses |
(17,200 |
) |
— |
(17,200 |
) |
(31,838 |
) |
— |
(31,838 |
) |
||||||||||||||
|
Share of income from equity accounted joint ventures |
1,370 |
(1,370 |
) |
— |
6,088 |
(6,088 |
) |
— |
||||||||||||||||
|
Amortization of intangible assets |
(250 |
) |
— |
(250 |
) |
(500 |
) |
— |
(500 |
) |
||||||||||||||
|
Transaction costs and other related expenses |
38,615 |
— |
38,615 |
38,615 |
— |
38,615 |
||||||||||||||||||
|
Adjustment to fair value of unit-based compensation |
1,288 |
— |
1,288 |
2,069 |
— |
2,069 |
||||||||||||||||||
|
Adjustment to fair value of Exchangeable Units |
372,039 |
— |
372,039 |
439,323 |
— |
439,323 |
||||||||||||||||||
|
Adjustment to fair value of investment properties |
28,035 |
(2,493 |
) |
25,542 |
26,670 |
(4,688 |
) |
21,982 |
||||||||||||||||
|
Adjustment to fair value of investment in real estate securities |
(27,870 |
) |
— |
(27,870 |
) |
(57,511 |
) |
— |
(57,511 |
) |
||||||||||||||
|
Income before Income Taxes |
513,231 |
— |
513,231 |
655,498 |
— |
655,498 |
||||||||||||||||||
|
Income tax expense |
— |
— |
— |
12 |
— |
12 |
||||||||||||||||||
|
Net Income |
$ |
513,231 |
$ |
— |
$ |
513,231 |
$ |
655,510 |
$ |
— |
$ |
655,510 |
||||||||||||
The following table reconciles net income as determined in accordance with GAAP to net income on a proportionate share basis for the three and six months ended June 30, 2023:
|
Three Months |
Six Months |
|||||||||||||||||||||||
|
($ thousands) |
GAAP Basis |
Adjustment to Proportionate Share Basis(1) |
Proportionate Share Basis(1) |
GAAP Basis |
Adjustment to Proportionate Share Basis(1) |
Proportionate Share Basis(1) |
||||||||||||||||||
|
Net Operating Income |
||||||||||||||||||||||||
|
Rental revenue |
$ |
330,327 |
$ |
20,285 |
$ |
350,612 |
$ |
654,984 |
$ |
42,252 |
$ |
697,236 |
||||||||||||
|
Property operating costs |
(92,175 |
) |
(6,609 |
) |
(98,784 |
) |
(187,445 |
) |
(14,222 |
) |
(201,667 |
) |
||||||||||||
|
238,152 |
13,676 |
251,828 |
467,539 |
28,030 |
495,569 |
|||||||||||||||||||
|
Other Income and Expenses |
||||||||||||||||||||||||
|
Interest income |
11,321 |
(4,884 |
) |
6,437 |
20,296 |
(7,598 |
) |
12,698 |
||||||||||||||||
|
Investment income |
5,315 |
— |
5,315 |
10,630 |
— |
10,630 |
||||||||||||||||||
|
Fee income |
688 |
— |
688 |
2,341 |
— |
2,341 |
||||||||||||||||||
|
Net interest expense and other financing charges |
(141,125 |
) |
(5,307 |
) |
(146,432 |
) |
(280,482 |
) |
(10,187 |
) |
(290,669 |
) |
||||||||||||
|
General and administrative expenses |
(13,649 |
) |
— |
(13,649 |
) |
(28,211 |
) |
— |
(28,211 |
) |
||||||||||||||
|
Share of income from equity accounted joint ventures |
3,353 |
(3,353 |
) |
— |
26,177 |
(26,177 |
) |
— |
||||||||||||||||
|
Amortization of intangible assets |
(250 |
) |
— |
(250 |
) |
(500 |
) |
— |
(500 |
) |
||||||||||||||
|
Transaction costs and other related expenses |
(9 |
) |
— |
(9 |
) |
(34 |
) |
— |
(34 |
) |
||||||||||||||
|
Adjustment to fair value of unit-based compensation |
998 |
— |
998 |
1,730 |
— |
1,730 |
||||||||||||||||||
|
Adjustment to fair value of Exchangeable Units |
375,997 |
— |
375,997 |
470,986 |
— |
470,986 |
||||||||||||||||||
|
Adjustment to fair value of investment properties |
86,053 |
(132 |
) |
85,921 |
161,820 |
15,932 |
177,752 |
|||||||||||||||||
|
Adjustment to fair value of investment in real estate securities |
(31,176 |
) |
— |
(31,176 |
) |
(45,819 |
) |
— |
(45,819 |
) |
||||||||||||||
|
Income before Income Taxes |
535,668 |
— |
535,668 |
806,473 |
— |
806,473 |
||||||||||||||||||
|
Income tax expense |
— |
— |
— |
(1 |
) |
— |
(1 |
) |
||||||||||||||||
|
Net Income |
$ |
535,668 |
$ |
— |
$ |
535,668 |
$ |
806,472 |
$ |
— |
$ |
806,472 |
||||||||||||
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The following table reconciles net income, as determined in accordance with GAAP, to Net Operating Income, Cash Basis for the periods ended as indicated:
|
For the periods ended June 30 |
Three Months |
Six Months |
||||||||||||||||||||||
|
2024 |
2023 |
Change $ |
2024 |
2023 |
Change $ |
|||||||||||||||||||
|
Net Income |
$ |
513,231 |
$ |
535,668 |
$ |
(22,437 |
) |
$ |
655,510 |
$ |
806,472 |
$ |
(150,962 |
) |
||||||||||
|
Residential inventory income |
— |
— |
— |
(2,034 |
) |
— |
(2,034 |
) |
||||||||||||||||
|
Interest income |
(15,275 |
) |
(11,321 |
) |
(3,954 |
) |
(25,034 |
) |
(20,296 |
) |
(4,738 |
) |
||||||||||||
|
Investment income |
(5,315 |
) |
(5,315 |
) |
— |
(10,630 |
) |
(10,630 |
) |
— |
||||||||||||||
|
Fee income |
(625 |
) |
(688 |
) |
63 |
(1,326 |
) |
(2,341 |
) |
1,015 |
||||||||||||||
|
Net interest expense and other financing charges |
146,204 |
141,125 |
5,079 |
288,488 |
280,482 |
8,006 |
||||||||||||||||||
|
General and administrative expenses |
17,200 |
13,649 |
3,551 |
31,838 |
28,211 |
3,627 |
||||||||||||||||||
|
Share of income from equity accounted joint ventures |
(1,370 |
) |
(3,353 |
) |
1,983 |
(6,088 |
) |
(26,177 |
) |
20,089 |
||||||||||||||
|
Amortization of intangible assets |
250 |
250 |
— |
500 |
500 |
— |
||||||||||||||||||
|
Transaction costs and other related expenses |
(38,615 |
) |
9 |
(38,624 |
) |
(38,615 |
) |
34 |
(38,649 |
) |
||||||||||||||
|
Adjustment to fair value of unit-based compensation |
(1,288 |
) |
(998 |
) |
(290 |
) |
(2,069 |
) |
(1,730 |
) |
(339 |
) |
||||||||||||
|
Adjustment to fair value of Exchangeable Units |
(372,039 |
) |
(375,997 |
) |
3,958 |
(439,323 |
) |
(470,986 |
) |
31,663 |
||||||||||||||
|
Adjustment to fair value of investment properties |
(28,035 |
) |
(86,053 |
) |
58,018 |
(26,670 |
) |
(161,820 |
) |
135,150 |
||||||||||||||
|
Adjustment to fair value of investment in real estate securities |
27,870 |
31,176 |
(3,306 |
) |
57,511 |
45,819 |
11,692 |
|||||||||||||||||
|
Income tax (recovery) expense |
— |
— |
— |
(12 |
) |
1 |
(13 |
) |
||||||||||||||||
|
Net Operating Income, Accounting Basis – GAAP |
242,193 |
238,152 |
4,041 |
482,046 |
467,539 |
14,507 |
||||||||||||||||||
|
Straight-line rental revenue |
1,434 |
898 |
536 |
1,173 |
1,877 |
(704 |
) |
|||||||||||||||||
|
Lease surrender revenue |
(1,224 |
) |
(8,207 |
) |
6,983 |
(3,773 |
) |
(8,218 |
) |
4,445 |
||||||||||||||
|
Net Operating Income, Cash Basis – GAAP |
242,403 |
230,843 |
11,560 |
479,446 |
461,198 |
18,248 |
||||||||||||||||||
|
Adjustments for equity accounted joint ventures and financial real estate assets |
14,165 |
12,687 |
1,478 |
28,755 |
26,384 |
2,371 |
||||||||||||||||||
|
Net Operating Income, Cash Basis – Proportionate Share(1) |
$ |
256,568 |
$ |
243,530 |
$ |
13,038 |
$ |
508,201 |
$ |
487,582 |
$ |
20,619 |
||||||||||||
The following table reconciles Net Operating Income, Cash Basis to Same-Asset Net Operating Income, Cash Basis for the periods ended as indicated:
|
For the periods ended June 30 |
Three Months |
Six Months |
||||||||||||||||||||||
|
2024 |
2023 |
Change $ |
2024 |
2023 |
Change $ |
|||||||||||||||||||
|
Net Operating Income, Cash Basis – Proportionate Share(1) |
$ |
256,568 |
$ |
243,530 |
$ |
13,038 |
$ |
508,201 |
$ |
487,582 |
$ |
20,619 |
||||||||||||
|
Less: |
||||||||||||||||||||||||
|
Transactions NOI, Cash Basis |
(14,839 |
) |
(12,036 |
) |
(2,803 |
) |
(29,266 |
) |
(24,452 |
) |
(4,814 |
) |
||||||||||||
|
Same-Asset NOI, Cash Basis |
$ |
241,729 |
$ |
231,494 |
$ |
10,235 |
$ |
478,935 |
$ |
463,130 |
$ |
15,805 |
||||||||||||
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The following table reconciles net income, as determined in accordance with GAAP, to Funds from Operations for the periods ended as indicated:
|
For the periods ended June 30 |
Three Months |
Six Months |
||||||||||||||||||||||
|
2024 |
2023 |
Change $ |
2024 |
2023 |
Change $ |
|||||||||||||||||||
|
Net Income |
$ |
513,231 |
$ |
535,668 |
$ |
(22,437 |
) |
$ |
655,510 |
$ |
806,472 |
$ |
(150,962 |
) |
||||||||||
|
Add (deduct) impact of the following: |
||||||||||||||||||||||||
|
Amortization of intangible assets |
250 |
250 |
— |
500 |
500 |
— |
||||||||||||||||||
|
Transaction costs and other related expenses |
(38,615 |
) |
9 |
(38,624 |
) |
(38,615 |
) |
34 |
(38,649 |
) |
||||||||||||||
|
Adjustment to fair value of unit-based compensation |
(1,288 |
) |
(998 |
) |
(290 |
) |
(2,069 |
) |
(1,730 |
) |
(339 |
) |
||||||||||||
|
Adjustment to fair value of Exchangeable Units |
(372,039 |
) |
(375,997 |
) |
3,958 |
(439,323 |
) |
(470,986 |
) |
31,663 |
||||||||||||||
|
Adjustment to fair value of investment properties |
(28,035 |
) |
(86,053 |
) |
58,018 |
(26,670 |
) |
(161,820 |
) |
135,150 |
||||||||||||||
|
Adjustment to fair value of investment properties to proportionate share(1) |
2,493 |
132 |
2,361 |
4,688 |
(15,932 |
) |
20,620 |
|||||||||||||||||
|
Adjustment to fair value of investment in real estate securities |
27,870 |
31,176 |
(3,306 |
) |
57,511 |
45,819 |
11,692 |
|||||||||||||||||
|
Interest otherwise capitalized for development in equity accounted joint ventures |
3,069 |
2,939 |
130 |
5,577 |
5,854 |
(277 |
) |
|||||||||||||||||
|
Exchangeable Units distributions |
75,199 |
74,210 |
989 |
149,739 |
147,761 |
1,978 |
||||||||||||||||||
|
Internal expenses for leasing |
2,579 |
2,254 |
325 |
5,067 |
4,508 |
559 |
||||||||||||||||||
|
Income tax (recovery) expense |
— |
— |
— |
(12 |
) |
1 |
(13 |
) |
||||||||||||||||
|
Funds from Operations |
$ |
184,714 |
$ |
183,590 |
$ |
1,124 |
$ |
371,903 |
$ |
360,481 |
$ |
11,422 |
||||||||||||
|
FFO per unit – diluted |
$ |
0.255 |
$ |
0.254 |
$ |
0.001 |
$ |
0.514 |
$ |
0.498 |
$ |
0.016 |
||||||||||||
|
Weighted average number of units outstanding – diluted(i) |
723,659,539 |
723,656,668 |
2,871 |
723,664,669 |
723,668,276 |
(3,607 |
) |
|||||||||||||||||
|
(i) |
Includes Trust Units and Exchangeable Units. |
The following table reconciles Funds from Operations to Adjusted Funds from Operations for the periods ended as indicated:
|
For the periods ended June 30 |
Three Months |
Six Months |
||||||||||||||||||||||
|
2024 |
2023 |
Change $ |
2024 |
2023 |
Change $ |
|||||||||||||||||||
|
Funds from Operations |
$ |
184,714 |
$ |
183,590 |
$ |
1,124 |
$ |
371,903 |
$ |
360,481 |
$ |
11,422 |
||||||||||||
|
Add (deduct) impact of the following: |
||||||||||||||||||||||||
|
Internal expenses for leasing |
(2,579 |
) |
(2,254 |
) |
(325 |
) |
(5,067 |
) |
(4,508 |
) |
(559 |
) |
||||||||||||
|
Straight-line rental revenue |
1,434 |
898 |
536 |
1,173 |
1,877 |
(704 |
) |
|||||||||||||||||
|
Straight-line rental revenue adjustment to proportionate share(1) |
(658 |
) |
(777 |
) |
119 |
(1,272 |
) |
(1,434 |
) |
162 |
||||||||||||||
|
Property capital |
(2,606 |
) |
(5,764 |
) |
3,158 |
(7,000 |
) |
(7,512 |
) |
512 |
||||||||||||||
|
Direct leasing costs |
(2,024 |
) |
(793 |
) |
(1,231 |
) |
(3,196 |
) |
(2,584 |
) |
(612 |
) |
||||||||||||
|
Tenant improvements |
(1,369 |
) |
(3,686 |
) |
2,317 |
(4,395 |
) |
(10,129 |
) |
5,734 |
||||||||||||||
|
Operating capital expenditures adjustment to proportionate share(1) |
(312 |
) |
(814 |
) |
502 |
(2,400 |
) |
(1,412 |
) |
(988 |
) |
|||||||||||||
|
Adjusted Funds from Operations |
$ |
176,600 |
$ |
170,400 |
$ |
6,200 |
$ |
349,746 |
$ |
334,779 |
$ |
14,967 |
||||||||||||
|
AFFO per unit – diluted |
$ |
0.244 |
$ |
0.235 |
$ |
0.009 |
$ |
0.483 |
$ |
0.463 |
$ |
0.020 |
||||||||||||
|
AFFO payout ratio – diluted(i) |
77.9 |
% |
79.6 |
% |
(1.7 |
)% |
78.3 |
% |
80.7 |
% |
(2.4 |
)% |
||||||||||||
|
Distribution declared per unit |
$ |
0.190 |
$ |
0.188 |
$ |
0.002 |
$ |
0.378 |
$ |
0.374 |
$ |
0.004 |
||||||||||||
|
Weighted average number of units outstanding – diluted(ii) |
723,659,539 |
723,656,668 |
2,871 |
723,664,669 |
723,668,276 |
(3,607 |
) |
|||||||||||||||||
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|
(i) |
AFFO payout ratio is calculated as cash distributions declared divided by AFFO. |
|
|
(ii) |
Includes Trust Units and Exchangeable Units. |
Management’s Discussion and Analysis and Consolidated Financial Statements and Notes
Information appearing in this news release is a select summary of results. This news release should be read in conjunction with the Choice Properties 2024 Second Quarter Report to Unitholders, which includes the unaudited interim period condensed consolidated financial statements and MD&A for the Trust, and is available at www.choicereit.ca and on SEDAR+ at www.sedarplus.ca.
Conference Call and Webcast
Management will host a conference call on Friday, July 19, 2024 at 10:00 AM (EDT) with a simultaneous audio webcast. To access via teleconference, please dial +1 (240) 789-2714 or +1 (888) 330-2454 and enter the event passcode: 4788974. The link to the audio webcast will be available on www.choicereit.ca/events-webcasts.
About Choice Properties Real Estate Investment Trust
Choice Properties is a leading Real Estate Investment Trust that creates enduring value through places where people thrive.
We bring this to life by improving how our tenants and communities come together to live, work, and connect. We strive to understand the needs of our tenants and manage our properties to the highest standard. We aspire to develop healthy, resilient communities through our dedication to social, economic, and environmental sustainability. In everything we do, we are guided by a shared set of values grounded in Care, Ownership, Respect and Excellence. For more information, visit Choice Properties’ website at www.choicereit.ca and Choice Properties’ issuer profile at www.sedarplus.ca.
Cautionary Statements Regarding Forward-looking Statements
This news release contains forward-looking statements relating to Choice Properties’ operations and the environment in which the Trust operates, which are based on management’s expectations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Therefore, actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. Management undertakes no obligation to publicly update any such statement, to reflect new information or the occurrence of future events or circumstances, except as required by law.
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Numerous risks and uncertainties could cause the Trust’s actual results to differ materially from those expressed, implied or projected in the forward-looking statements, including those described in Section 12 “Enterprise Risks and Risk Management” of the Trust’s MD&A for the year ended December 31, 2023 and those described in the Trust’s Annual Information Form for the year ended December 31, 2023.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240717039602/en/
Contacts
For further information, please contact investor@choicereit.ca
Mario Barrafato
Chief Financial Officer
t: (416) 628-7872 e: Mario.Barrafato@choicereit.ca
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