Choice Properties Real Estate Investment Trust Reports Results for the Nine Months Ended September 30, 2024 and Announces CFO Transition

Choice Properties Real Estate Investment Trust (“Choice Properties” or the “Trust”) (TSX: CHP.UN) today announced its consolidated financial results for the three and nine months ended September 30, 2024. The 2024 Third 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 delivered another quarter of strong operational and financial results, driven by increasing demand from retail tenants for our necessity-based neighbourhood centres and strong leasing spreads in our industrial portfolio,” said Rael Diamond, President and Chief Executive Officer of the Trust.

Choice Properties also announced the upcoming retirement of Chief Financial Officer, Mario Barrafato, effective March 1, 2025. He will be succeeded by Erin Johnston, who is currently Senior Vice President, Finance at the Trust. “Choice Properties has benefited from Mario’s leadership, deep industry knowledge, and relentless focus on delivering strong and consistent financial performance during his tenure. On behalf of everyone at Choice, I am grateful for Mario’s many contributions. I am also pleased to have Erin succeed Mario as CFO, which is a testament to her skill and experience, and our commitment to talent development and growth,” said Mr. Diamond.

2024 Third Quarter Highlights

• Reported a net loss for the quarter of $663.0 million compared to a net income of $435.9 million in the same prior year period. The loss in the current quarter is primarily due to an unfavourable fair value adjustment to the Trust’s Exchangeable Units, as a result of the increase in the Trust’s unit price ⁽²⁾ .
• Reported FFO diluted ⁽¹⁾ per unit of $0.258, an increase of 3.2% compared to the same prior year period.
• Period end occupancy was 97.7%.
  • Retail at 97.6%, industrial at 98.1%, and mixed-use & residential at 94.7%.
• Same-Asset NOI on a cash basis ⁽¹⁾ increased by 3.0% compared to the same prior year period.
  • Retail increased by 1.2%; Retail Same-Asset NOI growth was negatively impacted by certain timing differences between the current and prior year and the later completion of recoverable capital projects in the current year;
  • Industrial increased by 11.7%; and
  • Mixed-use & residential increased by 2.6%.
• Completed $172.1 million of transactions in the quarter:
  • Acquired a 50% interest in two retail properties and one industrial property from Loblaw for $128.7 million on a proportionate share basis ⁽¹⁾ .
  • Acquired a retail property in Wolfville, Nova Scotia for $1.3 million.
  • Disposed of our interest in a retail property in Quebec City, Quebec for proceeds of $33.9 million.
  • Disposed of a retail property in Mississauga, Ontario for proceeds of $8.2 million.
• Repaid the Trust’s $550.0 million Series K senior unsecured debentures upon maturity, primarily funded with proceeds from the issuance of the Trust’s $500.0 million Series U senior unsecured debentures in the second quarter of 2024.
• Completed $125.7 million of financings in the quarter:
  • Executed $82.2 million of mortgages at the Trust’s share in connection with the acquisition of three properties from Loblaw, with an average rate of 4.80% and an average term of 10.1 years.
  • Executed a $43.5 million mortgage at the Trust’s share secured by Element, a purpose-built residential property in Ottawa, Ontario. The mortgage is insured by CMHC and bears interest at 4.02% with a 10.2-year term. Proceeds were used to repay the construction loan secured by the property.
• Transferred $21.6 million of properties under development to income producing status, delivering approximately 41,000 square feet of new commercial GLA on a proportionate share basis ⁽¹⁾ .
• Invested $51.2 million of capital in development projects on a proportionate share basis ⁽¹⁾ .
• Ended the quarter in a strong liquidity position with $1.5 billion of available credit under the Trust’s revolving credit facility, a $12.9 billion pool of unencumbered assets and Adjusted Debt to EBITDAFV ⁽¹⁾ of 7.0x.

Summary of GAAP Basis Financial Results

Quarterly Results

Choice Properties reported a net loss of $663.0 million for the three months ended September 30, 2024 compared to a net income of $435.9 million in the same prior year period. The decrease of $1,098.9 million compared to the prior year was primarily due to changes in certain non-cash adjustments to fair value including:

• a $1,258.6 million unfavourable change in the adjustment to fair value of the Trust’s Exchangeable Units due to the increase in the Trust’s unit price; partially offset by
• a $102.7 million favourable change in the adjustment to fair value of the investment in real estate securities of Allied, driven by the increase in Allied’s unit price in the quarter; and
• a $55.4 million favourable change in the adjustment to fair value of investment properties.

Year-to-date Results

Choice Properties reported a net loss of $7.5 million for the nine months ended September 30, 2024 compared to a net income of $1,242.4 million in the same prior year period. The decrease of $1,249.9 million compared to the prior year was primarily due to changes in certain non-cash adjustments to fair value including:

• a $1,290.3 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 $79.8 million unfavourable change in the adjustment to fair value of investment properties; partially offset by
• a $91.0 million favourable change in the adjustment to fair value of the investment in real estate securities of Allied, driven by the increase in Allied’s unit price in the year, compared to a decrease in the prior year.

The changes described above were partially offset by the 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 ⁽¹⁾ Financial Results

Quarterly and Year-to-date Results

For the three and nine months ended September 30, 2024, Same-Asset NOI, cash basis ⁽¹⁾ increased by $7.0 million and $22.6 million, respectively, 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. In addition, the nine month period included the reversal of a provision in the industrial portfolio following the resolution of a tenant dispute.

FFO ⁽¹⁾ increased by $5.6 million and $17.1 million for the three and nine months ended September 30, 2024, respectively. The increase was primarily due to an increase in net operating income, partially offset by higher general and administrative expenses including certain non-recurring items, an increase in interest expense net of an increase in interest income ⁽³⁾ , and lower lease surrender revenue.

For the nine month period, income recognized in relation to the sale of residential inventory further contributed to the increase in FFO ⁽¹⁾ .

Outlook

We are focused on capital preservation, delivering stable and growing cash flows and net asset value appreciation, all with a long-term focus. 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 continue to experience positive leasing momentum across our portfolio and have successfully completed the majority of our 2024 lease renewals. We also continue to advance our development program, with a focus on commercial developments in the near term, 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 position us well for future success. In 2024, Choice Properties will continue to focus on its core business of essential retail and industrial, our growing residential platform and our robust development pipeline, and is targeting:

• Stable occupancy across the portfolio, resulting in 2.5%-3.0% year-over-year growth in Same-Asset NOI, cash basis;
• Annual FFO per unit diluted in a range of $1.02 to $1.03, reflecting 2.0%-3.0% 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.

The following table reconciles net loss, as determined in accordance with GAAP, to net loss on a proportionate share basis ⁽¹⁾ for the three and nine months ended September 30, 2024:

The following table reconciles net income, as determined in accordance with GAAP, to net income on a proportionate share basis ⁽¹⁾ for the three and nine months ended September 30, 2023:

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:

The following table reconciles Net Operating Income, Cash Basis to Same-Asset Net Operating Income, Cash Basis for the periods ended as indicated:

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

The following table reconciles Funds from Operations to Adjusted Funds from Operations for the periods ended as indicated:

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 Third Quarter Report to Unitholders, which includes the unaudited interim period condensed 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, November 7, 2024 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, 2023 and those described in the Trust’s Annual Information Form for the year ended December 31, 2023.

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