Choice Properties Real Estate Investment Trust

Choice Properties reported Q2 2026 FFO of $193 million, or $0.267 per diluted unit, up 0.8% year over year. Adjusted for non-recurring items, FFO growth was 1.5%. AFFO was $0.217 per unit, down 6.1% year over year, largely due to timing of maintenance capital and tenant improvements. Same asset cash NOI increased $6.9 million, or 2.8%, with retail up 1.9% and industrial up 5.0%. Portfolio occupancy was 97.7%, retail occupancy was 97.4%, and industrial occupancy was 98.6%. IFRS NAV was $14.73 per unit, up about $145 million, or 1.4%, from the prior quarter. For 2026, management reiterated guidance for stable occupancy, 2% to 3% same asset cash NOI growth, and FFO per unit diluted of $1.08 to $1.10, excluding the impact of the First Capital transaction.

Rael Lee Diamond described the quarter as reflecting the strength of the portfolio and disciplined execution, emphasizing strategic leasing in necessity-based retail and tenant demand in industrial. He highlighted progress on backfilling vacancies, including the Bloor and Dundas repositioning with Shoppers Drug Mart and GoodLife, and said the team is actively working through the First Capital transaction. His tone was constructive and confident, repeatedly pointing to solid fundamentals and value creation opportunities across the portfolio.

Aaron Johnston said Q2 was another solid quarter for the core business, with FFO of $193 million and same asset cash NOI growth of 2.8%. He noted AFFO per unit of $0.217 was down 6.1% mainly because of timing of maintenance capital and tenant improvements, and said 2026 capital spend should be broadly in line with the prior year. On the balance sheet, he cited about $2 billion of available liquidity, roughly $14.1 billion of unencumbered properties, and a debt-to-EBITDA ratio of 7.0x. He also pointed to the recent $500 million increase to the credit facility and said the company is well positioned to refinance its next unsecured maturity in November and fund the First Capital transaction.

Analysts focused heavily on the First Capital deal, asking about Competition Bureau timing, financing costs, and potential leverage implications. Management said the regulatory process is going well, the deal remains on track for Q4 closing, and the main remaining approval is regulatory; they also said 10-year financing recently hovered between 4.7% and 4.8%, no hedges are in place yet, and credit ratings were affirmed after the deal. Questions also covered retail backfill and industrial demand amid tariff uncertainty; management said Bloor and Dundas was turned over to Shoppers Drug Mart quickly, Laval will take longer because of rezoning, and industrial leasing behavior has not shown a meaningful impact so far.