Mr. Rael Diamond reports

CHOICE PROPERTIES REAL ESTATE INVESTMENT TRUST REPORTS RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

Choice Properties REIT has released its consolidated financial results for the three and nine months ended Sept. 30, 2023. The 2023 third quarter report to unitholders is available in the investors section of the trust's website and has been filed on SEDAR+.

"We delivered positive operating and financial results in the third quarter. Our performance is supported by stable cash flows, reflecting the strength of our necessity-based portfolio and demand for our well-located industrial assets, as well as an industry-leading balance sheet," said Rael Diamond, president and chief executive officer of the trust. "In a volatile economic environment, Choice is well positioned to execute on our strategic priorities and deliver strong and consistent operating performance."

2023 third quarter highlights:

• Reported net income for the quarter of $435.9-million, as compared with a net income of $948.1-million in the third quarter of 2022. The decrease in net income from the prior year was primarily due to non-cash fair value changes;
• Reported FFO (funds from operations) per unit diluted (1) was 25.0 cents, an increase of 4.6 per cent compared with the third quarter of 2022;
• Period-end occupancy of 97.7 per cent:
  • Retail at 97.7 per cent, industrial at 98.3 per cent, and mixed-use and residential at 88.6 per cent;
• Same-asset NOI (net operating income) on a cash basis (1) increased by 4.4 per cent compared with the third quarter of 2022:
  • Retail increased by 3.4 per cent;
  • Industrial increased by 9.1 per cent;
  • Mixed-use and residential increased by 6.8 per cent;
• Transferred $60.6-million of properties under development to income producing status, delivering approximately 322,296 square feet of new GLA (gross leasable area) on a proportionate-share basis (1), including the final phase of the trust's Horizon Business Park Industrial development in Edmonton, Alta.;
• Invested $44.8-million of capital in development on a proportionate-share basis (1);
• Completed an issuance of $350.0-million Series T senior unsecured debentures bearing interest at 5.699 per cent with a 10.5-year term and repaid upon maturity $200.0-million Series B senior unsecured debentures, bearing interest at 4.903 per cent;
• Obtained CMHC-insured (Canada Mortgage and Housing Corporation) mortgages, secured by two residential properties in Toronto (the Brixton and Liberty House), of $162.1-million at share, bearing interest at an average rate of 4.126 per cent and a term of 10 years;
• Ended the quarter in a strong liquidity position with $1.5-billion of available credit under the trust's revolving credit facility, a $12.4-billion pool of unencumbered properties and adjusted debt to EBITDAFV (1) (earnings before interest, taxes, depreciation, amortization and fair value) of 7.4 times (net of cash -- 7.3 times);
• Subsequent to the end of the quarter, transferred two projects from properties under development to income-producing status, the Element in Ottawa, Ont., a 126-unit residential building, and Choice Industrial Centre in Surrey, B.C., a 353,000-square-foot new generation industrial facility.

(1) Non-GAAP (generally accepted accounting principles) financial measures.

Quarterly results

Choice Properties reported net income of $435.9-million for the third quarter of 2023, as compared with a net income of $948.1-million in the third quarter of 2022. The decrease of $512.2-million compared with the prior-year was primarily due to:

• A $225.6-million unfavourable change in the adjustment to the fair value of the trust's exchangeable units due to the change in the trust's unit price (i);
• A $206.5-million decrease in income from equity accounted joint ventures primarily due to fair value gains recognized in the industrial development portfolio in 2022;
• A $114.5-million unfavourable change in the adjustment to the fair value of investment properties, driven by a smaller gain on investment properties in the third quarter of 2023 compared with the third quarter of 2022.

Year-to-date results

Choice Properties reported net income of $1,242.4-million for the nine months ended Sept. 30, 2023, as compared with $1,323.3-million for the nine months ended Sept. 30, 2022. The decrease of $80.9-million compared with the prior year was mainly due to:

• A $307.3-million decrease in income from equity accounted joint ventures primarily due to fair value gains recognized in the industrial development portfolio in 2022;
• A $205.8-million unfavourable change in the adjustment to the fair value of the trust's exchangeable units due to the change in the trust's unit price;
• Partially offset by a $268.9-million favourable change in the adjustment to the fair value of investment properties, driven by the gain on investment properties in 2023 compared with the loss on investment properties in the prior year;
• A $137.0-million favourable change in the adjustment to the fair value of the trust's investment in the real estate securities of Allied Properties Exchangeable LP, a subsidiary of Allied Properties Real Estate Investment Trust, driven by the mark-to-market loss in 2023 being significantly smaller than the mark-to-market loss recorded in 2022.

Quarterly and year-to-date results

For the three and nine months ended Sept. 30, 2023, same-asset NOI, cash basis (i), increased by $10.0-million and $31.4-million, respectively, compared with the prior year, primarily due to increased revenue from higher rental rates on renewals, new leasing and contractual rent steps, mainly in the retail and industrial portfolios. Higher capital and operating recoveries also contributed to the increases.

FFO increased by $7.9-million and $17.9-million for the three and nine months ended Sept. 30, 2023, respectively. The increases were primarily due to the increase in same-asset NOI, higher lease surrender revenue and an increase in interest income. The increases were partially offset by higher interest expense and general and administrative expenses. The nine-month increase was also offset by the impact of the sale of six office properties to Allied Properties REIT in the first quarter of 2022. The net impact of the Allied transaction includes the loss of NOI, partially offset by the distribution and interest income earned from the Class B limited partnership units of Allied Properties Exchangeable LP and promissory note received from Allied in exchange for the properties sold.

Outlook

Choice is focused on capital preservation, delivering stable and growing cash flows and net asset value appreciation, all with a long-term focus. Choice's high-quality portfolio is primarily leased to necessity-based tenants and logistics providers that are less sensitive to economic volatility and therefore provide stability to Choice's overall portfolio. Choice continues to experience positive leasing momentum across its portfolio and has successfully completed its 2023 lease renewals. It also continues to advance its development program, with a focus on industrial opportunities, which provides Choice with the best opportunity to add high-quality real estate to its portfolio at a reasonable cost and drive net asset value appreciation over time.

Choice is confident that its business model, stable tenant base, strong balance sheet and disciplined approach to financial management will continue to position the REIT well for future success; however, the trust cannot predict the precise impacts of the broader economic environment on its 2023 financial results. In 2023, Choice Properties has continued to focus on its core business of essential retail and industrial, its growing residential platform, and its robust development pipeline, and based on its year-to-date operating and financial performance, including certain non-recurring items, now expects:

• Stable occupancy across the portfolio, resulting in 4-5-per-cent year-over-year growth in same-asset NOI, cash basis;
• Annual FFO per unit diluted in a range of 99 cents to $1, reflecting 3-per-cent to 4-per-cent year-over-year growth;
• Stable leverage metrics, targeting adjusted debt to EBITDAFV of approximately 7.5 times.

Conference call and webcast

Management will host a conference call on Thursday, Nov. 9, 2023, at 10 a.m. ET, with a simultaneous audio webcast. To access via teleconference, please dial 240-789-2714 or 888-330-2454 and enter the event passcode 4788974. The link to the audio webcast will be available on the REIT's website.

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.

The REIT believes that value comes from creating spaces that improve how its tenants and communities come together to live, work and connect. Choice Properties strives to understand the needs of its tenants and manage its properties to the highest standard. The REIT aspires to develop healthy, resilient communities through its dedication to social, economic and environmental sustainability. In everything it does, Choice Properties is guided by a shared set of values grounded in care, ownership, respect and excellence.

We seek Safe Harbor.