Choice Properties Real Estate Investment Trust Reports Results for the Six Months Ended June 30, 2024

TORONTO--(BUSINESS WIRE)--Choice Properties Real Estate Investment Trust ("Choice Properties" or the "Trust") (TSX: CHP.UN) today announced its consolidated financial results for the three and six months ended June 30, 2024. The 2024 Second Quarter Report to Unitholders is available in the Investors section of the Trust's website at www.choicereit.ca, and has been filed on SEDAR+ at www.sedarplus.ca.

"This was another solid quarter operationally, as we continued to operate at a high level of occupancy and delivered strong leasing and same asset NOI growth," said Rael Diamond, President and Chief Executive Officer of the Trust. "We further strengthened our balance sheet, completing $788 million in financings with an average term of 9.6 years and an average interest rate of approximately 5.0%. We also received a credit rating upgrade, citing the strength of our grocery anchored retail properties and our strategic relationship with Loblaw."

2024 Second Quarter Highlights

• Reported net income for the quarter of $513.2 million as compared to net income of $535.7 million in the same prior year period.
• Reported FFO per unit diluted⁽¹⁾ of $0.255, an increase of 0.4% compared to the same prior year period.
  • FFO per unit diluted⁽¹⁾ excluding certain non-recurring items and timing differences, increased by $0.014 or 5.7%.
• Period end occupancy was 98.0%.
  • Retail at 97.7%, industrial at 98.8% and mixed-use & residential at 94.7%.
• Same-Asset NOI on a cash basis⁽¹⁾ increased by 4.4% compared to the same prior year period.
  • Retail increased by 3.0%;
  • Industrial increased by 11.8%; and
  • Mixed-use & residential increased by 0.8%.
• Completed $113.5 million of transactions in the quarter, including:
  • Acquisition of our partner's interest in a retail property in Fort Saskatchewan, Alberta for $21.1 million, following which the Trust owns 100% of the property;
  • Acquisition of a standalone retail property in midtown Toronto, Ontario for $12.0 million. Concurrent with the transaction, Choice entered into a lease with Loblaw for this property; and
  • Disposition of our interest in four retail properties in Alberta and Saskatchewan for proceeds of $80.4 million on a proportionate share basis⁽¹⁾. Consideration included three vendor take-back mortgages totalling $11.1 million, bearing interest at an average rate of 6.81%.
• Completed $788.2 million of debt financing in the quarter, including:
  • The issuance of $500.0 million Series U senior unsecured debentures, bearing interest at 5.03% with a 6.8-year term. Proceeds were invested in a GIC earning 5.50% interest;
  • Completion of $243.0 million of mortgage financings at share secured by three industrial properties, with an average rate of 5.309% and an average term of 16.9 years. Proceeds were partially used to repay $71.7 million of construction loans secured by two of the properties.
  • Assumption of $45.2 million of mortgages from our partner at an average rate of 3.407%, with an average remaining term of 2.7 years in connection with acquisition and disposition transactions completed in the quarter.
• Transferred $8.3 million of properties under development to income producing status, delivering approximately 44,000 square feet of new commercial GLA on a proportionate share basis⁽¹⁾ through retail intensifications.
• Invested $31.7 million of capital in development projects on a proportionate share basis⁽¹⁾.
• Received a credit rating upgrade from S&P Global Ratings to BBB+.
• Subsequent to the quarter end, 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.
• Ended the quarter in a strong liquidity position with $1.5 billion of available credit under the Trust's revolving credit facility, a $12.8 billion pool of unencumbered assets and Adjusted Debt to EBITDAFV⁽¹⁾ of 7.6x (net of cash 6.9x).

⁽¹⁾ Refer to Non-GAAP Financial Measures and Additional Financial Information section.

Summary of GAAP Basis Financial Results

($ thousands except where otherwise indicated) (unaudited)		Three Months										Six Months
		June 30, 2024			June 30, 2023			Change $				June 30, 2024				June 30, 2023			Change $
Net Income		$	513,231		$	535,668		$	(22,437	)		$	655,510			$	806,472		$	(150,962	)
Net income per unit diluted			0.709			0.740			(0.031	)			0.906				1.114			(0.208	)
Rental revenue			335,388			330,327			5,061				673,346				654,984			18,362
Fair value gain on Exchangeable Units(i)			372,039			375,997			(3,958	)			439,323				470,986			(31,663	)
Fair value gains (losses) excluding Exchangeable Units(ii)			1,453			55,875			(54,422	)			(28,772	)			117,731			(146,503	)
Cash flows from operating activities			136,282			152,032			(15,750	)			277,874				285,059			(7,185	)
Weighted average number of units outstanding - diluted(iii)			723,659,539			723,656,668			2,871				723,664,669				723,668,276			(3,607	)

(i)		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 Unit price rises and a positive impact when the Trust Unit price declines.
(ii)		Fair value gains (losses) excluding Exchangeable Units includes adjustments to fair value of investment properties, investment in real estate securities, and unit-based compensation.
(iii)		Includes Trust Units and Exchangeable Units.

Quarterly Results

Choice Properties reported net income of $513.2 million for the three months ended June 30, 2024 as compared to net income of $535.7 million in the same prior year period. The decrease of $22.4 million compared to the prior year was primarily due to a $58.0 million unfavourable change in the adjustment to fair value of investment properties, partially offset by the reversal of a $38.6 million transaction related provision that was determined to be no longer required.

Year-to-date Results

Choice Properties reported net income of $655.5 million for the six months ended June 30, 2024 as compared to net income of $806.5 million in the same prior year period. The decrease of $151.0 million compared to the prior year was primarily due to changes in the non-cash adjustments to fair value including:

• a $135.2 million unfavourable change in the adjustment to fair value of investment properties;
• a $31.7 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 $20.1 million decrease in income from equity accounted joint ventures primarily due to a fair value loss recognized in the current year.

The changes described above were partially offset by the reversal of a $38.6 million transaction related provision that was determined to be no longer required.

Summary of Proportionate Share⁽¹⁾ Financial Results

As at or for the period ended ($ thousands except where otherwise indicated)		Three Months												Six Months
		June 30, 2024				June 30, 2023				Change $				June 30, 2024				June 30, 2023				Change $
Rental revenue(i)		$	358,252			$	350,612			$	7,640			$	719,660			$	697,236			$	22,424
Net Operating Income ("NOI"), cash basis(i)			256,568				243,530				13,038				508,201				487,582				20,619
Same-Asset NOI, cash basis(i)			241,729				231,494				10,235				478,935				463,130				15,805
Adjustment to fair value of investment properties(i)			25,542				85,921				(60,379	)			21,982				177,752				(155,770	)
Occupancy (% of GLA)			98.0	%			97.4	%			0.6	%			98.0	%			97.4	%			0.6	%
Funds from operations ("FFO")(i)			184,714				183,590				1,124				371,903				360,481				11,422
FFO(i) per unit diluted			0.255				0.254				0.001				0.514				0.498				0.016
Adjusted funds from operations ("AFFO")(i)			176,600				170,400				6,200				349,746				334,779				14,967
AFFO(i) per unit diluted			0.244				0.235				0.009				0.483				0.463				0.020
AFFO(i) payout ratio - diluted			77.9	%			79.6	%			(1.7	)%			78.3	%			80.7	%			(2.4	)%
Cash distributions declared			137,492				135,684				1,808				273,779				270,162				3,617
Weighted average number of units outstanding - diluted(ii)			723,659,539				723,656,668				2,871				723,664,669				723,668,276				(3,607	)

(i)		Refer to Non-GAAP Financial Measures and Additional Financial Information section.
(ii)		Includes Trust Units and Exchangeable Units.

Quarterly and Year-to-date Results

For the three and six months ended June 30, 2024, Same-Asset NOI, cash basis⁽¹⁾ increased by $10.2 million and $15.8 million, respectively, compared to the prior year, primarily due to increased revenue from higher rental rates on renewals, new leasing, contractual rent steps, and higher recoveries in the retail and industrial portfolios, in addition to a provision reversal in the industrial portfolio following the resolution of a tenant dispute. Excluding bad debt expense, Same-Asset NOI, cash basis⁽¹⁾ increased 3.7% and 3.2% for the three and six month periods, respectively.

FFO⁽¹⁾ increased by $1.1 million and $11.4 million for the three and six months ended June 30, 2024, respectively. The increase was primarily due to an increase in net operating income, partially offset by higher general and administrative expenses and an increase in interest expense net of an increase in interest income.

FFO per unit diluted⁽¹⁾ for the three month period was relatively flat compared to the same prior year period primarily as a result of certain non-recurring items and timing differences, including lower lease surrender revenue of $7.2 million, restructuring costs of $3.3 million related to outsourcing a portion of the Trust's operational accounting function, and a provision reversal of $1.7 million in the industrial portfolio following the resolution of a tenant dispute. Normalized for these non-recurring items and timing differences, FFO per unit diluted⁽¹⁾ for the three month period increased by $0.014 or 5.7% over the same prior year period.

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

Outlook

We are focused on capital preservation, delivering stable and growing cash flows and net asset value appreciation, all with a long-term focus. Our high-quality portfolio is primarily leased to necessity-based tenants and logistics providers, who are less sensitive to economic volatility and therefore provide stability to our overall portfolio. We continue to experience positive leasing momentum across our portfolio and are well positioned to complete our 2024 lease renewals. We also continue to advance our development program, with a focus on commercial developments in the near term, which provides us with the best opportunity to add high-quality real estate to our portfolio at a reasonable cost and drive net asset value appreciation over time.

We are confident that our business model, stable tenant base, strong balance sheet and disciplined approach to financial management will continue to position us well for future success. In 2024, Choice Properties will continue to focus on its core business of essential retail and industrial, our growing residential platform and our robust development pipeline, and is targeting:

• Stable occupancy across the portfolio, resulting in 2.5%-3.0% year-over-year growth in Same-Asset NOI, cash basis;
• Annual FFO per unit diluted in a range of $1.02 to $1.03, reflecting 2.0%-3.0% year-over-year growth; and
• Strong leverage metrics, targeting Adjusted Debt to EBITDAFV below 7.5x.

Non-GAAP Financial Measures and Additional Financial Information

In addition to using performance measures determined in accordance with International Financial Reporting Standards ("IFRS" or "GAAP"), Choice Properties also measures its performance using certain non-GAAP measures, and provides these measures in this news release so that investors may do the same. Such measures and related per-unit amounts are not defined by IFRS and therefore should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Furthermore, the supplemental measures used by management may not be comparable to similar measures presented by other real estate investment trusts or enterprises. The non-GAAP measures included in this news release are defined and reconciled to the most comparable GAAP measure below. Choice Properties believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Trust for the reasons outlined below.

Non-GAAP Measure	Description
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.
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.
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.
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.
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 net 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.
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.
AFFO Payout Ratio	AFFO payout ratio is a supplementary measure used by Management to assess the sustainability of the Trust's distribution payments. The ratio is calculated using cash distributions declared divided by AFFO.
Earnings before Interest, Taxes, Depreciation, Amortization and Fair Value ("EBITDAFV")	Defined as net income 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.
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.
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 as net of cash and cash equivalents at the measurement date.

The following table reconciles net income as determined in accordance with GAAP to net income on a proportionate share basis for the three and six months ended June 30, 2024:

		Three Months												Six Months
($ 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)
Net Operating Income
Rental revenue		$	335,388			$	22,864			$	358,252			$	673,346			$	46,314			$	719,660
Property operating costs			(93,195	)			(8,041	)			(101,236	)			(191,300	)			(16,287	)			(207,587	)
			242,193				14,823				257,016				482,046				30,027				512,073
Residential Inventory Income
Gross sales			-				-				-				11,268				-				11,268
Cost of sales			-				-				-				(9,234	)			-				(9,234	)
			-				-				-				2,034				-				2,034
Other Income and Expenses
Interest income			15,275				(6,147	)			9,128				25,034				(8,075	)			16,959
Investment income			5,315				-				5,315				10,630				-				10,630
Fee income			625				-				625				1,326				-				1,326
Net interest expense and other financing charges			(146,204	)			(4,813	)			(151,017	)			(288,488	)			(11,176	)			(299,664	)
General and administrative expenses			(17,200	)			-				(17,200	)			(31,838	)			-				(31,838	)
Share of income from equity accounted joint ventures			1,370				(1,370	)			-				6,088				(6,088	)			-
Amortization of intangible assets			(250	)			-				(250	)			(500	)			-				(500	)
Transaction costs and other related expenses			38,615				-				38,615				38,615				-				38,615
Adjustment to fair value of unit-based compensation			1,288				-				1,288				2,069				-				2,069
Adjustment to fair value of Exchangeable Units			372,039				-				372,039				439,323				-				439,323
Adjustment to fair value of investment properties			28,035				(2,493	)			25,542				26,670				(4,688	)			21,982
Adjustment to fair value of investment in real estate securities			(27,870	)			-				(27,870	)			(57,511	)			-				(57,511	)
Income before Income Taxes			513,231				-				513,231				655,498				-				655,498
Income tax expense			-				-				-				12				-				12
Net Income		$	513,231			$	-			$	513,231			$	655,510			$	-			$	655,510

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

		Three Months												Six Months
($ 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)
Net Operating Income
Rental revenue		$	330,327			$	20,285			$	350,612			$	654,984			$	42,252			$	697,236
Property operating costs			(92,175	)			(6,609	)			(98,784	)			(187,445	)			(14,222	)			(201,667	)
			238,152				13,676				251,828				467,539				28,030				495,569
Other Income and Expenses
Interest income			11,321				(4,884	)			6,437				20,296				(7,598	)			12,698
Investment income			5,315				-				5,315				10,630				-				10,630
Fee income			688				-				688				2,341				-				2,341
Net interest expense and other financing charges			(141,125	)			(5,307	)			(146,432	)			(280,482	)			(10,187	)			(290,669	)
General and administrative expenses			(13,649	)			-				(13,649	)			(28,211	)			-				(28,211	)
Share of income from equity accounted joint ventures			3,353				(3,353	)			-				26,177				(26,177	)			-
Amortization of intangible assets			(250	)			-				(250	)			(500	)			-				(500	)
Transaction costs and other related expenses			(9	)			-				(9	)			(34	)			-				(34	)
Adjustment to fair value of unit-based compensation			998				-				998				1,730				-				1,730
Adjustment to fair value of Exchangeable Units			375,997				-				375,997				470,986				-				470,986
Adjustment to fair value of investment properties			86,053				(132	)			85,921				161,820				15,932				177,752
Adjustment to fair value of investment in real estate securities			(31,176	)			-				(31,176	)			(45,819	)			-				(45,819	)
Income before Income Taxes			535,668				-				535,668				806,473				-				806,473
Income tax expense			-				-				-				(1	)			-				(1	)
Net Income		$	535,668			$	-			$	535,668			$	806,472			$	-			$	806,472

The following table reconciles net income, as determined in accordance with GAAP, to Net Operating Income, Cash Basis for the periods ended as indicated:

For the periods ended June 30 ($ thousands)		Three Months												Six Months
			2024				2023			Change $					2024				2023			Change $
Net Income		$	513,231			$	535,668			$	(22,437	)		$	655,510			$	806,472			$	(150,962	)
Residential inventory income			-				-				-				(2,034	)			-				(2,034	)
Interest income			(15,275	)			(11,321	)			(3,954	)			(25,034	)			(20,296	)			(4,738	)
Investment income			(5,315	)			(5,315	)			-				(10,630	)			(10,630	)			-
Fee income			(625	)			(688	)			63				(1,326	)			(2,341	)			1,015
Net interest expense and other financing charges			146,204				141,125				5,079				288,488				280,482				8,006
General and administrative expenses			17,200				13,649				3,551				31,838				28,211				3,627
Share of income from equity accounted joint ventures			(1,370	)			(3,353	)			1,983				(6,088	)			(26,177	)			20,089
Amortization of intangible assets			250				250				-				500				500				-
Transaction costs and other related expenses			(38,615	)			9				(38,624	)			(38,615	)			34				(38,649	)
Adjustment to fair value of unit-based compensation			(1,288	)			(998	)			(290	)			(2,069	)			(1,730	)			(339	)
Adjustment to fair value of Exchangeable Units			(372,039	)			(375,997	)			3,958				(439,323	)			(470,986	)			31,663
Adjustment to fair value of investment properties			(28,035	)			(86,053	)			58,018				(26,670	)			(161,820	)			135,150
Adjustment to fair value of investment in real estate securities			27,870				31,176				(3,306	)			57,511				45,819				11,692
Income tax (recovery) expense			-				-				-				(12	)			1				(13	)
Net Operating Income, Accounting Basis - GAAP			242,193				238,152				4,041				482,046				467,539				14,507
Straight-line rental revenue			1,434				898				536				1,173				1,877				(704	)
Lease surrender revenue			(1,224	)			(8,207	)			6,983				(3,773	)			(8,218	)			4,445
Net Operating Income, Cash Basis - GAAP			242,403				230,843				11,560				479,446				461,198				18,248
Adjustments for equity accounted joint ventures and financial real estate assets			14,165				12,687				1,478				28,755				26,384				2,371
Net Operating Income, Cash Basis - Proportionate Share(1)		$	256,568			$	243,530			$	13,038			$	508,201			$	487,582			$	20,619

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

For the periods ended June 30 ($ thousands)		Three Months												Six Months
			2024				2023			Change $					2024				2023			Change $
Net Operating Income, Cash Basis - Proportionate Share(1)		$	256,568			$	243,530			$	13,038			$	508,201			$	487,582			$	20,619
Less:
Transactions NOI, Cash Basis			(14,839	)			(12,036	)			(2,803	)			(29,266	)			(24,452	)			(4,814	)
Same-Asset NOI, Cash Basis		$	241,729			$	231,494			$	10,235			$	478,935			$	463,130			$	15,805

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

For the periods ended June 30 ($ thousands except where otherwise indicated)		Three Months												Six Months
			2024				2023			Change $					2024				2023			Change $
Net Income		$	513,231			$	535,668			$	(22,437	)		$	655,510			$	806,472			$	(150,962	)
Add (deduct) impact of the following:
Amortization of intangible assets			250				250				-				500				500				-
Transaction costs and other related expenses			(38,615	)			9				(38,624	)			(38,615	)			34				(38,649	)
Adjustment to fair value of unit-based compensation			(1,288	)			(998	)			(290	)			(2,069	)			(1,730	)			(339	)
Adjustment to fair value of Exchangeable Units			(372,039	)			(375,997	)			3,958				(439,323	)			(470,986	)			31,663
Adjustment to fair value of investment properties			(28,035	)			(86,053	)			58,018				(26,670	)			(161,820	)			135,150
Adjustment to fair value of investment properties to proportionate share(1)			2,493				132				2,361				4,688				(15,932	)			20,620
Adjustment to fair value of investment in real estate securities			27,870				31,176				(3,306	)			57,511				45,819				11,692
Interest otherwise capitalized for development in equity accounted joint ventures			3,069				2,939				130				5,577				5,854				(277	)
Exchangeable Units distributions			75,199				74,210				989				149,739				147,761				1,978
Internal expenses for leasing			2,579				2,254				325				5,067				4,508				559
Income tax (recovery) expense			-				-				-				(12	)			1				(13	)
Funds from Operations		$	184,714			$	183,590			$	1,124			$	371,903			$	360,481			$	11,422
FFO per unit - diluted		$	0.255			$	0.254			$	0.001			$	0.514			$	0.498			$	0.016
Weighted average number of units outstanding - diluted(i)			723,659,539				723,656,668				2,871				723,664,669				723,668,276				(3,607	)

(i)

Includes Trust Units and Exchangeable Units.

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

For the periods ended June 30 ($ thousands except where otherwise indicated)		Three Months												Six Months
			2024				2023			Change $					2024				2023			Change $
Funds from Operations		$	184,714			$	183,590			$	1,124			$	371,903			$	360,481			$	11,422
Add (deduct) impact of the following:
Internal expenses for leasing			(2,579	)			(2,254	)			(325	)			(5,067	)			(4,508	)			(559	)
Straight-line rental revenue			1,434				898				536				1,173				1,877				(704	)
Straight-line rental revenue adjustment to proportionate share(1)			(658	)			(777	)			119				(1,272	)			(1,434	)			162
Property capital			(2,606	)			(5,764	)			3,158				(7,000	)			(7,512	)			512
Direct leasing costs			(2,024	)			(793	)			(1,231	)			(3,196	)			(2,584	)			(612	)
Tenant improvements			(1,369	)			(3,686	)			2,317				(4,395	)			(10,129	)			5,734
Operating capital expenditures adjustment to proportionate share(1)			(312	)			(814	)			502				(2,400	)			(1,412	)			(988	)
Adjusted Funds from Operations		$	176,600			$	170,400			$	6,200			$	349,746			$	334,779			$	14,967
AFFO per unit - diluted		$	0.244			$	0.235			$	0.009			$	0.483			$	0.463			$	0.020
AFFO payout ratio - diluted(i)			77.9	%			79.6	%			(1.7	)%			78.3	%			80.7	%			(2.4	)%
Distribution declared per unit		$	0.190			$	0.188			$	0.002			$	0.378			$	0.374			$	0.004
Weighted average number of units outstanding - diluted(ii)			723,659,539				723,656,668				2,871				723,664,669				723,668,276				(3,607	)

(i)		AFFO payout ratio is calculated as cash distributions declared divided by AFFO.
(ii)		Includes Trust Units and Exchangeable Units.

Management's Discussion and Analysis and Consolidated Financial Statements and Notes

Information appearing in this news release is a select summary of results. This news release should be read in conjunction with the Choice Properties 2024 Second Quarter Report to Unitholders, which includes the unaudited interim period condensed consolidated financial statements and MD&A for the Trust, and is available at www.choicereit.ca and on SEDAR+ at www.sedarplus.ca.

Conference Call and Webcast

Management will host a conference call on Friday, July 19, 2024 at 10:00 AM (EDT) with a simultaneous audio webcast. To access via teleconference, please dial [phone] or [phone] and enter the event passcode: 4788974. The link to the audio webcast will be available on www.choicereit.ca/events-webcasts.

About Choice Properties Real Estate Investment Trust

Choice Properties is a leading Real Estate Investment Trust that creates enduring value through places where people thrive.

We bring this to life by improving how our tenants and communities come together to live, work, and connect. We strive to understand the needs of our tenants and manage our properties to the highest standard. We aspire to develop healthy, resilient communities through our dedication to social, economic, and environmental sustainability. In everything we do, we are guided by a shared set of values grounded in Care, Ownership, Respect and Excellence. For more information, visit Choice Properties' website at www.choicereit.ca and Choice Properties' issuer profile at www.sedarplus.ca.

Cautionary Statements Regarding Forward-looking Statements

This news release contains forward-looking statements relating to Choice Properties' operations and the environment in which the Trust operates, which are based on management's expectations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Therefore, actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. Management undertakes no obligation to publicly update any such statement, to reflect new information or the occurrence of future events or circumstances, except as required by law.

Numerous risks and uncertainties could cause the Trust's actual results to differ materially from those expressed, implied or projected in the forward-looking statements, including those described in Section 12 "Enterprise Risks and Risk Management" of the Trust's MD&A for the year ended December 31, 2023 and those described in the Trust's Annual Information Form for the year ended December 31, 2023.

Contacts

For further information, please contact [e-mail]

Mario Barrafato
Chief Financial Officer
t: [phone] e: [e-mail]