Choice Properties Real Estate Investment Trust Reports Results for the Quarter and Year Ended December 31, 2024, and Announces Distribution Increase

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Business Wire

Wed, Feb 12, 2025, 4:21 PM 15 min read

TORONTO, February 12, 2025--(BUSINESS WIRE)--Choice Properties Real Estate Investment Trust ("Choice Properties" or the "Trust") (TSX: CHP.UN) today announced its consolidated financial results for the quarter and year ended December 31, 2024. The 2024 Annual 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.

"We achieved another year of strong operational and financial results, delivering on our financial outlook and strategic priorities," said Rael Diamond, President and Chief Executive Officer of the Trust. "Our performance continues to be supported by the strength of our necessity-based portfolio and the stability and flexibility provided by our industry-leading balance sheet. We continue to be well-positioned to deliver stable and growing cash flows and are pleased to announce our third consecutive annual distribution increase for unitholders."

2024 Fourth Quarter Highlights

Reported net income for the quarter of $791.9 million compared to a net loss of $445.7 million in the same prior year period. Income in the current quarter is primarily due to a favourable fair value adjustment in the Trust’s Exchangeable Units⁽¹⁾.
Reported FFO⁽²⁾ per unit diluted of $0.260, an increase of 2.0% compared to the same prior year period.
Period end occupancy was 97.6%: Retail at 97.6%, industrial at 97.9%, and mixed-use & residential at 94.1%.
Achieved leasing spreads⁽³⁾ on long-term renewals of 16.0% and 37.0% in the Retail and Industrial portfolios, respectively.
Same-Asset NOI on a cash basis⁽²⁾ increased by 2.8% compared to the same prior year period.
- Retail increased by 2.3%;
- Industrial increased by 6.4%; and
- Mixed-use & residential decreased by 1.9%.
Completed $79.2 million of transactions in the quarter, including the acquisition of a retail property, a 50% interest in a distribution centre, and two land parcels, as well as the disposition of three non-core retail properties.
Obtained $48.4 million of net new financing in the quarter.
Transferred $194.9 million of properties under development to income producing status, delivering approximately 991,000 square feet of new commercial GLA on a proportionate share basis⁽²⁾, including the Loblaw distribution centre at Choice Caledon Business Park located in Caledon, ON.
Invested $55.5 million of capital in development projects on a proportionate share basis⁽²⁾.

2024 Select Annual Highlights

Reported net income of $784.4 million compared to a net income of $796.7 million in 2023⁽¹⁾.
On a full-year comparative basis, the Trust:
- Achieved 3.2% growth in Same-Asset NOI on a cash basis⁽²⁾.
- Reported FFO⁽²⁾ per unit diluted of $1.032, an increase of 2.9%.
- Ended the year in a strong liquidity position with $1.5 billion of available credit under the revolving credit facility, a $13.0 billion pool of unencumbered assets and Adjusted Debt to EBITDAFV⁽²⁾ of 7.0x.
- Delivered Net Asset Value⁽²⁾ ("NAV") per unit appreciation of $0.40 to end the year at $14.07 per unit.
- Completed $426.5 million of real estate transactions.
- Delivered $299.4 million of development projects, adding 1.1 million square feet of new commercial retail and industrial space and a new purpose-built residential rental building.

Subsequent Events
Subsequent to year end, the Trust:

Announced an increase of distributions to $0.77 per unit per annum from the previous rate of $0.76 per unit per annum (an increase of 1.3%). The increase will be effective for Unitholders of record on March 31, 2025.
Issued the $300.0 million Series V senior unsecured debentures, bearing interest at 4.29% with a 5-year term. Proceeds were used to repay the $350.0 million Series J senior unsecured debentures upon maturity, bearing interest at 3.55%.
Completed a $136.0 million mortgage financing at share secured by the Loblaw distribution centre at Choice Caledon Business Park which was completed in the fourth quarter of 2024, bearing interest at 4.88% with a 25-year term. Proceeds were used to repay $26.2 million of the construction loan secured by the property.

____________________
⁽¹⁾		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.
⁽²⁾		Refer to Non-GAAP Financial Measures and Additional Financial Information section.
⁽³⁾		Long-term renewal spread is calculated as the difference between the average rate during the renewal term and the expiring rental rate.

Summary of GAAP Basis Financial Results

($ thousands except where otherwise indicated) (audited)	Three Months									Year Ended
($ thousands except where otherwise indicated) (audited)	December 31, 2024			December 31, 2023			Change $			December 31, 2024		December 31, 2023		Change $
Net income (loss)	$	791,916		$	(445,684	)	$	1,237,600		$	784,437	$	796,691	$	(12,254	)

Net income (loss) per unit diluted		1.094			(0.616	)		1.710			1.084		1.101		(0.017	)

Rental revenue		344,861			329,109			15,752			1,358,105		1,309,170		48,935

Fair value gain (loss) on Exchangeable Units⁽ⁱ⁾		704,500			(502,649	)		1,207,149			237,472		320,587		(83,115	)

Fair value (losses) gains excluding Exchangeable Units⁽ⁱⁱ⁾		(50,439	)		(49,310	)		(1,129	)		57,606		51,082		6,524

Cash flows from operating activities		242,441			207,667			34,774			724,729		641,972		82,757

Weighted average number of units outstanding - diluted⁽ⁱⁱⁱ⁾		723,726,328			723,662,727			63,601			723,680,890		723,666,503		14,387

(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 a net income of $791.9 million for the three months ended December 31, 2024 compared to a net loss of $445.7 million in the same prior year period. The increase of $1,237.6 million compared to the prior year period was primarily due to changes in certain non-cash adjustments to fair value including:

a $1,207.1 million favourable change in the adjustment to fair value of the Trust’s Exchangeable Units due to the decrease in the Trust’s unit price; and
a $58.3 million favourable change in the adjustment to fair value of investment properties; partially offset by
a $62.8 million unfavourable change in the adjustment to fair value of the investment in real estate securities of Allied, driven by the decrease in Allied’s unit price in the quarter.

Annual Results
Choice Properties reported a net income of $784.4 million for the year ended December 31, 2024 compared to a net income of $796.7 million in the prior year. The decrease of $12.3 million compared to the prior year was primarily due to changes in certain non-cash adjustments to fair value including:

a $83.1 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 $21.4 million unfavourable change in the adjustment to fair value of investment properties; partially offset by
a $28.2 million favourable change in the adjustment to fair value of the investment in real estate securities of Allied, driven by change in Allied’s unit price year over year.

The changes described above were partially offset by a $36.4 million increase in net operating income and a reversal of a $38.6 million transaction related provision during the second quarter of 2024 that was determined to be no longer required.

Summary of Proportionate Share⁽²⁾ Financial Results

As at or for the period ended ($ thousands except where otherwise indicated)	Three Months									Year Ended
	December 31, 2024			December 31, 2023			Change $			December 31, 2024			December 31, 2023			Change $
Rental revenue⁽ⁱ⁾	$	368,376		$	350,300		$	18,076		$	1,449,644		$	1,392,415		$	57,229

Net Operating Income ("NOI"), Cash Basis⁽ⁱ⁾		259,966			247,037			12,929			1,024,119			979,505			44,614

Same-Asset NOI, Cash Basis⁽ⁱ⁾		242,812			236,126			6,686			958,015			928,584			29,431

Adjustment to fair value of investment properties⁽ⁱ⁾		13,640			(73,281	)		86,921			118,415			130,900			(12,485	)

Occupancy (% of GLA)		97.6	%		98.0	%		(0.4	)%		97.6	%		98.0	%		(0.4	)%

Funds from operations ("FFO")⁽ⁱ⁾		188,220			184,640			3,580			746,770			726,134			20,636

FFO⁽ⁱ⁾ per unit diluted		0.260			0.255			0.005			1.032			1.003			0.029

Adjusted funds from operations ("AFFO")⁽ⁱ⁾		109,326			127,095			(17,769	)		624,948			598,432			26,516

AFFO⁽ⁱ⁾ per unit diluted		0.151			0.176			(0.025	)		0.864			0.827			0.037

AFFO⁽ⁱ⁾ payout ratio - diluted		125.8	%		106.8	%		19.0	%		87.8	%		90.5	%		(2.7	)%

Cash distributions declared		137,505			135,683			1,822			548,783			541,529			7,254

Weighted average number of units outstanding - diluted⁽ⁱⁱ⁾		723,726,328			723,662,727			63,601			723,680,890			723,666,503			14,387

(i)		Refer to Non-GAAP Financial Measures and Additional Financial Information section.
(ii)		Includes Trust Units and Exchangeable Units.

Quarterly Results
For the three months ended December 31, 2024, Same-Asset NOI, Cash Basis⁽²⁾ increased by $6.7 million, compared to the prior year period primarily due to increased revenue from higher rental rates on renewals, new leasing, contractual rent steps, and higher recoveries in the industrial and retail portfolios.

FFO⁽²⁾ increased by $3.6 million for the three months ended December 31, 2024. The increase was primarily due to an increase in net operating income, lower general and administrative expense due to lower salaries, benefits and employee costs, and higher lease surrender revenue. The increase was partially offset by lower investment income as a result of Allied’s special distribution in the prior year period, income from the sale of residential inventory in the prior year period, higher interest expense, and lower interest income.

Annual Results
For the year ended December 31, 2024, Same-Asset NOI, Cash Basis⁽²⁾ increased by $29.4 million, 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 industrial and retail portfolios.

FFO⁽²⁾ increased by $20.6 million for the year ended December 31, 2024. The increase was primarily due to an increase in net operating income, partially offset by higher interest expense net of higher interest income, lower investment income as a result of Allied’s special distribution in the prior year, higher general and administrative expense, lower lease surrender revenue, and lower income from the sale of residential inventory.

2025 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.

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 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.

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 flows 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.

Non-GAAP Measure

Description

Proportionate Share

Represents financial information adjusted to reflect the Trust’s equity accounted joint ventures and financial real estate assets and its share of net income (loss) from equity accounted joint ventures and financial real estate assets on a proportionately consolidated basis at the Trust’s ownership percentage of the related investment.

Management views this method as relevant in demonstrating the Trust's ability to manage the underlying economics of the related investments, including the financial performance and cash flows and the extent to which the underlying assets are leveraged, which is an important component of risk management.

Net Operating Income ("NOI"), Accounting Basis

Defined as property rental revenue including straight-line rental revenue, reimbursed contract revenue and lease surrender revenue, less direct property operating expenses and realty taxes, and excludes certain expenses such as interest expense and indirect operating expenses in order to provide results that reflect a property’s operations before consideration of how it is financed or the costs of operating the entity in which it is held.

Management believes that NOI is an important measure of operating performance for the Trust’s commercial real estate assets that is used by real estate industry analysts, investors and management, while also being a key input in determining the fair value of the Choice Properties portfolio.

NOI, Cash Basis

Defined as property rental revenue and reimbursed contract revenue, excluding straight-line rental revenue and lease surrender revenue, less direct property operating expenses and realty taxes, and excludes certain expenses such as interest expense and indirect operating expenses in order to provide results that reflect a property’s operations before consideration of how it is financed or the costs of operating the entity in which it is held.

Management believes NOI, Cash Basis is a useful measure in understanding period-over-period changes in income from operations due to occupancy, rental rates, operating costs and realty taxes.

Same-Asset NOI, Cash Basis

and

Same-Asset NOI, Accounting Basis

Same-Asset NOI is used to evaluate the period-over-period performance of those commercial properties and stabilized residential properties, owned and operated by Choice Properties since January 1, 2023, inclusive.

NOI from properties that have been (i) purchased, (ii) disposed, (iii) subject to significant change as a result of new development, redevelopment, expansion, or demolition, or (iv) residential properties not yet stabilized (collectively, "Transactions") are excluded from the determination of same-asset NOI.

Same-Asset NOI, Cash Basis, is useful in evaluating the realization of contractual rental rate changes embedded in lease agreements and/or the expiry of rent-free periods, while also being a useful measure in understanding period-over-period changes in NOI due to occupancy, rental rates, operating costs and realty taxes, before considering the changes in NOI that can be attributed to the Transactions and development activities.

Funds from Operations ("FFO")

Calculated in accordance with the Real Property Association of Canada’s ("REALpac") Funds From Operations (FFO) & Adjusted Funds From Operations (AFFO) for IFRS issued in January 2022.

Management considers FFO to be a useful measure of operating performance as it adjusts for items included in net income (or loss) that do not arise from operating activities or do not necessarily provide an accurate depiction of the Trust’s past or recurring performance, such as adjustments to fair value of Exchangeable Units, investment properties, investment in real estate securities, and unit-based compensation. From time to time, the Trust may enter into transactions that materially impact the calculation and are eliminated from the calculation for management’s review purposes.

Management uses and believes that FFO is a useful measure of the Trust’s performance that, when compared period over period, reflects the impact on operations of trends in occupancy levels, rental rates, operating costs and realty taxes, acquisition activities and interest costs.

Adjusted Funds from Operations ("AFFO")

Calculated in accordance with REALpac’s Funds From Operations (FFO) & Adjusted Funds From Operations (AFFO) for IFRS issued in January 2022.

Management considers AFFO to be a useful measure of operating performance as it further adjusts FFO for capital expenditures that sustain income producing properties and eliminates the impact of straight-line rent. AFFO is impacted by the seasonality inherent in the timing of executing property capital projects.

In calculating AFFO, FFO is adjusted by excluding straight-line rent, as well as costs incurred relating to internal leasing activities and property capital projects. Working capital changes, viewed as short-term cash requirements or surpluses are deemed financing activities pursuant to the methodology and are not considered when calculating AFFO.

Capital expenditures which are excluded and not deducted in the calculation of AFFO comprise those which generate a new investment stream, such as constructing a new retail pad during property expansion or intensification, development activities or acquisition activities.

Accordingly, AFFO differs from FFO in that AFFO excludes from its definition certain non-cash revenues and expenses recognized under GAAP, such as straight-line rent, but also includes capital and leasing costs incurred during the period which are capitalized for GAAP purposes. From time to time, the Trust may enter into transactions that materially impact the calculation and are eliminated from the calculation for management’s review purposes....

AFFO Payout Ratio

AFFO payout ratio is a supplementary measure used by Management to assess the sustainability of the Trust's distribution payments.

The ratio is calculated using cash distributions declared divided by AFFO.

Earnings before Interest, Taxes, Depreciation, Amortization and Fair Value ("EBITDAFV")

Defined as net income (loss) attributable to Unitholders, reversing, where applicable, income taxes, interest expense, amortization expense, depreciation expense, adjustments to fair value and other adjustments as allowed in the Trust Indentures, as supplemented.

Management believes EBITDAFV is useful in assessing the Trust’s ability to service its debt, finance capital expenditures and provide distributions to its Unitholders.

Total Adjusted Debt

Defined as variable rate debt (construction loans, mortgages, and credit facility) and fixed rate debt (senior unsecured debentures, construction loans and mortgages), as measured on a proportionate share basis⁽²⁾, and does not include the Exchangeable Units which are included as part of unit equity on account of the Exchangeable Units being economically equivalent and receiving equal distributions to the Trust Units.

Total Adjusted Debt is also presented on a net basis to include the impact of other finance charges such as debt placement costs and discounts or premiums, and defeasance or other prepayments of debt.

Net Asset Value ("NAV")

NAV is an alternative measurement of equity. It is calculated by summing Unitholder’s Equity and the fair value of the Trust’s Exchangeable Units. Under IFRS Exchangeable Units are considered debt. The Exchangeable Units are not required to be repaid and the holder of these units has the right to convert them into Units, therefore Management considers the Exchangeable Units to be equivalent to equity.

NAV is a useful measure as it reflects Management’s view of the intrinsic value of the Trust. NAV per unit allows Management to determine if the Trust is trading at a discount or premium to its intrinsic value.

Adjusted Debt to EBITDAFV,

and

Adjusted Debt to EBITDAFV, net of cash

Calculated as Total Adjusted Debt divided by EBITDAFV.

This ratio is used to assess the financial leverage of Choice Properties, measure its ability to meet financial obligations, and provide a snapshot of its balance sheet strength.

Management also presents this ratio with Total Adjusted Debt calculated net of cash and cash equivalents at the measurement date.

The following table reconciles net income, as determined in accordance with GAAP, to net income on a proportionate share basis⁽²⁾ for the three months and year ended December 31, 2024:

	Three Months						Year Ended
($ thousands)	GAAP Basis		Adjustment to Proportionate Share Basis⁽²⁾		Proportionate Share Basis⁽²⁾		GAAP Basis		Adjustment to Proportionate Share Basis⁽²⁾		Proportionate Share Basis⁽²⁾
Net Operating Income
Rental revenue	$	344,861	$	23,515	$	368,376	$	1,358,105	$	91,539	$	1,449,644
Property operating costs		(97,375)		(7,416)		(104,791)		(381,568)		(31,319)		(412,887)
		247,486		16,099		263,585		976,537		60,220		1,036,757
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		10,247		(2,298)		7,949		52,593		(14,434)		38,159
Investment income		5,315		—		5,315		21,260		—		21,260
Fee income		712		—		712		3,389		—		3,389
Net interest expense and other financing charges		(147,490)		(5,733)		(153,223)		(586,388)		(22,332)		(608,720)
General and administrative expenses		(16,987)		—		(16,987)		(67,833)		—		(67,833)
Share of income from equity accounted joint ventures		37,820		(37,820)		—		49,138		(49,138)		—
Amortization of intangible assets		(250)		—		(250)		(1,000)		—		(1,000)
Transaction costs and other related expenses		(55)		—		(55)		38,560		—		38,560
Adjustment to fair value of unit-based compensation		1,927		—		1,927		657		—		657
Adjustment to fair value of Exchangeable Units		704,500		—		704,500		237,472		—		237,472
Adjustment to fair value of investment properties		(16,112)		29,752		13,640		92,731		25,684		118,415
Adjustment to fair value of investment in real estate securities		(36,254)		—		(36,254)		(35,782)		—		(35,782)
Income before Income Taxes		790,859		—		790,859		783,368		—		783,368
Income tax recovery		1,057		—		1,057		1,069		—		1,069
Net Income	$	791,916	$	—	$	791,916	$	784,437	$	—	$	784,437

The following table reconciles net income (loss), as determined in accordance with GAAP, to net income (loss) on a proportionate share basis⁽²⁾ for the three months and year ended December 31, 2023:

	Three Months						Year Ended
($ thousands)	GAAP Basis		Adjustment to Proportionate Share Basis⁽²⁾		Proportionate Share Basis⁽²⁾		GAAP Basis		Adjustment to Proportionate Share Basis⁽²⁾		Proportionate Share Basis⁽²⁾
Net Operating Income
Rental revenue	$	329,109	$	21,191	$	350,300	$	1,309,170	$	83,245	$	1,392,415
Property operating costs		(94,386)		(7,658)		(102,044)		(369,060)		(28,349)		(397,409)
		234,723		13,533		248,256		940,110		54,896		995,006
Residential Inventory Income
Gross sales		25,634		—		25,634		25,634		—		25,634
Cost of sales		(21,008)		—		(21,008)		(21,008)		—		(21,008)
		4,626		—		4,626		4,626		—		4,626
Other Income and Expenses
Interest income		9,971		(1,195)		8,776		41,414		(11,751)		29,663
Investment income		10,983		—		10,983		26,928		—		26,928
Fee income		1,125		—		1,125		4,287		—		4,287
Net interest expense and other financing charges		(143,373)		(5,433)		(148,806)		(566,147)		(20,826)		(586,973)
General and administrative expenses		(19,599)		—		(19,599)		(64,230)		—		(64,230)
Share of income from equity accounted joint ventures		8,069		(8,069)		—		39,069		(39,069)		—
Amortization of intangible assets		(250)		—		(250)		(1,000)		—		(1,000)
Transaction costs and other related expenses		—		—		—		(34)		—		(34)
Adjustment to fair value of unit-based compensation		(1,435)		—		(1,435)		938		—		938
Adjustment to fair value of Exchangeable Units		(502,649)		—		(502,649)		320,587		—		320,587
Adjustment to fair value of investment properties		(74,445)		1,164		(73,281)		114,150		16,750		130,900
Adjustment to fair value of investment in real estate securities		26,570		—		26,570		(64,006)		—		(64,006)
(Loss) Income before Income Taxes		(445,684)		—		(445,684)		796,692		—		796,692
Income tax expense		—		—		—		(1)		—		(1)
Net Income (Loss)	$	(445,684)	$	—	$	(445,684)	$	796,691	$	—	$	796,691

The following table reconciles net income (loss), as determined in accordance with GAAP, to Net Operating Income, Cash Basis for the periods ended as indicated:

For the periods ended December 31 ($ thousands)	Three Months									Year Ended
For the periods ended December 31 ($ thousands)	2024			2023			Change $			2024			2023			Change $
Net Income (Loss)	$	791,916		$	(445,684	)	$	1,237,600		$	784,437		$	796,691		$	(12,254	)
Residential inventory income		—			(4,626	)		4,626			(2,034	)		(4,626	)		2,592
Interest income		(10,247	)		(9,971	)		(276	)		(52,593	)		(41,414	)		(11,179	)
Investment income		(5,315	)		(10,983	)		5,668			(21,260	)		(26,928	)		5,668
Fee income		(712	)		(1,125	)		413			(3,389	)		(4,287	)		898
Net interest expense and other financing charges		147,490			143,373			4,117			586,388			566,147			20,241
General and administrative expenses		16,987			19,599			(2,612	)		67,833			64,230			3,603
Share of income from equity accounted joint ventures		(37,820	)		(8,069	)		(29,751	)		(49,138	)		(39,069	)		(10,069	)
Amortization of intangible assets		250			250			—			1,000			1,000			—
Transaction costs and other related expenses		55			—			55			(38,560	)		34			(38,594	)
Adjustment to fair value of unit-based compensation		(1,927	)		1,435			(3,362	)		(657	)		(938	)		281
Adjustment to fair value of Exchangeable Units		(704,500	)		502,649			(1,207,149	)		(237,472	)		(320,587	)		83,115
Adjustment to fair value of investment properties		16,112			74,445			(58,333	)		(92,731	)		(114,150	)		21,419
Adjustment to fair value of investment in real estate securities		36,254			(26,570	)		62,824			35,782			64,006			(28,224	)
Income tax (recovery) expense		(1,057	)		—			(1,057	)		(1,069	)		1			(1,070	)
Net Operating Income, Accounting Basis - GAAP		247,486			234,723			12,763			976,537			940,110			36,427
Straight-line rental revenue		675			(446	)		1,121			2,194			2,270			(76	)
Lease surrender revenue		(2,558	)		(147	)		(2,411	)		(11,204	)		(14,584	)		3,380
Net Operating Income, Cash Basis - GAAP		245,603			234,130			11,473			967,527			927,796			39,731
Adjustments for equity accounted joint ventures and financial real estate assets		14,363			12,907			1,456			56,592			51,709			4,883
Net Operating Income, Cash Basis - Proportionate Share⁽²⁾	$	259,966		$	247,037		$	12,929		$	1,024,119		$	979,505		$	44,614

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 December 31 ($ thousands)	Three Months									Year Ended
For the periods ended December 31 ($ thousands)	2024			2023			Change $			2024			2023			Change $
Net Operating Income, Cash Basis - Proportionate Share⁽²⁾	$	259,966		$	247,037		$	12,929		$	1,024,119		$	979,505		$	44,614
Less:
Transactions NOI, Cash Basis		(17,154	)		(10,911	)		(6,243	)		(66,104	)		(50,921	)		(15,183	)
Same-Asset NOI, Cash Basis	$	242,812		$	236,126		$	6,686		$	958,015		$	928,584		$	29,431

The following table reconciles net income (loss), as determined in accordance with GAAP, to Funds from Operations for the periods ended as indicated:

For the periods ended December 31 ($ thousands except where otherwise indicated)	Three Months									Year Ended
	2024			2023			Change $			2024			2023			Change $
Net Income (Loss)	$	791,916		$	(445,684	)	$	1,237,600		$	784,437		$	796,691		$	(12,254	)
Add (deduct) impact of the following:
Amortization of intangible assets		250			250			—			1,000			1,000			—
Transaction costs and other related expenses		55			—			55			(38,560	)		34			(38,594	)
Adjustment to fair value of unit-based compensation		(1,927	)		1,435			(3,362	)		(657	)		(938	)		281
Adjustment to fair value of Exchangeable Units		(704,500	)		502,649			(1,207,149	)		(237,472	)		(320,587	)		83,115
Adjustment to fair value of investment properties		16,112			74,445			(58,333	)		(92,731	)		(114,150	)		21,419
Adjustment to fair value of investment properties to proportionate share⁽²⁾		(29,752	)		(1,164	)		(28,588	)		(25,684	)		(16,750	)		(8,934	)
Adjustment to fair value of investment in real estate securities		36,254			(26,570	)		62,824			35,782			64,006			(28,224	)
Interest otherwise capitalized for development in equity accounted joint ventures		2,975			2,670			305			11,671			11,457			214
Exchangeable Units distributions		75,199			74,210			989			300,137			296,181			3,956
Internal expenses for leasing		2,695			2,399			296			9,916			9,189			727
Income tax (recovery) expense		(1,057	)		—			(1,057	)		(1,069	)		1			(1,070	)
Funds from Operations	$	188,220		$	184,640		$	3,580		$	746,770		$	726,134		$	20,636
FFO per unit - diluted	$	0.260		$	0.255		$	0.005		$	1.032		$	1.003		$	0.029
Weighted average number of units outstanding - diluted⁽ⁱ⁾		723,726,328			723,662,727			63,601			723,680,890			723,666,503			14,387

(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 December 31 ($ thousands except where otherwise indicated)	Three Months									Year Ended
	2024			2023			Change $			2024			2023			Change $
Funds from Operations	$	188,220		$	184,640		$	3,580		$	746,770		$	726,134		$	20,636
Add (deduct) impact of the following:
Internal expenses for leasing		(2,695	)		(2,399	)		(296	)		(9,916	)		(9,189	)		(727	)
Straight-line rental revenue		675			(446	)		1,121			2,194			2,270			(76	)
Straight-line rental revenue adjustment to proportionate share⁽²⁾		(1,736	)		(626	)		(1,110	)		(3,628	)		(2,985	)		(643	)
Property capital		(61,315	)		(46,491	)		(14,824	)		(80,205	)		(85,516	)		5,311
Direct leasing costs		(1,738	)		(1,357	)		(381	)		(7,824	)		(5,622	)		(2,202	)
Tenant improvements		(10,107	)		(4,381	)		(5,726	)		(16,797	)		(22,833	)		6,036
Operating capital expenditures adjustment to proportionate share⁽²⁾		(1,978	)		(1,845	)		(133	)		(5,646	)		(3,827	)		(1,819	)
Adjusted Funds from Operations	$	109,326		$	127,095		$	(17,769	)	$	624,948		$	598,432		$	26,516
AFFO per unit - diluted	$	0.151		$	0.176		$	(0.025	)	$	0.864		$	0.827		$	0.037
AFFO payout ratio - diluted⁽ⁱ⁾		125.8	%		106.8	%		19.0	%		87.8	%		90.5	%		(2.7	)%
Distribution declared per unit	$	0.190		$	0.188		$	0.002		$	0.758		$	0.749		$	0.009
Weighted average number of units outstanding - diluted⁽ⁱⁱ⁾		723,726,328			723,662,727			63,601			723,680,890			723,666,503			14,387

(i)		AFFO payout ratio is calculated as cash distributions declared divided by AFFO.
(ii)		Includes Trust Units and Exchangeable Units.

The following table reconciles Net Asset Value⁽²⁾ as at the dates indicated below:

As at December 31 ($ thousands except where otherwise indicated)	2024		2023		Change $

Unitholders’ equity	$	4,899,800	$	4,368,502	$	531,298
Exchangeable Units		5,283,750		5,521,222		(237,472	)
NAV⁽²⁾	$	10,183,550	$	9,889,724	$	293,826
NAV⁽²⁾ per unit	$	14.07	$	13.67	$	0.40
Trust Units and Exchangeable Units, end of year		723,710,497		723,646,497		64,000

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 Annual Report to Unitholders, which includes the audited 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 Thursday, February 13, 2025 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 are more than a national owner, operator and developer of high-quality commercial and residential real estate. We believe in creating spaces that enhance how our tenants and communities come together to live, work, and connect. This includes our industry leadership in integrating environmental, social and economic sustainability practices into all aspects of our business. 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.

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, 2024 and those described in the Trust’s Annual Information Form for the year ended December 31, 2024.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250210657350/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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