Places
People
Thrive
™Places people Thrive™
2024 Annual Report
Who We Are
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.
Our Purpose-Driven Strategy
Our financial goals are centered on capital preservation, generating stable and growing cash flows, and
delivering appreciation in net asset value and distributions over time. We have a proven strategy
and an unmatched foundation that supports these goals. We are focused on:
Maintaining our
Market-Leading
Portfolio
A high-quality national footprint
within local markets, underpinned
by a strategic partnership with
Loblawi, Canada’s largest retailer.
Sustaining
Operational
Excellence
A track record of operational
excellence and ESG leadership
delivered by an experienced,
engaged, and diverse team.
Delivering on
our Development
Pipeline
Projects that diversify our tenant
base while delivering steady
growth for the near and long term
– backed by our industry-leading
balance sheet.
(1) See Section 15, “Non-GAAP Financial Measures”, of this MD&A
(2) To be read in conjunction with the “Forward-Looking Statements” included in the Notes for Readers located on page 21 of this MD&A
i Loblaw Companies Limited (“Loblaw”)
In This Report
1
Canada’s Premier REIT
2
3 Strategic Asset Classes
3
2024 Key Highlights
4
Message from the
President & CEO
8
Development Pipeline
Positioned for Growth
Bringing Our Purpose to Life
9
Our tenants
12
Our sustainability progress
and climate action
14
Our colleagues
15
Our community engagement
and social impact
16
Key Performance Indicators
17
Fourth Quarter Financial Highlights
18
Year End Financial Highlights
20 Management’s Discussion
and Analysis
100 Financial Statements
159 Shareholder Information and How to
Contact Us
Canada’s Premier REIT
Leading where it matters most
Largest in Canadai
700+
High-quality
properties
67.2M
sq. ft.
Across 3 strategic
asset classes
$17.1B
Fair valueii
Unmatched Necessity-
Based Portfolio
83%
Necessity-based
retail portfolioiii
38M
sq. ft.
Grocery-anchored
retail portfolio
Strategic Relationship with
Canada’s Largest Retailer
57%
Loblaw tenancyiv
Relationship with
Loblaw provides a
unique competitive
advantage
One of Canada’s Largest
Urban Landowners
18M+
sq. ft.
Development
pipeline
70+
Sites with future
development
potential
Industry Leading
Balance Sheet
BBB
(High)
DBRS Rating
BBB+
S&P Rating
7.0x
Adjusted Debt to
EBITDAFV(1)
ESG Leadership
Net
Zero
By 2050
One of Canada’s first
entities with targets
validated by SBTi
50%+ Women executives
(VP+)
i Based on total portfolio GLA, number of properties and market capitalization
ii Fair value of investment properties is shown on a proportionate share basis(1)
iii Calculated as a % of the retail segment’s annualized gross rental revenue on a proportionate share basis(1) as at December 31, 2024 (Section 6)
iv Calculated as a % of total annualized gross rental revenue on a proportionate share basis(1) as at December 31, 2024
Social Impact in Action
Uniti at Mount Pleasant Village
10–40 Lagerfeld Drive, Brampton, Ontario
Development type: Mixed-Use & Residential
Rental units: 302
Ownership: 50%
Completion: Q1 2024
At Uniti, Choice Properties and Daniels Gateway
Communities bring social impact to life. With
affordable, accessible housing certified by the
Rick Hansen Foundation, socially procured art,
and programs like Artist in Residence, Uniti
fosters local economic growth and inclusion,
showcasing the transformative power of
community-focused development.
2024 Annual Report • 1
2024 Annual Report • 1
3 Strategic Asset Classes
High-quality national footprint where Canadians live and work
Our unparalleled portfolio represents a combination of necessity-based, well-located retail properties supported by strong
anchor tenants; high-quality and high demand “generic” industrial assets in key distribution markets; and transit-oriented
mixed-use and residential rental assets concentrated in the most attractive Canadian markets.
Properties
Square
Feet
Fair
Valuei
Retail
Predominately necessity-
based grocery anchored
retail portfolio
570
44.5m
$11.3b
Industrial
Flexible well-located
industrial portfolio
124
20.9m
$4.1b
Mixed-Use &
Residential
Transit oriented mixed-use
and residential portfolio
11
1.8mii
$0.9b
Properties
Under
Development
44
Projects
18.1M
Square Feet
$0.8B
Fair Valuei
Percentage of NOI by Provinceiii
Retail
Industrial
Mixed-Use & Residential
10%
19%
2%
2%
46%
12%
9%
British
Columbia
Alberta
Saskatchewan
Manitoba
Ontario
Quebec
Atlantic
(NFLD/NB/
PEI/NS)
i Fair value of investment properties is shown on a proportionate share basis(1)
ii 1.8 million sq. ft. of GLA includes 0.7 million sq. ft. associated with Choice Properties’ 923 residential units
iii Calculated as a % of total NOI on a proportionate share(1) cash basis as at December 31, 2024
2 • 2024 Annual Report
2024 Key Highlights
A year of momentum
2.9%
FFO(1) growth per unit
3.2%
Growth in Same-Asset
NOI, Cash Basis(1)
$14.07
NAV(1) per unit
97.6%
Occupancy
20.2%
Leasing spreads on
renewals
7.0x
Adjusted Debt
to EBITDAFV(1)
$427M
Total transactionsi
$299M
Total development
transfersi
$931M
Total gross financingi
Named as a GTA
Top Employer
2025
Exceeded LEED/
BOMA BEST
certification
target
Redway Dog Run: Building
Community Connections
Choice Properties opened
the Redway Dog Run
in Leaside, a Toronto
neighborhood known for
its high dog ownership. We
transformed an underused
area at our 11 Redway Road
retail property into a public
amenity for local residents
adjacent to the grocery store
for shoppers to enjoy.
i On a proportionate share basis(1)
2024 Annual Report • 3
Message from the President & CEO
Delivering growth and stability
We achieved another year
of strong operational and
financial results, delivering
on our financial outlook and
strategic priorities.
Rael Diamond
President and CEO, Choice Properties
“
Fellow Unitholders,
In 2024, we achieved another year of strong
operational and financial results, delivering on our
strategic framework while further strengthening our
foundation. Despite ongoing market volatility, our
market leading portfolio continued to demonstrate
its resilience. Our disciplined approach to financial
management enabled us to focus on our day-to-day
business and long-term strategy.
Our high-quality portfolio delivered stable and
growing cash flows. Occupancy remained high at
97.6%, and we achieved strong leasing spreads of
20.2% and Same-Asset, Cash NOI growth of 3.2%.
Funds from Operations grew 2.9% year-over-year to
$1.032/unit. We ended 2024 with a stronger balance
sheet and liquidity position. Our Adjusted Debt to
EBITDAFV ratio at the end of the year was 7.0 times,
and we had $1.5 billion available on our credit facility
and approximately $13.0 billion of unencumbered
assets. These metrics demonstrate the strength and
resilience of our portfolio and platform. As a result,
we were able to increase our Unitholder distribution
for the third consecutive year.
Long-Term Focus: A Cornerstone of
Our Strategy
At Choice Properties, we believe the greatest
value is derived from consistency over time. This
philosophy drives every decision we make, from
managing our portfolio to making investments
focused on delivering long-term value for
Unitholders. Our balance sheet provides us the
financial strength and flexibility to navigate
challenges, seize opportunities, and support our
development pipeline. Our strategy remains focused
on achieving strong, risk-adjusted returns. This
disciplined approach ensures we continue to create
sustainable, long-term value.
Portfolio Strength and Resilience Across
Three Asset Classes
We are proud of our unique position to operate
and invest across three asset classes – retail,
industrial, and mixed-use & residential. Each offers
distinct opportunities to create value and deliver
4 • 2024 Annual Report
reliable and consistent cash flows. In addition, our
strategic and collaborative relationship with Loblaw,
Canada’s largest retailer, provides stability and
unique value creation opportunities.
20.2%
Leasing spreads on renewals
achieved in 2024
921K sq. ft.
Delivered Loblaw distribution
centre at Choice Caledon
Business Park
142 condos & 302 rental units
Completed at
Mount Pleasant Village
Leasing activity remained strong across all asset
classes in 2024, underpinned by the quality of our
properties and tenants:
• Retail: Our retail portfolio continues to be one
of the largest and most resilient in Canada,
providing steady cash flow growth. Our
grocery-anchored necessity-based retail
assets performed well. Our national footprint of
neighborhood centres delivered rental growth
rates comparable to those in core urban areas,
achieving overall leasing spreads of 8.6% in
2024. Looking forward, leasing demand remains
robust, with many tenants seeking to expand
their footprints, especially in non-urban markets.
Market demand for high quality real estate is
driven by where Canadians live and work, and
we’re unlocking untapped potential and creating
value for our tenants and Unitholders through our
retail intensifications of existing sites, delivering
over 180,000 square feet in 2024.
• Industrial: Our well-located “generic” industrial
portfolio continued to perform well in 2024. While
industrial rental rate growth moderated in 2024
after several years of robust growth, demand
for high-quality industrial assets remains strong
and supply in key markets is limited. Across our
industrial portfolio, we are benefitting from rental
growth on renewals as our low in-place rents
adjust to market rates, achieving leasing spreads
of 85.6% in 2024. In addition, our development
pipeline positions us to deliver prime logistics
space at competitive rates to help us attain
cash flow growth. A key highlight this year was
the transfer of the Loblaw distribution centre at
Choice Caledon Business Park into our income
producing portfolio. We commenced construction
on the second phase at this site and servicing for
the entire site is ongoing.
• Mixed-Use & Residential: Throughout the
year, we grew our mixed-use and residential
portfolio, delivering our Mount Pleasant Village
development consisting of 302 purpose-built
rental units and 142 condo units. The long-term
fundamentals for rental residential real estate
remain positive, driven by limited housing supply
and strong demand from a growing Canadian
population. Our focus in this asset class is to
position it for long term risk-adjusted growth. We
achieved zoning approval at our 985 Woodbine
Ave. residential development in 2024 and
continued to advance other projects, readying
them for execution when the timing is right.
Stepping back, we made significant advancements
in 2024, completing a total of 14 projects, and
delivering 1.2 million square feet of completed
developments across our three strategic
asset classes.
2024 Development
Completions
Number of
Projects
Transferred
GLA (sq. ft.)
Expected
Total Costs
Expected
Stabilized Yield
Retaili
12
181k
$ 49.0m
7.6%
Industrialii
1
921k
120.8m
8.0%
Mixed-Use & Residential
1
101k
66.7m
4.7%
Total
14
1,203k
$236.5m
7.0%
i Includes 0.1 million sq. ft. that represents the building area on properties where the Trust has leased the underlying sites to the tenants through ground leases
ii Includes 0.9 million sq. ft. that represents the building area on properties where the Trust has leased the underlying sites to the tenants through ground leases
2024 Annual Report • 5
Message from the President & CEO
Optimizing the Portfolio and Driving
Future Value
Throughout 2024, we continued to enhance the
quality of our portfolio through the careful execution
of our capital recycling program.
• Strategic Acquisitions: We completed
$260.1 million of acquisitions, which included
seven high-quality grocery-anchored retail assets
and two industrial properties. Of note are the
grocery stores located at Bathurst St. and St.
Clair Ave. in Toronto and the lower floors at the
iconic Maple Leaf Gardens in Toronto.
$426.5M
Capital recycling activity
• Targeted Dispositions: We successfully
completed the sale of 11 properties, generating
$166.4 million in proceeds as we further optimized
our portfolio. This included a power centre in
Quebec and four jointly owned assets in Alberta
and Saskatchewan.
As we move forward, Choice Properties is in an
enviable position to seize market opportunities
when they arise. In the near term, we are
prioritizing capital allocation in our commercial
portfolio, particularly retail and industrial, where
demand remains robust and returns are strong. At
the same time, we are advancing our residential
plans with a longer-term view, ensuring we remain
well-positioned to meet future demand. Our
development pipeline continues to benefit from
our low land costs, allowing us to deliver high-
quality projects while preserving a healthy margin.
Turning Sustainability Commitments
into Action
This year, we made significant strides in
deepening our ESG commitments across all
aspects of our business. We introduced a social
impact framework to promote local economic
development and social cohesion, leveraging our
assets and partnerships to make a meaningful
impact at the neighborhood level.
We expanded our focus on placemaking, creating
vibrant, connected spaces that enhance the
communities in which we serve. During the year,
we brought this vision to life by hosting numerous
community events across our properties including
the Bradford Patio activation. Moving beyond
aspirations, our teams developed actionable,
department-specific plans to achieve our 2030
environmental targets.
Key achievements included developing the first
retail asset in Canada to receive the Canada Green
Building Council’s Zero Carbon Building Design
certification. Furthermore, we achieved a rating
of B in the CDP Climate Change Questionnaire
for the third consecutive year. These milestones
demonstrate our commitment to driving sustainable,
long-term value while supporting the communities
where we live and work.
A Culture of Collaboration Driving
Operational Excellence
I am especially proud of the deep culture of
collaboration across our organization. Our diverse
and talented team continues to deliver best-in-
class property management, leasing, and tenant
engagement. In 2024, we saw even greater synergy
between teams, enhancing decision-making,
streamlining execution, and driving stronger
outcomes for our business and stakeholders.
6 • 2024 Annual Report
Bradford Patio
500 Holland Street West
Bradford, Ontario
" Bradford Patio has quickly become a cherished space for ou
r community–a place where residents and visitors can gather
, connect and play. Choice Properties’ commitment to creatin
g welcoming, vibrant public spaces is a testament to their dedicatio
n to enhancing our town’s livability and sense of community.
Mayor James Leduc
Town of Bradford West Gwillimbury
“
A Clear Path Forward
As we look ahead, although the macroeconomic
environment remains unpredictable, we are
confident in our ability to adapt and navigate
through the uncertainty to capitalize on the
opportunities that may present. Our high-quality
portfolio and platform provide reliable returns,
supported by a strong balance sheet and
conservative financial management. With a proven
strategy, a clear roadmap for growth, and an
experienced team to deliver our goals, we are well
positioned to sustain strong risk-adjusted returns for
our Unitholders.
I extend my gratitude to our employees, tenants,
partners, and Unitholders for your continued trust
and support.
Rael L. Diamond
President and CEO, Choice Properties
2024 Annual Report • 7
Development Pipeline Positioned for Growth
Driving near, medium and long-term value
Square Feeti
In Planning
Zoned & Ready
Active
Total
Total
8.5M
8.5M
1.1M
▸
18.1M
Retail
—
0.2M
0.3M
▸
0.5M
Industrial
—
4.2M
0.8M
▸
5.0M
Mixed-Use &
Residential
8.5M
4.1M
—
▸
12.6M
i At the Trust’s share
Redefining Senior Living
The Wellings of Bradford
500 Holland Street West
Bradford, Ontario
Property GLA: 93,861 sq. ft.
Intensification GLA: 24,000 sq. ft.
Ownership: 100%
Completion: Q2 2024
Choice Properties, with Nautical Lands Group
and Wellings Communities, proudly introduces
The Wellings of Bradford, a vibrant senior living
community adjacent to our retail property in
Bradford, Ontario. Designed for active adults
55+, it will offer independence and engaging
spaces like a fitness room, pub, and patio,
enriching residents’ lives through comfort and
connection, combined with the convenience
of necessity-based shopping next door.
8 • 2024 Annual Report
Bringing Our Purpose to Life
Our tenants
At Choice Properties, we actively listen and engage with our tenants, turning feedback into action. Whether it’s refining
store formats, enhancing operations, or creating welcoming environments, we’re committed to building relationships that
foster long-term growth and stronger connections. Our leadership in operational excellence, sustainability, and innovation
drive us to create spaces where businesses can grow, connect, and thrive.
Retail Excellence
in Woodbridge
Fortinos
8585 Highway 27
Woodbridge, Ontario
Property GLA: 106,096 sq. ft.
Intensification GLA: 17,000 sq. ft.
Choice Properties continues to elevate retail experiences
with its shopping centre in Woodbridge, Ontario.
Anchored by a 77,000-square-foot Fortinos, the property
will soon welcome a new Shoppers Drug Mart, further
strengthening its appeal. Planned façade upgrades and
an enhanced tenant mix will strengthen the centre’s
appearance, drive foot traffic, and support long-term
success for tenants. By sustaining operational excellence
and strategically curating retailers, Choice Properties is
ensuring this shopping hub is a key destination.
83%
Focus on necessity-based retail 85%
Retail located at key intersections
2024 Annual Report • 9
Creating High-Quality and Sustainable
Places to Support Tenant Success
Choice Properties’ strategic partnership with Loblaw, Canada’s
largest retailer, exemplifies our approach to creating high-quality
spaces that benefit both businesses and communities. Together
we identify the best locations, store formats, and complementary
tenant mixes that will enhance how our communities come together
to live, work and play. Our shared commitment to sustainability
strengthens this collaboration, enhancing how we develop, build,
and operate, while using our assets to spur local economic growth
and stronger connections.
" Our strategic relationship wit
h Choice Properties is pivotal for us a
t Loblaw. Our partnership–founde
d on collaboration, transparency an
d sustainability–allows us to plan fo
r the long term together. Having
a community-minded landlord an
d developer allows us to meet ou
r customers’ ever-evolving needs an
d grow our store network responsibly.
Sharla Paraskevopoulos
Senior Vice President, Real Estate,
Loblaw Companies Limited
“
10 • 2024 Annual Report
Bringing Our Purpose to Life
High quality tenants provide cash flow stability
Long-Term Leases
Weighted Average
Lease Term
Loblaw
6.6
years
Ancillary
5.3
years
Total
6.1
years
Choice’s Top 5 Tenants
% Revenuei
1
Loblaw
57.4%
2
Canadian Tire
1.7%
3
TJX Companies
1.1%
4
Dollarama Inc.
1.1%
5
Pet Valu
1.0%
Strong Necessity-Based Retail Anchor Tenants
+65%
of retail revenue from
Loblaw bannersii
Key Tenants:
Loblaws
Shoppers Drug Mart
Real Canadian Superstore
No Frills
Maxi
Fortinos
T&T
▸
+69%
of retail revenue from
grocery and pharmacyii
Key Tenants:
Sobeys
Metro
Save on Foods
Nations Fresh Foods
Costco
Walmart
Rexall
▸
+83%
of retail revenue from
necessity-based retailii
Key Tenants:
Dollarama
Canadian Tire
LCBO
TD
Restaurant Brands International
Pet Valu
Scotiabank
CIBC
Resilient Industrial Tenant Base
Top 10 Industrial Tenantsii
1
Loblaw
2
Amazon
3
Canada Cartage
4
Wonderbrands
5
Pet Valu
6
NFI IPD
7
Uline Canada Corporation
8
Alberta Gaming, Liquor and Cannabis
9
Kimberly-Clark
10 Canadian Tire
33%
Loblaw gross
industrial
revenueii
i Calculated on total annualized gross rental revenue of all segments on a proportionate share basis(1) as at December 31, 2024
ii Calculated on segment’s annualized gross rental revenue on a proportionate share basis(1) as at December 31, 2024 (Section 6)
2024 Annual Report • 11
Bringing Our Purpose to Life
Our sustainability progress and climate action
At Choice Properties, we’ve set ambitious net-zero targets approved by the Science Based Targets initiative, aligning
with the Paris Agreement. And our 2024 Social Impact Framework is fostering stronger communities, using our assets
and partnerships to drive local economic growth and connection.
1st CaGBCi Zero
Carbon Building
Design
Certification awarded to a
retail property in Canada
Maintained
B rating
for third year from CDPii Climate
Change Questionnaire
3-year ESG Roadmap
To align and empower
every department
Achieved our target of
certifying 65%
of GLAiii
under LEED or BOMA BEST
i Canada Green Building Council
ii Climate Disclosure Project
iii Over 46 million sq. ft. of the portfolio at
100% share
Industrial Excellence
and Sustainability
Choice Industrial Centre
18899 24th Avenue
Surrey, British Columbia
Asset class type: Industrial
Property GLA: 353,476 sq. ft.
Choice Industrial Centre is our
first industrial development in
Campbell Heights, offering a first-
class industrial distribution facility
featuring unprecedented 40’ clear
ceiling height in the hub of the Fraser
Valley. The development achieved
LEED Gold Certification, which
included sustainability measures to
reduce energy demand, greenhouse
gas emissions, and demand for
outdoor and indoor water use. The
building design includes improved
building envelope and a packaged
heat pump system with back-up gas
instead of a typical gas-fired make
up air unit.
-
Canada’s Most Responsible Companies 2025
Choice Properties was named one of Canada’s Most Responsible Companies
2025 by Newsweek and Statista, ranking #1 in our industry and placing in the top
10% overall. This inaugural recognition celebrates our commitment to climate
action, social welfare, and responsible governance, with scores drawn from key
performance indicators and consumer surveys. Achieving an impressive 78.4
overall score, this honour reflects the dedication of our entire team, whose integrity
and hard work continue to shape a brighter, more sustainable future.
12 • 2024 Annual Report
Green Lease Partnership with RBC
Erin Ridge Shopping Centrei
925 St. Albert Trail #100
St. Albert, Alberta
Choice Properties and RBC joined forces on an initiative
focused on energy efficiency and sustainability in RBC’s leased
spaces through innovative lease terms. By working together
to track and optimize energy use, the partnership aims to
generate actionable insights for reducing environmental
impact. Additionally, a focus on transitioning heating systems
to electric will help reduce reliance on fossil fuels.
I am thrilled by our recent collaboration
with Choice Properties which aims to
reduce operational emissions through
electrification of our leased spaces.
This initiative underscores our mutual
dedication and long-term commitment to a
successful landlord-tenant relationship.
Jon Douglas
Director, Global Climate & Sustainability
RBC Bank
“
i Erin Ridge Shopping Centre is not one of the RBC locations selected for decarbonization
2024 Annual Report • 13
Bringing Our Purpose to Life
Our colleagues
Our dynamic culture inspires creativity, collaboration, and strategic thinking. Guided by our shared values of care,
ownership, respect, and excellence, we cultivate meaningful experiences for our colleagues, customers and communities.
We are proud to foster an inclusive environment where diverse talents, perspectives, and experiences come together to
spark innovation. Our commitment to diversity, equity, and inclusion supports operational excellence and creates lasting
value for our stakeholders. Through continuous learning and growth opportunities, and a supportive culture, we are
dedicated to helping our colleagues flourish.
" Working at Choice Propertie
s continues to be an incredibl
y rewarding experience, where I’v
e felt empowered as a woman, wit
h limitless opportunities for caree
r development. Over the past si
x years, I’ve witnessed the evolutio
n of our commitment to diversity
, equity, and inclusion, communit
y engagement, and sustainabilit
y—creating an inclusive cultur
e that fosters both personal an
d professional growth.
Allison Miller
Senior Manager, Asset Management
“
84%
Employee engagement
survey rating
+4x
increase
To mental health coverage up
to $3,500 per year
$30K
Granted in tuition subsidies
in 2024
>750
Hours of DEI & cultural
education
DEI
Maintained or exceeded DEI
targets for representation of
women and visible minorities
14 • 2024 Annual Report
Bringing Our Purpose to Life
Our community engagement and social impact
Through our community involvement program, Choice Cares, we empower colleagues to raise funds, volunteer, and support
local charitable organizations. This colleague-led approach fosters a culture of giving and delivers meaningful impact
in our communities. Equally important is our commitment to leveraging our assets, business partnerships, and nonprofit
collaborations to promote local economic development and social cohesion at the neighborhood level. Aligning our social
impact efforts with our core business allows us to strengthen communities and help them prosper – one initiative at a time.
Scarborough Proud: Building
Community Connections
In summer 2024, we launched
Scarborough Proud at Golden Mile
Plaza, transforming a parking lot
into a vibrant gathering space. Over
six weeks, we partnered with local
charities and businesses to offer free
programming – dance classes, games,
art displays, and open mic nights –
celebrating Scarborough’s diversity
and fostering connections.
Dominoes: Fostering Community
Bonds Through Art
In fall 2024, Choice Properties
partnered with The Bentway to bring
Dominoes, a public art project by
Station House Opera, to Toronto
for its North American debut. Over
8,000 life-sized dominoes moved
through downtown neighborhoods,
including our West Block property,
uniting residents and showcasing art’s
power to connect communities. Our
colleagues volunteered on the ground,
deepening community engagement.
4
Programs in 2024
$850K
Donated to Canadian charities
in 2024
>1,100
Volunteer paid hours in 2024
Advancing Accessibility Across Canada
Choice Properties is setting a high standard
for accessibility, earning Rick Hansen
Foundation Accessibility Certification™
“Gold” for Mount Pleasant Village in
Brampton. Collaborating with experts and
advocacy groups, we’ve enhanced usability
with upgrades like better signage and
accessible parking. Through initiatives
like the Accelerating Accessibility
Coalition, we’re fostering more inclusive
communities nationwide.
2024 Annual Report • 15
Key Performance Indicators
Financial and Operating Performance
Financial Performance
Q4 2024
Q4 2023
Change
2024
2023
Change
FFO (1)
$0.260
/unit
$0.255
/unit
+2.0%
$1.032
/unit
$1.003
/unit
+2.9%
AFFO (1)
$0.151
/unit
$0.176
/unit
-14.2%
$0.864
/unit
$0.827
/unit
+4.5%
Same-Asset
NOI, Cash Basis
$242.8M
$236.1M
+2.8%
$958.0M
$928.6M
+3.2%
Occupancy
97.6%
98.0%
-0.4%
Visit Section 6, “Leasing Activity”, Section 7.2, “Net Operating Income Summary”, and Section 7.3, “Other Key Performance Indicators”, of our MD&A for
more context and details on the trends and significant events affecting the financial condition and results of our operations
2024 Debt Metrics
Adjusted Debt (1)
$7.3B
Adjusted Debt to EBITDAFV(1)
7.0x
Weighted Avg. Term to Maturity i
6.1 years
Weighted Avg. Interest Ratei
4.18%
Unencumbered Assets
$13.0B
Adjusted Debt to Total Assets(1)
40.0%
i Weighted average reflects senior unsecured debentures and
fixed-rate secured debt
The strength of our balance
sheet and our disciplined
approach to financial
management provides the
structure needed to execute
on our strategy and positions
us well for future success.
Mario Barrafato, CFO, Choice Properties
“
16 • 2024 Annual Report
Fourth Quarter
Financial Highlightsi
During the three months ended December 31, 2024
Operating
• Reported net income for the quarter of $791.9 million, compared to a net loss of $445.7 million in the same prior
year period. Income in the current quarter is primarily due to a favourable fair value adjustment to the Trust’s Exchangeable
Unitsii compared with an unfavourable adjustement in the same prior year period.
• Reported FFO(1) per unit diluted for the quarter of $0.260, increased by 2.0% compared to $0.255 in the same prior
year period.
• AFFO(1) per unit diluted for the quarter was $0.151, compared to $0.176 in the same prior year period. The decrease was primarily
due to the timing of maintenance capital spend, which occurred later in 2024 than in 2023.
• Same-Asset NOI on a cash basis(1) increased by 2.8% over the same prior year period.
• Retail and Industrial Same-Asset NOI on a cash basis(1) increased by 2.3% and 6.4%, respectively. Mixed-Use & Residential
Same-Asset NOI on a cash basis(1) decreased by 1.9% primarily due to higher bad debt expense, partially offset by higher
revenue from higher occupancy and rental rates at residential properties.
• Period end occupancy remained strong at 97.6%, with Retail at 97.6%, Industrial at 97.9%, and Mixed-Use & Residential
at 94.1%iii.
• Net fair value gain on investment properties in the quarter was $13.6 million on a proportionate share basis(1), reflecting
property-specific updates to market leasing assumptions and changes in contractual rents, as well as adjustments to discount
and capitalization rates primarily in the retail and industrial portfolios. In addition, the Trust recognized a fair value loss at a
development site.
Financing
• Up-financed two maturing mortgages by $21.3 million to $88.3 million at share, bearing average interest at 4.71% and an
average term of 9.6 years.
• Assumed a $19.0 million mortgage from seller in connection with the acquisition of a retail property, bearing interest at 3.45%
and a term of 2.0 years.
• Executed an $8.1 million mortgage at share, in connection with the acquisition of one industrial property from Loblaw, bearing
interest at 4.80% and a term of 9.8 years.
• Subsequent to year end, the Trust:
• Announced an increase of distributions to $0.77 per unit per annum from the previous rate of $0.76 per unit per annum (an
increase of 1.3%). The increase will be effective for Unitholders of record on March 31, 2025.
• Repaid the $350.0 million Series J senior unsecured debentures upon maturity, bearing interest at 3.55%.
• Issued the $300.0 million Series V senior unsecured debentures, bearing interest at 4.29% with a 5-year term.
• Completed a $136.0 million mortgage financing at share secured by the Loblaw distribution centre at Choice Caledon
Business Park which was completed in the fourth quarter of 2024, bearing interest at 4.88% with a 25-year term. Proceeds
were used to repay $26.2 million of the construction loan secured by the property.
Investing
• The Trust completed $79.2 million of transactions in the quarter:
• Acquired a retail property in Ottawa, Ontario for $32.3 million.
• Acquired a 50% interest in a distribution centre near Halifax, Nova Scotia from Loblaw for $14.6 million at share in partnership
with an affiliate of Crestpoint Real Estate Investments Ltd. (“Crestpoint”). Concurrently, the property was leased back to Loblaw.
• Acquired two parcels of land in Alberta to be developed into retail properties for $11.7 million.
• Disposed of three non-core retail properties for aggregate proceeds of $20.6 million.
• The Trust invested $55.5 million in its development program during the quarter on a proportionate share basis(1).
• The Trust transferred $194.9 million of properties under development to income producing, delivering approximately 991,000
square feetiv of new commercial GLA on a proportionate share basis(1), including the Loblaw distribution centre
at Choice Caledon Business Park located in Caledon, Ontario.
i Refer to the Notes for Readers located on page 21 of this MD&A for definitions of capitalized terms
ii Exchangeable Units are required to be classified as financial liabilities at fair value through profit and loss under GAAP. They are recorded at their fair value
based on the market trading price of the Trust Units, which results in a negative impact to the financial results when the Trust’s unit price rises and a positive
impact when the Trust unit price declines
iii Occupancy represents retail and office portion of mixed-use properties; residential units are excluded
iv Includes 965,000 sq. ft. that represents the building area on properties where the Trust has leased the underlying sites to the tenants through ground leases
2024 Annual Report • 17
Year End
Financial Highlightsi
During the year ended December 31, 2024
Operating
• Reported net income of $784.4 million, compared to a net income of $796.7 million in the prior yearii.
• Reported FFO(1) per unit diluted for the year of $1.032, increased by 2.9% compared to $1.003 in the prior year.
• AFFO(1) per unit diluted for the year was $0.864, compared to $0.827 in the prior year. AFFO payout ratio was 87.8%
compared to 90.5% in the prior year.
• Same-Asset NOI on a cash basis(1) increased by 3.2% over the prior year.
• Retail increased by 2.2%;
• Industrial increased by 8.2%; and
• Mixed-Use & Residential was flat.
• During the year, the Trust and Loblaw renewed 46 of 48 leases expiring in 2025, comprising 3.08 million of 3.20 million
square feet, at a weighted average extension term of 5.0 years and an average leasing spread of 8.4%.
Financing
• Issued $500.0 million of the Series U senior unsecured debentures, bearing interest at 5.03% and a 6.8-year term.
• Executed $400.0 million of mortgage financings, on a proportionate share basis(1), bearing average interest of 4.95%
and an average term of 13.7 years, with various banks and life insurance companies.
• Repaid upon maturity the $550.0 million Series K senior unsecured debentures, bearing interest at 3.56%, and the
$200.0 million Series D senior unsecured debentures, bearing interest at 4.29%.
• Ended the year with Adjusted Debt to EBITDAFV(1) of 7.0x, Adjusted Debt to Total Assets(1) at 40.0%, and Interest
Coverage ratio(1) of 3.3x.
• Ended the year in a strong liquidity position with $1.5 billion of available credit and a $13.0 billion pool of unencumbered
assets.
Investing
• The Trust completed $426.5 million of transaction in the year:
• Acquisitions of $260.1 million on a proportionate share basis(1) of seven high-quality grocery-anchored retail assets and
two industrial properties; and
• Dispositions of $166.4 million of 11 non-core assets.
• The Trust invested $170.5 million in its development program during the year on a proportionate share basis(1).
• The Trust transfered $299.4 million of properties under development to income producing, delivering approximately
1,203,000 square feetiii of new commercial GLA on a proportionate share basis(1), including 921,000 square feet of new
generation industrial logistics space with the Loblaw distribution centre at Choice Caledon Business Park in Caledon,
Ontario, and 151 residential rental units (at the Trust’s share) at Mount Pleasant Village in Brampton, Ontario.
i Refer to the Notes for Readers located on page 21 of this MD&A for definitions of capitalized terms
ii Exchangeable Units are required to be classified as financial liabilities at fair value through profit and loss under GAAP. They are recorded at their fair value
based on the market trading price of the Trust Units, which results in a negative impact to the financial results when the Trust’s unit price rises and a positive
impact when the Trust unit price declines
iii Includes 995,000 sq. ft. that represents the building area on properties where the Trust has leased the underlying sites to the tenants through ground leases
18 • 2024 Annual Report
A Hub of
Innovation
and
Opportunity
Choice Caledon
Business Park
5762 Mayfield Road
Caledon, Ontario
Development type:
Industrial
Property GLA:
6,000,000 sq. ft.
Ownership: 85%
Located at 5762 Mayfield Road in Caledon, Ontario,
Choice Caledon Business Park is one of our landmark
industrial developments, featuring a total of
6,000,000 sq. ft. of multi-use industrial space. This
forward-thinking business hub offers seamless access
to major highways and multimodal transport.
In 2024, Choice Properties, with its partner Rice Group,
proudly broke ground on a state-of-the-art 624,000 sq. ft.
distribution and fulfillment facility for National Logistics
Services, a leading Canadian logistics provider for
global lifestyle brands. The facility integrates cutting-
edge robotics and energy-efficient systems, reflecting
a commitment to operational excellence and
environmental responsibility.
The new fulfillment center is set to create over 300
jobs, bolstering the local economy and fostering
meaningful opportunities for Caledon area residents.
This partnership underscores Choice Properties’
commitment to strengthening communities.
" Our new fulfillment centr
e represents more tha
n just bricks and mortar
. It is a testament to ou
r commitment to innovation
. Choice Caledon Busines
s Park provides us wit
h a space and a locatio
n that will further enhanc
e our ability to serve ou
r customers so that we ma
y continue to be a leadin
g retail logistics provider
in Canada.
Mark Dienesch
President
National Logistics Services
“
2024 Annual Report • 19
Management’s Discussion and Analysis
Table of Contents
Financial Review
21
Notes for Readers
22
Key Performance Indicators
23
Balance Sheet
25
Investment Properties
43
Liquidity and Capital Resources
53
Results of Operations
58
Leasing Activity
65
Results of Operations – Segment Information
72
Quarterly Results of Operations
73
Related Party Transactions
75
Critical Accounting Estimates and Judgments
77
Internal Control over Financial Reporting
78
Enterprise Risks and Risk Management
86
Environmental, Social and Governance (“ESG”)
87
Outlook
88
Non-GAAP Financial Measures
100
Financial Statements
20 • 2024 Annual Report
Notes for Readers
Please refer to the Choice Properties Real
Estate Investment Trust (“Choice Properties”
or the “Trust”) audited consolidated financial
statements for the year ended December 31,
2024 and accompanying notes (“2024 Financial
Statements”) when reading this Management’s
Discussion and Analysis (“MD&A”). In addition,
this MD&A should be read in conjunction with
the Trust’s “Forward-Looking Statements” as
listed below. Choice Properties’ 2024 Financial
Statements have been prepared in accordance
with International Financial Reporting Standards
as issued by the International Accounting
Standards Board (“IFRS Accounting Standards” or
“GAAP”) and were authorized for issuance by the
Board of Trustees (“Board”).
In addition to using performance measures
determined in accordance with IFRS Accounting
Standards, Choice Properties’ management
also measures performance using certain
additional non-GAAP measures and provides
these measures in this MD&A so that investors
may do the same. Such measures do not have any
standardized definitions prescribed under IFRS
and are, therefore, unlikely to be comparable to
similar measures presented by other real estate
investment trusts or enterprises. Please refer to
Section 15, “Non-GAAP Financial Measures”, for a
list of defined non-GAAP financial measures and
reconciliations thereof.
This Annual Report, including this MD&A,
contains forward-looking statements about
Choice Properties’ objectives, outlook, plans,
goals, aspirations, strategies, financial condition,
results of operations, cash flows, performance,
prospects, opportunities, and legal and
regulatory matters. Specific statements with
respect to anticipated future results and events
can be found in various sections of this MD&A,
including but not limited to Section 3, “Investment
Properties”, Section 5, “Results of Operations”,
Section 6, “Leasing Activity”, Section 7, “Results of
Operations – Segment Information”, Section 13,
“Environmental, Social and Governance (“ESG”)”,
and Section 14, “Outlook”. Forward-looking
statements are typically identified by words such
as “expect”, “anticipate”, “believe”, “foresee”,
“could”, “estimate”, “goal”, “intend”, “plan”, “seek”,
“strive”, “will”, “may”, “should”, “aspire”, “pledge”,
“aim”, and similar expressions, as they relate to
Choice Properties and its management.
Forward-looking statements reflect Choice
Properties’ current estimates, beliefs and
assumptions, which are based on management’s
perception of historic trends, current conditions,
outlook, and expected future developments, as
well as other factors it believes are appropriate in
the circumstances.
Choice Properties’ expectation of operating
and financial performance is based on certain
assumptions, including assumptions about the
Trust’s future growth potential, prospects and
opportunities, industry trends, future levels of
indebtedness, tax laws, economic conditions
and competition. Management’s estimates,
beliefs and assumptions are inherently subject to
significant business, economic, competitive and
other uncertainties and contingencies regarding
future events and as such, are subject to change.
Choice Properties can give no assurance that
such estimates, beliefs and assumptions will prove
to be correct.
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 this MD&A and the Trust’s
Annual Information Form (“AIF”) for the year
ended December 31, 2024. Selected highlights of
such risks and uncertainties include:
• changes in economic conditions, including
changes in interest rates and inflation rates,
tariffs, and supply chain constraints;
• failure by Choice Properties to realize the
anticipated benefits associated with its
strategic priorities and major initiatives,
including failure to develop quality assets
and effectively manage development,
redevelopment, and renovation initiatives
and the timelines and costs related to
such initiatives;
• failure to adapt to environmental and social
risks, including failure to execute against
the Trust’s environmental and social equity
initiatives, and in the context of the Trust’s
environmental, social and governance
disclosures, additional factors such as the
availability, accessibility and sustainability of
comprehensive and high-quality data, and
the development of applicable national and
international laws, policies and regulations;
• the inability of Choice Properties’ information
technology infrastructure to support the
requirements of Choice Properties’ business,
failure by Choice Properties to identify
and respond to business disruptions, or the
occurrence of any internal or external security
breaches, denial of service attacks, viruses,
worms or other known or unknown cyber
security or data breaches;
• failure by Choice Properties to anticipate,
identify and react to demographic changes,
including shifting consumer preferences
toward digital commerce, which may result in
a decrease in demand for physical space by
retail tenants;
• failure by Choice Properties to effectively and
efficiently manage its property and leasing
management processes; and
• the inability of Choice Properties to make
acquisitions and dispositions of properties
in accordance with its near and long-
term strategies.
This is not an exhaustive list of the factors that
may affect Choice Properties’ forward-looking
statements. Other risks and uncertainties not
presently known to Choice Properties could
also cause actual results or events to differ
materially from those expressed in its forward-
looking statements.
Choice Properties’ financial results are impacted
by adjustments to the fair value of the Class B LP
units of Choice Properties Limited Partnership (the
“Exchangeable Units”), unit-based compensation,
the exchangeable Class B limited partnership
units of Allied Properties Exchangeable Limited
Partnership (“Class B Units”), a subsidiary of Allied
Properties Real Estate Investment Trust (“Allied”)
and investment properties. Exchangeable Units
and unit-based compensation liabilities are
recorded at their fair value based on the market
trading price of the Trust Units, which results in
a negative impact to the financial results when
the Trust Unit price rises and a positive impact
when the Trust Unit price declines. The publicly
traded units of Allied (“Allied Units”) are recorded
at fair value based on market trading prices of
the publicly traded units of Allied. Investment
properties are recorded at fair value based on
valuations performed by the Trust’s internal
valuations team. These adjustments to fair value
impact certain of the GAAP reported figures of
the Trust, including net income.
Additional risks and uncertainties are discussed
in Choice Properties’ materials filed with the
Canadian securities regulatory authorities
from time to time, including without limitation,
the Trust’s AIF for the year ended December 31,
2024. Readers are cautioned not to place undue
reliance on these forward-looking statements,
which reflect Choice Properties’ expectations only
as of the date of this MD&A. Except as required
by applicable law, Choice Properties does not
undertake to update or revise any forward-
looking statements, whether as a result of new
information, future events or otherwise.
Choice Properties is an unincorporated, open
ended mutual fund trust governed by the laws of
the Province of Ontario and established pursuant
to an amended and restated declaration of
trust dated April 30, 2021, as may be amended,
supplemented or restated from time to time (the
“Declaration of Trust”). Choice Properties’ Trust
Units (“Trust Units” or “Units”) are listed on the
Toronto Stock Exchange (“TSX”) and are traded
under the symbol “CHP.UN”.
George Weston Limited (“GWL”) is the controlling
unitholder of the Trust and the controlling
shareholder of Loblaw Companies Limited
(“Loblaw”), the Trust’s largest tenant. As of
December 31, 2024, GWL held a 61.7% effective
interest in Choice Properties. Choice Properties’
ultimate parent is Wittington Investments, Limited
(“Wittington”), the controlling shareholder of GWL.
Additional information about Choice Properties
has been filed electronically with the Canadian
securities regulatory authorities through the
System for Electronic Document Analysis and
Retrieval (“SEDAR+”) and is available online at
www.sedarplus.ca.
The information in this MD&A is current to
February 12, 2025, unless otherwise noted.
All amounts in this MD&A are reported in
thousands of Canadian dollars, except where
otherwise noted.
2024 Annual Report • 21
1.
KEY PERFORMANCE INDICATORS AND SELECTED FINANCIAL INFORMATION
Choice Properties has identified key financial and operating performance indicators that were derived from, and should be read in
conjunction with, the consolidated financial statements of the Trust as at and for the years ended December 31, 2024 and 2023.
The analysis of the indicators focuses on trends and significant events affecting the financial condition and results of operations
of the Trust.
As at or for the year ended December 31
($ thousands except where otherwise indicated)
2024
2023
2022
Number of income producing properties
705
705
704
GLA (in millions of square feet)(i)
67.2
66.1
64.5
Occupancy*(i)
97.6 %
98.0 %
97.9 %
Total assets (GAAP)
$
17,557,532
$
17,308,727
$
16,819,527
Total liabilities (GAAP)
$
12,657,732
$
12,940,225
$
12,995,374
Rental revenue (GAAP)
$
1,358,105
$
1,309,170
$
1,264,594
Net income
$
784,437
$
796,691
$
744,253
Net income per unit diluted
$
1.084
$
1.101
$
1.029
FFO(1) per unit diluted*
$
1.032
$
1.003
$
0.964
FFO(1) payout ratio*
73.5 %
74.6 %
76.7 %
AFFO(1) per unit diluted*
$
0.864
$
0.827
$
0.804
AFFO(1) payout ratio*
87.8 %
90.5 %
92.0 %
Distribution declared per unit
$
0.758
$
0.749
$
0.740
NAV(1) per unit
$
14.07
$
13.67
$
13.36
Weighted average number of units outstanding – diluted(ii)
723,680,890
723,666,503
723,523,362
Adjusted debt to total assets(iii)*
40.0 %
40.4 %
40.6 %
Debt service coverage(iii)*
3.0x
3.0x
3.1x
Adjusted Debt to EBITDAFV(1)(iv)*
7.0x
7.2x
7.5x
Indebtedness(v) – weighted average term to maturity*
6.1 years
5.7 years
5.3 years
Indebtedness(v) – weighted average interest rate*
4.18 %
4.03 %
3.77 %
* Denotes a key performance indicator
(i)
Includes 2,780,000 sq. ft. that represents the building area on properties where the Trust has leased the underlying sites to the tenants through ground leases
(December 31, 2023 - 1,848,000 sq. ft.; December 31, 2022 - 635,000 sq. ft.) and GLA associated with Choice Properties’ residential units.
(ii)
Includes Trust Units and Exchangeable Units.
(iii)
Debt ratios exclude Exchangeable Units, see Section 4, “Liquidity and Capital Resources”. The ratios are non-GAAP financial measures calculated based on the
Trust Indentures, as supplemented.
(iv)
Adjusted Debt to EBITDAFV, net of cash was 6.9x at December 31, 2024, 7.0x at December 31, 2023, and 7.4x at December 31, 2022.
(v)
Indebtedness reflects only senior unsecured debentures, fixed rate mortgages and fixed rate construction loans.
22 • 2024 Annual Report
Choice Properties REIT
2.
BALANCE SHEET
The following table reconciles Choice Properties’ balance sheet on a GAAP basis to a proportionate share basis(1) as at the dates
indicated:
As at December 31, 2024
As at December 31, 2023
($ thousands)
GAAP Basis
Adjustment to
Proportionate
Share Basis(1)
Proportionate
Share Basis(1)
GAAP Basis
Adjustment to
Proportionate
Share Basis(1)
Proportionate
Share Basis(1)
Assets
Investment properties
$ 15,331,000
$
1,790,000
$
17,121,000
$ 14,923,000
$
1,722,000
$ 16,645,000
Equity accounted joint ventures
884,431
(884,431)
—
883,712
(883,712)
—
Financial real estate assets
199,374
(199,374)
—
195,457
(195,457)
—
Residential development inventory
2,095
—
2,095
8,681
—
8,681
Mortgages, loans and notes receivable
720,205
(94,307)
625,898
656,001
(95,756)
560,245
Investment in real estate securities
202,526
—
202,526
238,308
—
238,308
Intangible assets
12,964
—
12,964
13,964
—
13,964
Accounts receivable and other assets
105,594
16,181
121,775
137,180
10,247
147,427
Assets held for sale
35,955
—
35,955
—
—
—
Cash and cash equivalents
63,388
33,838
97,226
252,424
23,195
275,619
Total Assets
$ 17,557,532
$
661,907
$
18,219,439
$ 17,308,727
$
580,517
$ 17,889,244
Liabilities and Equity
Long term debt
$
6,684,940
$
599,628
$
7,284,568
$
6,695,923
$
529,129
$
7,225,052
Exchangeable Units
5,283,750
—
5,283,750
5,521,222
—
5,521,222
Trade payables and other liabilities
689,042
62,279
751,321
723,080
51,388
774,468
Total Liabilities
12,657,732
661,907
13,319,639
12,940,225
580,517
13,520,742
Equity
Unitholders’ equity
4,899,800
—
4,899,800
4,368,502
—
4,368,502
Total Equity
4,899,800
—
4,899,800
4,368,502
—
4,368,502
Total Liabilities and Equity
$ 17,557,532
$
661,907
$
18,219,439
$ 17,308,727
$
580,517
$ 17,889,244
2024 Annual Report • 23
Choice Properties REIT
Balance Sheet Analysis (GAAP Basis)
Line Item
$ Change Variance Commentary
Investment properties
and Assets held for
sale
$
443,955 The increase was primarily due to acquisitions of $238.4 million, capital and leasing
expenditures of $190.3 million, a favourable fair value adjustment on investment
properties of $93.1 million, and a transfer from equity accounted joint ventures of $21.1
million. The increase was partially offset by dispositions of $96.3 million.
Equity accounted
joint ventures
719 The increase was primarily due to the acquisition of one retail property from Loblaw in
the third quarter of 2024 and income earned from equity accounted joint ventures,
largely offset by the disposition of three properties and the transfer of a property to
investment properties following the acquisition of the partner’s share of the underlying
asset in the second quarter of 2024.
Residential
development
inventory
(6,586) The decrease was primarily due to the cost of sales recognized in relation to the sale of
the Trust’s ownership interest in 36 condominium units at its Mount Pleasant Village
residential project in Brampton, Ontario, partially offset by development expenditures
incurred during the current year.
Mortgages, loans and
notes receivable
64,204 The increase was primarily due to net mortgages and loans receivable advances of
$60.2 million.
Investment in real
estate securities
(35,782) The decrease was due to a fair value loss of $35.8 million in the year due to the decrease
in the price of Allied’s publicly traded units.
Working capital, cash
and cash
equivalents
(186,584) The net decrease was primarily due to the reduction in excess cash held following the
repayment of the Series D senior unsecured debentures in the first quarter of 2024.
Long term debt
(10,983) The decrease was primarily due to the repayment of the $550.0 million Series K and the
$200.0 million Series D senior unsecured debentures and net construction loan
repayments of $25.3 million, largely offset by the issuance of the $500.0 million Series U
senior unsecured debentures and net mortgage advances of $264.0 million.
Exchangeable Units
(237,472) As this liability is measured at fair value, the change was due to the decrease in the unit
price for Choice Properties in the year.
Unitholders’ equity
531,298 The increase was primarily due to net income, partially offset by the distributions to
Unitholders.
24 • 2024 Annual Report
Choice Properties REIT
3.
INVESTMENT PROPERTIES
To expand the portfolio and participate in development opportunities, Choice Properties owns varying interests in real estate
entities that hold investment properties. Under GAAP, many of these interests are recorded as equity accounted joint ventures
and, as such, the Trust’s share of the investment properties owned by these entities is presented on the balance sheet as a
summarized value, not as part of the total investment properties. In addition, the Trust also has financial real estate assets which
are not included with investment properties as prepared under GAAP.
The following continuity schedule presents Choice Properties’ investment properties on a GAAP basis and inclusive of its
proportionate share ownership in equity accounted joint ventures and financial real estate assets for the three months ended
December 31, 2024:
Income Producing Properties
Properties Under Development
Total Investment Properties
For the three months ended December
31, 2024
($ thousands)
GAAP Basis
Adjustment to
Proportionate
Share Basis(1)
Proportionate
Share Basis(1)
GAAP Basis
Adjustment to
Proportionate
Share Basis(1)
Proportionate
Share Basis(1)
GAAP Basis
Proportionate
Share Basis(1)
Balance, beginning of period
$ 14,969,000
$
1,077,000
$ 16,046,000
$
238,000
$
646,000
$
884,000
$ 15,207,000
$
16,930,000
Acquisitions of investment properties(i)
46,838
—
46,838
11,754
—
11,754
58,592
58,592
Capital expenditures
Development capital(ii)
—
—
—
15,676
37,868
53,544
15,676
53,544
Building improvements
29
18
47
—
—
—
29
47
Capitalized interest(iii)
—
—
—
950
1,023
1,973
950
1,973
Property capital
61,315
1,062
62,377
—
—
—
61,315
62,377
Direct leasing costs
1,738
471
2,209
—
—
—
1,738
2,209
Tenant improvement allowances
10,107
445
10,552
—
—
—
10,107
10,552
Amortization of straight-line rent
(675)
1,736
1,061
—
—
—
(675)
1,061
Transfers to assets held for sale
(7,370)
—
(7,370)
—
—
—
(7,370)
(7,370)
Transfers from properties under
development
6,432
188,515
194,947
(6,432)
(188,515)
(194,947)
—
—
Dispositions
(250)
(5,375)
(5,625)
—
—
—
(250)
(5,625)
Adjustment to fair value of investment
properties
(1,164)
1,128
(36)
(14,948)
28,624
13,676
(16,112)
13,640
Balance, as at December 31, 2024
$ 15,086,000
$
1,265,000
$ 16,351,000
$
245,000
$
525,000
$
770,000
$ 15,331,000
$
17,121,000
(i)
Includes acquisition costs.
(ii)
Development capital includes $1,561 of site intensification payments paid to Loblaw for the three months ended December 31, 2024.
(iii)
Interest was capitalized to qualifying development projects based on a weighted average interest rate of 4.19% for the three months ended December 31, 2024.
2024 Annual Report • 25
Choice Properties REIT
The following continuity schedule presents Choice Properties’ investment properties on a GAAP basis and inclusive of its
proportionate share ownership in equity accounted joint ventures and financial real estate assets for the year ended December
31, 2024:
Income Producing Properties
Properties Under Development
Total Investment Properties
For the year ended December 31, 2024
($ thousands)
GAAP Basis
Adjustment to
Proportionate
Share Basis(1)
Proportionate
Share Basis(1)
GAAP Basis
Adjustment to
Proportionate
Share Basis(1)
Proportionate
Share Basis(1)
GAAP Basis
Proportionate
Share Basis(1)
Balance, beginning of year
$ 14,635,000
$
1,122,000
$ 15,757,000
$
288,000
$
600,000
$
888,000
$ 14,923,000
$
16,645,000
Acquisitions of investment properties(i)
226,600
21,779
248,379
11,754
—
11,754
238,354
260,133
Capital expenditures
Development capital(ii)
—
—
—
70,878
93,116
163,994
70,878
163,994
Building improvements
11,498
5,901
17,399
—
—
—
11,498
17,399
Capitalized interest(iii)
—
—
—
3,048
3,490
6,538
3,048
6,538
Property capital
80,205
1,158
81,363
—
—
—
80,205
81,363
Direct leasing costs
7,824
1,422
9,246
—
—
—
7,824
9,246
Tenant improvement allowances
16,797
3,066
19,863
—
—
—
16,797
19,863
Amortization of straight-line rent
(2,194)
3,628
1,434
—
—
—
(2,194)
1,434
Transfers to assets held for sale
(85,205)
—
(85,205)
—
—
—
(85,205)
(85,205)
Transfer from equity accounted joint
ventures
21,125
(21,125)
—
—
—
—
21,125
—
Transfers from properties under
development
105,949
193,440
299,389
(105,949)
(193,440)
(299,389)
—
—
Dispositions
(47,410)
(70,119)
(117,529)
—
—
—
(47,410)
(117,529)
Adjustment to fair value of investment
properties
115,811
3,850
119,661
(22,731)
21,834
(897)
93,080
118,764
Balance, as at December 31, 2024
$ 15,086,000
$
1,265,000
$ 16,351,000
$
245,000
$
525,000
$
770,000
$ 15,331,000
$
17,121,000
(i)
Includes acquisition costs.
(ii)
Development capital includes $3,872 of site intensification payments paid to Loblaw for the year ended December 31, 2024.
(iii)
Interest was capitalized to qualifying development projects based on a weighted average interest rate of 4.13% for the year ended December 31, 2024.
Included in certain investment properties acquired from Loblaw is excess land with development potential. Choice Properties will
compensate Loblaw, over time, with intensification payments determined by a site intensification payment grid as outlined in the
Strategic Alliance Agreement (see Section 9, “Related Party Transactions”), should Choice Properties pursue activity resulting in
the intensification of the excess land. The fair value of this excess land has been recorded in the consolidated financial
statements.
During the year ended December 31, 2024, the Trust classified four retail properties, with an aggregate fair value of $85,205, as
assets held for sale and disposed of two of the properties for aggregate proceeds of $48,901 (see Section 3.2, “Investment
Property and Other Transactions”). As at December 31, 2024, the two remaining retail properties with a fair value of $35,955
(December 31, 2023 - $nil) continued to be classified as assets held for sale. Subsequent to year end, the Trust disposed these
two retail properties.
26 • 2024 Annual Report
Choice Properties REIT
3.1
Valuation Method
Investment properties are measured at fair value, primarily determined using the discounted cash flow method. Under this
methodology, discount rates are applied to the projected annual operating cash flows, generally over a minimum term of ten
years, including a terminal value based on a capitalization rate applied to the estimated NOI(1) in the terminal year. The fair value of
investment properties reflects, among other things, rental income from current leases and assumptions about rental income from
future leases in light of current market conditions. Overall capitalization rates are applied when undertaking the Direct
Capitalization method of the Income Approach. This methodology applies the overall capitalization rate to a future estimated
stabilized NOI. Currently, this method is primarily applied to value residential assets and certain ground leases.
The portfolio is internally valued with external appraisals performed each quarter for a portion of the portfolio. The majority of the
properties will be subject to an external appraisal at least once over a four-year period. When an external valuation is obtained,
the internal valuation team assesses all major inputs used by the independent valuators in preparing their valuation reports and
holds discussions with the independent valuators on the reasonableness of their assumptions. Where warranted, adjustments will
be made to the internal valuations to reflect the assumptions contained in the external valuations. The Trust will record the internal
value in its consolidated financial statements.
Valuations are most sensitive to changes in capitalization rates. The terminal capitalization rates and discount rates are the most
relevant to the portfolio, under the application of the discounted cash flow method. The weighted average valuation metrics for
the Trust's investment properties (including financial real estate assets and those properties held within equity accounted joint
ventures) are listed below by asset class:
As at December 31, 2024
Retail
Industrial
Mixed-Use &
Residential
Total Investment Properties
Discount rate
7.32%
6.71%
5.77%
7.07%
Terminal capitalization rate
6.56%
5.88%
5.21%
6.31%
Overall capitalization rate
6.34%
5.59%
4.93%
6.06%
As at December 31, 2023
Retail
Industrial
Mixed-Use &
Residential
Total Investment Properties
Discount rate
7.38%
6.41%
5.87%
7.06%
Terminal capitalization rate
6.59%
5.59%
5.27%
6.27%
Overall capitalization rate
6.37%
5.33%
5.01%
6.04%
Valuation Commentary
For the three months ended December 31, 2024, the Trust recorded an unfavourable adjustment of $16.1 million on a GAAP
basis and a favourable adjustment of $13.6 million on a proportionate share basis(1) to the value of investment properties.
For the year ended December 31, 2024, the Trust recorded a favourable adjustment of $93.1 million on a GAAP basis and a
favourable adjustment of $118.8 million on a proportionate share basis(1) to the value of investment properties.
Fair value adjustments for the year reflected property-specific updates to market leasing assumptions and changes in
contractual rents, as well as adjustments to discount and capitalization rates primarily in the retail and industrial portfolios. In
addition, the Trust recognized a fair value loss at a development site.
2024 Annual Report • 27
Choice Properties REIT
3.2
Investment Property and Other Transactions
Acquisitions of Investment Properties
The following table summarizes the investment properties acquired in the year ended December 31, 2024:
($ thousands except where otherwise indicated)
Consideration
Property / Location
Date of
Acquisition
Segment
Ownership
Interest
Acquired
GLA
(square feet)
Purchase
Price incl.
Related
Costs
Debt
Assumed
from Seller
Assumed
Liabilities
Cash
Investment properties
Acquisitions from related parties
396 St. Clair Ave. W, Toronto, ON
Mar 19
Retail
100%
74,322 $
38,433 $
— $
— $
38,433
6941 Kennedy Rd., Mississauga, ON(i)
Sep 05
Industrial
50%
355,356
90,845
—
—
90,845
1385 Sargent Ave., Winnipeg, MB(i)
Sep 05
Retail
50%
75,250
16,070
—
—
16,070
19 Beechville Park Dr., Lakeside, NS(i)
Dec 18
Industrial
50%
106,653
14,560
—
1,750
12,810
Acquisitions from related parties
611,581
159,908
—
1,750
158,158
Acquisitions from third parties
755 Mount Pleasant Rd., Toronto, ON
Jun 20
Retail
100%
13,280
11,966
—
—
11,966
Cornerstone Shopping Centre, Fort
Saskatchewan, AB
Jun 21
Retail
50%
101,577
21,125
12,153
—
8,972
402 and 406 Main St., Wolfville, NS
Aug 22
Retail
100%
6,500
1,323
—
—
1,323
9025–17 Ave. SE and 1825–92 St. SE,
Calgary, AB
Nov 27
Retail (Land)
80%
N/A
5,617
—
—
5,617
Avalon Centre, Ottawa, ON
Dec 11
Retail
100%
85,438
32,278
18,974
—
13,304
1770 Keene Cres. SW, Edmonton, AB
Dec 20
Retail (Land)
100%
N/A
6,137
—
—
6,137
Acquisitions from third parties
206,795
78,446
31,127
—
47,319
Equity accounted joint ventures
60 Carlton St., Toronto, ON(i)(ii)
Sep 05
Retail
50%
47,537
21,779
—
—
21,779
Acquisition in equity accounted joint ventures
47,537
21,779
—
—
21,779
Total acquisitions of investment properties
865,913 $
260,133 $
31,127 $
1,750 $
227,256
(i)
The Trust acquired four properties from Loblaw in partnership with Crestpoint.
(ii)
The Trust acquired this retail property from Loblaw through an equity accounted joint venture.
28 • 2024 Annual Report
Choice Properties REIT
Dispositions of Investment Properties
The following table summarizes the investment properties sold in the year ended December 31, 2024:
($ thousands except where otherwise indicated)
Consideration
Property / Location
Date of
Disposition
Segment
Ownership
Interest
Disposed
GLA
(square
feet)
Sale Price
excl. Selling
Costs
Debt
Assumed by
Purchaser
Mortgage
Receivable
Advanced
Cash
Investment properties
Crossroads Shopping Centre, Edmonton, AB
Feb 14
Retail
50%
13,520 $
6,700 $
— $
— $
6,700
379 Orenda Rd., Brampton, ON
Mar 14
Industrial
100%
114,000
16,625
—
—
16,625
Cornerstone Shopping Centre, Olds, AB
May 13
Retail
50%
58,221
15,685
7,586
2,510
5,589
2955 Hazelton Place, Mississauga, ON
Aug 01
Retail
100%
9,461
8,150
—
—
8,150
100 Rorke Ave., Haileybury, ON
Oct 01
Retail
100%
30,600
250
—
—
250
Dispositions of investment properties
225,802
47,410
7,586
2,510
37,314
Assets held for sale
Mega Centre Lebourgneuf, Quebec City, QC
Sep 13
Retail
50%
170,666
33,901
—
9,151
24,750
800 Blvd. Henri-Bourassa W, Montreal, QC
Dec 18
Retail
100%
81,307
15,000
—
—
15,000
Dispositions of assets held for sale
251,973
48,901
—
9,151
39,750
Equity accounted joint ventures
Cornerstone Shopping Centre, Okotoks, AB
May 13
Retail
50%
78,370
23,500
7,705
4,300
11,495
Cornerstone Shopping Centre, Prince Albert, SK(i)
Jun 19
Retail
44%
195,901
41,244
—
4,260
36,984
Fort McMurray Shopping Centre, Fort McMurray, AB
Dec 03
Retail
50%
17,756
5,375
—
—
5,375
Dispositions in equity accounted joint ventures
292,027
70,119
7,705
8,560
53,854
Total dispositions of investment properties
769,802 $
166,430 $
15,291 $
20,221 $ 130,918
(i)
Comprised of two retail assets.
2024 Annual Report • 29
Choice Properties REIT
Acquisitions of Investment Properties
The following table summarizes the investment properties acquired in the year ended December 31, 2023:
($ thousands except where otherwise indicated)
Consideration
Property / Location
Date of
Acquisition
Segment
Ownership
Interest
Acquired
GLA
(square
feet)
Purchase
Price incl.
Related
Costs
Investment
Property
Debt
Assumed
from Seller
Mortgage
Receivable
Settlement
Other(i)
Cash
Investment properties
Acquisitions from related parties
2501–34th St., Vernon, BC
Jan 31
Retail
100%
46,504 $
12,697 $
— $
— $
— $
— $
12,697
10505 Southport Rd. SW,
Calgary, AB(ii)
Jan 31
Retail
100%
161,540
43,976
—
—
—
—
43,976
5251 Country Hills Blvd. NW,
Calgary, AB(ii)
Jan 31
Retail
100%
146,627
42,476
—
—
—
—
42,476
2255–29th St. NE, Calgary, AB
Dec 7
Industrial
100%
424,760
50,389
—
—
—
—
50,389
300 Sainte Croix Ave., Montreal,
QC
Dec 7
Retail
100%
88,305
20,241
—
—
—
1,728
18,513
820 Boul. du Cure-Labelle,
Blainville, QC
Dec 7
Retail
100%
43,348
11,903
—
—
—
—
11,903
Acquisitions from related parties
911,084
181,682
—
—
—
1,728
179,954
Acquisitions from third parties
1525 Victoria Park Ave., Toronto,
ON
Feb 24
Retail
100%
19,735
23,049
—
—
—
—
23,049
910 Dundas St. W, Whitby, ON
Mar 24
Retail
100%
46,512
17,876
—
—
—
—
17,876
Altius Centre, Calgary, AB(iii)
Mar 30
Mixed-Use
&
Residential
50%
162,836
19,850
5,300
13,346
—
1,204
—
2187 Bloor St. W, Toronto, ON
Apr 4
Retail
100%
1,800
1,915
—
—
—
—
1,915
210 Mohawk Rd. E, Hamilton,
ON
Aug 14
Retail
100%
22,968
7,501
—
—
—
—
7,501
Acquisitions from third parties
253,851
70,191
5,300
13,346
—
1,204
50,341
Equity accounted joint ventures
Horizon Business Park,
Edmonton, AB
Mar 16
Industrial
50%
129,990
32,090
—
15,995
5,385
4,187
6,523
Acquisition in equity accounted joint ventures
129,990
32,090
—
15,995
5,385
4,187
6,523
Total acquisitions of investment properties
1,294,925 $ 283,963 $
5,300 $
29,341 $
5,385 $
7,119 $ 236,818
(i)
Includes amounts related to de-recognition of intangible assets of $1,204 and assumed liabilities of $5,915.
(ii)
These properties are classified as financial real estate assets under GAAP.
30 • 2024 Annual Report
Choice Properties REIT
(iii)
The Trust completed an exchange of office properties with its partner. The exchange resulted in the Trust disposing of its 50% interest in Calgary Place (see disposition table
below) in exchange for the partner’s 50% interest in Altius Centre and a vendor take-back mortgage (Section 3.8).
Dispositions of Investment Properties
The following table summarizes the investment properties sold in the year ended December 31, 2023:
($ thousands except where otherwise indicated)
Consideration
Property / Location
Date of
Disposition
Segment
Ownership
Interest
Disposed
GLA
(square
feet)
Sale
Price
excl.
Selling
Costs
Debt
Assumed
by
Purchaser
Investment
Property
Mortgage
Receivable
Advanced
Other(i)
Cash
Investment properties
801 Ryan Rd., Courtenay, BC
Mar 8
Retail (Land)
100%
N/A $
4,613 $
— $
— $
— $
— $
4,613
Calgary Place, Calgary, AB(ii)
Mar 30
Mixed-Use &
Residential
50%
295,695
48,402
34,617
5,300
11,140
(2,655)
—
2730-2742 Eglinton Ave. E,
Scarborough, ON
May 12
Retail (Land)
100%
N/A
3,557
—
—
—
—
3,557
55 Hereford St., Brampton, ON(iii)
Jun 14
Mixed-Use &
Residential
100%
125,000
74,200
—
—
51,000
(8,300)
31,500
19-29 Gurholt Dr., Dartmouth, NS
Dec 14
Industrial
100%
61,465
7,230
—
—
—
—
7,230
1210 Summit Dr. & 500 Notre Dame Dr.,
Kamloops, BC(iv)(v)
Dec 28
Retail
50%
120,853
49,261
20,067
—
—
(611)
29,805
Dispositions of investment properties
603,013
187,263
54,684
5,300
62,140
(11,566)
76,705
Assets held for sale
460-506 Gardiners Rd., Kingston, ON
Feb 21
Retail
100%
104,286
23,000
—
—
—
—
23,000
950 Brookdale Ave., Cornwall, ON
Apr 21
Retail
100%
127,000
10,000
—
—
—
—
10,000
Metropolitan Place, Dartmouth, NS
Jun 19
Mixed-Use &
Residential
50%
103,546
13,360
7,678
—
5,495
(1,935)
2,122
2473 Ouellette Ave., Windsor, ON
Jul 7
Retail
100%
11,685
1,900
—
—
—
—
1,900
1 Gurholt Dr. & 10 Ilsley Dr.,
Dartmouth, NS(vi)
Oct 5
Industrial
100%
88,694
11,580
—
—
—
—
11,580
171 Trinity Dr., Moncton, NB
Oct 12
Retail
100%
362,205
61,174
—
—
9,624
—
51,550
Altius Centre, Calgary, AB
Oct 31
Mixed-Use &
Residential
100%
326,852
20,000
—
—
—
—
20,000
Dispositions of assets held for sale
1,124,268
141,014
7,678
—
15,119
(1,935)
120,152
Equity accounted joint ventures
10310 186 St. NW, Edmonton, AB
Dec 20
Retail (Land)
50%
N/A
6,300
—
—
—
—
6,300
Disposition in equity accounted joint ventures
—
6,300
—
—
—
—
6,300
Total dispositions of investment properties
1,727,281 $ 334,577 $
62,362 $
5,300 $
77,259 $ (13,501) $ 203,157
(i)
Includes amounts related to the de-recognition of intangible assets of $5,201 and a lease termination payment of $8,300.
(ii)
The Trust completed an exchange of office properties with its partner. The exchange resulted in the Trust disposing of its 50% interest in Calgary Place in exchange for the
partner’s 50% interest in Altius Centre (see acquisition table above) and a vendor take-back mortgage (Section 3.8).
(iii)
This data centre asset was leased to Loblaw. In connection with the disposition, Choice made a lease termination payment of $8,300 to Loblaw to terminate its lease early.
(iv)
Comprised of two retail assets.
(v)
Included in the debt assumed by purchaser is $128 of debt discounts, net of accumulated amortization.
(vi)
Comprised of two industrial assets.
2024 Annual Report • 31
Choice Properties REIT
32 • 2024 Annual Report
Choice Properties REIT
3.3
Completed Developments
For the year ended December 31, 2024, Choice Properties completed a total of $236.5 million in development projects delivering
181,000 square feet of retail space (71,000 square feet associated with ground leases), 921,000 square feet of industrial space
(associated with a ground lease) and 101,000 square feet of residential space comprising 151 units (at the Trust’s share) with a
weighted average yield of 7.0%.
The Trust delivered twelve retail developments including the expansion of an existing building with a national retailer, four ground
leases, three Shoppers Drug Mart stores, six quick service restaurants, two financial institutions, and two medical offices. In
addition, the Trust delivered one residential development at Mount Pleasant Village, in which the Trust owns a 50% interest. This
development of 302 units offers a unique rental community in the heart of Brampton’s Mount Pleasant Village.
During the fourth quarter, the Trust delivered the Loblaw distribution centre at Choice Caledon Business Park, in which the Trust
holds a 85% ownership interest, through an approximately 92 acre ground lease. Loblaw’s construction of its 1,084,000 square
feet distribution centre remains ongoing with rent commencing in the first quarter of 2025.
The Trust also discloses the expected stabilized yield(2) for each of its completed projects and projects under active development.
Expected stabilized yield is calculated by dividing the expected stabilized net rental income for each development by the
estimated total project costs. Stabilized net rental income is based on contracted rental rates on leased units, and market rental
rates on non-leased units which are based on the Trust’s market knowledge and, where applicable, supported by external market
studies. Estimated project costs include land costs, soft and hard construction costs, development and construction
management fees, tenant allowances and inducements, capitalized financing costs, and other carrying costs.
For the year ended December 31, 2024, Choice Properties transferred the following from properties under development to income
producing properties as presented on a proportionate share basis(1):
($ thousands except where otherwise indicated)
Project / Location
Completion
date
Ownership
%
Transferred
GLA
(square feet)
Transferred
residential
units(i)
Costs
incurred at
substantial
completion
Expected
costs to
complete
Expected
total
costs
Expected
stabilized
yield(2)
(ii)
Commercial
Retail
Guelph St., Georgetown, ON
Q1 2024
100 %
26,000
— $
7,900 $
— $
7,900
8.8 %
Harvest Hills Market,
Edmonton, AB(iii)
Q2 2024
50 %
1,000
—
516
—
516
12.6 % (iv)
Carlton Spur, Prince Albert, SK
Q2 2024
25 %
2,000
—
666
—
666
9.5 % (v)
43rd Ave., Innisfail, AB
Q2 2024
100 %
17,000
—
6,055
—
6,055
6.8 % (v)
Highway 88, Bradford, ON(iii)
Q2 2024
100 %
24,000
—
732
—
732
25.3 %
137 Ave., Edmonton, AB
Q3 2024
100 %
7,000
—
4,383
—
4,383
7.0 % (v)
Sunwapta West, Building 6-8,
Edmonton, AB(iii)
Q3 2024
50 %
5,000
—
4,188
—
4,188
5.6 % (vi)
Country Village Rd. NE,
Calgary, AB
Q3 2024
100 %
29,000
—
12,777
—
12,777
6.3 %
Countryview Dr.,
Dartmouth, NS
Q4 2024
50 %
3,000
—
1,330
176
1,506
8.6 % (v)
100th St., Morinville, AB
Q4 2024
100 %
17,000
—
6,009
10
6,019
7.0 % (v)
20 Jocelyn St.,
Port Hope, ON(iii)
Q4 2024
100 %
44,000
—
1,133
207
1,340
15.6 %
Harvest Pointe, Building 18,
Edmonton, AB
Q4 2024
50 %
6,000
—
2,770
119
2,889
6.5 % (v)
Subtotal retail development
181,000
—
48,459
512
48,971
7.6 %
Industrial
Choice Caledon Business Park
- Loblaw Distribution Centre,
Caledon, ON(iii)
Q4 2024
85 %
921,000
—
91,587
29,235
120,822
8.0 % (vii)
Subtotal industrial development
921,000
—
91,587
29,235
120,822
8.0 %
Mixed-Use & Residential
Mount Pleasant Village,
Brampton, ON
Q1 2024
50 %
101,000
151
66,685
—
66,685
4.7 % (iv)
Subtotal mixed-use & residential development
101,000
151
66,685
—
66,685
4.7 %
Total transferred properties at carrying value
1,203,000
151 $
206,731 $
29,747 $ 236,478
7.0 %
Total transferred properties at fair value
$
299,389
(i)
Choice Properties’ share.
(ii)
Unless otherwise noted, there were no material changes in previously reported expected stabilized yield.
(iii)
This development includes a ground lease.
(iv)
Expected stabilized yield for this development has increased due to higher expected income.
(v)
Expected stabilized yield for this development has increased due to lower costs.
(vi)
Expected stabilized yield for this development has decreased due to higher costs.
(vii)
Expected stabilized yield for this development has increased due to higher expected income and lower costs.
2024 Annual Report • 33
Choice Properties REIT
3.4
Development Activities
Development initiatives are a key component of Choice Properties’ business model, providing the Trust with an opportunity to
add high quality real estate at a reasonable cost and drive net asset value appreciation over time. The Trust has a mix of active
development projects ranging in size, scale and complexity, including retail intensification projects, industrial development, and
rental residential projects located in urban markets with a focus on transit accessibility. Choice Properties continues to drive long-
term growth and value creation through the development of commercial and residential projects and has a significant long-term
pipeline of potential mixed-use projects. The Trust views its development activities through the stages of the development
lifecycle, including the process of potential site identification, planning and rezoning, construction, and finally to development
completion.
Choice Properties’ development program on a proportionate share basis(1) as at December 31, 2024 is summarized below:
($ thousands except where otherwise indicated)
GLA(i)(ii)
(square feet)
Investment(i)(iii)
Project type
Section
Number of
projects
Estimated
upon
completion(2)
To-date
Estimated
costs to
completion(2)(iv)
Estimated
total
Projects under active development
Retail
3.5
18
304,000 $
13,563 $
94,918 $
108,481
Industrial
3.5
1
829,000
66,997
148,132
215,129
Residential(v)
1
—
2,095
—
2,095
Subtotal projects under active development
20
1,133,000
82,655
243,050
325,705
Developments in planning
Retail
3.6
9
204,000
32,565
Industrial
3.6
2
4,230,000
229,442
Mixed-Use & Residential
3.6
13
12,615,000
162,880
Subtotal developments in planning
24
17,049,000
424,887
Total development - cost
44
18,182,000 $
507,542
Total development - fair value(vi)
$
770,000
(i)
Choice Properties’ share.
(ii)
Estimated GLA is based on current development plans and final development square footage may differ. For developments in planning, GLA is an estimate and
may differ as the developments complete the rezoning and entitlement process. Includes GLA associated with ground leases.
(iii)
Compiled on a non-GAAP proportionate share basis(1). Investment to-date compiled on a cash basis, excluding adjustments to fair value of on-going projects.
(iv)
The Trust expects to invest approximately 59% during 2025 and the remainder thereafter.
(v)
Active residential represents the remaining units of the condominium portion of the Trust’s Mount Pleasant Village development project, in which the Trust owns
a 50% interest. This project is included within residential development inventory.
(vi)
Total development fair value excludes residential development inventory of $2,095 as at December 31, 2024 (December 31, 2023 - $8,681).
34 • 2024 Annual Report
Choice Properties REIT
3.5
Properties Under Active Development
Projects under active development are sites under construction or sites with appropriate approvals in place which are expected
to commence construction in the next six to twelve months. Currently, the Trust has 20 active developments comprised of 18
retail, one industrial and one residential. Upon completion, the projects under active development are expected to deliver a total
of 1,133,000 square feet of commercial space (including 90,000 square feet associated with ground leases). The Trust has
invested a total of $82.7 million to date and is expected to invest an additional $243.1 million over the next 12-24 months to
complete these projects(2).
Projects Under Active Development – Retail
The Trust invests in retail development projects through intensification of its existing retail assets. The Trust currently has 304,000
square feet at share of active retail development (including 90,000 square feet associated with ground leases), which is expected
to be completed in the next 12-24 months(2).
The following table details the Trust’s retail projects under active development on a proportionate share basis(1) as of
December 31, 2024:
($ thousands except where otherwise indicated)
GLA(i)
(square feet)
Investment(i)(ii)
Project / Location
Ownership
%
Expected
completion
date(iii)
Estimated
upon
completion(2)
%
Leased
To-date
Estimated
costs to
completion(2)
Estimated
total
Expected
stabilized
yield(2)(iv)
Retail
1
Sunwapta West, Building 2 B,
Edmonton, AB(v)
50 %
H1 2025
3,000
100 % $ 1,388 $
335 $
1,723
7.00%-7.50%
2
Sunwapta West, Building 2 A,
Edmonton, AB(v)
50 %
H1 2025
5,000
100 %
1,677
139
1,816
5.75%-6.25%
3
Harvest Hills Market, Building 5 & 9,
Edmonton, AB(v)
50 %
H1 2025
7,000
100 %
1,833
2,907
4,740
6.00%-6.50% (vii)
4
3050 Argentia Rd., Mississauga, ON
100 %
H1 2025
17,000
100 %
39
6,251
6,290
6.25%-6.75%
5
291-295 Hwy #214, Elmsdale, NS
100 %
H1 2025
17,000
100 %
1,198
6,853
8,051
6.50%-7.00%
6 211 Bell Blvd., Belleville, ON(vi)
100 %
H1 2025
21,000
100 %
22
869
891
25.25%-25.75%
7
2132 & 2136 McPhillips St.,
Winnipeg, MB(vi)
100 %
H1 2025
2,000
100 %
559
492
1,051
9.25%-9.75%
8
Harvest Hills Market, Building 8,
Edmonton, AB(vi)
50 %
H1 2025
2,000
100 %
398
673
1,071
7.25%-7.75%
9
4420–52nd Ave., Whitecourt, AB
100 %
H1 2025
17,000
100 %
52
6,635
6,687
6.75%-7.25% (viii)
10 Langstaff & Hwy 27, Woodbridge, ON
100 %
H2 2025
17,000
100 %
2,816
6,573
9,389
6.00%-6.50%
11 3050 Vega Blvd., Mississauga, ON
100 %
H2 2025
44,000
100 %
3,241
17,881
21,122
4.50%-5.00% (vii)
12 1048 Midland Ave., Kingston, ON(vi)
100 %
H2 2025
65,000
100 %
11
2,126
2,137
27.25%-27.75%
13 410 Baseline Rd., Sherwood Park, AB(vi)
100 %
H2 2025
2,000
100 %
49
1,059
1,108
11.00%-11.50%
14 680 O'Brien Rd., Renfrew, ON
100 %
H2 2025
17,000
100 %
75
7,240
7,315
7.25%-7.75%
15 504 Main St. N, Mount Forest, ON
100 %
H1 2026
17,000
100 %
52
9,854
9,906
7.00%-7.50%
16 657 John St. N, Aylmer, ON
100 %
H1 2026
17,000
100 %
63
7,778
7,841
7.25%-7.75%
17 5251 Country Hills Blvd. NW, Calgary, AB
100 %
H1 2026
17,000
100 %
46
7,316
7,362
5.75%-6.25%
18 1641 & 1675 Jane St., North York, ON
100 %
H1 2026
17,000
100 %
44
9,937
9,981
4.75%-5.25%
Total retail developments
304,000
$ 13,563 $
94,918 $ 108,481
6.50%-7.00%
(i)
Choice Properties’ share.
(ii)
Compiled on a non-GAAP proportionate share basis(1). Investment to-date was compiled on a cash basis, excluding adjustments to fair value of on-going
projects.
(iii)
H1 represents the first six months of the year. H2 represents the last six months of the year.
(iv)
Unless otherwise noted, there were no material changes in previously reported expected stabilized yields.
(v)
Development project with phased completion. Reported expected stabilized yield may vary as phases are completed or as future phases are added to the
development.
(vi)
This development includes a ground lease.
(vii)
Expected stabilized yield for this development has decreased due to higher costs.
(viii) Expected stabilized yield for this development has decreased due to lower expected income.
2024 Annual Report • 35
Choice Properties REIT
Projects Under Active Development – Industrial
The Trust invests in industrial development projects through development of greenfield industrial land. The Trust currently has one
active development project, which is expected to deliver 829,000 square feet at share of new generation logistics space in the
near term(2).
The following table details the Trust’s industrial projects under active development on a proportionate share basis(1) as of
December 31, 2024:
($ thousands except where otherwise indicated)
GLA(i)
(square feet)
Investment(i)(ii)
Project / Location
Ownership
%
Expected
completion
date(iii)
Estimated
upon
completion(2)
%
Leased
To-date
Estimated
costs to
completion(2)
Estimated
total(iv)
Expected
stabilized
yield(2)(v)
Industrial
1 Choice Caledon Business Park - Building H,
Caledon, ON(vi)
85 %
H2 2025
829,000
64 % $ 66,997 $
148,132 $
215,129
6.75%-7.25%
Total industrial developments
829,000
$ 66,997 $
148,132 $
215,129
6.75%-7.25%
(i)
Choice Properties’ share.
(ii)
Compiled on a non-GAAP proportionate share basis(1). Investment to-date was compiled on a cash basis, excluding adjustments to fair value of on-going
projects.
(iii)
H1 represents the first six months of the year. H2 represents the last six months of the year.
(iv)
Estimated total costs decreased due to lower tendered construction costs.
(v)
There were no material changes in previously reported expected stabilized yields.
(vi)
The development includes an expansion option to the tenant for the entirety of the space. The expansion space is expected to be completed in H2 2026, should
the tenant so elect.
At Choice Caledon Business Park, the Trust will construct eight state-of-the-art, multi-use industrial buildings in four phases over
the next 60 months(2). Building H, the first building of Phase 2 is leased to a leading logistics provider, with rent commencement
expected in the second quarter of 2026(2).
36 • 2024 Annual Report
Choice Properties REIT
3.6
Development in Planning
Beyond the projects under active development, Choice Properties has a substantial pipeline of larger, more complex mixed-use
developments and land held for future commercial development in various stages of planning, which collectively are expected to
drive meaningful net asset value growth in the future. The Trust continues to advance the rezoning status for several mixed-use
sites currently in different stages of the rezoning and planning process.
As of December 31, 2024, the Trust has identified 24 sites with potential for future development. This includes nine opportunities
totalling 204,000 square feet at existing retail sites, two industrial sites totalling 4,230,000 square feet, and 13 residential and
mixed-use projects totalling 12,615,000 square feet and 15,311 residential units (at the Trust’s share). The development plan for
each property is subject to completion of the Trust’s full review of each opportunity. The expected project scope may change
over time or the Trust may decide not to proceed with that development upon completion of full due diligence. To date, the Trust
has invested a total of $424.9 million on land acquisition and initial development and planning costs at these sites.
Retail Development in Planning
Retail intensification is focused on adding at-grade retail density within the existing retail portfolio. These projects provide the
opportunity to add new tenants, further expand the high-quality tenant mix and provide steady growth to the business.
($ thousands except where otherwise indicated)
Number of Sites
Investment To-date(i)(ii)
Retail developments in planning
9 $
32,565
(i)
Choice Properties’ share.
(ii)
Compiled on a non-GAAP proportionate share basis(1). Investment to-date was compiled on a cash basis, excluding adjustments to fair value of on-going
projects.
The Trust has identified approximately 150 additional retail sites with potential for future development.
Industrial Development in Planning
($ thousands except where otherwise indicated)
Number of Sites
Investment To-date(i)(ii)
Industrial developments in planning - zoning approved
2 $
229,442
(i)
Choice Properties’ share.
(ii)
Compiled on a non-GAAP proportionate share basis(1). Investment to-date was compiled on a cash basis, excluding adjustments to fair value of on-going
projects.
The Trust has obtained zoning approval on two industrial development sites. The following table details the Trust’s industrial
developments in planning:
Project / Location
Description
Choice Caledon Business
Park - Remaining Phases,
Caledon, ON
During the third quarter of 2022, the joint venture achieved entitlement to convert the lands from agricultural
uses to employment uses through a Ministerial Zoning Order. The Draft Plan of Subdivision and Site Plan
Applications for the first phase were submitted during the second quarter of 2023 and the grading permit was
received and site works commenced. Site preparation costs for the subdivision of the remaining phases is
expected to be $110.3 million in total, or $93.7 million at share, occurring over the next 12 months. The
remainder of the development is expected to consist of warehouse, distribution, and industrial uses totalling
approximately 4.2 million square feet on 205 net developable acres (at 100% share). The Trust has invested
$196.1 million to date, including land acquisition related to the remaining phases of the development.
Choice Eastway Industrial
Centre - Phase 2, East Gwillimbury, ON
The second phase of the Trust’s project constitutes approximately 54 acres (at 100% share) of developable
land and is fully zoned. The second phase is anticipated to be approximately 0.8 million total square feet (at
100% share). The Trust has invested $33.4 million to date, including land acquisition.
2024 Annual Report • 37
Choice Properties REIT
Mixed-Use & Residential Development in Planning
Mixed-use development represents a key component of Choice Properties’ long-term development strategy. The Trust
endeavours to create enduring value through high-quality mixed-use assets with a significant residential rental component.
Leveraging the Trust’s sizable portfolio in key urban markets, Choice Properties believes there are considerable value creation
opportunities through rezoning existing grocery anchored assets into mixed-use sites. The development plan for each project is
subject to municipal review and approval which may take several years to realize.
Once zoning and entitlement is obtained, the Trust can create additional value by pursuing ground up development, repositioning
existing retail and maximizing available density for residential and mixed-use development. Choice Properties is working through
the zoning and entitlement process for several of its future projects.
The Trust has obtained zoning approval on four residential and mixed-use developments and has submitted applications for
seven residential and mixed-use projects. A total of $162.9 million has been invested to date on land acquisition and initial
development and planning costs.
The following table details the Trust’s residential and mixed-use development projects by zoning status:
($ thousands except where otherwise indicated)
Estimated GLA(i)(ii)
(000’s square feet)
Project / Location
Type
Ownership %
Acreage(i)
Estimated
number
of units(i)
Commercial
Residential
Total
Investment
to-date (i)(iii)
Zoning approved
1
Golden Mile, Toronto, ON
Mixed-Use
100 %
19.0
3,597
323
2,907
3,230 $
19,271
2
Grenville & Grosvenor, Toronto, ON
Residential
50 %
0.5
385
17
320
337
36,325
3
Sheppard Ave. W, Toronto, ON
Residential
50 %
0.3
100
5
64
69
6,984
4
Woodbine Ave., Toronto, ON
Mixed-Use
100 %
1.7
606
38
422
460
8,738
Subtotal zoning approved
21.5
4,688
383
3,713
4,096
71,318
Zoning applications submitted
1
Broadview Ave., Toronto, ON
Mixed-Use
100 %
3.3
503
23
409
432
4,315
2
Carlaw Ave., Toronto, ON
Mixed-Use
100 %
5.6
1,080
84
993
1,077
7,896
3
Dundas St. W, Toronto, ON
Mixed-Use
100 %
13.0
1,923
178
1,477
1,655
46,506
4
North Rd., Coquitlam, BC
Mixed-Use
100 %
7.8
2,470
110
1,765
1,875
5,737
5
Parkway Forest Dr., Toronto, ON
Residential
50 %
1.5
191
—
120
120
2,484
6
Photography Dr., Toronto, ON
Mixed-Use
100 %
7.7
2,356
50
2,010
2,060
4,652
7
Warden Ave., Toronto, ON
Mixed-Use
100 %
6.5
2,100
10
1,290
1,300
14,051
Subtotal zoning applications submitted
45.4
10,623
455
8,064
8,519
85,641
Zoning applications to be submitted
1
Lower Jarvis, Toronto, ON
Mixed-Use
100 %
4.1
—
—
—
—
3,539
2
South Service Rd., Mississauga, ON
Mixed-Use
100 %
10.4
—
—
—
—
2,382
Subtotal zoning applications to be submitted
14.5
—
—
—
—
5,921
Total mixed-use & residential projects in planning
81.4
15,311
838
11,777
12,615 $
162,880
(i)
Choice Properties’ share.
(ii)
Estimated GLA is based on current development plans and final development square footage may differ. For projects in planning, GLA is an estimate and may
differ as the projects complete the rezoning and entitlement process.
(iii)
Investment to-date is comprised of incremental land assembly and development planning costs.
38 • 2024 Annual Report
Choice Properties REIT
Zoning Applications Approved
Obtaining zoning is a significant milestone in the development lifecycle. Zoning approval allows the Trust to unlock significant
land value through the realization of residential density potential. Once zoning is approved, the next phase of the development
process is obtaining all necessary permits, which allows the project to proceed to active development with construction
commencement. The Trust has completed approvals on two mixed-use and two residential developments in Toronto, Ontario. As
of December 31, 2024, the Trust has invested a total of $71.3 million to date on land acquisition and initial development and
planning costs.
Project / Location
Description
Golden Mile,
Toronto, ON
The approximately 19 acre site is located along Eglinton Avenue in the Golden Mile district of Toronto. The current
redevelopment plans contemplate a large, mixed-use master-plan community to be built in phases with a focus on
high density residential and retail uses. The site is directly adjacent to new transit stations along the first phase of
the Eglinton Crosstown LRT, which is currently under construction. The current plan includes approximately 3.2
million square feet of total ground floor area, with 0.3 million square feet of commercial GLA and approximately
3,600 residential units. The development will transform the area through the introduction of the Golden Mile
Community Innovation District by bringing together expertise from all stakeholders including community
organizations, the local councillor, and post-secondary educational institutions(2). The development will create a
community comprising residential and commercial uses along with privately owned public spaces including a new
park. The Official Plan and Zoning By-law Amendment Applications have been approved by the City of Toronto
and the Trust continues to work with the City to fulfill conditions of subdivision and site plan.
Grenville & Grosvenor,
Toronto, ON
The approximately 1 acre site is located in the area of Yonge Street and College Street in downtown Toronto. The
current development plan contemplates two residential towers providing a total 0.7 million square feet of total
gross floor area, including 34,000 square feet of commercial GLA and approximately 770 rental residential units (at
100% share). Approximately one third of the residential units will be affordable housing units(2).
Sheppard Avenue West,
Toronto, ON
The 0.6 acre site is located at the northeast corner of Allen Road and Sheppard Avenue West in Toronto. The site
is approximately 400 meters from the Sheppard West TTC subway station and in close proximity to Downsview
Park and Downsview Airport. The current development plans include a 15 storey residential building comprising
10,000 square feet of commercial GLA and approximately 200 residential units (at 100% share).
Woodbine Avenue,
Toronto, ON
The approximately 1.7 acres site is strategically located at the northeast intersection of Woodbine Avenue and
Danforth Avenue in the Danforth neighbourhood of Toronto. The site is directly adjacent to the Woodbine TTC
subway station. Toronto City Council has approved the redevelopment of the site into a mixed-use project. The
approved plan includes a new at-grade grocery store, a theatre, and a preschool. The project will feature two
residential buildings of 35 and 10 storeys, comprising a total of 606 purpose-built rental units. This includes 12
affordable units and 14 replacement units for existing tenants, aligning the development with community and
housing objectives. The design of this project will incorporate the urban design significance of the Danforth
neighbourhood and sustainable architecture. It will improve the public realm through the addition of a significant
privately owned public open space on Woodbine Avenue and the widening of both Danforth Avenue and
Woodbine Avenue. During the fourth quarter of 2024, zoning approval was achieved.
Zoning Applications Submitted
Choice Properties has submitted zoning applications for six mixed-use and one residential development in Toronto, Ontario. As of
December 31, 2024, the Trust has invested a total of $85.6 million to date on land acquisition and initial development and
planning costs.
Project / Location
Description
Broadview Avenue,
Toronto, ON
The approximately 3.3 acre site is located at the southwest corner of Danforth Avenue and Broadview Avenue in
Toronto's east end and is situated less than 150 metres from the Broadview TTC subway station. The current
development proposal includes one residential tower, a new grocery store and a public park. The submitted
application proposes 0.4 million square feet of total ground floor area, and approximately 500 residential units. The
Trust continues to refine the vision for a mixed-use, transit-oriented development that will transform an
underutilized site while highlighting the natural heritage and green connections of the existing community. The
Official Plan, Zoning By-law Amendment and Draft Plan of Subdivision Applications have been submitted to the
City of Toronto.
Carlaw Avenue,
Toronto, ON
During the second quarter of 2024, Choice Properties entered into an agreement with the Province of Ontario to
facilitate the construction of a transit station at its Carlaw Avenue property. In partnership with the Province of
Ontario, Choice Properties has developed a concept for the future transit-oriented community at this site, located
at the northeast corner of Gerrard Street East and Carlaw Avenue. The approximately 5.6 acre site will become the
anchor of the Gerrard TTC subway station on the future Ontario Line. The concept proposes three towers with
approximately 1,000 residential units, retail offerings including a new food store, privately owned public space over
the transit corridor, a new public street and a public park. Construction for the transit project commenced in 2024
and is expected to continue through 2030 and beyond(2), at which point Choice Properties will begin construction
on the residential towers. This project will transform the community and provide access to open space, retail and
transit, creating the ultimate complete community. The Trust has submitted a Zoning Application by way of the
Transit Oriented Communities Program.
2024 Annual Report • 39
Choice Properties REIT
Project / Location
Description
Dundas Street West,
Toronto, ON
The approximately 13 acre site is located at the southeast corner of Dundas Street West and Bloor Street West in
Toronto. The site is at the intersection of several major transit corridors including a TTC subway station, a GO train
station and the Union-Pearson Express train. The current redevelopment plans contemplate a large mixed-use
community integrated with the surrounding transit services with a focus on high density residential, office, retail
and other community uses. The submitted application proposes approximately 1.7 million square feet of total
ground floor area, including 0.2 million square feet of commercial GLA and approximately 1,900 residential units.
The development plan contemplates neighbourhood retail and community uses, including a public park. The
Official Plan, Rezoning, Plan of Subdivision and Site Plan Applications have been submitted to the City of Toronto.
North Road,
Coquitlam, BC
The approximately 7.8 acre site is located at the southeast corner of North Road and Austin Avenue in Coquitlam.
The Master Development Plan proposes the redevelopment of the existing Cariboo Centre into a diverse range of
housing, retail, public amenity space, and childcare over four phases. The overall project, upon completion, will see
a total of approximately 2,500 new homes through both market residential and rental in 6 towers, along with
110,000 square feet of retail space within commercial podiums, including a new food store and a drug store within
Phase 1 and a daycare in both Phases 1 and 4. In addition, the overall project will deliver approximately 26,000
square feet of public plaza. The Master Development Plan was submitted to the City of Coquitlam in December
2023 with resubmission in May 2024. The entitlements process associated with the Master Development Plan
along with the Development Permit application for Phase 1 continue to progress.
Parkway Forest Drive,
Toronto, ON
The approximately 3 acre site is located at the southeast intersection of Parkway Forest Drive and Sheppard
Avenue East in Toronto. The site is located 350 meters from the Don Mills TTC subway station and currently
features a 19-storey rental building and ten rental townhouses. The proposed development will replace five of the
existing townhouses with a 33-storey residential building comprised of approximately 382 units (at 100% share).
This intensification will support future growth in the City of Toronto by providing additional rental housing stock in a
transit-connected neighbourhood. The Official Plan Amendment, Zoning By-law Amendment and Draft Plan of
Subdivision Applications have been submitted to the City of Toronto.
Photography Drive,
Toronto, ON
The approximately 7.7 acre site is located at the southwest corner of Eglinton Avenue West and Black Creek Drive
in Toronto. The site is within close proximity to several major transit corridors, including the Kitchener GO Line, the
Union-Pearson Express train and the future Eglinton Crosstown LRT. The proposed redevelopment is comprised of
seven mixed-use buildings including residential and retail uses. The application includes a total gross floor area of
approximately 2.1 million square feet and 2,400 residential units. Choice Properties continues to refine the vision
for a mixed-use, inclusive community where people can live and access amenities, services, transit, and a brand
new grocery store, all within walking distance. The Official Plan and Zoning By-law Amendment Applications have
been submitted to the City of Toronto.
Warden Avenue,
Toronto, ON
The approximately 6.5 acre site is located south of the intersection of St. Clair Avenue and Warden Avenue in
Toronto and 500 meters from the Warden TTC subway station. The current development plan includes
approximately 2,100 residential units, over 1.3 million square feet of gross floor area and a proposal for a public
park. The Trust has reached a settlement with the City of Toronto and is working to clear conditions prior to the
issuance of an Official Plan Amendment and Zoning By-law Amendment.
3.7
Future Pipeline
Choice Properties’ long-term development strategy is to create value through residential and mixed-use development. Beyond
the projects that are currently in planning, the Trust has identified more than approximately 70 sites encompassing over 500 acres
in its existing portfolio that provide potential for incremental residential and mixed-use density through the intensification of an
existing asset. Over 90% of the identified sites are in the greater Toronto, Montreal and Vancouver areas, providing the
opportunity to grow the residential platform in Canada’s largest cities. Choice Properties is actively reviewing and prioritizing
these sites to proceed with the rezoning and entitlement process.
40 • 2024 Annual Report
Choice Properties REIT
3.8
Mortgages, Loans and Notes Receivable
As a means to generate acquisition opportunities, Choice Properties has established a program with a group of strong real estate
developers whereby Choice Properties provides mezzanine and/or co-owner financing. Such financing activities generally provide
Choice Properties with an option or other rights to acquire an interest in the developed income producing property. Mortgages
and loans receivable represent amounts advanced under mezzanine loans, joint venture financing, vendor take-back financing
and other arrangements.
As at December 31, 2024, the Trust has issued $305,348 (December 31, 2023 - $264,394) of secured mortgages to third-party
borrowers. These loans have been extended to borrowers who are strategic partners and counterparties of the Trust and are
secured by real property assets.
During the year ended December 31, 2024, the Trust advanced four vendor take-back mortgages with a total face value of
$21,153 and a total fair value of $20,221 (Section 3.2). The mortgages bear interest at a weighted average rate of 6.22% and are
secured by the disposed properties.
On June 21, 2024, the Trust advanced a $20,000 loan to a development partner. The loan bears interest at a rate of 7.00%.
On October 9, 2024, the Trust advanced a $25,000 mezzanine loan to a developer. The loan bears interest at a rate of 5.00% and
is secured by a retail property in Brampton, Ontario.
On December 10, 2024, the Trust advanced a $15,000 mezzanine loan to a development partner. The loan bears interest at a rate
of prime rate plus 3.55% with a floor rate of 10.00% and is secured by a residential property in Ottawa, Ontario.
Holders of Exchangeable Units may, in lieu of receiving all or a portion of their distributions, choose to be loaned an amount from
Choice Properties Limited Partnership, and to have such distributions made on the first business day following the end of the
fiscal year in which such distribution would otherwise have been made. The loans do not bear interest and are due and payable in
full on the first business day following the end of the fiscal year during which the loan was made. During the year ended
December 31, 2024, GWL elected to receive distributions from Choice Properties Limited Partnership in the form of loans. As
such, non-interest bearing short-term notes totalling $299,807 were issued to GWL and were settled against distributions payable
by the Trust to GWL in January 2025. Non-interest bearing short-term notes totalling $295,851 with respect to the loans received
in the 2023 fiscal year were settled against distributions payable by the Trust to GWL in January 2024.
Proportionate Share Basis(1)
As at December 31, 2024
($ thousands)
GAAP Basis
Proportionate
Share Basis(1)(i)
Weighted
average term to
maturity (years)
Weighted
average interest
rate (%)
Mortgages receivable
$
399,655
$
305,348
1.0
8.16 %
Loans receivable
20,743
20,743
0.1
7.00 %
Notes receivable from GWL
299,807
299,807
—
— %
Mortgages, loans and notes receivable
$
720,205
$
625,898
(i)
Adjustment to proportionate share basis(1) eliminates mortgage receivable balances advanced to an equity accounted joint venture at the Trust’s share.
Proportionate Share Basis(1)
As at December 31, 2023
($ thousands)
GAAP Basis
Proportionate
Share Basis(1)(i)
Weighted
average term to
maturity (years)
Weighted
average interest
rate (%)
Mortgages receivable
$
360,150
$
264,394
1.1
8.62 %
Notes receivable from GWL
295,851
295,851
—
— %
Mortgages, loans and notes receivable
$
656,001
$
560,245
(i)
Adjustment to proportionate share basis(1) eliminates mortgage receivable balances advanced to an equity accounted joint venture at the Trust’s share.
2024 Annual Report • 41
Choice Properties REIT
3.9
Investment in Real Estate Securities
On March 31, 2022, the Trust disposed of six office assets to Allied. As consideration, the Trust was issued 11,809,145 Class B
Units with a value of $550,660 ($46.63 per unit) on the transaction date, and a promissory note with a fair value of $193,155. The
promissory note was repaid on December 29, 2023. As at December 31, 2024, the Trust holds an approximate 8.4% effective
interest in Allied through its ownership of the Class B Units. The Trust does not have significant influence over Allied.
Allied is a leading owner-operator of distinctive urban workspace in Canada’s major cities. As at December 31, 2024(i), Allied’s
income producing portfolio consisted of 186 properties across Canada totalling 14.3 million square feet in gross leasable area
and was valued at $8.6 billion. Allied reported net asset value of $5.8 billion or $41.25 per unit diluted at December 31, 2024(i).
The Class B Units are exchangeable into, and are economically equivalent to, the publicly traded units of Allied (“Allied Units”),
and were accompanied by a corresponding number of special voting units of Allied. There are no restrictions on the exchange of
Class B Units into Allied Units, but the Allied Units (if exchanged) are subject to a lock-up from the closing of the Transaction,
such that 25% of the Class B Units or Allied Units, as applicable, will be released from lock up every three months following the
first anniversary of closing of the Transaction. As at December 31, 2024, none of the Class B Units were subject to lock-up
(December 31, 2023 - 2,952,286).
As a holder of the Class B Units, the Trust is entitled to distributions paid by Allied. For the year ended December 31, 2024, the
Trust recognized distribution income of $21,260 (December 31, 2023 - $26,928) from its investment in Allied. For the year ended
December 31, 2023, $5,668 of the distribution income recognized was related to the special distribution announced by Allied on
December 15, 2023 as a result of the sale of their urban data centre portfolio. The distributions were recorded as investment
income.
The Class B Units are recorded at their fair value based on market trading prices of Allied’s publicly traded units. The closing price
for Allied’s publicly traded units on the last trading day of the year ended December 31, 2024 was $17.15 (December 31, 2023 -
$20.18). For the year ended December 31, 2024, the Trust recognized a loss of $35,782 (December 31, 2023 - loss of $64,006) on
its investment in Allied due to the change in the price of Allied’s publicly traded units. As at December 31, 2024 the Trust held
11,809,145 Class B Units with a fair value of $202,526 (December 31, 2023 - 11,809,145 Class B Units with a fair value of
$238,308).
($ thousands)
Year Ended
December 31, 2024
Year Ended
December 31, 2023
Balance, beginning of year
$
238,308
$
302,314
Adjustment to fair value of investment in real estate securities
(35,782)
(64,006)
Balance, end of year
$
202,526
$
238,308
(i)
Values are from Allied’s Annual Report, December 31, 2024. Please refer to Allied’s Annual Report for further details.
42 • 2024 Annual Report
Choice Properties REIT
4.
LIQUIDITY AND CAPITAL RESOURCES
4.1
Liquidity and Capital Structure
Choice Properties expects to fund its ongoing operations and finance future growth primarily through the use of: (i) existing cash;
(ii) cash flows from operations; (iii) short-term financing through the committed credit facility; (iv) the issuance of unsecured
debentures and equity (including Exchangeable Units), subject to market conditions; and (v) secured mortgages. Given
reasonable access to capital markets, Choice Properties does not foresee any impediments in obtaining financing to satisfy its
short-term and long-term financial obligations, including its capital investment commitments(2).
($ thousands)
As at
December 31, 2024
As at
December 31, 2023
Change $
Cash and cash equivalents - proportionate share basis(1)(i)
$
97,226
$
275,619
$
(178,393)
Unused portion of the credit facility
1,500,000
1,500,000
—
Liquidity
$
1,597,226
$
1,775,619
$
(178,393)
Unencumbered assets - proportionate share basis(1)
$
12,982,000
$
12,718,125
$
263,875
(i)
As at December 31, 2024, cash and cash equivalents included $16,102 of short-term investments (December 31, 2023 - $144,441).
4.2
Major Cash Flow Components
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Cash and cash equivalents, beginning of period - GAAP basis
$
73,931
$
59,268
$
14,663
$ 252,424
$
64,736
$ 187,688
Cash flows from operating activities
242,441
207,667
34,774
724,729
641,972
82,757
Cash flows (used in) from investing activities
(212,169)
62,033
(274,202)
(584,208)
(361,345)
(222,863)
Cash flows used in financing activities
(40,815)
(76,544)
35,729
(329,557)
(92,939)
(236,618)
Cash and cash equivalents, end of period - GAAP basis
$
63,388
$ 252,424
$ (189,036) $
63,388
$ 252,424
$ (189,036)
Three Months and Year Ended
During the three months and year ended, cash was primarily used for mortgages, loans and notes receivable advances,
development and intensification of investment properties, capital expenditures, acquisitions, and cash distributions paid on
Trust Units. Cash used was partially offset by cash flows generated by operations.
Cash flows from operating activities are partially used to fund ongoing operations and expenditures for leasing capital and
property capital(2).
2024 Annual Report • 43
Choice Properties REIT
4.3
Adjusted Cash Flow from Operations (“ACFO”)
Adjusted Cash Flow from Operations(1) excludes most of the short-term fluctuations in non-cash working capital, such as property
tax instalments, and the timing of semi-annual debenture instalments, although some fluctuations between quarters for
operational cash flows still exist. ACFO(1) also adjusts cash flows from operating activities for the working capital requirements
related to operating capital expenditures that maintain productive capacity of the investment properties, which adds volatility to
the values due to the seasonality of capital projects. Management includes this non-GAAP measure in its assessment of cash
flows available for distributions. Refer to Section 15.4, “Adjusted Cash Flow from Operations”, for a reconciliation of ACFO(1) to
cash flows from operating activities, as determined in accordance with GAAP.
The table below summarizes the ACFO(1) metrics:
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Adjusted cash flow from operations(1)
$ 129,708
$ 138,248
$
(8,540)
$ 641,135
$ 608,763
$
32,372
Cash distributions declared
137,505
135,683
1,822
548,783
541,529
7,254
Cash retained after cash distributions
$
(7,797)
$
2,565
$
(10,362)
$
92,352
$
67,234
$
25,118
ACFO(1) payout ratio
106.
0 %
98.
1 %
7.
9 %
85.
6 %
89.
0 %
(3.4) %
Three Months
ACFO(1) decreased for the three months compared to the same
prior year period primarily due to higher leasing and
maintenance spend due to timing, lower investment income, and
higher interest expense, partially offset by higher net operating
income and a favourable change in working capital. ACFO may
fluctuate each quarter due to the timing of maintenance capital
spend during the year.
Year Ended
ACFO(1) increased for the year ended compared to the prior
year primarily due to higher net operating income, lower
leasing and maintenance spend, and a favourable change in
working capital, partially offset by lower investment income
and higher interest expense net of higher interest income.
44 • 2024 Annual Report
Choice Properties REIT
4.4
Distribution Excess / Shortfall Analysis
The tables below summarize the excess or shortfall of certain GAAP and non-GAAP measures over cash distributions declared:
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Cash flows from operating activities
$
242,441
$
207,667
$
34,774
$
724,729
$
641,972
$
82,757
Less: Cash distributions declared
(137,505)
(135,683)
(1,822)
(548,783)
(541,529)
(7,254)
Excess of cash flows provided by
operating activities over cash
distributions declared
$
104,936
$
71,984
$
32,952
$
175,946
$
100,443
$
75,503
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Adjusted Cash Flow from Operations(1)(i)
$
129,708
$
138,248
$
(8,540) $
641,135
$
608,763
$
32,372
Less: Cash distributions declared
(137,505)
(135,683)
(1,822)
(548,783)
(541,529)
(7,254)
(Shortfall) Excess of ACFO after
distributions
$
(7,797) $
2,565
$
(10,362) $
92,352
$
67,234
$
25,118
ACFO may fluctuate each quarter due to the timing of maintenance capital spend during the year.
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Net income (loss)
$
791,916
$
(445,684) $
1,237,600
$
784,437
$
796,691
$
(12,254)
Add: Distributions on Exchangeable Units
included in net interest expense and other
financing charges
75,199
74,210
989
300,137
296,181
3,956
Net income attributable to Unitholders
excluding distributions on Exchangeable
Units
867,115
(371,474)
1,238,589
1,084,574
1,092,872
(8,298)
Less: Cash distributions declared
(137,505)
(135,683)
(1,822)
(548,783)
(541,529)
(7,254)
Excess (Shortfall) of net income
attributable to Unitholders, less
distributions on Exchangeable Units,
over cash distributions declared
$
729,610
$
(507,157) $
1,236,767
$
535,791
$
551,343
$
(15,552)
Management anticipates that distributions declared will, in the foreseeable future, continue to vary from net income (loss) as this
GAAP measure includes adjustments to fair value and other non-cash items(2).
2024 Annual Report • 45
Choice Properties REIT
4.5
Components of Total Adjusted Debt
Choice Properties’ debt structure was as follows:
Proportionate Share Basis(1)
As at December 31, 2024
($ thousands)
GAAP Basis
Proportionate
Share Basis(1)
Weighted
average term to
maturity (years)
Weighted
average interest
rate (%)
Construction loans (variable rate)
$
5,230
$
96,994
1.0
5.47 %
Senior unsecured debentures
5,400,000
5,400,000
5.4
4.20 %
Mortgages payable
1,300,158
1,815,675
8.0
4.12 %
Less: Debt placement costs, discounts and premiums(i)
(20,448)
(28,101)
Fixed rate debt
6,679,710
7,187,574
6.1
4.18%
Total adjusted debt, net
$
6,684,940
$
7,284,568
Proportionate Share Basis(1)
As at December 31, 2023
($ thousands)
GAAP Basis
Proportionate
Share Basis(1)
Weighted
average term to
maturity (years)
Weighted
average interest
rate (%)
Construction loans (variable rate)
$
49,603 $
160,370
0.7
6.84 %
Construction loans
40,456
40,456
7.3
2.08 %
Senior unsecured debentures
5,650,000
5,650,000
5.5
4.07 %
Mortgages payable
976,661
1,402,858
6.6
3.94 %
Less: Debt placement costs, discounts and premiums(i)
(20,797)
(28,632)
Fixed rate debt
6,646,320
7,064,682
5.7
4.03 %
Total adjusted debt, net
$
6,695,923 $
7,225,052
Construction Loans
For the purpose of financing the development of certain industrial and mixed-use & residential properties, various investments in
equity accounted joint ventures and co-ownerships have variable rate non-revolving construction facilities, in which certain
subsidiaries of the Trust guarantee its own share. As at December 31, 2024 the construction loans have a maximum capacity to
be drawn at the Trust’s ownership interest of $276,225, of which $270,700 relates to equity accounted joint ventures, as at
December 31, 2024 (December 31, 2023 - $447,987 and $328,261, respectively). The construction loans mature throughout 2025
and 2026.
As at December 31, 2024, $96,994 was drawn on the construction loans, of which $91,764 relates to equity accounted joint
ventures. The construction loans had a weighted average interest rate of 5.47% and a weighted average term to maturity of 1.0
year (December 31, 2023 - 5.88% and 2.0 years, respectively).
Credit Facility
Choice Properties has a $1,500,000 senior unsecured committed revolving credit facility provided by a syndicate of lenders.
During the second quarter of 2024, the Trust extended the maturity date for the credit facility from September 1, 2028 to June 13,
2029.
Under the credit facility, the Trust has the ability to draw funds at variable rates in either Canadian dollars or U.S. dollars.
Canadian dollar-denominated borrowings bear interest at either the Canadian bank prime rate plus 0.20% or Canadian Overnight
Repo Rate Average (“CORRA”) plus 1.20% and a daily compounded CORRA adjustment of approximately 0.30%, and U.S.
dollar-denominated borrowings bear interest at the U.S. prime rate plus 0.30% or Secured Overnight Financing Rate (“SOFR”)
plus 1.30%. The pricing is contingent on the credit ratings for Choice Properties from either DBRS remaining at BBB (high) or S&P
remaining at BBB+. Concurrently with any U.S. dollar draws, the Trust enters into cross currency swaps to exchange its U.S.
dollar borrowings into Canadian dollar borrowings. The Trust applies hedge accounting to the cross currency swaps.
As at December 31, 2024, $nil was drawn in Canadian dollar-denominated borrowings (December 31, 2023 - $nil) and $nil was
drawn in U.S. dollar-denominated borrowings (December 31, 2023 - $nil). The credit facility is subject to an annual commitment
fee of 0.24% of the undrawn balance. The unamortized balance for debt placement costs as at December 31, 2024 of $2,213
(December 31, 2023 - $2,232) was included in other assets.
The credit facility contains certain financial covenants. As at December 31, 2024, the Trust was in compliance with all its financial
covenants for the credit facility.
46 • 2024 Annual Report
Choice Properties REIT
Senior Unsecured Debentures
On February 8, 2024, the Trust paid in full upon maturity, at par, plus accrued and unpaid interest thereon, the $200 million
aggregate principal amount of the 4.29% Series D senior unsecured debentures outstanding. The repayment of the Series D
senior unsecured debentures was funded with proceeds from the repayment of the Allied promissory note received on December
29, 2023.
On May 23, 2024, the Trust completed the issuance, on a private placement basis, of $500 million aggregate principal amount of
Series U senior unsecured debentures bearing interest at a rate of 5.03% per annum and maturing on February 28, 2031.
On September 9, 2024, the Trust paid in full upon maturity, at par, plus accrued and unpaid interest thereon, the $550 million
aggregated principal amount of the 3.56% Series K senior unsecured debentures outstanding. The repayment of the Series K
senior unsecured debentures was primarily funded with proceeds from the issuance of Series U senior unsecured debentures.
Subsequent to year end, on January 10, 2025, the Trust paid in full upon maturity, at par, plus accrued and unpaid interest
thereon, the $350 million aggregated principal amount of the 3.55% Series J senior unsecured debentures outstanding. The
repayment of the Series J senior unsecured debenture was primarily funded by an advance on the Trust’s credit facility.
Subsequent to year end, on January 16, 2025, the Trust completed the issuance, on a private placement basis, of $300 million
aggregated principal amount of Series V senior unsecured debentures bearing interest at a rate of 4.29% per annum and
maturing on January 16, 2030. The Trust used the net proceeds to repay certain amounts drawn on its revolving credit facility
which were utilized to repay upon maturity its Series J senior unsecured debentures.
Summary of Total Adjusted Debt Activities
The following outlines the net changes to the components of Choice Properties’ variable rate debt on a GAAP basis and non-
GAAP proportionate share basis(1) during the year ended December 31, 2024:
GAAP Basis
Adjustment to
Proportionate
Share Basis(1)
Proportionate
Share Basis(1)
For the year ended December 31, 2024
($ thousands)
Credit facility
Construction
loans
Construction
loans(i)
Total adjusted
debt, variable rate
Principal balance outstanding, beginning of year
$
—
$
49,603
$
110,767
$
160,370
Issuances and advances
—
2,694
82,895
85,589
Repayments
—
(47,067)
(101,898)
(148,965)
Principal balance outstanding, end of year
$
—
$
5,230
$
91,764
$
96,994
(i)
Adjustment to proportionate share(1) reflects construction loans within equity accounted joint ventures.
2024 Annual Report • 47
Choice Properties REIT
The following outlines the changes to the components of Choice Properties’ fixed rate debt on a GAAP basis and non-GAAP
proportionate share basis(1) during the year ended December 31, 2024:
GAAP Basis
Adjustment to
Proportionate
Share Basis(1)
Proportionate
Share Basis(1)
For the year ended December 31, 2024
($ thousands)
Senior
unsecured
debentures
Mortgages
payable
Construction
loans
Mortgages
payable(i)
Total adjusted
debt, fixed rate
Principal balance outstanding, beginning of year
$ 5,650,000
$
976,661
$
40,456
$
426,197
$
7,093,314
Issuances and advances(ii)
500,000
283,865
19,069
147,358
950,292
Repayments
(750,000)
(81,674)
—
(12,093)
(843,767)
Assumed by purchaser
—
(7,586)
—
(7,705)
(15,291)
Assumed from seller
—
31,127
—
—
31,127
Transfer from equity accounted joint ventures(iii)
—
38,240
—
(38,240)
—
Loan reclassification(iv)
—
59,525
(59,525)
—
—
Principal balance outstanding, end of year
$ 5,400,000
$ 1,300,158
$
—
$
515,517
$
7,215,675
(i)
Adjustment to proportionate share(1) reflects mortgages payable within equity accounted joint ventures.
(ii)
Issuances and advances include $33,075 of mortgages assumed from the Trust’s partner, previously secured by the partner’s interest in the properties disposed
by the Trust and its partner during the second quarter of 2024, which were transferred to the Trust from the partner’s share of proceeds. These mortgages have
been secured by other properties held by the Trust.
(iii)
Transfer from equity accounted joint ventures includes the Trust’s share of mortgages payable previously secured by the disposed properties mentioned above
and the Trust’s share of the mortgages payable related to an acquisition which was transferred to investment properties.
(iv)
Loan reclassification includes the transfer of the Trust’s share of the loan secured by the rental portion of the Mount Pleasant Village development project from
construction loans to mortgages payable. The loan was funded through Canada Mortgage and Housing Corporation’s Rental Construction Financing Initiative
program and as such will require blended principal and interest payments starting twelve months after stabilization (as defined by the loan agreement) for the
remainder of its term.
Schedules of Repayments and Cash Flow Activities
The schedule of principal repayments of total long term debt on a GAAP basis and non-GAAP proportionate share basis(1) based
on maturity is as follows:
GAAP Basis
Adjustment to
Proportionate Share Basis(1)
Proportionate
Share Basis(1)
As at December 31, 2024
($ thousands)
Credit
facility
Senior
unsecured
debentures
Mortgages
payable
Construction
loans
Mortgages
payable(i)
Construction
loans(i)
Total
2025
$
—
$
550,000
$
131,014
$
5,230
$
10,239
$
64,682
$
761,165
2026
—
350,000
153,945
—
15,832
27,082
546,859
2027
—
500,000
94,399
—
31,362
—
625,761
2028
—
750,000
49,095
—
26,455
—
825,550
2029
—
750,000
39,466
—
36,566
—
826,032
Thereafter
—
2,500,000
832,239
—
395,063
—
3,727,302
Total adjusted debt
outstanding
$
—
$ 5,400,000
$
1,300,158
$
5,230
$
515,517
$
91,764
$
7,312,669
(i)
Adjustment to proportionate share(1) reflects mortgages payable and construction loans within equity accounted joint ventures.
In order to reduce refinancing risk, Choice Properties attempts to stagger debt maturities and future financing obligations to
ensure no large maturities or financing needs occur in any one year.
48 • 2024 Annual Report
Choice Properties REIT
(i)
Presented on a proportionate share basis(1).
(ii)
Includes cash and cash equivalents.
(iii)
The credit facility matures on June 13, 2029.
2024 Annual Report • 49
Choice Properties REIT
4.6
Contractual Obligations
The undiscounted future principal and interest payments on Choice Properties’ debt instruments and other contractual
obligations as at December 31, 2024 were as follows:
($ thousands)
2025
2026
2027
2028
2029
Thereafter
Total
Senior unsecured debentures
$
770,807 $
556,492 $
690,776 $
917,988 $
889,076 $ 2,977,809 $ 6,802,948
Mortgage payable(i)
183,367
202,216
138,241
89,232
77,297
993,649
1,684,002
Mortgage payable(ii)
27,344
32,709
46,957
44,500
51,663
468,971
672,144
Total mortgage payable
210,711
234,925
185,198
133,732
128,960
1,462,620
2,356,146
Construction loan(i)
5,303
—
—
—
—
—
5,303
Construction loan(ii)
65,176
27,082
—
—
—
—
92,258
Total construction loans
70,479
27,082
—
—
—
—
97,561
Other(iii)
176,675
129,296
217,686
389
389
614
525,049
Total
$ 1,228,672 $
947,795 $ 1,093,660 $ 1,052,109 $ 1,018,425 $ 4,441,043 $ 9,781,704
(i)
Compiled on a GAAP basis.
(ii)
Mortgages payable and construction loans held within equity accounted joint ventures.
(iii)
As at December 31, 2024, Choice Properties had commitments of $525,000 for future capital expenditures related to ongoing development and property capital projects, and
other contractual obligations such as operating rents, of which $366,000 related to equity accounted joint ventures.
4.7
Financial Condition
Choice Properties is subject to certain financial and non-financial covenants on its senior unsecured debentures and credit facility
that include maintaining certain leverage and debt service ratios. These ratios are monitored by management on an ongoing basis
to ensure compliance. Choice Properties was in compliance with all these covenants as at December 31, 2024 and December 31,
2023.
The Trust’s compliance with leverage and coverage ratios, as they relate to its debentures, are shown below:
As at
December 31, 2024
As at
December 31, 2023
Adjusted Debt to Total Assets(1)(i)
Limit: Maximum excluding convertible debt is 60.0%
40.0 %
40.4 %
Debt Service Coverage Ratio(1)(i)
Limit: Minimum 1.5x
3.0x
3.0x
Adjusted Debt to EBITDAFV(1)(i)(ii)(iii)(iv)(v)
7.0x
7.2x
Interest Coverage Ratio(1)(iii)(iv)
3.3x
3.4x
(i)
Debt ratios exclude Exchangeable Units. The ratios are non-GAAP financial measures calculated based on the Trust Indentures, as supplemented.
(ii)
Refer to Section 15.6, “Earnings Before Interest, Taxes, Depreciation, Amortization and Fair Value” for a reconciliation of net income (loss) to EBITDAFV used in
this ratio.
(iii)
Refer to Section 15.5, “Net Interest Expense and Other Financing Charges Reconciliation” for a reconciliation of proportionate share basis(1) to GAAP basis for
net interest expense and other financing charges used in this ratio.
(iv)
The senior unsecured debentures and credit facility financial covenants do not include the Adjusted Debt to EBITDAFV(1) and Interest Coverage Ratio(1) metrics.
These metrics are used to assess financial leverage and are useful in determining the Trust’s ability to meet financial obligations. Refer to Section 15 “Non-GAAP
Financial Measures”.
(v)
Adjusted Debt to EBITDAFV, net of cash(1) was 6.9x as at December 31, 2024 and 7.0x as at December 31, 2023.
4.8
Credit Ratings
Choice Properties’ debt securities are rated by two independent credit rating agencies: DBRS and S&P.
On May 29, 2024, S&P upgraded the Choice Properties rating to BBB+ with a stable outlook. On August 27, 2024, DBRS
confirmed the Choice Properties rating at BBB (high) with a stable trend. A credit rating of BBB- or higher is an investment grade
rating.
The following table sets out the current credit ratings for Choice Properties as at December 31, 2024:
DBRS
S&P
Credit ratings (Canadian standards)
Credit rating
Trend
Credit rating
Outlook
Issuer rating
BBB (high)
Stable
BBB+
Stable
Senior unsecured debentures
BBB (high)
Stable
BBB+
N/A
50 • 2024 Annual Report
Choice Properties REIT
4.9
Unit Equity
Unit equity, for the purposes of this MD&A, includes both Units and Exchangeable Units, which are economically equivalent to
Units and receive equal distributions. The following is a continuity of Choice Properties’ unit equity:
Year ended
December 31, 2024
Year ended
December 31, 2023
Units, beginning of year
327,859,972
327,771,149
Units issued under unit-based compensation arrangements
368,610
329,716
Units repurchased for unit-based compensation arrangements
(304,610)
(240,893)
Units, end of year
327,923,972
327,859,972
Exchangeable Units, end of year
395,786,525
395,786,525
Total Units and Exchangeable Units, end of year
723,710,497
723,646,497
Normal Course Issuer Bid (“NCIB”)
Choice Properties, may, from time to time, purchase Units in accordance with the rules prescribed under applicable stock
exchange or regulatory policies. On November 19, 2024, Choice Properties received approval from the TSX to purchase up to
27,566,130 Units during the twelve-month period from November 21, 2024 to November 20, 2025, by way of a NCIB over the
facilities of the TSX or through alternative trading systems. Choice Properties intends to file a Notice of Intention to make a NCIB
with the TSX upon the expiry of its current NCIB.
Units Repurchased for Unit-Based Compensation Arrangements
The Trust acquired Units under its NCIB during the years ended December 31, 2024 and 2023, which were then granted to certain
employees in connection with the Unit-Settled Restricted Unit Plan, and are subject to vesting conditions and disposition
restrictions.
Units Issued under Unit-Based Compensation Arrangements
Units were issued as part of settlements under the Unit Option Plan and grants under the Unit-Settled Restricted Unit Plan, as
applicable.
Distributions
The distributions declared for the three months and years ended December 31, 2024 and 2023, including distributions to holders
of Exchangeable Units, were as follows:
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Total distributions declared
$
137,505
$
135,683
$
1,822
$
548,783
$
541,529
$
7,254
Choice Properties’ Board retains full discretion with respect to the timing and quantum of distributions and expects to distribute
the amount necessary to ensure the Trust will not be liable to pay income taxes under Part I of the Income Tax Act (Canada).
Accordingly, no provision for current income taxes payable is required, except for amounts incurred for the Trust’s Canadian
corporate subsidiaries. The taxable income allocated to the Trust and Exchangeable Unitholders may vary in certain taxation
years. Over time, such differences, in aggregate, are expected to be minimal.
On February 14, 2024, the Board reviewed and approved an increase of distributions to $0.76 per unit per annum from the
previous rate of $0.75 per unit per annum (an increase of 1.3%). The increase was effective for Unitholders of record on March 31,
2024.
At its most recent meeting on February 12, 2025, the Board reviewed and approved an increase of distributions to $0.77 per unit
per annum from the previous rate of $0.76 per unit per annum (an increase of 1.3%). The increase will be effective for Unitholders
of record on March 31, 2025.
In determining the amount of distributions to be made to Unitholders, Choice Properties’ Board considers many factors, including
provisions in its Declaration of Trust, macro-economic and industry specific environments, the overall financial condition of
the Trust, future capital requirements, debt covenants, and taxable income. In accordance with Choice Properties’ Distribution
Policy, management and the Board regularly review Choice Properties’ rate of distributions to assess the stability of cash and
non-cash distributions.
2024 Annual Report • 51
Choice Properties REIT
4.10
Net Asset Value
NAV(1) is an alternate measure of equity and includes Unitholder’s Equity and the fair value of the Trust’s Exchangeable Units.
Under IFRS Exchangeable Units are considered debt. The Exchangeable Units are not required to be repaid and the holder of
these units has the right to convert them into Units, therefore management considers the Exchangeable Units to be equivalent to
equity.
($ thousands)
As at December 31, 2024
As at December 31, 2023
Change
Unitholders’ equity
$
4,899,800
$
4,368,502
$
531,298
Exchangeable Units
5,283,750
5,521,222
(237,472)
NAV(1)
$
10,183,550
$
9,889,724
$
293,826
NAV(1) per unit
$
14.07
$
13.67
$
0.40
Trust Units and Exchangeable Units, end of year
723,710,497
723,646,497
64,000
Year Ended
NAV(1) increased by $293.8 million or $0.40 per unit during the year ended December 31, 2024, primarily due to net contributions
from FFO of $746.8 million and a fair value gain on investment properties of $118.8 million, partially offset by distributions of
$548.8 million.
4.11
Financial Instruments
Designated hedging derivatives consist of interest rate swaps to hedge the interest rate associated with an equivalent amount of
variable rate mortgages, and cross currency swaps to hedge foreign exchange associated with the equivalent amount borrowed
in U.S. dollars on the Trust’s credit facility. During the year ended December 31, 2024, an interest swap was settled upon maturity
of the underlying variable rate mortgage. As at December 31, 2024, the interest rates associated with the interest rate swaps
ranged from 2.8% to 5.0% (December 31, 2023 - 2.8% to 5.0%).
The impact of the hedging instruments on the consolidated balance sheets was as follows:
($ thousands)
Maturity
Date
Notional
Amount
As at
December 31, 2024
As at
December 31, 2023
Derivative assets
Interest rate swaps
Nov 2025 - Jun 2030
$
76,477
$
5,619
$
7,872
Total derivative assets
$
76,477
$
5,619
$
7,872
Derivative liabilities
Interest rate swaps
March 1, 2030
$
74,989
$
2,048
$
1,337
Total derivative liabilities
$
74,989
$
2,048
$
1,337
During the year ended December 31, 2024, Choice Properties recorded an unrealized fair value loss in other comprehensive loss
of $2,964 (December 31, 2023 - unrealized fair value loss of $6,374).
4.12
Off-Balance Sheet Arrangements
Choice Properties issues letters of credit to support guarantees related to its investment properties including maintenance and
development obligations to municipal authorities. The Trust has aggregate letters of credit with a maximum capacity of $83,135 at
the Trust’s ownership interest. As at December 31, 2024, the aggregate gross potential liability related to these letters of credit
totalled $37,479 (December 31, 2023 - $37,668).
52 • 2024 Annual Report
Choice Properties REIT
5.
RESULTS OF OPERATIONS
Choice Properties’ results, as reported under GAAP, for the three months and year ended December 31, 2024 and December 31,
2023 are summarized below:
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
% Change
2024
2023
Change $
% Change
Net Operating Income
Rental revenue
$ 344,861
$ 329,109
$
15,752
4.8 % $ 1,358,105 $ 1,309,170 $
48,935
3.7 %
Property operating costs
(97,375)
(94,386)
(2,989)
3.2 %
(381,568)
(369,060)
(12,508)
3.4 %
247,486
234,723
12,763
5.4 %
976,537
940,110
36,427
3.9 %
Residential Inventory Income
Gross sales
—
25,634
(25,634)
(100.0)%
11,268
25,634
(14,366)
(56.0)%
Cost of sales
—
(21,008)
21,008
(100.0)%
(9,234)
(21,008)
11,774
(56.0)%
—
4,626
(4,626)
(100.0)%
2,034
4,626
(2,592)
(56.0)%
Other Income and Expenses
Interest income
10,247
9,971
276
2.8 %
52,593
41,414
11,179
27.0 %
Investment income(i)
5,315
10,983
(5,668)
(51.6)%
21,260
26,928
(5,668)
(21.0)%
Fee income
712
1,125
(413)
(36.7)%
3,389
4,287
(898)
(20.9)%
Net interest expense and other
financing charges
(147,490)
(143,373)
(4,117)
2.9 %
(586,388)
(566,147)
(20,241)
3.6 %
General and administrative
expenses
(16,987)
(19,599)
2,612
(13.3)%
(67,833)
(64,230)
(3,603)
5.6 %
Share of income from equity
accounted joint ventures
37,820
8,069
29,751
368.7 %
49,138
39,069
10,069
25.8 %
Amortization of intangible assets
(250)
(250)
—
— %
(1,000)
(1,000)
—
— %
Transaction costs and other
related expenses
(55)
—
(55)
n/a
38,560
(34)
38,594
n/a
Adjustment to fair value of unit-
based compensation
1,927
(1,435)
3,362
(234.3)%
657
938
(281)
(30.0)%
Adjustment to fair value of
Exchangeable Units
704,500
(502,649)
1,207,149
(240.2)%
237,472
320,587
(83,115)
(25.9)%
Adjustment to fair value of
investment properties
(16,112)
(74,445)
58,333
(78.4)%
92,731
114,150
(21,419)
(18.8)%
Adjustment to fair value of
investment in real estate
securities
(36,254)
26,570
(62,824)
(236.4)%
(35,782)
(64,006)
28,224
(44.1)%
Income (Loss) before Income
Taxes
790,859
(445,684)
1,236,543
(277.4)%
783,368
796,692
(13,324)
(1.7) %
Income tax recovery (expense)
1,057
—
1,057
n/a
1,069
(1)
1,070
n/a
Net Income (Loss)
$ 791,916
$ (445,684) $ 1,237,600
(277.7)% $ 784,437
$ 796,691
$
(12,254)
(1.5) %
(i)
Investment income is comprised of distributions from the Trust’s investment in Allied.
Adjustments to fair value can vary widely from period to period, as they are impacted by market factors such as the Trust’s Unit
price, Allied’s publicly traded unit price, and market capitalization rates. These market factors can have a significant impact on the
Trust’s net income.
Three Months
The Trust reported a net income of $791.9 million for the three
month period compared to a net loss of $445.7 million for the
same prior year period. The increase was primarily due to
changes in certain non-cash adjustments to fair value
including: a $1,207.1 million favourable change in the
adjustment to fair value of the Trust’s Exchangeable Units due
to the decrease in the Trust’s unit price and a $58.3 million
favourable change in the adjustment to fair value of investment
properties.
The favourable fair value changes described above were
partially offset by a $62.8 million unfavourable change in the
adjustment to fair value of the investment in real estate
securities of Allied, driven by the decrease in Allied’s unit price
in the quarter.
Year Ended
The Trust reported a net income of $784.4 million for the year
ended compared to a net income of a $796.7 million for the
prior year. The decrease was primarily due to changes in
certain non-cash adjustments to fair value including: a $83.1
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 $21.4 million unfavourable change in
the adjustment to fair value of investment properties.
The unfavourable fair value changes described above were
partially offset by a $36.4 million increase in net operating
income and a reversal of a $38.6 million transaction related
provision during the second quarter of 2024 that was
determined to be no longer required.
Choice Properties REIT
2024 Annual Report • 53
Choice Properties REIT
Rental Revenue and Property Operating Costs
Rental revenue is comprised primarily of base rent, including straight-line rent, and recoveries from tenants for property taxes,
insurance, operating costs, and qualifying capital expenditures. Growth in rental revenue is materially impacted by newly acquired
or constructed assets.
Property operating costs are comprised primarily of expenses to manage and maintain the properties for the benefit of the
tenants, including realty taxes and insurance, that are recoverable under the leases of most tenants. Non-recoverable operating
costs do not directly benefit the tenants and include property management fees paid by the Trust for properties managed by its
partners.
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Rental revenue
$
344,861
$
329,109
$
15,752
$ 1,358,105
$ 1,309,170
$
48,935
Property operating costs
(97,375)
(94,386)
(2,989)
(381,568)
(369,060)
(12,508)
Net Operating Income
$
247,486
$
234,723
$
12,763
$
976,537
$
940,110
$
36,427
Three Months and Year Ended
Net operating income increased for the three months and year ended compared to the prior year periods primarily due to
increased rental revenue from higher rental rates on renewals, new leasing, and contractual rent steps mainly in the retail and
industrial portfolios. Further contributing to the increase were higher recoveries, net acquisitions and completed developments.
In addition, the increase for the year ended included the reversal of a provision in the industrial portfolio following the resolution
of a tenant dispute.
Rental revenue for the three months and year ended included lease surrender revenue of $2.5 million and $11.2 million,
respectively, compared to $0.1 million and $14.8 million in the prior year. The current year lease surrender revenue was primarily
related to the right-sizing of four Loblaw grocery stores and a store closure at an Alberta property.
Residential Inventory Income
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Gross sales
$
—
$
25,634
$
(25,634) $
11,268
$
25,634
$
(14,366)
Cost of sales
—
(21,008)
21,008
(9,234)
(21,008)
11,774
Residential Inventory Income
$
—
$
4,626
$
(4,626) $
2,034
$
4,626
$
(2,592)
Three Months and Year Ended
Residential inventory income decreased for the three months and year ended compared to the prior year periods due to fewer
sales of residential units in 2024 than in 2023. The Trust recognized gross sales and cost of sales related to the sale of the
Trust’s ownership interest of 36 condominium units of its Mount Pleasant Village residential project in Brampton, Ontario during
the first quarter of 2024, compared to 94 units in fourth quarter of 2023.
54 • 2024 Annual Report
Interest Income
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Interest income from mortgages and loans receivable
$
6,505
$
7,109
$
(604) $
24,031
$
25,933
$
(1,902)
Income earned from financial real estate assets
2,969
2,262
707
11,772
9,102
2,670
(Loss) income from financial real estate assets due to
changes in value
(409)
(1,024)
615
3,206
1,897
1,309
Other interest income
1,182
1,624
(442)
13,584
4,482
9,102
Interest Income
$
10,247
$
9,971
$
276
$
52,593
$
41,414
$
11,179
Three Months
Interest income increased for the three months compared to
the prior year period primarily due to additional income earned
from financial real estate assets.
The increase was partially offset by a decrease in interest from
mortgages and loans receivable as a result of the net
repayments of mortgages receivable over the past twelve
months and a decrease in interest income earned on excess
cash during the quarter compared to the same prior year
quarter.
Year Ended
Interest income increased for the year ended compared to the
prior year primarily due to additional interest income earned on
excess cash invested in a GIC from the proceeds of the
issuance of Series U debentures in the second quarter of 2024
before using the proceeds to repay a portion of the Series K
debentures upon maturity in the third quarter of 2024. Further
contributing to the increase was additional income earned
from financial real estate assets.
These increases were partially offset by a decrease in interest
from mortgages and loans receivable as a result of the net
repayments of mortgages receivable over the past twelve
months.
Fee Income
Fees charged to third parties include property management fees, leasing fees, and project management fees relating to co-owned
properties which serve as a cash flow supplement to enhance returns from the co-owned assets. Fee income from third parties is
impacted by changes in the portfolio along with the timing of leasing transactions and project activity. Choice Properties provides
Wittington with property management services for certain properties with third-party tenancies and development consulting
services on a fee for service basis (see Section 9, “Related Party Transactions”).
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Fees charged to related party
$
62
$
167
$
(105) $
320
$
830
$
(510)
Fees charged to third parties
650
958
(308)
3,069
3,457
(388)
Fee Income
$
712
$
1,125
$
(413) $
3,389
$
4,287
$
(898)
Three Months and Year Ended
Fee income decreased for the three months and year ended compared to the prior year periods primarily due to a decrease in
development consulting fees from Wittington and a decrease in leasing and project management services provided to third
parties.
Choice Properties REIT
2024 Annual Report • 55
Net Interest Expense and Other Financing Charges
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Interest on senior unsecured debentures
$
57,064
$
57,974
$
(910) $
231,621
$
220,246
$
11,375
Interest on mortgages and construction loans
13,934
10,659
3,275
48,286
41,898
6,388
Interest on credit facility
958
612
346
4,105
9,638
(5,533)
Interest on right-of-use lease liabilities
10
13
(3)
45
63
(18)
Amortization of debt discounts and premiums
135
50
85
665
30
635
Amortization of debt placement costs
1,140
1,160
(20)
4,577
4,639
(62)
Capitalized interest(i)
(950)
(1,305)
355
(3,048)
(6,548)
3,500
72,291
69,163
3,128
286,251
269,966
16,285
Distributions on Exchangeable Units(ii)
75,199
74,210
989
300,137
296,181
3,956
Net interest expense and other financing charges
$
147,490
$
143,373
$
4,117
$
586,388
$
566,147
$
20,241
(i)
Interest was capitalized to qualifying development projects based on a weighted average interest rate of 4.19% and 4.13% for the three months and year ended
December 31, 2024, respectively (December 31, 2023 - 4.04% and 4.05%, respectively).
(ii)
Represents interest on indebtedness due to GWL.
Three Months and Year Ended
Net interest expense and other financing charges increased for the three months and year ended compared to the prior year
periods primarily due to new debt issuances over the past twelve months bearing interest at higher rates than maturing debt and
a decrease in capitalized interest following the completion of several significant developments in the fourth quarter of 2023 and
in the first quarter of 2024.
In addition, the interest on senior unsecured debentures increased for the year ended as a result of the issuance of the
$500 million Series U senior unsecured debentures, bearing interest at 5.03% in the second quarter of 2024, the proceeds of
which were used to repay a portion of the $550 million Series K debentures, bearing interest at 3.56%, upon maturity in the third
quarter. Prior to the repayment of Series K, proceeds of the Series U issuance were invested in a GIC earning interest at a higher
rate than the debentures.
56 • 2024 Annual Report
Choice Properties REIT
General and Administrative Expenses
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Salaries, benefits and employee costs
$
18,054
$
20,095
$
(2,041) $
71,880
$
71,080
$
800
Investor relations and other public entity costs
792
730
62
3,268
3,301
(33)
Professional fees
961
1,597
(636)
7,206
5,112
2,094
Information technology costs
2,823
3,152
(329)
9,368
8,273
1,095
Services Agreement expense charged by
related party(i)
1,247
1,238
9
4,988
4,970
18
Amortization of other assets
315
321
(6)
1,254
1,311
(57)
Office related costs
611
570
41
1,828
1,812
16
Other
1,092
980
112
3,389
3,225
164
25,895
28,683
(2,788)
103,181
99,084
4,097
Less:
Capitalized to properties under development
(3,428)
(3,945)
517
(13,159)
(13,811)
652
Allocated to recoverable operating expenses
(5,480)
(5,139)
(341)
(22,189)
(21,043)
(1,146)
General and administrative expenses
$
16,987
$
19,599
$
(2,612) $
67,833
$
64,230
$
3,603
(i)
The Services Agreement is described in Section 9, “Related Party Transactions”.
Three Months
General and administrative expenses decreased for the three
months compared to the prior year period primarily due to
lower
salaries,
benefits
and
employee
costs,
lower
professional fees, and the timing of information technology
costs. The decrease is partially offset by restructuring costs
related to outsourcing a portion of the Trust’s operational
accounting function.
Year Ended
General and administrative expenses increased for the year
ended compared to the prior year primarily due to
restructuring costs related to outsourcing a portion of the
Trust’s operational accounting function, higher expenditures
related to information technology, and certain other expenses.
Choice Properties REIT
2024 Annual Report • 57
6.
LEASING ACTIVITY
Choice Properties’ leasing activities are centred on driving value by:
•
focusing on property operations and striving for superior service to tenants;
•
managing properties to maintain high levels of occupancy;
•
increasing rental rates when market conditions permit; and
•
adding tenants in complementary business sectors to retail sites anchored by Loblaw food and drug stores.
The following table details the changes for in-place occupancy by segment for the three months ended December 31, 2024:
(in thousands of
square feet except
where otherwise
indicated)
Retail(i)
Industrial(ii)
Mixed-Use & Residential(iii)
Total Portfolio
Leasable Occupied
%
Rate(iv) Leasable Occupied
%
Rate(iv) Leasable Occupied
% Leasable Occupied
% Rate(iv)
Sep. 30, 2024
44,479
43,423 97.6 % $ 17.05
19,898
19,515 98.1 % $ 9.68
1,157
1,096 94.7 %
65,534
64,034 97.7 % $ 14.83
New Leasing
—
65
$ 27.16
—
14
$ 10.21
—
—
—
79
$ 23.96
Net Expiries(v)
—
(108)
$ 20.32
—
(70)
$ 11.48
—
(6)
—
(184)
$ 15.98
Absorption
—
(43)
—
(56)
—
(6)
—
(105)
Portfolio
changes(vi)
—
24
1,027
1,027
1
—
1,028
1,051
Dec. 31, 2024
44,479
43,404 97.6 % $ 17.13
20,925
20,486 97.9 % $ 9.76
1,158
1,090 94.1 %
66,562
64,980 97.6 % $ 14.92
Renewals
377
$ 20.37
223
$ 10.70
10
610
$ 16.08
Long Term Renewal Spread(vii)
16.0 %
37.0 %
21.6 %
Retention Ratio
77.7 %
76.1 %
62.5 %
76.8 %
(i)
Includes 668,000 sq. ft. that represents the building area on properties where the Trust has leased the underlying sites to the tenants through ground leases
(September 30, 2024 - 674,000 sq. ft.).
(ii)
Includes 2,112,000 sq. ft. that represents the building area on properties where the Trust has leased the underlying sites to the tenants through ground leases
(September 30, 2024 - 1,191,000 sq. ft.).
(iii)
Occupancy represents retail and office portion of mixed-use properties; residential units are excluded.
(iv)
Weighted average rate per occupied square foot excludes ground leases. Total portfolio excludes Mixed-Use & Residential.
(v)
Net expiries reflects spaces that naturally expired and were not renewed.
(vi)
Portfolio changes represents changes in occupied square footage arising from acquisitions, dispositions, intensifications, expansions, and transfers from
properties under development.
(vii)
Long-term renewal spread is calculated as the difference between the average rental rate of the renewal term and the expiring rental rate. Comparing the rental
rate during the first year of the renewal term versus the expiring rate, spread was 17.3%. Total portfolio excludes Mixed-Use & Residential.
Three Months
Overall occupancy decreased slightly to 97.6% as at December 31, 2024 from 97.7% as at September 30, 2024.
Occupancy remained stable in the retail segment primarily due to positive portfolio changes, offset by negative absorption of
approximately 43,000 square feet. Positive portfolio changes of approximately 24,000 square feet of occupied GLA in the retail
segment included the completion of four intensifications and the acquisition of one retail property, partially offset by the
disposition of three properties.
Occupancy decreased by 0.2% in the industrial segment primarily due to negative absorption of approximately 56,000 square
feet mainly in the Nova Scotia and Ontario portfolios, partially offset by the positive impact of portfolio changes. Positive
portfolio changes of approximately 1,027,000 square feet of occupied GLA in the industrial segment included the acquisition of
a 50% interest in a Loblaw distribution centre near Halifax, Nova Scotia and the completion of a Loblaw distribution centre in
Caledon, Ontario, in which the Trust owns an 85% interest.
58 • 2024 Annual Report
Choice Properties REIT
Choice Properties REIT
The following table details the changes for in-place occupancy by segment for the year ended December 31, 2024:
(in thousands of
square feet except
where otherwise
indicated)
Retail(i)
Industrial(ii)
Mixed-Use & Residential(iii)
Total Portfolio
Leasable Occupied
%
Rate(iv) Leasable Occupied
%
Rate(iv) Leasable Occupied
% Leasable Occupied
%
Rate(iv)
Dec. 31, 2023
44,691
43,667 97.7 % $ 16.80
19,655
19,458 99.0 % $ 9.06
1,134
1,068 94.2 %
65,480
64,193 98.0 % $ 14.49
New Leasing
—
197
$ 26.83
—
166
$ 11.54
—
13
—
376
$ 19.30
Net Expiries(v)
—
(300)
$ 22.40
—
(409)
$ 8.65
—
(6)
—
(715)
$ 13.92
Absorption
—
(103)
—
(243)
—
7
—
(339)
Portfolio
changes(vi)
(212)
(160)
1,270
1,271
24
15
1,082
1,126
Dec. 31, 2024
44,479
43,404 97.6 % $ 17.13
20,925
20,486 97.9 % $ 9.76
1,158
1,090 94.1 %
66,562
64,980 97.6 % $ 14.92
Renewals
4,163
$ 16.37
1,407
$ 12.39
41
5,611
$ 15.26
Long Term Renewal Spread(vii)
8.6 %
85.6 %
20.2 %
Retention Ratio
93.3 %
77.5 %
87.2 %
88.7 %
(i)
Includes 668,000 sq. ft. that represents the building area on properties where the Trust has leased the underlying sites to the tenants through ground leases
(December 31, 2023 - 657,000 sq. ft.).
(ii)
Includes 2,112,000 sq. ft. that represents the building area on properties where the Trust has leased the underlying sites to the tenants through ground leases
(December 31, 2023 - 1,191,000 sq. ft.).
(iii)
Occupancy represents retail and office portion of mixed-use properties; residential units are excluded.
(iv)
Weighted average rate per occupied square foot excludes ground leases. Total portfolio excludes Mixed-Use & Residential.
(v)
Net expiries reflects spaces that naturally expired and were not renewed.
(vi)
Portfolio changes represents changes in occupied square footage arising from acquisitions, dispositions, intensifications, expansions, and transfers from
properties under development.
(vii)
Long-term renewal spread is calculated as the difference between the average rental rate of the renewal term and the expiring rental rate. Comparing the rental
rate during the first year of the renewal term versus the expiring rate, spread was 17.5%. Total portfolio excludes Mixed-Use & Residential.
2024 Annual Report • 59
Year Ended
Overall occupancy for the year ended December 31, 2024 decreased to 97.6% from 98.0% as at December 31, 2023.
Occupancy decreased slightly in the retail segment primarily due to negative absorption of approximately 103,000 square feet
and the negative impact from portfolio changes. Negative portfolio changes of approximately 160,000 square feet of occupied
GLA in the retail segment included the disposition of seven properties and the removal of the GLA associated with the Trust’s
Carlaw Avenue property where the Trust has entered into an agreement with the Province of Ontario to facilitate the
construction of a transit station at the site. The decrease was partially offset by the acquisition of a partner’s share of one
Alberta property, two retail properties from Loblaw, and three properties acquired from third parties.
Occupancy decreased by 1.1% in the industrial segment primarily due to negative absorption of approximately 243,000 square
feet as a result of several vacancies in the Ontario and Alberta portfolios, partially offset by the positive impact of portfolio
changes. Positive portfolio changes of approximately 1,271,000 square feet of occupied GLA in the industrial segment were
primarily due to the completion of a Loblaw distribution centre in Caledon, Ontario, in which the Trust owns an 85% interest,
and the acquisition of a 50% interest in two properties from Loblaw, partially offset by the disposition of an Ontario property.
At December 31, 2024, the Trust had 29 retail sites and 6 industrial sites leased to tenants through ground leases (December 31,
2023 - 30 retail and 5 industrial). Tenants have constructed buildings on sites with gross building area of approximately
2,780,000 sq. ft. at the Trust’s share (December 31, 2023 - 1,848,000 sq. ft.). In addition, the Trust has 177 gas bars in its retail
segment (December 31, 2023 - 178), which have been excluded from the occupancy tables.
Choice Properties’ principal tenant, Loblaw, represents 58.9% of its total GLA (December 31, 2023 - 57.7%). During the current
year, Choice and Loblaw renewed 46 of a tranche of 48 leases expiring in 2025, comprising 3.08 million of 3.20 million square
feet, at a weighted average spread of 8.4% and a weighted average extension term of 5.0 years. The 46 renewals included one
industrial lease.
As at December 31, 2024
As at December 31, 2023
(in millions of square feet except where
otherwise indicated)
Portfolio
GLA
Occupied
GLA
Occupancy
(%)
WALT(i)
(years)
Portfolio
GLA
Occupied
GLA
Occupancy
(%)
WALT(i)
(years)
Loblaw banners(ii)
39.2
39.2
100.0 %
6.6
37.8
37.8
100.0 %
6.5
Third-party tenants(iii)
27.4
25.8
94.2 %
5.3
27.7
26.4
95.4 %
5.4
Total commercial GLA
66.6
65.0
97.6 %
6.1
65.5
64.2
98.0 %
6.0
(i)
Weighted average lease term.
(ii)
Included in Loblaw banners GLA is 1.9 million sq. ft. related to ground leases (December 31, 2023 - 0.9 million sq. ft.).
(iii)
Included in third-party tenants GLA is 0.9 million sq. ft. related to ground leases (December 31, 2023 - 0.9 million sq. ft.).
The lease maturity profile for Choice Properties’ portfolio as at December 31, 2024 was as follows:
(in thousands of square feet except
where otherwise indicated)
Third-party
GLA
Loblaw
GLA
Total
GLA
Expiring GLA
as a % of
total GLA
Expiring
annualized
base rent
($ 000s)
Average expiring
base rent
(per square foot)
Month-to-month
372
25
397
0.6 % $
7,717
$
19.76
2025
2,445
118
2,563
3.9 %
29,852
11.75
2026
3,508
2,605
6,113
9.2 %
92,407
15.16
2027
3,275
3,949
7,224
10.9 %
115,423
15.98
2028
3,346
4,941
8,287
12.5 %
132,478
15.96
2029
2,755
7,006
9,761
14.7 %
152,143
15.59
2030
2,095
7,064
9,159
13.8 %
147,149
16.07
2031 & Thereafter
7,111
11,585
18,696
27.8 %
321,707
17.06
Occupied GLA
24,907
37,293
62,200
93.4 %
998,876
16.06
Ground lease GLA(i)
928
1,852
2,780
4.2 %
35,898
12.91
Vacant GLA
1,582
—
1,582
2.4 %
—
—
Total
27,417
39,145
66,562
100.0 % $
1,034,774
$
15.92
(i)
Represents the building area on properties where the Trust has leased the underlying sites to tenants through ground leases.
60 • 2024 Annual Report
Choice Properties REIT
Retail Tenant Profile
Choice Properties’ retail portfolio is the foundation for maintaining stable and growing cash flows. It is primarily leased to grocery
stores, pharmacies, and other necessity-based tenants. Stability is attained through a strategic relationship and long-term leases
with Loblaw.
The Trust’s ten largest retail tenants as at December 31, 2024 represented approximately 56.2% of total annualized gross rental
revenue and 73.7% of retail annualized gross rental revenue, as calculated on a proportionate share basis(1). The names noted
below may be the names of the parent entities and are not necessarily the parties to the leases.
Retail Tenants
% of Retail
Annualized Gross
Rental Revenue
GLA
(000s square feet)
1.
Loblaws
64.7 %
30,928
2.
Canadian Tire
1.8 %
904
3.
TJX Companies
1.5 %
663
4.
Dollarama
1.5 %
574
5.
Goodlife
1.1 %
431
6.
Liquor Control Board of Ontario (LCBO)
0.7 %
198
7.
Sobeys
0.6 %
269
8.
Walmart
0.6 %
544
9.
TD Canada Trust
0.6 %
118
10.
Staples
0.6 %
283
Total
73.7 %
34,912
The following table outlines further details of the Trust’s retail tenant composition as at December 31, 2024:
Retail Category
% of Retail
Annualized Gross
Rental Revenue
GLA
(000s square feet)
Grocery & Pharmacy
68.7 %
32,859
Essential Services
14.4 %
4,279
Specialty & Value
5.0 %
2,095
Fitness & Other Personal Services
4.9 %
1,726
Full-Service Restaurants
2.9 %
709
Furniture & Home
2.5 %
1,160
Other
1.6 %
576
Total
100.0 %
43,404
Choice Properties REIT
2024 Annual Report • 61
The lease maturity profile for Choice Properties’ retail portfolio as at December 31, 2024 was as follows:
(in thousands of square feet except
where otherwise indicated)
Third-party
GLA
Loblaw
GLA
Total
GLA
Expiring GLA
as a % of
total GLA
Expiring
annualized
base rent
($ 000s)
Average expiring
base rent
(per square foot)
Month-to-month
372
25
397
0.9 % $
7,717
$
19.76
2025(i)
908
118
1,026
2.3 %
17,899
17.48
2026
2,012
2,605
4,617
10.4 %
77,017
16.77
2027
1,834
3,949
5,783
13.0 %
100,979
17.47
2028
1,592
4,141
5,733
12.9 %
102,707
17.92
2029
1,410
6,342
7,752
17.4 %
127,508
16.45
2030
874
6,461
7,335
16.5 %
123,380
16.83
2031 & Thereafter
2,806
7,287
10,093
22.7 %
211,831
20.73
Occupied GLA
11,808
30,928
42,736
96.1 %
769,038
18.00
Ground lease GLA(ii)
668
—
668
1.5 %
6,808
10.19
Vacant GLA
1,075
—
1,075
2.4 %
—
—
Total
13,551
30,928
44,479
100.0 % $
775,846
$
17.87
(i)
The 1,026,000 sq. ft. of GLA maturing in 2025 is located in the following markets: 21.0% Greater Toronto Area, 14.0% Greater Montreal Area, 9.8% Edmonton,
7.6% Vancouver, 4.5% Ottawa, 1.5% Calgary, and 41.6% other markets.
(ii)
Represents the building area on properties where the Trust has leased the underlying sites to tenants through ground leases.
62 • 2024 Annual Report
Choice Properties REIT
Industrial Tenant Profile
Choice Properties’ industrial portfolio is centred on large, purpose-built distribution facilities for Loblaw and high-quality “generic”
industrial assets that readily accommodate the diverse needs of a broad range of tenants. The term “generic” refers to a product
that appeals to a wide range of potential users, such that the leasing or re-leasing timeframe is reduced.
The Trust’s ten largest industrial tenants as at December 31, 2024 represented approximately 12.2% of total annualized gross
rental revenue and 59.2% of industrial annualized gross rental revenue, as calculated on a proportionate share basis(1). The names
noted below may be the names of the parent entities and are not necessarily the parties to the leases.
Industrial Tenants
% of Industrial
Annualized Gross
Rental Revenue
GLA
(000’s square feet)
1.
Loblaw
32.7 %
7,476
2.
Amazon
4.7 %
1,020
3.
Canada Cartage
4.3 %
672
4.
Wonderbrands Inc.
3.6 %
1,050
5.
Pet Valu
3.5 %
353
6.
NFI IPD
2.6 %
354
7.
Uline Canada Corporation
2.2 %
635
8.
Alberta Gaming, Liquor and Cannabis
1.9 %
424
9.
Kimberly-Clark
1.9 %
514
10.
Canadian Tire
1.8 %
486
Total
59.2 %
12,984
The following table outlines further details of the Trust’s industrial tenant composition as at December 31, 2024:
Building Type / Tenant Use
% of Industrial
Annualized Gross
Rental Revenue
GLA
(000s square feet)(i)
Occupied GLA
(000s square feet)
Occupancy
Distribution
53.1 %
10,777
10,590
98.3 %
Large Bay-Loblaw Distribution
32.7 %
7,476
7,476
100.0 %
Warehouse(ii)
14.2 %
2,672
2,420
90.6 %
Total
100.0 %
20,925
20,486
97.9 %
(i)
Includes 1,852,000 sq. ft. in Large Bay-Loblaw Distribution and 260,000 sq. ft. in Distribution that represent the building area on properties where the Trust has
leased the underlying sites to the tenants through ground leases.
(ii)
Warehouse includes certain Small Bay assets.
Choice Properties REIT
2024 Annual Report • 63
The lease maturity profile for Choice Properties’ industrial portfolio as at December 31, 2024 was as follows:
(in thousands of square feet except
where otherwise indicated)
Third-party
GLA
Loblaw
GLA
Total
GLA
Expiring GLA
as a % of
total GLA
Expiring
annualized
base rent
($ 000s)
Average expiring
base rent
(per square foot)
2025(i)
1,519
—
1,519
7.3 % $
11,432
$
7.63
2026
1,390
—
1,390
6.6 %
12,892
9.21
2027
1,385
—
1,385
6.6 %
12,893
9.31
2028
1,741
772
2,513
12.0 %
28,561
11.28
2029
1,294
663
1,957
9.4 %
23,195
11.86
2030
1,207
596
1,803
8.6 %
22,953
12.73
2031 & Thereafter
4,214
3,593
7,807
37.3 %
91,798
11.76
Occupied GLA(ii)
12,750
5,624
18,374
87.8 %
203,724
11.09
Ground lease GLA(iii)
260
1,852
2,112
10.1 %
29,090
13.77
Vacant GLA
439
—
439
2.1 %
—
—
Total
13,449
7,476
20,925
100.0 % $
232,814
$
11.36
(i)
The 1,519,000 sq. ft. of GLA maturing in 2025 is located in the following markets: 42.3% Greater Toronto Area, 37.7% Calgary, 9.3% Edmonton, and 10.7%
other markets.
(ii)
Average in-place base rent per square foot for the major markets (excluding ground leases): $14.07 Vancouver, $8.97 Edmonton, $8.41 Calgary, $10.23 Greater
Toronto Area, $10.07 Greater Montreal Area, and $8.45 other markets.
(iii)
Represents the building area on properties where the Trust has leased the underlying sites to tenants through ground leases.
64 • 2024 Annual Report
Choice Properties REIT
7.
RESULTS OF OPERATIONS - SEGMENT INFORMATION
7.1
Net Income and Segment NOI Reconciliation
Choice Properties operates in three reportable segments: retail, industrial, and mixed-use & residential. Management measures
and evaluates the performance of the Trust based on net operating income, which is presented by segment below at the
proportionate share of the related revenue and expenses for these properties, while other net income items are reviewed on a
consolidated GAAP basis.
The following table reconciles net income on a proportionate share basis(1) to net income as determined in accordance with GAAP
for the three months ended December 31, 2024:
($ thousands)
Retail
Industrial
Mixed-Use &
Residential
Proportionate
Share Basis(1)
Adjustment
to GAAP(i)
GAAP Basis
Rental revenue, excluding straight-line
rental revenue and lease surrender
revenue
$
276,861 $
68,044 $
19,852
$
364,757
$
(21,779) $
342,978
Property operating costs
(77,704)
(18,263)
(8,824)
(104,791)
7,416
(97,375)
Net Operating Income, Cash Basis(1)
199,157
49,781
11,028
259,966
(14,363)
245,603
Straight-line rental revenue
(1,891)
2,706
246
1,061
(1,736)
(675)
Lease surrender revenue
2,558
—
—
2,558
—
2,558
Net Operating Income, Accounting
Basis(1)
199,824
52,487
11,274
263,585
(16,099)
247,486
Other Income and Expenses
Interest income
7,949
2,298
10,247
Investment income
5,315
—
5,315
Fee income
712
—
712
Net interest expense and other financing charges
(153,223)
5,733
(147,490)
General and administrative expenses
(16,987)
—
(16,987)
Share of income from equity accounted joint ventures
—
37,820
37,820
Amortization of intangible assets
(250)
—
(250)
Transaction costs and other related expenses
(55)
—
(55)
Adjustment to fair value of unit-based compensation
1,927
—
1,927
Adjustment to fair value of Exchangeable Units
704,500
—
704,500
Adjustment to fair value of investment properties
13,640
(29,752)
(16,112)
Adjustment to fair value of investment in real estate securities
(36,254)
—
(36,254)
Income before Income Taxes
790,859
—
790,859
Income tax recovery
1,057
—
1,057
Net Income
$
791,916
$
—
$
791,916
(i)
Reconciling items adjust Choice Properties’ proportionate share of joint ventures and financial real estate assets to reflect the equity method of accounting and
financial instrument accounting treatment, respectively, under GAAP.
Choice Properties REIT
2024 Annual Report • 65
The following table reconciles net income on a proportionate share basis(1) to net income as determined in accordance with GAAP
for the year ended December 31, 2024:
($ thousands)
Retail
Industrial
Mixed-Use &
Residential
Proportionate
Share Basis(1)
Adjustment
to GAAP(i)
GAAP Basis
Rental revenue, excluding straight-line
rental revenue and lease surrender
revenue
$
1,099,146 $
264,380 $
73,480
$
1,437,006
$
(87,911) $
1,349,095
Property operating costs
(314,398)
(68,523)
(29,966)
(412,887)
31,319
(381,568)
Net Operating Income, Cash Basis(1)
784,748
195,857
43,514
1,024,119
(56,592)
967,527
Straight-line rental revenue
(7,701)
7,884
1,251
1,434
(3,628)
(2,194)
Lease surrender revenue
11,202
—
2
11,204
—
11,204
Net Operating Income, Accounting
Basis(1)
788,249
203,741
44,767
1,036,757
(60,220)
976,537
Gross sales
11,268
—
11,268
Cost of sales
(9,234)
—
(9,234)
Residential Inventory Income
2,034
—
2,034
Other Income and Expenses
Interest income
38,159
14,434
52,593
Investment income
21,260
—
21,260
Fee income
3,389
—
3,389
Net interest expense and other financing charges
(608,720)
22,332
(586,388)
General and administrative expenses
(67,833)
—
(67,833)
Share of income from equity accounted joint ventures
—
49,138
49,138
Amortization of intangible assets
(1,000)
—
(1,000)
Transaction costs and other related expenses
38,560
—
38,560
Adjustment to fair value of unit-based compensation
657
—
657
Adjustment to fair value of Exchangeable Units
237,472
—
237,472
Adjustment to fair value of investment properties
118,415
(25,684)
92,731
Adjustment to fair value of investment in real estate securities
(35,782)
—
(35,782)
Income before Income Taxes
783,368
—
783,368
Income tax recovery
1,069
—
1,069
Net Income
$
784,437
$
—
$
784,437
(i)
Reconciling items adjust Choice Properties’ proportionate share of joint ventures and financial real estate assets to reflect the equity method of accounting and
financial instrument accounting treatment, respectively, under GAAP.
66 • 2024 Annual Report
Choice Properties REIT
7.2
Net Operating Income(1) Summary
NOI(1) is a supplemental measure of operating performance widely used in the real estate industry. There is no industry-defined
definition of NOI(1). Refer to Section 15.1, “Net Operating Income”, of this MD&A for a definition of NOI(1) and a reconciliation to
net income (loss) determined in accordance with GAAP.
Management also measures performance of operating segments using NOI(1) as calculated on a proportionate share basis(1) and,
in particular, Same-Asset NOI, which isolates Management’s success at dealing with certain key performance factors. “Same-
Asset” refers to those properties that were owned and operated by Choice Properties for the entire 24 months ended December
31, 2024, and where such properties had no changes to income as a result of acquisitions, dispositions, new developments,
redevelopments and expansions, intensifications, transfers, or demolitions (collectively, “Transactions”). NOI related to
Transactions for the period is presented separately from the Same-Asset financial results.
Choice Properties’ NOI(1), calculated on a proportionate share basis(1) to incorporate the Trust’s investment in equity accounted
joint ventures and financial real estate assets as if they were owned directly, for the three months and years ended December 31,
2024 and December 31, 2023 is summarized below.
Summary - Accounting Basis
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
% Change
2024
2023
Change $
% Change
Rental revenue
$ 341,975
$ 332,494
$
9,481
2.9 % $ 1,346,287 $ 1,300,283 $
46,004
3.5 %
Straight-line rental revenue
(1,993)
(2,132)
139
(6.5) %
(7,759)
(4,979)
(2,780)
55.8 %
Property operating costs excluding
bad debt expense
(99,400)
(96,109)
(3,291)
3.4 %
(389,636)
(371,291)
(18,345)
4.9 %
Same-Asset NOI, Cash Basis
excluding bad debt expense
240,582
234,253
6,329
2.7 %
948,892
924,013
24,879
2.7 %
Bad debt recovery (expense)
237
(259)
496
n/a
1,364
(408)
1,772
n/a
Same-Asset NOI, Accounting Basis
240,819
233,994
6,825
2.9 %
950,256
923,605
26,651
2.9 %
Transactions NOI including straight-
line rental revenue, excluding bad
debt expense
20,264
14,174
6,090
75,152
56,899
18,253
Bad debt (expense) recovery
(56)
(59)
3
145
(284)
429
Transactions NOI, Accounting Basis
20,208
14,115
6,093
75,297
56,615
18,682
Lease surrender revenue
2,558
147
2,411
11,204
14,786
(3,582)
Total NOI, Accounting Basis
$ 263,585
$ 248,256
$
15,329
$ 1,036,757 $ 995,006
$
41,751
Choice Properties REIT
2024 Annual Report • 67
Choice Properties REIT
Summary - Cash Basis
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
% Change
2024
2023
Change $
% Change
Rental revenue
$ 341,975
$ 332,494
$
9,481
2.9 % $ 1,346,287 $ 1,300,283 $
46,004
3.5 %
Property operating costs excluding
bad debt expense
(99,400)
(96,109)
(3,291)
3.4 %
(389,636)
(371,291)
(18,345)
4.9 %
Same-Asset NOI, Cash Basis
excluding bad debt expense
242,575
236,385
6,190
2.6 %
956,651
928,992
27,659
3.0 %
Bad debt recovery (expense)
237
(259)
496
n/a
1,364
(408)
1,772
n/a
Same-Asset NOI, Cash Basis
242,812
236,126
6,686
2.8 %
958,015
928,584
29,431
3.2 %
Transactions NOI excluding bad
debt expense
17,210
10,970
6,240
65,959
51,205
14,754
Bad debt (expense) recovery
(56)
(59)
3
145
(284)
429
Transactions NOI, Cash Basis
17,154
10,911
6,243
66,104
50,921
15,183
Total NOI, Cash Basis
$ 259,966
$ 247,037
$
12,929
$ 1,024,119 $ 979,505
$
44,614
Three Months and Year Ended
Same-Asset NOI, Cash Basis increased by 2.8% and 3.2% for the three months and year ended, respectively. The increase was
driven by increased revenue from higher rental rates on renewals, new leasing, contractual rent steps, and higher recoveries
mainly in the industrial and retail portfolios.
Transactions NOI increased for the three months and year ended compared to the prior year periods primarily due to the
contribution from acquisitions and development transfers, partially offset by the foregone income from dispositions.
Retail Segment
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
% Change
2024
2023
Change $
% Change
Rental revenue
$ 264,961
$ 260,008
$
4,953
1.9 % $ 1,046,959 $ 1,019,618 $
27,341
2.7 %
Property operating costs excluding
bad debt expense
(75,697)
(74,464)
(1,233)
1.7 %
(300,923)
(289,435)
(11,488)
4.0 %
Same-Asset NOI, Cash Basis
excluding bad debt expense
189,264
185,544
3,720
2.0 %
746,036
730,183
15,853
2.2 %
Bad debt recovery (expense)
419
(105)
524
n/a
536
10
526
n/a
Same-Asset NOI, Cash Basis
189,683
185,439
4,244
2.3 %
746,572
730,193
16,379
2.2 %
Transactions NOI excluding bad
debt expense
9,482
9,468
14
37,996
42,357
(4,361)
Bad debt (expense) recovery
(8)
71
(79)
180
(264)
444
Transactions NOI, Cash Basis
9,474
9,539
(65)
38,176
42,093
(3,917)
Total NOI, Cash Basis
$ 199,157
$ 194,978
$
4,179
$ 784,748
$ 772,286
$
12,462
Three Months and Year Ended
Same-Asset NOI, Cash Basis for the retail segment increased by 2.3% and 2.2% for the three months and year ended,
respectively. The increase was driven by increased revenue from contractual rent steps, higher rental rates on renewals, new
leasing, and higher recoveries. Further contributing to the increase was the reversal of a bad debt provision in the fourth quarter
of 2024.
Transactions NOI for the retail segment decreased for the three months and year ended compared to the prior year periods
primarily due to the foregone income from dispositions, partially offset by the contribution from acquisitions and development
transfers.
68 • 2024 Annual Report
Choice Properties REIT
Industrial Segment
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
% Change
2024
2023
Change $
% Change
Rental revenue
$
59,312
$
56,453
$
2,859
5.1 % $ 233,305
$ 217,209
$
16,096
7.4 %
Property operating costs excluding
bad debt expense
(16,054)
(15,355)
(699)
4.6 %
(62,236)
(57,148)
(5,088)
8.9 %
Same-Asset NOI, Cash Basis
excluding bad debt expense
43,258
41,098
2,160
5.3 %
171,069
160,061
11,008
6.9 %
Bad debt recovery (expense)
191
(281)
472
n/a
1,532
(502)
2,034
n/a
Same-Asset NOI, Cash Basis
43,449
40,817
2,632
6.4 %
172,601
159,559
13,042
8.2 %
Transactions NOI excluding bad
debt expense
6,332
597
5,735
23,260
2,867
20,393
Bad debt expense
—
(11)
11
(4)
(8)
4
Transactions NOI, Cash Basis
6,332
586
5,746
23,256
2,859
20,397
Total NOI, Cash Basis
$
49,781
$
41,403
$
8,378
$ 195,857
$ 162,418
$
33,439
Three Months and Year Ended
Same-Asset NOI, Cash Basis for the industrial segment increased by 6.4% and 8.2% for the three months and year ended,
respectively. This increase was driven by increased revenue from higher rental rates on renewals, new leasing at market rates,
contractual rent steps, and higher recoveries. In addition, the increase for the year ended included the reversal of a provision
following the resolution of a tenant dispute.
Transactions NOI for the industrial segment increased for the three months and year ended compared to the prior year periods
primarily due to the contribution from acquisitions and development transfers, partially offset by the foregone income from
dispositions.
Mixed-Use & Residential Segment
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
% Change
2024
2023
Change $
% Change
Rental revenue
$
17,702
$
16,033 $
1,669
10.4 % $
66,023
$
63,456
$
2,567
4.0 %
Property operating costs excluding
bad debt expense
(7,649)
(6,290)
(1,359)
21.6 %
(26,477)
(24,708)
(1,769)
7.2 %
Same-Asset NOI, Cash Basis
excluding bad debt expense
10,053
9,743
310
3.2 %
39,546
38,748
798
2.1 %
Bad debt (expense) recovery
(373)
127
(500)
n/a
(704)
84
(788)
n/a
Same-Asset NOI, Cash Basis
9,680
9,870
(190)
(1.9) %
38,842
38,832
10
— %
Transactions NOI excluding bad
debt expense
1,396
905
491
4,703
5,981
(1,278)
Bad debt expense
(48)
(119)
71
(31)
(12)
(19)
Transactions NOI, Cash Basis
1,348
786
562
4,672
5,969
(1,297)
Total NOI, Cash Basis
$
11,028
$
10,656 $
372
$
43,514
$
44,801
$
(1,287)
Three Months and Year Ended
Same-Asset NOI, Cash Basis for the mixed-use & residential segment decreased by 1.9% for the three months compared to the
prior year period primarily due to higher bad debt expense recognized in the fourth quarter of 2024, partially offset by increased
revenue from higher occupancy and rental rates at residential properties.
Same-Asset NOI, Cash Basis for the year ended compared to the prior year was flat, primarily due to increased revenue from
higher occupancy and rental rates at residential properties, offset by the impact of higher bad debt expense recognized in the
current year compared to favourable final billing adjustments recognized in the prior year.
Transactions NOI for the mixed-use and residential segment increased for the three months and decreased for the year ended
compared to the prior year periods. For the three month period, the increase was driven by the contributions from the recently
completed residential developments. For the year ended, the decrease was primarily due to the foregone income from
dispositions of three office properties and one data centre in the prior year, partially offset by the contributions from recently
completed residential developments.
2024 Annual Report • 69
7.3
Other Key Performance Indicators
FFO(1) and AFFO(1) are included in the Trust’s summary of key performance indicators. See Section 15, “Non-GAAP Financial
Measures”, of this MD&A for details on how these measures are defined, calculated and reconciled to GAAP financial measures
and why management uses these measures. FFO(1) and AFFO(1) for the three months and year ended December 31, 2024 and
December 31, 2023 are summarized below:
Three Months
Year Ended
For the periods ended December 31
($ thousands except where otherwise indicated)
2024
2023
Change $
2024
2023
Change $
Funds from Operations(1)
$ 188,220
$ 184,640
$
3,580
$ 746,770
$ 726,134
$ 20,636
FFO(1) per unit basic
$
0.260
$
0.255
$
0.005
$
1.032
$
1.003
$
0.029
FFO(1) per unit diluted
$
0.260
$
0.255
$
0.005
$
1.032
$
1.003
$
0.029
FFO(1) payout ratio - diluted
73.1 %
73.5 %
(0.4) %
73.5 %
74.6 %
(1.1) %
Adjusted Funds from Operations(1)
$ 109,326
$ 127,095
$ (17,769)
$ 624,948
$ 598,432
$ 26,516
AFFO(1) per unit basic
$
0.151
$
0.176
$
(0.025)
$
0.864
$
0.827
$
0.037
AFFO(1) per unit diluted
$
0.151
$
0.176
$
(0.025)
$
0.864
$
0.827
$
0.037
AFFO(1) payout ratio - diluted
125.8 %
106.8 %
19.0 %
87.8 %
90.5 %
(2.7) %
Distribution declared per unit
$
0.190
$
0.188
$
0.002
$
0.758
$
0.749
$
0.009
Weighted average number of units outstanding -
basic(i)
723,710,497
723,646,497
64,000
723,667,543
723,643,248
24,295
Weighted average number of units outstanding -
diluted(i)
723,726,328
723,662,727
63,601
723,680,890
723,666,503
14,387
Number of units outstanding, end of period(i)
723,710,497
723,646,497
64,000
723,710,497
723,646,497
64,000
(i)
Includes Trust Units and Exchangeable Units.
Funds from Operations (“FFO”)(1)
FFO(1) is calculated in accordance with the Real Property Association of Canada’s Funds from Operations & Adjusted Funds from
Operations for IFRS issued in January 2022. From time to time the Trust may enter into transactions that materially impact the
calculation of FFO(1) and accordingly the impact of these items are excluded from the calculation for management’s review
purposes. Refer to Section 15.2, “Funds from Operations” for a reconciliation of FFO(1) to net income (loss) determined in
accordance with GAAP.
Three Months
FFO(1) increased for the three months primarily due to an
increase in net operating income, lower general and
administrative expenses, and higher lease surrender revenue.
The increase was partially offset by lower investment income
as a result of Allied’s special distribution in the prior year,
income from the sale of residential inventory in the prior year,
higher interest expense, and lower interest income.
Year Ended
FFO(1) increased for the year ended primarily due to an increase
in net operating income. The increase was partially offset by
higher interest expense net of higher interest income, lower
investment income as a result of Allied’s special distribution in
the prior year, higher general and administrative expenses,
lower lease surrender revenue, and lower income from the sale
of residential inventory.
Adjusted Funds from Operations (“AFFO”)(1)
AFFO(1) is calculated in accordance with the Real Property Association of Canada’s Funds from Operations & Adjusted Funds
from Operations for IFRS issued in January 2022. From time to time the Trust may enter into transactions that materially impact
the calculation of AFFO(1) and accordingly the impact of these items are excluded from the calculation for management’s review
purposes. Refer to Section 15.3, “Adjusted Funds from Operations” for a reconciliation of AFFO(1) to net income determined in
accordance with GAAP.
Three Months
AFFO(1) decreased for the three months primarily due to the
timing of maintenance capital spend, which occurred later in
2024 than in 2023.
Year Ended
AFFO(1) increased for the year ended primarily due to the
increase in FFO(1) as noted above.
70 • 2024 Annual Report
Choice Properties REIT
Property Capital and Leasing Expenditures
Choice Properties endeavours to fund operating capital requirements from cash flows from operations.
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Property capital
$
62,377
$
46,765
$
15,612
$
81,363
$
85,878
$
(4,515)
Direct leasing costs
2,209
1,662
547
9,246
6,403
2,843
Tenant improvements
10,552
5,647
4,905
19,863
25,517
(5,654)
Total property capital and leasing expenditures,
proportionate share basis(1)
$
75,138
$
54,074
$
21,064
$
110,472
$
117,798
$
(7,326)
Property capital expenditures incurred to sustain the existing GLA for investment properties are considered to be operational and
are deducted in the calculation of AFFO(1) and ACFO(1). During the three months and year ended December 31, 2024, Choice
Properties incurred $62,377 and $81,363 of property capital expenditures, respectively, which may be recoverable from tenants
under the terms of their leases over the useful life of the improvements (December 31, 2023 - $46,765 and $85,878, respectively).
Recoverable capital improvements may include items such as parking lot resurfacing and roof replacements. These items are
recorded as part of investment properties and the recoveries from tenants are recorded as revenue.
Capital expenditures for leasing activities, such as direct leasing costs or leasing commissions, and tenant improvement
allowances are considered to be operational and are deducted in the calculation of AFFO(1) and ACFO(1). Leasing capital
expenditures vary with tenant demand and the balance between new and renewal leasing, as capital expenditures relating to
securing new tenants are generally higher than the cost for renewing existing tenants.
Choice Properties REIT
2024 Annual Report • 71
Choice Properties REIT
8.
QUARTERLY RESULTS OF OPERATIONS
The following is a summary of selected consolidated financial information for each of the eight most recently completed quarters:
Selected Quarterly Information
($ thousands except where
otherwise indicated)
Fourth Quarter
2024
Third Quarter
2024
Second Quarter
2024
First Quarter
2024
Fourth Quarter
2023
Third Quarter
2023
Second Quarter
2023
First Quarter
2023
Number of income producing
properties
705
705
702
705
705
706
704
705
Gross leasable area
(in millions of square feet)(i)
67.2
66.2
65.9
66.1
66.1
65.2
64.5
64.9
Occupancy
97.6 %
97.7 %
98.0 %
97.9 %
98.0 %
97.7 %
97.4 %
97.7 %
Rental revenue (GAAP)
$
344,861
$
339,898
$
335,388
$
337,958
$
329,109
$
325,077
$
330,327
$ 324,657
Net income (loss)
$
791,916
$
(662,989)
$
513,231
$
142,279
$
(445,684)
$
435,903
$
535,668
$ 270,804
Net income (loss) per unit
$
1.094
$
(0.916)
$
0.709
$
0.197
$
(0.616)
$
0.602
$
0.740
$
0.374
Net income (loss) per unit -
diluted
$
1.094
$
(0.916)
$
0.709
$
0.197
$
(0.616)
$
0.602
$
0.740
$
0.374
Net operating income,
cash basis(1)
$
259,966
$
255,952
$
256,568
$
251,633
$
247,037
$
244,886
$
243,530
$ 244,052
FFO(1)
$
188,220
$
186,647
$
184,714
$
187,189
$
184,640
$
181,013
$
183,590
$ 176,891
FFO(1) per unit - diluted
$
0.260
$
0.258
$
0.255
$
0.259
$
0.255
$
0.250
$
0.254
$
0.244
AFFO(1)
$
109,326
$
165,876
$
176,600
$
173,146
$
127,095
$
136,558
$
170,400
$ 164,379
AFFO(1) per unit - diluted
$
0.151
$
0.229
$
0.244
$
0.239
$
0.176
$
0.189
$
0.235
$
0.227
Distribution declared per unit
$
0.190
$
0.190
$
0.190
$
0.188
$
0.188
$
0.188
$
0.188
$
0.186
NAV(i) per unit
$
14.07
$
14.04
$
13.79
$
13.69
$
13.67
$
13.69
$
13.65
$
13.51
Market price per unit - closing
$
13.35
$
15.13
$
12.84
$
13.78
$
13.95
$
12.68
$
13.57
$
14.52
Number of units outstanding,
period end
723,710,497
723,710,497
723,646,497
723,646,497
723,646,497
723,646,497
723,646,497
723,646,497
Adjusted debt to total
assets(1)(ii)
40.0 %
40.0 %
42.2 %
40.3 %
40.4 %
40.6 %
40.5 %
41.0 %
Debt service coverage(1)(ii)
3.0x
2.9x
3.0x
3.1x
3.0x
3.0x
3.1x
3.1x
(i)
Includes GLA that represents the building area on properties where the Trust has leased the underlying sites to the tenants through ground leases and GLA
associated with Choice Properties’ residential units.
(ii)
The Exchangeable Units are excluded from the debt ratio calculations. The ratios are non-GAAP financial measures calculated based on the Trust Indentures, as
supplemented.
Choice Properties’ quarterly results are impacted by acquisition and disposition activity and the development of additional GLA.
In addition, net income (loss) is impacted by fluctuations in adjustments to fair value of Exchangeable Units, investment
properties, investment in real estate securities, and unit-based compensation, and therefore are often not comparable from
quarter to quarter.
72 • 2024 Annual Report
9.
RELATED PARTY TRANSACTIONS
Choice Properties’ controlling unitholder is GWL, which, as at December 31, 2024, held either directly or indirectly, a 61.7%
effective interest in the Trust through ownership of 50,661,415 Units and all the Exchangeable Units, which are economically
equivalent to and exchangeable to Units. GWL is also the controlling shareholder of Loblaw, with ownership of 52.6% of Loblaw’s
outstanding common shares as at December 31, 2024. Choice Properties’ ultimate parent is Wittington Investments, Limited, the
controlling shareholder of GWL.
In the normal course of operations, Choice Properties enters into various transactions with related parties. These transactions are
measured at the exchange amount, which is the amount of consideration established and agreed upon by the related parties.
Loblaw represents approximately 57.4% of Choice Properties’ rental revenue on a proportionate share basis(1) and 58.9% of its
commercial GLA as at December 31, 2024 (December 31, 2023 - 57.1% and 57.7%, respectively).
Leases
During the year ended December 31, 2024, Choice and Loblaw renewed 46 of a tranche of 48 leases expiring in 2025, comprising
3.08 million of 3.20 million square feet, at a weighted average spread of 8.4% and a weighted average extension term of
5.0 years. The 46 renewals included one industrial lease (December 31, 2023 - 47 of 49 leases expiring in 2024, comprising
2.80 million of 2.84 million square feet at a weighted average extension term of 4.9 years and an average spread of 7.5%).
Acquisitions
During the year ended December 31, 2024, Choice Properties completed five acquisitions from Loblaw, for an aggregate
purchase price of $178,902. The acquisitions included: a retail property in Toronto, Ontario for $38,300, a 50% interest in a retail
property in Winnipeg, Manitoba for $15,596, a 50% interest in an industrial property in Mississauga, Ontario for $89,601, a 50%
interest in a retail property in Toronto, Ontario that was acquired through an equity accounted joint venture for $21,267, and a
50% interest in an industrial property in Lakeside, Nova Scotia for $14,138. In each case the purchase price excludes transaction
costs. Concurrent with the transactions, the properties were leased back to Loblaw.
During the year ended December 31, 2023, Choice Properties acquired from Loblaw two financial real estate assets for an
aggregate purchase price of $86,300, as well as three retail properties and one industrial property for an aggregate purchase
price of $91,889, in each case excluding transaction costs.
Dispositions
During the year ended December 31, 2023, Choice Properties disposed of a data centre asset tenanted by Loblaw to a third party
for net proceeds of $74,200. In connection with the transaction, Choice made a $8,300 payment to Loblaw to terminate its lease
early.
Lease Surrender Revenue
During the year ended December 31, 2024, Choice Properties recognized $9,534 of lease surrender revenue from Loblaw
(December 31, 2023 - $1,393).
Services Agreement
During the year ended December 31, 2024, GWL provided Choice Properties with corporate, administrative and other support
services for an annualized cost of $4,988 (December 31, 2023 - $4,970).
Strategic Alliance Agreement
The Strategic Alliance Agreement creates a series of rights and obligations between Choice Properties and Loblaw intended to
establish a preferential and mutually beneficial business and operating relationship. The initial term of the Strategic Alliance
Agreement expired on July 5, 2023. Upon expiry of the initial term, the Strategic Alliance Agreement renewed until July 5, 2033 or
the date on which GWL and its affiliates own less than 50% of the Trust on a fully diluted basis. The Strategic Alliance Agreement
provides Choice Properties with important rights that are expected to meaningfully contribute to the Trust’s growth. Subject to
certain exceptions, rights include:
•
Choice Properties has the right of first offer to purchase any property in Canada that Loblaw seeks to sell;
•
Loblaw is generally required to present shopping centre property acquisitions in Canada to Choice Properties to allow the
Trust a right of first opportunity to acquire the property itself; and
•
Choice Properties has the right to participate in future shopping centre developments involving Loblaw.
Included in certain investment properties acquired from Loblaw is excess land with development potential. In accordance with the
Strategic Alliance Agreement, Choice Properties will compensate Loblaw, over time, with intensification payments, as Choice
Properties pursues development, intensification or redevelopment of such excess land. The payments to Loblaw are calculated in
accordance with a payment grid that takes into account the region, market ranking and type of use for the property.
Management Agreements
Choice Properties provides Wittington with property management services for certain properties with third-party tenancies and
development consulting services on a fee for service basis.
Choice Properties REIT
2024 Annual Report • 73
Site Intensification Payments
Choice Properties compensated Loblaw with intensification payments of $3,872 in connection with completed gross leasable
area for which tenants took possession during the year ended December 31, 2024 (December 31, 2023 - $14,377).
Distributions on Exchangeable Units
GWL, directly or indirectly, holds all of the Exchangeable Units issued by Choice Properties Limited Partnership, a subsidiary of
Choice Properties. During the year ended December 31, 2024, distributions declared on the Exchangeable Units totalled
$300,137 (December 31, 2023 - $296,181).
As at December 31, 2024, Choice Properties had distributions on Exchangeable Units payable to GWL of $324,873
(December 31, 2023 - $320,587).
Notes Receivable
Holders of Exchangeable Units may, in lieu of receiving all or a portion of their distributions, choose to be loaned an amount from
Choice Properties Limited Partnership, and to have such distributions made on the first business day following the end of the
fiscal year in which such distribution would otherwise have been made. The loans do not bear interest and are due and payable in
full on the first business day following the end of the fiscal year during which the loan was made. During the year ended
December 31, 2024, GWL elected to receive distributions from Choice Properties Limited Partnership in the form of loans. As
such, non-interest bearing short-term notes totalling $299,807 were issued to GWL and were repaid in January 2025. Non-interest
bearing short-term notes totalling $295,851 with respect to the loans received in the 2023 fiscal year were settled against
distributions payable by the Trust to GWL in January 2024.
Trust Unit Distributions
During the year ended December 31, 2024, Choice Properties declared cash distributions of $38,419 on the Units held by GWL
(December 31, 2023 - $37,912). As at December 31, 2024, $3,209 of Trust Unit distributions declared were payable to GWL
(December 31, 2023 - $3,166). There were no non-cash distributions settled through the issuance of additional Trust Units during
the year ended December 31, 2024 (December 31, 2023 - $nil).
During the year ended December 31, 2024, Choice Properties declared cash distributions of $12,513, on the Units held by
Wittington (December 31, 2023 - $12,348). As at December 31, 2024, $1,045 of Trust Unit distributions declared were payable to
Wittington (December 31, 2023 - $1,031). There were no non-cash distributions settled through the issuance of additional Trust
Units during the year ended December 31, 2024 (December 31, 2023 - $nil).
74 • 2024 Annual Report
Choice Properties REIT
10.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of the consolidated financial statements requires management to make judgments and estimates in applying
Choice Properties’ accounting policies that affect the reported amounts and disclosures made in the consolidated financial
statements and accompanying notes.
Within the context of these consolidated financial statements, a judgment is a decision made by management in respect of the
application of an accounting policy, a recognized or unrecognized financial statement amount and/or note disclosure, following an
analysis of relevant information that may include estimates and assumptions. Estimates and assumptions are used mainly in
determining the measurement of balances recognized or disclosed in the consolidated financial statements and are based on a
set of underlying data that may include management’s historical experience, knowledge of current events and conditions and
other factors that are believed to be reasonable under the circumstances. Management continually evaluates the estimates and
judgments it uses.
The following are the accounting policies subject to judgments and key sources of estimation uncertainty that Choice Properties
believes could have the most significant impact on the amounts recognized in the consolidated financial statements.
a.
Investment Properties
Judgments Made in Relation to Accounting Policies Applied
Judgment is applied in determining whether certain costs are additions to the carrying value of investment properties,
identifying the point at which substantial completion of a development property occurs, and identifying the attributable
borrowing costs to be included in the carrying value of the development property. Choice Properties also applies judgment in
determining whether the properties it acquires are considered to be asset acquisitions or business combinations. Choice
Properties considers all properties acquired in the current year to be asset acquisitions.
Key Sources of Estimation
The fair value of income producing properties is dependent on significant assumptions related to discount rates and terminal
capitalization rates, and other assumptions related to the future cash flows over the holding period. The review of future cash
flows involves assumptions relating to market rents, as well as current leasing and/or development activity, renewal
probability, downtime on lease expiry, vacancy allowances, and expected maintenance costs. In addition to reviewing future
cash flows, management assesses changes in the business climate and other factors, which may affect the ultimate value of
the property. These assumptions may not ultimately be achieved.
b.
Joint Arrangements
Judgments Made in Relation to Accounting Policies Applied
Judgment is applied in determining whether the Trust has joint control and whether the arrangements are joint operations or
joint ventures. In assessing whether the joint arrangements are joint operations or joint ventures, management applies
judgment to determine the Trust’s rights and obligations in the arrangement based on factors such as the structure, legal
form and contractual terms of the arrangement.
c.
Leases
Judgments Made in Relation to Accounting Policies Applied
Choice Properties is required to make judgments in determining whether certain leases are operating or finance leases, in
particular long-term leases. All tenant leases where Choice Properties is the lessor have been determined to be operating
leases.
d.
Income Taxes
Judgments Made in Relation to Accounting Policies Applied
Choice Properties is a mutual fund trust and a REIT as defined in the Income Tax Act (Canada). Choice Properties is not liable
to pay Canadian income taxes provided that its taxable income is fully distributed to Unitholders each year. Choice
Properties is a REIT if it meets the prescribed conditions under the Income Tax Act (Canada). Choice Properties uses
judgment in reviewing these conditions in assessing its interpretation and application to its assets and revenue.
Choice Properties has determined that it qualifies as a REIT for the current period. Choice Properties expects to continue to
qualify as a REIT under the Income Tax Act (Canada), however, should it no longer qualify, it would not be able to flow
through its taxable income to Unitholders and would therefore be subject to tax.
Choice Properties REIT
2024 Annual Report • 75
e.
Sale Leaseback Transactions
Judgments Made in Relation to Accounting Policies Applied
These judgments apply where Choice Properties enters into agreements to acquire investment properties where the seller is
also the lessee. Judgment is applied in determining the useful life of the leased asset and whether the lease term covers the
major part of the economic life of that leased asset. In addition, the fair value of the leased asset is compared to the present
value of the future minimum lease payments to determine whether those payments represent substantially all the fair value,
and purchase options are compared to the fair value of the leased asset to identify bargain purchase options. There are
judgments applied in determining fair value for purposes of these comparisons. Refer to Section 3, Investment Properties for
more information regarding estimates and judgments associated with valuations. The Trust evaluates each transaction
individually based on the specifics of the agreement.
76 • 2024 Annual Report
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11.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Internal Controls Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal controls over financial reporting to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial reports for external purposes
in accordance with IFRS.
As required by National Instrument 52-109, “Certification of Disclosure in Issuers’ Annual and Interim Filings” (“NI 52-109”), the
President and Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) have caused the effectiveness of the
internal controls over financial reporting to be evaluated using the framework established in ‘Internal Control - Integrated
Framework (COSO Framework)’ (2013) published by The Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”). Based on that evaluation, they have concluded that the design and operation of the Trust’s internal controls over
financial reporting were effective as at December 31, 2024.
In designing such controls, it should be recognized that due to inherent limitations, any control, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives and may not prevent or detect
misstatements. Projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Additionally, management is required to use judgment in evaluating controls and procedures.
Changes in Internal Controls Over Financial Reporting
There were no changes in the Trust’s internal controls over financial reporting in 2024 that materially affected or are reasonably
likely to materially affect the Trust’s internal control over financial reporting.
Disclosure Controls and Procedures
Management is responsible for establishing and maintaining a system of disclosure controls and procedures to provide
reasonable assurance that all material information relating to Choice Properties is gathered and reported to senior management
on a timely basis so that appropriate decisions can be made regarding public disclosure.
As required by NI 52-109, the CEO and CFO have caused the effectiveness of the disclosure controls and procedures to be
evaluated. Based on that evaluation, they have concluded that the design and operation of the system of disclosure controls and
procedures were effective as at December 31, 2024.
Choice Properties REIT
2024 Annual Report • 77
12.
ENTERPRISE RISKS AND RISK MANAGEMENT
Choice Properties is committed to maintaining a framework that ensures risk management is an integral part of its activities. The
Trust’s Enterprise Risk Management (“ERM”) program assists all areas of the business in managing risks within appropriate levels
of tolerance by bringing a systematic approach and methodology for evaluating, measuring and monitoring key risks. The results
of the ERM program and other business planning processes are used to identify emerging risks to the Trust, prioritize risk
mitigation activities and develop a risk-based internal audit plan.
Risks are not eliminated through the ERM program, but rather, are identified and managed in line with the Trust’s Risk Appetite
Statement and within approved risk tolerances. The Risk Appetite Statement articulates key aspects of the Trust’s business and
values and provides directional guidance on risk taking.
(i) Risks are assessed and evaluated based on the Trust’s vulnerability to the risk and the potential impact that the underlying risks would have on the Trust’s ability to
execute on its strategies and achieve its objectives.
(ii) Any of the key risks have the potential to negatively affect the Trust and its financial performance. The Trust has risk management strategies in place for key risks.
However, there can be no assurance that the risks will be mitigated or will not materialize or that events or circumstances will not occur that could adversely affect the
reputation, operations or financial condition or performance of the Trust.
78 • 2024 Annual Report
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12.1
Operating Risks and Risk Management
The following discussion of risks identifies significant factors that may adversely affect the Trust’s business, operations and
financial condition or future performance. This information should be read in conjunction with the Trust’s consolidated financial
statements and related notes. The following discussion of risks is not exhaustive but is designed to highlight the key risks inherent
in the Trust’s business.
Economic Environment
Choice Properties’ financial results may be affected to varying degrees by the general business and economic conditions in the
geographic regions in which it operates. Continued concerns about the uncertainty over whether the economy will be adversely
affected by various factors, including volatile energy costs, geopolitical issues, tariffs, pandemics and the availability and cost of
credit have contributed to increased market volatility and weakened business and consumer confidence. This operating
environment could adversely affect Choice Properties’ ability to generate revenues, thereby reducing its operating income and
earnings. It could also have a material adverse effect on the ability of Choice Properties to maintain occupancy rates in the
properties, which could harm Choice Properties’ financial condition. In a prolonged negative economic environment, Choice
Properties’ tenants may be unable to meet their rental payments and other obligations owing to Choice Properties, which could
have a material adverse effect on Choice Properties.
Property Development and Construction
Choice Properties engages in development, redevelopment and major renovation activities with respect to certain properties. It is
subject to certain risks, including: (a) the availability and pricing of financing on satisfactory terms or availability at all; (b) the
availability and timely receipt of zoning, occupancy, land use and other regulatory and governmental approvals; (c) changes in
zoning and land use laws; (d) the ability to achieve an acceptable level of occupancy upon completion; (e) the potential that
Choice Properties may fail to recover expenses already incurred if it abandons redevelopment opportunities after commencing to
explore them; (f) the potential that Choice Properties may expend funds on and devote management time to projects which are
not completed; (g) construction or redevelopment costs of a project, including rising construction costs and development charges
and shortages of experienced labour in certain construction related trades, may exceed original estimates, possibly making the
project less profitable than originally estimated, or unprofitable; (h) the time required to complete the construction or
redevelopment of a project or to lease-up the completed project may be greater than originally anticipated, thereby adversely
affecting Choice Properties’ cash flows and liquidity; (i) the cost and timely completion of construction (including risks beyond
Choice Properties’ control, such as weather, labour conditions or material shortages); (j) contractor and subcontractor disputes,
strikes, labour disputes or supply disruptions; (k) occupancy rates and rents of a completed project may not be sufficient to make
the project profitable; and (l) Choice Properties’ ability to dispose of properties redeveloped with the intent to sell could be
impacted by the ability of prospective buyers to obtain financing given the current state of the credit markets.
The above risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent the
initiation of development activities or the completion of development activities once undertaken. In addition, development
projects entail risks that investments may not perform in accordance with expectations and can carry an increased risk of
litigation (and its accompanying risks) with contractors, subcontractors, suppliers, partners and others. Any failure by Choice
Properties to develop quality assets and effectively manage all development, redevelopment and major renovation initiatives may
negatively impact the reputation and financial performance of the Trust.
Property Valuation
Choice Properties conducts a valuation assessment of its properties on a quarterly basis. As property values fluctuate over time
in response to market factors, or as underlying assumptions and inputs to the valuation model change, the fair value of the Trust’s
portfolio could change materially. Choice Properties is responsible for the reasonableness of the assumptions and for the
accuracy of the inputs into the property valuation model. Errors in the inputs to the valuation model or inappropriate assumptions
may result in an inaccurate valuation of the properties. In addition to a market activity report that is tailored to Choice Properties’
portfolio, management uses the market information obtained in external appraisals, across multiple firms, commissioned during
the reporting period to assess whether changes to market-related assumptions are required for the balance of the portfolio. The
Trust is responsible for monitoring the value of its portfolio going forward and evaluating the impact of any changes in property
value over time. Any changes in the value of the Trust’s properties may impact Unitholder value.
A publicly traded real estate investment trust will not necessarily trade at values determined solely by reference to the underlying
value of its real estate assets. Accordingly, the Units may trade at a premium or a discount to values implied by the above-
mentioned valuations.
Capitalization Rate Risk
The property valuation process is dependent on several inputs, including the current market capitalization rate. Risks associated
with the Trust’s property valuation model include fluctuations in the current market capitalization rate which can significantly
impact the value of Choice Properties’ overall real estate portfolio. In addition, Choice Properties is subject to certain financial and
non-financial covenants in the Debentures and the Revolving Credit Facility that include maintaining certain leverage ratios.
Changes in the market capitalization rate could impact the Trust’s property valuation which, in turn, could impact financial
covenants.
Choice Properties REIT
2024 Annual Report • 79
Environmental and Social
ESG considerations are an integral component of the Trust’s corporate strategy. As a leading real estate company, Choice
Properties is committed to creating positive environmental and social change by focusing on the issues that matter most to the
Trust’s tenants, employees, communities, investors and other stakeholders, with a particular focus on combating climate change
and advancing social equity. Any failure or perceived failure to advance the ESG priorities of the Trust may negatively affect the
Trust’s reputation, operations or financial performance.
Environmental
Choice Properties faces environmental risks that could, directly or indirectly, negatively impact the Trust’s reputation, operations
or performance over the short or long term. In particular, Choice Properties is confronted with issues related to climate change.
Choice Properties defines climate-related risk as the risk of loss, either directly through financial loss or indirectly through
reputational damage, resulting from the inability or failure to adequately prepare for the impacts from climate change or the
transition to a lower-carbon economy. Choice Properties may be exposed to the impact of events caused by climate change,
such as natural disasters, severe weather events, floods, forest fires and rising sea levels. Such events could interrupt Choice
Properties’ operations and activities, damage its properties and require Choice Properties to incur additional expenses to recover
or repair properties from a natural disaster and inclement weather. Choice Properties’ financial position and results from
operations could be adversely affected by the materialization of any of the risks identified herein related to climate change.
Furthermore, as a real estate property owner and manager, Choice Properties faces the risk that its properties will be subject to
government initiatives and reforms aimed at countering climate change, such as transitioning to a low carbon economy and may
entail extensive changes to policies, regulations and technologies to address mitigation and adaption efforts. Choice Properties
may require operational changes and/or incur financial costs to comply with various reforms. Any failure to adhere and adapt to
climate change could result in fines or adversely affect Choice Properties’ reputation, operations or financial performance.
As an owner of real property in Canada, Choice Properties is subject to various federal, provincial, territorial and municipal laws
relating to environmental matters. Such laws provide that Choice Properties could be, or become, liable for environmental harm,
damage or costs, including with respect to the release of hazardous, toxic or other regulated substances into the environment,
and the removal or other remediation of hazardous, toxic or other regulated substances that may be present at or under its
properties. Further, liability may be incurred by Choice Properties with respect to the release of such substances from or to its
properties. Applicable laws often impose liability regardless of whether the property owner knew of, or was responsible for, the
presence of such substances. Additional liability may be incurred by Choice Properties with respect to the release of such
substances from its properties to properties owned by third parties, including properties adjacent to its properties or with respect
to the exposure of persons to such substances. Laws also govern the maintenance and removal of materials containing asbestos
in the event of damage, demolition or renovation of a property as well as emissions of, and exposure to, asbestos fibres in the air.
The portfolio of properties may contain ground contamination, hazardous substances and/or other residual pollution and
environmental risks. Buildings and their fixtures might contain asbestos or other hazardous substances above the allowable or
recommended thresholds, or other environmental risks could be associated with the buildings. Some of the properties have, or
have had, tenants that would or currently use, hazardous, toxic or other regulated substances. For example, retail gas stations
and dry-cleaning operations are currently located, or have been located in the past, at some of the properties.
In such cases, Choice Properties will bear the risk of cost-intensive assessment, remediation or removal of such ground
contamination, hazardous substances or other residual pollution. The discovery of any such residual pollution on the sites and/or
in the buildings, particularly in connection with the lease or sale of properties or borrowing using the real estate as security, could
trigger claims for rent reductions or termination of leases for cause, for damages and other breach of warranty claims against
Choice Properties. The remediation of any pollution and the related additional measures Choice Properties would have to
undertake could have a materially adverse effect on Choice Properties and could involve considerable additional costs. Choice
Properties will also be exposed to the risk that recourse against the polluter or the previous owners of the properties might not be
possible. Moreover, the existence or even the mere suspicion of the existence of ground contamination, hazardous materials or
other residual pollution can adversely affect the value of a property and Choice Properties’ ability to lease or sell such property.
Choice Properties’ operating policy is to obtain a Phase I environmental site assessment, conducted by an independent and
experienced environmental consultant, prior to acquiring a property and to have Phase II environmental site assessment work
completed where recommended in a Phase I environmental site assessment. Although such environmental site assessments
would provide Choice Properties with some level of assurance about the condition of such properties, Choice Properties may
become subject to liability for undetected contamination or other environmental conditions at its properties.
Choice Properties intends to make the necessary capital and operating expenditures to comply with environmental laws and
address any material environmental issues and such costs may have a material adverse effect on Choice Properties’ business,
financial condition or results of operations and decrease or eliminate the amount of cash available for distribution to Unitholders.
Environmental laws can change and Choice Properties may become subject to more stringent environmental laws in the future,
with increased enforcement of laws by the government. Compliance with more stringent environmental laws, which may be more
rigorously enforced, the identification of currently unknown environmental issues or an increase in the costs required to address a
currently known condition, may have a material adverse effect on Choice Properties’ financial condition and results of operations
and decrease or eliminate the amount of cash available for distribution to Unitholders.
80 • 2024 Annual Report
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Social
Choice Properties faces risks associated with social issues and has established certain priorities in response, including achieving
adequate representation of traditionally under-represented groups on the Board and in management positions and the employee
population as a whole and building a culture of inclusion. The Trust recognizes its responsibility to respect and protect the human
rights of all people who support and intersect with the business, and will not tolerate abuse, discrimination or harassment in any
form. In addition, Choice Properties is subject to various occupational health and safety laws and regulations. Any failure by
Choice Properties to adhere to appropriate and established workplace health and safety procedures and to ensure compliance
with applicable laws and regulations could have an adverse effect on the operations, financial performance and reputation of
Choice Properties.
Information and Cyber Security
Choice Properties requires segregation and protection of its information, including security over tenant lease details, employee
information, financial records and operational data (“Confidential Information”). Some of this Confidential Information is held and
managed by third-party service providers. Any failure in data security or any system vulnerability (internal or external) could result
in harm to the reputation or competitive position of the Trust. To reduce the level of vulnerability, the Trust has implemented
security measures, including monitoring and testing, maintenance of protective systems and contingency plans to protect and to
prevent unauthorized access of Confidential Information and to reduce the likelihood of disruptions to its IT systems.
Despite these measures, all of the Trust’s information systems, including its back-up systems and any third-party service provider
systems that it employs, are vulnerable to damage, interruption, disability or failures due to a variety of reasons, including physical
theft, fire, power loss, computer and telecommunication failures or other catastrophic events, as well as internal and external
security breaches, denial of service attacks, viruses, worms and other known or unknown disruptive events.
Choice Properties or its third-party service providers may be unable to anticipate, timely identify or appropriately respond to one
or more of the rapidly evolving and increasingly sophisticated means by which computer hackers, cyber terrorists and others may
attempt to breach the Trust’s security measures or those of our third-party service providers’ information systems.
As cyber threats evolve and become more difficult to detect and successfully defend against, one or more cyber threats might
defeat the Trust’s security measures or those of its third-party service providers. Moreover, employee error or malfeasance, faulty
password management or other irregularities may result in a breach of the Trust’s or its third-party service providers’ security
measures, which could result in a breach of Confidential Information.
If Choice Properties does not allocate and effectively manage the resources necessary to build and sustain a reliable IT
infrastructure, fails to timely identify or appropriately respond to cybersecurity incidents, or Choice Properties’ or its third-party
service providers’ information systems are damaged, destroyed, shut down, interrupted or cease to function properly, Choice
Properties’ business could be disrupted and Choice Properties could, among other things, be subject to: the loss of or failure to
attract new tenants; the loss of revenue; the loss or unauthorized access to Confidential Information or other assets; the loss of or
damage to trade secrets; damage to its reputation; litigation; regulatory enforcement actions; violation of privacy, security or other
laws and regulations; and remediation costs.
Demographic and Tenant Changes
A large portion of Choice Properties’ existing real estate portfolio is comprised of necessity-based retail tenants. Shifting
consumer preferences toward e-commerce may result in a decrease in the demand for physical space by retail tenants. The
failure of Choice Properties to adapt to changes in the retail landscape, including finding new tenants to replace any lost income
stream from existing tenants that reduce the amount of physical space they rent from Choice Properties, could adversely affect
Choice Properties’ operations or financial performance.
Asset Management
Certain significant expenditures, including property taxes, maintenance costs, debt service payments, insurance costs and
related charges, must be made throughout the period of ownership of real property, regardless of whether the property is
producing sufficient income to pay such expenses. In order to retain desirable rentable space, increase tenant demand and to
generate adequate revenue over the long-term, Choice Properties must maintain or, in some cases, improve each property’s
condition to meet market demand. Property management services, including lease management and facility repairs and
maintenance must be executed in a timely and cost-effective manner. Maintaining a rental property in accordance with market
standards can entail significant costs, which Choice Properties may not be able to recover from its tenants. All the Loblaw Leases
contain exclusions on certain operating costs and/or property tax recoveries. In addition, property tax reassessments based on
updated appraised values may occur, which Choice Properties may not be able to recover from its tenants. As a result, Choice
Properties may bear the economic cost of such operating costs and/or property taxes which may adversely impact the financial
condition and results of operations and decrease the amount of cash available for distribution to Unitholders. Numerous factors,
including the age of the relevant building, the materials used at the time of construction or currently unknown building code
violations could result in substantial unbudgeted costs for refurbishment or modernization. In addition, the timing and amount of
capital expenditures may indirectly affect the amount of cash available for distribution to Unitholders. Distributions may be
reduced, or even eliminated, at times when Choice Properties deems it necessary to make significant capital or other
expenditures.
2024 Annual Report • 81
Choice Properties REIT
If the actual costs of maintaining or upgrading a property exceed Choice Properties’ estimates, or if hidden defects are
discovered during maintenance or upgrading which are not covered by insurance or contractual warranties, additional and
unexpected costs may be incurred. If similar properties located in the vicinity of one of the properties in the Trust’s portfolio are
substantially refurbished and the property is not similarly refurbished, the net operating income derived from, and the value of,
such property could be reduced. Any failure by Choice Properties to undertake appropriate maintenance and refurbishment work
in response to the factors described above could adversely affect the rental income that is earned from such properties. Any such
event could have a material adverse effect on Choice Properties’ business, cash flows, financial condition or results of operations
and its ability to make distributions to Unitholders.
In addition, a failure by Choice Properties to allocate operational capital adequately could negatively impact occupancy levels,
attraction of high-quality tenants and lease renewals, which could have a material adverse effect on Choice Properties’ operations
and financial performance.
Regulatory Compliance
Choice Properties is subject to laws and regulations governing the ownership and leasing of real property, securities, intellectual
property, privacy, employment standards and other matters. It is possible that future changes in applicable federal, provincial,
municipal, local or common laws or regulations or changes in their enforcement or regulatory interpretation could result in
changes in the legal requirements affecting the Trust. Also, to retain its tax status as a REIT, Choice Properties must comply with
the REIT exception to the SIFT Rules at all times. Choice Properties’ failure to comply with the REIT exception would result in
certain distributions from the Trust not being deductible in computing its taxable income and the Trust being subject to tax on
such distributions at a rate that is substantially equivalent to the general tax rate applicable to Canadian corporations. Any non-
compliance under the Tax Act or non-compliance with other laws or regulations could subject Choice Properties to civil or
regulatory actions, investigations or proceedings, which in turn could negatively impact Choice Properties’ operations and
financial position. There can be no assurance that the Canadian federal income tax laws respecting real estate investment trusts,
or the ways in which these rules are interpreted and applied by the Canada Revenue Agency, will not be changed in a manner
which adversely affects Choice Properties and/or Unitholders. It is impossible to predict whether there will be any future changes
in the regulatory regimes to which the Trust will be subject or the effect of any such changes on its investments.
Talent Management and Succession Planning
Choice Properties’ continued growth is dependent on its ability to hire, retain and develop its leaders and other key personnel.
Any failure to attract and retain talented and experienced employees effectively and to establish adequate succession planning
and retention strategies could result in a lack of requisite knowledge, skill and experience. This could erode Choice Properties’
competitive position or result in increased costs and competition for, or high turn-over of, employees. Any of the foregoing could
negatively affect Choice Properties’ ability to operate its business and execute its strategies, which in turn, could adversely affect
its reputation, operations or financial performance.
Business Continuity
Choice Properties’ ability to continue critical operations and processes could be negatively impacted by adverse events resulting
from various incidents, including severe weather, development site work stoppages, prolonged IT systems failure, terrorist
activity, pandemics, power failures or other national or international catastrophes. Any of these events, including ineffective
contingency planning, may have a material adverse effect on Choice Properties’ reputation, business, cash flows, financial
condition and results of operations and its ability to make distributions to Unitholders.
Acquisitions and Dispositions
Acquired properties may be subject to unknown, unexpected or undisclosed liabilities which could have a material adverse
impact on the operations and financial results of Choice Properties. Representations and warranties given by third parties to
Choice Properties may not adequately protect against these liabilities and any recourse against third parties may be limited by the
financial capacity of such third parties. Furthermore, it is not always possible to obtain from the seller the records and documents
that are required in order to verify fully that the buildings to be acquired are constructed in accordance, and that their use
complies, with planning laws and building code requirements. Accordingly, in the course of acquiring a property, specific risks
might not be or might not have been recognized or correctly evaluated. These circumstances could lead to additional costs and
could have a material adverse effect on rental income of the relevant properties or the sale prices of such properties upon a
disposition of such properties.
Choice Properties’ ability to acquire properties on satisfactory terms and integrate and operate them successfully is subject to the
following additional risks: (a) Choice Properties may be unable to acquire desired properties because of (i) constraints imposed by
the terms of the Strategic Alliance Agreement, or (ii) competition from other real estate investors with more capital, including other
real estate operating companies, real estate investment trusts and investment funds; (b) Choice Properties may acquire properties
that are not accretive to results upon acquisition, and Choice Properties may not successfully manage and lease those properties
to meet its expectations; (c) competition from other potential acquirers may significantly increase the purchase price of a desired
property; (d) Choice Properties may be unable to generate sufficient cash from operations, or obtain the necessary debt or equity
financing to consummate an acquisition or, if obtainable, financing may not be on satisfactory terms; (e) Choice Properties may
need to spend more than budgeted amounts to make necessary improvements or renovations to acquired properties; (f)
agreements for the acquisition of properties are typically subject to customary conditions to closing, including satisfactory
completion of due diligence investigations, and Choice Properties may spend significant time and money on potential acquisitions
that Choice Properties does not consummate; (g) the process of acquiring or pursuing the acquisition of a new property may
divert the attention of Choice Properties’ senior management team from existing business operations; (h) Choice Properties may
82 • 2024 Annual Report
Choice Properties REIT
be unable to integrate new acquisitions quickly and efficiently, particularly acquisitions of portfolios of properties, into existing
operations; (i) market conditions may result in higher than expected vacancy rates and lower than expected rental rates; and (j)
Choice Properties may acquire properties without any recourse, or with only limited recourse, for liabilities, whether known or
unknown, such as clean-up of environmental contamination, claims by tenants, vendors or other persons against the former
owners of the properties and claims for indemnification by general partners, directors, officers and others indemnified by the
former owners of the properties.
If Choice Properties cannot complete property acquisitions on favourable terms, or operate acquired properties to meet Choice
Properties’ goals or expectations, Choice Properties’ business, financial condition, results of operations and cash flows the per
Unit trading price, and its ability to satisfy debt service obligations and to make distributions to Unitholders could be materially
and adversely affected.
In addition, Choice Properties undertakes strategic property dispositions from time to time in order to recycle its capital and
maintain an optimal portfolio composition. Failure to dispose of certain assets not aligned with Choice Properties’ investment
criteria may adversely affect its operations and financial performance.
Vendor Management, Partnerships and Third-Party Service Providers
Choice Properties relies on third-party vendors, joint venture partners, developers, co-owners and strategic partners to provide
the Trust with various services or to complete projects. The lack of an effective process for developing joint venture arrangements
or for contract tendering, drafting, review, approval and monitoring may pose a risk for the Trust. Choice Properties may not be
able to negotiate contracts with terms, services levels and rates that are optimal for Choice Properties. In addition, co-owners or
joint venture partners may fail to fund their share of capital, may not comply with the terms of any governing agreements or may
incur reputational damage which could negatively impact the Trust. Inefficient, ineffective or incomplete vendor management /
partnership strategies, policies and procedures could impact the Trust’s reputation, operations and/or financial performance.
Tenant Concentration
The Trust’s properties generate income through rent payments made by tenants, and particularly rent payments made by Loblaw
as Choice Properties’ largest tenant. Upon the expiry of any lease, there can be no assurance that the lease will be renewed or
the tenant replaced. Furthermore, the terms of any subsequent lease may be less favourable than the existing lease, including the
addition of restrictive covenants. In addition, historical occupancy rates and rents are not necessarily an accurate prediction of
future occupancy rates. Choice Properties’ cash flows and financial position would be adversely affected if its tenants (and
especially Loblaw) were to become unable to meet their obligations under their leases or if a significant amount of available space
in the properties was not able to be leased on economically favourable lease terms. In the event of default by a tenant, Choice
Properties may experience delays or limitations in enforcing its rights as lessor and incur substantial costs in protecting its
investment. In addition, restrictive covenants and the terms of the Strategic Alliance Agreement may narrow the field of potential
tenants at a property and could contribute to difficulties in leasing space to new tenants.
Choice Properties’ net income could also be adversely affected in the event of a downturn in the business, or the bankruptcy or
insolvency, of Loblaw, as Choice Properties’ largest tenant. Choice Properties derives a large portion of its annual base minimum
rent from Loblaw. Consequently, revenues are dependent on the ability of Loblaw to meet its rent obligations and Choice
Properties’ ability to collect rent from Loblaw. The future financial performance and operating results of Loblaw are subject to
inherent risks, uncertainties, and other factors. If Loblaw were to terminate its tenancies, default on or cease to satisfy its payment
obligations, it would have a material adverse effect on Choice Properties’ financial condition or results of operations and its ability
to make distributions to Unitholders.
The closing of an anchor store at a property could also have a material adverse effect on the value of that property. Vacated
anchor tenant space also tends to adversely affect the entire property because of the loss of the departed anchor tenant’s power
to draw customers to the property, which in turn may cause other tenants’ operations to suffer and adversely affect such other
tenants’ ability to pay rent or perform any other obligations under their leases. No assurance can be given that Choice Properties
will be able to re-lease space vacated by an anchor tenant quickly and/or on favourable terms, if at all. In addition, certain leases
contain a provision requiring tenants to maintain continuous occupancy of leased premises, and there can be no assurance that
such tenants will continue to occupy such premises. Furthermore, at any time, an anchor tenant may seek the protection of
bankruptcy, insolvency or similar laws which could result in the rejection and termination of the lease of the tenant and thereby
cause a reduction in Choice Properties’ cash flows, financial condition or results of operations and its ability to make distributions
to Unitholders.
2024 Annual Report • 83
Choice Properties REIT
12.2
Financial Risks and Risk Management
Choice Properties is exposed to a number of financial risks, which have the potential to affect its operating and financial
performance. The following is a summary of Choice Properties’ financial risks:
Interest Rate Risk
Choice Properties requires extensive financial resources to complete the implementation of its strategy. Successful
implementation of Choice Properties’ strategy will require cost effective access to additional funding. There is a risk that interest
rates may increase, which could impact long-term borrowing costs and negatively impact financial performance.
The majority of Choice Properties’ debt is financed at fixed rates with maturities staggered over the long-term, thereby mitigating
the exposure to near term changes in interest rates. To the extent that Choice Properties incurs variable rate indebtedness (such
as borrowings under the Revolving Credit Facility), this will result in fluctuations in Choice Properties’ cost of borrowing as interest
rates change. If interest rates rise, Choice Properties’ operating results and financial condition could be materially adversely
affected and the amount of cash available for distribution to Unitholders could decrease.
Choice Properties’ Revolving Credit Facility and the Debentures also contain covenants that require it to maintain certain financial
ratios on a consolidated basis. If Choice Properties does not maintain such ratios, its ability to make distributions to Unitholders
may be limited or suspended.
Choice Properties analyzes its interest rate risk and the impact of rising and falling interest rates on operating results and financial
condition on a regular basis.
Liquidity and Capital Availability Risk
Liquidity risk is the risk that Choice Properties cannot meet a demand for cash or fund its obligations as they come due. Although
a portion of the cash flows generated by its properties is devoted to servicing such outstanding debt, there can be no assurance
that Choice Properties will continue to generate sufficient cash flows from operations to meet interest payments and principal
repayment obligations upon an applicable maturity date. If Choice Properties is unable to meet interest payments or principal
repayment obligations, it could be required to renegotiate such payments or issue additional equity or debt or obtain other
financing. The failure of Choice Properties to make or renegotiate interest or principal payments or issue additional equity or debt
or obtain other financing could materially adversely affect Choice Properties’ financial condition and results of operations and
decrease or eliminate the amount of cash available for distribution to Unitholders.
The real estate industry is highly capital intensive. Choice Properties requires access to capital to fund operating expenses,
property maintenance costs, development spending; and other capital expenditures, and to refinance indebtedness. Although
Choice Properties expects to have access to the Revolving Credit Facility, there can be no assurance that it will otherwise have
access to sufficient capital or access to capital on favourable terms. Further, in certain circumstances, Choice Properties may not
be able to borrow funds due to limitations set forth in the Declaration of Trust, the Indenture, as supplemented by the
Supplemental Indentures. Failure by Choice Properties to access required capital could have a material adverse effect on its
financial condition or results of operations and its ability to make distributions to Unitholders.
Liquidity and capital availability risks are mitigated by maintaining appropriate levels of liquidity, by diversifying the Trust’s
sources of funding, by maintaining a well-diversified debt maturity profile and by actively monitoring market conditions.
Liquidity of Real Property
An investment in real estate is relatively illiquid. Such illiquidity will tend to limit Choice Properties’ ability to adjust its portfolio
promptly in response to changing economic or investment conditions or in the event it seeks to sell real estate assets as a source
of liquidity. In recessionary times, it may be difficult to dispose of certain types of real estate. The costs of holding real estate are
considerable and during an economic recession Choice Properties may be faced with ongoing expenditures with a declining
prospect of incoming revenue. In such circumstances, it may be necessary for Choice Properties to dispose of properties at lower
prices in order to generate sufficient cash for operations and for making distributions to Unitholders.
Unit Price Risk
Choice Properties is exposed to Unit price risk as a result of the issuance of the Exchangeable Units, which are economically
equivalent to and exchangeable for Units, as well as the issuance of unit-based compensation. The Exchangeable Units and unit-
based compensation liabilities are recorded at their fair value based on market trading prices. The Exchangeable Units and unit-
based compensation negatively impact net income when the Unit price rises and positively impact net income when the Unit
price declines.
Credit Risk
Choice Properties is exposed to credit risk resulting from the possibility that counterparties could default on their financial
obligations to Choice Properties. Exposure to credit risk relates to rent receivables, cash and cash equivalents, short-term
investments, security deposits, derivatives, and mortgages, loans and notes receivable.
Choice Properties mitigates the risk of credit loss related to rent receivables by evaluating the creditworthiness of new tenants,
obtaining security deposits wherever permitted by legislation, ensuring its tenant mix is diversified and limiting its exposure to any
84 • 2024 Annual Report
Choice Properties REIT
one tenant (except Loblaw). Choice Properties establishes for expected credit losses with respect to rent receivables. The
allowance is determined on a tenant-by-tenant basis based on the specific factors related to the tenant.
The risk related to cash and cash equivalents, short-term investments, security deposits, and derivatives is reduced by policies
and guidelines that require Choice Properties to enter into transactions only with Canadian financial and government institutions
that have a minimum short-term rating of “A-2” and a long-term credit rating of “A-” from S&P or an equivalent credit rating from
another recognized credit rating agency and by placing minimum and maximum limits for exposures to specific counterparties
and instruments.
The risk related to its mortgages, loans and notes receivable arise in the event that the borrowers default on the repayment of
such financing. Choice Properties has established a program with a group of strategic development partners whereby the Trust
provides financing in the form of mezzanine loans, joint venture financing, vendor take-back financing and other arrangements. In
exchange, the Trust generally receives an option or other rights to acquire an interest in real property assets. The Trust mitigates
this risk by ensuring the loans are well secured by real property assets and by obtaining guarantees where necessary.
Despite such mitigation efforts, if Choice Properties’ counterparties default, it could have a material adverse impact on Choice
Properties’ financial condition or results of operations and its ability to make distributions to Unitholders.
Degree of Leverage
Choice Properties’ degree of leverage could have important consequences to Unitholders, including: (i) Choice Properties’ ability
to obtain additional financing in the future for operating costs, capital expenditures, acquisitions, development or other general
business purposes; (ii) a larger portion of Choice Properties’ cash flows being dedicated to the payment of the principal of, and
interest on, its indebtedness, thereby reducing the amount of funds available for distributions to Unitholders; and (iii) making
Choice Properties more vulnerable to a downturn in business or the economy in general. Under the Declaration of Trust, the
maximum amount that Choice Properties can leverage is (i) 60% excluding any convertible Indebtedness and (ii) 65% including
any convertible Indebtedness.
To reduce this risk, Choice Properties actively monitors its degree of leverage to ensure it is within acceptable levels.
Any of these risks could have an adverse effect on Choice Properties’ financial condition, results of operations, cash flows, the
trading price of the Units, distributions to Unitholders and its ability to satisfy principal and interest obligations on its outstanding
debt.
Credit Rating Risk
Credit ratings assigned to the Trust, Partnership and any of their respective securities may be changed at any time based on the
judgement of the credit rating agencies and may also be impacted by a change in the credit rating of GWL, Loblaw and their
respective Affiliates. In addition, the Trust, GWL, Loblaw and their respective Affiliates may incur additional indebtedness in the
future, which could impact current and future credit ratings. A reduction in credit ratings could materially adversely affect the
market value of the Trust’s outstanding securities and the Trust’s access to and cost of financing.
2024 Annual Report • 85
Choice Properties REIT
13.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG")
Environmental, Social and Governance (“ESG”) considerations are integrated into the Trust’s day-to-day business activities, and
are aligned with the Trust’s purpose of creating enduring value through places where people thrive. ESG principles are embedded
in the Trust’s corporate strategy, which prioritizes maintaining a market-leading portfolio, sustaining operational excellence and
executing on its development pipeline.
The Board oversees the Trust’s ESG program, with the Trust’s President and Chief Executive Officer as the executive sponsor.
Progress against the Trust’s 2024 environmental targets will be made available in the upcoming ESG Report to be issued later
this year.
Reporting and Disclosure
As part of the Trust’s continued efforts to enhance communication with its stakeholder community, it publishes an annual ESG
Report, which is available on the Trust’s website at www.choicereit.ca. The ESG Report is overseen by the Board and the controls
related to the Trust's ESG disclosures are reviewed by the Audit Committee. The Trust also engages a third party to assure the
energy, water, waste and GHG emission statements in the ESG Report.
The Trust has a robust governance framework in place, elements of which are discussed in the Management Proxy Circular,
available on the Trust’s website at www.choicereit.ca, including the section titled “Statement of Governance Practices.”
86 • 2024 Annual Report
Choice Properties REIT
14.
OUTLOOK(2)
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.
We are confident that our business model, stable tenant base, strong balance sheet and disciplined approach to financial
management will continue to benefit us. In 2025, Choice Properties is targeting:
•
Stable occupancy across the portfolio, resulting in approximately 2%-3% year-over-year growth in Same-Asset NOI,
Cash Basis;
•
Annual FFO per unit diluted in a range of $1.05 to $1.06, reflecting approximately 2%-3% year-over-year growth; and
•
Strong leverage metrics, targeting Adjusted Debt to EBITDAFV below 7.5x.
2024 Annual Report • 87
Choice Properties REIT
15.
NON-GAAP FINANCIAL MEASURES
The financial statements of Choice Properties are prepared in accordance with GAAP. However, in this MD&A, a number of
measures are presented that do not have any standardized meaning under GAAP. Such measures and related per-unit amounts
therefore should not be construed as alternatives to net income or cash flows from operating activities determined in accordance
with GAAP and may not be comparable to similar measures presented by other real estate investment trusts or enterprises. These
terms are defined below and are cross referenced, as applicable, to a reconciliation elsewhere in this MD&A to the most
comparable GAAP measure. Choice Properties believes these non-GAAP financial measures and ratios provide useful information
to both management and investors in measuring the financial performance and financial condition of the Trust for the reasons
outlined below.
Non-GAAP Measure
Description
Reconciliation
Proportionate Share
•
Represents financial information adjusted to reflect the Trust’s equity
accounted joint ventures and financial real estate assets and its
share of net income (loss) from equity accounted joint ventures and
financial real estate assets on a proportionately consolidated basis
at the Trust’s ownership percentage of the related investment.
•
Management views this method as relevant in demonstrating the
Trust's ability to manage the underlying economics of the related
investments, including the financial performance and cash flows and
the extent to which the underlying assets are leveraged, which is an
important component of risk management.
Section 2, “Balance Sheet”
Section 7.1, “Net Income
and Segment NOI
Reconciliation”
Net Operating Income
(“NOI”), Accounting
Basis
•
Defined as property rental revenue including straight-line rental
revenue, reimbursed contract revenue and lease surrender revenue,
less direct property operating expenses and realty taxes, and
excludes certain expenses such as interest expense and indirect
operating expenses in order to provide results that reflect a
property’s operations before consideration of how it is financed or
the costs of operating the entity in which it is held.
•
Management believes that NOI is an important measure of operating
performance for the Trust’s commercial real estate assets that is
used by real estate industry analysts, investors and management,
while also being a key input in determining the fair value of the
Choice Properties portfolio.
Section 7.1, “Net Income
and Segment NOI
Reconciliation”
NOI, Cash Basis
•
Defined as property rental revenue and reimbursed contract revenue,
excluding straight-line rental revenue and lease surrender revenue,
less direct property operating expenses and realty taxes, and
excludes certain expenses such as interest expense and indirect
operating expenses in order to provide results that reflect a
property’s operations before consideration of how it is financed or
the costs of operating the entity in which it is held.
•
Management believes NOI, Cash Basis is a useful measure in
understanding
period-over-period
changes
in
income
from
operations due to occupancy, rental rates, operating costs and realty
taxes.
Section 7.1, “Net Income
and Segment NOI
Reconciliation”
Section 15.1, “Net
Operating Income”
Same-Asset NOI,
Cash Basis
and
Same-Asset NOI,
Accounting Basis
•
Same-Asset NOI is used to evaluate the period-over-period
performance of those commercial properties and stabilized
residential properties, owned and operated by Choice Properties
since January 1, 2023, inclusive.
•
NOI from properties that have been (i) purchased, (ii) disposed, (iii)
subject to significant change as a result of new development,
redevelopment, expansion, or demolition, or (iv) residential
properties not yet stabilized (collectively, “Transactions”) are
excluded from the determination of same-asset NOI.
•
Same-Asset NOI, Cash Basis, is useful in evaluating the realization
of contractual rental rate changes embedded in lease agreements
and/or the expiry of rent-free periods, while also being a useful
measure in understanding period-over-period changes in NOI due to
occupancy, rental rates, operating costs and realty taxes, before
considering the changes in NOI that can be attributed to the
Transactions and development activities.
Section 7.2, “Net Operating
Income Summary”
88 • 2024 Annual Report
Choice Properties REIT
Funds from Operations
(“FFO”)
•
Calculated in accordance with the Real Property Association of
Canada’s (“REALpac”) Funds From Operations (FFO) & Adjusted
Funds From Operations (AFFO) for IFRS issued in January 2022.
•
Management considers FFO to be a useful measure of operating
performance as it adjusts for items included in net income (or loss)
that do not arise from operating activities or do not necessarily
provide an accurate depiction of the Trust’s past or recurring
performance, such as adjustments to fair value of Exchangeable
Units, investment properties, investment in real estate securities,
and unit-based compensation. From time to time, the Trust may
enter into transactions that materially impact the calculation and are
eliminated from the calculation for management’s review purposes.
•
Management uses and believes that FFO is a useful measure of the
Trust’s performance that, when compared period over period,
reflects the impact on operations of trends in occupancy levels,
rental rates, operating costs and realty taxes, acquisition activities
and interest costs.
Section 15.2, “Funds from
Operations”
Section 15.7, “Selected
Information for Comparative
Purposes”
Adjusted Funds from
Operations (“AFFO”)
•
Calculated in accordance with REALpac’s Funds From Operations
(FFO) & Adjusted Funds From Operations (AFFO) for IFRS issued in
January 2022.
•
Management considers AFFO to be a useful measure of operating
performance as it further adjusts FFO for capital expenditures that
sustain income producing properties and eliminates the impact of
straight-line rent. AFFO is impacted by the seasonality inherent in
the timing of executing property capital projects.
•
In calculating AFFO, FFO is adjusted by excluding straight-line rent,
as well as costs incurred relating to internal leasing activities and
property capital projects. Working capital changes, viewed as
short-term cash requirements or surpluses are deemed financing
activities pursuant to the methodology and are not considered
when calculating AFFO.
•
Capital expenditures which are excluded and not deducted in the
calculation of AFFO comprise those which generate a new
investment stream, such as constructing a new retail pad during
property expansion or intensification, development activities or
acquisition activities.
•
Accordingly, AFFO differs from FFO in that AFFO excludes from its
definition certain non-cash revenues and expenses recognized
under GAAP, such as straight-line rent, but also includes capital
and leasing costs incurred during the period which are capitalized
for GAAP purposes. From time to time, the Trust may enter into
transactions that materially impact the calculation and are
eliminated from the calculation for management’s review purposes.
Section 15.3, “Adjusted
Funds from Operations”
Section 15.7, “Selected
Information for Comparative
Purposes”
Adjusted Cash Flow
from Operations
(“ACFO”)
•
Calculated in accordance with REALpac’s Adjusted Cashflow from
Operations (ACFO) for IFRS issued in January 2023.
•
Management views ACFO as a useful measure of the cash
generated from operations after providing for operating capital
requirements, and in evaluating the ability of Choice Properties to
fund distributions to Unitholders. ACFO adjusts cash flows from
operations as calculated under GAAP including, but not limited to,
removing the effects of distributions on Exchangeable Units,
deducting amounts for property capital expenditures to sustain
existing GLA and for leasing capital expenditures.
•
The resulting ACFO will include the impact of the seasonality of
property capital expenditures and the impact of fluctuations from
normal operating working capital, such as changes to net rent
receivable from tenants, trade accounts payable and accrued
liabilities.
•
From time to time, the Trust may enter into transactions that
materially impact the calculation and are eliminated from the
calculation for management’s review purposes.
Section 15.4, “Adjusted
Cash Flow from Operations”
FFO, AFFO and ACFO
Payout Ratios
•
FFO, AFFO and ACFO payout ratios are supplementary measures
used by Management to assess the sustainability of the Trust's
distribution payments.
•
The ratios are calculated using cash distributions declared divided
by FFO, AFFO or ACFO, as applicable.
Section 7.3, “Other Key
Performance Indicators”
2024 Annual Report • 89
Choice Properties REIT
Earnings before
Interest, Taxes,
Depreciation,
Amortization and Fair
Value (“EBITDAFV”)
•
Defined as net income (loss) attributable to Unitholders, reversing,
where applicable, income taxes, interest expense, amortization
expense, depreciation expense, adjustments to fair value and other
adjustments as allowed in the Trust Indentures, as supplemented.
•
Management believes EBITDAFV is useful in assessing the Trust’s
ability to service its debt, finance capital expenditures and provide
distributions to its Unitholders.
Section 15.6, “Earnings
before Interest, Taxes,
Depreciation, Amortization
and Fair Value”
Cash Retained after
Distributions
•
Represents the portion of ACFO retained within Choice Properties
which can be used to invest in new acquisitions, development
properties and capital activity.
Section 4.4, “Distribution
Excess / Shortfall Analysis”
Total Adjusted Debt
•
Defined as variable rate debt (construction loans, mortgages, and
credit facility) and fixed rate debt (senior unsecured debentures,
construction loans and mortgages), as measured on a proportionate
share basis(1), and does not include the Exchangeable Units which
are included as part of unit equity on account of the Exchangeable
Units
being
economically
equivalent
and
receiving
equal
distributions to the Trust Units.
•
Total Adjusted Debt is also presented on a net basis to include the
impact of other finance charges such as debt placement costs and
discounts or premiums, and defeasance or other prepayments of
debt.
Section 4.5, “Components
of Total Adjusted Debt”
Net Asset Value
(“NAV”)
•
NAV is an alternative measurement of equity. It is calculated by
summing Unitholder’s Equity and the fair value of the Trust’s
Exchangeable
Units.
Under
IFRS
Exchangeable
Units
are
considered debt. The Exchangeable Units are not required to be
repaid and the holder of these units has the right to convert them
into Units, therefore Management considers the Exchangeable
Units to be equivalent to equity.
•
NAV is a useful measure as it reflects Management’s view of the
intrinsic value of the Trust. NAV per unit allows Management to
determine if the Trust is trading at a discount or premium to its
intrinsic value.
Section 4.10, “Net Asset
Value”
Adjusted Debt to Total
Assets
•
Determined by dividing Total Adjusted Debt (as defined above) by
total assets as presented on a proportionate share basis(1) and can
be interpreted as the proportion of the Trust’s assets that are
financed by debt.
•
Management believes this ratio is useful in evaluating the Trust’s
flexibility to incur additional financial leverage.
Section 4.7, “Financial
Condition”
Section 15.7, “Selected
Information for Comparative
Purposes”
Debt Service Coverage
•
Calculated as EBITDAFV divided by interest expense on the Total
Adjusted Debt and all regularly scheduled principal payments made
with respect to indebtedness during such period (other than any
balloon, bullet or similar principal payable at maturity or which
repays such indebtedness in full). This ratio is calculated based on
the Trust Indentures, as supplemented.
•
This ratio is useful in determining the ability of Choice Properties to
service the interest requirements of its outstanding debt.
Section 4.7, “Financial
Condition”
Section 15.7, “Selected
Information for Comparative
Purpose”
Adjusted Debt to
EBITDAFV
and
Adjusted Debt to
EBITDAFV, net of cash
•
Calculated as Total Adjusted Debt divided by EBITDAFV.
•
This ratio is used to assess the financial leverage of Choice
Properties, measure its ability to meet financial obligations, and
provide a snapshot of its balance sheet strength.
•
Management also presents this ratio with Total Adjusted Debt
calculated net of cash and cash equivalents at the measurement
date.
Section 4.7, “Financial
Condition”
Interest Coverage
•
Calculated as EBITDAFV divided by interest expense on the Total
Adjusted Debt incurred by Choice Properties for the period.
•
This ratio is useful in determining Choice Properties’ ability to
service the interest requirements of its outstanding debt.
Section 4.7, “Financial
Condition”
Liquidity
•
Liquidity is a non-GAAP measure calculated based on the sum of
total cash and cash equivalents and the undrawn portion of the
revolving unsecured operating line of credit.
Section 4, “Liquidity and
Capital Resources”
Section 4.1, “Liquidity and
Capital Structure”
90 • 2024 Annual Report
Choice Properties REIT
15.1
Net Operating Income
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. Refer to Section 7, “Results of Operations - Segment Information” and Section 15, “Non-
GAAP Financial Measures” for further details about this non-GAAP measure.
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Net Income (Loss)
$
791,916
$
(445,684) $
1,237,600
$
784,437
$
796,691
$
(12,254)
Residential inventory income
—
(4,626)
4,626
(2,034)
(4,626)
2,592
Interest income
(10,247)
(9,971)
(276)
(52,593)
(41,414)
(11,179)
Investment income
(5,315)
(10,983)
5,668
(21,260)
(26,928)
5,668
Fee income
(712)
(1,125)
413
(3,389)
(4,287)
898
Net interest expense and other financing
charges
147,490
143,373
4,117
586,388
566,147
20,241
General and administrative expenses
16,987
19,599
(2,612)
67,833
64,230
3,603
Share of income from equity accounted joint
ventures
(37,820)
(8,069)
(29,751)
(49,138)
(39,069)
(10,069)
Amortization of intangible assets
250
250
—
1,000
1,000
—
Transaction costs and other related expenses
55
—
55
(38,560)
34
(38,594)
Adjustment to fair value of unit-based
compensation
(1,927)
1,435
(3,362)
(657)
(938)
281
Adjustment to fair value of Exchangeable
Units
(704,500)
502,649
(1,207,149)
(237,472)
(320,587)
83,115
Adjustment to fair value of investment
properties
16,112
74,445
(58,333)
(92,731)
(114,150)
21,419
Adjustment to fair value of investment in real
estate securities
36,254
(26,570)
62,824
35,782
64,006
(28,224)
Income tax (recovery) expense
(1,057)
—
(1,057)
(1,069)
1
(1,070)
Net Operating Income, Accounting Basis -
GAAP
247,486
234,723
12,763
976,537
940,110
36,427
Straight-line rental revenue
675
(446)
1,121
2,194
2,270
(76)
Lease surrender revenue
(2,558)
(147)
(2,411)
(11,204)
(14,584)
3,380
Net Operating Income, Cash Basis - GAAP
245,603
234,130
11,473
967,527
927,796
39,731
Adjustments for equity accounted joint
ventures and financial real estate assets
14,363
12,907
1,456
56,592
51,709
4,883
Net Operating Income, Cash Basis -
Proportionate Share(1)
$
259,966
$
247,037
$
12,929
$
1,024,119
$
979,505
$
44,614
—
—
—
—
—
—
—
—
—
—
2024 Annual Report • 91
Choice Properties REIT
15.2
Funds from Operations
The following table reconciles net income (loss), as determined in accordance with GAAP, to Funds from Operations for the
periods ended as indicated. Refer to Section 7, “Results of Operations - Segment Information” and Section 15, “Non-GAAP
Financial Measures” for further details about this non-GAAP measure.
Three Months
Year Ended
For the periods ended December 31
($ thousands except where otherwise indicated)
2024
2023
Change $
2024
2023
Change $
Net Income (Loss)
$
791,916
$ (445,684)
$ 1,237,600
$
784,437
$ 796,691
$
(12,254)
Add (deduct) impact of the following:
Amortization of intangible assets
250
250
—
1,000
1,000
—
Transaction costs and other related expenses
55
—
55
(38,560)
34
(38,594)
Adjustment to fair value of unit-based
compensation
(1,927)
1,435
(3,362)
(657)
(938)
281
Adjustment to fair value of Exchangeable
Units
(704,500)
502,649
(1,207,149)
(237,472)
(320,587)
83,115
Adjustment to fair value of investment
properties
16,112
74,445
(58,333)
(92,731)
(114,150)
21,419
Adjustment to fair value of investment
properties to proportionate share(1)
(29,752)
(1,164)
(28,588)
(25,684)
(16,750)
(8,934)
Adjustment to fair value of investment in real
estate securities
36,254
(26,570)
62,824
35,782
64,006
(28,224)
Interest otherwise capitalized for development
in equity accounted joint ventures
2,975
2,670
305
11,671
11,457
214
Exchangeable Units distributions
75,199
74,210
989
300,137
296,181
3,956
Internal expenses for leasing
2,695
2,399
296
9,916
9,189
727
Income tax (recovery) expense
(1,057)
—
(1,057)
(1,069)
1
(1,070)
Funds from Operations
$ 188,220
$ 184,640
$
3,580
$ 746,770
$ 726,134
$
20,636
FFO per unit - diluted
$
0.260
$
0.255
$
0.005
$
1.032
$
1.003
$
0.029
FFO payout ratio - diluted(i)
73.1 %
73.5 %
(0.4) %
73.5 %
74.6 %
(1.1) %
Distribution declared per unit
$
0.190
$
0.188
$
0.002
$
0.758
$
0.749
$
0.009
Weighted average number of units
outstanding - diluted(ii)
723,726,328
723,662,727
63,601
723,680,890
723,666,503
14,387
(i)
FFO payout ratio is calculated as cash distributions declared divided by FFO.
(ii)
Includes Trust Units and Exchangeable Units.
92 • 2024 Annual Report
Choice Properties REIT
FFO as calculated on a proportionate share basis(1):
Three Months
Year Ended
For the periods ended December 31
($ thousands except where otherwise indicated)
2024
2023
Change $
2024
2023
Change $
Net Operating Income, Cash Basis
$ 259,966
$ 247,037
$
12,929
$ 1,024,119
$ 979,505
$
44,614
Straight-line rental revenue
1,061
1,072
(11)
1,434
715
719
Lease surrender revenue
2,558
147
2,411
11,204
14,786
(3,582)
Net Operating Income, Accounting Basis
263,585
248,256
15,329
1,036,757
995,006
41,751
Residential inventory income
—
4,626
(4,626)
2,034
4,626
(2,592)
Interest income
7,949
8,776
(827)
38,159
29,663
8,496
Investment income
5,315
10,983
(5,668)
21,260
26,928
(5,668)
Fee income
712
1,125
(413)
3,389
4,287
(898)
Net interest expense and other financing
charges
(153,223)
(148,806)
(4,417)
(608,720)
(586,973)
(21,747)
Distributions on Exchangeable Units(i)
75,199
74,210
989
300,137
296,181
3,956
Interest otherwise capitalized for development
in equity accounted joint ventures
2,975
2,670
305
11,671
11,457
214
General and administrative expenses
(16,987)
(19,599)
2,612
(67,833)
(64,230)
(3,603)
Internal expenses for leasing
2,695
2,399
296
9,916
9,189
727
Funds from Operations
$ 188,220
$ 184,640
$
3,580
$ 746,770
$ 726,134
$
20,636
FFO per unit - diluted
$
0.260
$
0.255
$
0.005
$
1.032
$
1.003
$
0.029
FFO payout ratio - diluted(ii)
73.1 %
73.5 %
(0.4) %
73.5 %
74.6 %
(1.1) %
Distribution declared per unit
$
0.190
$
0.188
$
0.002
$
0.758
$
0.749
$
0.009
Weighted average number of units
outstanding - diluted(iii)
723,726,328
723,662,727
63,601
723,680,890
723,666,503
14,387
(i)
Represents interest on indebtedness due to GWL.
(ii)
FFO payout ratio is calculated as cash distributions declared divided by FFO.
(iii)
Includes Trust Units and Exchangeable Units.
2024 Annual Report • 93
Choice Properties REIT
15.3
Adjusted Funds from Operations
The following table reconciles FFO to AFFO for the periods ended as indicated. Refer to Section 7, “Results of Operations -
Segment Information” and Section 15, “Non-GAAP Financial Measures” for further details about this non-GAAP measure.
Three Months
Year Ended
For the periods ended December 31
($ thousands except where otherwise indicated)
2024
2023
Change $
2024
2023
Change $
Funds from Operations
$ 188,220
$ 184,640
$
3,580
$ 746,770
$ 726,134
$
20,636
Add (deduct) impact of the following:
Internal expenses for leasing
(2,695)
(2,399)
(296)
(9,916)
(9,189)
(727)
Straight-line rental revenue
675
(446)
1,121
2,194
2,270
(76)
Straight-line rental revenue adjustment to
proportionate share(1)
(1,736)
(626)
(1,110)
(3,628)
(2,985)
(643)
Property capital
(61,315)
(46,491)
(14,824)
(80,205)
(85,516)
5,311
Direct leasing costs
(1,738)
(1,357)
(381)
(7,824)
(5,622)
(2,202)
Tenant improvements
(10,107)
(4,381)
(5,726)
(16,797)
(22,833)
6,036
Operating capital expenditures adjustment to
proportionate share(1)
(1,978)
(1,845)
(133)
(5,646)
(3,827)
(1,819)
Adjusted Funds from Operations
$ 109,326
$ 127,095
$
(17,769)
$ 624,948
$ 598,432
$
26,516
AFFO per unit - diluted
$
0.151
$
0.176
$
(0.025)
$
0.864
$
0.827
$
0.037
AFFO payout ratio - diluted(i)
125.8 %
106.8 %
19.0 %
87.8 %
90.5 %
(2.7) %
Distribution declared per unit
$
0.190
$
0.188
$
0.002
$
0.758
$
0.749
$
0.009
Weighted average number of units
outstanding - diluted(ii)
723,726,328
723,662,727
63,601
723,680,890
723,666,503
14,387
(i)
AFFO payout ratio is calculated as cash distributions declared divided by AFFO.
(ii)
Includes Trust Units and Exchangeable Units.
94 • 2024 Annual Report
Choice Properties REIT
15.4
Adjusted Cash Flow from Operations
The following table reconciles cash flows from operating activities, as determined in accordance with GAAP, to ACFO for the
periods ended as indicated. Refer to Section 4.3, “Adjusted Cash Flow from Operations” and Section 15, “Non-GAAP Financial
Measures” for further details about this non-GAAP measure.
Three Months
Year Ended
For the periods ended December 31
($ thousands except where otherwise indicated)
2024
2023
Change $
2024
2023
Change $
Cash Flows from Operating Activities
$ 242,441
$ 207,667
$
34,774
$ 724,729
$ 641,972
$
82,757
Add (deduct) impact of the following:
Net interest expense and other financing
charges in excess of interest paid(i)
(89,952)
(88,250)
(1,702)
(302,657)
(303,626)
969
Distributions on Exchangeable Units included
in net interest expense and other financing
charges
75,199
74,210
989
300,137
296,181
3,956
Interest and other income in excess of interest
received(i)
761
1,415
(654)
7,921
9,739
(1,818)
Interest otherwise capitalized for development
in equity accounted joint ventures
2,975
2,670
305
11,671
11,457
214
Portion of internal expenses for leasing
relating to development activity
1,347
1,200
147
4,958
4,595
363
Adjustment for property capital expenditures
on a proportionate share basis(1)
(62,377)
(46,765)
(15,612)
(81,363)
(85,878)
4,515
Adjustment for leasing expenditures to a
proportionate share basis(1)
(916)
(1,571)
655
(4,488)
(3,465)
(1,023)
Transaction costs and other related expenses
55
—
55
(38,560)
34
(38,594)
Adjustment for proportionate share of
operating income from equity accounted
joint ventures(ii)
8,068
6,905
1,163
23,454
22,319
1,135
Adjustment for distributions from equity
accounted joint ventures
(4,563)
(9,587)
5,024
(31,938)
(33,913)
1,975
Adjustment for additions to residential
inventory
—
2,020
(2,020)
2,648
9,758
(7,110)
Adjustment for changes in non-cash working
capital items not indicative of sustainable
operating cash flows(iii)
(43,330)
(11,666)
(31,664)
24,623
39,590
(14,967)
Adjusted Cash Flow from Operations
129,708
138,248
(8,540)
641,135
608,763
32,372
Cash distributions declared
137,505
135,683
1,822
548,783
541,529
7,254
Cash Retained after Distributions
$
(7,797)
$
2,565
$
(10,362)
$
92,352
$
67,234
$
25,118
ACFO Payout Ratio(iv)
106.0 %
98.1 %
7.9 %
85.6 %
89.0 %
(3.4) %
(i)
The timing of the recognition of interest expense and income differs from the cash payment and collection.
(ii)
Excludes adjustment to fair value of investment properties for equity accounted joint ventures.
(iii)
ACFO is adjusted each quarter for fluctuations in non-cash working capital due to the timing of realty taxes prepaid or payable and prepaid insurance. The
payments for these operating expenses tend to have quarterly, seasonal fluctuations that even out on an annual basis. ACFO is also adjusted each quarter to
remove fluctuations in non-cash working capital, which are not related to sustainable operating activities.
(iv)
ACFO payout ratio is calculated as the cash distributions declared divided by ACFO.
Based on the Real Property Association of Canada’s Adjusted Cashflow from Operations (ACFO) for IFRS issued in January 2023,
Choice Properties adjusts ACFO for amounts included in the net change in non-cash working capital, a component of cash flows
from operating activities, to eliminate fluctuations that are not indicative of sustainable cash available for distribution. The resulting
remaining impacts on ACFO from changes in non-cash working capital are calculated below:
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Net change in non-cash working capital(i)
$
58,411
$
19,781
$
38,630
$
(21,295) $
(40,198) $
18,903
Adjustment for changes in non-cash working
capital items not indicative of sustainable
operating cash flows
(43,330)
(11,666)
(31,664)
24,623
39,590
(14,967)
Net non-cash working capital increase
included in ACFO
$
15,081
$
8,115
$
6,966
$
3,328
$
(608) $
3,936
(i)
As calculated and disclosed in the Trust’s audited consolidated financial statements.
2024 Annual Report • 95
Choice Properties REIT
15.5
Net Interest Expense and Other Financing Charges Reconciliation
The following tables reconcile net interest expense and other financing charges as determined in accordance with GAAP to net
interest expense and other financing charges on a proportionate share basis(1) for the periods ended as indicated:
2024
2023
For the three months ended December 31
($ thousands)
GAAP Basis
Adjustment to
Proportionate
Share Basis(1)
Proportionate
Share Basis(1)
GAAP Basis
Adjustment to
Proportionate
Share Basis(1)
Proportionate
Share Basis(1)
Interest on senior unsecured debentures
$
57,064
$
—
$
57,064
$
57,974
$
—
$
57,974
Interest on mortgages and construction loans
13,934
6,516
20,450
10,659
6,206
16,865
Interest on credit facility
958
—
958
612
—
612
Subtotal (for use in Debt Service Coverage(1)
calculation)
71,956
6,516
78,472
69,245
6,206
75,451
Distributions on Exchangeable Units(i)
75,199
—
75,199
74,210
—
74,210
Subtotal (for use in EBITDAFV(1) calculation)
147,155
6,516
153,671
143,455
6,206
149,661
Interest on right-of-use lease liabilities
10
—
10
13
—
13
Amortization of debt discounts and premiums
135
54
189
50
71
121
Amortization of debt placement costs
1,140
186
1,326
1,160
156
1,316
Capitalized interest
(950)
(1,023)
(1,973)
(1,305)
(1,000)
(2,305)
Net interest expense and other financing charges
$
147,490
$
5,733
$
153,223
$
143,373
$
5,433
$
148,806
(i)
Represents interest on indebtedness due to GWL.
2024
2023
For the years ended December 31
($ thousands)
GAAP Basis
Adjustment to
Proportionate
Share Basis(1)
Proportionate
Share Basis(1)
GAAP Basis
Adjustment to
Proportionate
Share Basis(1)
Proportionate
Share Basis(1)
Interest on senior unsecured debentures
$
231,621
$
—
$
231,621
$
220,246
$
—
$
220,246
Interest on mortgages and construction loans
48,286
25,007
73,293
41,898
21,948
63,846
Interest on credit facility
4,105
—
4,105
9,638
—
9,638
Subtotal (for use in Debt Service Coverage(1)
calculation)
284,012
25,007
309,019
271,782
21,948
293,730
Distributions on Exchangeable Units(i)
300,137
—
300,137
296,181
—
296,181
Subtotal (for use in EBITDAFV(1) calculation)
584,149
25,007
609,156
567,963
21,948
589,911
Interest on right-of-use lease liabilities
45
—
45
63
—
63
Amortization of debt discounts and premiums
665
156
821
30
282
312
Amortization of debt placement costs
4,577
659
5,236
4,639
276
4,915
Capitalized interest
(3,048)
(3,490)
(6,538)
(6,548)
(1,680)
(8,228)
Net interest expense and other financing charges
$
586,388
$
22,332
$
608,720
$
566,147
$
20,826
$
586,973
(i)
Represents interest on indebtedness due to GWL.
96 • 2024 Annual Report
Choice Properties REIT
15.6
Earnings Before Interest, Taxes, Depreciation, Amortization and Fair Value
The following table reconciles net income (loss), as determined in accordance with GAAP, to EBITDAFV for the periods ended as
indicated. Refer to Section 15, “Non-GAAP Financial Measures” for further details about this non-GAAP measure.
Three Months
Year Ended
For the periods ended December 31
($ thousands)
2024
2023
Change $
2024
2023
Change $
Net Income (Loss)
$
791,916
$
(445,684) $
1,237,600
$
784,437
$
796,691
$
(12,254)
Add (deduct) impact of the following:
Transaction costs and other related expenses
55
—
55
(38,560)
34
(38,594)
Adjustment to fair value of unit-based
compensation
(1,927)
1,435
(3,362)
(657)
(938)
281
Adjustment to fair value of Exchangeable
Units
(704,500)
502,649
(1,207,149)
(237,472)
(320,587)
83,115
Adjustment to fair value of investment
properties
16,112
74,445
(58,333)
(92,731)
(114,150)
21,419
Adjustment to fair value of investment
properties to proportionate share(1)
(29,752)
(1,164)
(28,588)
(25,684)
(16,750)
(8,934)
Adjustment to fair value of investment in real
estate securities
36,254
(26,570)
62,824
35,782
64,006
(28,224)
Interest expense on a proportionate share
basis(1)(i)
153,671
149,661
4,010
609,156
589,911
19,245
Amortization of other assets
315
321
(6)
1,254
1,311
(57)
Amortization of intangible assets
250
250
—
1,000
1,000
—
Income tax (recovery) expense
(1,057)
—
(1,057)
(1,069)
1
(1,070)
Earnings Before Interest, Taxes,
Depreciation, Amortization and Fair Value
(EBITDAFV)
$
261,337
$
255,343
$
5,994
$
1,035,456
$
1,000,529
$
34,927
(i)
As calculated in Section 15.5, “Net Interest Expense and Other Financing Charges Reconciliation”.
2024 Annual Report • 97
Choice Properties REIT
15.7
Selected Information For Comparative Purposes
The following table reconciles net income (loss), as determined in accordance with GAAP, to Funds from Operations for the
periods ended as indicated. Refer to Section 7, “Results of Operations - Segment Information” and Section 15, “Non-GAAP
Financial Measures” for further details about this non-GAAP measure.
($ thousands except where
otherwise indicated)
Fourth
Quarter
2024
Third
Quarter
2024
Second
Quarter
2024
First
Quarter
2024
Fourth
Quarter
2023
Third
Quarter
2023
Second
Quarter
2023
First
Quarter
2023
Fourth
Quarter
2022
Net income (loss)
$ 791,916
$ (662,989)
$
513,231
$
142,279
$ (445,684)
$
435,903
$
535,668
$
270,804
$ (579,000)
Amortization of intangible
assets
250
250
250
250
250
250
250
250
250
Transaction costs and other
related expenses
55
—
(38,615)
—
—
—
9
25
82
Adjustment to fair value of
unit-based compensation
(1,927)
3,339
(1,288)
(781)
1,435
(643)
(998)
(732)
2,665
Adjustment to fair value of
Exchangeable Units
(704,500)
906,351
(372,039)
(67,284)
502,649
(352,250)
(375,997)
(94,989)
858,857
Adjustment to fair value of
investment properties
16,112
(82,173)
(28,035)
1,365
74,445
(26,775)
(86,053)
(75,767)
(193,370)
Adjustment to fair value of
investment properties to
proportionate share(1)
(29,752)
(620)
2,493
2,195
(1,164)
346
132
(16,064)
(13,877)
Adjustment to fair value of
investment in real estate
securities
36,254
(57,983)
27,870
29,641
(26,570)
44,757
31,176
14,643
20,784
Interest otherwise capitalized
for development in equity
accounted joint ventures
2,975
3,119
3,069
2,508
2,670
2,933
2,939
2,915
2,790
Exchangeable Units
distributions
75,199
75,199
75,199
74,540
74,210
74,210
74,210
73,551
73,221
Internal expenses for leasing
2,695
2,154
2,579
2,488
2,399
2,282
2,254
2,254
1,900
Income tax (recovery) expense
(1,057)
—
—
(12)
—
—
—
1
(119)
Funds from Operations
$ 188,220
$
186,647
$
184,714
$
187,189
$
184,640
$
181,013
$
183,590
$
176,891
$
174,183
FFO per unit - diluted
$
0.260
$
0.258
$
0.255
$
0.259
$
0.255
$
0.250
$
0.254
$
0.244
$
0.241
FFO payout ratio - diluted(i)
73.1 %
73.7 %
74.4 %
72.8 %
73.5 %
75.0 %
73.9 %
76.0 %
76.8 %
Distribution declared per unit
$
0.190
$
0.190
$
0.190
$
0.188
$
0.188
$
0.188
$
0.188
$
0.186
$
0.185
Weighted average number of
units outstanding - diluted(ii)
723,726,328
723,683,222
723,659,539
723,666,036
723,662,727
723,664,818
723,656,668
723,665,160
723,586,201
(i)
FFO payout ratio is calculated as cash distributions declared divided by FFO.
(ii)
Includes Trust Units and Exchangeable Units.
98 • 2024 Annual Report
Choice Properties REIT
The following table reconciles FFO to AFFO for the periods ended as indicated. Refer to Section 7, “Results of Operations -
Segment Information” and Section 15, “Non-GAAP Financial Measures” for further details about this non-GAAP measure.
($ thousands except where
otherwise indicated)
Fourth
Quarter
2024
Third
Quarter
2024
Second
Quarter
2024
First
Quarter
2024
Fourth
Quarter
2023
Third
Quarter
2023
Second
Quarter
2023
First
Quarter
2023
Fourth
Quarter
2022
Funds from operations
$ 188,220
$
186,647
$
184,714
$
187,189
$ 184,640
$
181,013
$
183,590
$
176,891
$ 174,183
Add (deduct) impact of the
following:
Internal expenses for
leasing
(2,695)
(2,154)
(2,579)
(2,488)
(2,399)
(2,282)
(2,254)
(2,254)
(1,900)
Straight-line rental revenue
675
346
1,434
(261)
(446)
839
898
979
(838)
Straight-line rental revenue
adjustment to
proportionate share(1)
(1,736)
(620)
(658)
(614)
(626)
(925)
(777)
(657)
(658)
Property capital
(61,315)
(11,890)
(2,606)
(4,394)
(46,491)
(31,513)
(5,764)
(1,748)
(35,456)
Direct leasing costs
(1,738)
(2,890)
(2,024)
(1,172)
(1,357)
(1,681)
(793)
(1,791)
(2,258)
Tenant improvements
(10,107)
(2,295)
(1,369)
(3,026)
(4,381)
(8,323)
(3,686)
(6,443)
(5,188)
Operating capital
expenditures adjustment
to proportionate share(1)
(1,978)
(1,268)
(312)
(2,088)
(1,845)
(570)
(814)
(598)
(950)
Adjusted Funds from
Operations
$ 109,326
$
165,876
$
176,600
$
173,146
$ 127,095
$
136,558
$
170,400
$
164,379
$ 126,935
AFFO per unit - diluted
$
0.151
$
0.229
$
0.244
$
0.239
$
0.176
$
0.189
$
0.235
$
0.227
$
0.175
AFFO payout ratio -
diluted(i)
125.8 %
82.9 %
77.9 %
78.7 %
106.8 %
99.4 %
79.6 %
81.8 %
105.5 %
Weighted average number
of units outstanding -
diluted(ii)
723,726,328
723,683,222
723,659,539
723,666,036
723,662,727
723,664,818
723,656,668
723,665,160
723,586,201
(i)
AFFO payout ratio is calculated as cash distributions declared divided by AFFO.
(ii)
Includes Trust Units and Exchangeable Units.
Components of certain financial leverage ratios
The following table includes the denominator applied to the calculation of Adjusted Debt to Total Assets ratio(1) and Debt Service
Coverage ratio(1) for the periods indicated. Refer to section 4.7 “Financial Condition” and Section 15, “Non-GAAP Financial
Measures” for further details about this non-GAAP measure.
Fourth
Quarter
2024
Third
Quarter
2024
Second
Quarter
2024
First
Quarter
2024
Fourth
Quarter
2023
Third
Quarter
2023
Second
Quarter
2023
First
Quarter
2023
Fourth
Quarter
2022
Total Assets -
Proportionate Basis
$ 18,219,439 $ 18,042,431
$ 18,243,332 $ 17,467,013 $ 17,889,244
$ 17,800,387
$ 17,624,482
$ 17,483,341
$ 17,349,387
Debt Service Coverage
Ratio - Denominator
$
87,597
$
89,641
$
83,587
$
82,312
$
84,686
$
84,449
$
79,923
$
79,121
$
78,148
2024 Annual Report • 99
Choice Properties REIT
Financial Statements
Table of Contents
101
Management’s Statement of Responsibility for Financial Reporting
102
Independent Auditor’s Report
107
Consolidated Balance Sheets
108
Consolidated Statements of Income and Comprehensive Income
109
Consolidated Statements of Changes in Equity
110
Consolidated Statements of Cash Flows
111
Notes to the Consolidated Financial Statements
111
Note 1.
Nature and Description of the Trust
111
Note 2.
Material Accounting Policy Information
120
Note 3.
Future Accounting Standards
121
Note 4.
Critical Accounting Judgments and Estimates
123
Note 5.
Investment Property and Other Transactions
126
Note 6.
Investment Properties
129
Note 7.
Equity Accounting Joint Ventures
131
Note 8.
Co-Ownership Property Interests
131
Note 9.
Financial Real Estate Assets
131
Note 10.
Residential Development Inventory
132
Note 11.
Mortgages, Loans, and Notes Receivable
134
Note 12.
Investment in Real Estate Securities
134
Note 13.
Intangible Assets
135
Note 14.
Accounts Receivables and Other Assets
136
Note 15.
Long Term Debt
139
Note 16.
Credit Facility
140
Note 17.
Unitholders’ Equity
141
Note 18.
Income Taxes
142
Note 19.
Trade Payables and Other Liabilities
143
Note 20. Unit-Based Compensation
145
Note 21.
Rental Revenue
145
Note 22. Property Operating Costs
146
Note 23. Interest Income
146
Note 24. Net Interest Expense and Other Financing Charges
146
Note 25. General and Administrative Expenses
147
Note 26. Financial Risk Management
149
Note 27.
Financial Instruments
150
Note 28. Capital Management
151
Note 29.
Supplemental Cash Flow Information
152
Note 30. Segment Information
154
Note 31.
Contingencies, Commitments, and Guarantees
155
Note 32. Related Party Transactions
100 • 2024 Annual Report
Choice Properties REIT
Management’s Statement of Responsibility for Financial Reporting
The management of Choice Properties Real Estate Investment Trust (the “Trust”) is responsible for the preparation, presentation
and integrity of the accompanying consolidated financial statements, Management’s Discussion and Analysis and all other
information in the Annual Report. This responsibility includes the selection and consistent application of appropriate accounting
principles and methods in addition to making the judgments and estimates necessary to prepare the consolidated financial
statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards
Board (the “IFRS Accounting Standards” or “GAAP”). It also includes ensuring that the financial information presented elsewhere
in the Annual Report is consistent with that in the consolidated financial statements.
Management is also responsible for providing reasonable assurance that assets are safeguarded, and that relevant and reliable
financial information is produced. Management is required to design a system of internal controls and certify as to the design and
operating effectiveness of internal controls over financial reporting. A dedicated control compliance team reviews and evaluates
internal controls, the results of which are shared with management on a quarterly basis. PricewaterhouseCoopers LLP, whose
report follows, are the independent auditors engaged to audit the consolidated financial statements of the Trust.
The Board of Trustees, acting through an Audit Committee comprised solely of trustees who are independent, is responsible for
determining that management fulfills its responsibilities in the preparation of the consolidated financial statements and the
financial control of operations. The Audit Committee recommends the independent auditors for appointment by the Unitholders.
The Audit Committee meets regularly with senior and financial management and the independent auditors to discuss internal
controls, auditing activities and financial reporting matters. The independent auditors and internal auditors have unrestricted
access to the Audit Committee. These consolidated financial statements and Management’s Discussion and Analysis have been
approved by the Board of Trustees for inclusion in the Annual Report based on the review and recommendation of the Audit
Committee.
Toronto, Canada
February 12, 2025
[signed]
Rael Diamond
President and Chief Executive Officer
[signed]
Mario Barrafato
Chief Financial Officer
2024 Annual Report • 101
Choice Properties REIT
Independent auditor’s report
To the Unitholders of Choice Properties Real Estate Investment Trust
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of Choice Properties Real Estate Investment Trust and its subsidiaries (together, the
Trust) as at December 31, 2024 and 2023, and its financial performance and its cash flows for the years
then ended in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board (IFRS Accounting Standards).
What we have audited
The Trustʼs consolidated financial statements comprise:
•
the consolidated balance sheets as at December 31, 2024 and 2023;
•
the consolidated statements of income and comprehensive income for the years then ended;
•
the consolidated statements of changes in equity for the years then ended;
•
the consolidated statements of cash flows for the years then ended; and
•
the notes to the consolidated financial statements, comprising material accounting policy information
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidate
d financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Trust in accordance with the ethical requirements that are relevant to our audit
of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in
accordance with these requirements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2024. These matters were
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2500, Toronto, Ontario, Canada M5J 0B2
T.: +1 416 863 1133, F.: +1 416 365 8215, Fax to mail: ca_toronto_18_york_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
102 • 2024 Annual Report
Choice Properties REIT
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Valuation of income producing properties
Refer to note 2 – Material Accounting Policy
Information, note 4 – Critical Accounting Judgments
and Estimates and note 6 – Investment Propertie
s to t he consolida ted finan cial statements.
The Trust measures its income producing
properties at fair value and, as at December 31,
2024, these assets were valued at $15.1 billion.
The fair values of these assets are prepared by the
Trustʼs internal valuations team and reviewed by
management. As part of managementʼs internal
valuation program, the Trust considers external
valuations performed by independent national real
estate valuation firms for a cross section of
properties that represent different geographical
locations and asset classes across the Trustʼs
portfolio. Income producing properties are valued
using the discounted cash flow method. The
significant assumptions under this method include
the discount rates and terminal capitalization rates
applicable to those assets.
We considered this a key audit matter due to
(i) significant audit effort required to assess the fair
values of income producing properties; (ii) critical
judgments by management when determining the
fair values of the income producing properties,
including the development of the significant
assumptions; and (iii) a high degree of complexity
in assessing audit evidence related to the
significant assumptions developed by management.
In addition, the audit effort involved the use of
professionals with specialized skill and knowledge
in the field of real estate valuations.
Our approach to addressing the matter included the
following procedures, among others:
•
Developed a point estimate of the fair value of
each individual income producing property
using external market data and compared each
independent point estimate to managementʼs
estimate of each property to evaluate the
reasonableness of managementʼs estimate.
•
For the individual estimates that fell outside of
the expected range established from the point
estimate, we tested how management
determined the fair value estimate of the
income producing property, which included the
following:
•
Evaluated the appropriateness of the
valuation methodology used.
•
Evaluated the reasonableness of the
discount rates and terminal capitalization
rates by comparing to externally available
market data. For certain properties,
professionals with specialized skill and
knowledge in the field of real estate
valuations assisted in evaluating the
reasonableness of the discount rates and
terminal capitalization rates.
•
Tested the underlying data used in the
discounted cash flow method.
2024 Annual Report • 103
Choice Properties REIT
Other information
Management is responsible for the other information. The other information comprises the Managementʼs
Discussion and Analysis and the information, other than the consolidated financial statements and our
auditorʼs report thereon, included in the annual report.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Trustʼs
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Trust or to
cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Trustʼs financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditorʼs
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
104 • 2024 Annual Report
Choice Properties REIT
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Trustʼs internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
•
Conclude on the appropriateness of managementʼs use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Trustʼs ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditorʼs report to
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditorʼs report. However, future events or conditions may cause the Trust to cease to continue as a
going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
•
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business units within the Trust as a basis for forming an opinion on the
consolidated financial statements. We are responsible for the direction, supervision and review of the
audit work performed for purposes of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
2024 Annual Report • 105
Choice Properties REIT
are therefore the key audit matters. We describe these matters in our auditorʼs report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditorʼs report is Frank Magliocco. /s/Pricewate
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Ontario
February 12, 2025
106 • 2024 Annual Report
Choice Properties REIT
Choice Properties Real Estate Investment Trust
Consolidated Balance Sheets
(in thousands of Canadian dollars)
Note
As at
December 31, 2024
As at
December 31, 2023
Assets
Investment properties
6
$
15,331,000
$
14,923,000
Equity accounted joint ventures
7
884,431
883,712
Financial real estate assets
9
199,374
195,457
Residential development inventory
10
2,095
8,681
Mortgages, loans and notes receivable
11
720,205
656,001
Investment in real estate securities
12
202,526
238,308
Intangible assets
13
12,964
13,964
Accounts receivable and other assets
14
105,594
137,180
Assets held for sale
6
35,955
—
Cash and cash equivalents
29(c)
63,388
252,424
Total Assets
$
17,557,532
$
17,308,727
Liabilities and Equity
Long term debt
15
$
6,684,940
$
6,695,923
Exchangeable Units
17
5,283,750
5,521,222
Trade payables and other liabilities
19
689,042
723,080
Total Liabilities
12,657,732
12,940,225
Equity
Unitholders’ equity
17
4,899,800
4,368,502
Total Equity
4,899,800
4,368,502
Total Liabilities and Equity
$
17,557,532
$
17,308,727
Contingencies, Commitments, and Guarantees (Note 31).
See accompanying notes to the audited consolidated financial statements.
Approved on behalf of the Board of Trustees
[signed]
Gordon A. M. Currie
Chair, Board of Trustees
[signed]
Diane Kazarian
Chair, Audit Committee
Choice Properties REIT
2024 Annual Report • 107
Choice Properties Real Estate Investment Trust
Consolidated Statements of Income and Comprehensive Income
Year Ended
(in thousands of Canadian dollars)
Note
December 31, 2024
December 31, 2023
Net Rental Income
Rental revenue
21
$
1,358,105
$
1,309,170
Property operating costs
22
(381,568)
(369,060)
976,537
940,110
Residential Inventory Income
Gross sales
10
11,268
25,634
Cost of sales
10
(9,234)
(21,008)
2,034
4,626
Other Income and Expenses
Interest income
23
52,593
41,414
Investment income
12
21,260
26,928
Fee income
3,389
4,287
Net interest expense and other financing charges
24
(586,388)
(566,147)
General and administrative expenses
25
(67,833)
(64,230)
Share of income from equity accounted joint ventures
7
49,138
39,069
Amortization of intangible assets
13
(1,000)
(1,000)
Transaction costs and other related expenses
19
38,560
(34)
Adjustment to fair value of unit-based compensation
20
657
938
Adjustment to fair value of Exchangeable Units
17
237,472
320,587
Adjustment to fair value of investment properties
6
92,731
114,150
Adjustment to fair value of investment in real estate securities
12
(35,782)
(64,006)
Income Before Income Taxes
783,368
796,692
Income tax recovery (expense)
18
1,069
(1)
Net Income
$
784,437
$
796,691
Net Income
$
784,437
$
796,691
Other Comprehensive Loss
Unrealized loss on designated hedging instruments
27
(2,964)
(6,374)
Other Comprehensive Loss
(2,964)
(6,374)
Comprehensive Income
$
781,473
$
790,317
See accompanying notes to the audited consolidated financial statements.
108 • 2024 Annual Report
Choice Properties REIT
Choice Properties Real Estate Investment Trust
Consolidated Statements of Changes in Equity
Attributable to Choice Properties’ Unitholders
(in thousands of Canadian dollars)
Note
Trust
Units
Cumulative
net income
Accumulated
other
comprehensive
income
Cumulative
distributions
to Unitholders
Total
Unitholders’
equity
Equity, December 31, 2023
$ 3,660,985
$ 2,375,686
$
6,551
$
(1,674,720) $ 4,368,502
Net income
—
784,437
—
—
784,437
Other comprehensive loss
—
—
(2,964)
—
(2,964)
Distributions
—
—
—
(248,646)
(248,646)
Units issued under unit-based compensation arrangements
17
951
—
—
—
951
Reclassification of vested Unit-Settled Restricted Units liability
to equity
17
1,534
—
—
—
1,534
Units repurchased for unit-based compensation arrangements
17
(4,014)
—
—
—
(4,014)
Equity, December 31, 2024
$ 3,659,456
$ 3,160,123
$
3,587
$
(1,923,366) $ 4,899,800
Attributable to Choice Properties’ Unitholders
(in thousands of Canadian dollars)
Trust
Units
Cumulative
net income
Accumulated
other
comprehensive
income
Cumulative
distributions
to Unitholders
Total
Unitholders’
equity
Equity, December 31, 2022
$ 3,661,605
$ 1,578,995
$
12,925
$
(1,429,372) $ 3,824,153
Net income
—
796,691
—
—
796,691
Other comprehensive loss
—
—
(6,374)
—
(6,374)
Distributions
—
—
—
(245,348)
(245,348)
Units issued under unit-based compensation arrangements
17
1,362
—
—
—
1,362
Reclassification of vested Unit-Settled Restricted Units liability
to equity
17
1,497
—
—
—
1,497
Units repurchased for unit-based compensation arrangements
17
(3,479)
—
—
—
(3,479)
Equity, December 31, 2023
$ 3,660,985
$ 2,375,686
$
6,551
$
(1,674,720) $ 4,368,502
See accompanying notes to the audited consolidated financial statements.
Choice Properties REIT
2024 Annual Report • 109
Choice Properties Real Estate Investment Trust
Consolidated Statements of Cash Flows
Year Ended
(in thousands of Canadian dollars)
Note
December 31, 2024
December 31, 2023
Operating Activities
Net income
$
784,437
$
796,691
Net interest expense and other financing charges
24
586,388
566,147
Interest paid
(283,731)
(262,521)
Interest income
23
(52,593)
(41,414)
Interest received
44,672
31,675
Share of income from equity accounted joint ventures
7
(49,138)
(39,069)
Distributions from equity accounted joint ventures
7
31,938
33,913
Additions to residential inventory
10
(2,648)
(9,758)
Direct leasing costs and tenant improvement allowances
6
(24,621)
(28,455)
Cash paid on vesting of restricted and performance units
(2,935)
(2,952)
Items not affecting cash and other items
29(a)
(285,745)
(362,087)
Net change in non-cash working capital
29(b)
(21,295)
(40,198)
Cash Flows from Operating Activities
724,729
641,972
Investing Activities
Acquisitions of investment properties
5
(205,477)
(143,843)
Acquisitions of financial real estate assets
5,9
—
(86,452)
Additions to investment properties
6
(148,410)
(228,962)
Additions to financial real estate assets
9
(711)
(470)
Contributions to equity accounted joint ventures
7
(48,534)
(31,816)
Distribution of disposition proceeds from equity accounted joint ventures
7
48,479
—
Return of capital distribution from equity accounted joint ventures
7
28,500
—
Mortgages, loans and notes receivable advances
11
(381,305)
(359,765)
Mortgages, loans and notes receivable repayments
11
46,186
293,106
Proceeds from dispositions
5
77,064
196,857
Cash Flows Used in Investing Activities
(584,208)
(361,345)
Financing Activities
Proceeds from issuance of debentures, net
15
496,888
894,983
Repayments of debentures
15
(750,000)
(575,000)
Net advances of mortgages payable
15
201,132
76,169
Net (repayments) advances on construction loans
15
(25,304)
18,979
Net repayments of credit facility
16
—
(260,000)
Payment of credit facility extension fee
16
(703)
(677)
Cash received on exercise of options
813
1,156
Repurchase of units for unit-based compensation arrangement
17
(4,014)
(3,479)
Distributions paid on Trust Units
(248,369)
(245,070)
Cash Flows Used in Financing Activities
(329,557)
(92,939)
Change in cash and cash equivalents
(189,036)
187,688
Cash and cash equivalents, beginning of year
252,424
64,736
Cash and Cash Equivalents, end of Year
29(c)
$
63,388
$
252,424
Supplemental disclosure of non-cash operating activities (Note 29).
See accompanying notes to the audited consolidated financial statements.
110 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Note 1. Nature and Description of the Trust
Choice Properties Real Estate Investment Trust (“Choice Properties” or the “Trust”) is an unincorporated, open-ended mutual
fund trust governed by the laws of the Province of Ontario and established pursuant to a declaration of trust amended and
restated as of April 30, 2021, as may be amended from time to time (the “Declaration of Trust”). Choice Properties, Canada’s
premier diversified real estate investment trust, is the owner, manager and developer of a high-quality portfolio of commercial
retail, industrial, mixed-use and residential properties across Canada. The principal, registered, and head office of Choice
Properties is located at 22 St. Clair Avenue East, Suite 700, Toronto, Ontario, M4T 2S5. Choice Properties’ trust units (“Trust
Units” or “Units”) are listed on the Toronto Stock Exchange (“TSX”) and are traded under the symbol “CHP.UN”.
Choice Properties commenced operations on July 5, 2013, when it issued Units and debt for cash pursuant to an initial public
offering (the “IPO”) and completed the acquisition of 425 properties from Loblaw Companies Limited and its subsidiaries
(“Loblaw”). Pursuant to a reorganization transaction on November 1, 2018, Loblaw spun out its 61.6% effective interest in Choice
Properties to George Weston Limited (“GWL”). As at December 31, 2024, GWL held either directly or indirectly, a 61.7% effective
interest in Choice Properties. Choice Properties’ ultimate parent is Wittington Investments, Limited (“Wittington”).
The principal subsidiaries of the Trust included in Choice Properties’ audited consolidated financial statements are Choice
Properties Limited Partnership (the “Partnership”), Choice Properties GP Inc. (the “General Partner”) and CPH Master Limited
Partnership (“CPH Master LP”).
Note 2. Material Accounting Policy Information
a.
Statement of Compliance
The consolidated financial statements of Choice Properties are prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards” or “GAAP”) and using
the accounting policies described herein. These consolidated financial statements were authorized for issuance by the
Choice Properties Board of Trustees (“Board”) on February 12, 2025.
b.
Basis of Preparation
The consolidated financial statements are prepared on a historical cost basis except for investment properties (Note 6),
financial real estate assets (Note 9), investment in real estate securities (Note 12), Class B LP Units (the “Exchangeable
Units”) which are exchangeable for Trust Units at the option of the holder (Note 17), liabilities for unit-based compensation
arrangements (Note 20) and certain financial instruments (Note 27) that have been measured at fair value. The consolidated
financial statements are presented in Canadian dollars, which is the Trust’s functional currency.
The Trust presents its consolidated balance sheet based on the liquidity method, whereby all assets and liabilities are
presented in ascending order of liquidity, while the notes to the consolidated financial statements distinguish between current
and non-current assets and liabilities. Choice Properties considers this presentation to be reliable and more relevant to the
Trust’s business.
c.
Basis of Consolidation
The consolidated financial statements include the accounts of Choice Properties and other entities controlled by the Trust (its
subsidiaries). Control is achieved when the Trust has power over the entity, has exposure, or rights, to variable returns from
its involvement with the entity, and has the ability to use its power to affect its returns. Choice Properties reassesses control
on an ongoing basis.
Consolidation of a subsidiary begins when the Trust obtains control over the subsidiary and ceases when the Trust loses
control of the subsidiary. Income and expenses of a subsidiary acquired or disposed of during the year are included in the
consolidated statements of income and comprehensive income from the effective date of acquisition and up to the effective
date of disposal, as appropriate.
When Choice Properties does not own all the equity in a subsidiary, the non-controlling equity interest is disclosed in the
consolidated balance sheet as a separate component of total equity. Changes in the Trust’s ownership interests in
subsidiaries that do not result in the Trust losing control over the subsidiaries are accounted for as equity transactions. The
carrying amounts of the Trust’s interests and any non-controlling interests are adjusted to reflect the changes in their relative
interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the
fair value of the consideration paid or received is recognized directly in equity and attributed to the Unitholders of the Trust.
When the Trust loses control of a subsidiary, for example through sale or partial sale, a gain or loss is recognized and is
calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling
interests.
Choice Properties REIT
2024 Annual Report • 111
Notes to the Consolidated Financial Statements
d.
Business Combinations
When an investment is acquired, the Trust considers the substance of the assets and activities of the acquisition in
determining whether the acquisition represents an asset acquisition or a business combination. The transaction is considered
to be a business combination if the acquired investment meets the definition of a business in accordance with IFRS 3,
“Business Combinations”, being an integrated set of activities and assets that are capable of being managed for the
purposes of providing a return to Unitholders.
The acquisition of a business is accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred at fair value on the date of acquisition. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are measured initially at fair value at the acquisition date. Any
contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Acquisition-
related costs are expensed in the period as incurred.
If the acquisition of an investment does not represent a business, it is accounted for as an acquisition of a group of assets
and liabilities. The cost of the acquisition is allocated to the assets and liabilities acquired based upon their relative fair values
at the acquisition date, and no goodwill is recognized. Acquisition-related costs are capitalized to the investment at the time
the acquisition is completed.
e.
Joint Arrangements
Joint arrangements are arrangements of which two or more parties have joint control. Joint control is the contractual sharing
of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the
parties sharing control. Joint arrangements are classified as either joint operations or joint ventures depending on the Trust’s
rights and obligations in the arrangement based on factors such as the structure, legal form and contractual terms of the
arrangement.
Joint Ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net
assets of the joint arrangement. The Trust’s investments in joint ventures are recorded using the equity method and are
initially recognized in the consolidated balance sheet at cost and adjusted thereafter to recognize the Trust’s share of the
profit or loss and other comprehensive income or loss of the joint venture. The Trust’s share of the joint venture’s profit or
loss is recognized in the Trust’s consolidated statements of income and comprehensive income.
The financial statements of the equity accounted joint ventures are prepared for the same reporting period as the Trust.
Where necessary, adjustments are made to bring the accounting policies in line with those of the Trust.
A joint venture is considered to be impaired if there is objective evidence of impairment, as a result of one or more events
that occurred after initial recognition of the joint venture, and that event has a negative impact on the future cash flows of the
joint venture that can be reliably estimated.
Joint Operations
A joint operation is a joint arrangement whereby the parties that have joint control have rights to the assets and obligations
for the liabilities relating to the arrangement. The financial statements of the joint operations are prepared for the same
reporting period as the Trust. Where necessary, adjustments are made to bring the accounting policies in line with those of
the Trust. The Trust accounts for its interests in joint operations by recognizing its proportionate share of jointly controlled
assets, liabilities, revenues and expenses.
112 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
f.
Investment Properties
Investment properties include income producing properties and properties under development that are held by the Trust to
earn rental income or for capital appreciation or both. The Trust accounts for its investment properties in accordance with
International Accounting Standard ("IAS") 40, "Investment Properties". Additionally, an investment property held under a
lease is classified as investment property if it meets the definition of investment property. At the inception of the lease the
investment property is recognized at the present value of the future minimum lease payments and an equivalent amount is
recognized as a lease obligation.
Subsequent to initial recognition, investment properties are measured at fair value in accordance with the valuation policy
discussed in Note 6. Gains and losses arising from changes in the fair value of investment properties are included in the
consolidated statements of income and comprehensive income in the period in which they arise. Investment properties are
de-recognized when disposed.
Income Producing Properties
Additions to income producing properties are expenditures incurred for the expansion and/or improvement of existing
income producing properties that increase the revenue generating ability of the properties and are considered revenue
enhancing capital expenditures. Extending and improving the productive capacity of leasable area of existing income
producing properties owned by the Trust requires significant on-going capital expenditures. The Trust considers these on-
going capital expenditures to be the following:
•
Property capital: Major expenditures such as parking lot resurfacing and roof replacements which are significant
items of improvement incurred pursuant to a capital plan are capitalized and recoverable from tenants under the
terms of their leases over the useful life of the improvements. All other repair and maintenance costs are expensed
when incurred.
•
Direct leasing costs: These include direct third-party brokerage fees incurred in the successful negotiation of a
lease.
•
Tenant improvement allowances: Amounts expended to meet the Trust’s lease obligations are characterized as
either tenant improvements, which are owned by the Trust, or tenant inducements. An expenditure is determined to
be a tenant improvement when it primarily benefits and/or is owned by the Trust. In such circumstances, the Trust is
considered to have acquired an asset which is recorded as an addition to income producing properties. Tenant
inducements are amortized on a straight-line basis over the term of the lease as a reduction of revenue.
Properties Under Development
The cost of land and buildings under development (consisting of commercial development sites, density or intensification
rights and related infrastructure) are specifically identifiable costs incurred in the period before construction is complete.
Costs capitalized in development capital include:
•
Permits, architect fees, hard construction costs;
•
Payments to tenants under lease obligations when the payment is reimbursement for construction which Choice
Properties will receive benefit after the tenant vacates; and
•
Site intensification payments, project management fees, professional fees, and property taxes.
Directly attributable borrowing costs associated with acquiring or constructing a qualifying investment property are
capitalized. Capitalization of borrowing costs commences when the activities necessary to prepare an asset for development
or redevelopment begin, and ceases once the asset is substantially complete, or if there is a prolonged period where
development activity is interrupted. The amount of borrowing costs capitalized is determined first by reference to borrowings
specific to the project, where relevant, and otherwise by applying a weighted average cost of borrowings to eligible
expenditures after adjusting for borrowings associated with other specific developments.
Properties under development are transferred to income producing properties at their fair value upon practical completion.
The Trust considers practical completion to have occurred when the property is capable of operating in the manner intended
by management.
Choice Properties REIT
2024 Annual Report • 113
Notes to the Consolidated Financial Statements
g.
Residential Development Inventory
Residential development inventory, which is developed for sale in the ordinary course of business, is stated at the lower of
cost and estimated net realizable value. Residential development inventory is reviewed for impairment at each reporting date.
An impairment loss is recognized as an expense when the carrying value of the property exceeds its net realizable value. Net
realizable value is based on projections of future cash flows, which take into account the development plans for each project
and management’s best estimate of the most probable set of anticipated economic conditions.
The cost of residential development inventory includes borrowing costs directly attributable to projects under active
development. The amount of borrowing costs capitalized is determined first by reference to borrowings specific to the
project, where relevant, and otherwise by applying a weighted average cost of borrowings to eligible expenditures after
adjusting for borrowings associated with specific developments. Borrowing costs are not capitalized on residential
development inventory where no development activity is taking place.
Transfers between residential inventory and investment property occur when there is a change in use. A change in use
occurs when the property meets, or ceases to meet, the definition of investment property based on management's intentions
and there is observable evidence of a change in use.
h.
Assets Held for Sale
An investment property is classified as held for sale when it is expected that the carrying amount will be recovered principally
through sale rather than from continuing use. For this to be the case, the property must be available for immediate sale in its
present condition, subject only to terms that are usual and customary for sales of such property, and its sale must be highly
probable, generally within one year. Upon designation as held for sale, the investment property continues to be measured at
fair value and is presented separately on the consolidated balance sheets.
i.
Financial Instruments
Financial assets and liabilities are recognized when Choice Properties becomes a party to the contractual provision of the
financial instrument.
Classification and Measurement
Financial assets are classified and measured based on three categories: amortized cost, fair value through other
comprehensive income (“FVOCI”), and fair value through profit or loss (“FVTPL”). Financial liabilities are classified and
measured based on two categories: amortized cost or FVTPL. Derivatives embedded in contracts where the host is a
financial asset in the scope of IFRS 9, “Financial Instruments” are not separated, but the hybrid financial instrument as a
whole is assessed for classification.
The classification and measurement of financial assets based on the Trust’s business model for managing these financial
assets and their contractual cash flow characteristics, is summarized as follows:
•
Assets held for the purpose of collecting contractual cash flows that represent solely payments of principal and
interest (“SPPI”) are measured at amortized cost;
•
Assets held within a business model where assets are held for both the purpose of collecting contractual cash flows
and selling financial assets prior to maturity, and the contractual cash flows represent solely payments of principal
and interest, are measured at FVOCI; and
•
Assets held within another business model or assets that do not have contractual cash flow characteristics that are
SPPI are measured at FVTPL.
Financial assets are not reclassified subsequent to their initial recognition, unless the Trust identifies changes in its business
model in managing financial assets and would reassess the classification of financial assets. All financial liabilities are
measured subsequently at amortized cost using the effective interest method or at FVTPL.
114 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
The following summarizes the classification and measurement of financial assets and liabilities:
Asset/Liability
Classification and Measurement Basis
Accounts receivable
Amortized cost
Mortgages, loans and notes receivable - SPPI
Amortized cost
Mortgages, loans and notes receivable - FVTPL
FVTPL
Financial real estate assets
FVTPL
Investment in real estate securities
FVTPL
Cash and cash equivalents
Amortized cost
Long term debt:
Senior unsecured debentures
Amortized cost
Mortgages payable
Amortized cost
Construction loans
Amortized cost
Credit facility
Amortized cost
Trade payables and other liabilities
Amortized cost
Derivative instruments designated as hedge
FVOCI
Derivative instruments not designated as hedge
FVTPL
Exchangeable Units
FVTPL
Impairment
An allowance for expected credit losses (“ECL”) is recognized at each balance sheet date for all financial assets measured at
amortized cost or those measured at FVOCI, except for investments in equity instruments. The ECL model requires
considerable judgment, including consideration of how changes in economic factors affect ECLs, which are determined on a
probability-weighted basis.
Impairment losses, if incurred, would be recorded as expenses in the consolidated statements of income and comprehensive
income with the carrying amount of the financial asset or group of financial assets reduced through the use of impairment
allowance accounts. In periods subsequent to the impairment where the impairment loss has decreased, and such decrease
can be related objectively to conditions and changes in factors occurring after the impairment was initially recognized, the
previously recognized impairment loss would be reversed through the consolidated statements of income and
comprehensive income. The impairment reversal would be limited to the lesser of the decrease in impairment or the extent
that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortized
cost would have been had the impairment not been recognized, after the reversal.
Fair Value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of an asset or a liability, the Trust takes into account the
characteristics of the asset or liability if market participants would take those characteristics into account when pricing the
asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated
financial statements is determined on such basis, unless otherwise noted.
Choice Properties measures financial assets and financial liabilities under the following fair value hierarchy. The different
levels have been defined as follows:
Level 1:
quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2:
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
Level 3:
inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Determination of fair value and the resulting hierarchy requires the use of observable market data whenever available. The
classification of a financial instrument in the hierarchy is based upon the lowest level of input that is significant to the
measurement of fair value.
Acquisition costs, other than those related to financial instruments classified as FVTPL which are expensed as incurred, are
capitalized to the carrying amount of the instrument and amortized using the effective interest method.
Choice Properties REIT
2024 Annual Report • 115
Notes to the Consolidated Financial Statements
Valuation process
The determination of the fair value of financial instruments is performed by Choice Properties’ treasury and financial reporting
departments on a quarterly basis. The following table describes the valuation techniques used in the determination of the fair
values of financial instruments:
Type
Valuation approach
Financial real estate assets
Fair value is determined based on valuation methodology described in Note 5.
Mortgages, loans and notes receivable
The fair value of each mortgage, loan and note receivable is based on the current
market conditions for financing with similar terms and risks.
Investment in real estate securities
Fair value is based on closing market trading price of Allied Properties Real Estate
Investment Trust (“Allied”).
Accounts receivable, cash and cash equivalents,
and trade payables and other liabilities
The carrying amount approximates fair value due to the short-term maturity of these
instruments.
Unit Options
Fair value of each tranche is valued separately using a Black-Scholes option pricing
model.
Restricted Units, Performance Units, Trustee
Deferred Units and Exchangeable Units
Fair value is based on closing market trading price of Choice Properties’ Units.
Unit-Settled Restricted Units (“URU”)
Fair value of each grant is measured based on the market value of a Unit at the balance
sheet date, less a discount to account for the vesting and holding period restriction
placed on the URUs.
Long term debt
Fair value is based on the present value of contractual cash flows, discounted at Choice
Properties’ current incremental borrowing rate for similar types of borrowing
arrangements or, where applicable, quoted market prices.
De-recognition of Financial Instruments
Financial assets are de-recognized when the contractual rights to receive cash flows and benefits from the financial asset
expire, or if Choice Properties transfers the control or substantially all the risks and rewards of ownership of the financial
asset to another party. The difference between the assets carrying amount and the sum of the consideration received and
receivable is recognized in net income.
Financial liabilities are de-recognized when obligations under the contract expire, are discharged or cancelled. The difference
between the carrying amount of the financial liability de-recognized and the consideration paid and payable is recognized in
net income.
j.
Financial Real Estate Assets
Financial real estate assets are land and buildings purchased by the Trust that did not meet the criteria of a transfer of control
under IFRS 15, “Revenue from Contracts with Customers”, due to the sale-leaseback arrangement with the seller of the
asset. In accordance with IFRS 16, “Leases”, the Trust has recognized these acquisitions as financial instruments under IFRS
9, “Financial Instruments”.
k.
Mortgages, Loans and Notes Receivable
The Trust’s mortgages, loans and notes receivable are classified into two categories: (1) those held for the purpose of
collecting contractual cash flows that represent SPPI and are classified and measured at amortized cost; and (2) those that
do not meet the SPPI criteria that are classified and measured at FVTPL.
Interest income for mortgages and loans receivable is recognized using the effective interest method. At the end of each
reporting period management reviews its SPPI mortgages, loans and notes receivable to determine whether there is an event
or change in circumstance that indicates a possible impairment loss. If such indication exists, the recoverable amount of the
asset is estimated in order to measure any impairment loss and an allowance for expected credit losses is recorded.
Mortgages, loans, and notes receivables are assessed for impairment under an ECL model. The Trust applies the general
approach for the mortgages, loans and notes receivables measured at amortized cost. An impairment loss is recognized if
the present value of estimated future cash flows discounted at the original effective interest rate inherent in the loan is less
than its carrying value and is measured as the difference between the two amounts. When the amounts and the timing of
future cash flows cannot be estimated with reasonable reliability, impairment is recognized if either (a) the fair value of the
underlying security, net of any realization costs and amounts legally required to be paid to the borrowers, or (b) the
observable market price for the loan, is less than the carrying value. The valuation of such amounts is subjective and is based
upon assumptions regarding market conditions that could differ materially from actual results in future periods.
116 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
l.
Intangible Assets
Intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Intangible
assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible
asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or
the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the
amortization period or method, as appropriate, and are treated as changes in accounting estimates.
m. Leases
As lessor
When the Trust acts as a lessor, it determines and classifies each lease as a finance lease or operating lease at the lease
commencement date.
When a lease transfers to the lessee substantially all the risk and rewards of ownership incidental to the ownership of the
underlying asset, the lease is classified as a finance lease; otherwise, the lease is classified as an operating lease. To make
this assessment, the Trust considers certain indicators including whether the lease is for the major part of the economic life
of the asset or the present value of lease payments is substantially all the fair value of the underlying asset.
The majority of the lease agreements entered into by the Trust as a lessor are classified as operating leases. The Trust’s
policy for these leases are discussed further in the accounting policy for revenue recognition.
At the commencement date of a finance lease, the Trust recognizes a lease receivable at the amount of its net investment in
the lease, which is measured at the present value of lease payments to be made over the lease term. The lease payments
include fixed payments, variable lease payments that depend on an index or a rate and amounts expected to be paid under
residual value guarantees, less any lease incentives payable. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the lessee and payments of penalties for terminating a lease, if the
lease term reflects the lessee exercising the option to terminate. The variable lease payments that do not depend on an index
or a rate are recognized as rental revenue in the period on which the event or condition that triggers the payment occurs.
n.
Cash and Cash Equivalents
Cash and cash equivalents consist of unrestricted cash on hand and marketable investments with an original maturity date of
90 days or less from the date of acquisition.
o.
Financial Derivative Instruments
The Trust does not use derivative instruments for speculative purposes. Any embedded derivative instruments that may be
identified are separated from their host contract and recorded on the consolidated balance sheet at fair value. Derivative
instruments are recorded in current or non-current assets and liabilities based on their remaining terms to maturity. All
changes in fair values of the derivative instruments are recorded in net earnings unless the derivative qualifies and is effective
as a hedging item in a designated hedging relationship. The Trust has cash flow hedges which are used to manage exposure
to fluctuations in interest rates. The effective portion of the change in fair value of the hedging item is recorded in other
comprehensive income. If the change in fair value of the hedging item is not completely offset by the change in fair value of
the hedged item, the ineffective portion of the hedging relationship is recorded in net income. Amounts accumulated in other
comprehensive income are reclassified to net earnings when the hedged item is recognized in net income.
p.
Exchangeable Units
The Class B LP Units of the Trust’s subsidiary, the Partnership, are exchangeable into Trust Units at the option of the holder
(the “Exchangeable Units”). GWL holds all the Exchangeable Units. These Exchangeable Units are considered puttable
instruments and are required to be classified as financial liabilities at FVTPL. Distributions paid on the Exchangeable Units are
accounted for as interest expense.
q.
Trust Units
With certain restrictions, the Units of Choice Properties are redeemable at the option of the holder, and, therefore, are
considered puttable instruments in accordance with IAS 32, “Financial Instruments - Presentation” (“IAS 32”). Puttable
instruments are required to be accounted for as financial liabilities, except where certain conditions are met in accordance
with IAS 32, in which case, the puttable instruments may be presented as equity.
To be presented as equity, a puttable instrument must meet all of the following conditions: (i) it must entitle the holder to a
pro-rata share of the entity’s net assets in the event of the entity’s dissolution; (ii) it must be in the class of instruments that is
subordinate to all other instruments; (iii) all instruments in the class in (ii) above must have identical features; (iv) other than
the redemption feature, there can be no other contractual obligations that meet the definition of a liability; and (v) the
expected cash flows for the instrument must be based substantially on the profit or loss of the entity or change in fair value of
the instrument. The Trust Units meet the conditions of IAS 32 and, accordingly, are presented as equity in the consolidated
financial statements.
Choice Properties REIT
2024 Annual Report • 117
Notes to the Consolidated Financial Statements
r.
Revenue Recognition
Property Rental Revenue
Choice Properties has retained substantially all of the risks and benefits of ownership of its investment properties and
therefore accounts for its leases with tenants as operating leases. The Trust commences revenue recognition on its leases
based on a number of factors. In most cases, revenue recognition under a lease begins when the tenant takes possession of,
or controls, the physical use of the leased property. Generally, this occurs on the later of the lease commencement date, or
when the Trust is required to make additions to the leased property in the form of tenant improvements, upon substantial
completion of such additions.
The Trust's revenues are earned from lease contracts with tenants and include both a lease component and a non-lease
component. The Trust recognizes revenue from lease components on a straight-line basis over the lease term, including the
recovery of property taxes and insurance, which is included in revenue in the consolidated statements of income and
comprehensive income due to its operating nature, except for contingent rental income which is recognized when it arises.
An accrued straight-line rent receivable is recorded from tenants for the difference between the straight-line rent and the rent
that is contractually due from the tenant.
The lease agreements include certain services offered to tenants such as cleaning, utilities, security, landscaping, snow
removal, property maintenance costs, as well as other support services. The consideration charged to tenants for these
services includes fees charged based on a percentage of the rental income and reimbursement of certain expenses incurred.
The Trust has determined that these services constitute a distinct non-lease component (transferred separately from the right
to use the underlying asset) and are within the scope of IFRS 15, “Revenue from Contracts with Customers”. These property
management services are considered one performance obligation, meeting the criteria for over time recognition and are
recognized in the period that recoverable costs are incurred, or services are performed.
Interest Income
Interest income is the interest earned on the amounts advanced under the Trust’s mezzanine loans, vendor take-back loans
and joint venture financing arrangements, as well as bank interest earned from deposits. Interest income is recognized in
accordance with the terms set out in the financing arrangements using the effective interest method.
Fee Income
Fee income consists mainly of property management fees, leasing fees, project management fees and other miscellaneous
fees. Property management fees are generally based on a percentage of property revenues and are recognized when earned
in accordance with the property management or co-ownership agreements. Leasing fees are incurred when the Trust is the
leasing manager for co-owned properties and are recognized when earned in accordance with the property management or
co-ownership agreements.
Residential Inventory Income
The revenue generated from contracts with customers on the sale of residential condominium units is recognized at a point in
time when control of the asset (i.e. condominium unit) has transferred to the purchaser (i.e., generally, when the purchaser
takes possession of the condominium unit) as the purchaser has the ability to direct the use of and obtain substantially all of
the remaining benefits from the asset. The amount of revenue recognized is based on the transaction price included in the
purchasers' contracts. Any funds received prior to the purchasers taking possession of their respective assets are recognized
as deferred revenue (contractual liability).
Lease Termination Income
Lease termination income represents amounts earned from tenants in connection with the cancellation or the early
termination of their remaining lease obligations. Lease termination income is recognized on a straight-line basis over the
modified lease term, commencing when a lease termination is signed, and ending at the amended lease expiration date.
s.
Unit-Based Compensation
The Trust has five unit-based compensation plans. The (1) Unit Option, (2) Restricted Unit (“RU”), (3) Performance Unit (“PU”),
(4) Trustee Deferred Unit (“DU”) and (5) Unit-Settled Restricted Unit (“URU”) plans are accounted for as cash-settled awards,
as the Trust is an open-ended trust making its units redeemable, and thus requiring its unit-based compensation plans to be
recognized as a liability and carried at fair value. The fair value in respect of each plan is re-measured at each balance sheet
date. Compensation expense is recognized in general and administrative expenses over the vesting period for each tranche
with a corresponding change in the liability.
Unit Option Plan
Unit Options have a five to ten year term, vest 25% cumulatively on each anniversary date of the grant and are exercisable at
the designated Unit price, which is based on the greater of the volume weighted average trading price of a Unit for the five
trading days prior to the date of grant or the trading day immediately preceding the grant date. The fair value of each tranche
is valued separately using a Black-Scholes option pricing model, and includes the following assumptions:
•
The expected distribution yield is estimated based on the expected annual distribution prior to the balance sheet
date and the closing unit price as at the balance sheet date;
118 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
•
The expected Unit price volatility is estimated based on the average volatility of the Trust over a period consistent
with the expected life of the options;
•
The risk-free interest rate is estimated based on the Government of Canada bond yield in effect at the balance sheet
date for a term to maturity equal to the expected life of the options; and
•
The effect of expected exercise of options prior to expiry is incorporated into the weighted average expected life of
the options, which is based on expectations of option holder behaviour.
Restricted Unit Plan
Restricted Units entitle certain employees to receive the value of the RU award in cash or Units at the employees’ discretion
at the end of the applicable vesting period, which is usually three years in length. The RU plan provides for the crediting of
additional RUs in respect of distributions paid on Units for the period when a RU is outstanding. The fair value of each RU
granted is measured based on the market value of a Unit at the balance sheet date.
Performance Unit Plan
Performance Units entitle certain employees to receive the value of the PU award in cash or Units at the end of the applicable
performance period, which is usually three years in length, based on the Trust achieving certain performance conditions. The
PU plan provides for the crediting of additional PUs in respect of distributions paid on Units for the period when a PU is
outstanding. The fair value of each PU granted is measured based on the market value of a Unit and an estimate of the
performance conditions being met at the balance sheet date.
Trustee Deferred Unit Plan
Non-management members of the Board are required to receive a portion of their annual retainer in the form of DUs and may
also elect to receive up to 100% of their remaining fees in DUs. Distributions paid earn fractional DUs, which are treated as
additional awards. DUs vest upon grant. The fair value of each DU granted is measured based on the market value of a Unit
at the balance sheet date.
Unit-Settled Restricted Unit Plan
Unit-Settled Restricted Units are accounted for as cash-settled awards. Typically, full vesting of the URUs would not occur
until the employee had remained with Choice Properties for three years from the grant date. Depending on the nature of the
grant, the URUs are subject to a six-year holding period during which the Units cannot be disposed. The fair value of each
URU granted is measured based on the market value of a Unit at the balance sheet date, less a discount to account for the
vesting and holding period restriction placed on the URUs.
t.
Income Taxes
Choice Properties qualifies as a “mutual fund trust” and a real estate investment trust (“REIT”) under the Income Tax Act
(Canada). Certain legislation relating to the federal income taxation of Specified Investment Flow Through trusts or
partnerships (“SIFT”) provide that certain distributions from a SIFT will not be deductible in computing the SIFT’s taxable
income and that the SIFT will be subject to tax on such distributions at a rate that is substantially equivalent to the general
tax rate applicable to Canadian corporations.
Under the SIFT rules, the taxation regime will not apply to a REIT that meets prescribed conditions relating to the nature of its
assets and revenue (the “REIT Conditions”) and distributions may be deducted against the REIT’s taxable income. Choice
Properties has reviewed the SIFT rules and has assessed its interpretation and application to its assets and revenue and has
determined that it meets the REIT Conditions. The Trustees intend to distribute annually all taxable income directly earned by
Choice Properties to Unitholders and to deduct such distributions for income tax purposes and, accordingly, no net current
income tax expense or deferred income tax assets or liabilities have been recorded in the consolidated financial statements
related to its Canadian investment properties.
The Trust also consolidates certain taxable entities in Canada for which current and deferred income taxes are recorded.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized using the asset and liability method of accounting for temporary differences arising between the
financial statement carrying values of existing assets and liabilities and their respective income tax bases. Deferred tax is
measured using enacted or substantively enacted income tax rates expected to apply in the years in which those temporary
differences are expected to be recovered or settled. A deferred tax asset is recognized for temporary differences as well as
unused tax losses and credits to the extent that it is probable that future taxable profits will be available against which they
can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realized.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and
they relate to income taxes levied by the same taxation authority on the same taxable entity, or on different taxable entities
where Choice Properties intends to settle its current tax assets and liabilities on a net basis.
Choice Properties REIT
2024 Annual Report • 119
Notes to the Consolidated Financial Statements
Deferred tax is recorded on temporary differences arising on investments in subsidiaries, except where the timing of the
reversal of the temporary difference is controlled by the Trust and it is probable that the temporary difference will not reverse
in the foreseeable future.
Note 3. Future Accounting Standards and Changes in Accounting Standards
IFRS 18, Presentation and Disclosure in Financial Statements
In April 2024, IFRS 18, “Presentation and Disclosure in Financial Statements” was issued to achieve comparability of the financial
performance of similar entities. The standard, which replaces IAS 1, “Presentation of Financial Statements”, impacts the
presentation of primary financial statements and notes, including the statement of earnings where companies will be required to
present separate categories of income and expense for operating, investing, and financing activities with prescribed subtotals for
each new category. The standard will also require management-defined performance measures to be explained and included in a
separate note within the consolidated financial statements.
The standard is effective for annual reporting periods beginning on or after January 1, 2027, including interim financial statements,
and requires retrospective application. The Trust is currently assessing the impact of the new standard.
Amendments to IFRS 9 and IFRS 7
In May 2024, amendments to IFRS 9, “Financial Instruments” and IFRS 7, “Financial Instruments: Disclosures” were issued. The
amendments clarify the timing of recognition and derecognition for a financial asset or financial liability, including clarifying that a
financial liability is derecognized on the settlement date. Further, the amendments introduce an accounting policy choice to
derecognize financial liabilities settled using an electronic payment system before the settlement date, if specific conditions are
met. In addition the amendments clarify the classification of financial assets with features linked to environmental, social and
corporate governance. The amendments also require additional disclosures for financial instruments with contingent features and
investments in equity instruments classified at fair value through other comprehensive income. These amendments are effective
for annual reporting periods beginning on or after January 1, 2026. Early adoption is permitted, with an option to early adopt only
the amendments related to the classification of financial assets. The adoption is not expected to have a material impact on the
Trust’s consolidated financial statements.
Segment Reporting
In July 2024, the International Accounting Standards Board published an agenda decision of the IFRS Interpretations Committee
(“IFRIC”) clarifying certain requirements of IFRS 8, “Operating Segments”. The IFRIC requires entities to disclose certain specified
income and expense items if they are included within the segment profit measure that is provided to the chief operating decision
makers (“CODM”). This is regardless of whether they are provided to the CODM separately. As a result, the Trust has made
changes to its segment disclosure (Note 30).
120 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Note 4.
Critical Accounting Judgments and Estimates
The preparation of the consolidated financial statements requires management to make judgments and estimates in applying
Choice Properties’ accounting policies that affect the reported amounts and disclosures made in the consolidated financial
statements and accompanying notes.
Within the context of these consolidated financial statements, a judgment is a decision made by management in respect of the
application of an accounting policy, a recognized or unrecognized financial statement amount and/or note disclosure, following an
analysis of relevant information that may include estimates and assumptions. Estimates and assumptions are used mainly in
determining the measurement of balances recognized or disclosed in the consolidated financial statements and are based on a
set of underlying data that may include management’s historical experience, knowledge of current events and conditions and
other factors that are believed to be reasonable under the circumstances. Management continually evaluates the estimates and
judgments it uses.
The following are the accounting policies subject to judgments and key sources of estimation uncertainty that Choice Properties
believes could have the most significant impact on the amounts recognized in the consolidated financial statements.
Choice Properties’ material accounting policies are disclosed in Note 2.
a.
Investment Properties
Judgments Made in Relation to Accounting Policies Applied
Judgment is applied in determining whether certain costs are additions to the carrying value of investment properties,
identifying the point at which substantial completion of a development property occurs, and identifying the attributable
borrowing costs to be included in the carrying value of the development property. Choice Properties also applies judgment in
determining whether the properties it acquires are considered to be asset acquisitions or business combinations. Choice
Properties considers all properties acquired in the current year to be asset acquisitions.
Key Sources of Estimation
The fair value of income producing properties is dependent on significant assumptions related to discount rates and terminal
capitalization rates, and other assumptions related to the future cash flows over the holding period. The review of future cash
flows involves assumptions relating to market rents, as well as current leasing and/or development activity, renewal
probability, downtime on lease expiry, vacancy allowances, and expected maintenance costs. In addition to reviewing future
cash flows, management assesses changes in the business climate and other factors, which may affect the ultimate value of
the property. These assumptions may not ultimately be achieved.
b.
Joint Arrangements
Judgments Made in Relation to Accounting Policies Applied
Judgment is applied in determining whether the Trust has joint control and whether the arrangements are joint operations or
joint ventures. In assessing whether the joint arrangements are joint operations or joint ventures, management applies
judgment to determine the Trust’s rights and obligations in the arrangement based on factors such as the structure, legal
form and contractual terms of the arrangement.
c.
Leases
Judgments Made in Relation to Accounting Policies Applied
Choice Properties is required to make judgments in determining whether certain leases are operating or finance leases, in
particular long-term leases. All tenant leases where Choice Properties is the lessor have been determined to be operating
leases.
d.
Income Taxes
Judgments Made in Relation to Accounting Policies Applied
Choice Properties is a mutual fund trust and a REIT as defined in the Income Tax Act (Canada). Choice Properties is not liable
to pay Canadian income taxes provided that its taxable income is fully distributed to Unitholders each year. Choice
Properties is a REIT if it meets the prescribed conditions under the Income Tax Act (Canada). Choice Properties uses
judgment in reviewing these conditions in assessing its interpretation and application to its assets and revenue.
Choice Properties has determined that it qualifies as a REIT for the current period. Choice Properties expects to continue to
qualify as a REIT under the Income Tax Act (Canada), however, should it no longer qualify, it would not be able to flow
through its taxable income to Unitholders and would therefore be subject to tax.
Choice Properties REIT
2024 Annual Report • 121
Notes to the Consolidated Financial Statements
e.
Sale Leaseback Transactions
Judgments Made in Relation to Accounting Policies Applied
These judgments apply where Choice Properties enters into agreements to acquire investment properties where the seller is
also the lessee. Judgment is applied in determining the useful life of the leased asset and whether the lease term covers the
major part of the economic life of that leased asset. In addition, the fair value of the leased asset is compared to the present
value of the future minimum lease payments to determine whether those payments represent substantially all the fair value,
and purchase options are compared to the fair value of the leased asset to identify bargain purchase options. There are
judgments applied in determining fair value for purposes of these comparisons. Refer to Note 6, Investment Properties for
more information regarding estimates and judgments associated with valuations. The Trust evaluates each transaction
individually based on the specifics of the agreement.
122 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Note 5. Investment Property and Other Transactions
The following table summarizes the investment properties acquired in the year ended December 31, 2024:
($ thousands except where otherwise indicated)
Consideration
Property / Location
Date of
Acquisition
Segment
Ownership
Interest
Acquired
Purchase
Price
Purchase Price
incl. Related
Costs
Debt Assumed
from Seller
Assumed
Liabilities
Cash
Investment properties
396 St. Clair Ave. W, Toronto, ON
Mar 19
Retail
100%
$
38,300 $
38,433 $
— $
— $
38,433
6941 Kennedy Rd., Mississauga, ON
Sep 05
Industrial
50%
89,601
90,845
—
—
90,845
1385 Sargent Ave., Winnipeg, MB
Sep 05
Retail
50%
15,596
16,070
—
—
16,070
19 Beechville Park Dr., Lakeside, NS
Dec 18
Industrial
50%
14,138
14,560
—
1,750
12,810
Acquisitions from related parties (Note 32)
157,635
159,908
—
1,750
158,158
755 Mount Pleasant Rd., Toronto, ON
Jun 20
Retail
100%
11,500
11,966
—
—
11,966
Cornerstone Shopping Centre,
Fort Saskatchewan, AB (Note 7)
Jun 21
Retail
50%
21,125
21,125
12,153
—
8,972
402 and 406 Main St., Wolfville, NS
Aug 22
Retail
100%
1,250
1,323
—
—
1,323
9025–17 Ave. SE and 1825–92 St. SE,
Calgary, AB
Nov 27
Retail (Land)
80%
5,617
5,617
—
—
5,617
Avalon Centre, Ottawa, ON
Dec 11
Retail
100%
31,650
32,278
18,974
—
13,304
1770 Keene Cres. SW, Edmonton, AB
Dec 20
Retail (Land)
100%
6,123
6,137
—
—
6,137
Acquisitions from third parties
77,265
78,446
31,127
—
47,319
Total acquisitions
$
234,900 $
238,354 $
31,127 $
1,750 $ 205,477
The following table summarizes the investment properties sold in the year ended December 31, 2024:
($ thousands except where otherwise indicated)
Consideration
Property / Location
Date of
Disposition
Segment
Ownership
Interest
Disposed
Sale Price
excl. Selling
Costs
Debt Assumed
by Purchaser
Mortgage
Receivable
Advanced
Cash
Investment properties
Crossroads Shopping Centre, Edmonton, AB
Feb 14
Retail
50%
$
6,700 $
— $
— $
6,700
379 Orenda Rd., Brampton, ON
Mar 14
Industrial
100%
16,625
—
—
16,625
Cornerstone Shopping Centre, Olds, AB
May 13
Retail
50%
15,685
7,586
2,510
5,589
2955 Hazelton Place, Mississauga, ON
Aug 01
Retail
100%
8,150
—
—
8,150
100 Rorke Ave., Haileybury, ON
Oct 01
Retail
100%
250
—
—
250
Total dispositions of investment properties
47,410
7,586
2,510
37,314
Assets held for sale
Mega Centre Lebourgneuf, Quebec City, QC
Sep 13
Retail
50%
33,901
—
9,151
24,750
800 Blvd. Henri-Bourassa W, Montreal, QC
Dec 18
Retail
100%
15,000
—
—
15,000
Total dispositions of assets held for sale
48,901
—
9,151
39,750
Total dispositions
$
96,311 $
7,586 $
11,661 $
77,064
Choice Properties REIT
2024 Annual Report • 123
Notes to the Consolidated Financial Statements
The following table summarizes the investment properties acquired in the year ended December 31, 2023:
($ thousands except where otherwise indicated)
Consideration
Property / Location
Date of
Acquisition
Segment
Ownership
Interest
Acquired
Purchase
Price
Purchase
Price incl.
Related
Costs
Debt
Assumed
from Seller
Investment
Property
Other(i)
Cash
Investment properties
2501–34th St., Vernon, BC
Jan 31
Retail
100%
$
12,330 $
12,697 $
— $
— $
— $ 12,697
2255–29th St. NE, Calgary, AB
Dec 7
Industrial
100%
50,340
50,389
—
—
—
50,389
300 Sainte Croix Ave., Montreal, QC
Dec 7
Retail
100%
17,734
20,241
—
—
1,728
18,513
820 Boul. du Cure-Labelle, Blainville, QC
Dec 7
Retail
100%
11,485
11,903
—
—
—
11,903
Acquisitions from related parties (Note 32)
91,889
95,230
—
—
1,728
93,502
1525 Victoria Park Ave., Toronto, ON
Feb 24
Retail
100%
21,872
23,049
—
—
—
23,049
910 Dundas St. W, Whitby, ON
Mar 24
Retail
100%
17,500
17,876
—
—
—
17,876
Altius Centre, Calgary, AB(ii)
Mar 30
Mixed-Use &
Residential
50%
19,850
19,850
13,346
5,300
1,204
—
2187 Bloor St. W, Toronto, ON
Apr 4
Retail
100%
1,728
1,915
—
—
—
1,915
210 Mohawk Rd. E, Hamilton, ON
Aug 14
Retail
100%
7,300
7,501
—
—
—
7,501
Acquisitions from third parties
68,250
70,191
13,346
5,300
1,204
50,341
Total acquisitions of investment properties
160,139
165,421
13,346
5,300
2,932
143,843
Financial real estate assets
10505 Southport Rd. SW, Calgary, AB
Jan 31
Retail
100%
43,900
43,976
—
—
—
43,976
5251 Country Hills Blvd. NW, Calgary, AB
Jan 31
Retail
100%
42,400
42,476
—
—
—
42,476
Total acquisitions of financial real estate assets (Note 32)
86,300
86,452
—
—
—
86,452
Total acquisitions
$ 246,439 $
251,873 $
13,346 $
5,300 $
2,932 $ 230,295
(i)
Includes amounts related to the de-recognition of intangible assets of $1,204 and assumed liabilities of $1,728.
(ii)
The Trust completed an exchange of office properties with its partner. The exchange resulted in the Trust disposing of its 50% interest in Calgary Place (see disposition table
below) in exchange for the partner’s 50% interest in Altius Centre and a vendor take-back mortgage.
124 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
The following table summarizes the investment properties sold in the year ended December 31, 2023:
($ thousands except where otherwise indicated)
Consideration
Property / Location
Date of
Disposition
Segment
Ownership
Interest
Disposed
Sale Price
excl.
Selling
Costs
Debt
Assumed
by
Purchaser
Investment
Property
Mortgage
Receivable
Advanced
Other(i)
Cash
Investment properties
801 Ryan Rd., Courtenay, BC
Mar 8
Retail (Land)
100%
$
4,613 $
— $
— $
— $
— $
4,613
Calgary Place, Calgary, AB(ii)
Mar 30
Mixed-Use &
Residential
50%
48,402
34,617
5,300
11,140
(2,655)
—
2730-2742 Eglinton Ave. E,
Scarborough, ON
May 12
Retail (Land)
100%
3,557
—
—
—
—
3,557
55 Hereford St., Brampton, ON(iii)
Jun 14
Mixed-Use &
Residential
100%
74,200
—
—
51,000
(8,300)
31,500
19-29 Gurholt Dr., Dartmouth, NS
Dec 14
Industrial
100%
7,230
—
—
—
—
7,230
1210 Summit Dr. & 500 Notre Dame
Dr., Kamloops, BC(iv)(v)
Dec 28
Retail
50%
49,261
20,067
—
—
(611)
29,805
Total disposition of investment properties
187,263
54,684
5,300
62,140
(11,566)
76,705
Assets held for sale
460-506 Gardiners Rd., Kingston, ON
Feb 21
Retail
100%
23,000
—
—
—
—
23,000
950 Brookdale Ave., Cornwall, ON
Apr 21
Retail
100%
10,000
—
—
—
—
10,000
Metropolitan Place, Dartmouth, NS
Jun 19
Mixed-Use &
Residential
50%
13,360
7,678
—
5,495
(1,935)
2,122
2473 Ouellette Ave., Windsor, ON
Jul 7
Retail
100%
1,900
—
—
—
—
1,900
1 Gurholt Dr. & 10 Ilsley Dr.,
Dartmouth, NS(vi)
Oct 5
Industrial
100%
11,580
—
—
—
—
11,580
171 Trinity Dr., Moncton, NB
Oct 12
Retail
100%
61,174
—
—
9,624
—
51,550
Altius Centre, Calgary, AB
Oct 31
Mixed-Use &
Residential
100%
20,000
—
—
—
—
20,000
Total dispositions of assets held for sale
141,014
7,678
—
15,119
(1,935)
120,152
Total dispositions
$
328,277 $
62,362 $
5,300 $
77,259 $
(13,501) $ 196,857
(i)
Includes amounts related to the de-recognition of intangible assets of $5,201 and a lease termination payment of $8,300.
(ii)
The Trust completed an exchange of office properties with its partner. The exchange resulted in the Trust disposing of its 50% interest in Calgary Place in exchange for the
partner’s 50% interest in Altius Centre (see acquisition table above) and a vendor take-back mortgage.
(iii)
This data centre asset was leased to Loblaw. In connection with the disposition, Choice made a lease termination payment of $8,300 to Loblaw to terminate its lease early.
(iv)
Comprised of two retail assets.
(v)
Included in the debt assumed by purchaser was $128 of debt discounts, net of accumulated amortization.
(vi)
Comprised of two industrial assets.
Choice Properties REIT
2024 Annual Report • 125
Notes to the Consolidated Financial Statements
Note 6.
Investment Properties
($ thousands)
Note
Income producing
properties
Properties under
development
Year ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of year
$
14,635,000
$
288,000
$
14,923,000
$
14,444,000
Acquisitions - including transaction costs of
$3,454 (2023 - $5,282)
5
226,600
11,754
238,354
165,421
Capital expenditures
Development capital(i)
—
70,878
70,878
122,264
Building improvements
11,498
—
11,498
20,141
Capitalized interest(ii)
24
—
3,048
3,048
5,402
Property capital
80,205
—
80,205
85,516
Direct leasing costs
7,824
—
7,824
5,622
Tenant improvement allowances
16,797
—
16,797
22,833
Amortization of straight-line rent
(2,194)
—
(2,194)
(2,270)
Transfers to assets held for sale
(85,205)
—
(85,205)
(92,754)
Transfer from equity accounted joint
ventures
7
21,125
—
21,125
192,810
Transfers from properties under
development
105,949
(105,949)
—
—
Reclassification of lease receivable
—
—
—
24,988
Dispositions
5
(47,410)
—
(47,410)
(187,263)
Adjustment to fair value of investment
properties(iii)
115,811
(22,731)
93,080
116,290
Balance, end of year
$
15,086,000
$
245,000
$
15,331,000
$
14,923,000
(i)
Development capital included $3,872 of site intensification payments paid to Loblaw (December 31, 2023 - $14,377) (Note 32).
(ii)
Interest was capitalized to qualifying development projects based on a weighted average interest rate of 4.13% (December 31, 2023 - 4.05%).
(iii)
The unrealized fair value changes to income producing properties and properties under development were a gain of $120,005 and a loss of $22,732, respectively,
for properties owned as at December 31, 2024 (December 31, 2023 - unrealized fair value gains of $64,692 and $27,050, respectively).
Included in certain investment properties acquired from Loblaw is excess land with development potential. Choice Properties will
compensate Loblaw, over time, with intensification payments determined by a site intensification payment grid as outlined in the
Strategic Alliance Agreement (Note 32) should Choice Properties pursue activity resulting in the intensification of such excess
land. The fair value of this excess land has been recorded in the audited consolidated financial statements.
During the second quarter Choice Properties entered into an agreement with the Province of Ontario to facilitate the construction
of a transit station at its Carlaw Avenue property. The Trust maintains control of the property.
During the year ended December 31, 2024, the Trust classified four retail properties, with an aggregate fair value of $85,205, as
assets held for sale and disposed of two of the properties for aggregate proceeds of $48,901 (Note 5). As at December 31, 2024,
the two remaining retail properties with a fair value of $35,955 (December 31, 2023 - $nil) continue to be classified as assets held
for sale. Subsequent to year end, the Trust disposed these two retail properties.
126 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Valuation Methodology and Process
The investment properties (including those owned through equity accounted joint ventures) are measured at fair value using
valuations prepared by the Trust’s internal valuation team. The team reports directly to the President & Chief Executive Officer,
with the valuation processes and results reviewed by Management at least once every quarter. The valuations exclude any
portfolio premium or value for the management platform and reflect the highest and best use for each of the Trust's investment
properties.
As part of Management's internal valuation program, the Trust considers external valuations performed by independent national
real estate valuation firms for a cross-section of properties that represent different geographical locations and asset classes
across the Trust's portfolio. On a quarterly basis, the valuation team reviews and updates, as deemed necessary, the valuation
models to reflect current market data. Updates may be made to significant assumptions related to terminal capitalization rates
and discount rates and other assumptions such as future cash flow assumptions including market rents, current leasing and/or
development activity, renewal probability, downtime on lease expiry, vacancy allowances, and expected maintenance costs.
When an external valuation is obtained, the internal valuation team assesses all major inputs used by the independent valuators in
preparing their valuation reports and holds discussions with the independent valuators on the reasonableness of their
assumptions. Where warranted, adjustments will be made to the internal valuations to reflect the assumptions contained in the
external valuations. The Trust will record the internal value in its consolidated financial statements.
Income Producing Properties
Income producing properties are valued using the discounted cash flow method. Under the discounted cash flow method, fair
value is estimated using assumptions regarding the benefits and liabilities of ownership over the asset’s life, generally over a
minimum term of 10 years, including a terminal value based on the application of a terminal capitalization rate applied to
estimated stabilized net operating income, in the terminal year. The significant assumptions under this method include the
discount rate and the terminal capitalization rate. This method also involves the projection of future cash flows for the specific
asset. For the future cash flows, a market-derived discount rate is applied to establish the present value of the income stream
associated with the asset. The terminal capitalization rate is separately determined and may differ from the discount rate.
The duration of the future cash flows and the specific timing of inflows and outflows are determined by events such as rent
reviews, new and renewed leasing and related re-leasing, redevelopment, or refurbishment. The appropriate duration is typically
driven by market behaviour that is a characteristic of the related asset class. The future cash flows are typically estimated as
gross income less vacancy, non-recoverable expenses, collection losses, lease incentives, maintenance costs, lease costs, and
other operating expenses. The future cash flows, along with an estimate of the terminal value anticipated at the end of the
projection period, are then discounted.
Properties Under Development
Properties under active development are generally valued with reference to market land values and costs invested to date. Where
significant leasing and construction is in place and the future income stream is reasonably determinable, the development
property is valued on a discounted cash flow basis which includes future cash outflow assumptions for future capital outlays,
construction and development costs. Development risks such as planning, zoning, licenses, and building permits are considered
in the valuation process. Properties not under active development, such as vacant land parcels held for future development, are
generally valued based on comparable sales of commercial land.
Choice Properties REIT
2024 Annual Report • 127
Notes to the Consolidated Financial Statements
Significant Valuation Assumptions
The following table highlights the significant assumptions used in determining the fair value of the Trust’s income producing
properties by asset class:
As at December 31, 2024
As at December 31, 2023
Total Income Producing Properties
Range
Weighted average
Range
Weighted average
Discount rate
5.00% - 10.50%
7.14%
5.50% - 10.50%
7.10%
Terminal capitalization rate
4.50% - 9.95%
6.36%
4.75% - 9.95%
6.31%
Retail
Discount rate
5.25% - 10.50%
7.32%
5.50% - 10.50%
7.36%
Terminal capitalization rate
4.50% - 9.95%
6.56%
4.75% - 9.95%
6.58%
Industrial
Discount rate
6.00% - 9.00%
6.74%
5.75% - 8.75%
6.41%
Terminal capitalization rate
5.00% - 8.50%
5.89%
5.00% - 8.00%
5.59%
Mixed-Use & Residential
Discount rate
5.00% - 7.75%
6.50%
5.50% - 7.50%
6.79%
Terminal capitalization rate
4.50% - 7.00%
5.83%
5.00% - 6.75%
6.10%
The significant assumptions and inputs used in the valuation techniques to estimate the fair value of income producing properties
are classified as Level 3 in the fair value hierarchy as certain inputs for the valuation are not based on observable market data
points.
Independent Appraisals
Properties are typically independently appraised at the time of acquisition. In addition, Choice Properties has engaged
independent nationally-recognized valuation firms to appraise its investment properties such that the majority of the portfolio will
be independently appraised at least once over a four-year period.
The properties independently appraised each year represent a subset of the property types and geographic distribution of the
overall portfolio and includes properties owned within equity accounted joint ventures and properties recognized as financial real
estate assets. The aggregate fair value of investment properties independently appraised during each year, in accordance with
the Trust’s policy, is as follows:
Year ended
December 31, 2024
Year ended
December 31, 2023
($ thousands except where otherwise indicated)
Number of income
producing
properties
Fair value
Number of income
producing
properties
Fair value
79
$
3,686,000
79
$
3,057,000
Fair Value Sensitivity
The following table summarizes fair value sensitivity for the Trust’s income producing properties which are most sensitive to
changes in terminal capitalization rates and discount rates:
($ thousands)
Terminal capitalization rate
Discount rate
Rate sensitivity
Weighted average
terminal
capitalization rate
Fair value
Change in
fair value
Weighted average
discount rate
Fair value
Change in
fair value
(0.75)%
5.61 % $
16,215,000
$
1,129,000
6.39 % $
15,932,000
$
846,000
(0.50)%
5.86 %
15,807,000
721,000
6.64 %
15,644,000
558,000
(0.25)%
6.11 %
15,432,000
346,000
6.89 %
15,362,000
276,000
— %
6.36 %
15,086,000
—
7.14 %
15,086,000
—
0.25 %
6.61 %
14,766,000
(320,000)
7.39 %
14,817,000
(269,000)
0.50 %
6.86 %
14,470,000
(616,000)
7.64 %
14,554,000
(532,000)
0.75 %
7.11 %
14,194,000
(892,000)
7.89 %
14,297,000
(789,000)
128 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Note 7. Equity Accounted Joint Ventures
Choice Properties accounts for its investments in joint ventures using the equity method. These investments hold primarily
income producing properties and some development properties. The table below summarizes the Trust’s investment in joint
ventures:
As at December 31, 2024
As at December 31, 2023
Number of
joint ventures(i)
Ownership
interest
Number of
joint ventures
Ownership
interest
Retail
12
50% - 75%
15
25% - 75%
Industrial
1
75%
—
— %
Mixed-Use & Residential
4
50%
3
50%
Land held for development
1
85%
3
50% - 85%
Total equity accounted joint ventures
18
21
Choice Properties’ investment in equity accounted joint
ventures
$
884,431
$
883,712
(i)
During 2024, one joint venture was reclassified to industrial and one to mixed-use & residential from land held for development.
On May 13, 2024 and June 19, 2024, the Trust disposed of its interest in three retail joint ventures. The proceeds of the sales
were distributed to the Trust in the amount of $48,479.
On June 21, 2024, the Trust acquired its partner’s interest in the Cornerstone Shopping Centre in Fort Saskatchewan, Alberta
(Note 5) and obtained control of the property. At acquisition, the Trust’s net investment in the joint venture was $9,292, comprised
of property value of $21,125, its mortgage of $12,153, and positive net working capital of $320. Upon obtaining control of the
property, the Trust consolidated its share of the assets and liabilities and de-recognized the equity accounted joint venture.
During the third quarter of 2024, the Trust contributed $7,443 to a new joint venture in which it has a 50% ownership interest. On
September 5, 2024, the joint venture completed the acquisition of the Loblaw grocery store at 60 Carlton Street in Toronto,
Ontario from Loblaw for $42,534 (Note 32). The joint venture partially financed the acquisition by taking a mortgage of $27,646
against the property.
Summarized financial information for equity accounted joint ventures at 100% and Choice Properties’ ownership interest are set
out below:
As at December 31, 2024
($ thousands)
Ownership
Current
assets
Non-current
assets
Current
liabilities
Non-current
liabilities
Net assets at
100%
Tullamore Industrial LP
85% $
7,537 $
733,647 $
(210,198) $
(31,786) $
499,200
Woodbine One LP
75%
14,057
244,285
(40,866)
(116,280)
101,196
Other joint ventures
50%-75%
73,143
1,519,002
(86,081)
(765,834)
740,230
Net assets at 100%
$
94,737 $
2,496,934 $
(337,145) $
(913,900) $
1,340,626
Investment in equity accounted joint
ventures
$
41,830 $
1,617,717 $
(249,905) $
(525,211) $
884,431
Year ended December 31, 2024
($ thousands)
Ownership
Rental
revenue
Property
operating
costs
Interest
income
Interest
expense
Adjustment
to fair value
Net income and
comprehensive
income at 100%
Tullamore Industrial LP
85% $
1,169 $
(3) $
— $
(67) $
15,719 $
16,818
Woodbine One LP
75%
14,743
(3,152)
—
(6,019)
15,040
20,612
Other joint ventures
50%-75%
115,285
(44,814)
1,242
(34,786)
(12,123)
24,804
Net income and comprehensive income
at 100%
$
131,197 $
(47,969) $
1,242 $
(40,872) $
18,636 $
62,234
Share of net income and
comprehensive income in equity
accounted joint ventures
$
75,563 $
(27,344) $
257 $
(22,999) $
23,661 $
49,138
Choice Properties REIT
2024 Annual Report • 129
Notes to the Consolidated Financial Statements
As at December 31, 2023
($ thousands)
Ownership
Current
assets
Non-current
assets
Current
liabilities
Non-current
liabilities
Net assets at
100%
Tullamore Industrial LP
85% $
1,273 $
622,353 $
(129,952) $
(17,145) $
476,529
Woodbine One LP
75 %
1,307
218,668
(92,914)
—
127,061
Other joint ventures
25%-75%
78,684
1,616,508
(177,039)
(766,779)
751,374
Net assets at 100%
$
81,264 $
2,457,529 $
(399,905) $
(783,924) $
1,354,964
Investment in equity accounted joint
ventures
$
31,539 $
1,541,134 $
(265,477) $
(423,484) $
883,712
Year ended December 31, 2023
($ thousands)
Ownership
Rental
revenue
Property
operating
costs
Interest
income
Interest
expense
Adjustment
to fair value
Net income and
comprehensive
income at 100%
Tullamore Industrial LP
85% $
— $
— $
— $
— $
(10,880) $
(10,880)
Woodbine One LP
75 %
1,018
(281)
—
(229)
8,756
9,264
Other joint ventures
25%-75%
120,068
(43,270)
3,578
(37,310)
24,960
68,026
Net income and comprehensive income
at 100%
$
121,086 $
(43,551) $
3,578 $
(37,539) $
22,836 $
66,410
Share of net income and
comprehensive income in equity
accounted joint ventures
$
66,012 $
(24,274) $
2,306 $
(19,827) $
14,852 $
39,069
The following table reconciles the changes in cash flows from equity accounted joint ventures:
($ thousands)
Note
Year ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of year
$
883,712
$
995,822
Contributions to equity accounted joint ventures
48,534
31,816
Distributions from equity accounted joint ventures
(31,938)
(33,913)
Distribution of disposition proceeds from equity accounted joint ventures
(48,479)
—
Return of capital distribution from equity accounted joint ventures(i)
(28,500)
—
Total cash flow activities
(60,383)
(2,097)
Transfers from equity accounted joint venture to consolidated investment properties
6
(21,125)
(154,956)
Mortgages receivable advanced upon dispositions of equity accounted joint ventures
11
(8,560)
5,385
Mortgages payable transferred from equity accounted joint ventures
15
38,240
—
Accretion of contingent consideration payable
3,409
489
Share of income from equity accounted joint ventures
49,138
39,069
Total non-cash activities
61,102
(110,013)
Balance, end of year
$
884,431
$
883,712
(i)
Represents the distribution of net mortgage proceeds after the repayment of a construction loan within a joint venture.
130 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Note 8. Co-Ownership Property Interests
Choice Properties has the following co-owned property interests and includes its proportionate share of the related assets,
liabilities, revenue and expenses of these properties in the audited consolidated financial statements.
As at December 31, 2024
As at December 31, 2023
Number of
co-owned properties
Ownership
interest
Number of
co-owned properties
Ownership
interest
Retail
34
50% - 80%
35
50% - 75%
Industrial
4
50% - 67%
2
50% - 67%
Mixed-Use & Residential
6
50%
6
50%
Total co-ownership property interests
44
43
Note 9. Financial Real Estate Assets
($ thousands)
Note
Year Ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of year
$
195,457
$
109,509
Acquisitions
—
86,452
Additions (Deductions)
711
(2,401)
Income from financial real estate assets due to changes in value
23
3,206
1,897
Balance, end of year
$
199,374
$
195,457
As at December 31, 2024, the weighted average discount rate and terminal capitalization rate used to determine the fair value of
the Trust’s financial real estate assets were 6.82% and 6.22%, respectively (December 31, 2023 - 6.85% and 6.27%,
respectively).
Note 10. Residential Development Inventory
Residential development inventory consists of a co-owned development project located in Brampton, Ontario, for the purpose of
developing and selling residential condominium units.
The following table summarizes the activity in residential development inventory:
($ thousands)
Note
Year Ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of year
$
8,681
$
18,785
Development capital
2,648
9,758
Capitalized interest
24
—
1,146
Cost of sales
(9,234)
(21,008)
Balance, end of year
$
2,095
$
8,681
The following table provides details on residential inventory income recognized for the year ended December 31, 2024:
($ thousands)
Note
Year Ended
December 31, 2024
Year ended
December 31, 2023
Gross sales
$
11,268
$
25,634
Cost of sales
(9,234)
(21,008)
Residential inventory income
$
2,034
$
4,626
Choice Properties REIT
2024 Annual Report • 131
Notes to the Consolidated Financial Statements
Note 11. Mortgages, Loans and Notes Receivable
($ thousands)
Note
As at
December 31, 2024
As at
December 31, 2023
Mortgages receivable classified as amortized cost(i)
$
236,710
$
199,197
Mortgages receivable classified as fair value through profit and loss ("FVTPL")
27
162,945
160,953
Loans receivable classified as amortized cost(i)
20,743
—
Notes receivable from GWL classified as amortized cost(i)
32
299,807
295,851
Mortgages, loans and notes receivable
$
720,205
$
656,001
Classified as:
Expected to be recovered in more than twelve months
$
81,590
$
84,277
Expected to be recovered in less than twelve months
638,615
571,724
$
720,205
$
656,001
(i)
The fair value of the mortgages, loans and notes receivable classified as amortized cost was $560,200 (December 31, 2023 - $500,700) (Note 27).
Mortgages and Loans Receivable
Mortgages and loans receivable represent amounts advanced under mezzanine loans, joint venture financing, vendor take-back
financing and other arrangements. Choice Properties mitigates its risk by diversifying the number of entities and assets to which it
loans funds.
The table below summarizes the rate and life of interest-bearing mortgages and loans:
December 31, 2024
December 31, 2023
Weighted average term
to maturity (years)
Weighted average
interest rate
Weighted average term
to maturity (years)
Weighted average
interest rate
Mortgages receivable
0.9
7.90%
0.8
8.14%
Loans receivable
0.1
7.00 %
—
— %
Mortgages and loans receivable
0.9
7.86%
0.8
8.14%
Notes Receivable from GWL
Non-interest bearing short-term notes totalling $299,807 were issued to GWL during the year ended December 31, 2024 and
were settled against distributions payable by the Trust to GWL in January 2025. Non-interest bearing short-term notes totalling
$295,851 with respect to the loans received in the 2023 fiscal year were settled against distributions payable by the Trust to GWL
in January 2024 (Note 32).
Schedules of Maturity and Cash Flow Activities
The schedule of repayment of mortgages, loans and notes receivable based on maturity and redemption rights is as follows:
($ thousands)
2025
2026
2027
2028
Total
Principal repayments
Mortgages receivable
$
315,831 $
62,810 $
— $
18,780
$
397,421
Loans receivable
20,700
—
—
—
20,700
Notes receivable from GWL
299,807
—
—
—
299,807
Total principal repayments
636,338
62,810
—
18,780
717,928
Interest accrued
2,277
—
—
—
2,277
Total repayments
$
638,615 $
62,810 $
— $
18,780
$
720,205
132 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
The following table reconciles the changes in cash flows from investing activities for mortgages, loans and notes receivable:
Choice Properties REIT
2024 Annual Report • 133
December 31, 2024
December 31, 2023
($ thousands)
Note
Mortgages
receivable
Loans
receivable
Notes
receivable
from GWL
Mortgages, loans
and notes
receivable
Mortgages, loans
and notes
receivable
Balance, beginning of year
$
360,150
$
—
$
295,851
$
656,001
$
680,475
Advances(i)
61,498
20,000
299,807
381,305
359,765
Repayments
(46,186)
—
—
(46,186)
(293,106)
Interest received
(19,316)
—
—
(19,316)
(18,091)
Total cash flow activities
(4,004)
20,000
299,807
315,803
48,568
Mortgages receivable advanced upon
dispositions of equity accounted joint
ventures
7
8,560
—
—
8,560
(5,385)
Advances upon dispositions of properties
5
11,661
—
—
11,661
77,259
Settlement against distributions payable
—
—
(295,851)
(295,851)
(170,849)
Interest accrued
23
23,288
743
—
24,031
25,933
Total non-cash activities
43,509
743
(295,851)
(251,599)
(73,042)
Balance, end of year
$
399,655
$
20,743
$
299,807
$
720,205
$
656,001
(i)
Advances include funds advanced to an entity in which the Trust is a partner. The funds advanced were used for development within an equity accounted joint
venture.
As a means to generate acquisition opportunities, Choice Properties has established a program with a group of real estate
developers whereby Choice Properties provides mezzanine and/or co-owner financing. Credit risks arise if the borrowers default
on repayment of their mortgages and loans to the Trust. Choice Properties’ receivables, including mezzanine financings, are
typically subordinate to prior ranking mortgage charges and generally represent equity financing for the Trust’s co-owners or
development partners. Not all the Trust’s mezzanine financing activities will result in acquisitions. At the time of advancing
financing, the Trust’s co-owners or development partners would typically have some of the equity invested in the form of cash
with the balance being financed by third-party lenders and Choice Properties.
As at December 31, 2024, the Trust has issued $305,348 (December 31, 2023 - $264,394) of secured mortgages to third-party
borrowers. These loans have been extended to borrowers who are strategic partners and counterparties of the Trust and are
secured by real property assets. In the event of a large commercial real estate market correction, the fair market value of an
underlying property may be unable to support the investment. The Trust mitigates this risk by obtaining guarantees and registered
mortgage charges, which are often cross-collateralized on several different commercial properties that are in various stages of
development.
During the year ended December 31, 2024, the Trust advanced four vendor take-back mortgages with a total face value of
$21,153 and a total fair value of $20,221. The mortgages bear interest at a weighted average rate of 6.22% and are secured by
the disposed properties.
On June 21, 2024, the Trust advanced a $20,000 loan to a development partner. The loan bears interest at a rate of 7.00%.
On October 9, 2024, the Trust advanced a $25,000 mezzanine loan to a developer. The loan bears interest at a rate of 5.00% and
is secured by a retail property in Brampton, Ontario.
On December 10, 2024, the Trust advanced a $15,000 mezzanine loan to a development partner. The loan bears interest at a rate
of prime rate plus 3.55% with a floor rate of 10.00%. The loan is secured by a residential properties in Ottawa, Ontario.
Notes to the Consolidated Financial Statements
Note 12. Investment in Real Estate Securities
On March 31, 2022, the Trust disposed of six office assets to Allied. As consideration, the Trust was issued 11,809,145
exchangeable Class B limited partnership units of Allied Properties Exchangeable Limited Partnership (“Class B Units”), an
affiliated entity of Allied, with a value of $550,660 ($46.63 per unit) on the transaction date, and a promissory note with a fair value
of $193,155. The promissory note was repaid on December 29, 2023. As at December 31, 2024, the Trust holds an approximate
8.4% effective interest in Allied through its ownership of the Class B Units. The Trust does not have significant influence over
Allied.
The Class B Units are exchangeable into, and are economically equivalent to, the publicly traded units of Allied (“Allied Units”),
and were accompanied by a corresponding number of special voting units of Allied. There are no restrictions on the exchange of
Class B Units into Allied Units, but the Allied Units (if exchanged) are subject to a lock-up from the closing of the Transaction,
such that 25% of the Class B Units or Allied Units, as applicable, will be released from lock up every three months following the
first anniversary of closing of the Transaction. As at December 31, 2024, none of the Class B Units were subject to lock-up
(December 31, 2023 - 2,952,286).
As a holder of the Class B Units, the Trust is entitled to distributions paid by Allied. For the year ended December 31, 2024, the
Trust recognized distribution income of $21,260 (December 31, 2023 - $26,928) from its investment in Allied. For the year ended
December 31, 2023, $5,668 of the distribution income recognized was related to the special distribution announced by Allied on
December 15, 2023. The distributions were recorded as investment income.
The Class B Units are recorded at their fair value based on market trading prices of Allied’s publicly traded units. The closing price
for Allied’s publicly traded units on the last trading day of the year ended December 31, 2024 was $17.15 (December 31, 2023 -
$20.18). A change of one dollar in the underlying price of Allied’s publicly traded units would result in a change to the fair value of
the investment in real estate securities and a corresponding change in net income of $11,809 (December 31, 2023 - $11,809). For
the year ended December 31, 2024, the Trust recognized a loss of $35,782 (year ended December 31, 2023 - loss of $64,006) on
its investment in Allied due to the change in the price of its publicly traded units. As at December 31, 2024 the Trust held
11,809,145 Class B Units with a fair value of $202,526 (December 31, 2023 - 11,809,145 Class B Units with a fair value of
$238,308).
($ thousands)
Year ended
December 31, 2024
Year ended
December 31, 2023
Balance, beginning of year
$
238,308
$
302,314
Adjustment to fair value of investment in real estate securities
(35,782)
(64,006)
Balance, end of year
$
202,526
$
238,308
Note 13. Intangible Assets
The intangible assets for Choice Properties relate to its third-party revenue streams associated with property and asset
management contracts for co-ownership property interests and joint ventures. The Trust has the continuing rights, based on the
co-ownership agreements, to property and asset management fees from investment properties where it manages the interests of
co-owners.
As at December 31, 2024, the carrying value was $12,964 (December 31, 2023 - $13,964), net of accumulated amortization of
$5,000 (December 31, 2023 - $4,000). The remaining useful economic life of these assets is 13 years.
134 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Note 14. Accounts Receivable and Other Assets
($ thousands)
Note
As at
December 31, 2024
As at
December 31, 2023
Rent receivables(i) - net of expected credit loss of $8,663 (2023 - $13,954)
$
8,139
$
1,760
Accrued recovery income
19,944
22,198
Other receivables
17,245
49,671
Cost-to-complete receivable
32
1,980
4,440
Due from related parties(ii)
32
14,601
3,138
Restricted cash
211
4,419
Prepaid property taxes
7,359
8,045
Prepaid insurance
641
412
Other assets
21,200
21,097
Right-of-use assets - net of accumulated amortization of $2,876 (2023 - $2,465)
797
1,413
Deferred tax asset
18
3,861
2,792
Deferred acquisition costs and deposits on land
3,997
9,923
Designated hedging derivatives
27
5,619
7,872
Accounts receivable and other assets
$
105,594
$
137,180
Classified as:
Expected to be recovered in more than twelve months
$
20,709
$
23,519
Expected to be recovered in less than twelve months
84,885
113,661
$
105,594
$
137,180
(i)
Includes net rent receivable of $31 from Loblaw and $132 from Wittington (December 31, 2023 - $1,080 and $129, respectively) (Note 32).
(ii)
Other receivables due from related parties include $14,517 from Loblaw and $84 from GWL (December 31, 2023 - $2,626 and $512, respectively) (Note 32).
Rent receivables
In determining the expected credit losses, the Trust takes into account the payment history and future expectations of likely
default events (i.e. tenants asking for rental concessions or stating they will not be making rental payments on the due date)
based on actual or expected insolvency filings or company voluntary arrangements and likely deferrals of payments due. These
assessments are made on a tenant-by-tenant basis.
The Trust’s assessment of expected credit losses is inherently subjective due to the forward-looking nature of the assessments.
As a result, the value of the expected credit loss is subject to a degree of uncertainty and is made on the basis of assumptions
which may not prove to be accurate.
Choice Properties REIT
2024 Annual Report • 135
Notes to the Consolidated Financial Statements
Note 15. Long Term Debt
($ thousands)
As at
December 31, 2024
As at
December 31, 2023
Senior unsecured debentures
$
5,382,954
$
5,632,522
Mortgages payable
1,296,756
973,342
Construction loans
5,230
90,059
Long term debt
$
6,684,940
$
6,695,923
Classified as:
Expected to be settled in more than twelve months
$
6,002,031
$
5,731,427
Expected to be settled in less than twelve months
682,909
964,496
$
6,684,940
$
6,695,923
Senior Unsecured Debentures
($ thousands)
Series
Issuance /
Assumption Date
Maturity
Date
Interest
Rate
As at
December 31, 2024
As at
December 31, 2023
D
Feb 8, 2014
Feb 8, 2024
4.29%
$
—
$
200,000
F
Nov 24, 2015
Nov 24, 2025
4.06%
200,000
200,000
H
Mar 7, 2016
Mar 7, 2046
5.27%
100,000
100,000
J
Jan 12, 2018
Jan 10, 2025
3.55%
350,000
350,000
K
Mar 8, 2018
Sept 9, 2024
3.56%
—
550,000
L
Mar 8, 2018
Mar 8, 2028
4.18%
750,000
750,000
M
Jun 11, 2019
Jun 11, 2029
3.53%
750,000
750,000
N
Mar 3, 2020
Mar 4, 2030
2.98%
400,000
400,000
O
Mar 3, 2020
Mar 4, 2050
3.83%
100,000
100,000
P
May 22, 2020
May 21, 2027
2.85%
500,000
500,000
Q
Nov 30, 2021
Nov 30, 2026
2.46%
350,000
350,000
R
Jun 24, 2022
Jun 24, 2032
6.00%
500,000
500,000
S
Mar 1, 2023
Mar 1, 2033
5.40%
550,000
550,000
T
Aug 1, 2023
Feb 28, 2034
5.70%
350,000
350,000
U
May 23, 2024
Feb 28, 2031
5.03%
500,000
—
Total principal outstanding
5,400,000
5,650,000
Debt placement costs - net of accumulated amortization of $25,433 (2023 - $21,889)
(17,046)
(17,478)
Senior unsecured debentures
$
5,382,954
$
5,632,522
As at December 31, 2024, the senior unsecured debentures had a weighted average interest rate of 4.20% and a weighted
average term to maturity of 5.4 years (December 31, 2023 - 4.07% and 5.5 years, respectively).
On February 8, 2024, the Trust paid in full upon maturity, at par, plus accrued and unpaid interest thereon, the $200 million
aggregate principal amount of the 4.29% Series D senior unsecured debentures outstanding.
On May 23, 2024, the Trust completed an issuance, on a private placement basis, of $500 million aggregate principal amount of
Series U senior unsecured debentures bearing interest at a rate of 5.03% per annum and maturing on February 28, 2031.
On September 9, 2024, the Trust paid in full upon maturity, at par, plus accrued and unpaid interest thereon, the $550 million
aggregated principal amount of the 3.56% Series K senior unsecured debentures outstanding.
Subsequent to year end, on January 10, 2025, the Trust paid in full upon maturity, at par, plus accrued and unpaid interest
thereon, the $350 million aggregated principal amount of the 3.55% Series J senior unsecured debentures outstanding.
136 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Subsequent to year end, on January 16, 2025, the Trust completed the issuance, on a private placement basis, of $300 million
aggregated principal amount of Series V senior unsecured debentures bearing interest a rate of 4.29% per annum and maturing
on January 16, 2030.
Mortgages Payable
($ thousands)
As at
December 31, 2024
As at
December 31, 2023
Mortgages principal
$
1,300,158
$
976,661
Net debt discounts and premiums - net of accumulated amortization of $6,773
(2023 - $6,108)
(505)
(1,170)
Debt placement costs - net of accumulated amortization of $1,025 (2023 - $714)
(2,897)
(2,149)
Mortgages payable
$
1,296,756
$
973,342
As at December 31, 2024, the mortgages had a weighted average interest rate of 4.11% and a weighted average term to maturity
of 6.9 years (December 31, 2023 - 4.03% and 6.1 years, respectively).
Construction Loans
As at December 31, 2024, $5,230 was outstanding on the construction loans (December 31, 2023 - $90,059), with a weighted
average interest rate of 5.78% and a weighted average term to maturity of 0.7 year (December 31, 2023 - 4.61% and 3.5 years,
respectively). The outstanding construction loans were financed at variable rates.
For the purpose of financing the development of certain industrial and mixed-use & residential properties, various investments in
equity accounted joint ventures and co-ownerships have variable rate non-revolving construction facilities, in which certain
subsidiaries of the Trust guarantee its own share. As at December 31, 2024 the construction loans have a maximum capacity to
be drawn at the Trust’s ownership interest of $276,225, of which $270,700 relates to equity accounted joint ventures, as at
December 31, 2024 (December 31, 2023 - $447,987 and $328,261, respectively). The construction loans mature throughout 2025
and 2026.
Schedules of Repayments and Cash Flow Activities
The schedule of principal repayment of long term debt based on maturity is as follows:
($ thousands)
2025
2026
2027
2028
2029
Thereafter
Total
Senior unsecured debentures
$ 550,000 $
350,000 $
500,000 $
750,000 $
750,000 $ 2,500,000
$ 5,400,000
Mortgages payable
131,014
153,945
94,399
49,095
39,466
832,239
1,300,158
Construction loans
5,230
—
—
—
—
—
5,230
Total
$ 686,244 $
503,945 $
594,399 $
799,095 $
789,466 $ 3,332,239
$ 6,705,388
Choice Properties REIT
2024 Annual Report • 137
Notes to the Consolidated Financial Statements
The following table reconciles the changes in cash flows from financing activities for long term debt:
Note
December 31, 2024
December 31, 2023
($ thousands)
Senior
unsecured
debentures
Mortgages
payable
Construction
loans
Long term debt
Long term debt
Balance, beginning of year
$ 5,632,522
$
973,342
$
90,059
$
6,695,923
$
6,294,101
Issuances and advances(i)
500,000
283,865
21,763
805,628
1,106,157
Repayments
(750,000)
(81,674)
(47,067)
(878,741)
(685,292)
Debt placement costs
(3,112)
(1,059)
—
(4,171)
(5,734)
Total cash flow activities
(253,112)
201,132
(25,304)
(77,284)
415,131
Assumed by purchaser
5
—
(7,586)
—
(7,586)
(62,490)
Assumed from seller
5
—
31,127
—
31,127
13,346
Transfer from equity accounted joint
ventures(ii)
7
—
38,240
—
38,240
31,866
Amortization of debt discounts and
premiums
—
665
—
665
158
Amortization of debt placement costs
3,544
311
—
3,855
3,811
Loan reclassification(iii)
59,525
(59,525)
—
—
Total non-cash activities
3,544
122,282
(59,525)
66,301
(13,309)
Balance, end of year
$ 5,382,954
$ 1,296,756
$
5,230
$
6,684,940
$
6,695,923
(i)
Mortgages payable issuances and advances include $33,075 of mortgages assumed from the Trust’s partner, previously secured by the partner’s interest in the
properties disposed by the Trust and its partner during the second quarter of 2024, which were transferred to the Trust from the partner’s share of proceeds.
These mortgages have been secured by other properties held by the Trust.
(ii)
Transfer from equity accounted joint ventures includes the Trust’s share of mortgages payable previously secured by the disposed properties mentioned above
and the Trust’s share of mortgages payable related to an acquisition which was transferred to investment properties.
(iii)
Loan reclassification includes the transfer of the Trust’s share of the loan secured by the rental portion of the Mount Pleasant Village development project from
construction loans to mortgages payable. The loan was funded through Canada Mortgage and Housing Corporation’s Rental Construction Financing Initiative
program and as such will require blended principal and interest payments starting twelve months after stabilization (as defined by the loan agreement) for the
remainder of its term.
138 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Note 16. Credit Facility
Choice Properties has a $1,500,000 senior unsecured committed revolving credit facility provided by a syndicate of lenders.
During the second quarter of 2024, the Trust extended the maturity date for the credit facility from September 1, 2028 to June 13,
2029.
Under the credit facility, the Trust has the ability to draw funds at variable rates in either Canadian dollars or U.S. dollars.
Canadian dollar-denominated borrowings bear interest at either the Canadian bank prime rate plus 0.20% or Canadian Overnight
Repo Rate Average (“CORRA”) plus 1.20% and a daily compounded CORRA adjustment of approximately 0.30%, and U.S.
dollar-denominated borrowings bear interest at the U.S. prime rate plus 0.30% or Secured Overnight Financing Rate (“SOFR”)
plus 1.30%. The pricing is contingent on the credit ratings for Choice Properties from either DBRS remaining at BBB (high) or S&P
remaining at BBB+. Concurrently with any U.S. dollar draws, the Trust enters into cross currency swaps to exchange its U.S.
dollar borrowings into Canadian dollar borrowings. The Trust applies hedge accounting to the cross currency swaps.
As at December 31, 2024, $nil was drawn in Canadian dollar-denominated borrowings (December 31, 2023 - $nil) and $nil was
drawn in U.S. dollar-denominated borrowings (December 31, 2023 - $nil). The credit facility is subject to an annual commitment
fee of 0.24% of the undrawn balance. The unamortized balance for debt placement costs as at December 31, 2024 of $2,213
(December 31, 2023 - $2,232) was included in other assets (Note 14).
The credit facility contains certain financial covenants. As at December 31, 2024, the Trust was in compliance with all its financial
covenants for the credit facility.
Schedule of Cash Flow Activities
The following table reconciles the changes in cash flows from financing activities for the credit facility:
($ thousands)
December 31, 2024
December 31, 2023
Balance, beginning of year
$
—
$
257,617
Net advances (repayments) of $1,500,000 syndicated credit facility
—
(260,000)
Extension fee and related costs included in debt placement costs
(703)
(677)
Total cash flow activities
(703)
(260,677)
Amortization of debt placement costs
722
828
Reclassified (from) to other assets
(19)
2,232
Total non-cash activities
703
3,060
Balance, end of year
$
—
$
—
Choice Properties REIT
2024 Annual Report • 139
Notes to the Consolidated Financial Statements
Note 17.
Unitholders' Equity
Trust Units (authorized - unlimited)
Each Trust Unit (“Unit”) represents a single vote at any meeting of Unitholders and entitles the Unitholder to receive a pro-rata
share of all distributions. With certain restrictions, a Unitholder has the right to require Choice Properties to redeem its Units on
demand. Upon receipt of a redemption notice by Choice Properties, all rights to and under the Units tendered for redemption
shall be surrendered and the holder thereof shall be entitled to receive a price per unit as determined by a market formula and
shall be paid in accordance with the conditions provided for in the Declaration of Trust.
Exchangeable Units (authorized - unlimited)
Exchangeable Units issued by the Partnership are economically equivalent to Units, receive distributions equal to the distributions
paid on the Units and are exchangeable, at the holder’s option, to Units. All Exchangeable Units are held, directly or indirectly, by
GWL.
The 70,881,226 Exchangeable Units issued on May 4, 2018, in connection with the acquisition of Canadian Real Estate
Investment Trust contain voting and exchange restrictions which will expire based on the following schedule:
Voting and exchange rights restriction period expiration dates
Number of Exchangeable Units eligible for voting and transfer
July 5, 2027
22,988,505
July 5, 2028
22,988,505
July 5, 2029
24,904,216
Special Voting Units
Each Exchangeable Unit is accompanied by one Special Voting Unit which provides the holder thereof with a right to vote on
matters respecting the Trust equal to the number of units that may be obtained upon the exchange of the Exchangeable Units for
which each Special Voting Unit is attached.
Units Outstanding
Note
As at December 31, 2024
As at December 31, 2023
($ thousands except where otherwise indicated)
Units
Amount
Units
Amount
Units, beginning of year
327,859,972
$ 3,660,985
327,771,149 $ 3,661,605
Units issued under unit-based compensation arrangements
20
368,610
951
329,716
1,362
Reclassification of vested Unit-Settled Restricted Units liability to equity
—
1,534
—
1,497
Units repurchased for unit-based compensation arrangements
20
(304,610)
(4,014)
(240,893)
(3,479)
Units, end of year
327,923,972
$ 3,659,456
327,859,972 $ 3,660,985
Exchangeable Units, beginning of year
395,786,525
$ 5,521,222
395,786,525 $ 5,841,809
Adjustment to fair value of Exchangeable Units
—
(237,472)
—
(320,587)
Exchangeable Units, end of year
395,786,525
$ 5,283,750
395,786,525 $ 5,521,222
Total Units and Exchangeable Units, end of year
723,710,497
723,646,497
Normal Course Issuer Bid (“NCIB”)
Choice Properties, may, from time to time, purchase Units in accordance with the rules prescribed under applicable stock
exchange or regulatory policies. On November 19, 2024, Choice Properties received approval from the TSX to purchase up to
27,566,130 Units during the twelve-month period from November 21, 2024 to November 20, 2025, by way of a NCIB over the
facilities of the TSX or through alternative trading systems. Choice Properties intends to file a Notice of Intention to make a NCIB
with the TSX upon the expiry of its current NCIB.
Units Repurchased for Unit-Based Compensation Arrangements
The Trust acquired Units under its NCIB during the years ended December 31, 2024 and 2023, which were then granted to certain
employees in connection with the Unit-Settled Restricted Unit Plan, and are subject to vesting conditions and disposition
restrictions.
Units Issued under Unit-Based Compensation Arrangements
Units were issued as part of settlements under the Unit Option Plan and grants under the Unit-Settled Restricted Unit Plan, as
applicable (Note 20).
140 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Distributions
Choice Properties’ Board retains full discretion with respect to the timing and quantum of distributions and expects to distribute
the amount necessary to ensure the Trust will not be liable to pay income taxes under Part I of the Income Tax Act (Canada)
(Note 18). Accordingly, no provision for current income taxes payable is required, except for amounts incurred for the Trust’s
Canadian corporate subsidiaries. The taxable income allocated to the Trust and Exchangeable Unitholders may vary in certain
taxation years. Over time, such differences, in aggregate, are expected to be minimal.
In the year ended December 31, 2024, Choice Properties declared cash distributions of $0.758 per unit or $548,783 in aggregate
(December 31, 2023 - $0.749 per unit or $541,529, respectively), including distributions to holders of Exchangeable Units, which
are reported as interest expense. Distributions declared to Unitholders of record at the close of business on the last business day
of a month are paid on or about the 15th day of the following month.
On February 14, 2024, the Board reviewed and approved an increase of distributions to $0.76 per unit per annum from the
previous rate of $0.75 per unit per annum (an increase of 1.3%). The increase was effective for Unitholders of record on March 31,
2024.
At its most recent meeting on February 12, 2025, the Board reviewed and approved an increase of distributions to $0.77 per unit
per annum from the previous rate of $0.76 per unit per annum (an increase of 1.3%). The increase will be effective for Unitholders
of record on March 31, 2025.
The holders of Exchangeable Units may elect to defer receipt of all, or a portion of distributions declared by the Partnership until
the first date following the end of the fiscal year. If the holder elects to defer, the Partnership will loan the holder the amount equal
to the deferred distribution without interest, and the loan will be due and payable in full on the first business day following the end
of the fiscal year the loan was advanced.
Base Shelf Prospectus
On June 16, 2023, Choice Properties filed a Short Form Base Shelf Prospectus allowing for the issuance of Units and debt
securities over a 25-month period.
Note 18. Income Taxes
The Trust is taxed as a “mutual fund trust” and a REIT under the Income Tax Act (Canada). The Trustees intend to distribute all of
the Trust’s taxable income to the Unitholders and accordingly, the Trust is not taxable on its Canadian investment property
income. The Trust is subject to taxation on certain taxable entities in Canada.
Income taxes recognized in the consolidated statements of income and comprehensive income was as follows:
Year Ended
($ thousands)
December 31, 2024
December 31, 2023
Current income tax expense
$
(1) $
(1)
Deferred income tax recovery
1,070
—
Income tax recovery (expense)
$
1,069
$
(1)
A deferred income tax asset of $3,861 (Note 14) was recognized due to temporary differences between the carrying value and the
tax basis of net assets held in the Trust’s taxable subsidiaries (December 31, 2023 - $2,792).
Choice Properties REIT
2024 Annual Report • 141
Notes to the Consolidated Financial Statements
Note 19. Trade Payables and Other Liabilities
($ thousands)
Note
As at
December 31, 2024
As at
December 31, 2023
Trade accounts payable
$
18,110
$
43,514
Accrued liabilities and provisions(i)
90,899
97,542
Accrued acquisition transaction costs and other related expenses
122
39,318
Accrued capital expenditures(ii)
77,313
60,077
Accrued interest expense
61,536
60,905
Due to related party(iii)
32
326,501
323,036
Contingent consideration
20,623
17,214
Unit-based compensation
20
16,346
15,482
Distributions payable(iv)
20,942
20,665
Lease liabilities
1,149
1,453
Tenant deposits
19,629
17,508
Deferred revenue
33,824
25,029
Designated hedging derivatives
27
2,048
1,337
Trade payables and other liabilities
$
689,042
$
723,080
Classified as:
Expected to be settled in more than twelve months
$
26,605
$
24,628
Expected to be settled in less than twelve months
662,437
698,452
$
689,042
$
723,080
(i)
Includes amounts payable to Loblaw of $8,304 (December 31, 2023 - $7,428) (Note 32).
(ii)
Includes construction allowances payable to Loblaw of $27,927 (December 31, 2023 - $26,726) (Note 32).
(iii)
Includes distributions accrued on Exchangeable Units of $324,873 payable to GWL (December 31, 2023 - $320,587); $1,030 payable for shared costs incurred
by GWL, the Services Agreement expense and other related party charges (December 31, 2023 - $1,050); and $598 of reimbursed contract revenue and other
related party charges payable to Loblaw (December 31, 2023 - $296) (Note 32).
(iv)
Includes distributions payable to GWL of $3,209 and Wittington of $1,045 (December 31, 2023 - $3,166 and $1,031, respectively) (Note 32).
Contingent consideration
On March 30, 2021, the Trust acquired an 85% interest in future industrial development land in Caledon, Ontario, for $138,000.
The purchase price comprised a $100,000 cash payment and a commitment to pay the remaining $38,000 balance based on
certain milestones being met over the development lifecycle, which represented the then present value of the estimated amount
payable. A payment of $23,100 was made upon reaching the first development milestone. The present value of the remaining
estimated amount payable is $20,623 as at December 31, 2024 (December 31, 2023 - $17,214).
Accrued acquisition transaction costs and other related expenses
The reduction in accrued acquisition transaction costs and other related expenses was due to the reversal of a $38,560
transaction related provision that was determined to be no longer required.
142 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Note 20. Unit-Based Compensation
Year Ended
($ thousands)
December 31, 2024
December 31, 2023
Unit Option plan
$
(2) $
(131)
Restricted Unit plan
3,035
2,720
Performance Unit plan
858
1,378
Trustee Deferred Unit plan
1,591
1,407
Unit-based compensation expense
$
5,482
$
5,374
Recorded in:
General and administrative expenses
$
6,139
$
6,312
Adjustment to fair value of unit-based compensation
(657)
(938)
$
5,482
$
5,374
As at December 31, 2024, the carrying value of the unit-based compensation liability was $16,346 (December 31, 2023 - $15,482)
(Note 19).
Unit Option Plan
Choice Properties maintains a Unit Option plan for certain employees. Under this plan, Choice Properties may grant Unit Options
totalling up to 19,744,697 Units, as approved at the annual and special meeting of Unitholders on April 29, 2015. The Unit Options
vest in tranches over a period of four years. The following is a summary of Choice Properties’ Unit Option plan activity:
Year ended December 31, 2024
Year ended December 31, 2023
Number of awards
Weighted average
exercise price/unit
Number of awards
Weighted average
exercise price/unit
Outstanding Unit Options, beginning of year
164,300
$
11.92
253,154 $
12.01
Exercised
(64,000)
11.92
(88,823)
12.17
Expired
—
—
(31)
13.93
Outstanding Unit Options, end of year
100,300
$
11.92
164,300 $
11.92
Unit Options exercisable, end of year
100,300
$
11.92
164,300 $
11.92
The assumptions used to measure the fair value of the Unit Options under the Black-Scholes model (level 2) were as follows:
As at December 31, 2024
As at December 31, 2023
Expected average distribution yield
5.69 %
5.38%
Expected average Unit price volatility
14.47 %
11.26%
Average risk-free interest rate
0.03 %
0.06%
Expected average remaining life of options
0.1 Year
0.1 Year
The following table details the Unit Options outstanding as at December 31, 2024:
Exercise Price
Expiry Date
Number of Unit Options outstanding
Remaining weighted
average life (in years)
$11.92
February 22, 2025
100,300
0.2
Restricted Unit Plan
Choice Properties has a Restricted Unit Plan and a Unit-Settled Restricted Unit Plan as described below.
Restricted Unit Plan
Restricted Units entitle certain employees to receive the value of the RU award in cash or units at the end of the applicable
vesting period, which is usually three years in length. The RU plan provides for the crediting of additional RUs in respect of
distributions paid on Units for the period when a RU is outstanding. The fair value of each RU granted is measured based on the
market value of a Trust Unit at the balance sheet date. No outstanding RUs had vested as at December 31, 2024 (December 31,
2023 - nil).
Choice Properties REIT
2024 Annual Report • 143
Notes to the Consolidated Financial Statements
The following is a summary of Choice Properties’ RU plan activity:
(Number of awards)
Year Ended
December 31, 2024
Year Ended
December 31, 2023
Outstanding Restricted Units, beginning of year
265,338
271,147
Granted
119,867
128,795
Reinvested
15,544
16,361
Exercised
(96,610)
(96,308)
Forfeited
(28,638)
(54,657)
Outstanding Restricted Units, end of year
275,501
265,338
Unit-Settled Restricted Unit Plan
Under the terms of the Unit-Settled Restricted Unit plan, certain employees are granted URUs which are subject to vesting
conditions and disposition restrictions. Typically, full vesting of the URUs occurs three years after the date of grant. Depending on
the nature of the grant, the URUs are subject to a six-year holding period during which the Units cannot be disposed. There were
1,573,240 URUs vested but still subject to disposition restrictions as at December 31, 2024 (December 31, 2023 - 1,503,185).
The following is a summary of Choice Properties’ URU plan activity for units not yet vested:
(Number of awards)
Year Ended
December 31, 2024
Year Ended
December 31, 2023
Outstanding Unit-Settled Restricted Units, beginning of year
705,401
666,719
Granted
304,610
240,893
Forfeited
(10,486)
(4,942)
Vested
(228,444)
(197,269)
Outstanding Unit-Settled Restricted Units, end of year
771,081
705,401
Performance Unit Plan
Performance Units entitle certain employees to receive the value of the PU award in cash or units at the end of the applicable
performance period, which is usually three years in length, based on the Trust achieving certain performance conditions. The PU
plan provides for the crediting of additional PUs in respect of distributions paid on Units for the period when a PU is outstanding.
The fair value of each PU granted is measured based on the market value of a Trust Unit at the balance sheet date. There were no
PUs vested as at December 31, 2024 (December 31, 2023 - nil).
The following is a summary of Choice Properties’ PU plan activity:
(Number of awards)
Year Ended
December 31, 2024
Year Ended
December 31, 2023
Outstanding Performance Units, beginning of year
256,674
238,418
Granted
94,335
97,056
Reinvested
14,000
14,148
Exercised
(116,832)
(107,057)
Forfeited
(14,562)
(19,737)
Added by performance factor
19,918
33,846
Outstanding Performance Units, end of year
253,533
256,674
Trustee Deferred Unit Plan
Non-management members of the Board are required to receive a portion of their annual retainer in the form of Deferred Units
and may also elect to receive up to 100% of their remaining fees in DUs. Distributions paid earn fractional DUs, which are treated
as additional awards. The fair value of each DU granted is measured based on the market value of a unit at the balance sheet
date. All DUs vest when granted, however, they cannot be exercised while Trustees are members of the Board.
144 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
The following is a summary of Choice Properties’ DU plan activity:
(Number of awards)
Year Ended
December 31, 2024
Year Ended
December 31, 2023
Outstanding Trustee Deferred Units, beginning of year
559,380
506,556
Granted
110,696
111,047
Reinvested
33,565
30,029
Exercised
—
(88,252)
Outstanding Trustee Deferred Units, end of year
703,641
559,380
Note 21.
Rental Revenue
Rental revenue is comprised of the following:
($ thousands)
Related
Parties(i)
Third
Parties
Year ended
December 31, 2024
Related
Parties(i)
Third
Parties
Year ended
December 31, 2023
Base rent
$
532,674
$
375,199
$
907,873
$
520,087
$
353,994
$
874,081
Property tax and insurance
recoveries
152,965
107,281
260,246
146,178
102,372
248,550
Operating cost recoveries
92,849
78,122
170,971
84,623
80,294
164,917
Lease surrender and other revenue
9,534
9,481
19,015
1,393
20,229
21,622
Rental revenue
$
788,022
$
570,083
$
1,358,105
$
752,281
$
556,889
$
1,309,170
(i)
Refer to Note 32, Related Party Transactions.
Choice Properties enters into long-term lease contracts with tenants for space in its properties. Initial lease terms are generally
between three and ten years for commercial units and longer terms for food store anchors. Leases generally provide for the
tenant to pay Choice Properties base rent, with provisions for contractual increases in base rent over the term of the lease, plus
operating cost, property tax and insurance recoveries. Many of the leases with Loblaw are stand-alone retail sites, where Loblaw
is directly responsible for the operating costs.
Future contractual base rent revenue, excluding adjustments for straight-line rent, for the years ended December 31 is as follows:
($ thousands)
2025
$
930,965
2026
892,553
2027
801,583
2028
697,349
2029
551,651
Thereafter
1,714,934
Total
$
5,589,035
Note 22. Property Operating Costs
Year Ended
($ thousands)
December 31, 2024
December 31, 2023
Property taxes and insurance
$
272,078
$
260,483
Recoverable operating costs
106,380
104,419
Non-recoverable operating costs
3,110
4,158
Property operating costs
$
381,568
$
369,060
Included in non-recoverable operating expenses are reversals of net expected credit losses of $1,752 for the year ended
December 31, 2024 (December 31, 2023 - net expected credit losses of $684). Refer to Note 14 for discussion on rents receivable
and the related expected credit losses.
Choice Properties REIT
2024 Annual Report • 145
Notes to the Consolidated Financial Statements
Note 23. Interest Income
Year Ended
($ thousands)
Note
December 31, 2024
December 31, 2023
Interest income from mortgages and loans receivable(i)
11
$
24,031
$
25,933
Income earned from financial real estate assets
11,772
9,102
Income from financial real estate assets due to changes in value
9
3,206
1,897
Other interest income
13,584
4,482
Interest income
$
52,593
$
41,414
(i)
Interest income from mortgages and loans receivable includes $1,169 accretion income in relation to vendor take-back mortgages issued to partners for the year
ended December 31, 2024 (December 31, 2023 - $3,647, which also includes accretion income on the promissory note issued to Allied).
Note 24.
Net Interest Expense and Other Financing Charges
Year Ended
($ thousands)
Note
December 31, 2024
December 31, 2023
Interest on senior unsecured debentures
$
231,621
$
220,246
Interest on mortgages and construction loans
48,286
41,898
Interest on credit facility
4,105
9,638
Interest on right-of-use lease liabilities
45
63
Amortization of debt discounts and premiums
15
665
30
Amortization of debt placement costs
15,16
4,577
4,639
Distributions on Exchangeable Units(i)
32
300,137
296,181
589,436
572,695
Less: Capitalized interest(ii)
6,10
(3,048)
(6,548)
Net interest expense and other financing charges
$
586,388
$
566,147
(i)
Represents interest on indebtedness due to GWL.
(ii)
Interest was capitalized to qualifying development projects based on a weighted average interest rate of 4.13% for the year ended December 31, 2024
(December 31, 2023 - 4.05%).
Note 25. General and Administrative Expenses
Year Ended
($ thousands)
Note
December 31, 2024
December 31, 2023
Salaries, benefits and employee costs(i)
$
58,721
$
57,269
Investor relations and other public entity costs
3,268
3,301
Professional fees
7,206
5,112
Information technology costs
9,368
8,273
Services Agreement expense charged by related party
32
4,988
4,970
Amortization of other assets
1,254
1,311
Office related costs
1,828
1,812
Other
3,389
3,225
Total
90,022
85,273
Less: Allocated to recoverable operating expenses
(22,189)
(21,043)
General and administrative expenses
$
67,833
$
64,230
(i)
Salaries, benefits and employee costs is shown net of costs capitalized to properties under development.
146 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Note 26. Financial Risk Management
As a result of holding and issuing financial instruments, Choice Properties is exposed to credit risk, market risk and liquidity and
capital availability risk. The following is a description of those risks and how the exposures are managed:
a.
Credit Risk
Choice Properties is exposed to credit risk resulting from the possibility that counterparties could default on their financial
obligations to Choice Properties. Exposure to credit risk relates to rent receivables, cash and cash equivalents, short-term
investments, security deposits, derivatives, and mortgages, loans and notes receivable.
Choice Properties mitigates the risk of credit loss related to rent receivables by evaluating the creditworthiness of new
tenants, obtaining security deposits wherever permitted by legislation, ensuring its tenant mix is diversified and limiting its
exposure to any one tenant (except Loblaw). Choice Properties establishes for expected credit losses with respect to rent
receivables. The allowance is determined on a tenant-by-tenant basis based on the specific factors related to the tenant.
The risk related to cash and cash equivalents, short-term investments, security deposits, and derivatives is reduced by
policies and guidelines that require Choice Properties to enter into transactions only with Canadian financial and government
institutions that have a minimum short-term rating of “A-2” and a long-term credit rating of “A-” from S&P or an equivalent
credit rating from another recognized credit rating agency and by placing minimum and maximum limits for exposures to
specific counterparties and instruments.
The risk related to its mortgages, loans and notes receivable arise in the event that the borrowers default on the repayment of
such financing. Choice Properties has established a program with a group of strategic development partners whereby the
Trust provides financing in the form of mezzanine loans, joint venture financing, vendor take-back financing and other
arrangements. In exchange, the Trust generally receives an option or other rights to acquire an interest in real property
assets. The Trust mitigates this risk by ensuring the loans are well secured by real property assets and by obtaining
guarantees where necessary.
Despite such mitigation efforts, if Choice Properties’ counterparties default, it could have a material adverse impact on
Choice Properties’ financial condition or results of operations and its ability to make distributions to Unitholders.
b.
Market Risk
Interest Rate Risk
Choice Properties requires extensive financial resources to complete the implementation of its strategy. Successful
implementation of Choice Properties’ strategy will require cost effective access to additional funding. There is a risk that
interest rates may increase, which could impact long-term borrowing costs and negatively impact financial performance.
The majority of Choice Properties’ debt is financed at fixed rates with maturities staggered over the long-term, thereby
mitigating the exposure to near term changes in interest rates. To the extent that Choice Properties incurs variable rate
indebtedness (such as borrowings under the Revolving Credit Facility), this will result in fluctuations in Choice Properties’
cost of borrowing as interest rates change. If interest rates rise, Choice Properties’ operating results and financial condition
could be materially adversely affected and the amount of cash available for distribution to Unitholders could decrease.
Choice Properties’ Revolving Credit Facility and the Debentures also contain covenants that require it to maintain certain
financial ratios on a consolidated basis. If Choice Properties does not maintain such ratios, its ability to make distributions to
Unitholders may be limited or suspended.
Choice Properties analyzes its interest rate risk and the impact of rising and falling interest rates on operating results and
financial condition on a regular basis. An increase of 1.0% per annum in the variable component of the interest rate for the
credit facility would result in an increase to liabilities and a decrease in net income of $15,000 (December 31, 2023 - $15,000)
(assuming fully drawn credit facility).
Unit Price Risk - Exchangeable Units
Choice Properties is exposed to Unit price risk as a result of the issuance of the Exchangeable Units, which are economically
equivalent to and exchangeable for Units, as well as the issuance of unit-based compensation. The Exchangeable Units and
unit-based compensation liabilities are recorded at their fair value based on market trading prices. The Exchangeable Units
and unit-based compensation negatively impact net income when the Unit price rises and positively impact net income when
the Unit price declines.
An increase of $1.00 in the underlying price of Choice Properties’ Units would result in an increase to liabilities and decrease
in net income due to Exchangeable Units of $395,787 (December 31, 2023 - $395,787) and Unit-based compensation
liabilities of $1,422 (December 31, 2023 - $1,232).
Choice Properties REIT
2024 Annual Report • 147
Notes to the Consolidated Financial Statements
Unit Price Risk - Investment in Real Estate Securities
Choice Properties is exposed to unit price risk as a result of its investment in the Class B Units of Allied Properties
Exchangeable Limited Partnership (Note 12), which are economically equivalent to and exchangeable for the publicly traded
units of Allied. The Class B Units are recorded at their fair value based on market trading prices the publicly traded units of
Allied.
c.
Liquidity and Capital Availability Risk
Liquidity risk is the risk that Choice Properties cannot meet a demand for cash or fund its obligations as they come due.
Although a portion of the cash flows generated by its properties is devoted to servicing such outstanding debt, there can be
no assurance that Choice Properties will continue to generate sufficient cash flows from operations to meet interest
payments and principal repayment obligations upon an applicable maturity date. If Choice Properties is unable to meet
interest payments or principal repayment obligations, it could be required to renegotiate such payments or issue additional
equity or debt or obtain other financing. The failure of Choice Properties to make or renegotiate interest or principal payments
or issue additional equity or debt or obtain other financing could materially adversely affect Choice Properties’ financial
condition and results of operations and decrease or eliminate the amount of cash available for distribution to Unitholders.
The real estate industry is highly capital intensive. Choice Properties requires access to capital to fund operating expenses,
property maintenance costs, development spending; and other capital expenditures, and to refinance indebtedness.
Although Choice Properties expects to have access to the Revolving Credit Facility, there can be no assurance that it will
otherwise have access to sufficient capital or access to capital on favourable terms. Further, in certain circumstances, Choice
Properties may not be able to borrow funds due to limitations set forth in the Declaration of Trust, the Indenture, as
supplemented by the Supplemental Indentures. Failure by Choice Properties to access required capital could have a material
adverse effect on its financial condition or results of operations and its ability to make distributions to Unitholders.
Liquidity and capital availability risks are mitigated by maintaining appropriate levels of liquidity, by diversifying the Trust’s
sources of funding, by maintaining a well-diversified debt maturity profile and by actively monitoring market conditions.
The undiscounted future principal and interest payments on Choice Properties’ debt instruments are as follows:
($ thousands)
2025
2026
2027
2028
2029
Thereafter
Total
Senior unsecured debentures
$
770,807 $
556,492 $
690,776 $
917,988 $
889,076 $
2,977,809
$
6,802,948
Mortgages payable
183,367
202,216
138,241
89,232
77,297
993,649
1,684,002
Construction loans
5,303
—
—
—
—
—
5,303
Total
$
959,477 $
758,708 $
829,017 $
1,007,220 $
966,373 $
3,971,458
$
8,492,253
148 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Note 27. Financial Instruments
The following table presents the fair value hierarchy of financial assets and liabilities, excluding those classified as amortized cost
that are short term in nature:
As at December 31, 2024
As at December 31, 2023
($ thousands)
Note
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Assets
Fair value through profit and loss:
Mortgages, loans and notes
receivable
11
$
—
$
—
$ 162,945
$ 162,945
$
—
$
—
$ 160,953
$ 160,953
Financial real estate assets
9
—
—
199,374
199,374
—
—
195,457
195,457
Investment in real estate
securities
12
—
202,526
—
202,526
—
238,308
—
238,308
Designated hedging derivatives
14
—
5,619
—
5,619
—
7,872
—
7,872
Amortized cost:
Mortgages, loans and notes
receivable
11
—
—
560,200
560,200
—
—
500,700
500,700
Cash and cash equivalents
29(c)
—
63,388
—
63,388
—
252,424
—
252,424
Liabilities
Fair value through profit and loss:
Exchangeable Units
17
—
5,283,750
—
5,283,750
—
5,521,222
—
5,521,222
Unit-based compensation
19,20
—
16,346
—
16,346
—
15,482
—
15,482
Designated hedging derivatives
19
—
2,048
—
2,048
—
1,337
—
1,337
Amortized cost:
Long term debt
15
—
—
6,811,253
6,811,253
—
—
6,599,055
6,599,055
The carrying value of the Trust’s assets and liabilities approximated fair value except for long term debt. The fair value of Choice
Properties’ senior unsecured debentures was calculated using market trading prices for similar instruments, whereas the fair
values for the mortgages was calculated by discounting future cash flows using appropriate discount rates. There were no
transfers between levels of the fair value hierarchy during the periods.
Designated Hedging Derivatives
Designated hedging derivatives consist of interest rate swaps to hedge the interest rate associated with an equivalent amount of
variable rate mortgages, and cross currency swaps to hedge foreign exchange associated with the equivalent amount borrowed
in US$ on the Trust’s credit facility (Note 16). During the year ended December 31, 2024, an interest swap was settled upon
maturity of the underlying variable rate mortgage. As at December 31, 2024, the interest rates associated with the interest rate
swaps ranged from 2.8% to 5.0% (December 31, 2023 - 2.8% to 5.0%).
The impact of the hedging instruments on the consolidated balance sheets was as follows:
($ thousands)
Note
Maturity
Date
Notional
Amount
As at
December 31, 2024
As at
December 31, 2023
Derivative assets
Interest rate swaps
14
Nov 2025 - Jun 2030
$
76,477
$
5,619
$
7,872
Total derivative assets
$
76,477
$
5,619
$
7,872
Derivative liabilities
Interest rate swaps
19
March 1, 2030
$
74,989
$
2,048
$
1,337
Total derivative liabilities
$
74,989
$
2,048
$
1,337
During the year ended December 31, 2024, the Trust recorded an unrealized fair value loss in other comprehensive loss of $2,964
(December 31, 2023 - unrealized fair value loss of $6,374).
Choice Properties REIT
2024 Annual Report • 149
Notes to the Consolidated Financial Statements
Note 28.
Capital Management
In order to maintain or adjust its capital structure, Choice Properties may issue new Units and debt, repay debt, or adjust the
amount of distributions paid to Unitholders. Choice Properties manages its capital structure with the objective of:
•
complying with the guidelines set out in its Declaration of Trust;
•
complying with debt covenants;
•
maintaining credit rating metrics consistent with those of investment grade REITs;
•
ensuring sufficient liquidity is available to support its financial obligations and to execute its operating and strategic
plans;
•
maintaining financial capacity and flexibility through access to capital to support future growth and development; and
•
minimizing its cost of capital while taking into consideration current and future industry, market and economic risks and
conditions.
Financing activity during the years ended December 31, 2024 and 2023 consisted of the repayment and issuance of various
senior unsecured debentures and the issuance of various mortgages (Note 15).
Choice Properties has certain key covenants in its debentures and its committed credit facility. The key financial covenants
include debt service ratios and leverage ratios, as defined in the respective agreements. These ratios are measured by the Trust
on an ongoing basis to ensure compliance with the agreements. Choice Properties was in compliance with each of the key
financial covenants under these agreements as at December 31, 2024 and December 31, 2023.
The following schedule details the capitalization of Choice Properties:
,
,
($ thousands)
Note
2024
2023
Liabilities
Senior unsecured debentures
15
$
5,400,000
$
5,650,000
Mortgages payable
15
1,300,158
976,661
Construction loans
15
5,230
90,059
Credit facility
16
—
—
Exchangeable Units
17
5,283,750
5,521,222
Equity
Unitholders’ equity
17
4,899,800
4,368,502
Total
$
16,888,938
$
16,606,444
150 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Note 29. Supplemental Cash Flow Information
(a)
Items not affecting cash and other items
Year Ended
($ thousands)
Note
December 31, 2024
December 31, 2023
Straight-line rental revenue
6
$
2,194
$
2,270
Unit-based compensation expense included in general and administrative expenses
20
6,139
6,312
Amortization of intangible assets
13
1,000
1,000
Adjustment to fair value of unit-based compensation
20
(657)
(938)
Adjustment to fair value of Exchangeable Units
17
(237,472)
(320,587)
Adjustment to fair value of investment properties
(92,731)
(114,150)
Adjustment to fair value of investment in real estate securities
12
35,782
64,006
Items not affecting cash and other items
$
(285,745) $
(362,087)
(b)
Net change in non-cash working capital
Year Ended
($ thousands)
Note
December 31, 2024
December 31, 2023
Net change in accounts receivable and other assets
14
$
29,314
$
(32,856)
Cost of sales recognized - residential development inventory
10
9,234
21,008
Net change in trade payables and other liabilities
19
(59,843)
(28,350)
Net change in non-cash working capital
$
(21,295) $
(40,198)
(c)
Cash and cash equivalents
($ thousands)
As at
December 31, 2024
As at
December 31, 2023
Cash
$
47,286
$
107,983
Short-term investments
16,102
144,441
Cash and cash equivalents
$
63,388
$
252,424
Choice Properties REIT
2024 Annual Report • 151
Notes to the Consolidated Financial Statements
Note 30. Segment Information
Choice Properties operates in three reportable segments: retail, industrial, and mixed-use & residential. The segments are
reported in a manner consistent with the internal reporting provided to the CODM, determined to be the senior leadership team,
which is comprised of the Chief Executive Officer, the Chief Financial Officer, and Chief Operating Officer of the Trust. The CODM
measures and evaluates the performance of the Trust based on net rental income.
The tables below presents net rental income for the year ended December 31, 2024 and December 31, 2023 in a manner
consistent with internal reporting. The accounting policies of the segments presented here are the same as those described in
Note 2 of the audited annual consolidated financial statements, except that segment rental revenue and segment property
operating costs include the proportionate share of revenue and direct operating costs of joint ventures and financial real estate
assets.
($ thousands)
Retail
Industrial
Mixed-Use &
Residential
Consolidation
and Eliminations(i)
Year Ended
December 31, 2024
Base rent
$ 735,558
$ 188,840
$
50,820
$
(67,345) $
907,873
Property tax and insurance recoveries
211,186
55,299
8,728
(14,967)
260,246
Operating cost recoveries
137,567
27,447
12,655
(6,698)
170,971
Lease surrender and other revenue
18,336
678
2,530
(2,529)
19,015
Rental Revenue
1,102,647
272,264
74,733
(91,539)
1,358,105
Property taxes and insurance
(222,067)
(55,640)
(11,906)
17,535
(272,078)
Recoverable operating costs
(89,232)
(12,883)
(15,441)
11,176
(106,380)
Non-recoverable operating costs
(3,099)
—
(2,619)
2,608
(3,110)
Property Operating Costs
(314,398)
(68,523)
(29,966)
31,319
(381,568)
Net Rental Income
$ 788,249
$ 203,741
$
44,767
$
(60,220) $
976,537
(i)
Reconciling items to adjust Choice Properties’ proportionate share of joint ventures and financial real estate assets to reflect the equity method of accounting
and financial instrument accounting treatment, respectively, under GAAP.
($ thousands)
Retail
Industrial
Mixed-Use &
Residential
Consolidation
and Eliminations(i)
Year Ended
December 31, 2023
Base rent
$ 720,105
$ 159,457
$
54,955
$
(60,436) $
874,081
Property tax and insurance recoveries
205,728
46,369
9,268
(12,815)
248,550
Operating cost recoveries
132,636
23,600
16,255
(7,574)
164,917
Lease surrender and other revenue
29,215
232
(5,405)
(2,420)
21,622
Rental Revenue
1,087,684
229,658
75,073
(83,245)
1,309,170
Property taxes and insurance
(217,079)
(47,328)
(11,635)
15,559
(260,483)
Recoverable operating costs
(87,407)
(11,308)
(16,737)
11,033
(104,419)
Non-recoverable operating costs
(3,093)
(1,149)
(1,673)
1,757
(4,158)
Property Operating Costs
(307,579)
(59,785)
(30,045)
28,349
(369,060)
Net Rental Income
$ 780,105
$ 169,873
$
45,028
$
(54,896) $
940,110
(i)
Reconciling items to adjust Choice Properties’ proportionate share of joint ventures and financial real estate assets to reflect the equity method of accounting
and financial instrument accounting treatment, respectively, under GAAP.
152 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
The tables below presents investment properties as at December 31, 2024 and as at December 31, 2023 in a manner consistent
with internal reporting. The accounting policies of the segments presented here are the same as those described in Note 2 of the
audited annual consolidated financial statements, except that segment income producing properties and segment properties
under development include the proportionate share of joint ventures and financial real estate assets.
($ thousands)
Retail
Industrial
Mixed-Use &
Residential
Consolidation
and Eliminations(i)
As at
December 31, 2024
Income producing properties
$ 11,272,834
$ 4,148,360
$
929,806
$
(1,265,000) $
15,086,000
Properties under development
201,958
506,500
61,542
(525,000)
245,000
Investment Properties
$ 11,474,792
$ 4,654,860
$
991,348
$
(1,790,000) $
15,331,000
(i)
Reconciling items to adjust Choice Properties’ proportionate share of joint ventures and financial real estate assets to reflect the equity method of accounting
and financial instrument accounting treatment, respectively, under GAAP.
($ thousands)
Retail
Industrial
Mixed-Use &
Residential
Consolidation
and Eliminations(i)
As at
December 31, 2023
Income producing properties
$ 11,025,128
$ 3,897,983
$
833,889
$
(1,122,000) $
14,635,000
Properties under development
185,024
587,524
115,452
(600,000)
288,000
Investment Properties
$ 11,210,152
$ 4,485,507
$
949,341
$
(1,722,000) $
14,923,000
(i)
Reconciling items to adjust Choice Properties’ proportionate share of joint ventures and financial real estate assets to reflect the equity method of accounting
and financial instrument accounting treatment, respectively, under GAAP.
Choice Properties REIT
2024 Annual Report • 153
Notes to the Consolidated Financial Statements
Note 31. Contingencies, Commitments, and Guarantees
Choice Properties is involved in and potentially subject to various claims by third parties arising from the normal course of
conduct of its business including regulatory, property and environmental claims. In addition, Choice Properties is potentially
subject to regular audits from federal and provincial tax authorities, and as a result of these audits may receive assessments and
reassessments. Although such matters cannot be predicted with certainty, management currently considers Choice Properties’
exposure to such claims and litigation, to the extent not covered by Choice Properties’ insurance policies or otherwise provided
for, not to be material to the audited consolidated financial statements, but they may have a material impact in future periods.
a.
Legal Proceedings
Choice Properties is potentially the subject of various legal proceedings and claims that arise in the ordinary course of
business. The outcome of all these proceedings and claims is uncertain. Based on information currently available, any
proceedings and claims, individually and in the aggregate, are not expected to have a material impact on Choice Properties.
b.
Guarantees
Choice Properties issues letters of credit to support guarantees related to its investment properties including maintenance
and development obligations to municipal authorities. The Trust has aggregate letters of credit with a maximum capacity of
$83,135 at the Trust’s ownership interest. As at December 31, 2024, the aggregate gross potential liability related to these
letters of credit totalled $37,479 (December 31, 2023 - $37,668).
Choice Properties’ credit facility and senior unsecured debentures are guaranteed by each of the General Partner, the
Partnership and any other person that becomes a subsidiary of Choice Properties (with certain exceptions). In the case of
default by the Trust, the indenture trustee will be entitled to seek redress from the guarantors for the guaranteed obligations
in the same manner and upon the same terms that it may seek to enforce the obligations of the Trust. These guarantees are
intended to eliminate structural subordination, which would otherwise arise as a consequence of Choice Properties’ assets
being primarily held in various subsidiaries of the Trust.
c.
Commitments
Choice Properties has entered into contracts for development and property capital projects and has other contractual
obligations. The Trust is committed to future payments of approximately $525,000, of which $366,000 relates to equity
accounted joint ventures, as at December 31, 2024 (December 31, 2023 - $427,000 and $339,000, respectively).
d.
Contingent Liabilities
Generally, the Trust is only liable for its proportionate share of the obligations of the co-ownerships and equity accounted
joint ventures in which it participates, except in limited circumstances. Credit risk arises in the event that the partners default
on the payment of their proportionate share of such obligations. The Trust has exposure to its partners’ share of mortgage
debt obligations within its equity accounted joint ventures in the amount of $422,876 as at December 31, 2024
(December 31, 2023 - $399,071). This credit risk is mitigated as the Trust generally has recourse under its co-ownership
agreements and joint venture arrangements in the event of default of its partners, in which case the Trust’s claim would be
against both the underlying real estate investments and the partners that are in default. Management believes that the assets
of its co-ownerships and equity accounted joint ventures are sufficient for the purpose of satisfying any obligation of the
Trust should the Trust’s partner default.
154 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Note 32. Related Party Transactions
Choice Properties’ controlling unitholder is GWL, which, as at December 31, 2024, held either directly or indirectly, a 61.7%
effective interest in the Trust through ownership of 50,661,415 Units and all the Exchangeable Units, which are economically
equivalent to and exchangeable to Units. GWL is also the controlling shareholder of Loblaw, with ownership of 52.6% of Loblaw’s
outstanding common shares as at December 31, 2024. Choice Properties’ ultimate parent is Wittington Investments, Limited.
In the normal course of operations, Choice Properties enters into various transactions with related parties. These transactions are
measured at the exchange amount, which is the amount of consideration established and agreed upon by the related parties.
Transactions and Agreements with GWL
Services Agreement
During the year ended December 31, 2024, GWL provided Choice Properties with corporate, administrative and other support
services for an annualized cost of $4,988 (December 31, 2023 - $4,970).
Distributions on Exchangeable Units
GWL, directly or indirectly, holds all of the Exchangeable Units issued by Choice Properties Limited Partnership, a subsidiary of
Choice Properties. During the year ended December 31, 2024, distributions declared on the Exchangeable Units totalled
$300,137 (December 31, 2023 - $296,181).
As at December 31, 2024, Choice Properties had distributions on Exchangeable Units payable to GWL of $324,873
(December 31, 2023 - $320,587). The payable to GWL includes deferred distributions of $299,807 to be paid on the first business
day of the 2025 fiscal year (December 31, 2023 - $295,851).
Notes Receivable
Holders of Exchangeable Units may, in lieu of receiving all or a portion of their distributions, choose to be loaned an amount from
Choice Properties Limited Partnership, and to have such distributions made on the first business day following the end of the
fiscal year in which such distribution would otherwise have been made. The loans do not bear interest and are due and payable in
full on the first business day following the end of the fiscal year during which the loan was made. During the year ended
December 31, 2024, GWL elected to receive distributions from Choice Properties Limited Partnership in the form of loans. As
such, non-interest bearing short-term notes totalling $299,807 were issued to GWL and were repaid in January 2025. Non-interest
bearing short-term notes totalling $295,851 with respect to the loans received in the 2023 fiscal year were settled against
distributions payable by the Trust to GWL in January 2024.
Trust Unit Distributions
During the year ended December 31, 2024, Choice Properties declared cash distributions of $38,419 on the Units held by GWL
(December 31, 2023 - $37,912). As at December 31, 2024, $3,209 of Trust Unit distributions declared were payable to GWL
(December 31, 2023 - $3,166). There were no non-cash distributions settled through the issuance of additional Trust Units during
the year ended December 31, 2024 (December 31, 2023 - $nil).
Transaction Summary as Reflected in the Consolidated Financial Statements
Transactions with GWL recorded in the consolidated statements of income and comprehensive income were comprised as
follows:
Year Ended
($ thousands)
Note
December 31, 2024
December 31, 2023
Rental revenue
21
$
2,866
$
3,103
Services Agreement expense
25
(4,988)
(4,970)
Distributions on Exchangeable Units
24
(300,137)
(296,181)
Choice Properties REIT
2024 Annual Report • 155
Notes to the Consolidated Financial Statements
The balances due from (to) GWL and subsidiaries were as follows:
($ thousands)
Note
As at
December 31, 2024
As at
December 31, 2023
Notes receivable
11
$
299,807
$
295,851
Other receivables
14
84
512
Exchangeable Units
17
(5,283,750)
(5,521,222)
Accrued liabilities
19
(1,030)
(1,050)
Distributions payable on Exchangeable Units
19
(324,873)
(320,587)
Distributions payable on Trust Units
19
(3,209)
(3,166)
Due to GWL and subsidiaries
$
(5,312,971) $
(5,549,662)
Transactions and Agreements with Loblaw
Acquisitions
During the year ended December 31, 2024, Choice Properties completed five acquisitions from Loblaw, for an aggregate
purchase price of $178,902. The acquisitions included: a retail property in Toronto, Ontario $38,300, a 50% interest in a retail
property in Winnipeg, Manitoba for $15,596, a 50% interest in an industrial property in Mississauga, Ontario for $89,601, a 50%
interest in a retail property in Toronto, Ontario that was acquired through an equity accounted joint venture for $21,267, and a
50% interest in an industrial property in Lakeside, Nova Scotia for $14,138. In each case the purchase price excludes transaction
costs. Concurrent with the transactions, the properties were leased back to Loblaw.
During the year ended December 31, 2023, Choice Properties acquired from Loblaw two financial real estate assets for an
aggregate purchase price of $86,300, as well as three retail properties and one industrial property for an aggregate purchase
price of $91,889, in each case excluding transaction costs.
Dispositions
During the year ended December 31, 2023, Choice Properties disposed of a data centre asset tenanted by Loblaw to a third party
for net proceeds of $74,200. In connection with the transaction, Choice made an $8,300 payment to Loblaw to terminate its lease
early.
Strategic Alliance Agreement
The Strategic Alliance Agreement creates a series of rights and obligations between Choice Properties and Loblaw intended to
establish a preferential and mutually beneficial business and operating relationship. The initial term of the Strategic Alliance
Agreement expired on July 5, 2023. Upon expiry of the initial term, the Strategic Alliance Agreement renewed until July 5, 2033 or
the date on which GWL and its affiliates own less than 50% of the Trust on a fully diluted basis. The Strategic Alliance Agreement
provides Choice Properties with important rights that are expected to meaningfully contribute to the Trust’s growth. Subject to
certain exceptions, rights include:
•
Choice Properties has the right of first offer to purchase any property in Canada that Loblaw seeks to sell;
•
Loblaw is generally required to present shopping centre property acquisitions in Canada to Choice Properties to allow the
Trust a right of first opportunity to acquire the property itself; and
•
Choice Properties has the right to participate in future shopping centre developments involving Loblaw.
Included in certain investment properties acquired from Loblaw is excess land with development potential. In accordance with the
Strategic Alliance Agreement, Choice Properties will compensate Loblaw, over time, with intensification payments, as Choice
Properties pursues development, intensification or redevelopment of such excess land. The payments to Loblaw are calculated in
accordance with a payment grid that takes into account the region, market ranking and type of use for the property.
Leases
During the year ended December 31, 2024, Choice and Loblaw renewed 46 of a tranche of 48 leases expiring in 2025, including
one industrial lease (December 31, 2023 - 47 of 49 leases expiring in 2024).
Lease Surrender Revenue
During the year ended December 31, 2024, Choice Properties recognized $9,534 of lease surrender revenue from Loblaw
(December 31, 2023 - $1,393).
Site Intensification Payments
Choice Properties compensated Loblaw with intensification payments of $3,872 in connection with completed gross leasable
area for which tenants took possession during the year ended December 31, 2024 (December 31, 2023 - $14,377).
156 • 2024 Annual Report
Choice Properties REIT
Notes to the Consolidated Financial Statements
Transaction Summary as Reflected in the Consolidated Financial Statements
Loblaw is the largest tenant for Choice Properties, representing approximately 57.7% of Choice Properties’ rental revenue for the
year ended December 31, 2024 (December 31, 2023 - 57.1%). Transactions with Loblaw recorded in the consolidated statements
of income and comprehensive income were comprised as follows:
Year Ended
($ thousands)
Note
December 31, 2024
December 31, 2023
Rental revenue
21
$
783,280
$
747,616
The balances due from (to) Loblaw were as follows:
($ thousands)
Note
As at
December 31, 2024
As at
December 31, 2023
Rent receivable
14
$
31
$
1,080
Other receivables
14
14,517
2,626
Accrued liabilities
19
(8,304)
(7,428)
Construction allowances payable
19
(27,927)
(26,726)
Reimbursed contract payable
19
(598)
(296)
Due to Loblaw
$
(22,281) $
(30,744)
Transactions and Agreements with Wittington
Management Agreements
Choice Properties provides Wittington with property management services for certain properties with third-party tenancies and
development consulting services on a fee for service basis.
Trust Unit Distributions
During the year ended December 31, 2024, Choice Properties declared cash distributions of $12,513 on the Units held by
Wittington (December 31, 2023 - $12,348). As at December 31, 2024, $1,045 of Trust Unit distributions declared were payable to
Wittington (December 31, 2023 - $1,031). There were no non-cash distributions settled through the issuance of additional Trust
Units during the year ended December 31, 2024 (December 31, 2023 - $nil).
Transaction Summary as Reflected in the Consolidated Financial Statements
Transactions with Wittington recorded in the consolidated statements of income and comprehensive income were comprised as
follows:
Year Ended
($ thousands)
Note
December 31, 2024
December 31, 2023
Rental revenue
21
$
1,876
$
1,562
Fee income
320
830
The balances due from (to) Wittington and subsidiaries were as follows:
($ thousands)
Note
As at
December 31, 2024
As at
December 31, 2023
Rent receivable
14
$
132
$
129
Cost-to-complete receivable
14
1,980
4,440
Distributions payable
19
(1,045)
(1,031)
Due from Wittington and subsidiaries
$
1,067
$
3,538
Transactions and Agreements with other related parties
Mortgages receivable
As at December 31, 2024, $114,217 of mortgages receivable included within mortgages, loans and notes receivable were to
entities in which the Trust has an ownership interest (December 31, 2023 - $114,524).
Choice Properties REIT
2024 Annual Report • 157
Notes to the Consolidated Financial Statements
Transactions with Key Personnel
Key personnel are comprised of Trustees and certain members of the executive team of Choice Properties. Compensation of key
personnel was as follows:
($ thousands)
December 31, 2024
December 31, 2023
Salaries, trustee fees, incentives and short-term employee benefits
$
4,387
$
4,144
Unit-based compensation recorded in:
General and administrative expenses
4,436
4,204
Adjustment to fair value of unit-based compensation
(338)
(626)
Compensation of key personnel
$
8,485
$
7,722
158 • 2024 Annual Report
Choice Properties REIT
Shareholder Information and
How to Contact Us
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. As Canada’s largest REIT, we have
a responsibility to understand deeply our stakeholders’
needs and to manage our properties to be best in class.
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.
Conference Call and Webcast
Management will host a conference call on Thursday,
February 13, 2025 at 10:00 AM (EDT) with a simultaneous
audio webcast. To access via teleconference, please dial
1-888-330-2454 or 1-240-789-2714 and enter the event
passcode: 4788974. The link to the audio webcast will be
available on www.choicereit.ca/events-webcasts.
Head Office
Choice Properties Real Estate Investment Trust
The Weston Centre, 700-22 St. Clair Avenue East
Toronto, Ontario M4T 2S5 Tel: 416-628-7771 •
Toll free: 1-855-322-2122 • Fax: 416-628-7777
Stock Exchange Listing and Symbol
The Trust’s Units are listed on the Toronto Stock Exchange
and trade under the symbol “CHP.UN”.
Distribution Policy
Choice Properties’ Board retains full discretion with respect
to the timing and quantum of distributions. Declared
distributions are paid to Unitholders of record at the close
of business on the last business day of a month on or about
the 15th day of the following month.
Registrar and Transfer Agent
TSX Trust Company, P.O. Box 700, Station B,
Montreal, QC, H3B 3K3
Tel: 416-682-3860 (outside of Canada and US)
Tel toll free: 1-800-387-0825 (Canada and US)
Fax: 514-985-8843 (outside of Canada and US)
Fax toll free: 1-888-249-6189 (Canada and US)
E-Mail: shareholderinquiries@tmx.com
Website: www.tsxtrust.com
Investor Relations
Tel: 416-628-7771 • Toll free: 1-855-322-2122
Email: investor@choicereit.ca • Website: www.choicereit.ca
Additional financial information has been filed electronically
with various securities regulators in Canada through the
System for Electronic Document Analysis and Retrieval
(“SEDAR+”), www.sedarplus.ca. Choice Properties holds a
conference call shortly following the release of its quarterly
results. These calls are archived in the Investor Relations
section of the Trust’s website, www.choicereit.ca.
Non-Management Trustees
Gordon A. M. Currie – Chair
Corporate Director
L. Jay Cross
President, The Howard Hughes Corporation
Diane A. Kazariani
Corporate Director
Karen A. Kinsleyii iii
Corporate Director
R. Michael Latimeriii
Corporate Director
Nancy H.O. Lockhartiii
Corporate Director
Dale R. Ponderi
Corporate Director
Qi Tangi
CFO, Skyservice Investments, Inc.
Cornell Wright
President, Wittington Investments, Limited
i Audit Committee
ii Lead Independant Director
iii Governance, Compensation and Nominating Committee
Ce rapport est disponible en français.
2024 Annual Report • 159
To learn about the many other ways
we are bringing our Purpose to life for
tenants, colleagues, communities,
and investors, please visit:
Our latest Sustainability Report
choicereit.ca/sustainability
Our Leading Portfolio
choicereit.ca/portfolio
Our most recent Investor Presentation
choicereit.ca/presentations
Our Career website
choicereit.ca/careers
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