Choice Properties Real Estate Investment Trust T.CHP.UN

Alternate Symbol(s): PPRQF

Choice Properties Real Estate Investment Trust is a real estate investment trust that creates value through the ownership, operation, and development of commercial and residential properties. The Company’s portfolio is comprised of retail properties primarily leased to necessity-based tenants. It also owns a portfolio of industrial, mixed-use, and residential assets concentrated in markets across Canada. Its retail portfolio is primarily leased to grocery stores, pharmacies, and other necessity-based tenants. Its industrial portfolio is centered around large, purpose-built distribution facilities for Loblaw and generic industrial assets that accommodate the diverse needs of a range of tenants. Its industrial properties are in target distribution markets across Canada. Its residential properties include both newly developed purpose-built rental buildings and residential-focused mixed-use communities. It is the owner and manager of over 64 million square feet of gross leasable area.

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Choice Properties Real Estate Investment Trust

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Post by retiredcfon Apr 25, 2024 10:33am

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Post# 36007066

RBC

April 24, 2024

Choice Properties REIT
Q1 as expected; 2024 guidance sticks

TSX: CHP.UN | CAD 12.95 | Sector Perform | Price Target CAD 15.00

Sentiment: Neutral

Our view: CHP reported Q1/24 FFOPU of $0.26, in line with RBC/Street at $0.26E/$0.255E, vs. $0.24 last year (+6% YoY). Overall, an in-line, yet sound quarter with healthy organic growth, a decent round of development completions, and modest capital recycling. 2024 FFOPU guidance is intact (+2-3% YoY), in line with our call and the Street, with support from a solid balance sheet and ample liquidity. The IFRS NAV held steady. Conference call Apr-25 (9 a.m. ET, 1-888-330-2454; ID 4788974).

Highlights:

No significant variances to forecast. NOI was marginally ahead of our call, mainly from $2.5MM (<$0.005/unit) of lease termination fees from Loblaw (Markham, ON store right-sizing; vacant space re-leased at higher rent). Results also include $2MM of condo gains (Brampton, ON), in line with our estimate.
SP NOI +2.4% YoY from higher rents and higher capital recoveries. Industrial led at +2.8% YoY, followed by retail at +2.5%, partly offset by mixed-use/residential at -1.3% (due to favourable adjustments in prior year). Industrial was partly impacted by fixturing and free rent periods, along with lower retention (CHP expects to backfill later this year).
Occupancy relatively stable at 97.9% (-10 bps QoQ, +20 bps YoY). Retail at 97.7% (flat QoQ), industrial at 98.8% (-20 bps QoQ), and mixed-use/residential at 94.7% (+50 bps QoQ).
2024 FFOPU guidance intact at $1.02-1.03 (in line with RBC/Street at $1.03E/$1.03E). No changes to assumptions (+2.5-3% SP NOI, stable occupancy, and debt/EBITDA at slightly below 7.5x).
IFRS BVPU (pre-tax) at $13.69 (flat QoQ, +1% YoY). IFRS cap rate 6.08% (+4 bps QoQ, +11 bps YoY) vs. our 6.3% NAV cap rate and current 6.7% implied cap. In Q1, CHP recorded a nominal $4MM fair value loss on the portfolio for updated leasing assumptions, rents, and higher industrial cap rates.
Good start to the year with $75MM of completed developments at an average 5.1% yield. That includes 151 residential rental units in Brampton and a 26K sf retail intensification.
Modest capital recycling. In Q1, CHP acquired a retail property from Loblaw for $38MM and completed $23MM of industrial ($16MM) and retail ($7MM) dispositions.
Debt/GBV at 40.3% (-10 bps QoQ, -70 bps YoY), debt/EBITDA at 6.9x (-0.3x QoQ, -0.6x YoY). Liquidity remains ample at $1.5B