Choice Properties Real Estate Investment Trust (CHP.UN) Q2 2024 earnings summary

Executive summary

• Achieved high operational and financial performance in Q2 2024, with 98.0% occupancy and strong leasing momentum, particularly in necessity-based retail and industrial assets.

• Net income for Q2 2024 was $513.2 million, down from $535.7 million year-over-year, mainly due to lower fair value adjustments and non-recurring items.

• FFO per unit diluted was $0.255, flat year-over-year, but normalized FFO per unit increased 5.7% after adjusting for non-recurring items.

• Strategic relationship with Loblaw remains a key advantage, with 56.5%–57% of gross rental revenue from Loblaw tenancy.

• Development pipeline advanced, with intensification projects, new ground leases for senior living, and a focus on long-term growth in industrial and mixed-use segments.

Financial highlights

• FFO for Q2 2024 was $184.7 million ($0.255/unit diluted), and AFFO was $176.6 million ($0.244/unit diluted), with normalized FFO per unit up 5.7% year-over-year.

• Same-asset NOI (cash basis) grew 4.4% year-over-year to $241.7 million, with retail up 3.0%, industrial up 11.8%, and mixed-use/residential up 0.8%.

• Rental revenue for Q2 2024 was $335.4 million, up from $330.3 million in Q2 2023.

• IFRS NAV per unit rose to CAD 13.79, up 0.7% from last quarter.

• Distribution declared per unit increased to $0.190 for Q2, up from $0.188 year-over-year.

Outlook and guidance

• Targeting stable occupancy and 2.5%–3.0% year-over-year growth in same-asset NOI (cash basis) for 2024.

• Annual FFO per unit diluted guidance is $1.02–$1.03, reflecting 2.0%–3.0% growth.

• Management expects continued stable cash flows, supported by high-quality tenants and long-term leases.

• Restructuring costs of approximately CAD 7 million in 2024 are expected to be offset by lease surrender income, leaving full-year outlook unchanged.

• Distribution yield stands at 5.9%, with a 1% increase in 2024, marking the second consecutive annual increase.