Q4 2025 Choice Properties Real Estate Investment Trust Earnings Call

February 19, 2026

Speaker #2: At this time, I would like to welcome everyone to the Choice Properties Real Estate Investment Trust fourth quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise.

Speaker #2: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, followed by the number one on your telephone keypad.

Speaker #2: If you would like to withdraw your question, again, press the star one. Thank you. I would now like to turn the call over to Simone Cole, General Counsel and Secretary.

Speaker #2: Please go ahead. Thank you. Good morning and welcome to Choice Properties Q4, 2025 conference call. I am joined this morning by Rael Diamond, President and Chief Executive Officer; Erin Johnston, Chief Financial Officer; David Nualem, Senior Vice President, Leasing and Operations; and Niall Collins, Executive Vice President, Development and Construction.

Simone Cole: Thank you. Good morning, and welcome to Choice Properties Q4 2025 conference call. I am joined this morning by Rael Diamond, President and Chief Executive Officer, Erin Johnston, Chief Financial Officer, David Mualem, Senior Vice President, Leasing and Operations, and Niall Collins, Executive Vice President, Development and Construction. Rael and Erin will provide a recap on our fourth quarter operational results and annual highlights before we open the lines for Q&A, where Niall and David will join to answer your questions. 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,...

Speaker #2: Rael and Erin will provide a recap on our fourth quarter operational results and annual highlights before we open the lines for Q&A, where Niall and David will join to answer your questions.

Speaker #2: 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 exceptions that are not historical facts.

Simone Cole: 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 exceptions 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. Additional information on the material risks that can impact our financial results and estimates, and the assumptions that we are made in applying and making these statements, can be found in the recently filed Q4 2025 financial statements and management discussion and analysis, which are available on our website and on SEDAR+. With that, I turn the call over to Rael.

Speaker #2: 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.

Speaker #2: Additional information on the material risks that can impact our financial results and estimates and the assumptions that we are made in applying and making these statements can be found in the recently filed Q4, 2025 financial statements and management discussion and analysis.

Speaker #2: Which are available on our website and on Cedar Plus. And with that, I turn the call over to Rael.

Speaker #3: Thank you, Simone, and good morning, everyone. Welcome to our Q4 conference call. Before I begin my comments, I want to provide an exciting update on our team.

Rael Diamond: Thank you, Simone, and good morning, everyone. Welcome to our Q4 conference call. Before I begin my comments, I want to provide an exciting update on our team. I'm pleased to share that David Mualem has returned to Choice Properties as SVP Leasing and Operations. David brings exceptional experience back to Choice from his time at Loblaw, overseeing their real estate leasing and new store development. Previous to that, David spent a decade with our organization, and we're very excited to welcome him back. With David's return, Niall Collins is transitioning back to his primary role of EVP, Development and Construction, where he will be focused on delivering a robust development pipeline. I want to thank Niall for his leadership and the stability he provided, leading both our operational and development teams over the past two years.

Speaker #3: I'm pleased to share that David Nualem has returned to Choice Properties as SVP Leasing and Operations. David brings exceptional experience back to Choice from his time at Lovlaw overseeing their real estate leasing and new store development.

Speaker #3: Previous to that, David spent a decade with our organization and we are very excited to welcome him back. With David's return, Niall Collins is transitioning back to his primary role of EVP Development and Construction, where he will be focused on delivering a robust development pipeline.

Speaker #3: I want to thank Niall for his leadership and the stability he provided leading both our operational and development teams over the past two years.

Speaker #3: This transition underscores the depth of our leadership team as we continue to execute on our strategy for unitholders. With that, I'll now focus on our results.

Rael Diamond: This transition underscores the depth of our leadership team as we continue to execute on our strategy for unitholders. With that, I'll now focus on our results. We are pleased to deliver another strong year of operational and financial results as our team continues to execute on our strategic priorities. Our full year performance in 2025 demonstrated the strength of our necessity-based retail portfolio, our well-located industrial portfolio, and our ability to create value through development. Together, these factors enabled us to once again meet our earnings outlook, delivering same-asset cash NOI growth of 2.2% and FFO per unit growth of 3.6%. We completed this while further strengthening our industry-leading balance sheet, ending the year with leverage at 7.0 times.

Speaker #3: We are pleased to deliver another strong year of operational and financial results as our team continues to execute on our strategic priorities. A full year performance in 2025 demonstrated the strength of our necessity-based retail portfolio, a well-located industrial portfolio, and our ability to create value through development.

Speaker #3: Together, these factors enabled us to once again meet our earnings outlook, delivering same asset cash NOR growth of 2.2% and FFO per unit growth of 3.6%.

Speaker #3: We completed this while further strengthening our industry-leading balance sheet ending the year with leverage at 7.0 times. During the year, we remained extremely active in our capital recycling, completing 801 million of real estate transactions.

Rael Diamond: During the year, we remained extremely active in our capital recycling, completing CAD 801 million of real estate transactions. This included CAD 460 million of acquisitions and CAD 341 million of dispositions for net acquisition activity of CAD 119 million. We also continued to create value through our development, transferring 17 new commercial projects totaling 836,000 sq ft. These projects were completed at an average yield of 7.4% and resulted in CAD 47 million of value creation. Given the strength and stability of our business and our strong performance in 2025, our board of trustees has approved our fourth consecutive distribution increase, effective March 2026. This increase reflects our ongoing commitment to returning capital to unitholders. Turning now to our Q4 results.

Speaker #3: This included 460 million of acquisitions, and 341 million of dispositions for net acquisition activity of 119 million. We also continued to create value through our development, transferring 17 new commercial projects totaling 836,000 square feet, these projects were completed at an average yield of 7.4% and resulted in 47 million of value creation.

Speaker #3: Given the strength and stability of our business, and our strong performance in 2025, our board of trustees has approved our fourth consecutive distribution increase, effective March 2026.

Speaker #3: This increase reflects our ongoing commitment to returning capital to unit holders. Turning now to our fourth quarter results. The momentum in our business continued, and we've finished the year in a solid position.

Rael Diamond: The momentum in our business continued, and we've finished the year in a solid position. Our portfolio occupancy increased 20 basis points to 98.2% in Q4, primarily due to new leasing in our industrial portfolio, combined with favorable renewal spreads of approximately 22%. This drove healthy Same-Asset NOI growth of 2.4%. Our leasing spreads in the quarter were completed on 1.6 million sq ft, representing very strong retention rate of 92.4%. We also completed 233,000 sq ft of new leasing, highlighted by positive absorption in Ontario retail and Alberta industrial portfolios. In retail, we continue to see robust demand for necessity-based centers nationwide. In the quarter, we completed 596,000 sq ft of renewals and 89,000 sq ft of new leasing.

Speaker #3: Our portfolio occupancy increased 20 basis points to 98.2% in the fourth quarter, primarily due to new leasing and our industrial portfolio. Combined with favorable renewal spreads of approximately 22%, this drove healthy, same asset NOR growth of 2.4%.

Speaker #3: Our leasing spreads in the quarter were completed on 1.6 million square feet, representing very strong retention rates, of 92.4%. We also completed 233,000 square feet of new leasing, highlighted by positive absorption in Ontario retail and Alberta industrial portfolios.

Speaker #3: In retail, we continue to see robust demand for necessity-based sensors nationwide. In the quarter, we completed 596,000 square feet of renewals, and 89,000 square feet of new leasing.

Speaker #3: This drove our retail occupancy up 20 basis points, ending the year at 98%. Renewal activity was particularly strong, with leasing spreads of 16.8%, led by Atlantic and Quebec regions, and tenants in the Dollar Store, Liquor, and Office Supplies categories.

Rael Diamond: This drove our retail occupancy up 20 basis points, ending the year at 98%. Renewal activity was particularly strong, with leasing spreads of 16.8%, led by Atlantic and Quebec regions and tenants in the dollar store, liquor, and office supplies categories. Looking ahead, our team views vacancies and potential backfalls as opportunities to re-lease space at both higher rents and to higher covenant tenants. Beyond our existing portfolio, we remain active in advancing retail intensifications and new greenfield developments at attractive risk-adjusted yields. Aaron will speak more about our development completion shortly. Our industrial portfolio has remained remarkably resilient, with occupancy increasing another 50 basis points in the quarter to end the year at 98.8%. The leasing progress is consistent with what we outlined at the beginning of the year.

Speaker #3: Looking ahead, our team views vacancies and potential backfills, as opportunities to relieve space at both higher rents and to higher covenant tenants. Beyond our existing portfolio, we remain active in advancing retail intensifications and new greenfield developments, and attractive risk-adjusted yields.

Speaker #3: Erin will speak more about our development completion shortly. Our industrial portfolios have remained remarkably resilient, with occupancy increasing another 50 basis points in the quarter, to end the year at 98.8%.

Speaker #3: The leasing progress is consistent with what we outlined at the beginning of the year. During the quarter, we had a very strong retention rate of 93.8%, completing over 1 million square feet of renewals at a spread of 26%.

Rael Diamond: During the quarter, we had a very strong retention rate of 93.8%, completing over 1 million sq ft of renewals at a spread of 26%. Included in our leasing activity was 514,000 sq ft of renewals in the GTA, where the tenant had a fixed rate option, resulting in a spread of 17%.... Excluding this renewal, our spreads averaged 40%. Our team also completed 138,000 sq ft of new leasing at rents 31% above our average in-place rents. This leasing activity highlights the significant mark-to-market and embedded growth in our industrial portfolio. We continue to see a stabilizing industrial market broadly for high-quality, generic assets in the right markets, and remain focused on advancing our industrial development pipeline at Choice Caledon Business Park.

Speaker #3: Included in our leasing activity was 514,000 square feet of renewals, in the GTA where the tenant had a fixed rate option, resulting in a spread of 17%.

Speaker #3: Excluding this renewal, our spreads averaged 40%. Our team also completed 138,000 square feet of new leasing at rents 31% above our average in-place rents.

Speaker #3: This leasing activity highlights the significant mark-to-market and embedded growth in our industrial portfolio. We continue to see a stabilizing industrial market broadly for high-quality generic assets in the right markets, and remain focused on advancing our industrial development pipeline at choice Caledon Business Park.

Speaker #3: Lastly, in our mixed use and residential portfolio, we delivered stable performance in 2025, reflecting the high quality of our office assets, which are primarily leased to affiliate entities.

Rael Diamond: Lastly, in our mixed-use and residential portfolio, we delivered stable performance in 2025, reflecting the high quality of our office assets, which are primarily leased to affiliated entities. While select residential properties have experienced some pressures from new supply, they remain supported by strong long-term fundamentals in urban markets, and we remain committed to a pipeline of high-quality, transit-oriented residential developments. Finally, touching on transaction activity in the quarter. We remained active on our capital recycling program, completing approximately CAD 261 million of real estate transactions during the quarter. This included CAD 67 million of acquisitions and CAD 195 million of dispositions. Our most significant transaction in the quarter was a new 50/50 joint venture with Wittington across two office towers at Yonge and St. Clair in Midtown Toronto. This transaction included the third-party acquisition of two St.

Speaker #3: While select residential properties have experienced some pressures from new supply, they remain supported by strong long-term fundamentals in urban markets, and we remain committed to our pipeline of high-quality, transit-orientated residential developments.

Speaker #3: Finally, touching on transaction activity in the quarter. We remain active on our capital recycling program, completing approximately $261 million of real estate transactions during the quarter. This included $67 million of acquisitions and $195 million of dispositions.

Speaker #3: Our most significant transaction in the quarter was a new 50/50 joint venture with Weddington across two office towers at Yonge and St. Clair in Midtown Toronto.

Speaker #3: This transaction included the third-party acquisition of two St. Clair Avenue East for 43 million, at choices 50% share excluding costs, while concurrently selling a 50% interest in the Weston Centre to Weddington for 76 million.

Rael Diamond: Clair Avenue East for CAD 43 million, at Choice's 50 percent share, excluding costs, while concurrently selling a 50 percent interest in the Weston Centre to Wittington for CAD 76 million. Overall, the transaction represents a net CAD 33 million office disposition for Choice. This was a strategic transaction, as the two buildings are directly adjacent and operate as an integrated complex with shared common areas, including a shared loading dock. Choice will manage both properties going forward. During the quarter, we also disposed of a non-strategic industrial asset for CAD 18 million and CAD 101 million of retail assets that we disclosed last quarter. All dispositions were completed above IFRS values. We also acquired a retail center for CAD 23 million in Peterborough, and subsequent to the quarter, completed CAD 28 million of additional retail acquisitions.

Speaker #3: Overall, the transaction represents a net 33 million office disposition for choice, this was a strategic transaction as the two buildings are directly adjacent and operate as an integrated complex, with shared common areas including a shared loading dock.

Speaker #3: Choice will manage both properties going forward. During the quarter, we also disposed of a non-strategic industrial asset for 18 million, and 101 million of retail assets that we disclosed last quarter.

Speaker #3: All dispositions were completed above IFRS values. We also acquired a retail centre for 23 million in Peterborough and subsequent to the quarter completed 28 million of additional retail acquisitions.

Speaker #3: Overall, 2025 marked an active year of capital recycling. As our team remained focused on maintaining the quality of our market-leading portfolio while leveraging our balance sheet to grow our business through net acquisitions.

Rael Diamond: Overall, 2025 marked an active year of capital recycling, as our team remained focused on maintaining the quality of our market-leading portfolio, while leveraging our balance sheet to grow our business through net acquisitions. With that, I'll turn the call over to Erin to discuss our financial results and additional capital allocation activity. Erin?

Speaker #3: With that, I'll turn the call over to Erin to discuss our financial results and additional capital allocation activity. Erin?

Speaker #4: Thank you, Ralph, and good morning, everyone. We are very pleased with our financial performance this year. As Ralph noted earlier, we closed the year from a position of strength, having achieved each of our financial objectives.

Erin Johnston: Thank you, Rael, and good morning, everyone. We are very pleased with our financial performance this year. As Rael noted earlier, we closed the year from a position of strength, having achieved each of our financial objectives. When we set our 2025 outlook a year ago, the economic environment was highly uncertain. Our ability to meet each of our core financial targets underscores the quality and resilience of our portfolio and our team's ability to deliver consistent results for unitholders. Turning to our fourth quarter results. Our reported funds from operations was CAD 189.9 million, or CAD 0.262 on a per unit dilutive basis, representing an increase of 0.8% year-over-year.

Speaker #4: When we set our 2025 outlook a year ago, the economic environment was highly uncertain. Our ability to each to meet each of our core financial targets underscores the quality and resilience of our portfolio and our team's ability to deliver consistent results for unit holders.

Speaker #4: Turning to our fourth quarter results, our reported funds from operations was $189.9 million, or 26.2 cents on a per unit diluted basis, representing an increase of 0.8% year over year.

Speaker #4: FFO in the quarter was driven by year-over-year total cash NOI growth of 4.4%, which included higher same asset NOI and contributions from transactions and completed development.

Erin Johnston: FFO in the quarter was driven by year-over-year total cash NOI growth of 4.4%, which included higher Same-Asset NOI and contributions from transactions and completed developments. This was partially offset by the timing of lease surrender revenue, higher interest expense from refinancing activities, and lower investment income. AFFO in the quarter was CAD 0.201 per unit, an increase of CAD 0.05 year-over-year. This increase was largely driven by the timing of maintenance capital projects, which commenced earlier in the current year compared to the prior period. On a full-year basis, our AFFO payout ratio of 88% was in line with prior years. Turning to our property performance. Same-Asset Cash NOI increased by CAD 5.9 million, or 2.4% compared to the prior year.

Speaker #4: This was partially offset by the timing of lease surrender revenue, higher interest expense from refinancing activities, and lower investment income. AFFO in the quarter was 20.1 cents per unit, an increase of 5 cents year over year.

Speaker #4: This increase was largely driven by the timing of maintenance capital projects, which commenced earlier in the current year compared to the prior period. On a full-year basis, our AFFO payout ratio of 88% was in line with prior years.

Speaker #4: Turning to our property performance, same asset cash NOI increased by 5.9 million, or 2.4%, compared to the prior year. By asset class, retail same asset cash NOI increased 3.1 million, or 1.6%.

Erin Johnston: By asset class, retail same-asset cash NOI increased CAD 3.1 million, or 1.6%. This was driven by higher base rents and recovery revenue, and excluding bad debt expense, year-over-year growth was 2.1%. Industrial same-asset cash NOI increased by CAD 2.9 million, or 6.2%, primarily due to higher rental rates on renewals, new leasing, and contractual rent steps. Mixed-use and residential same-asset cash NOI decreased by approximately CAD 0.1 million, or 1.8%, primarily as a result of lower rent at certain residential properties. Moving to our balance sheet. IFRS net asset value, or NAV, for the quarter was CAD 14.43 per unit, a decrease of CAD 72 million, or approximately 0.7% compared to Q3.

Speaker #4: This was driven by higher base rents and recovery revenue. And excluding bad debt expense, year-over-year growth was 2.1%. Industrial same asset cash NOI increased by 2.9 million, or 6.2%, primarily due to higher rental rates on renewals, new leasing, and contractual rent steps.

Speaker #4: Mixed use and residential same asset cash NOI decreased by approximately 0.1 million, or 1.8%, primarily as a result of lower rent at certain residential properties.

Speaker #4: Moving to our balance sheet. IFRS net asset value, or NAV, for the quarter was $14.43 per unit, a decrease of 72 million, or approximately 0.7%, compared to the third quarter.

Speaker #4: The decrease was primarily driven by an 87 million fair value loss on our investment in the units of allied properties. On a net fair value loss on investment properties of 29 million.

Erin Johnston: The decrease was primarily driven by a CAD 87 million fair value loss on our investment in the units of Allied Properties, and a net fair value loss on investment properties of CAD 29 million. This was partially offset by a net contribution from operations of CAD 45 million. As a reminder, we're required under IFRS to mark to market our investment in Allied to its trading price at each period end. The fair value changes on investment properties in the quarter were primarily driven by adjustments to select mixed-use and residential developments, as well as certain existing residential assets to reflect current market conditions. This was partially offset by gains in the retail portfolio, which were supported by favorable leasing and cash flow assumptions related to backfilling certain sites with higher quality tenants, and favorable cap rate adjustments, mainly in Ontario, reflecting continued demand for necessity-based retail centers.

Speaker #4: This was partially offset by a net contribution from operations of 45 million. As a reminder, we're required under IFRS to mark to market our investment in allied to its trading price at each period end.

Speaker #4: The fair value changes on investment properties in the quarter were primarily driven by adjustments to select mixed-use and residential developments, as well as certain existing residential assets to reflect current market conditions.

Speaker #4: This was partially offset by gains in the retail portfolio, which were supported by favorable leasing and cash flow assumptions related to backfilling certain sites with higher quality tenants, and favorable cap rate adjustments, mainly in Ontario, reflecting continued demand for necessity-based retail centers.

Speaker #4: On a full-year basis, we continue to generate stable value across the portfolio, resulting in year-over-year NAV growth of 263 million, or 2.6%, on a per unit basis.

Erin Johnston: On a full year basis, we continue to generate stable value across the portfolio, resulting in year-over-year NAV growth of CAD 263 million, or 2.6% on a per unit basis. We ended the year in solid financial position, with strong debt metrics and ample access to capital, including CAD 1.6 billion of available liquidity through our corporate facility and cash on hand, and CAD 13.8 billion of unencumbered properties. Our debt-to-EBITDA ratio was 7x and remained largely stable. We had no material financing or debt maturities in the quarter, and with our next material maturity not occurring until our CAD 350 million debenture in November. Turning to our development activity. Our pipeline continues to be a reliable source of long-term cash flow growth and NAV creation for the REIT.

Speaker #4: We ended the year in a solid financial position, with strong debt metrics and ample access to capital, including $1.6 billion of available liquidity through our corporate facility and cash on hand, and $13.8 billion of unencumbered properties.

Speaker #4: Our debt to EBITDA ratio was 7 times and remained largely stable. We had no material financing or debt maturities in the quarter, and with our next material maturity not occurring until our $350 million debt venture in November.

Speaker #4: Turning to our development activity. Our pipeline continues to be a reliable source of long-term cash flow growth and NAV creation for the REIT. In the quarter, development spend totaled approximately $40 million, and our team delivered three new commercial projects totaling $601,000 square feet at a blended yield of 7.8%.

Erin Johnston: In the quarter, development spend totaled approximately CAD 40 million, and our team delivered three new commercial projects, totaling 601,000 sq ft at a blended yield of 7.8%. Our largest delivery in the quarter was the latest phase of Choice Caledon Business Park project, totaling 530,000 sq ft at our ownership share, which we completed at a yield of 7.9% and expect rents commencement to begin in April. We also completed two retail intensifications, including a 54,000 sq ft Costco gas bar in Edmonton, completed to our 50% owned JV at a 6.1% yield, and a 17,000 sq ft Shoppers Drug Mart in Ontario at a 6.9% yield, leaving 8 additional Shoppers Drug Mart projects in our active pipeline and many more in various stages of planning.

Speaker #4: Our largest delivery in the quarter was the latest phase of Choice Caledon Business Park project totaling $530,000 square feet at our ownership share. Which we completed at a yield of 7.9% and expect rents commencement to begin in April.

Speaker #4: We also completed two retail intensifications, including a 54,000 square foot Costco Gas Bar in Edmonton, completed through our 50%-owned JV at a 6.1% yield, and a 17,000 square foot Shoppers Drug Mart in Ontario at a 6.9% yield.

Speaker #4: Leaving eight additional Shoppers Drug Mart projects in our active pipeline and many more, in various stages of planning. On a full-year basis, our development spend totaled approximately $237 million, and we successfully transferred $222 million of assets to income producing, representing $836,000 square feet of new commercial GLA.

Erin Johnston: On a full year basis, our development spend totaled approximately CAD 237 million, and we successfully transferred CAD 222 million of assets to income producing, representing 836,000 sq ft of new commercial GLA. These transfers resulted in approximately CAD 47 million of value creation for Choice. Looking ahead, we remain confident in our strategy and financial plan. Our focus remains the same. We will continue to prioritize operational excellence, supported by strong leasing execution, while enhancing portfolio quality through disciplined capital recycling and delivering on our development pipeline to create value for unitholders. For the full year 2026, we expect to maintain stable occupancy and deliver 2% to 3% year-over-year growth in same-asset cash NOI.

Speaker #4: These transfers resulted in approximately $47 million of value creation for Choice. Looking ahead, we remain confident in our strategy and financial plan. Our focus remains the same.

Speaker #4: We will continue to prioritize operational excellence, supported by strong leasing execution, while enhancing portfolio quality through disciplined capital recycling and delivering on our development pipeline to create value for unit holders.

Speaker #4: For the full year 2026, we expect to maintain stable occupancy and deliver 2 to 3% year-over-year growth in same asset cash NOI. Our business is expected to deliver annual FFO per unit diluted between $1.08 and $1.10 in 2026.

Erin Johnston: Our business is expected to deliver annual FFO per unit diluted between CAD 1.08 and 1.10 in 2026, supported by the strength of our core business, including strong same-asset NOI growth and contributions from transactions and development. This strong performance will be partially offset by the impact of Allied's distribution cut. We will continue to leverage our industry-leading balance sheet to support both our transaction and development activity, while maintaining our debt to EBITDA below our long-term target of 7.5 times. Lastly, given the strength of our business and performance in 2025, as Rael mentioned, we are increasing our distribution to CAD 0.78 per unit effective March 2026, which represents a 1.3% increase from the prior year. With that, Rael, David, Niall, and I would be glad to answer your questions.

Speaker #4: Supported by the strengths of our core business, including strong same asset NOI growth and contributions from transactions and development. This strong performance will be partially offset by the impact of allied's distribution cut.

Speaker #4: We will continue to leverage our industry-leading balance sheet to support both our transaction and development activity, while maintaining our debt to EBITDA below our long-term target of 7.5 times.

Speaker #4: Lastly, given the strength of our business and performance in '25, as Rael mentioned, we are increasing our distribution to 78 cents per unit, effective March 2026.

Speaker #4: Which represents a 1.3% increase from the prior year. With that, Rael, Dave, and Niall and I would be glad to answer your questions.

Speaker #1: At this time, I would like to remind everyone that in order to ask a question, please press star, then the number 1 on your telephone keypad. We will pause for just a moment to compile the Q&A roster.

Operator 2: At this time, I would like to remind everyone: in order to ask a question, press Star, then 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question today comes from the line of Mark Rothschild from Canaccord Genuity. Your line is open.

Operator: At this time, I would like to remind everyone: in order to ask a question, press Star, then 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question today comes from the line of Mark Rothschild from Canaccord Genuity. Your line is open.

Speaker #1: And your first question today comes from a line of Mark Rothschild from Kennecord Genuity, your line is open.

Speaker #3: Thanks, good morning. It sounds like that industrial is doing pretty well for the types of properties you own. You're advancing on the development projects.

Mark Rothschild: Thanks, and good morning. It sounds like that industrial is doing pretty well for the types of properties you own. You're advancing on the development projects. Is this an area that you think you can expand on, grow this year? And do you feel confident enough to maybe start additional development projects?

Speaker #3: Is this an area that you think you can expand on, grow with this year, and do you feel confident enough to maybe start additional development projects?

Rael Diamond: Hey, Mark, good morning. So look, we said throughout the year that things were starting to stabilize, and we've definitely seen that on the leasing front. We commenced the spec development last quarter, and it's a function of us having confidence in the market. We've seen lots of RFP activity. I think we need to see a little more traction on the RFP activity before we consider commencing another spec development. I think from a growth point of view, we'll continue to capture that mark-to-market that we spoke about. And you know, our team is always looking for new investment opportunities, and we hope we can grow in that avenue, too, but nothing yet that we are underwriting actively. I don't know, Niall, if you want to add anything else.

Speaker #4: Hey, Mark, good morning. So look, we said throughout the year that things were starting to stabilize, and we've definitely seen that in on the leasing front.

Speaker #4: We commenced the spec development last quarter, and it's a function of us having confidence in the market. We've seen lots of RFP activity. I think we need to see a little more traction on the RFP activity before we consider commencing another spec development.

Speaker #4: I think from a growth point of view, we'll continue to capture that mark to market that we spoke about. And our team is always looking for new investment opportunities, and we hope we can grow in that avenue too, but nothing yet that we are underwriting actively.

Speaker #4: I don't know, Niall, if you want to add anything else.

Speaker #3: Yeah, maybe just to add, we're delivering our spec building in early 2027 for really focusing on deliveries for that year or tenant inquiries for that year.

Erin Johnston: Yeah, maybe just to add, we're delivering our spec building in early 2027. We're really focusing on deliveries for that year or tenant inquiries for that year. We're starting to hear inquiries around 2028, and as we feel that they, they're getting some traction, we'll be able to pursue those opportunities as well.

Niall Collins: Yeah, maybe just to add, we're delivering our spec building in early 2027. We're really focusing on deliveries for that year or tenant inquiries for that year. We're starting to hear inquiries around 2028, and as we feel that they, they're getting some traction, we'll be able to pursue those opportunities as well.

Speaker #3: We're starting to hear inquiries around 2028, and as we feel that they're getting some traction, we'll be able to pursue those opportunities as well.

Speaker #5: Okay, great. And maybe just.

Mark Rothschild: Okay, great. And maybe just one more for me-

Speaker #3: Yeah.

Erin Johnston: Um, just-

Mark Rothschild: Yeah.

Speaker #4: Mark, sorry, just one thing quickly. Erin's.

Rael Diamond: Oh, sorry, just one thing quickly, Erin.

Erin Johnston: Mark, just wanted to call out the, you know, prospect activity at Caledon has increased to Niall and Rael's point. And then just if we think about industrial for 2026, we would think about same asset growth being closer to that 4% range.

Speaker #6: Mark, just wanted to call out the prospect activity at Caledon has increased to Niall and Rael's point. And then just if we think about industrial for 2026, we would think about same asset growth being closer to that 4% range.

Speaker #5: Okay, great. Thanks. And then maybe just one more in regards to office. The transaction you did sounds like more strategic than anything else. There has been some signs of an office recovery.

Mark Rothschild: Okay, great. Thanks. And then maybe just one more in regards to office. The transaction you did sounds like more strategic than anything else. There has been some signs of an office recovery. Obviously, Allied has not participated in that yet. Do you have any thoughts on office investment at this time? Is it an asset class that you would ever, with the REIT, get back into in a more material way? Would you do something if you were confident in improvement, or is that an asset class that Choice is just not looking to be heavily involved in going forward?

Speaker #5: Obviously, Allied has not participated in that yet. Do you have any thoughts on office investment at this time? Is it an asset class that the REIT would ever get back into in a more material way?

Speaker #5: Would you do something if you were confident in improvement, or is that an asset class that Choice is just not looking to be heavily involved in going forward?

Speaker #4: Yeah, look, Mark, if you go back a few years ago, we exited office because we felt we could never get real scale in the asset class.

Niall Collins: ... Yeah, look, Mark, if you go back a few years ago, we exited office because we felt we could never get real scale in the asset class. And, you know, it's unlikely for us to see that opportunity. So, you know, we are very focused on continuing to build out our retail, industrial, and then over time, purpose-built rental. And there's enough, you know, investment opportunities in those three asset classes that we would not be pursuing, you know, office as an asset class.

Niall Collins: Yeah, look, Mark, if you go back a few years ago, we exited office because we felt we could never get real scale in the asset class. And, you know, it's unlikely for us to see that opportunity. So, you know, we are very focused on continuing to build out our retail, industrial, and then over time, purpose-built rental. And there's enough, you know, investment opportunities in those three asset classes that we would not be pursuing, you know, office as an asset class.

Speaker #4: And it's unlikely for us to see that opportunity. So we are very focused on continuing to build out our retail industrial and then over time purpose-built rental.

Speaker #4: And there's enough investment opportunities in those three asset classes that we would not be pursuing office as an asset class.

Speaker #5: Okay, great. Thanks so much.

Mark Rothschild: Okay, great. Thanks so much.

Operator 2: Your next question comes from the line of Lorne Kalmar from Desjardins. Your line is open.

Operator: Your next question comes from the line of Lorne Kalmar from Desjardins. Your line is open.

Speaker #1: Your next question comes from a line of Lauren Kelmar from Desjardins. Your line is open.

Speaker #5: Thanks. Good morning. Just on the guidance side, and Erin, I'm sorry if I missed this—you guys are usually really tight, and not that three cents isn't tight—but just wondering what has to happen to hit the low end versus the high end.

Lorne Kalmar: Thanks. Good morning. Just on the guidance side, and, Erin, I'm sorry if I missed this. You know, you guys are usually really tight, and not that 3 cents isn't tight, but just wondering what has to happen to hit the low end versus the high end. Is it, is it more of that lease term income you guys saw throughout, 2025, or, or is there something else we should be thinking about?

Speaker #5: Is it more of that lease term income you guys saw throughout 2025, or is there something else we should be thinking about?

Erin Johnston: Lorne, I would think about our plan as right down the middle now. I know we gave an extra bit of range on guidance, but I think last year we got the feedback that it was very tight. So I just thought we'd give ourselves the room. In order to outperform, a couple of things that we need to see is leasing coming in stronger than expected on retail, same on industrial, maybe a little bit less downtime than is in plan. So there's definitely flex there. And then, yes, if there was a little more lease termination income, that would help, but I think there's a bit of room for our team to outperform.

Speaker #6: Lauren, I would think about our plan is right down the middle now. I know we gave an extra bit of range on guidance, but I think last year we got the feedback that it was very tight.

Speaker #6: So I just thought we'd give ourselves the room in order to outperform. A couple of things that we need to see is leasing coming in stronger than expected on retail, same amount on industrial, maybe a little bit less downtime than is in plan.

Speaker #6: So there's definitely flex there. And then, yes, if there was a little more lease termination income, that would help. But I think there's a bit of room for our team to outperform.

Speaker #5: Okay. And then I think you talked to the SPNY growth range for industrial for retail. Would that kind of be in the 2 to 3 percent range?

Lorne Kalmar: Okay. And then, I think you talked to the SPNOI growth range for industrial, for retail. Would that kind of be in the 2 to 3% range?

Speaker #6: That's right.

Erin Johnston: That's right.

Speaker #5: Okay. Thank you. And then just lastly, on building D at Caledon, notice the yield was quite a bit lower, maybe just some color around that and why you guys decided to move forward with it given the lower yield than what you guys were getting on the previous buildings.

Lorne Kalmar: Okay, thank you. And then just lastly, on building D at Caledon, noticed the yield is quite a bit lower. Maybe just some color around that and why you guys decided to move forward with it, given the, you know, lower yield than what you guys were getting on the previous buildings.

Speaker #4: Lauren, it's really a function of it being a spec building. And it needs to address a wide range of kind of tenant requirements. So what we feel we put in appropriately allowances to be able to capture those requirements.

Niall Collins: Lauren, it's really a function of it being a spec building, and it needs to address a wide range of kind of tenant requirements. So we feel we've put in appropriate allowances to be able to capture that, those requirements. So as we continue to see costs moderate and hone in on a potential tenant, we feel we'll be able to improve those yields.

Speaker #4: So as we continue to see cost moderate and hone in on a potential tenant, we feel we'll be able to improve those yields.

Speaker #5: Okay. Fair enough. Thanks so much. I'll turn it back.

Lorne Kalmar: Okay, fair enough. Thanks so much. I'll turn it back.

Speaker #1: Your next question comes from the line of Brad Sturgis from Raymond James. Your line is open.

Operator 2: Your next question comes from the line of Brad Sturges from Raymond James. Your line is open.

Operator: Your next question comes from the line of Brad Sturges from Raymond James. Your line is open.

Speaker #5: Hey, good morning. Just to follow up on your commentary around the industrial segment and RFPs, is it I guess I'm trying to understand that the comment around the need to see a little bit more activity on the RFP side.

Brad Sturges: Hey, good morning. Just to follow up on your commentary around the industrial segment and RFPs. I guess I'm trying to understand the comment around need to see a little bit more activity on the RFP side. Is it a function of have you seen a change in that market relative to last quarter? Or, it's just a little bit too early to be thinking about 2028 yet, given you're only starting to see that activity start to pick up now?

Speaker #5: Is it a function of you're not have you seen a change in that market relative to last quarter, or it's a little bit too early to be thinking about 2028 yet given you're only starting to see that activity start to pick up now?

Speaker #4: Well, it's more about supply coming into the market, which is falling off dramatically, and we're building D, it will be one of potentially two 1 million square feet buildings in the GTA.

Niall Collins: Well, it's more about supply coming into the market, which is falling off dramatically. And with building D, it will be one of potentially two, 1 million sq ft buildings, in the GTA, one actually being ready for occupancy now. So we're the only spec building underway. The activity we've seen over the last couple of months is a function of, I think, people getting used to a level of uncertainty and starting to make decisions around that. For 2028 deliveries, that's now going to be a function of well, how we see, the current environment smoothing out, but we're encouraged by it.

Speaker #4: One actually being ready for occupancy now. So we're the only spec building underway. The activity we've seen over the last couple of months is a function of, I think, people getting used to a level of uncertainty and starting to make decisions around that.

Speaker #4: For 2028 deliveries, that's now going to be a function of how we see the current environment smoothing out. But we're encouraged by it.

Speaker #5: Okay, and just following up on that—in terms of the assets you own and across your markets—what do you expect there this year in terms of timelines to see a bit more stabilization, maybe even a positive inflection point on market rent growth?

Brad Sturges: Okay. And just following up on that, in terms of, like, just market rents for industrial, for the type of assets you own and across your markets, what do you expect there this year, in terms of timelines to see a bit more stabilization, even maybe a positive inflection point on a market rent growth?

Speaker #4: I think we see this year's 2026 spreads will be consistent with '25. Which I think has been a very good year in itself.

Niall Collins: I think we see this year's 2026 spreads will be consistent with 2025, which I think has been a very good year in itself.

Speaker #5: Okay. I'll turn it back. Thank you.

Brad Sturges: Okay. I'll turn it back. Thank you.

Speaker #1: Your next question comes from a line of Himanshugupta from Scotiabank. Your line is open.

Operator 2: Your next question comes from the line of Himanshu Gupta from Scotiabank. Your line is open.

Operator: Your next question comes from the line of Himanshu Gupta from Scotiabank. Your line is open.

Speaker #7: Thank you and good morning. On the same asset NOI outlook, Erin, I think you mentioned 4% for industrial. Just wondering, are you being conservative here?

Mark Rothschild: Thank you, and good morning. On the same asset NOI outlook, and then I think you mentioned 4% for industrial. Just wondering, are you being conservative here, you know, given the occupancy uptick you have seen year to date and then the mark-to-market opportunity as well?

Himanshu Gupta: Thank you, and good morning. On the same asset NOI outlook, and then I think you mentioned 4% for industrial. Just wondering, are you being conservative here, you know, given the occupancy uptick you have seen year to date and then the mark-to-market opportunity as well?

Speaker #7: Given the occupancy uptick you have seen here to date, and then the mark-to-market opportunity as well?

Speaker #6: Yeah, it'll be between 3 and 4. Himanshu, and I'd say, as I was just answering the last question, there could be upside if our team sees stronger leasing on deals, 50 cents or a dollar more, or shorter downtime.

Erin Johnston: Yeah, it'll be between 3 and 4, Himanshu, and I'd say, as I was just answering the last question, there could be upside if our team sees stronger leasing on deals, you know, CAD 0.50 or CAD 1 more or shorter downtime. But I'd say that every year is also dependent on the mix of what's renewing and what province it's renewing in. So to Niall's point, spreads will be relatively consistent with last year, and that 3 to 4% is very in line with how we view industrial long term.

Speaker #6: But I'd say that every year is also dependent on the mix of what's renewing and what province it's renewing in. So to Niall's point, spreads will be relatively consistent with last year.

Speaker #6: And that 3 to 4 percent is very in line with how we view industrial long-term.

Speaker #7: Got it. Okay. Thank you. Sticking to industrial here, your industrial occupancy is obviously outperforming the broader Canadian market. What is causing that—for that outperformance?

Mark Rothschild: Got it. Okay, thank you. Sticking to industrial here, your industrial occupancy is obviously outperforming the broader Canadian market. What is causing that for that outperformance?

Himanshu Gupta: Got it. Okay, thank you. Sticking to industrial here, your industrial occupancy is obviously outperforming the broader Canadian market. What is causing that for that outperformance?

Speaker #4: I think it's a combination of our quality of building and the age, as well as the generic kind of properties that the building as well.

Niall Collins: I think it's a combination of our quality of building and the age, as well as the generic kind of properties of the building as well. It's, it's-- they're not-- we're not, we don't-- we're not factoring into some of the other issues that other portfolios are seeing.

Speaker #4: We're not factoring into some of the other issues that our portfolios are seeing.

Mark Rothschild: I know, you know, there's a section of Loblaw portfolio. On the third-party portfolio, are you more small to mid-bay, larger bay? How would you, you know, classify in terms of demand for these sizes of product?

Speaker #7: And I know there's a section of Loblaw portfolio. On the third-party portfolio, are you more small to mid-pay, larger pay? How would you classify in terms of demand for these types of product?

Himanshu Gupta: I know, you know, there's a section of Loblaw portfolio. On the third-party portfolio, are you more small to mid-bay, larger bay? How would you, you know, classify in terms of demand for these sizes of product?

Speaker #4: I think we're Niall's speaking about the market, Himanshu, and he'll chime in after this. He's referring to the third-party portfolio because the Loblaw represents roughly just call it 30% of our income, and it's very stable.

Niall Collins: I think when Niall's speaking about the market, Himanshu, and he'll chime in after this, he's referring to the third-party portfolio because the Loblaw represents roughly just, you know, call it 30% of our-

Rael Diamond: ... our income, and it's very stable. And I think we're seeing, you know, demand across the board in, in the small bay, mid bay, and then obviously on the RFP activity, you know, on the large distribution type buildings. But maybe, Niall, is there anything else you want to add?

Speaker #4: And I think we're seeing demand across the board in the small bay, mid-bay, and then obviously on the RFP activity, on the large, distribution-type buildings.

Speaker #4: But maybe Niall, is there anything else you want to add?

Speaker #2: I think it's a large activity is what we're seeing the most interest. There's a lot of competition in the smaller bay. And we're not really focused on that.

Niall Collins: I think it's the large activities that we're seeing the most interest. There's a lot of competition in the smaller bay, and we're not really focused on that.

Speaker #7: Got it. Okay. That's very helpful, Carlos. Last question is on capital recycling. Obviously, you have been very active on that front over the years.

Mark Rothschild: Got it. Okay, and that's, that's very helpful color. Last question is on capital recycling. Obviously, you have been very active on that front over the years. What more, you know, non-core disposition targets do you have for the year? And, do you become, like, more active on, you know, net acquisitions here, you know, given the, the good balance sheet?

Himanshu Gupta: Got it. Okay, and that's, that's very helpful color. Last question is on capital recycling. Obviously, you have been very active on that front over the years. What more, you know, non-core disposition targets do you have for the year? And, do you become, like, more active on, you know, net acquisitions here, you know, given the, the good balance sheet?

Speaker #7: What more non-codisposition targets do you have for the year? And do you become more active on net acquisitions here? Given the good balance sheet?

Speaker #4: Yeah. Look, Himanshu, I would say for us, we always focus on quality and every year we start the year and we say, "It's not our product to buy and we have to obviously source their product and it depends what comes to market." And if you think of 2025, we did roughly 800 million dollars of total transactions and we bought more than we sold.

Rael Diamond: Look, Himanshu, we - I would say for us, we always focus on quality, and every year we start the year and we say, there's not a lot of product to buy, and we have to obviously source the product, and it depends what comes to market. You know, if you think of 2025, we did roughly CAD 800 million of total transactions, and we bought more than we sold. We entering 2026, we've done a full few small retail acquisitions, and we're hopeful that we can find more assets to buy and use the strength of the balance sheet. We just don't have great visibility right now. As far as what we can still sell, I would say our portfolio is in phenomenal shape, and it's not that we're selling things that, in our minds, is bad quality.

Speaker #4: And we're entering '26, we've done a few small retail acquisitions. And we hopeful that we can find more assets to buy and use the strength of the balance sheet.

Speaker #4: We just don't have great visibility right now. As far as what we can still sell, I would say our portfolio is in phenomenal shape.

Speaker #4: And it's not that we're selling things that in our mind is bad quality. It's just on the lower end of spectrum, maybe from a growth point of view, and we can use that capital and recycle it into new acquisitions.

Rael Diamond: It's just on the lower end of spectrum, maybe from a growth point of view, and we can use that capital and recycle it into to new acquisitions. I'll say the other area we're very focused on is, you know, the greenfield and just on the commercial development. You know, Erin made reference to, you know, 8 Shoppers Drug Marts that are currently under construction. You know, there's a significant pipeline behind that. We're also building, I think, 5, you know, neighborhood shopping centers, and our team is underwriting another asset. So I think just that benefit of working with Loblaw, you know, to find those growth opportunities, you know, we believe we'll be able to deploy capital in that area as well, which is very encouraging.

Speaker #4: I'd say the other area we're very focused on is the greenfield and just on the commercial developments. Erin made reference to eight shoppers, drug marts, that are currently on construction.

Speaker #4: There's a significant pipeline behind that. We're also building, I think, five neighborhood shopping centers and our team is underwriting another asset. So I think just that benefit of working with Loblaw to find those growth opportunities we believe we'll be able to deploy capital in that area as well, which is very encouraging.

Speaker #7: Awesome. This is very helpful, and thank you, guys. I'll turn it back.

Mark Rothschild: Awesome. This is very helpful, and thank you, guys. I'll turn it back.

Himanshu Gupta: Awesome. This is very helpful, and thank you, guys. I'll turn it back.

Speaker #1: Your next question comes from Gilliano Thornhill with National Bank. Your line is open.

Operator 2: Your next question comes from the line of Giuliano Thornhill from National Bank. Your line is open.

Operator: Your next question comes from the line of Giuliano Thornhill from National Bank. Your line is open.

Speaker #5: Hey guys. Good morning, everyone. Just one question back on the greenfield that you mentioned there. How big are these kind of retail sites and where are they kind of working for Loblaws?

Giuliano Thornhill: Hey, guys. Good morning, everyone. Just one question back on the greenfield that you mentioned there. How big are these kind of retail sites, and where are they kind of working for Loblaws?

Speaker #4: At the moment, we've got four that total about 350,000 square feet, and they range from about 40,000 to 160,000 square feet. They're largely Loblaws-anchored, with either a No Frills brand or some Shoppers brand.

Rael Diamond: At the moment, we've got four that total about 350,000 sq ft, and they range from about 40 to 160,000 sq ft. They're largely Loblaws anchored, with either a No Frills brand or some Shoppers brand. So they're a large part of how we're anchoring our centers and going out and getting additional CRE leasing.

Speaker #4: So, they're a large part of how we're anchoring our centers and going out and getting additional CRE leasing.

Speaker #5: And kind of with the industrial, I guess, I don't want to say on pause, but now is the increasing focus going to be more of that retail nodes and larger sites going forward?

Giuliano Thornhill: Kind of with the industrial, I guess, I don't want to say on pause, but now is the increasing focus going to be more of that retail nodes and larger sites going forward out to 2027?

Speaker #5: Out to 2027?

Rael Diamond: Yeah, we don't see industrial on pause because we're building the large 1 million sq ft facility. It's just, from our point of view, it's just managing risk that you don't want to be too-- doing too many of them at once. But as we said earlier, as we get leasing traction on the building, we'll consider other spec industrial buildings to keep the momentum.

Speaker #4: Yeah. We don't see industrial on pause because we're building the large 1 million foot facility. It's just from our point of view, it's just managing risk that you don't want to be doing too many of them at once.

Speaker #4: But as we said earlier, as we get leasing traction on the building, we'll consider other spec industrial buildings to keep the momentum.

Speaker #2: Yeah. And just to add, Tullamore has a range of building types, typologies as well. So if there is a demand for a smaller size, we can also go forward with that too.

Niall Collins: Yeah, and just to add, like, Tullamore has a range of building types, typologies as well. So if there is a small, demand for a smaller size, we can also go forward with that too.

Speaker #5: I see. Okay. And just one last question. With the Bank of Canada potentially done cutting, and rates maybe staying higher for longer, are you seeing the narrowing a bit, as spreads begin to happen in transactions, and potentially for the market to pick up yet?

Giuliano Thornhill: I see. Okay, and just one last question. Just with the Bank of Canada, you know, potentially done cutting. There's, you know, rates may be going higher for longer. Are you seeing the narrowing of bid-ask spreads beginning to happen in transactions and potentially for the market to pick up yet?

Speaker #4: Look, for the product that we've been buying and selling, there seems to have been strong demand. And I think the wider bid-ask spread is when a certain seller or sellers need a certain price to clear or cover their debt.

Rael Diamond: Look, for the product that we've been buying and selling, you know, there seems to be in strong demand. And I think the bid ask, the wider bid-ask spread is when a certain seller or seller needs, you know, a certain price to clear or cover their debt. I think as time has gone by, they've become more realistic. But we think the transaction market has generally stabilized for the assets that we are investing in.

Speaker #4: I think as time has gone by, they've become more realistic. But we think the transaction market has generally stabilized for the assets that we are investing in.

Speaker #5: Thanks. I'll turn it back.

Giuliano Thornhill: Thanks. I'll turn it back.

Speaker #1: Your next question comes from a line of Sam Demiani from TD Cowan. Your line is open.

Operator 2: Your next question comes from a line of Sam Damiani from TD Cowen. Your line is open.

Operator: Your next question comes from a line of Sam Damiani from TD Cowen. Your line is open.

Speaker #5: Thank you. Good morning, everyone. And congrats, David, on your return to Choice. Just on the—it's literally one by one my questions have been addressed here, but maybe just to drill a little bit deeper on the retail development.

Sam Damiani: Thank you. Good morning, everyone, and congrats, David, on your return to Choice. Just on the... So literally one by one, my questions have been addressed here, but maybe just to drill a little bit deeper on the retail development. You know, the active pipeline is down around 200,000 sq ft. Now, that doesn't include the Napanee site, which I assume you're going to move forward with. I wonder if you could just confirm that. But you know, just given how tight retail leasing is today, do you see that sort of 200,000 to 300,000 sq ft sort of activity annually meaningfully increasing potentially for Choice in the coming years?

Speaker #5: The active pipeline is down around 200,000 square feet. Now, that doesn't include the Nepean site, which I assume you're going to move forward with.

Speaker #5: I wonder if you could just confirm that. But just given how tight retail leasing is today, do you see that sort of 2 to 300,000 square foot sort of activity annually meaningfully increasing potentially for choice in the coming years?

Speaker #6: We haven't just going to give some color and then I'll hand it over to Niall. What we include in our MD&A is active, our sites where really are further along with our permits and zoning.

Erin Johnston: Yeah, I'm just just gonna give some color, and then I'll hand it over to Niall. What we include in our MD&A is active. Our sites really are further along with our permits and zoning, but you'll see in our investor presentation as well, if we think about kind of the next 3 or 4 years, we've identified over 1 million sq ft, plus in our portfolio that we are able to build out, and probably over 60 projects, plus in the next 3 to 4 years. So very healthy pipeline there, and those will start to funnel into our MD&A as they become more real. But I'll let Niall comment on the detailed color.

Speaker #6: But you'll see in our investor presentation as well, if we think about kind of the next three or four years, we've identified over a million square feet plus in our portfolio that we are able to build out and probably over 60 projects plus in the next three to four years.

Speaker #6: So very healthy pipeline there. And those will start to funnel into our MD&A as they become more real. But I'll let Niall comment on the detailed color.

Speaker #2: Yeah. So as I mentioned, Tom earlier, it was about 350,000 square feet, but there's also an additional four that we're bringing in as well as we kind of work through it.

Rael Diamond: ... Yeah. So as I mentioned, Sam, earlier, it's about 350,000 square feet, but there's also an additional 4 that we're bringing in as well as we kind of work through it. So what's in our active development is what's zoned, and we can move forward with in the next 6 to 12 months. We will see additional projects coming into the pipeline, the active pipeline, over the course of the year. So we're encouraged by what's going to happen over the next 3 years in our plan.

Niall Collins: Yeah. So as I mentioned, Sam, earlier, it's about 350,000 square feet, but there's also an additional 4 that we're bringing in as well as we kind of work through it. So what's in our active development is what's zoned, and we can move forward with in the next 6 to 12 months. We will see additional projects coming into the pipeline, the active pipeline, over the course of the year. So we're encouraged by what's going to happen over the next 3 years in our plan.

Speaker #2: So what's in interactive development is what's zoned, and we can move forward with it in the next 6 to 12 months. We will see additional projects coming into the pipeline—the active pipeline—over the course of the year.

Speaker #2: So we're encouraged by what's going to happen over the next three years in our plan.

Speaker #5: That's great. That's helpful. And maybe just shifting over to the rental residential segment, it's obviously seen a little bit of pressure. The occupancy is down.

Sam Damiani: That's great. That's helpful. And maybe just shifting over to the rental residential segment. You know, it's obviously seen a little bit of pressure. The occupancy is down, which you commented on in your opening remarks, but maybe to drill down a little bit more deeper, you know, which sort of, I guess, clusters or markets are performing best for Choice right now? Is it, you know, between Toronto, North York, Brampton, Ottawa, Edmonton?

Speaker #5: What you commented on in your opening remarks, but what do you think to drill down a little bit more deeper? Which sort of, I guess, clusters or markets are performing best for choice right now?

Speaker #5: Is it between Toronto and North York, Brampton, Ottawa, Edmonton?

Rael Diamond: Look, Ontario, generally, we're been seeing in Ottawa and Toronto, a similar pattern. However, that pattern, we think, has leveled off, and as we saw, the majority of the supply that was going to come off for shadow rental occur in 25. We think we're going to see the same type of growth pattern for a little bit longer and, potentially see it improve over the next 12, 18 months.

Speaker #4: Look, Ontario generally, we've been seeing an Ottawa and Toronto similar pattern. However, that pattern, we think, has leveled off. And as we saw the majority of the supply that was going to come out for shadow rental occur in '25, we think we're going to see the same type of growth pattern for a little bit longer.

Speaker #4: And potentially see it improve over the next 12, 18 months.

Speaker #5: And do you still feel confident you'll move forward with a new project potentially this year?

Sam Damiani: And, do you still feel confident you'll move forward with a, with a new project, potentially this year?

Speaker #4: We do. We do. Because that will bridge the cycle in our view.

Rael Diamond: We do. We do, because that will bridge the cycle, in our view.

Speaker #5: Yeah, perfect. Thank you. I'll turn it back.

Sam Damiani: Yeah. Perfect. Thank you. I'll turn it back.

Speaker #1: Again, if you'd like to ask a question, press star one in your telephone keypad. Your next question comes from a line of Pammy Burr from RBC Capital Markets.

Operator 2: Again, if you'd like to ask a question, press star one on your telephone keypad. Your next question comes from the line of Pammi Bir from RBC Capital Markets. Your line is open.

Operator: Again, if you'd like to ask a question, press star one on your telephone keypad. Your next question comes from the line of Pammi Bir from RBC Capital Markets. Your line is open.

Speaker #1: Your line is open.

Speaker #7: Thanks. Good morning. Just coming back to the, I guess, the new joint venture with Whittington, can you maybe just expand on that and what was said at the maybe the motivation behind those transactions and any color you can share just in terms of the longer-term play there?

Pammi Bir: Thanks. Good morning. Just coming back to the, I guess, the new joint venture with Wittington. Can you maybe just, you know, expand on that and what was sort of the, maybe the, the motivation behind those transactions and any color you can share just in terms of the, the longer-term play there?

Rael Diamond: Yeah, yeah, Pammi, I think if you think of Yonge St. Clair, you know, essentially the block is owned by either Choice or Wittington. So Choice owning the office asset, Wittington owning all the development land. And the last piece of the block that wasn't owned was the corner, you know, which is two St. Clair, which is a small office asset, but call it more than 30% of the income comes from the ground floor retail. If you stand in the buildings, you actually don't know which one is two St. Clair and which one is twenty-two St. Clair. So from our point of view, it just made logical sense to own them. Obviously, they own the office together. Office is obviously not completely strategic to Choice.

Speaker #4: Yeah. Pammy, I think if you think of younger Sinclair, essentially the block is owned by either Choice or Whittington. So Choice owning the office asset, Whittington owning all the development land.

Speaker #4: And the last piece of the block that wasn't owned was the corner, which is to Sinclair, which is a small office asset, but, call it, more than 30% of the income comes from the ground floor retail.

Speaker #4: If you stand in the buildings, you actually don't know which one is to Sinclair and which one's 22 Sinclair. So from our point of view, it just made logical sense to own them obviously to own the office together.

Speaker #4: Office is obviously not completely strategic to Choice. We've said we do it when it's primarily through related entities. And what it is, is it allowed us to reduce overall exposure control operations, and then from a group point of view, allowed full control of the block.

Rael Diamond: We've said we do it when it's primarily through, you know, related entities. What it did is it allowed us to reduce overall exposure, you know, control operations, and then from a group point of view, allowed full control of the block. You know, and 22 St. Clair is fully occupied, and 2 St. Clair has a bit of leasing upside, which we're quite confident we will pick up that, just given the pickup in office momentum at the moment.

Speaker #4: 22 Sinclair is fully occupied, and 2 Sinclair has a bit of leasing upside, which we’re quite confident we will pick up, just given the pickup in office momentum at the moment.

Speaker #7: Okay. Actually, that was one of my next questions, just in terms of the occupancy there. So that's good to hear, and it all makes sense.

Pammi Bir: Okay, actually, that was actually one of my next questions, just in terms of the occupancy there. So that's, that's good to hear, and it all makes sense. Maybe just as a follow-up, are there other opportunities where, you know, a similar situation may arise that you might be looking at for, you know, in terms of 2026, where there's an opportunity to maybe consolidate some ownership that might be held by third parties, or?

Speaker #7: Maybe just as a follow-up, are there other opportunities where a similar situation may arise that you might be looking at for in terms of 2026 where there's an opportunity to maybe consolidate some ownership that might be held by third parties or?

Speaker #4: If you think of 2025, we actually consolidated ownership through some of our joint ventures where our partner wanted us. I can think of an asset in Edmonton that we purchased—our two assets in Edmonton, actually.

Rael Diamond: If you think of 2025, we actually consolidated ownership, you know, through some of our joint ventures where our partner wanted out. So I can think of an asset in Edmonton that we purchased our partner—two assets in Edmonton, actually. We purchased one of our partners out. One of them, we, you know, took back a Chapters box, and we split it, and we leased it to a No Frills and a Shoppers Drug Mart. So I think we're always looking for opportunities where, you know, one of our partners wants liquidity, where we can consolidate ownership. And then I think back a few years ago, if assets were not, you know, core or strategic to us, we always offer it to our partner first. So we'll continue to look for those opportunities on high-quality assets.

Speaker #4: We purchased one of our partners out. One of them, we took back a chapter's box and we split it and we leased it to a no-frills and a shop as drug mart.

Speaker #4: So I think we're always looking for opportunities where one of our partners wants liquidity, where we can consolidate ownership. And then I think back a few years ago, assets were not core or strategic to us.

Speaker #4: We always offer it to our partner first. So we'll continue to look for those opportunities on high-quality assets.

Speaker #7: Okay. And then, was there any—what range of sort of transaction activity was, I guess, incorporated into your guidance, if any?

Pammi Bir: Okay, and then just was there any like, what, what range of sort of transaction activity was, I guess, incorporated into your guidance, if any?

Speaker #6: So Pammy, in 2025, we bought more than we sold by about 120 million. I'd say in 2026, our plan would be to be kind of around 100 million buying more than we're selling.

Erin Johnston: So, Pammi, in 2025, we bought more than we sold by about CAD 120 million. I'd say in 2026, our plan would be to be kind of around CAD 100 million, buying more than we're selling.

Speaker #7: Okay, got it. Thanks so much. I'll turn it back.

Pammi Bir: Okay, got it. Thanks so much. I'll turn it back.

Speaker #1: And with no further questions, I will now turn the call back over to Rael Diamond, CEO for closing remarks.

Operator 2: With no further questions, I will now turn the call back over to Rael Diamond, CEO, for closing remarks.

Operator: With no further questions, I will now turn the call back over to Rael Diamond, CEO, for closing remarks.

Speaker #4: Thank you, Rob. Once again, our portfolio and balance sheet remain in excellent position, and our teams are focused on executing on our strategic objectives in the year ahead.

Rael Diamond: Thank you, Rob. Once again, our portfolio and balance sheet remain in excellent position, and our teams are focused on executing on our strategic objectives in the year ahead. Thank you for your interest in Choice and for joining us this morning. We look forward to providing you another update on the business in the spring.

Speaker #4: Thank you for your interest in Choice and for joining us this morning. We look forward to providing you another update on the business in the spring.

Speaker #1: This concludes today's conference call. You may now disconnect.

Operator 2: This concludes today's conference call. You may now disconnect.

Operator: This concludes today's conference call. You may now disconnect.

Sam Damiani: Please wait. The conference will begin shortly.

Operator: Please wait. The conference will begin shortly.

Q4 2025 Choice Properties Real Estate Investment Trust Earnings Call

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