TORONTO--(BUSINESS WIRE)--July 22, 2026--
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, 2026. The 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.
"We are pleased with Choice Properties' second quarter results, highlighted by robust leasing spreads and Same-Asset NOI growth," said Rael Diamond, President and Chief Executive Officer of the Trust. "These results reflect the strength of our portfolio and the disciplined execution of our strategy. We continue to unlock value through strategic leasing initiatives across our necessity-based retail portfolio, while capitalizing on tenant demand to drive rental rate growth in our industrial portfolio."
2026 Second Quarter Highlights
-- Reported a net loss of $176.4 million compared to a net loss of $154.2
million in the prior year period. The loss in both periods was primarily
due to the fair value adjustment related to the Trust's Exchangeable
Units(1) resulting from the increase in the Trust's unit price.
-- Reported FFO(2) per unit diluted of $0.267, representing year-over-year
growth of 0.8%.
-- FFO(2) per unit diluted, excluding lease surrender revenue and the
reduction in Allied Properties REIT's ("Allied") distribution, increased
by 1.5% compared to the prior year period.
-- Achieved Same-Asset NOI, Cash Basis(2) growth of 2.8% and Total NOI,
Cash Basis(2) growth of 2.8%.
-- Achieved long term renewal leasing spreads(3) of 19.0%.
-- Period end occupancy was 97.7%, with Retail at 97.4%, Industrial at
98.6%, and Mixed-Use & Residential at 94.3%.
-- Completed $14.6 million of real estate transactions on a proportionate
share basis(2).
-- Delivered $3.0 million of development projects through retail
intensification, adding approximately 66,000 square feet of new
commercial GLA associated with ground leases on a proportionate share
basis(2).
-- Subsequent to the quarter end, Choice Properties and Loblaw renewed a
full tranche of 50 leases expiring in 2027, comprising 3.55 million
square feet, at a weighted average spread of 8.8% and a weighted average
extension term of 5.0 years.
Agreement to Acquire Certain Assets of First Capital Real Estate Investment Trust
On April 16, 2026, the Trust announced that it entered into an agreement with First Capital Real Estate Investment Trust ("FCR") and KingSett Capital, on behalf of its investors, (collectively, "KingSett") pursuant to which KingSett and the Trust will acquire FCR in a unit and cash transaction valued at approximately $9.4 billion, including the assumption of certain debt (the "Transaction").
On June 23, 2026, the Transaction was approved by FCR's unitholders. On June 25, 2026, the Ontario Superior Court of Justice (Commercial List) issued a final order approving the Transaction's plan of arrangement pursuant to the arrangement agreement dated April 16, 2026. The Transaction is subject to other regulatory and customary approvals and closing conditions, and is expected to close in the second half of 2026.
Performance Highlights
As at or for the
periods ended Three Months Six Months
--------------------------------------- ---------- --------------------------------------- ------
($ thousands except
where otherwise June 30, June 30, Change June 30, June 30, Change
indicated) 2026 2025 Change % 2026 2025 Change %
-------------------- ------------ ------------ -------- ------ ------------ ------------ -------- ------
FFO(2) $ 192,904 $ 191,567 $ 1,337 0.7% $ 388,924 $ 382,506 $ 6,418 1.7%
FFO per unit
diluted(2) $ 0.267 $ 0.265 $ 0.002 0.8% $ 0.537 $ 0.528 $ 0.009 1.7%
Net Loss $ (176,381) $ (154,247) $(22,134) (14.3)% $ (263,575) $ (250,480) $(13,095) (5.2)%
Weighted average
number of units
outstanding -
diluted(i) 723,810,797 723,810,797 -- --% 723,810,797 723,790,848 19,949 --%
--------------------- ----------- ----------- ------- ------ ----------- ----------- ------- ------
(i) Includes Trust Units and Exchangeable Units
Funds from Operations
FFO(2) increased by $1.3 million, or 0.8% per unit diluted for the three months ended June 30, 2026. The increase was primarily driven by strong same-asset net operating income growth, partially offset by higher interest expense primarily due to new debt issuances over the past twelve months bearing interest at higher rates than maturing debt, as well as a higher average debt balance. The timing of higher lease surrender revenue and the reduction of Allied's distribution further impacted growth.
Excluding lease surrender revenue and the reduction of Allied's distribution, FFO(2) per unit diluted for the three-month period increased by 1.5%.
Net Loss
Choice Properties reported a net loss of $176.4 million for the three months ended June 30, 2026, compared to a net loss of $154.2 million in the prior year period. The difference of $22.1 million was primarily due to changes in certain non-cash adjustments to fair value including:
-- a $23.7 million unfavourable change in the adjustment to fair value of
the Trust's Exchangeable Units(1) due to the change in the Trust's unit
price;
-- a $14.3 million decrease in income from equity accounted joint ventures
resulting from the unfavourable change in the adjustment to fair value of
related investment properties; and
-- a $10.3 million unfavourable fair value adjustment of a derivative
financial liability related to the Transaction; partially offset by
-- a $30.0 million favourable change in the adjustment to fair value of
investment properties.
Select Proportionate Share(2) Operational and Financial Highlights
As at or for the
periods ended Three Months Six Months
---------------------------------- ------ --------------------------------------- ------
($ thousands except
where otherwise June 30, June 30, Change June 30, June 30, Change
indicated) 2026 2025 Change % 2026 2025 Change %
-------------------- -------- -------- ------ ------ -------- -------- ------- ------
NOI, Cash Basis(2) $275,853 $268,399 $7,454 2.8% $548,938 $530,469 $18,469 3.5%
Same-Asset NOI, Cash
basis(2) $255,403 $248,504 $6,899 2.8% $510,530 $496,115 $14,415 2.9%
Long term renewal
spreads(3) 19.0% 24.0% n/a n/a 20.0% 16.5% n/a n/a
Occupancy (% of GLA) 97.7% 97.8% (0.1)% n/a
NAV(2) per unit $ 14.73 $ 14.38 $ 0.35 2.4%
--------------------- -------- -------- ------ ------ ------- ------- ------ ------
-- Same-Asset NOI, Cash Basis(2) increased by 2.8% for the three months
ended June 30, 2026 compared to the prior year period.
-- Retail increased by 1.9%. Growth in the Retail segment was
impacted by a bad debt provision related to a tenant bankruptcy in
the current quarter. Excluding bad debt expense, Retail increased
by 2.4%.
-- Industrial increased by 5.8%. Growth in the Industrial segment
was impacted by a bad debt provision reversal in the current
quarter. Excluding bad debt expense, Industrial increased by
5.2%.
-- Mixed-Use & Residential increased by 4.1%.
-- Period end occupancy decreased by 40 basis points from March 31, 2026
to 97.7%, with:
-- Retail at 97.4%, Industrial at 98.6%, and Mixed-Use &
Residential at 94.3%.
-- Occupancy decreased primarily as a result of the strategic
repositioning of certain spaces and the expiry of a
non-operational space, all within the Retail segment.
-- Achieved leasing spreads(3) on long-term renewals of 19.0%, with 12.4%
and 40.2% in the Retail and Industrial portfolios, respectively.
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.
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