Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Choice Properties Real Estate Investment Trust (PPRQF, Financial) maintained near full occupancy rates throughout 2024, demonstrating strong operational performance.
- The company completed approximately $425 million in real estate transactions, including $260 million of acquisitions, enhancing its portfolio.
- Significant progress was made on the development pipeline, adding approximately $300 million of high-quality real estate to the portfolio.
- The Board of Trustees approved a third consecutive annual distribution increase, reflecting a commitment to sharing growth with unitholders.
- Strong leasing demand was observed, particularly in the grocery and necessity-based retail sectors, indicating robust market interest.
Negative Points
- The company experienced negative absorption of 105,000 square feet, primarily due to vacancies in the Ontario retail and Atlantic industrial portfolios.
- The Golden Mile redevelopment project was paused due to increased upfront site servicing costs and a partner's decision not to proceed.
- Higher interest costs partially offset the financial gains from higher same-asset NOI and completed developments.
- The industrial portfolio saw a small occupancy decline, with a 20 basis point drop to 97.9% due to vacancies in Atlantic and Alberta.
- The residential asset class remains a small portion of the portfolio, with challenges in advancing large master plan sites due to elevated costs and lower land values.
Q & A Highlights
Q: Can you provide insights on the potential impact of tariffs on your industrial portfolio and any changes in leasing timelines?
A: Rael Diamond, Chief Operating Officer, stated that while it's early to assess the full impact of tariffs, the portfolio's resilience is expected to mitigate significant effects. The company has already renewed 85% of tenants for 2025, and demand remains strong, particularly for necessity-based retail tenants.
Q: What yield do you expect from the Loblaw developments and intensifications?
A: Rael Diamond mentioned that the expected yield for both ground-up developments and intensifications is typically around 7.5%.
Q: How are you approaching new industrial developments given the current macroeconomic environment?
A: Rael Diamond explained that due to competitive land cost advantages, they are confident in proceeding with speculative construction, pending no major market disruptions. They are monitoring the situation closely and responding to RFPs.
Q: Can you elaborate on the decision to pause the Golden Mile redevelopment project?
A: Niall Collins, Chief Operating Officer, explained that high infrastructure costs and a partner's decision not to proceed were key factors. They are working with the city and landowners to find more efficient solutions.
Q: What are your expectations for industrial occupancy and rental spreads in 2025?
A: Erin Johnston, Senior Vice President of Finance, noted that industrial occupancy is expected to improve to 98.5% by year-end, with rental spreads remaining strong, particularly in Ontario.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
