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

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 nine months ended September 30, 2024. The 2024 Third Quarter Report to Unitholders is available in the Investors section of the Trust's website at www.choicereit.ca, and has been filed on SEDAR+ at www.sedarplus.ca.

"We delivered another quarter of strong operational and financial results, driven by increasing demand from retail tenants for our necessity-based neighbourhood centres and strong leasing spreads in our industrial portfolio," said Rael Diamond, President and Chief Executive Officer of the Trust.

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

2024 Third Quarter Highlights

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

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

⁽²⁾ 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.

Summary of GAAP Basis Financial Results

($ thousands except where otherwise indicated) (unaudited)		Three Months												Nine Months
		September 30, 2024				September 30, 2023				Change $				September 30, 2024				September 30, 2023			Change $
Net (loss) income		$	(662,989	)		$	435,903			$	(1,098,892	)		$	(7,479	)		$	1,242,375		$	(1,249,854	)
Net (loss) income per unit diluted			(0.916	)			0.602				(1.518	)			(0.010	)			1.717			(1.727	)
Rental revenue			339,898				325,077				14,821				1,013,244				980,061			33,183
Fair value (loss) gain on Exchangeable Units(i)			(906,351	)			352,250				(1,258,601	)			(467,028	)			823,236			(1,290,264	)
Fair value gains (losses) excluding Exchangeable Units(ii)			136,817				(17,339	)			154,156				108,045				100,392			7,653
Cash flows from operating activities			203,902				149,246				54,656				482,288				434,305			47,983
Weighted average number of units outstanding - diluted(iii)			723,683,222				723,664,818				18,404				723,665,943				723,667,850			(1,907	)

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

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

Year-to-date Results

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

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

The changes described above were partially offset by the reversal of a $38.6 million transaction related provision during the second quarter of 2024 that was determined to be no longer required.

Summary of Proportionate Share⁽¹⁾ Financial Results

As at or for the period ended ($ thousands except where otherwise indicated)		Three Months												Nine Months
		September 30, 2024				September 30, 2023				Change $				September 30, 2024				September 30, 2023				Change $
Rental revenue(i)		$	361,608			$	344,879			$	16,729			$	1,081,268			$	1,042,115			$	39,153
Net Operating Income ("NOI"), cash basis(i)			255,952				244,886				11,066				764,153				732,468				31,685
Same-Asset NOI, cash basis(i)			239,128				232,150				6,978				716,379				693,771				22,608
Adjustment to fair value of investment properties(i)			82,793				26,429				56,364				104,775				204,181				(99,406	)
Occupancy (% of GLA)			97.7	%			97.7	%			-	%			97.7	%			97.7	%			-	%
Funds from operations ("FFO")(i)			186,647				181,013				5,634				558,550				541,494				17,056
FFO(i) per unit diluted			0.258				0.250				0.008				0.772				0.748				0.024
Adjusted funds from operations ("AFFO")(i)			165,876				136,558				29,318				515,622				471,337				44,285
AFFO(i) per unit diluted			0.229				0.189				0.040				0.713				0.651				0.062
AFFO(i) payout ratio - diluted			82.9	%			99.4	%			(16.5	)%			79.8	%			86.1	%			(6.3	)%
Cash distributions declared			137,499				135,684				1,815				411,278				405,846				5,432
Weighted average number of units outstanding - diluted(ii)			723,683,222				723,664,818				18,404				723,665,943				723,667,850				(1,907	)

(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 nine months ended September 30, 2024, Same-Asset NOI, cash basis⁽¹⁾ increased by $7.0 million and $22.6 million, respectively, compared to the prior year primarily due to increased revenue from higher rental rates on renewals, new leasing, contractual rent steps, and higher recoveries in the industrial and retail portfolios. In addition, the nine month period included the reversal of a provision in the industrial portfolio following the resolution of a tenant dispute.

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

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

⁽³⁾ Excess cash held during the current and prior quarters primarily resulted from the investment of proceeds from the issuance of the $500 million Series U senior unsecured debentures completed during the second quarter bearing interest at 5.03%. Proceeds were invested in a GIC earning interest at a higher rate than the debentures at 5.50%. The Trust used the proceeds of the Series U issuance to repay a portion of the $550 million Series K debentures upon maturity during the current quarter.

Outlook

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

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

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

Non-GAAP Financial Measures and Additional Financial Information

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

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

		Three Months												Nine 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		$	339,898			$	21,710			$	361,608			$	1,013,244			$	68,024			$	1,081,268
Property operating costs			(92,893	)			(7,616	)			(100,509	)			(284,193	)			(23,903	)			(308,096	)
			247,005				14,094				261,099				729,051				44,121				773,172
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			17,312				(4,061	)			13,251				42,346				(12,136	)			30,210
Investment income			5,315				-				5,315				15,945				-				15,945
Fee income			1,351				-				1,351				2,677				-				2,677
Net interest expense and other financing charges			(150,410	)			(5,423	)			(155,833	)			(438,898	)			(16,599	)			(455,497	)
General and administrative expenses			(19,008	)			-				(19,008	)			(50,846	)			-				(50,846	)
Share of income from equity accounted joint ventures			5,230				(5,230	)			-				11,318				(11,318	)			-
Amortization of intangible assets			(250	)			-				(250	)			(750	)			-				(750	)
Transaction costs and other related expenses			-				-				-				38,615				-				38,615
Adjustment to fair value of unit-based compensation			(3,339	)			-				(3,339	)			(1,270	)			-				(1,270	)
Adjustment to fair value of Exchangeable Units			(906,351	)			-				(906,351	)			(467,028	)			-				(467,028	)
Adjustment to fair value of investment properties			82,173				620				82,793				108,843				(4,068	)			104,775
Adjustment to fair value of investment in real estate securities			57,983				-				57,983				472				-				472
Loss before Income Taxes			(662,989	)			-				(662,989	)			(7,491	)			-				(7,491	)
Income tax recovery			-				-				-				12				-				12
Net Loss		$	(662,989	)		$	-			$	(662,989	)		$	(7,479	)		$	-			$	(7,479	)

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

		Three Months												Nine 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		$	325,077			$	19,802			$	344,879			$	980,061			$	62,054			$	1,042,115
Property operating costs			(87,229	)			(6,469	)			(93,698	)			(274,674	)			(20,691	)			(295,365	)
			237,848				13,333				251,181				705,387				41,363				746,750
Other Income and Expenses
Interest income			11,147				(2,958	)			8,189				31,443				(10,556	)			20,887
Investment income			5,315				-				5,315				15,945				-				15,945
Fee income			821				-				821				3,162				-				3,162
Net interest expense and other financing charges			(142,292	)			(5,206	)			(147,498	)			(422,774	)			(15,393	)			(438,167	)
General and administrative expenses			(16,420	)			-				(16,420	)			(44,631	)			-				(44,631	)
Share of income from equity accounted joint ventures			4,823				(4,823	)			-				31,000				(31,000	)			-
Amortization of intangible assets			(250	)			-				(250	)			(750	)			-				(750	)
Transaction costs and other related expenses			-				-				-				(34	)			-				(34	)
Adjustment to fair value of unit-based compensation			643				-				643				2,373				-				2,373
Adjustment to fair value of Exchangeable Units			352,250				-				352,250				823,236				-				823,236
Adjustment to fair value of investment properties			26,775				(346	)			26,429				188,595				15,586				204,181
Adjustment to fair value of investment in real estate securities			(44,757	)			-				(44,757	)			(90,576	)			-				(90,576	)
Income before Income Taxes			435,903				-				435,903				1,242,376				-				1,242,376
Income tax expense			-				-				-				(1	)			-				(1	)
Net Income		$	435,903			$	-			$	435,903			$	1,242,375			$	-			$	1,242,375

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:

For the periods ended September 30 ($ thousands)		Three Months												Nine Months
			2024				2023			Change $					2024				2023			Change $
Net (Loss) Income		$	(662,989	)		$	435,903			$	(1,098,892	)		$	(7,479	)		$	1,242,375			$	(1,249,854	)
Residential inventory income			-				-				-				(2,034	)			-				(2,034	)
Interest income			(17,312	)			(11,147	)			(6,165	)			(42,346	)			(31,443	)			(10,903	)
Investment income			(5,315	)			(5,315	)			-				(15,945	)			(15,945	)			-
Fee income			(1,351	)			(821	)			(530	)			(2,677	)			(3,162	)			485
Net interest expense and other financing charges			150,410				142,292				8,118				438,898				422,774				16,124
General and administrative expenses			19,008				16,420				2,588				50,846				44,631				6,215
Share of income from equity accounted joint ventures			(5,230	)			(4,823	)			(407	)			(11,318	)			(31,000	)			19,682
Amortization of intangible assets			250				250				-				750				750				-
Transaction costs and other related expenses			-				-				-				(38,615	)			34				(38,649	)
Adjustment to fair value of unit-based compensation			3,339				(643	)			3,982				1,270				(2,373	)			3,643
Adjustment to fair value of Exchangeable Units			906,351				(352,250	)			1,258,601				467,028				(823,236	)			1,290,264
Adjustment to fair value of investment properties			(82,173	)			(26,775	)			(55,398	)			(108,843	)			(188,595	)			79,752
Adjustment to fair value of investment in real estate securities			(57,983	)			44,757				(102,740	)			(472	)			90,576				(91,048	)
Income tax (recovery) expense			-				-				-				(12	)			1				(13	)
Net Operating Income, Accounting Basis - GAAP			247,005				237,848				9,157				729,051				705,387				23,664
Straight-line rental revenue			346				839				(493	)			1,519				2,716				(1,197	)
Lease surrender revenue			(4,873	)			(6,219	)			1,346				(8,646	)			(14,437	)			5,791
Net Operating Income, Cash Basis - GAAP			242,478				232,468				10,010				721,924				693,666				28,258
Adjustments for equity accounted joint ventures and financial real estate assets			13,474				12,418				1,056				42,229				38,802				3,427
Net Operating Income, Cash Basis - Proportionate Share(1)		$	255,952			$	244,886			$	11,066			$	764,153			$	732,468			$	31,685

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 September 30 ($ thousands)		Three Months												Nine Months
			2024				2023			Change $					2024				2023			Change $
Net Operating Income, Cash Basis - Proportionate Share(1)		$	255,952			$	244,886			$	11,066			$	764,153			$	732,468			$	31,685
Less:
Transactions NOI, Cash Basis			(16,824	)			(12,736	)			(4,088	)			(47,774	)			(38,697	)			(9,077	)
Same-Asset NOI, Cash Basis		$	239,128			$	232,150			$	6,978			$	716,379			$	693,771			$	22,608

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

For the periods ended September 30 ($ thousands except where otherwise indicated)		Three Months												Nine Months
			2024				2023			Change $					2024				2023			Change $
Net (Loss) Income		$	(662,989	)		$	435,903			$	(1,098,892	)		$	(7,479	)		$	1,242,375			$	(1,249,854	)
Add (deduct) impact of the following:
Amortization of intangible assets			250				250				-				750				750				-
Transaction costs and other related expenses			-				-				-				(38,615	)			34				(38,649	)
Adjustment to fair value of unit-based compensation			3,339				(643	)			3,982				1,270				(2,373	)			3,643
Adjustment to fair value of Exchangeable Units			906,351				(352,250	)			1,258,601				467,028				(823,236	)			1,290,264
Adjustment to fair value of investment properties			(82,173	)			(26,775	)			(55,398	)			(108,843	)			(188,595	)			79,752
Adjustment to fair value of investment properties to proportionate share(1)			(620	)			346				(966	)			4,068				(15,586	)			19,654
Adjustment to fair value of investment in real estate securities			(57,983	)			44,757				(102,740	)			(472	)			90,576				(91,048	)
Interest otherwise capitalized for development in equity accounted joint ventures			3,119				2,933				186				8,696				8,787				(91	)
Exchangeable Units distributions			75,199				74,210				989				224,938				221,971				2,967
Internal expenses for leasing			2,154				2,282				(128	)			7,221				6,790				431
Income tax (recovery) expense			-				-				-				(12	)			1				(13	)
Funds from Operations		$	186,647			$	181,013			$	5,634			$	558,550			$	541,494			$	17,056
FFO per unit - diluted		$	0.258			$	0.250			$	0.008			$	0.772			$	0.748			$	0.024
Weighted average number of units outstanding - diluted(i)			723,683,222				723,664,818				18,404				723,665,943				723,667,850				(1,907	)

(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 September 30 ($ thousands except where otherwise indicated)		Three Months												Nine Months
			2024				2023			Change $					2024				2023			Change $
Funds from Operations		$	186,647			$	181,013			$	5,634			$	558,550			$	541,494			$	17,056
Add (deduct) impact of the following:
Internal expenses for leasing			(2,154	)			(2,282	)			128				(7,221	)			(6,790	)			(431	)
Straight-line rental revenue			346				839				(493	)			1,519				2,716				(1,197	)
Straight-line rental revenue adjustment to proportionate share(1)			(620	)			(925	)			305				(1,892	)			(2,359	)			467
Property capital			(11,890	)			(31,513	)			19,623				(18,890	)			(39,025	)			20,135
Direct leasing costs			(2,890	)			(1,681	)			(1,209	)			(6,086	)			(4,265	)			(1,821	)
Tenant improvements			(2,295	)			(8,323	)			6,028				(6,690	)			(18,452	)			11,762
Operating capital expenditures adjustment to proportionate share(1)			(1,268	)			(570	)			(698	)			(3,668	)			(1,982	)			(1,686	)
Adjusted Funds from Operations		$	165,876			$	136,558			$	29,318			$	515,622			$	471,337			$	44,285
AFFO per unit - diluted		$	0.229			$	0.189			$	0.040			$	0.713			$	0.651			$	0.062
AFFO payout ratio - diluted(i)			82.9	%			99.4	%			(16.5	)%			79.8	%			86.1	%			(6.3	)%
Distribution declared per unit		$	0.190			$	0.188			$	0.002			$	0.568			$	0.561			$	0.007
Weighted average number of units outstanding - diluted(ii)			723,683,222				723,664,818				18,404				723,665,943				723,667,850				(1,907	)

(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 Third Quarter Report to Unitholders, which includes the unaudited interim period condensed consolidated financial statements and MD&A for the Trust, and is available at www.choicereit.ca and on SEDAR+ at www.sedarplus.ca.

Conference Call and Webcast

Management will host a conference call on Thursday, November 7, 2024 at 10:00 AM (EDT) with a simultaneous audio webcast. To access via teleconference, please dial [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 are more than a national owner, operator and developer of high-quality commercial and residential real estate. We believe in creating spaces that enhance how our tenants and communities come together to live, work, and connect. This includes our industry leadership in integrating environmental, social and economic sustainability practices into all aspects of our business. In everything we do, we are guided by a shared set of values grounded in Care, Ownership, Respect and Excellence. For more information, visit Choice Properties' website at www.choicereit.ca and Choice Properties' issuer profile at www.sedarplus.ca.

Cautionary Statements Regarding Forward-looking Statements

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

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

Contacts

For further information, please contact [e-mail]

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