Choice Properties Real Estate Investment Trust (CHP.UN) Q3 2024 earnings summary

Executive summary

• Reported a net loss of $663.0 million for Q3 2024, primarily due to unfavorable fair value adjustments to Exchangeable Units, despite strong operational and financial results, high occupancy at 97.7%, and robust leasing spreads, especially in the industrial segment.

• FFO per unit diluted increased 3.2% year-over-year to $0.258, and AFFO per unit diluted rose 21.2% to $0.229, with same-asset NOI (cash basis) up 3.0% year-over-year, led by 11.7% growth in industrial.

• Completed $172.1 million in real estate transactions, including a significant joint venture acquisition with Crestpoint and property disposals, and invested $51.2 million in development.

• Announced CFO succession, with Erin Johnstone to succeed Mario Barrafato in March 2025.

• Largest REIT in Canada with 705 income-producing properties, a strategic relationship with Loblaw, and a focus on necessity-based retail, industrial, and mixed-use/residential assets.

Financial highlights

• Q3 2024 FFO was $186.7 million, or $0.258 per unit, up 3.2% year-over-year; AFFO was $165.9 million, up 21.2% year-over-year.

• Rental revenue for Q3 2024 was $339.9 million, up 4.6% year-over-year; NOI (cash basis) was $255.95 million, up 4.5% from Q3 2023.

• IFRS NAV per unit rose to $14.04, up 1.8% from last quarter, driven by operational contributions and fair value gains.

• Distribution declared per unit was $0.190, with a payout ratio of 73.7% for FFO and 82.9% for AFFO.

• Adjusted Debt to EBITDAFV was 7.0x at quarter-end, improving from 7.4x a year ago.

Outlook and guidance

• Targeting stable occupancy and 2.5%-3.0% year-over-year growth in Same-Asset NOI (cash basis), with annual FFO per unit diluted guidance set at $1.02-$1.03.

• Expecting strong leasing spreads to continue for the remainder of 2024, with industrial occupancy anticipated to decline marginally in Q4 but improve in 2025.

• Maintaining strong leverage metrics, with a target Adjusted Debt to EBITDAFV below 7.5x.

• Focus on maximizing value in core asset classes, advancing the development pipeline, and maintaining operational excellence.