Choice Properties Real Est Invstmnt Trst Q3 2026 Earnings Results & Report

Choice Properties Real Est Invstmnt Trst EPS Results

• Actual EPS: C$2.71
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Choice Properties Real Est Invstmnt Trst Revenue Results

• Actual Revenue: C$367.58 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Choice Properties is Canada's largest real estate investment trust, guided by a clear purpose: to create places where people thrive. This is how we build enduring value. As a national owner, operator, and developer of high-quality commercial and residential real estate, we go beyond managing assets. We create places that strengthen how tenants and communities live, work, and connect. Our platform is built on industry leadership in sustainability, community engagement, and social impact, embedded across how we operate, build, and grow. As a trusted steward of capital, we are committed to disciplined execution, long-term value creation, and responsible growth. Everything we do is guided by our core values of Care, Ownership, Respect, and Excellence.

Choice Properties Real Est Invstmnt Trst Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Choice reported 3.1% same-asset cash NOI growth and diluted FFO per unit of $0.284, up 2.2% year over year. Occupancy was 97.8%, while leasing spreads averaged 11.2% (17.7% excluding annual Loblaw renewals).
• Positive Sentiment: Retail demand remained strong, with 97.5% occupancy, 96% tenant retention and 12.8% average renewal spreads for third-party tenants. Industrial renewal spreads averaged 30.8%, including 46.2% in Ontario.
• Positive Sentiment: Management reiterated its 2026 outlook of 2%–3% same-asset cash NOI growth and FFO per unit of $1.08–$1.10, excluding the FCR transaction. It lowered expected year-end adjusted debt-to-EBITDA to about 7x from 7.5x, citing balanced capital recycling and lower development spending.
• Negative Sentiment: The FCR acquisition is progressing through regulatory review, but closing could slip from Q4 into Q1. Higher financing assumptions—about 4.5% weighted average cost versus 4.2% initially—are expected to add roughly $0.01 of dilution.
• Positive Sentiment: Choice started a 255,000-square-foot build-to-suit industrial project in Ajax, targeting a mid-6% development yield and Q1 2028 completion. Leasing discussions for its 1-million-square-foot Caledon project are active, though management said cash rent may not begin until 2028.

Presentation

[Operator]

Good morning. My name is Melissa, and I will be your conference moderator today. At this time, I would like to welcome everyone to the Choice Properties Real Estate Investment Trust Third Quarter 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. Thank you. I will now hand the conference over to Simone Cole, General Counsel and Secretary. Please go ahead.

[Simone Cole, General Counsel and Secretary at Choice Properties Real Estate Investment Trust]

Thank you, Melissa. Good morning, and welcome to Choice Properties Q3 2026 conference call. I am joined this morning by Rael Diamond, President and Chief Executive Officer, Erin Johnston, Chief Financial Officer, Niall Collins, EVP Development and Construction, and David Muallim, SVP Leasing and Operations. Rael and Erin will provide a brief recap of our third quarter operational results and highlights before we open the line for Q&A, where Niall and David will join to answer your questions. Before we begin today's call, I would like to remind you that by discussing our financial and operating performance, and in responding to your questions, we may make forward-looking statements, including statements regarding Choice Properties' objectives, strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, intentions, outlook and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical facts.

[Simone Cole, General Counsel and Secretary at Choice Properties Real Estate Investment Trust]

These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from the conclusions in these forward-looking statements. Additional information on the material risks that can impact our financial results and estimates, and the assumptions that we made in applying and making these statements, can be found in the recently filed Q3 2026 financial statements and management discussion and analysis, which are available on our website and on SEDAR+. Before I turn the call over to Rael, I want to take a moment to comment on our transaction with First Capital and KingSett. We continue to make good progress on our previously announced FCR acquisition and are working constructively through the regulatory process. We remain optimistic about a closing in the fourth quarter of this year. However, it is possible that closing will slip into Q1.

[Simone Cole, General Counsel and Secretary at Choice Properties Real Estate Investment Trust]

We will provide further updates as the regulatory process nears completion. With that, I turn the call over to Rael.

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

Thank you, Simone, and good morning, everyone. This was another solid quarter for Choice Properties. Our core business continues to deliver healthy organic growth. Our development program is creating value, and our industry-leading balance sheet remains in excellent shape. Our portfolio continues to benefit from a healthy retail market and continued tenant demand for high-quality, well-located industrial space. During the quarter, operating fundamentals remained strong across our core retail and industrial segments. We maintained near-full occupancy and delivered healthy leasing activity and renewal spreads, contributing to another quarter of strong same-asset NOI and FFO growth. Portfolio occupancy was 97.8%, up 10 basis points from the prior quarter. Average leasing spreads were 11.2%, which included our annual renewal tranche of Loblaw leases at 8.7%. Excluding the Loblaw renewals, average leasing spreads were 17.7%, helping drive same-asset NOI growth of 3.1%.

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

Our retail portfolio continues to perform exceptionally well, supported by favorable operating and leasing environment. Demand for well-located, grocery-anchored retail space continues to exceed supply, supporting high occupancy and strong rental rate growth. This continues to create opportunities to strengthen our tenant mix and capture higher rents. Retail occupancy increased 10 basis points from last quarter to 97.5%. Our strong leasing activity included 148,000 sq ft of new leasing and exceptionally high tenant retention of 96%, with no major vacancies during the quarter. We completed 3.1 million square ft of renewals, including 2.4 million square ft of annual Loblaw renewals. Renewal retail spreads averaged 9.6%, with Loblaw accounting for approximately 80% of activity at an average spread of 8.7%. For third-party tenants, renewal spreads averaged a healthy 12.8%.

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

This included 165,000 sq ft of fixed-rate deals with an average spread of 4.4%, and 334,000 sq ft of market-rate renewals with a strong spread of 16.2%. Importantly, our leasing strength was broad-based. Notable big box renewals included an 80,000-square-foot home improvement tenant in Mississauga and a 50,000-square-foot furniture tenant in Victoria, B.C. Both were completed at approximately 25% lifts. We also achieved spreads about 15% across several categories, including restaurants, beauty, pets, and medical. These results reinforce the continued depth of demand for our necessity-based retail portfolio. Looking ahead, we expect positive absorption in the fourth quarter as recent leasing commences. This includes a new No Frills at Dartmouth Crossing, backfilling one of our former three Toys R Us locations. We also made progress on the remaining two Toys R Us locations, with one leased to Maxi Montreal and the final location in advanced discussions.

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

Finally, progress continues at Bloor and Dufferin retail revitalization, with the renovated No Frills opening last week and Shoppers Drug Mart opening later this quarter. We are proud of our team's efforts as we look to finalize the project next year, with GoodLife targeted for possession in Q1. Turning to our industrial portfolio, occupancy ended the quarter at 98.6%, unchanged from prior quarter. This reflects the continued demand for well-located space in major markets. During the quarter, we completed 505,000 sq ft of renewals with a retention ratio of 83.2%. Renewal spreads averaged 30.8%, led by strong performance in Ontario, where spreads averaged 46.2% across approximately 252,000 sq ft of renewals. These fundamentals reinforce our conviction in selectively advancing our industrial development pipeline in the GTA, where construction is progressing well at our 1 million square foot Building D at Choice Caledon Business Park.

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

We continue to target a completion in the second half of 2027, and our team remains active in RFP discussions with prospective single and multi-user tenants. We are also pleased to announce we have started development on a new build-to-suit industrial development on excess land at our Ajax property, which we acquired from Loblaw early last year. The multi-phase development will add 255,000 sq ft at a development yield in the mid-6% range, with completion expected in Q1 2028. Separately, we moved the NLS expansion, Building H1, out of active development and back to planning. The site is shovel-ready, but we do not intend to advance it further until we know NLS's decision on its option, which they have until April to exercise. If NLS elects not to exercise, we will then decide whether to proceed on a speculative basis.

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

Looking ahead, we expect positive absorption in the fourth quarter to bring industrial occupancy to higher levels by year-end, reflecting the quality of our portfolio and continued demand for well-located assets. Renewal spreads are expected to moderate in the fourth quarter as the mix of expiring leases changes, rather than reflecting a shift in market fundamentals. Lastly, while same-asset NOI in our mixed-use portfolio benefited from contractual steps, occupancy declined temporarily as we agreed to end a tenant's lease early at our head office to accommodate increased staffing needs for the First Capital transaction. In our residential portfolio, operating performance remains stable, and we continue to prioritize tenant retention. Now, turning to transaction activity. We completed approximately CAD 107 million of transactions during and subsequent to quarter-end, including one acquisition for CAD 39 million and three dispositions totaling CAD 68 million.

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

This brings year-to-date capital recycling activity to approximately CAD 149 million, including CAD 75 million of dispositions and CAD 74 million of acquisitions. Our acquisitions included a retail property in Burnaby, British Columbia, for approximately CAD 39 million. The property is located along Kingsway in the Metrotown area, a high-traffic retail node benefiting from significant residential densification and growing retail demand. The property is anchored by Wholesale Club under a new 15-year lease with Loblaw, providing healthy contractual growth over the lease term. The site had previously been designated for mixed-use redevelopment, and in light of a softening residential land market, this acquisition is an example of Choice's ability to acquire high-quality real estate while working with Loblaw to help them secure long-term tenancies.

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

We also completed three dispositions during and subsequent to quarter-end, including a 50% interest in Slave Lake, Alberta, for CAD 13.2 million, the sale of Park 61 in Calgary, a non-core industrial portfolio comprising four buildings for CAD 35.9 million, and the sale of 120 Susie Lake in Halifax, an older, unanchored retail property with near-term capital requirements for CAD 19 million that we closed subsequent to quarter-end. These dispositions demonstrate our continued focus on enhancing portfolio quality and recycling capital from non-core assets. Looking ahead, excluding our anticipated portfolio acquisition from First Capital, we expect net capital recycling to be largely balanced. With that, I'll turn the call over to Erin to discuss our financial results and capital allocation activity. Erin?

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

Thank you, Rael, and good morning, everyone. We are pleased to report another consistent and strong quarter. Our financial performance was driven by strong organic growth, supported by near-full occupancy and healthy leasing spreads in our core business. At the same time, we continue to strengthen our balance sheet through our disciplined approach to capital allocation. For the quarter, reported funds from operations, or FFO, was CAD 205.2 million, or CAD 0.284 per unit on a diluted basis, an increase of 2.2% year over year. Growth was driven by strong same-asset cash NOI growth of 3.1%. Contributions from acquisitions and developments largely offset dispositions, while higher refinancing costs and lower investment income partially tempered FFO growth. Lease surrender revenue was CAD 10.6 million and was relatively consistent year over year. In the quarter, this amount included both amounts related to our ongoing right-sizing program, as well as other lease termination income.

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

The third quarter represents the end of our right-sizing program for 2026. Adjusting for the year-over-year impact of non-recurring items, including the increase in lease surrender revenue of CAD 0.7 million and the reduction in Allied's distribution of CAD 3.2 million, FFO growth was 3.5%. AFFO in the quarter was CAD 0.214 per unit, up 11.5% from the prior year, which was largely related to the timing of tenant improvements and maintenance capital. We continue to expect full-year 2026 capital spend and our AFFO payout ratio to be broadly in line with the prior year. Turning to our property performance. Same-asset cash NOI increased CAD 7.8 million, or 3.1%, over the prior year. By asset class, retail same-asset cash NOI increased by CAD 4.8 million, or 2.5%. Industrial same-asset cash NOI increased by CAD 2.7 million, or 5.5%, including approximately 50 basis points of growth from bad debt recoveries.

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

Both asset classes benefited from higher base rents driven by strong renewal spreads, new leasing activity, and contractual rent steps, and higher recovery revenues. Mixed-use and residential same-asset cash NOI increased by approximately CAD 0.2 million, or 2.1%, primarily due to higher base rents in our mixed-use portfolio. Moving to the balance sheet. IFRS net asset value, or NAV, was CAD 15.04 per unit, an increase of approximately CAD 229 million, or 2.1%, compared to the prior quarter. This included CAD 139 million fair value gain on derivative financial assets related to the unit consideration for the FCR transaction. Under IFRS, we are required to record a derivative, which represents the difference between Choice's unit price as completed on the announcement of the transaction and Choice's unit price as of the end of the quarter.

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

Excluding the derivative asset, NAV would have been CAD 14.86 per unit, up 0.8% from the prior quarter. NAV also benefited from a CAD 61 million net contribution from operations and a CAD 60 million net fair value gain on investment properties, partially offset by a CAD 33 million fair value loss on our investment in Allied Properties. Under IFRS, we are required to mark this investment to market based on Allied's trading price at each period end. Fair value gains on investment properties in the quarter were primarily driven by our retail portfolio, reflecting favorable cap rate and leasing adjustments supported by external appraisals. We recorded a modest gain in our industrial portfolio related to a disposition. We also reported a write-down in properties under development related to our residential development pipeline, largely as a response to market conditions.

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

Our balance sheet remains in excellent shape, with strong debt metrics and significant liquidity and access to capital ahead of our expected closing of the FCR transaction. We have approximately CAD 2.4 billion of available liquidity through our corporate facility and cash on hand. We also have approximately CAD 14.1 billion of unencumbered properties, and our debt-to-EBITDA ratio, net of cash, was unchanged from the prior quarter at 6.9 times. During the quarter, we completed a successful financing of our new Series Y unsecured debenture offering of CAD 300 million in September. The seven-year offering was completed at a 4.836% coupon. Proceeds will be used to partially redeem our Series Q unsecured debenture at maturity on November 30. With the pre-funding of our November maturity complete, we have addressed our remaining 2026 maturities. This positions us to focus the remainder of the year on completing the financing required to close the FCR transaction.

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

While financing costs remain higher compared to our original transaction assumptions for the deal, we have flexibility to optimize the term and cost of financing for our remaining financing needs. We have also taken advantage of the recent pullback in rates to begin strategically hedging a portion of our expected financing needs for the transaction. We are now expecting the weighted average cost on the total debt financing of the transaction to be approximately 4.5%, compared to 4.2% in our original underwriting. Looking ahead to next year, we expect refinancing costs to remain a headwind as lower-cost debt matures. Our next significant maturity is CAD 500 million in May. Turning to development. During the quarter, development spend totaled approximately CAD 54 million. We transferred six retail development projects totaling 91,000 sq ft, representing approximately CAD 42 million of investment at a blended yield of 7%.

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

These projects included four Shoppers Drug Marts, a QSR tenant, and an automotive services tenant. Together, these projects highlight both the strength of our relationship with Loblaw, including our work to support its national pharmacy growth program, and our ability to create value by intensifying excess land across our existing retail portfolio. We remain disciplined in advancing our commercial development pipeline, prioritizing retail and industrial opportunities that generate attractive risk-adjusted returns and create value over the long term. Year to date, we have spent approximately CAD 100 million on development and expect to spend approximately CAD 150 million for the full year, primarily across our retail and industrial pipeline. As we look to the balance of the year, our focus remains on delivering strong operating performance in our core business, advancing our commercial development pipeline, and continuing to progress toward the anticipated closing of the FCR transaction.

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

We expect strong total NOI growth in Q4 as a result of contributions from development deliveries in the past year, with same-asset NOI growth being slightly lower than Q3 due to strong leasing performance in the prior period, particularly in industrial. We are reiterating the majority of our 2026 outlook and expect to deliver stable occupancy and 2%-3% same-asset cash on NOI growth, with FFO per unit diluted between CAD 1.08 and CAD 1.10 for the year, excluding the impact of the FCR transaction. We have changed our outlook for adjusted debt to EBITDA for the full year to approximately seven times from seven and a half times. Our strategic shift to balance capital recycling ahead of the FCR transaction, as well as lower development spend, supports this stronger balance sheet outlook.

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

Assuming a close date in Q4 for the First Capital transaction, we expect adjusted debt to EBITDA to be approximately 8.5 times on an annual basis post-closing, with the remainder of our outlook ranges remaining unchanged. We expect to provide our full 2027 outlook along with Q4 results in February. With that, Rael, David, Niall, and I would be glad to answer your questions.

[Operator]

At this time, I would like to remind everyone, in order to ask a question, press star followed by the number 1 on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Mark Rothschild with Canaccord Genuity. Your line is now open. Please go ahead.

[Mark Rothschild, Analyst at Canaccord Genuity]

Thanks. Good morning, everyone. Rael, maybe in regard to development, can you just give an update on your thoughts in general on advancing development projects, maybe Caledon in particular, and is the slower pace at all impacted by the First Capital transaction, or does one have nothing to do with the other?

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

One doesn't have to do with the other. So, what we always said, Mark, is that we will advance a building on spec, and when we lease it up or get momentum, we would start another one in Caledon. We will tell you, there is good RFP activity, as we commented in the script. We are very hopeful, and as soon as we have more clarity on leasing timing, we are happy to advance another one.

[Mark Rothschild, Analyst at Canaccord Genuity]

Okay, great. Thanks. Maybe just one more. In regard to the Allied investment, obviously, the unit price has declined dramatically. Is there any strategic reason or reason why you would still look at that as something to own? Do you believe that maybe just there could be a recovery there? Also connected to that, is this something that Choice would consider being more involved with? Obviously, you have more liquidity and financial capacity than Allied itself does.

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

Yeah, look, as you indicated, Mark, we're clearly disappointed with the performance. Having said that, we think that the board has made some hard but truly necessary decisions, and we're supportive of all the steps that they've recently taken, including the reduction in the distribution. I think as far as our long-term hold, I would say everything's on the table. However, this could be a great turnaround story. As you said, there could be upside, and we believe there will likely be upside as more changes are implemented.

[Mark Rothschild, Analyst at Canaccord Genuity]

Okay, great. Thanks so much. I'll turn it back.

[Operator]

Your next question comes from the line of Himanshu Gupta with Scotiabank. Your line is now open. Please go ahead.

[Himanshu Gupta, Analyst at Scotiabank]

Thank you, and good morning. First on lease surrender revenue, chunky this quarter. Can you elaborate how many Loblaw assets were right-sized, and should we expect anything in Q4?

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

Hi, Himanshu. It's Erin. Good morning. The lease surrender revenue included two Loblaw assets, which David can give some color on, and some smaller lease termination income related to a few other tenants. In terms of our right-sizing program, we had said at the beginning of the year that it would be relatively consistent with last year, i.e., around CAD 10 million, and that's where we're at as of now. There won't be any more right-sizing lease termination income in Q4. We're done for the year. Next year, we'll give you more guidance in Q4, but David can give some color on what the locations were in the quarter.

[David Muallim, SVP of Leasing and Operations at Choice Properties Real Estate Investment Trust]

Hi, Himanshu. The two this quarter, both were in Alberta. One was in Calgary, and one was in a smaller market, Lethbridge. At a high level, we backfilled with fitness and dollar stores. Those are the tenants that will be taking over the space that Loblaw had downsized. Essentially, the termination payment really accounts for the re-leasing costs and the downtime, but all of the rents that we had received from the new leases are higher than our in-place leases. So we got a bit of upside there too from the rents.

[Himanshu Gupta, Analyst at Scotiabank]

Got it. Thank you, David and Erin. Next question on the FCR transaction, sounds like you're optimistic to close in Q4. Regarding Competition Bureau approvals, is there a timeline by which you expect a response one way or the other?

[Simone Cole, General Counsel and Secretary at Choice Properties Real Estate Investment Trust]

Thanks. It's Simone Cole. Thanks for your question. There's no exact timeline, but we're working very well through the process, and that's why we're feeling optimistic about Q4.

[Himanshu Gupta, Analyst at Scotiabank]

Okay. Once you get that approval, how long the closing will take once you get those approvals?

[Simone Cole, General Counsel and Secretary at Choice Properties Real Estate Investment Trust]

Yeah. We're pretty well organized, so it's not a long lag between announcing we have approval and the closing. Couple of weeks.

[Himanshu Gupta, Analyst at Scotiabank]

Okay, couple of weeks. Okay, thank you. Just a last quick one on the financing side. What are your latest expectation on raising that, I think it's around CAD 800 million of debentures for the FCR transaction? I know you mentioned 4.5% weighted average, but what's specifically for the new debenture raise?

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

Our current assumption for the CAD 800 million of new debentures is 5%, Himanshu, and that's a blend of tenors. Then if you think about 2027, you should be modeling 10-year debt. So it's probably, depending on where today's rates are at, probably more around 5.2.

[Himanshu Gupta, Analyst at Scotiabank]

Got it. Thank you so much. I'll term it back.

[Operator]

Your next question comes from the line of Pammi Bir with RBC Capital Markets. Your line is now open. Please go ahead.

[Pammi Bir, Analyst at RBC Capital Markets]

Yeah. Thanks. Good morning. Just maybe coming back to the FCR deal, just with the updated financing costs that you disclosed, any change to your outlook relative to the initial dilution that you'd cited?

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

Yeah, Pammi, it's Erin. We expect it to be approximately another CAD 0.01 dilutive.

[Pammi Bir, Analyst at RBC Capital Markets]

Okay. Just in terms of the, I guess, just the ongoing review with the Competition Bureau, what are some of the parts of that process that could push that, whether it's to mid-Q1 or late Q1 or early Q2, or sorry, yeah, or this quarter? What are some of the things that could either extend it or just expedite it?

[Simone Cole, General Counsel and Secretary at Choice Properties Real Estate Investment Trust]

Yeah. Thanks for the question. I don't think there's component parts. It's working, and we've been going through it quite constructively. It's just we wanted to be really transparent that we don't control the process, and so it could slip into Q1. But as we said, we're feeling quite good through it, and we're still anticipating that it's late this year, early next year.

[Pammi Bir, Analyst at RBC Capital Markets]

Okay. All right. That's helpful. Last one for me, just coming back to the Caledon Building D. Rael, I think you mentioned, look, you're getting some RFPs, and the activity seems good, but do you expect that property to be leased by the time the project's completed, or is the economic impact in terms of income production more so in 2028?

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

Look, the building will be complete towards the end of 2027, and we're hopeful we have a tenant in place by that time. But likely, even if we have a tenant in place by that time, cash rent won't commence until 2028.

[Niall Collins, EVP of Development and Construction at Choice Properties Real Estate Investment Trust]

Pammi, just to add to that, there is strong. Just adding to the strong activity, we've three transactions we're looking at right now of various sizes and various commencement dates over the course of 2027 to early 2028.

[Pammi Bir, Analyst at RBC Capital Markets]

And sorry, would that be for the full amount of the space?

[Niall Collins, EVP of Development and Construction at Choice Properties Real Estate Investment Trust]

Yes.

[Pammi Bir, Analyst at RBC Capital Markets]

Okay. Thanks very much. I'll term it back.

[Operator]

Your next question comes from the line of Tal Woolley with CIBC Capital Markets. Your line is now open. Please go ahead.

[Tal Woolley, Analyst at CIBC Capital Markets]

Hey, good morning. We saw one of your peers repurchase a portfolio they had sold to Oak Street, roughly around the same time you guys did a significant transaction with them as well in 2019. Just wondering, do you think this is part of a broader Are they looking to liquidate their holdings here in Canada? Have you been approached about maybe buying back those sites?

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

Oak Street is looking to repatriate their capital, but it is not something we are intending to purchase back the assets that we had sold them.

[Tal Woolley, Analyst at CIBC Capital Markets]

Okay. So you would be willing to let that turn back to a third party then?

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

Yeah. Look, we have lots of uses of our capital. We are very excited by the development program. We have the First Capital acquisition, and then we have also said that we want to make sure that our balance sheet gets back to being in the place where it was, starting the First Capital transaction. That is why that portfolio would not be compelling.

[Tal Woolley, Analyst at CIBC Capital Markets]

Okay. With respect to the transaction, do you have a sense of what, if any, kind of changes or modifications would be under consideration at this point to expedite clearance, or the feedback you have gotten so far is that the other transactions being considered as is?

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

Thank you, sir. Look, unfortunately, we cannot give much more color on the Competition Bureau process other than what Simone Cole said, that we are feeling optimistic. As soon as we have clarity, we will provide that update.

[Tal Woolley, Analyst at CIBC Capital Markets]

Okay.

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

Tal, just also coming back to your previous question on Oak Street. Oak Street has actually been out selling most of the assets that we had sold them already. I believe most of the portfolio that we had sold them is actually being sold already and already changed hands.

[Tal Woolley, Analyst at CIBC Capital Markets]

Okay. That is great. I appreciate that, Rael. Thanks very much, everybody.

[Operator]

As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Your next question comes from the line of Giuliano Thornhill with National Bank Capital Markets. Your line is now open. Please go ahead.

[Giuliano Thornhill, Analyst at National Bank Capital Markets]

Hey, guys. Good morning, everyone. Just wanted to talk about FCR. I am just wondering if that portfolio, at least from what you are seeing, if that is tracking as you are underwriting currently, and if everything on their operations side is hitting as expected.

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

Hi, it is Erin. Good morning. Yeah, you would have seen their Q3 results last week, and they are strong, and I think all year long they have also been strong, or I know they have. And if you think about the trends that are showing up in our portfolio in terms of retail strength in the market, we are seeing the same thing with the FCR assets.

[Giuliano Thornhill, Analyst at National Bank Capital Markets]

Okay. And similar for, I guess, retail occupancy, I know the total outlook is that it will be roughly stable for the entire portfolio. Does that indicate there will be a substantial uptick in Q4?

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

Yes. Retail occupancy will be slightly higher in Q4.

[David Muallim, SVP of Leasing and Operations at Choice Properties Real Estate Investment Trust]

Related to Choice, yeah.

[Erin Johnston, CFO at Choice Properties Real Estate Investment Trust]

Yeah.

[Giuliano Thornhill, Analyst at National Bank Capital Markets]

Great. Okay. Thanks.

[Operator]

There are no further questions at this time. I will now turn the call back to Rael Diamond, CEO, for closing remarks.

[Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust]

Thank you, Melissa. Looking ahead, our core business remains in excellent shape, and we are well-positioned as we prepare for the closing of the First Capital transaction. Thank you all for your interest in Choice and for joining us this morning. We look forward to providing you another update on the business in the new year. Have a good weekend.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Analysts

• Simone Cole, General Counsel and Secretary at Choice Properties Real Estate Investment Trust
• Rael Diamond, President and CEO at Choice Properties Real Estate Investment Trust
• Erin Johnston, CFO at Choice Properties Real Estate Investment Trust
• Mark Rothschild, Analyst at Canaccord Genuity
• Himanshu Gupta, Analyst at Scotiabank
• David Muallim, SVP of Leasing and Operations at Choice Properties Real Estate Investment Trust
• Pammi Bir, Analyst at RBC Capital Markets
• Niall Collins, EVP of Development and Construction at Choice Properties Real Estate Investment Trust
• Tal Woolley, Analyst at CIBC Capital Markets
• Giuliano Thornhill, Analyst at National Bank Capital Markets