Choice Properties Real Estate Investment (CHP.UN) AI Stock Analysis

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Choice Properties Real Estate Investment

(TSX:CHP.UN)

76Outperform

Choice Properties Real Estate Investment has a solid overall stock score driven by strong financial performance and positive earnings call highlights. The company's robust profitability and efficient operations, alongside strategic acquisitions, bolster its position. While the technical analysis shows strong recent momentum, the valuation suggests moderate pricing. Minor concerns include industrial occupancy decline and potential tariff exposures, but these are outweighed by the company's strengths.

Positive Factors

Growth and Performance

Solid operating performance leads to 2% growth in Choice Properties REIT, highlighted by FFO per unit and same-property NOI growth of 1.9% and 2.9%, respectively.

Portfolio Composition

The REIT's portfolio composition and capital structure have become increasingly attractive to investors in an uncertain environment.

Return on Investment

Units have returned 9.5%, outpacing the return for retail peers and the REIT index of 0.2% and -1.2%, respectively.

Negative Factors

Interest Expense

Greater interest expense from refinancing maturing debt at higher interest rates over the past year partially offset growth.

Occupancy

Total occupancy ended at 97.6%, which was a decline compared to the previous quarter and year.

Choice Properties Real Estate Investment (CHP.UN) vs. S&P 500 (SPY)

Market Cap

$10.71B

Dividend Yield5.15%

Average Volume (3M)530.83K

Price to Earnings (P/E)19.6

Beta (1Y)0.74

Revenue Growth0.70%

EPS Growth-18.29%

CountryCA

Employees285

SectorReal Estate

Sector Strength61

IndustryREIT - Retail

Share Statistics

EPS (TTM)-0.13

Shares Outstanding328,024,260

10 Day Avg. Volume433,824

30 Day Avg. Volume530,828

Financial Highlights & Ratios

PEG Ratio-1.26

Price to Book (P/B)2.21

Price to Sales (P/S)0.00

P/FCF Ratio6.76

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$15.71

Price Target Upside6.68% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

Choice Properties Real Estate Investment Business Overview & Revenue Model

Company DescriptionChoice Properties Real Estate Investment Trust (CHP.UN) is one of Canada's largest real estate investment trusts, primarily focused on owning, managing, and developing a diverse portfolio of commercial, retail, industrial, and residential properties. The company operates in sectors including retail, office, and industrial, with a strategic emphasis on long-term value creation through its robust real estate assets and development projects.

How the Company Makes MoneyChoice Properties Real Estate Investment Trust generates revenue primarily through leasing its extensive portfolio of properties to a diverse range of tenants. This includes long-term lease agreements with its anchor tenant, Loblaw Companies Limited, which contributes significantly to its rental income. The company's revenue streams are bolstered by property appreciation and strategic developments that enhance the value and income potential of its assets. Additionally, Choice Properties engages in property management and development activities that provide supplementary income, thereby enhancing its overall profitability. Strategic partnerships with reputable tenants and stakeholders also play a crucial role in maintaining steady cash flow and optimizing occupancy rates across its portfolio.

Choice Properties Real Estate Investment Financial Statement Overview

Summary

Choice Properties Real Estate Investment exhibits robust financial health. It has strong profitability with a high Gross Profit Margin of 75.07% and Net Profit Margin of 39.35%, complemented by efficient cost management as indicated by strong EBIT and EBITDA margins. The balance sheet shows moderate leverage with a Debt-to-Equity Ratio of 1.40 and strong ROE of 11.52%. Cash flow is solid with good conversion of income into cash, although there is room for improvement in cash flow growth.

Income Statement

Very Positive

The company exhibits a strong financial performance with a solid Gross Profit Margin of 75.07% and a healthy Net Profit Margin of 39.35% for the TTM. Revenue growth has been relatively stable, with a slight decline in the current TTM compared to previous periods. The EBIT and EBITDA margins are robust at 33.24% and 75.32%, respectively, indicating efficient cost management.

Balance Sheet

Positive

Choice Properties maintains a moderate Debt-to-Equity Ratio of 1.40, indicating a balanced use of debt financing. The Return on Equity (ROE) is strong at 11.52%, reflecting effective use of equity to generate profits. The Equity Ratio stands at 27.40%, showing a stable asset base supported by equity.

Cash Flow

Positive

The company demonstrates strong cash flow generation with a Free Cash Flow to Net Income Ratio of 1.29, indicating efficient conversion of income into cash. The Operating Cash Flow to Net Income Ratio of 1.29 reflects good cash operational efficiency. However, Free Cash Flow Growth Rate is slightly negative, signaling potential areas for improvement in cash flow management.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.39B	1.37B	1.43B	1.26B	1.29B	1.27B
	Gross Profit
1.04B	978.57M	1.04B	900.64M	912.01M	886.60M
	EBIT
461.11M	909.74M	976.39M	1.23B	954.61M	852.96M
	EBITDA
1.04B	1.37B	1.14B	1.28B	956.90M	981.61M
	Net Income Common Stockholders
545.92M	784.44M	796.69M	744.25M	23.01M	450.69M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
105.06M	63.39M	252.42M	64.74M	84.30M	207.22M
	Total Assets
17.29B	17.56B	17.31B	16.82B	16.17B	15.65B
	Total Debt
6.63B	6.68B	6.70B	6.55B	6.23B	6.49B
	Net Debt
6.52B	6.62B	6.44B	6.49B	6.15B	6.41B
	Total Liabilities
12.55B	12.66B	12.94B	13.00B	12.86B	12.12B
	Stockholders Equity
4.74B	4.90B	4.37B	3.82B	3.31B	3.51B
Cash Flow		Free Cash Flow
702.74M	724.73M	641.97M	1.01B	773.41M	507.76M
	Operating Cash Flow
702.74M	724.73M	641.97M	633.15M	669.43M	621.18M
	Investing Cash Flow
-426.96M	-584.21M	-361.35M	-616.73M	-64.12M	155.19M
	Financing Cash Flow
-180.42M	-329.56M	-92.94M	-35.99M	-728.22M	-611.15M

Choice Properties Real Estate Investment Technical Analysis

Technical Analysis Sentiment

Positive

Last Price14.73

Price Trends

50DMA

14.17

Positive

100DMA

13.63

Positive

200DMA

13.76

Positive

Market Momentum

MACD

0.22

Negative

RSI

57.77

Neutral

STOCH

75.39

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CHP.UN, the sentiment is Positive. The current price of 14.73 is above the 20-day moving average (MA) of 14.64, above the 50-day MA of 14.17, and above the 200-day MA of 13.76, indicating a bullish trend. The MACD of 0.22 indicates Negative momentum. The RSI at 57.77 is Neutral, neither overbought nor oversold. The STOCH value of 75.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CHP.UN.

Choice Properties Real Estate Investment Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CRT.UN	79 Outperform	C$3.66B	8.26	11.23%	6.11%	4.69%	88.66%
SRU.UN	77 Outperform	C$4.37B	18.55	4.75%	7.22%	10.06%	-19.26%
CHP.UN	76 Outperform	$10.71B	19.62	11.80%	5.15%	0.70%	-18.29%
FCR.UN	74 Outperform	C$3.64B	16.98	5.40%	5.08%	3.11%	―
PMZ.UN	71 Outperform	C$1.51B	26.26	2.99%	5.69%	22.60%	-48.92%
REI.UN	68 Neutral	$5.16B	20.06	3.61%	6.45%	13.66%	426.86%
Sector *	60 Neutral	$2.80B	10.72	0.24%	8543.13%	6.02%	-17.28%

* Real Estate Sector Average

Performance Comparison

TSE:CHP.UN

Choice Properties Real Estate Investment

14.73

2.39

19.39%

TSE:REI.UN

RioCan Real Estate Investment

17.30

0.65

3.90%

TSE:FCR.UN

First Capital Realty

17.09

2.75

19.18%

TSE:SRU.UN

SmartCentres Real Estate Investment Trust

25.42

4.18

19.68%

TSE:CRT.UN

CT Real Estate Investment

15.19

2.27

17.57%

TSE:PMZ.UN

Primaris Real Estate Investment Trust

14.83

2.12

16.68%

Choice Properties Real Estate Investment Earnings Call Summary

Earnings Call Date:Apr 23, 2025

(Q1-2025)

% Change Since: 2.68%|

Next Earnings Date:Jul 17, 2025

Earnings Call Sentiment Positive

The earnings call presented a strong start to the fiscal year with solid occupancy and NOI growth, successful strategic acquisitions, and robust retail leasing performance. However, there were concerns regarding industrial occupancy decline and potential exposure to tariffs. Overall, the positive highlights outweigh the lowlights.

Q1-2025 Updates

Positive Updates

Strong Occupancy and NOI Growth

The portfolio maintained near full occupancy at 97.7% and achieved strong same-asset cash NOI growth of 2.9%.

Successful Real Estate Transactions

Completed approximately $95 million in total real estate transactions, including $33 million of strategic acquisitions and $62 million of noncore asset dispositions.

Significant Industrial Acquisitions

Completed two industrial transactions totaling $340 million, including a 1.1 million square foot distribution asset with future intensification potential.

Retail Leasing Success

Retail lease renewals were completed at an average rent spread of 11.7%, and new leasing resulted in a positive absorption of 53,000 square feet.

Strong Balance Sheet

Maintained a fully undrawn $1.5 billion corporate facility and $13.1 billion of unencumbered properties, with a debt-to-EBITDA ratio of 7x.

Negative Updates

Industrial Occupancy Decline

Industrial occupancy decreased by 20 basis points to 97.7%, with a 72% retention rate for lease renewals.

Exposures and Tariff Concerns

Discussed potential exposure to tariffs, particularly in the automotive and consumer goods sectors, though considered not material.

Nonrecurring Financial Items

Reported a modest amount of nonrecurring items totaling $2.9 million, affecting financial performance comparisons.

Company Guidance

During the Choice Properties Real Estate Investment Trust First Quarter 2025 Earnings Call, several key metrics and performance indicators were discussed. The company reported near full occupancy at 97.7%, a same-asset cash net operating income (NOI) growth of 2.9%, and a funds from operations (FFO) growth of 1.9%. The call highlighted strategic acquisitions and dispositions totaling approximately $95 million, including a $33 million acquisition of a retail property in Brampton and $62 million in non-core asset sales. Additionally, year-to-date acquisitions were reported at approximately $373 million, including a $182 million industrial distribution asset acquisition. The company also noted an increase in same-asset cash NOI across different asset classes, with industrial seeing a 6.1% increase and mixed-use and residential witnessing a 15.3% rise. The balance sheet remains strong with a debt-to-EBITDA ratio of 7x, bolstered by a fully undrawn $1.5 billion corporate facility. Looking forward, Choice Properties plans to advance its development pipeline, focusing on industrial development at Choice Caledon Business Park and retail intensification, while maintaining a commitment to a strong balance sheet and targeting a debt-to-EBITDA ratio below 7.5x.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.