Choice Properties Reit Reports Strong Q3 Earnings

Choice Properties Reit (OTC) (($TSE:CHP.UN)) has held its Q3 earnings call. Read on for the main highlights of the call.

Choice Properties Reit (OTC) recently held its earnings call, revealing a positive sentiment overall. The company reported strong leasing and occupancy results, with significant growth in funds from operations (FFO) per unit. Despite facing some macroeconomic challenges and pressures in the residential market, Choice Properties remains financially robust and committed to its growth initiatives.

Strong Tenant Demand and Near Full Occupancy

Choice Properties reported a near full occupancy rate of 98%, an increase of 20 basis points from the previous quarter. This achievement was driven by strong tenant demand, particularly in their national grocery-anchored retail portfolio and industrial assets.

Robust Leasing Activity

The company experienced healthy rent spreads, with an overall increase of 10.8% during the quarter. Excluding renewals from Loblaw, the average rent spread was even higher at 23%, showcasing the company’s effective leasing strategies.

FFO Per Unit Growth

FFO per unit saw a growth of 7.8% this quarter, supported by lease surrender revenue from Loblaw’s rightsizing initiative. Even when excluding nonrecurring items, FFO per unit still grew by 3.5%, indicating strong financial performance.

New Retail and Industrial Developments

Choice Properties delivered seven new retail intensification projects at attractive yields and completed a $9 million acquisition of a 50% interest in a greenfield site in Ottawa, reflecting its strategic expansion efforts.

Strong Financial Position

The company ended the quarter with approximately $1.5 billion in available liquidity and $13.7 billion in unencumbered properties, underscoring its solid financial standing.

Macroeconomic Uncertainty

Despite ongoing macroeconomic uncertainty driven by trade-related risks in Canada and abroad, Choice Properties continues to perform well, demonstrating resilience in challenging times.

Pressure in Residential Portfolio

The residential segment of the company’s portfolio is experiencing pressure due to an influx of new supply, which remains a challenge for the management to address.

Higher Net Interest Expense

While FFO growth was strong, it was partially offset by higher net interest expenses resulting from recent financings, highlighting a cost that the company needs to manage.

Forward-Looking Guidance

Choice Properties has increased its 2025 FFO per unit guidance to a range of $1.06 to $1.07, indicating an expected year-over-year growth of 3% to 4%. This forecast is supported by robust leasing activities and strategic real estate transactions, including a $500 million dual tranche unsecured debenture offering.

In summary, Choice Properties Reit (OTC) has demonstrated strong performance in its latest earnings call, with positive leasing and occupancy results, strategic expansions, and a solid financial position. Despite facing some macroeconomic and residential market challenges, the company remains optimistic about its growth prospects, as reflected in its increased FFO guidance for 2025.