Choice Properties Real Estate Investment Trust Reports Results for the Year Ended December 31, 2021
Choice Properties Real Estate Investment Trust (“Choice Properties” or the “Trust”) (TSX: CHP.UN) today announced its consolidated financial results for the three months and year ended December 31, 2021. The 2021 Annual Report to Unitholders is available in the Investors section of the Trust’s website at www.choicereit.ca, and has been filed on SEDAR at www.sedar.com.
“We are pleased with our financial and operational results for both the quarter and the year ended December 31, 2021, as our portfolio of high-quality real estate assets continued to drive solid earnings. In addition to posting strong results, we completed over $275 million of real estate transactions and completed $115 million of new developments for the quarter, demonstrating our commitment to improving our portfolio and driving net asset value growth” said Rael Diamond, President and Chief Executive Officer of the Trust. “We also advanced our sustainability initiatives in the quarter by issuing our inaugural green bond for $350 million and by committing to set enhanced science-based emissions reduction targets. We are proud of these advancements, which are aligned with our goal of creating enduring value.”
Summary of GAAP Basis Financial Results
($ thousands except where otherwise indicated)
|
|
Three Months |
|
Year Ended |
||||||||||||||||||||
|
December
|
|
December
|
|
Change |
|
December
|
|
December
|
|
Change |
|||||||||||||
Net income (loss) |
|
$ |
(163,087 |
) |
|
$ |
116,570 |
|
|
$ |
(279,657 |
) |
|
$ |
23,008 |
|
|
$ |
450,685 |
|
|
$ |
(427,677 |
) |
Net income (loss) per unit diluted |
|
|
(0.225 |
) |
|
|
0.162 |
|
|
|
(0.387 |
) |
|
|
0.032 |
|
|
|
0.637 |
|
|
|
(0.605 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Rental revenue |
|
|
325,763 |
|
|
|
321,862 |
|
|
|
3,901 |
|
|
|
1,292,321 |
|
|
|
1,270,614 |
|
|
|
21,707 |
|
Fair value gain (loss) on Exchangeable Units(i) |
|
|
(372,039 |
) |
|
|
(86,370 |
) |
|
|
(285,669 |
) |
|
|
(862,815 |
) |
|
|
354,286 |
|
|
|
(1,217,101 |
) |
Fair value gains (losses) excluding Exchangeable Units(ii) |
|
|
96,941 |
|
|
|
104,948 |
|
|
|
(8,007 |
) |
|
|
457,237 |
|
|
|
(217,808 |
) |
|
|
675,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash flows from operating activities |
|
|
244,202 |
|
|
|
255,960 |
|
|
|
(11,758 |
) |
|
|
669,428 |
|
|
|
621,184 |
|
|
|
48,244 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average Units outstanding - diluted(iii) |
|
|
723,363,313 |
|
|
|
718,026,576 |
|
|
|
5,336,737 |
|
|
|
723,127,566 |
|
|
|
707,764,714 |
|
|
|
15,362,852 |
|
(i) Exchangeable Units are recorded at their fair value based on the market trading price of the Trust Units, which results in a negative impact to the financial results when the Trust Unit price rises and a positive impact when the Trust Unit price declines. (ii) Fair value gains (losses) excluding Exchangeable Units includes adjustments to fair value of investment properties and unit-based compensation. (iii) Includes Trust Units and Exchangeable Units. |
||||||||||||||||||||||||
Quarterly Results
Choice Properties recorded a net loss of $163.1 million for the fourth quarter of 2021 as compared to $116.6 million in net income in the fourth quarter of 2020. The quarterly decrease compared to the prior year was mainly due to a $285.7 million unfavourable change in the adjustment to the fair value of the Trust’s Exchangeable Units due to an increase in the Trust’s Unit price.
For the three months ended December 31, 2021, bad debt expense was $0.8 million on a GAAP basis ($0.7 million on a proportionate share basis) compared to $2.7 million on a GAAP basis ($3.5 million on a proportionate share basis) for the three months ended December 31, 2020.
Year-to-Date Results
Choice Properties reported net income for the year ended December 31, 2021 of $23.0 million compared to $450.7 million for the year ended December 31, 2020. The decrease compared to the prior year was mainly due to a $1,217.1 million unfavourable change in the adjustment to the fair value of the Trust’s Exchangeable Units due to an appreciation in the Trust’s Unit price, partially offset by a $678.8 million favourable change in the fair value of investment properties, a favourable change in the share of income from equity accounted joint ventures of $72.5 million, an increase in rental revenue of $21.7 million mainly due to the net contribution from acquisitions and development transfers completed in the past 18 months, a decline in expected credit loss on mortgage receivables of $9.3 million and lower interest expense of $6.2 million.
For the year ended December 31, 2021, the year-to-date bad debt expense was $4.4 million on a GAAP basis ($5.4 million on a proportionate share basis(1)) compared to $21.7 million on a GAAP basis ($23.7 million on a proportionate share basis(1)) for the year ended December 31, 2020.
The results for the year ended December 31, 2020 were impacted by a non-recurring $7.8 million allowance for expected credit losses on a specific mortgage receivable and $6.8 million in early redemption premiums paid in June 2020 for two senior unsecured debentures that would have matured in 2021.
| _______________________________________________ |
(1) Refer to Non-GAAP Financial Measures and Additional Financial Information section. |
Summary of Proportionate Share(1) Financial Results
As at or for the period ended
|
|
Three Months |
|
Year Ended |
||||||||||||||||||||
|
December
|
|
December
|
|
Change |
|
December
|
|
December
|
|
Change |
|||||||||||||
Rental revenue(i) |
|
$ |
341,907 |
|
|
$ |
337,907 |
|
|
$ |
4,000 |
|
|
$ |
1,353,657 |
|
|
$ |
1,332,657 |
|
|
$ |
21,000 |
|
Net Operating Income (“NOI”), cash basis(i)(ii) |
|
|
238,674 |
|
|
|
230,353 |
|
|
|
8,321 |
|
|
|
937,499 |
|
|
|
908,081 |
|
|
|
29,418 |
|
Same-Asset NOI, cash basis(i)(ii) |
|
|
216,188 |
|
|
|
210,755 |
|
|
|
5,433 |
|
|
|
853,110 |
|
|
|
832,119 |
|
|
|
20,991 |
|
Adjustment to fair value of investment properties(i) |
|
|
109,227 |
|
|
|
103,931 |
|
|
|
5,296 |
|
|
|
502,295 |
|
|
|
(256,837 |
) |
|
|
759,132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Occupancy (% of GLA) |
|
|
97.1 |
% |
|
|
97.1 |
% |
|
|
— |
% |
|
|
97.1 |
% |
|
|
97.1 |
% |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Funds from operations (“FFO”)(i) |
|
|
174,797 |
|
|
|
171,519 |
|
|
|
3,278 |
|
|
|
689,898 |
|
|
|
652,007 |
|
|
|
37,891 |
|
FFO(i) per unit diluted |
|
|
0.242 |
|
|
|
0.239 |
|
|
|
0.003 |
|
|
|
0.954 |
|
|
|
0.921 |
|
|
|
0.033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Adjusted funds from operations (“AFFO”)(i) |
|
|
118,924 |
|
|
|
136,054 |
|
|
|
(17,130 |
) |
|
|
586,506 |
|
|
|
566,469 |
|
|
|
20,037 |
|
AFFO(i) per unit diluted |
|
|
0.164 |
|
|
|
0.189 |
|
|
|
(0.025 |
) |
|
|
0.811 |
|
|
|
0.800 |
|
|
|
0.011 |
|
AFFO(i) payout ratio - diluted |
|
|
112.5 |
% |
|
|
97.7 |
% |
|
|
14.8 |
% |
|
|
91.2 |
% |
|
|
92.6 |
% |
|
|
(1.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash distributions declared |
|
|
133,820 |
|
|
|
162,411 |
|
|
|
(28,591 |
) |
|
|
535,104 |
|
|
|
554,157 |
|
|
|
(19,053 |
) |
Weighted average number of Units outstanding - diluted(iii) |
|
|
723,363,313 |
|
|
|
718,026,576 |
|
|
|
5,336,737 |
|
|
|
723,127,566 |
|
|
|
707,764,714 |
|
|
|
15,362,852 |
|
(i) Refer to Non-GAAP Financial Measures and Additional Financial Information section. (ii) Includes a provision for bad debts and rent abatements. (iii) Includes Trust Units and Exchangeable Units. |
||||||||||||||||||||||||
Quarterly and Year-to-Date Results
For the three months ended December 31, 2021, Funds from Operations (“FFO”, a non-GAAP measure) was $174.8 million or $0.242 per unit diluted compared to $171.5 million or $0.239 per unit diluted for the three months ended December 31, 2020. For the year ended December 31, 2021, FFO was $689.9 million or $0.954 per unit diluted compared to $652.0 million or $0.921 per unit diluted for the year ended December 31, 2020.
FFO increased by $3.3 million compared to the prior year primarily due to higher net operating income from higher revenues, a $2.7 million decline in bad debt expense, and a reversal of an expected credit loss on a specific mortgage receivable, partially offset by a decline in straight line rental revenue and an increase in general and administrative expenses.
On a year-to-date basis, FFO increased by $37.9 million mainly due to a $18.2 million decrease in bad debt expense, savings from lower borrowing costs and contributions from development transfers and transaction activity. The prior year results were impacted by a non-recurring $7.8 million allowance for expected credit losses on a specific mortgage receivable and $6.8 million in early redemption premiums paid in June 2020 for two senior unsecured debentures that would have matured in 2021.
On a per unit basis, the Trust had a higher weighted average number of units outstanding as at December 31, 2021 as a result of the Trust units issued as consideration for the acquisition of two assets from Wittington Properties Limited in July 2020 and the Exchangeable Units issued as consideration for the acquisition of six assets in December 2020 from Weston Foods (Canada) Inc. (“Weston Foods”), a wholly-owned subsidiary of George Weston Limited (“GWL”). Weston Foods amalgamated with GWL in July 2021, and the Exchangeable Units held by Weston Foods were transferred to GWL.
Quarterly Financing and Transaction Activity
On November 30, 2021, the Trust completed the issuance of $350 million aggregate principal amount of Series Q senior unsecured debentures (the “Series Q Debentures”) bearing interest at 2.46% per annum and maturing on November 30, 2026. The Series Q Debentures represented the Trust’s inaugural green bond offering pursuant to its Green Financing Framework released on November 15, 2021. The Trust intends to allocate the net proceeds of the offering to fund the financing and/or refinancing of eligible green projects as described in the Green Financing Framework. Prior to the allocation of the net proceeds of the offering to eligible green projects, the Trust used the net proceeds to repay existing indebtedness, including (i) the early redemption of the Trust’s $300 million principal amount of 3.01% Series I senior unsecured debentures on December 10, 2021, and (ii) to repay a portion of the balance drawn on the Trust’s credit facility.
The Trust completed $138.2 million of mortgage financings at a weighted average rate of 3.5% and discharged $57.1 million of mortgages at a weighted average rate of 3.8%.
Since the end of the prior quarter, the Trust completed $228.4 million of dispositions and $46.4 million of acquisitions on a proportionate share basis(1). Notable transactions include:
- the disposal of $228.4 million of non-core retail, industrial, and excess land assets;
- the acquisition of strategic retail assets, tenanted by Shoppers Drug Mart and Loblaw for $38.5 million; and
- the acquisition of a land assembly parcel for a GTA industrial development for $7.9 million
The Trust invested in its development program, with $41.1 million of spending during the quarter on a proportionate share basis(1). During the quarter, the Trust transferred a new 3,500 square foot retail site, and 229 residential units from properties under development to income producing properties, at a value of $114.8 million on a proportionate share basis(1).
Outlook
Choice Properties is a leading Real Estate Investment Trust that creates enduring value through the ownership, operation and development of high-quality commercial and residential properties. Our goal is to provide net asset value appreciation, stable net operating income growth and capital preservation, all with a long-term focus. Although there remains uncertainty about the longer-term impacts of the COVID-19 pandemic, Choice Properties is confident that its business model, stable tenant base, and disciplined approach to financial management will continue to position it well.
Our diversified portfolio of retail, industrial, residential and office properties is 97.1% occupied and leased to high-quality tenants across Canada. Our portfolio is primarily leased to necessity-based tenants and logistics providers, who continue to perform well in this environment and provide stability to our overall portfolio. This stability is evident in our financial results and by our collections, which were approximately 99% of contractual rents for the year. Despite the unpredictable re-opening of the economy, we are encouraged by high vaccination rates and anticipate further reopening measures. This optimism is reflected in our tenant base as we are seeing positive leasing momentum across our portfolio.
We continue to advance our development program, which provides us with the best opportunity to add high-quality real estate to our portfolio at a reasonable cost and drive net asset value appreciation over time. We have a mix of active development projects ranging in size, scale and complexity, including retail intensification projects, industrial development, and rental residential projects located in urban markets with a focus on transit accessibility. We recently completed two residential projects in downtown Toronto, Ontario and we are progressing on the construction of two additional high-rise residential projects, one of which is in Brampton, Ontario located next to the Mount Pleasant GO Station and the other is in the Westboro neighbourhood in Ottawa, Ontario. We are also finding ways to grow our industrial platform through development. We have two active industrial projects, which we expect will deliver 0.6M square feet of new generation logistics space. This includes a modern logistics facility located in a prime industrial node in Surrey, British Columbia comprising 0.4M square feet.
Beyond our active projects, we have a substantial pipeline of larger, more complex mixed-use developments and land held for future industrial development, which collectively are expected to drive meaningful net asset value growth in the future. We continue to advance the rezoning process for several mixed-use sites with 11 projects representing over 10.5M square feet now in different stages of the rezoning and planning process. We also acquired 300 acres of future industrial land in the GTA that will be developed into a multi-phase industrial park, providing a pipeline of opportunity to grow our industrial portfolio.
Underpinning all aspects of our business model is a strong balance sheet and a disciplined approach to financial management. We take a conservative approach to leverage and financing risk by maintaining strong leverage ratios and a staggered debt maturity profile. We have approximately $691 million of debt obligations coming due in 2022 which we intend to refinance with longer term debt, primarily unsecured debentures. From a liquidity perspective, the Trust has approximately $1.6 billion of available liquidity, comprised of $1.5 billion from the unused portion of the Trust’s revolving credit facility and $124.3 million in cash and cash equivalents, in addition to approximately $12.8 billion in unencumbered assets.
Update on Rent Collection
Rent collection for the fourth quarter remained high, reflecting the stability of the Trust’s necessity-based portfolio. For the three months ended December 31, 2021, the Trust collected or expects to collect approximately 99% of contractual rents.
In determining the expected credit losses on rent receivables, the Trust takes into account the payment history and future expectations of likely default events (i.e. asking for rental concessions, applications for rental relief through government programs, or stating they will not be making rental payments on the due date) based on actual or expected insolvency filings or company voluntary arrangements and likely deferrals of payments due, and potential abatements to be granted by the landlord. These assessments are made on a tenant-by-tenant basis.
The Trust’s assessment of expected credit losses is inherently subjective due to the forward-looking nature of the assessments. As a result, the value of the expected credit loss is subject to a degree of uncertainty and is made on the basis of assumptions which may not prove to be accurate given the uncertainty caused by COVID-19. Based on its review, the Trust recorded bad debt expense of $5.4 million in property operating costs, on a proportionate share basis(1), during the year ended December 31, 2021, with a corresponding amount recorded as an expected credit loss against its rent receivables.
(on a Proportionate Share basis(1))
|
Year ended December
|
As a % |
||||
Total recurring tenant billings |
$ |
1,483,090 |
|
100.0 |
% |
|
Less: Amounts received and deferrals repaid to date |
|
(1,468,978 |
) |
99.0 |
% |
|
Balance outstanding |
|
14,112 |
|
1.0 |
% |
|
Total rents expected to be collected pursuant to deferral arrangements |
|
(2,780 |
) |
(0.2 |
)% |
|
Total rents to be collected excluding collectible deferrals |
|
11,332 |
|
0.8 |
% |
|
Less: Provision recorded related to recurring tenant billings |
|
(5,448 |
) |
(0.4 |
)% |
|
Balance expected to be recovered in time |
$ |
5,884 |
|
0.4 |
% |
|
The Trust’s provision for recurring tenant billings for the year ended December 31, 2021, is comprised of the following:
(on a Proportionate Share basis(1))
|
Year ended December
|
|
Provisions for tenants with negotiated rent abatements |
$ |
(2,128) |
Provisions for additional expected credit losses |
|
(3,320) |
Total provision recorded related to recurring tenant billings |
$ |
(5,448) |
Due to continued uncertainty surrounding the pandemic, it is not possible to reliably estimate the length and severity of COVID-19 related impacts on the financial results and operations of the Trust and its tenants, as well as on consumer behaviours and the economy in general. For more information on the risks presented to the Trust by the COVID-19 pandemic, please see Section 12, “Enterprise Risks and Risk Management” of the Trust’s MD&A for the year ended December 31, 2021 and its Annual Information Form for the year ended December 31, 2021.
Non-GAAP Financial Measures and Additional Financial Information
In addition to using performance measures determined in accordance with International Financial Reporting Standards (“IFRS” or “GAAP”), Choice Properties also measures its performance using certain non-GAAP measures, and provides these measures in this news release so that investors may do the same. Such measures and related per-unit amounts are not defined by IFRS and therefore should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Furthermore, the supplemental measures used by management may not be comparable to similar measures presented by other real estate investment trusts or enterprises. The non-GAAP measures included in this news release are defined and reconciled to the most comparable GAAP measure below. Choice Properties believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Trust for the reasons outlined below.
Non-GAAP
|
Description |
Proportionate
|
|
Net Operating
|
|
NOI, Cash Basis |
|
Same-Asset NOI,
and
Same-Asset NOI,
|
|
Funds from
|
|
Adjusted Funds
|
|
AFFO Payout
|
|
The following table reconciles net income (loss) as determined in accordance with GAAP to net income on a proportionate share basis for the three months and year ended December 31, 2021.
|
|
Three Months |
|
Year Ended |
||||||||||||||||||||
For the periods ended December 31
|
|
GAAP Basis |
|
Consolidation
|
|
Proportionate
|
|
GAAP Basis |
|
Consolidation
|
|
Proportionate
|
||||||||||||
Net Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Rental revenue |
|
$ |
325,763 |
|
|
$ |
16,144 |
|
|
$ |
341,907 |
|
|
$ |
1,292,321 |
|
|
$ |
61,336 |
|
|
$ |
1,353,657 |
|
Property operating costs |
|
|
(95,691 |
) |
|
|
(4,571 |
) |
|
|
(100,262 |
) |
|
|
(380,306 |
) |
|
|
(21,385 |
) |
|
|
(401,691 |
) |
|
|
|
230,072 |
|
|
|
11,573 |
|
|
|
241,645 |
|
|
|
912,015 |
|
|
|
39,951 |
|
|
|
951,966 |
|
Other Income and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest income |
|
|
7,312 |
|
|
|
(3,779 |
) |
|
|
3,533 |
|
|
|
20,079 |
|
|
|
(8,040 |
) |
|
|
12,039 |
|
Fee income |
|
|
946 |
|
|
|
— |
|
|
|
946 |
|
|
|
3,801 |
|
|
|
— |
|
|
|
3,801 |
|
Net interest expense and other financing charges |
|
|
(134,320 |
) |
|
|
(2,408 |
) |
|
|
(136,728 |
) |
|
|
(534,525 |
) |
|
|
(8,437 |
) |
|
|
(542,962 |
) |
General and administrative expenses |
|
|
(11,799 |
) |
|
|
— |
|
|
|
(11,799 |
) |
|
|
(40,917 |
) |
|
|
— |
|
|
|
(40,917 |
) |
Reversal of (allowance for) expected credit loss on mortgage receivable |
|
|
1,026 |
|
|
|
— |
|
|
|
1,026 |
|
|
|
1,502 |
|
|
|
— |
|
|
|
1,502 |
|
Share of income (loss) from equity accounted joint ventures |
|
|
18,338 |
|
|
|
(18,338 |
) |
|
|
— |
|
|
|
66,952 |
|
|
|
(66,952 |
) |
|
|
— |
|
Amortization of intangible assets |
|
|
(250 |
) |
|
|
— |
|
|
|
(250 |
) |
|
|
(1,000 |
) |
|
|
— |
|
|
|
(1,000 |
) |
Foreign exchange gain reclassified from other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Acquisition transaction costs and other related expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other fair value gains (losses), net |
|
|
666 |
|
|
|
— |
|
|
|
666 |
|
|
|
(1,580 |
) |
|
|
— |
|
|
|
(1,580 |
) |
Adjustment to fair value of Exchangeable Units |
|
|
(372,039 |
) |
|
|
— |
|
|
|
(372,039 |
) |
|
|
(862,815 |
) |
|
|
— |
|
|
|
(862,815 |
) |
Adjustment to fair value of investment properties |
|
|
96,275 |
|
|
|
12,952 |
|
|
|
109,227 |
|
|
|
458,817 |
|
|
|
43,478 |
|
|
|
502,295 |
|
Income (Loss) before income taxes |
|
|
(163,773 |
) |
|
|
— |
|
|
|
(163,773 |
) |
|
|
22,329 |
|
|
|
— |
|
|
|
22,329 |
|
Income tax recovery |
|
|
686 |
|
|
|
— |
|
|
|
686 |
|
|
|
679 |
|
|
|
— |
|
|
|
679 |
|
Net Income (Loss) |
|
$ |
(163,087 |
) |
|
$ |
— |
|
|
$ |
(163,087 |
) |
|
$ |
23,008 |
|
|
$ |
— |
|
|
$ |
23,008 |
|
(i) Adjustments reflect the Trust’s share of net income (losses) from equity accounted joint ventures and financial real estate assets on a proportionately consolidated basis at the Trust’s ownership percentage of the related investment. |
||||||||||||||||||||||||
The following table reconciles net income (loss) as determined in accordance with GAAP to net income on a proportionate share basis for the three months and year ended December 31, 2020:
|
|
Three Months |
|
Year Ended |
||||||||||||||||||||
For the periods ended December 31
|
|
GAAP Basis |
|
Consolidation
|
|
Proportionate
|
|
GAAP Basis |
|
Consolidation
|
|
Proportionate
|
||||||||||||
Net Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Rental revenue |
|
$ |
321,862 |
|
|
$ |
16,045 |
|
|
$ |
337,907 |
|
|
$ |
1,270,614 |
|
|
$ |
62,043 |
|
|
$ |
1,332,657 |
|
Property operating costs |
|
|
(96,460 |
) |
|
|
(5,697 |
) |
|
|
(102,157 |
) |
|
|
(384,016 |
) |
|
|
(22,127 |
) |
|
|
(406,143 |
) |
|
|
|
225,402 |
|
|
|
10,348 |
|
|
|
235,750 |
|
|
|
886,598 |
|
|
|
39,916 |
|
|
|
926,514 |
|
Other Income and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest income |
|
|
2,770 |
|
|
|
323 |
|
|
|
3,093 |
|
|
|
13,639 |
|
|
|
(586 |
) |
|
|
13,053 |
|
Fee income |
|
|
1,136 |
|
|
|
— |
|
|
|
1,136 |
|
|
|
4,416 |
|
|
|
— |
|
|
|
4,416 |
|
Net interest expense and other financing charges |
|
|
(133,121 |
) |
|
|
(1,965 |
) |
|
|
(135,086 |
) |
|
|
(540,720 |
) |
|
|
(8,081 |
) |
|
|
(548,801 |
) |
General and administrative expenses |
|
|
(8,778 |
) |
|
|
— |
|
|
|
(8,778 |
) |
|
|
(36,718 |
) |
|
|
— |
|
|
|
(36,718 |
) |
Reversal of (allowance for) expected credit loss on mortgage receivable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,830 |
) |
|
|
— |
|
|
|
(7,830 |
) |
Share of income (loss) from equity accounted joint ventures |
|
|
9,036 |
|
|
|
(9,036 |
) |
|
|
— |
|
|
|
(5,570 |
) |
|
|
5,570 |
|
|
|
— |
|
Amortization of intangible assets |
|
|
(250 |
) |
|
|
— |
|
|
|
(250 |
) |
|
|
(1,000 |
) |
|
|
— |
|
|
|
(1,000 |
) |
Foreign exchange gain reclassified from other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,184 |
|
|
|
— |
|
|
|
1,184 |
|
Acquisition transaction costs and other related expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,589 |
) |
|
|
— |
|
|
|
(1,589 |
) |
Other fair value gains (losses), net |
|
|
1,347 |
|
|
|
— |
|
|
|
1,347 |
|
|
|
2,210 |
|
|
|
— |
|
|
|
2,210 |
|
Adjustment to fair value of Exchangeable Units |
|
|
(86,370 |
) |
|
|
— |
|
|
|
(86,370 |
) |
|
|
354,286 |
|
|
|
— |
|
|
|
354,286 |
|
Adjustment to fair value of investment properties |
|
|
103,601 |
|
|
|
330 |
|
|
|
103,931 |
|
|
|
(220,018 |
) |
|
|
(36,819 |
) |
|
|
(256,837 |
) |
Income (Loss) before income taxes |
|
|
114,773 |
|
|
|
— |
|
|
|
114,773 |
|
|
|
448,888 |
|
|
|
— |
|
|
|
448,888 |
|
Income tax recovery |
|
|
1,797 |
|
|
|
— |
|
|
|
1,797 |
|
|
|
1,797 |
|
|
|
— |
|
|
|
1,797 |
|
Net Income (Loss) |
|
$ |
116,570 |
|
|
$ |
— |
|
|
$ |
116,570 |
|
|
$ |
450,685 |
|
|
$ |
— |
|
|
$ |
450,685 |
|
(i) Adjustments reflect the Trust’s share of net income (losses) from equity accounted joint ventures and financial real estate assets on a proportionately consolidated basis at the Trust’s ownership percentage of the related investment. |
||||||||||||||||||||||||
The following table reconciles net income (loss), as determined in accordance with GAAP, to Net Operating Income, Cash Basis, for the periods ended as indicated.
For the periods ended December 31
|
|
Three Months |
|
Year Ended |
||||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
Change |
|
|
2021 |
|
|
2020 |
|
Change |
|||||||||
Net income (loss) |
|
$ |
(163,087 |
) |
|
$ |
116,570 |
|
|
$ |
(279,657 |
) |
|
$ |
23,008 |
|
|
$ |
450,685 |
|
|
$ |
(427,677 |
) |
Reversal of (allowance for) expected credit loss on mortgage receivable |
|
|
(1,026 |
) |
|
|
— |
|
|
|
(1,026 |
) |
|
|
(1,502 |
) |
|
|
7,830 |
|
|
|
(9,332 |
) |
General and administrative expenses |
|
|
11,799 |
|
|
|
8,778 |
|
|
|
3,021 |
|
|
|
40,917 |
|
|
|
36,718 |
|
|
|
4,199 |
|
Fee income |
|
|
(946 |
) |
|
|
(1,136 |
) |
|
|
190 |
|
|
|
(3,801 |
) |
|
|
(4,416 |
) |
|
|
615 |
|
Net interest expense and other financing charges |
|
|
134,320 |
|
|
|
133,121 |
|
|
|
1,199 |
|
|
|
534,525 |
|
|
|
540,720 |
|
|
|
(6,195 |
) |
Interest income |
|
|
(7,312 |
) |
|
|
(2,770 |
) |
|
|
(4,542 |
) |
|
|
(20,079 |
) |
|
|
(13,639 |
) |
|
|
(6,440 |
) |
Share of income (loss) from equity accounted joint ventures |
|
|
(18,338 |
) |
|
|
(9,036 |
) |
|
|
(9,302 |
) |
|
|
(66,952 |
) |
|
|
5,570 |
|
|
|
(72,522 |
) |
Amortization of intangible assets |
|
|
250 |
|
|
|
250 |
|
|
|
— |
|
|
|
1,000 |
|
|
|
1,000 |
|
|
|
— |
|
Foreign exchange gain reclassified from other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,184 |
) |
|
|
1,184 |
|
Acquisition transaction costs and other related expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,589 |
|
|
|
(1,589 |
) |
Other fair value gains (losses), net |
|
|
(666 |
) |
|
|
(1,347 |
) |
|
|
681 |
|
|
|
1,580 |
|
|
|
(2,210 |
) |
|
|
3,790 |
|
Adjustment to fair value of Exchangeable Units |
|
|
372,039 |
|
|
|
86,370 |
|
|
|
285,669 |
|
|
|
862,815 |
|
|
|
(354,286 |
) |
|
|
1,217,101 |
|
Adjustment to fair value of investment properties |
|
|
(96,275 |
) |
|
|
(103,601 |
) |
|
|
7,326 |
|
|
|
(458,817 |
) |
|
|
220,018 |
|
|
|
(678,835 |
) |
Income tax recovery |
|
|
(686 |
) |
|
|
(1,797 |
) |
|
|
1,111 |
|
|
|
(679 |
) |
|
|
(1,797 |
) |
|
|
1,118 |
|
Net Operating Income, Accounting Basis - GAAP |
|
|
230,072 |
|
|
225,402 |
|
|
4,670 |
|
|
912,015 |
|
|
886,598 |
|
|
25,417 |
|
|||||
Straight line rental revenue |
|
|
(339 |
) |
|
|
(3,217 |
) |
|
|
2,878 |
|
|
|
(7,893 |
) |
|
|
(13,946 |
) |
|
|
6,053 |
|
Lease surrender revenue |
|
|
(1,840 |
) |
|
|
(929 |
) |
|
|
(911 |
) |
|
|
(4,363 |
) |
|
|
(1,958 |
) |
|
|
(2,405 |
) |
Net Operating Income, Cash Basis - GAAP |
|
|
227,893 |
|
|
221,256 |
|
|
6,637 |
|
|
899,759 |
|
|
870,694 |
|
|
29,065 |
|
|||||
Adjustments for equity accounted joint ventures and financial real estate assets |
|
|
10,781 |
|
|
|
9,097 |
|
|
|
1,684 |
|
|
|
37,740 |
|
|
|
37,387 |
|
|
|
353 |
|
Net Operating Income, Cash Basis - Proportionate Share |
|
$ |
238,674 |
|
|
$ |
230,353 |
|
|
$ |
8,321 |
|
|
$ |
937,499 |
|
|
$ |
908,081 |
|
|
$ |
29,418 |
|
The following table reconciles Net Operating Income, Cash Basis to Same-Asset Net Operating Income, Cash Basis, for the periods ended as indicated.
For the periods ended December 31 ($ thousands) |
|
Three Months |
|
Year Ended |
||||||||||||||
|
|
2021 |
|
|
2020 |
|
Change |
|
|
2021 |
|
|
2020 |
|
Change |
|||
Net Operating Income, Cash Basis - Proportionate Share |
|
$ |
238,674 |
|
$ |
230,353 |
|
$ |
8,321 |
|
$ |
937,499 |
|
$ |
908,081 |
|
$ |
29,418 |
Transactions NOI, Cash Basis |
|
|
22,486 |
|
|
19,598 |
|
|
2,888 |
|
|
84,389 |
|
|
75,962 |
|
|
8,427 |
Same-Asset NOI, Cash Basis |
|
$ |
216,188 |
|
$ |
210,755 |
|
$ |
5,433 |
|
$ |
853,110 |
|
$ |
832,119 |
|
$ |
20,991 |
The following table reconciles net income, as determined in accordance with GAAP, to Funds from Operations for the periods ended as indicated.
|
|
Three Months |
|
Year Ended |
||||||||||||||||||||
For the periods ended December 31 ($ thousands) |
|
|
2021 |
|
|
2020 |
|
Change |
|
|
2021 |
|
|
2020 |
|
Change |
||||||||
Net income (loss) |
|
$ |
(163,087 |
) |
|
$ |
116,570 |
|
|
$ |
(279,657 |
) |
|
$ |
23,008 |
|
|
$ |
450,685 |
|
|
$ |
(427,677 |
) |
Amortization of intangible assets |
|
|
250 |
|
|
|
250 |
|
|
|
— |
|
|
|
1,000 |
|
|
|
1,000 |
|
|
|
— |
|
Foreign exchange gain reclassified from other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,184 |
) |
|
|
1,184 |
|
Acquisition transaction costs and other related expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,589 |
|
|
|
(1,589 |
) |
Other fair value gains (losses), net |
|
|
(666 |
) |
|
|
(1,347 |
) |
|
|
681 |
|
|
|
1,580 |
|
|
|
(2,210 |
) |
|
|
3,790 |
|
Adjustment to fair value of Exchangeable Units |
|
|
372,039 |
|
|
|
86,370 |
|
|
|
285,669 |
|
|
|
862,815 |
|
|
|
(354,286 |
) |
|
|
1,217,101 |
|
Adjustment to fair value of investment properties |
|
|
(96,275 |
) |
|
|
(103,601 |
) |
|
|
7,326 |
|
|
|
(458,817 |
) |
|
|
220,018 |
|
|
|
(678,835 |
) |
Adjustment to fair value of investment property held in equity accounted joint ventures |
|
|
(12,952 |
) |
|
|
(330 |
) |
|
|
(12,622 |
) |
|
|
(43,478 |
) |
|
|
36,819 |
|
|
|
(80,297 |
) |
Interest otherwise capitalized for development in equity accounted joint ventures |
|
|
393 |
|
|
|
1,005 |
|
|
|
(612 |
) |
|
|
3,173 |
|
|
|
5,112 |
|
|
|
(1,939 |
) |
Exchangeable Units distributions |
|
|
73,221 |
|
|
|
72,502 |
|
|
|
719 |
|
|
|
292,884 |
|
|
|
288,932 |
|
|
|
3,952 |
|
Internal expenses for leasing |
|
|
2,560 |
|
|
|
1,897 |
|
|
|
663 |
|
|
|
8,412 |
|
|
|
7,329 |
|
|
|
1,083 |
|
Income tax recovery |
|
|
(686 |
) |
|
|
(1,797 |
) |
|
|
1,111 |
|
|
|
(679 |
) |
|
|
(1,797 |
) |
|
|
1,118 |
|
Funds from Operations |
|
$ |
174,797 |
|
|
$ |
171,519 |
|
|
$ |
3,278 |
|
|
$ |
689,898 |
|
|
$ |
652,007 |
|
|
$ |
37,891 |
|
FFO per Unit - diluted(i) |
|
$ |
0.242 |
|
|
$ |
0.239 |
|
|
$ |
0.003 |
|
|
$ |
0.712 |
|
|
$ |
0.921 |
|
|
$ |
0.033 |
|
Weighted average Units outstanding - diluted(ii) |
|
|
723,363,313 |
|
|
|
718,026,576 |
|
|
|
5,336,737 |
|
|
|
723,127,566 |
|
|
|
707,764,714 |
|
|
|
15,362,852 |
|
(i) FFO payout ratio is calculated as cash distributions declared divided by FFO |
||||||||||||||||||||||||
| (ii) Includes Trust Units and Exchangeable Units. | ||||||||||||||||||||||||
The following table reconciles Funds from Operations to Adjusted Funds from Operations for the periods ended as indicated.
|
|
Three Months |
|
Year Ended |
||||||||||||||||||||
For the periods ended December 31 ($ thousands) |
|
|
2021 |
|
|
2020 |
|
Change |
|
|
2021 |
|
|
2020 |
|
Change |
||||||||
Funds from Operations |
|
$ |
174,797 |
|
|
$ |
171,519 |
|
|
$ |
3,278 |
|
|
$ |
689,898 |
|
|
$ |
652,007 |
|
|
$ |
37,891 |
|
Internal expenses for leasing |
|
|
(2,560 |
) |
|
|
(1,897 |
) |
|
|
(663 |
) |
|
|
(8,412 |
) |
|
|
(7,329 |
) |
|
|
(1,083 |
) |
Straight line rental revenue |
|
|
(339 |
) |
|
|
(3,217 |
) |
|
|
2,878 |
|
|
|
(7,893 |
) |
|
|
(13,946 |
) |
|
|
6,053 |
|
Adjustment for proportionate share of straight line rental revenue from equity accounted joint ventures and financial real estate assets |
|
|
(792 |
) |
|
|
(889 |
) |
|
|
(2,878 |
) |
|
|
(2,211 |
) |
|
|
(2,167 |
) |
|
|
(6,053 |
) |
Property capital |
|
|
(41,073 |
) |
|
|
(22,592 |
) |
|
|
(18,481 |
) |
|
|
(60,012 |
) |
|
|
(33,112 |
) |
|
|
(26,900 |
) |
Direct leasing costs |
|
|
(2,258 |
) |
|
|
(1,051 |
) |
|
|
(1,207 |
) |
|
|
(6,426 |
) |
|
|
(6,519 |
) |
|
|
93 |
|
Tenant improvements |
|
|
(8,265 |
) |
|
|
(4,711 |
) |
|
|
(3,554 |
) |
|
|
(16,379 |
) |
|
|
(19,269 |
) |
|
|
2,890 |
|
Adjustment for proportionate share of operating capital expenditures from equity accounted joint ventures and financial real estate assets |
|
|
(586 |
) |
|
|
(1,108 |
) |
|
|
51,596 |
|
|
|
(2,059 |
) |
|
|
(3,196 |
) |
|
|
51,746 |
|
Adjusted Funds from Operations |
|
$ |
118,924 |
|
|
$ |
136,054 |
|
|
$ |
(17,130 |
) |
|
$ |
586,506 |
|
|
$ |
566,469 |
|
|
$ |
20,037 |
|
AFFO per unit - diluted |
|
$ |
0.164 |
|
|
$ |
0.189 |
|
|
$ |
(0.025 |
) |
|
$ |
0.811 |
|
|
$ |
0.800 |
|
|
$ |
0.011 |
|
AFFO payout ratio - diluted(i) |
|
|
112.5 |
% |
|
|
97.7 |
% |
|
|
14.8 |
% |
|
|
91.2 |
% |
|
|
92.6 |
% |
|
|
(1.4 |
)% |
Distribution declared per Unit |
|
$ |
0.185 |
|
|
$ |
0.185 |
|
|
$ |
— |
|
|
$ |
0.740 |
|
|
$ |
0.740 |
|
|
$ |
— |
|
Weighted average Units outstanding - diluted(ii) |
|
|
723,363,313 |
|
|
|
718,026,576 |
|
|
|
5,336,737 |
|
|
|
723,127,566 |
|
|
|
707,764,714 |
|
|
|
15,362,852 |
|
(i) AFFO payout ratio is calculated as cash distributions declared divided by AFFO |
||||||||||||||||||||||||
| (ii) Includes Trust Units and Exchangeable Units. | ||||||||||||||||||||||||
Management’s Discussion and Analysis and Consolidated Financial Statements and Notes
Information appearing in this news release is a select summary of results. This news release should be read in conjunction with the Choice Properties 2021 Annual Report to Unitholders, which includes the consolidated financial statements and MD&A for the Trust, and is available at www.choicereit.ca and on SEDAR at www.sedar.com.
Conference Call and Webcast
Management will host a conference call on Thursday, February 17, 2022 at 10:00AM (ET) with a simultaneous audio webcast. To access via teleconference, please dial (236) 389-2653 or (833) 921-1643 and enter the event passcode: 2690932. The link to the audio webcast will be available on www.choicereit.ca/events-webcasts.
About Choice Properties Real Estate Investment Trust
Choice Properties is a leading Real Estate Investment Trust that creates enduring value through the ownership, operation and development of high-quality commercial and residential properties.
We believe that value comes from creating spaces that improve how our tenants and communities come together to live, work, and connect. We strive to understand the needs of our tenants and manage our properties to the highest standard. We aspire to develop healthy, resilient communities through our dedication to social, economic, and environmental sustainability. In everything we do, we are guided by a shared set of values grounded in Care, Ownership, Respect and Excellence. For more information, visit Choice Properties’ website at www.choicereit.ca and Choice Properties’ issuer profile at www.sedar.com.
Cautionary Statements Regarding Forward-looking Statements
This news release contains forward-looking statements relating to Choice Properties’ operations and the environment in which the Trust operates, which are based on management’s expectations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Therefore, actual outcomes and results may differ materially from those expressed in these forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. Management undertakes no obligation to publicly update any such statement, to reflect new information or the occurrence of future events or circumstances, except as required by law.
Numerous risks and uncertainties could cause the Trust’s actual results to differ materially from those expressed, implied or projected in the forward-looking statements, including those described in Section 12, “Enterprise Risks and Risk Management” of the Trust’s MD&A for the year ended December 31, 2021, which includes detailed risks and disclosure regarding COVID-19 and its impact on the Trust, and those described in the Trust’s Annual Information Form for the year ended December 31, 2021.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220215006131/en/
For further information, please contact [email protected]
Mario Barrafato
Chief Financial Officer
t: (416) 628-7872 e: [email protected]
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