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Choice Properties Real Estate Investment Trust (TSE:CHP.UN)
TSX:CHP.UN
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Choice Properties Real Estate Investment
(TSX:CHP.UN)
Rating:76Outperform
Price Target:―
Positive Factors
Investment Activity
CHP will likely be a net acquirer in 2025, with significant acquisition activity including high-value properties.
Operating Performance
Solid operating performance leads to 2% growth in Choice Properties REIT, highlighted by FFO per unit and same-property NOI growth of 1.9% and 2.9%, respectively.
Portfolio Composition
The REIT's portfolio composition and capital structure have become increasingly attractive to investors in an uncertain environment.
Negative Factors
Interest Expense
Greater interest expense from refinancing maturing debt at higher interest rates over the past year partially offset growth.
Occupancy Rates
Total occupancy ended Q424 at 97.6%, which was a decline compared to the previous quarter and year.
Choice Properties Real Estate Investment (CHP.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$10.80B
Dividend Yield5.12%
Average Volume (3M)423.44K
Price to Earnings (P/E)19.8
Beta (1Y)0.74
Revenue Growth0.70%
EPS Growth-18.29%
CountryCA
Employees285
SectorReal Estate
Sector Strength63
IndustryREIT - Retail
Share Statistics
EPS (TTM)-0.13
Shares Outstanding328,024,260
10 Day Avg. Volume406,796
30 Day Avg. Volume423,435
Financial Highlights & Ratios
PEG Ratio-1.26
Price to Book (P/B)2.21
Price to Sales (P/S)0.00
P/FCF Ratio6.76
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$15.72Price Target Upside7.06% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Choice Properties Real Estate Investment Business Overview & Revenue Model
Company DescriptionChoice Properties Real Estate Investment Trust (CHP.UN) is one of Canada's largest real estate investment trusts, primarily focused on owning, managing, and developing a diverse portfolio of commercial, retail, industrial, and residential properties. The company operates in sectors including retail, office, and industrial, with a strategic emphasis on long-term value creation through its robust real estate assets and development projects.
How the Company Makes MoneyChoice Properties Real Estate Investment Trust generates revenue primarily through leasing its extensive portfolio of properties to a diverse range of tenants. This includes long-term lease agreements with its anchor tenant, Loblaw Companies Limited, which contributes significantly to its rental income. The company's revenue streams are bolstered by property appreciation and strategic developments that enhance the value and income potential of its assets. Additionally, Choice Properties engages in property management and development activities that provide supplementary income, thereby enhancing its overall profitability. Strategic partnerships with reputable tenants and stakeholders also play a crucial role in maintaining steady cash flow and optimizing occupancy rates across its portfolio.
Choice Properties Real Estate Investment Earnings Call Summary
Earnings Call Date:Apr 23, 2025
(Q1-2025)
| % Change Since: 2.77%|
Next Earnings Date:Jul 17, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong start to the fiscal year with solid occupancy and NOI growth, successful strategic acquisitions, and robust retail leasing performance. However, there were concerns regarding industrial occupancy decline and potential exposure to tariffs. Overall, the positive highlights outweigh the lowlights.Q1-2025 Updates
Positive Updates
Strong Occupancy and NOI Growth
The portfolio maintained near full occupancy at 97.7% and achieved strong same-asset cash NOI growth of 2.9%.
Successful Real Estate Transactions
Completed approximately $95 million in total real estate transactions, including $33 million of strategic acquisitions and $62 million of noncore asset dispositions.
Significant Industrial Acquisitions
Completed two industrial transactions totaling $340 million, including a 1.1 million square foot distribution asset with future intensification potential.
Retail Leasing Success
Retail lease renewals were completed at an average rent spread of 11.7%, and new leasing resulted in a positive absorption of 53,000 square feet.
Strong Balance Sheet
Maintained a fully undrawn $1.5 billion corporate facility and $13.1 billion of unencumbered properties, with a debt-to-EBITDA ratio of 7x.
Negative Updates
Industrial Occupancy Decline
Industrial occupancy decreased by 20 basis points to 97.7%, with a 72% retention rate for lease renewals.
Exposures and Tariff Concerns
Discussed potential exposure to tariffs, particularly in the automotive and consumer goods sectors, though considered not material.
Nonrecurring Financial Items
Reported a modest amount of nonrecurring items totaling $2.9 million, affecting financial performance comparisons.
Company Guidance
During the Choice Properties Real Estate Investment Trust First Quarter 2025 Earnings Call, several key metrics and performance indicators were discussed. The company reported near full occupancy at 97.7%, a same-asset cash net operating income (NOI) growth of 2.9%, and a funds from operations (FFO) growth of 1.9%. The call highlighted strategic acquisitions and dispositions totaling approximately $95 million, including a $33 million acquisition of a retail property in Brampton and $62 million in non-core asset sales. Additionally, year-to-date acquisitions were reported at approximately $373 million, including a $182 million industrial distribution asset acquisition. The company also noted an increase in same-asset cash NOI across different asset classes, with industrial seeing a 6.1% increase and mixed-use and residential witnessing a 15.3% rise. The balance sheet remains strong with a debt-to-EBITDA ratio of 7x, bolstered by a fully undrawn $1.5 billion corporate facility. Looking forward, Choice Properties plans to advance its development pipeline, focusing on industrial development at Choice Caledon Business Park and retail intensification, while maintaining a commitment to a strong balance sheet and targeting a debt-to-EBITDA ratio below 7.5x.Choice Properties Real Estate Investment Financial Statement Overview
Summary
Choice Properties Real Estate Investment exhibits robust financial health. It has strong profitability with a high Gross Profit Margin of 75.07% and Net Profit Margin of 39.35%, complemented by efficient cost management as indicated by strong EBIT and EBITDA margins. The balance sheet shows moderate leverage with a Debt-to-Equity Ratio of 1.40 and strong ROE of 11.52%. Cash flow is solid with good conversion of income into cash, although there is room for improvement in cash flow growth.Income Statement
The company exhibits a strong financial performance with a solid Gross Profit Margin of 75.07% and a healthy Net Profit Margin of 39.35% for the TTM. Revenue growth has been relatively stable, with a slight decline in the current TTM compared to previous periods. The EBIT and EBITDA margins are robust at 33.24% and 75.32%, respectively, indicating efficient cost management.82
Very Positive
Balance Sheet
Choice Properties maintains a moderate Debt-to-Equity Ratio of 1.40, indicating a balanced use of debt financing. The Return on Equity (ROE) is strong at 11.52%, reflecting effective use of equity to generate profits. The Equity Ratio stands at 27.40%, showing a stable asset base supported by equity.78
Positive
Cash Flow
The company demonstrates strong cash flow generation with a Free Cash Flow to Net Income Ratio of 1.29, indicating efficient conversion of income into cash. The Operating Cash Flow to Net Income Ratio of 1.29 reflects good cash operational efficiency. However, Free Cash Flow Growth Rate is slightly negative, signaling potential areas for improvement in cash flow management.75
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.39B | 1.37B | 1.43B | 1.26B | 1.29B | 1.27B | Gross Profit |
| 1.04B | 978.57M | 1.04B | 900.64M | 912.01M | 886.60M | EBIT |
| 461.11M | 909.74M | 976.39M | 1.23B | 954.61M | 852.96M | EBITDA |
| 1.04B | 1.37B | 1.14B | 1.28B | 956.90M | 981.61M | Net Income Common Stockholders |
| 545.92M | 784.44M | 796.69M | 744.25M | 23.01M | 450.69M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 105.06M | 63.39M | 252.42M | 64.74M | 84.30M | 207.22M | Total Assets |
| 17.29B | 17.56B | 17.31B | 16.82B | 16.17B | 15.65B | Total Debt |
| 6.63B | 6.68B | 6.70B | 6.55B | 6.23B | 6.49B | Net Debt |
| 6.52B | 6.62B | 6.44B | 6.49B | 6.15B | 6.41B | Total Liabilities |
| 12.55B | 12.66B | 12.94B | 13.00B | 12.86B | 12.12B | Stockholders Equity |
| 4.74B | 4.90B | 4.37B | 3.82B | 3.31B | 3.51B |
| Cash Flow | Free Cash Flow | ||||
| 702.74M | 724.73M | 641.97M | 1.01B | 773.41M | 507.76M | Operating Cash Flow |
| 702.74M | 724.73M | 641.97M | 633.15M | 669.43M | 621.18M | Investing Cash Flow |
| -426.96M | -584.21M | -361.35M | -616.73M | -64.12M | 155.19M | Financing Cash Flow |
| -180.42M | -329.56M | -92.94M | -35.99M | -728.22M | -611.15M |
Choice Properties Real Estate Investment Technical Analysis
Positive
14.68
Price Trends
14.42
Positive
13.84
Positive
13.81
Positive
Market Momentum
0.11
Positive
49.34
Neutral
29.50
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CHP.UN, the sentiment is Positive. The current price of 14.68 is below the 20-day moving average (MA) of 14.83, above the 50-day MA of 14.42, and above the 200-day MA of 13.81, indicating a neutral trend. The MACD of 0.11 indicates Positive momentum. The RSI at 49.34 is Neutral, neither overbought nor oversold. The STOCH value of 29.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CHP.UN.
Choice Properties Real Estate Investment Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | C$3.79B | 8.55 | 11.23% | 5.80% | 4.54% | 68.32% | |
78 Outperform | C$4.39B | 18.66 | 4.75% | 7.16% | 10.06% | -19.26% | |
77 Outperform | C$1.55B | 26.96 | 2.99% | 5.54% | 22.60% | -48.92% | |
76 Outperform | $10.80B | 19.78 | 11.80% | 5.12% | 0.70% | -18.29% | |
76 Outperform | C$3.76B | 17.50 | 5.40% | 4.92% | 3.11% | ― | |
71 Outperform | $5.15B | 20.06 | 3.61% | 6.39% | 13.66% | 426.86% | |
61 Neutral | $2.82B | 10.84 | 0.42% | 8439.00% | 5.74% | -20.95% |
* Real Estate Sector Average
Performance Comparison
TSE:CHP.UN
Choice Properties Real Estate Investment
14.68
2.27
18.25%
TSE:REI.UN
RioCan Real Estate Investment
17.19
0.63
3.78%
TSE:FCR.UN
First Capital Realty
17.58
3.12
21.58%
TSE:SRU.UN
SmartCentres Real Estate Investment Trust
25.65
4.45
20.99%
TSE:CRT.UN
CT Real Estate Investment
16.00
3.00
23.08%
TSE:PMZ.UN
Primaris Real Estate Investment Trust
15.05
2.24
17.49%
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.