Q2 2025 Choice Properties REIT Earnings Call
Rob: My name is Rob and I will be your conference operator today.
Rob: At this time, I would like to welcome everyone to the Choice Properties Real Estate Investment Trust second quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise.
Rob: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you.
Simone Cole: I will now hand the call over to Simone Cole, General Counsel and Secretary. Please go ahead. Thank you.
Good morning. My name is Rob and I will be your conference operator. Today at this time I would like to welcome everyone to the Choice. Properties, Real Estate Investment, trusts second quarter 2025 earnings. Call all lines have been placed on mute to prevent any background noise. After the speakers are marks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question. Again, press star 1. Thank you. I will now hand the call over to Simone Cole, general counsel and secretary. Please go ahead.
Simone Cole: Good morning and welcome to the Choice Properties Q2 2025 conference call. I am joined this morning by Raelle Diamond, President and Chief Executive Officer, Niall Collins, Chief Operating Officer, and Erin Johnston, Chief Financial Officer.
Simone Cole: Thank you. Good morning and welcome to the Choice, Properties, Q2 2025 conference call.
Simone Cole: We'll start the call today by providing a brief recap of our second quarter performance and provide an update on our transaction activity.
I'm joined this morning by rail Diamond press and chief executive officer Nile Collins Chief Operating Officer and Aaron Johnston Chief Financial Officer.
Simone Cole: Niall will discuss our operating results and our development pipeline, and Erin will conclude the call with a review of our financial results before we open the line for Q&A.
Simone Cole: Rails. Start the call today, by providing a brief recap of our second quarter, performance and provide an update on our transaction activity.
Simone Cole: Before we begin today's call, I would like to remind you that by discussing our financial and operating performance, and in responding to your questions, we may make forward-looking statements, including statements regarding choice properties objectives, strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, intentions, outlook, and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not as clear as they may seem. These statements are based on our current estimates and assumptions, and are subject to risks and uncertainties that could cause actual results to differ materially from the conclusions in these forward-looking statements.
Simone Cole: Nia will discuss our operating results and our development Pipeline and Aaron will conclude the call with a review of our financial results. Before we open the line for Q&A,
Simone Cole: Additional information on the material risks that can impact our financial results and estimates and the assumptions that were made in applying and making these statements can be found in the recently filed Q2 2025 Financial Statements and Management Discussion and Analysis, which are available on our website and on CDER Plus.
Simone Cole: Before we begin today's call, I would like to remind you that by discussing our financial and operating performance and in responding to your questions. We may make forward-looking statements, including statements regarding Choice, Properties, objectives, strategies to achieve those objectives as well as statements with respect to Management's beliefs plans, estimates and intentions, Outlook, and similar statements concerning anticipated future events results, circumstances performance or expectations that are not historical facts. These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause actual results to differ. Materially from the conclusions in these forward-looking statements,
Raelle Diamond: And with that, I turn the call over to Rail. Thank you, Simone, and good morning, everyone. Welcome to our Q2 conference call. We are pleased to report another solid quarter, underpinned by robust demand for our gross re-anchored retail and well-located industrial assets. We maintain near full occupancy of 97.8%, driven by the resilience of our necessity-based portfolio that continues to produce steady cash flow growth. This quarter, we delivered 3.9% growth in FFO per unit and achieved exceptional leasing spreads of 24%, underscoring the quality of our assets and our team's ability to drive growth. While the macroeconomic environment has somewhat stabilised since our last update, uncertainty continues to persist.
and on Cedar Plus
Speaker Change: and with that, I turn the call over to rail.
Thank you, Simone and good morning, everyone. Welcome to our Q2 conference call. We are pleased to report another solid quarter underpinned by robust, demand for grocery anchored, retail, and well-located Industrial assets. We maintain near full occupancy of 97.8% driven by the resilience of a necessity based portfolio, that continues to produce steady cash flow growth.
Speaker Change: This quarter, we delivered 3.9% growth in ffo per unit and achieved exceptional. Leasing spreads of 24%, underscoring the quality of our assets and our team's ability to drive growth.
Raelle Diamond: Nonetheless, our ability to deliver steady earnings growth is a testament to the resilience of both our portfolio and our team. Operationally, our portfolio remains sound, evidenced by the strong leasing spreads and healthy same-asset NOI growth. In our retail portfolio, demand remains strong for our well-located necessity-based properties. This quarter, we achieved strong renewal spreads and completed strategic asset management initiatives, which resulted in securing higher paying and stronger covenant tenants at certain assets. The portfolio continues to deliver stable, predictable growth, and this quarter was no exception. Industrial Portfolio is performing well with occupancy increasing 30 basis points to 98% and we delivered strong leasing spreads.
Speaker Change: While the macroeconomic environment has somewhat stabilized. Since our last update on certainty continues to persist
Speaker Change: Nonetheless, our ability to deliver steady earnings growth is a testament to the resilience of both our portfolio and our team operationally, our portfolio remains sound evidenced by the strong, leasing spreads and healthy, same asset, and our growth.
You know retail portfolio it's a man remains strong for a well-located necessity based properties. This quarter we achieved strong renewal spreads and completed, strategic Asset Management initiatives, which resulted in securing higher, paying and stronger, Covenant, tenants at certain assets, the portfolio continues to deliver stable predictable growth in this quarter was no exception.
Raelle Diamond: While new supply has recently come to market, development activity is now slowing across major markets. With successful recent leasing at our properties and expectations of lower supply, both our existing income-producing portfolio and development pipeline remain well positioned for continued growth. From a development perspective, we remain in a strong position. We have 360 acres of land at a low cost base at Choice Caledon Business Park, a strong balance sheet and a proven team ready to execute. We are well positioned to move forward when others simply cannot.
Raelle Diamond: In our mixed-use and residential portfolio, we've observed some softening in residential markets as new supply comes online. Despite this, our assets have maintained solid occupancy and stable rental rates, consistently outperforming their respective sub-markets. We continue to be confident in the quality of our residential product and remain bullish on the long-term fundamentals of residential real estate across major urban markets in Canada. With that, our development team continues to make progress on zoning for our rental residential projects. We're exceptionally pleased to receive city approval this quarter for the next phase of our Forest Parkway project in North York.
Speaker Change: Industrial portfolio is performing well with occupancy, increasing, 30 basis points to 98%. And we delivered, strong leasing spreads while. New supply, has recently come to Market development activities. Now, slowing across major markets with successful recent leasing at our properties, and expectations of lower Supply. Both our existing income income producing portfolio and development pipeline remained. Well, positioned for continued. Growth from a development perspective, we remain in the strong position. We have 360 acres of land at a low cost base at Choice Kalan Business Park, a strong balance sheet, and a proven team, ready to execute. We are well, positioned to move forward when others simply cannot.
Speaker Change: In a mixed use and residential portfolio. We reserve observed, some softening in residential markets and new Supply comes online. Despite this our assets have maintained, solid occupancy and stable, rental rates. Consistently outperforming their respective sub markets. We continue to be confident in the quality of our residential product and remain bullish on the long-term. Fundamentals of residential. Real estate across major Urban markets in Canada with that our development team continues to make progress on Zoning for rental residential projects for exceptionally pleased to receive City approval this quarter for the next phase of our Forest Parkway project in North York.
Raelle Diamond: Turning to our transaction activity in the quarter, in Q2, we continue to advance our capital recycling program, completing approximately $427 million in total real estate transactions. This includes $351 million of industrial and mixed-use acquisitions and $76 million of non-core asset dispositions, further enhancing the quality of our portfolio. As we discussed on our last conference call, we completed the acquisition of approximately $345 million of industrial assets. This included A $1.1 million square foot industrial distribution asset that we acquired from Loblaw for approximately $183 million, which was concurrently leased back to them for 10 years with 2% annual rent increases.
Speaker Change: Turning to our transaction activity. In the quarter in Q2, we continue to advance our Capital recycling program, completing approximately 427 million in total. Real estate transactions, this include 351 million of industrial and maxed use the Acquisitions and 76 million of non-core asset dispositions further. Enhancing the quality of our portfolio.
Speaker Change: as we discussed on our last conference call, we completed the acquisition of approximately 345 million of industrial assets, this included,
Raelle Diamond: This transaction highlights the benefit of our strategic relationship with Loblaw. We also purchased a portfolio of eight industrial outdoor storage sites for approximately $162 million, totaling approximately 140 acres of land across core Canadian industrial markets, which we believe is a perfect complement to our existing industrial portfolio strategy. Finally in the quarter, we also acquired a 50% interest in 555 Yonge Street in downtown Toronto for $6 million. The 3,400 square foot retail property is adjacent to our JV at 543 Yonge Street and positions us to unlock future density potential in a stronger market environment. On the disposition front, we capitalize on strong market conditions.
Speaker Change: A 1.1 million square foot. Industrial distribution asset that we acquired from Loblaw for approximately 183 million, which was concurrently least back to them for 10 years with 2% annual, rent increases. This transaction highlights the benefit of our strategic relationship with love law.
Speaker Change: We also purchased a portfolio of 18, industrial outdoor storage sites for approximately 162 million totaling approximately 140 acres of land across core. Canadian industrial markets, which we believe is a perfect complement to existing industrial portfolio and strategy.
Finally, in the quarter we also provide a 50% interest in 5555 Young Street in downtown. Toronto for 6 million, the 3,400 square foot. Retail property is adjacent to our JV at 543 Yonge Street and positions us to unlock Future density, potential in a stronger Market environment.
Raelle Diamond: to achieve Attractive pricing on a disposition of a non-small bay industrial portfolio in Calgary for $73 million, which was well above our IFRS value. The portfolio totalling approximately 497,000 square feet across nine sites in the Foothills sub-market of Calgary was management-intensive and not aligned with our broad industrial strategy. With the strength of our portfolio and Fortress Downsheet, we're well positioned in any economic environment and continue to take advantage of opportunities as they arise. Looking ahead to the second half of the year, we remain firmly on track to achieve our outlook, which Erin will speak to later.
Speaker Change: On a disposition. Front, we capitalize on strong market conditions.
Speaker Change: To achieve.
Speaker Change: 4 small Bay National portfolio in Calgary for 73 million which was well above, our is value, the portfolio. Totaling approximately 497,000 Square ft across 9 sites in the foothill. Submarket of Calgary was management intensive and not aligned with our broad industrial strategy.
Speaker Change: With the strength of our portfolio and Fortress balance sheet, we're well positioned in any economic environment and continue to take advantage of opportunities as they arise looking ahead.
Niall Collins: With that, I'll pass the call over to Niall to discuss our operational results in more detail. Thank you, Rael. Good morning, everyone. As Rael mentioned, our portfolio delivered solid operational results in the second quarter, and we continue to see strong demand and leasing spreads across our property type. Portfolio occupancy remains strong, ending the quarter at 97.8%. This is a 10 basis point increase compared to the prior quarter. During the quarter we had approximately 838,000 square feet of lease expiry. We renewed 582,000 square feet, achieving approximately 70% tenant retention. Our tenant retention was largely impacted by strategic lease terminations, which I will speak about in a moment.
To the second half of the year. We remain firmly on track to achieve our Outlook which Aeron will speak to later with that, I'll pass the call over to Nile to discuss our operational results in more detail now.
Thank you, Ray and good morning everyone as well. Mentioned our portfolio delivered solid operational results in the second quarter and we continue to see strong demand and leasing spreads across our Pro. Our property types
Portfolio occupancy, remains strong, ending the quarter at 97.8%. This is a 10, uh, 10 basis point increase. Compared to the prior quarter during the quarter, we had approximately 838,000 square feet of at least expiry.
Niall Collins: overall spread renewal portfolio renewals were completed at a very healthy average rental rate spread of 24%. We also completed 321,000 square feet of new lease. providing a positive absorption of 65,000 square feet, which was largely driven by our Ontario and Alberta industrial portfolio. Turning to each of our asset classes, in our necessity-based retail portfolio, occupancy was unchanged at 97.8%. During the quarter, 337,000 square feet of leases expired. We renewed 251,000 square feet for a 75% tenant retention. Our retail retention rate was impacted by two strategic lease terminations in Ontario and Alberta, totalling approximately 50,000 square feet of non-core tenants.
Speaker Change: We renewed 582,000 square feet, achieving approximately 70% tenant retention. Our tenant retention was largely impacted by strategic lease terminations, which I would speak about in a moment.
Speaker Change: overall spread renewal portfolio renewals, were completed at a very healthy average rental rate spread of 24%,
Speaker Change: we also completed 321,000 Square ft of new Leasing
Speaker Change: Providing a positive absorption of 65,000, square feet, which was largely driven by our Ontario and Alberta industrial portfolios.
Speaker Change: Turning to each of our asset classes in our necessity based retail portfolio. Occupancy was unchanged at 97.8%.
Speaker Change: During the quarter 337,000 square feet of leases expired. We were new 251,000 square feet for a 75% tenant retention rate.
Niall Collins: These terminations enabled us to release the space to more portfolio-focused, long-term tenants at higher rents, including Staples, Shoppers Drug Mart and No Frills. Excluding the strategic de-leasing, our retention rate in the quarter would have been 89%. These renewal spreads averaged 13.2% above expiring rents with broad-based strength across all our regions and categories. We also completed 78,000 square feet of new retail leasing the quarter, where average rents over the lease term are 58% higher than our average in This largely offsets the 86,000 square feet of expires that did not renew. Currently, 68% of the vacancies will be backfilled this year with rents meaningfully higher than our average in the past.
Speaker Change: Our retail retention rate was impacted by 2, strategic lease terminations in Ontario and Alberta totaling approximately 50,000 square feet of non-core tenants. These terminations enabled us to release the space to more portfolio focused. Long-term tenants at higher rents, including Staples Shoppers Drug Mart and no thrills
Speaker Change: Excluding the Strategic deleting or retention rate in the quarter. Would have been 89%.
Speaker Change: These renewal spreads average 13.2% above expiring rents with broad-based strength across all our regions and categories.
We also completed 78,000 square feet of new retail. Leasing in the quarter where average rents over the lease term are 8058 percent higher than our average intake rents.
Speaker Change: This largely offsets the 86,000 square ft of expires. That did not reduce in the quarter.
Niall Collins: Our team is also confident in the Turn your attention to 2026 for a moment. We have 41 Loblaw locations. all of which are retail locations, both in 2.6 million We are pleased to announce that we renewed 39 of these locations, totaling 2.5 million square feet at a five-year wait at our. The basic rent for these renewals increased on an average by 8.6% over expiring rent. Two leases that were not renewed represent smaller locations and were expected. but only with one store already dark and the other slated to close. Overall, these Loblaw renewals represent 58% of our 2026 retail expiry and will continue to provide steady cash flow growth.
Currently 68% of the vacancies will be backfilled this year with rents meaningfully higher than our average in place rents.
Speaker Change: Our team is also confident in releasing activity on the remaining space.
Speaker Change: Turning your attention to 2026. For a moment, we have 41, Loblaw locations, up for Renewal, all of which are retail locations Spokane, 2.6 million square feet. We are pleased to announce that we renewed 39 of these locations, totaling 2.5 million square feet out of 5-year weighted average terms.
Speaker Change: The basic rent for these renewals increased on an average by 8.6% over expiring. Rent the 2 leases that were not renewed, represent smaller locations, and were expected but only with 1 store, already dark, and the other is slated to close.
Niall Collins: Turning to our industrial portfolio, occupancy increased by 30 basis points from the last quarter to 19. This quarter, we had 501,000 square feet expiry primarily in Alberta and our Alberta portfolio and renewed 331,000 square feet for 66% retention. The retention rate in the quarter was largely the result of one property whereby a tenant vacated the space, but was immediately released to an adjacent tenant at higher rents, ensuring no downtime and an increase in cash flow for the property. Excluding this, the retention rate in our industrial portfolio would have been 91%. Lease rate renewals were exceptionally strong, averaging 38.9% above expiry.
Speaker Change: overall, these Loblaw renewals represent 58% of our 2026 retail expiries and will continue to provide steady cash flow growth for the re
Speaker Change: turning to our industrial portfolio occupancy. Increased by 30 basis points from the last quarter to 98%.
Speaker Change: This quarter, we had 501,000 Square ft of expiries primarily in Alberta and our Alberta portfolio and renewed 331,000 square feet for a 66%, retention rate.
Speaker Change: The retention rate in the quarter was largely. The result of 1 property whereby a tenant vacated the space, but was immediately released to an adjacent tenant at higher rents ensuring no downtime and an increase in cash flow for the property.
Speaker Change: Excluding this, the retention rate and our industrial portfolio would have been 9 to 1,000.
Niall Collins: Prolumnery drew to strong leasing in the Ontario portfolio where we had 82,000 square feet of expiry to renew at an average rent sprint of 78%. We also completed 237,000 square feet of new lease. Looking ahead, we still expect industrial portfolio occupancy to improve over the balance of the year. end of the year to be above 98% due to strong tenant retention at vacant space. Lastly, our mixed use and residential portfolio continues to perform well with occupancy at 95.4%, which is up 50 basis points from the last quarter and increased 130 basis points year-over-year.
Lease rate renewals, were exceptionally strong, averaging 38.9% above expiry, for primary due to strong leasing in the Ontario portfolio where we had 82,000 square feet of expiries Renew at an average rent spread of 78%. We also completed 237,000 square feet of new leasing in the quarter.
Speaker Change: ahead, we still expect industrial portfolio occupancy to improve over the balance of the year and end of the year to be above 98% due to strong, tenant retention and vacant space being released
Niall Collins: Turning to our developments, our team continues to deliver on our development pipeline. During the quarter, we completed four retail intensifications totaling 30,900 square feet at a blended yield of 7.6%. Included in these intensifications was a Shoppers Drug Mart at Elmsdale, Nova Scotia, totaling 17,000 square feet at a yield of 7%. You have an additional eight Shoppers Drug Mart intensifications in our active development pipeline and three in plan. CRU in Edmonton totaling 7,000 square feet at a 50% share delivering out a yield of 7.3%. And finally, two ground lease properties in Manitoba and Alberta, totaling 6,900 square feet at a yield of 11.9% and 8.7% respectively.
Speaker Change: Lastly, our mixed use and residential portfolio continues to perform. Well, with occupancy at 95.4% which is up 50 basis points from the last quarter and increased 130 basis points year-over-year.
Speaker Change: To our developments, our team continues to deliver on our development pipeline.
Speaker Change: During the quarter, we completed 4 retail intensification totaling 30,900 Square ft at a blended yield of 7.6%.
Speaker Change: Including these intensification was a sharper stroke Market at Elmsdale Nova Scotia totaling 17,000 square feet at a yield of 7%.
Speaker Change: We have an additional 8, Shoppers Drug Market intensification that are active development Pipeline and 3 in planning,
Niall Collins: These leases are with tenants in the automotive services and QSR sectors that are looking to expand their retail locations. The ground lease intensifications completed this year have been a great example of our team extracting value and incrementing cash flow from our retail site.
Speaker Change: A Cru in Edmonton totaling 7,000 square feet out of 50% share, delivering at a yield of 7.3%. And finally 2, ground leases properties in Manitoba and Alberta totaling 6. 6,900 square feet at a yield of 11.9 and 8.7% respectively.
Niall Collins: Looking ahead to the second half of the year, our major major active development continues to be in our industrial pipeline at Callaghan Business Park. Construction of the first phase of building H, representing 530,000 square feet in share remains on schedule with NLS expected to take possession September. tenant lease also includes an expansion option to 830,000 square feet that will expire in the first half of 2027. Overall, our active development pipeline totals 18 projects of approximately 1.1 million square feet at an average forecasted yield of 6.7%. Our development pipeline continues to be a reliable source of long-term cash flow and now growth for our portfolio.
Speaker Change: These leases are with tenants in the automotive services and qsr sectors that are looking to expand their retail locations. The ground lease intensification is completed this year have been a great example of our team. Extracting value and incremental cash flow from our retail sites.
Speaker Change: Looking ahead to the second half of the Year, our major major active development, continues to be in our Industrial Pipeline, a talent and business part.
Construction of the first phase of building h representing 530,000 Square ft a share remains on schedule with NLS expected to take possession. September.
Speaker Change: The 10th and also release also includes an expansion option to 830,000 square feet that it will expire in the first half of 2027.
Speaker Change: Overall our active development pipeline, totals 18 projects of approximately 1.1, million square feet at an average forecasted yield of 6.7%.
Erin Johnston: I will now pass the call over to Erin to discuss our financial Thank you, Niall, and good morning, everyone. Once again, we are pleased with our financial performance for the second quarter. Our portfolio remains operationally strong, which continues to translate into consistent same-asset NOI and FFO growth in line with our expectations. A reported funds from operations for the second quarter was $191.6 million or $0.265 on a per unit diluted basis, reflecting an increase of 3.9% compared to the second quarter of 2024. We had minimal non-recurring items in the quarter. As a reminder, we had approximately 400,000 of net non-recurring items in Q2 2024, including 3.3 million of non-recurring G&A expenses related to outsourcing, partially offset by 2.9 million of lease surrender revenue and bad debt provision reversals.
Our development pipeline continues to be a reliable source of long-term, cash flow. And Now growth for our portfolio, I'll now pass the call over to her and to discuss her financial performance.
Speaker Change: Thank you Nile and good morning everyone.
Speaker Change: Once again, we are pleased with our financial performance for the second quarter.
Speaker Change: Our portfolio remains operationally strong, which continues to translate into consistent. Same asset, noi and foe growth in line with our expectations.
Speaker Change: A reported funds from operations for the second quarter was 191.6. Million or 26.5 cents on a per unit diluted basis, reflecting an increase of 3.9% compared to the second quarter of 2024.
Erin Johnston: Normalizing for these non-recurring items, FFO per unit growth was approximately 3.5%. This increase was primarily due to higher same-asset cash NOI and net contributions from development transfers and net acquisition activity over the last year, partially offset by higher net interest expense. Turning to our properties, same asset cash NOI increased by $3.4 million or 1.4% compared to the second quarter of 2024, driven by higher rental rates and strong leasing activity. Excluding bad debt expense primarily due to a prior reversal in the industrial portfolio, total same asset cash NOI growth would have been approximately 2%. By Asset Class, Retail Same Asset Cash NOI increased by $3.2 million, or 1.7%.
Speaker Change: We had minimal non-recurring items in the quarter as a reminder. We had approximately 400,000 of net, non-recurring items in Q2 2024, including 3.3 million of non-recurring, G&A expenses, related to Outsourcing partially offset by 2.9 Million of lease surrender, revenue and bad debt provision reversals.
Speaker Change: Normalizing for these non-recurring items. Ffo per unit growth was approximately 3.5%. This increase was primarily due to higher same asset cash and a y and net contributions from development transfers and net acquisition activity over the last year, partially offset by higher net. Interest expense.
Speaker Change: Returning to our properties, same asset cash and a y increase by 3.4 million, or 1.4%, compared to the second quarter of 2024 driven by higher rental rates and strong leasing activity.
Speaker Change: Excluding bad debt expense primarily due to a prior to reversal in the industrial portfolio. Total same as a cash and a w. Grow would have been approximately 2%.
Erin Johnston: The increase was driven primarily by lower interest on capital recoveries and higher base rents from renewals, new leasing, and contractual rent steps. Industrial same asset cash on a Y increased by approximately $87,000 or 0.2%. Industrial year-over-year growth was impacted by $1.7 million bad debt provision reversal in the prior year. Excluding bad debt expense, same asset cash ROI would have been 4.2% driven by higher base rents from renewals, new leasing activity and rent Mixed use and residential same asset cash NOI increased by approximately $167,000 or 1.6%. This increase was primarily due to higher revenues and lower expenses at certain of our residential properties.
By asset class retail same asset cache on a y increase by 3.2 million or 1.7%. The increase was driven primarily by lower interest on Capital, recoveries and higher base rents from renewals new Leasing and contractual rent steps.
Speaker Change: Industrial same asset cache on a y increase by Approximately 80% or 0.2% industrial year-over-year growth was impacted by 1.7 million, bad debt provision reversal in the prior year.
Speaker Change: Excluding, bad debt. Expense same asset cash. And a, why would have been 4.2% driven by higher base rents from renewals new, leasing activity and rest steps?
Speaker Change: Mixed use and residentials. Same asset cash noi increased by approximately 167,000 or 1.6% this increase was primarily due to higher revenues and lower expenses at certain of our Residential Properties.
Erin Johnston: Our IFRS NAV for the quarter was $14.38 per unit, an increase of $148 million, or 1.5% over the last quarter. Our NAV growth was driven by a net contribution from operations of $48 million, a net fair value gain on our investment properties of $91 million, and a fair value gain on our investment in the units of allied properties of $9 million. As a reminder, we are required under IFRS to mark to market this investment to its trading price at each period end. Our fair value gain on investment properties in the quarter was primarily driven by our retail segment and included a fair value gain related to the 2026 Loblaw lease renewals Niall mentioned.
Speaker Change: now, for the quarter was 14.38 per unit, an increase of 148 million or 1.5% over the last quarter,
Speaker Change: Our Nas growth was driven by a net contribution, from operations of 48 million and that's your value gain on our investment properties of 91 million and a fair value. Gain on your investment. In the units of Allied properties of 9 million. As a reminder, we are required under IRS to Mark to Market this investment to, which trading price at each period end.
Erin Johnston: and Modest Caprite Expand Compression in our Ontario Retail Portfolio, reflecting the continued demand for our grocery-anchored neighbourhood centre. We continue to take a prudent approach to capital management and benefit from the stability provided by our industry-leading balance sheet. This was further supported by DBRS's recent report, placing our BBB High credit rating on positive trend. Once again, we end the quarter in a solid financial position with strong debt metrics and ample liquidity, including approximately $1.3 billion of available credit on our corporate facility and $13.5 billion of unencumbered property. Our debt to EBITDA ratio was 7.2 times, which was 0.2 times higher from last quarter.
Speaker Change: Our Fair Value, gain on investment properties. In the quarter was primarily driven by our retail segment and included, a fair value, gain related to the 2026 lava lease renewals and I mentioned
Speaker Change: and modest cap rate expansion in our Ontario retail portfolio, reflecting the continued demand for our grocery anchored neighborhood centers.
Speaker Change: We continue to take a prudent approach to Capital Management and benefit from the stability provided by our industry-leading balance sheet. This is further supported by dbs's recent report. Placing our Triple B High credit rating on positive trends.
Once again, we end as a quarter and a solid financial position with strong debt metrics and ample liquidity, including approximately 1.3 billion of available credit on our corporate facility and 13.5 billion of unencumbered properties.
Erin Johnston: This increase was primarily due to our net acquisition activity in the quarter. Normalizing for a full year of income from our second quarter acquisitions, our debt to EBITDA ratio would have remained in line with the prior quarter at seven times. We had no major financing activities in the quarter, and looking ahead to the second half of the year, we had our $200 million series of unsecured debenture maturity in November, and approximately $167 million of mortgages and construction loans maturing that we are well-prepared to handle. Overall, we are very pleased having another solid quarter and a strong first half of 2025.
Speaker Change: I'd like to able to ratio with 7.2 times which was 0.2 times higher from last quarter. This increase was primarily due to our net acquisition activity in the quarter, normalizing for a full year of income from our second quarter, Acquisitions our debt to even a ratio would have remained in line with the prior quarter at 7 times.
Speaker Change: We had no major financing activities in the quarter and looking ahead to the second half of the year. We have our 200 million series of unsecured debenture. Maturity in November and approximately 100607 million of mortgages and construction loans. Maturing that we are well prepared to handle
Erin Johnston: Looking ahead to the second half of 2025, we continue to have conviction in our ability to deliver on our operational and financial goals, supported by the strength of our balance sheet and our business, and are confident in our ability to deliver on our 2025 outlook.
Speaker Change: Overall, we are very pleased, having another solid quarter and a strong first half of 2025.
Simone Cole: With that, Raelle, Niall, and I would be glad to answer your question. At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.
Speaker Change: Looking ahead to the second half of 25, we continue to have conviction and our ability to deliver on our operational and financial goals supported by the strength of our business sheet, our balance sheet, and our business, and our confident in our ability to deliver on our 2025 Outlook.
With that rail nylon, I would be glad to answer your questions.
Speaker Change: At this time, I would like to remind everyone in order to ask a question. Press star, then the number 1 on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
Lorne Kalmar: And your first question comes from a line of Lorne Kalmar from Desjardins Capital Markets. Your line is open. Thanks very much. And good morning, everybody. Congrats on another solid result here. First up on the retail leasing spreads continue to be very solid. I was just wondering, you know, given all the volatility and backs and forth, have you seen any changes in the leasing environment over the past few months? No, as I mentioned, Lorne, it's been very steady. Across all of the categories across all of our geography, we haven't seen any blips or anything to be of a concern.
Speaker Change: And your first question comes from a line of Lauren kalmar from desjarden Capital markets, your line is open.
Lauren Kalmar: Thanks very much. And good morning everybody. Congrats on another, uh, solid result here. Um, first up on the retail, leasing spreads continue to be very solid. I was just wondering, you know, given all the volatility and and backs and forth. Have you seen any changes in the leasing environment over the past few months?
No. As as I mentioned Lauren it's been very steady um across all of the categories across all of our geography we haven't seen any Blitz or anything to be of a concern of
Lorne Kalmar: Okay, so fair to assume that you guys can continue to sort of deliver this level of, you know, granted, there'll be some ups and downs quarter to quarter, but this is this level of leasing spreads for the foreseeable future.
Lauren Kalmar: Okay, so fair to assume that you guys can continue to sort of deliver this level of, you know, Grant ability some ups and downs quarter quarter. But this is this level of uh leasing spreads for the foreseeable future.
Niall Collins: Well, as we kind of go into the second half of this year, we're very focused on increasing our occupancy, as I talked about. And we may not perform at the same level of spreads, they may come down a little bit, but we're really focused on occupancy. And can you maybe elaborate on, you know, why you would, why, what was behind the decision to focus on occupancy over rent spreads? Well, we did some strategic de-leasing, which helped us get some boost in rents. And as we focus for the rest of the year, a lot of it is already committed to, so there's very little speculative leasing.
Lauren Kalmar: Well, as we kind of go into the second half of this year, we're very focused on increasing our occupancy. As I talked about and we may not perform at the same level of spreads that may come down a little bit but we're really focused on occupancy.
Speaker Change: and can you maybe elaborate on on, you know why you would why what was behind the decision to focus on occupancy over rent spreads
Niall Collins: Okay, Lorne, just to give a little bit more color on the back end of the year, some of that strategic leasing that Niall is speaking of is actually the team leasing up Chronically Vacant Space, which is improving our occupancy. And when he says its spreads may not be as strong, it's not a trend we see in the market, it would just be specific to a one-off deal that's renewing. Okay, that's, that's fair. Okay.
Speaker Change: Well we we did some strategic dealing which helped us get some boost in in rents and as we focus to the rest of the year. Um a lot of it is already um committed to so there's very little speculative Leasing
Lauren Kalmar: Okay, fair enough, Loren just to give a little bit more color on the back. End of the year, some of that strategic leasing that Miles. Speaking of is, speaking of is actually the team leasing up chronically vacant space which is improving our occupancy and when he says it spreads may not be as strong. It's not a trend. We see in the market. It would just be specific to a 1-off deal. That's renewing.
Speaker Change: Oh, okay. That's
Lorne Kalmar: And then maybe another one just on the two law ball leases that weren't renewed in that tranche of 41.
Niall Collins: Could you maybe give us a little color on on why and what the plans for the space are? Well, one of them is already dark. And the other one, it We know it's a store that's going to close and we're focused on plans right now about how we're going to backfill that. These are both tiny assets, and the one that was closed, we decided to hold on to the asset to collect the cash flow so it wasn't discounted, and then we'll sell it likely vacant. The other one, as well, we're going to think about how to proceed, but again, these are tiny, tiny assets and not surprising to us.
Speaker Change: That's fair. Okay. Um, and then maybe another 1 just on the 2 lb ball, leases that weren't renewed in that tranche of 41. Could you maybe give us a little color on on why? And what the plans for the space are
Speaker Change: well, 1 of them is already dark and the other, um, well, it
Speaker Change: These are both tiny assets.
Lorne Kalmar: Okay, so not really overly material.
Speaker Change: And um, you know, and the 1 that was closed with, you know, we decided to hold on to the asset to collect the cash flow so it wasn't discounted and then we'll sell it like eBay and the other 1. Um, you know, as well we we're going to think about how to proceed. But again, these are tiny, tiny assets and, and not surprising to us.
Lorne Kalmar: Okay, thank you so much for the call.
Simone Cole: I will turn it.
Okay, so not not really over the material. Um okay, thank you so much for the call. I will turn it back.
Simone Cole: Again, if you'd like to ask a question, press star 1 on your telephone keypad.
Linda Wang: Your next question comes from a line of Linda Wang from TD Securities. Your line is open. Hi, everyone.
Speaker Change: Again, if you like to ask a question press star 1 on your telephone keypad, your next question comes from a line of Linda Wong from TD, Securities. Your line is open.
Linda Wang: So I'm signing in for Sam Damiani. My first question is with regards to developments, sorry, next developments. I was wondering if you can provide some details on timing, what is required to activate and expected yield?
Hi everyone. Um, so I'm sending in for Sam Yanni. Um, my first question is with regards to developments, um, with sorry next developments. Um, I was wondering if you can provide some details on timing. What is, uh, required to activate and expected yields
Niall Collins: Hi, Lorne. As I mentioned, on our industrial portfolio, we're very focused on expanding our building cage with NLS and we're working with them proactively. But we're also continuing to service that site and prepare it for new opportunities, which we've been responding to a lot of RFPs recently. So on the industrial side, it's quite active. Retail, as I mentioned, we have 18 projects that are in development over the next two, two and a half years. And then residentially, we have a number of zone projects that we're advancing the design and very focused on how we're going to bring them forward in a timely way to take advantage of where the market is.
Um, hi Lauren. As I mentioned honor industrial portfolio. We're very focused on expanding our building cage with NLS and we're working with them proactively but we're also continue to service that site and you know prepare it for um New Opportunities which we've been responding to a lot of rfps recently so on and the industrial side is quite active. Um retail as I mentioned we have 18 projects um that are in development over the next uh 2 2 and a half years and then residentially we have a number of Zone projects that we're
Linda Wang: In terms of yields, they're generally going to correspond to the types of yields we've had to date. Okay, thank you.
Speaker Change: Ing the design and very focused on how we're going to bring them forward in a timely way to take advantage of where the market is. In terms of yields, they're generally going to correspond to the types of yields. We've had to date
Linda Wang: And then my other question is, I was wondering if you can share your initial thoughts on leasing and SPNOI for 2020. And that's guidance that we'll provide on our Q4 conference call. Okay, thank you. I'll turn it back.
Speaker Change: Okay, thank you. Um and then my other question is was wondering if you can share um your initial thoughts on uh leading, sorry, Leasing and um, SP analyzed for 2026.
Hi. Linda, that's guidance that will provide on our Q4 conference call.
Speaker Change: Okay, thank you. I'll turn it back.
Simone Cole: And that concludes our question and answer session.
Raelle Diamond: I will now turn the call back over to Rail Diamond CEO for closing remarks. Thank you, Rob. As I mentioned at the onset of our call, our team remains focused and on track to achieving our 2025 objectives.
And that concludes our question and answer session. I will now turn the call back over to rail Diamond CEO for closing remarks.
Raelle Diamond: Thank you for your interest in Choice Properties and for joining us this morning. We look forward to providing you with another update on the business this fall. Have a great weekend, all. This concludes today's conference call. You may now disconnect.
Speaker Change: Thank you, rob. As I mentioned at the onset of our call, um, our team remains focused and on track to achieving our 2025 objectives. Thank you for your interest in Choice, Properties. And for joining us this morning, we look forward to providing you with another update on the business. This fall have a great weekend, all
this concludes today's conference call, you may now disconnect
Rob: Please wait, the conference will begin shortly.
Speaker Change: Please wait the conference will begin shortly.