Choice Properties Real Estate Investment Trust recently announced its consolidated financial results for the three and six months ended June 30.
“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.”
2025 Second Quarter Highlights
- Reported a net loss for the quarter of $154.2 million compared to net income of $513.2 million in the same prior year period. The loss in the current quarter is primarily due to an unfavourable fair value adjustment in the Trust’s Exchangeable Units.
- Reported FFO per unit diluted of $0.265, an increase of 3.9% compared to the same prior year period.
- Period end occupancy remained strong at 97.8%: Retail at 97.8%, Industrial at 98.0%, and Mixed-Use & Residential at 95.4%.
- Achieved leasing spreads on long-term renewals of 13.2% and 38.9% in the Retail and Industrial portfolios, respectively.
- Same-Asset NOI on a cash basis increased by 1.4% compared to the same prior year period.
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- Retail increased by 1.7%;
- Industrial increased by 0.2%. Growth in the industrial segment was impacted by a bad debt provision reversal in the prior year following the resolution of a tenant dispute. Excluding bad debt expense, industrial increased by 4.2%;
- Mixed-Use & Residential increased by 1.6%.
- Completed $427.1 million of transactions in the quarter:
- Acquired an industrial distribution centre in Ajax, ON from Loblaw for a purchase price of $182.9 million. Concurrent with the transaction, the property was leased back to Loblaw.
- Acquired eight industrial outdoor storage sites located across Canada for a purchase price of $162.0 million.
- Disposed of nine industrial sites located in Calgary, AB for proceeds of $73.4 million.
- Acquired a mixed-use parcel in Toronto, ON for $6.0 million and disposed of a retail property in Halifax, NS for $2.8 million.
- Transferred $13.9 million of properties under development to income producing status, delivering approximately 30,900 square feet of new commercial GLA (including 6,900 square feet associated with a ground lease) on a proportionate share basis through retail intensifications.
- Invested $34.2 million of capital in development projects on a proportionate share basis.
- Maintained healthy and stable debt metrics with Adjusted Debt to EBITDAFV of 7.2x, Adjusted Debt to Total Assets at 40.8%, and Interest Coverage ratio of 3.3x.
- Maintained a strong liquidity position with approximately $1.3 billion of available credit and a $13.5 billion pool of unencumbered properties.
“Subsequent to quarter end, Choice Properties and Loblaw renewed 39 of a tranche of 41 leases expiring in 2026, comprising 2.52 million of 2.62 million square feet, at a weighted average spread of 8.6% and a weighted average extension term of 5.0 years,” said Choice.
Year-to-Date Results
Choice Properties reported a net loss of $250.5 million for the six months ended June 30, 2025 compared to net income of $655.5 million in the same prior year period. The decrease of $906.0 million was primarily due to changes in certain non-cash adjustments to fair value including: a $1,040.9 million unfavourable change in the adjustment to fair value of the Trust’s Exchangeable Units due to the increase in the Trust’s unit price; partially offset by a $96.8 million favourable change in the adjustment to fair value of investment properties; and a $57.6 million favourable change in the adjustment to fair value of the investment in real estate securities of Allied, driven by the change in Allied’s unit price in the quarter.
Outlook
“We are focused on capital preservation, delivering stable and growing cash flows and net asset value appreciation. 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 will continue to advance our development program, with a focus on commercial developments, 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,” said Choice.
“We are confident that our business model, stable tenant base, strong balance sheet, and disciplined approach to financial management will continue to benefit us.”
In 2025, Choice Properties said it is targeting:
- Stable occupancy across the portfolio, resulting in approximately 2%-3% year-over-year growth in Same-Asset NOI, Cash Basis;
- Annual FFO per unit diluted in a range of $1.05 to $1.06, reflecting approximately 2%-3% year-over-year growth; and
- Strong leverage metrics, targeting Adjusted Debt to EBITDAFV below 7.5x.
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