Choice Properties Real Estate Investment Trust (CHP.UN) Q2 2024 earnings summary

Executive summary

• Achieved high operational performance in Q2 2024 with 98.0% occupancy, strong leasing momentum, and a focus on necessity-based retail and industrial assets.

• Net income for Q2 2024 was $513.2 million, down from $535.7 million year-over-year, mainly due to lower fair value adjustments and non-recurring items.

• FFO per unit diluted was $0.255, flat year-over-year, but normalized FFO per unit increased 5.7% after adjusting for non-recurring items.

• Strategic relationship with Loblaw remains a key advantage, with 56.5%-57% of gross rental revenue from Loblaw tenancy and 46 of 48 2025 leases renewed at an 8.4% average spread.

• Ongoing development pipeline and ESG leadership position the REIT for long-term growth, especially in industrial and mixed-use segments.

Financial highlights

• FFO for Q2 2024 was $184.7 million ($0.255/unit diluted); normalized FFO per unit rose 5.7% year-over-year.

• AFFO per unit diluted was $0.244, up from $0.235; AFFO payout ratio improved to 77.9%.

• Same-asset NOI (cash basis) grew 4.4% year-over-year, with retail up 3.0%, industrial up 11.8%, and mixed-use/residential up 0.8%.

• Rental revenue for Q2 2024 was $335.4 million, up from $330.3 million year-over-year.

• IFRS NAV per unit rose to CAD 13.79, up 0.7% sequentially, driven by operational contributions and fair value gains.

Outlook and guidance

• Targeting stable occupancy and 2.5%-3.0% year-over-year growth in same-asset NOI (cash basis) for 2024.

• Annual FFO per unit diluted guidance is $1.02–$1.03, reflecting 2.0%-3.0% growth.

• Restructuring costs of CAD 7 million in 2024 will be offset by lease surrender income, leaving full-year FFO guidance unchanged.

• Development pipeline of 17.2M sq. ft. is expected to drive future growth, with a focus on industrial and mixed-use projects.

• Distribution yield stands at 5.9%, with a 1% increase in 2024, marking the second consecutive annual increase.