Choice Properties Real Estate Investment (CHP.UN) AI Stock Analysis

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Choice Properties Real Estate Investment

(TSX:CHP.UN)

Rating:76Outperform

Price Target:―

Choice Properties Real Estate Investment has a solid overall stock score driven by strong financial performance and positive earnings call highlights. The company's robust profitability and efficient operations, alongside strategic acquisitions, bolster its position. While the technical analysis shows strong recent momentum, the valuation suggests moderate pricing. Minor concerns include industrial occupancy decline and potential tariff exposures, but these are outweighed by the company's strengths.

Positive Factors

Earnings

Choice Properties REIT reported solid results, slightly ahead of expectations as operating performance has been solid, in spite of an increase in vacancy in the industrial portfolio.

Financial Performance

The units have returned 14.5% year-to-date, outpacing both the retail peers and the REIT index of 10.5% and 10.4%, respectively.

Growth Strategy

CHP will likely be a net acquirer in 2025, with significant acquisition activity including high-value properties.

Negative Factors

Interest Expense

Interest expense increased from refinancing maturing debt at higher interest rates over the past year, as the weighted average interest rate rose from 4.12% to 4.23%.

Choice Properties Real Estate Investment (CHP.UN) vs. iShares MSCI Canada ETF (EWC)

Market Cap

$10.67B

Dividend Yield5.2%

Average Volume (3M)423.48K

Price to Earnings (P/E)19.5

Beta (1Y)0.72

Revenue Growth0.70%

EPS Growth-18.29%

CountryCA

Employees285

SectorReal Estate

Sector Strength56

IndustryREIT - Retail

Share Statistics

EPS (TTM)-0.21

Shares Outstanding328,024,260

10 Day Avg. Volume287,948

30 Day Avg. Volume423,483

Financial Highlights & Ratios

PEG Ratio-1.28

Price to Book (P/B)2.26

Price to Sales (P/S)0.00

P/FCF Ratio6.90

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$15.80

Price Target Upside6.10% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

Choice Properties Real Estate Investment Business Overview & Revenue Model

Company DescriptionChoice Properties, Canada's preeminent diversified real estate investment trust, is the owner, manager and developer of a high-quality portfolio comprising 725 properties totaling 66.1 million square feet of gross leasable area. Choice Properties owns a portfolio comprised of retail properties predominantly leased to necessity-based tenants; industrial, office and residential assets concentrated in attractive markets; and offers an impressive and substantial development pipeline. Choice Properties' strategic alliance with its principal tenant, Loblaw Companies Limited, the country's leading retailer, is a key competitive advantage providing long-term growth opportunities.

How the Company Makes MoneyChoice Properties Real Estate Investment Trust generates revenue primarily through leasing its diversified portfolio of real estate properties. The company's key revenue stream is rental income from long-term leases with tenants, predominantly from Loblaw Companies Limited, which provides a reliable and consistent income source due to the strong credit profile of the tenant. Additionally, Choice Properties engages in property development and redevelopment projects that contribute to its earnings by enhancing property values and increasing rental income potential. Strategic partnerships and joint ventures in development projects also play a role in expanding its asset base and delivering additional revenue streams.

Choice Properties Real Estate Investment Earnings Call Summary

Earnings Call Date:Jul 18, 2025

(Q2-2025)

% Change Since: 4.69%|

Next Earnings Date:Nov 05, 2025

Earnings Call Sentiment Positive

The earnings call reflects strong operational and financial performance with robust occupancy, leasing spreads, and successful transaction activity. Challenges such as market softening in the residential sector and strategic lease terminations were noted but did not significantly impact overall positive performance.

Q2-2025 Updates

Positive Updates

Strong Occupancy and Leasing Spreads

Near full occupancy at 97.8%, with exceptional leasing spreads of 24%, reflecting robust demand for grocery-anchored retail and industrial assets.

Successful Capital Recycling Program

Completed approximately $427 million in total real estate transactions, including $351 million of acquisitions and $76 million of noncore asset dispositions.

Resilient Financial Performance

Reported FFO increased by 3.9% to $191.6 million, or $0.265 per unit, driven by higher Same-Asset cash NOI and strong leasing activity.

Industrial Portfolio Growth

Occupancy increased to 98%, with an average lease renewal spread of 38.9%, indicating strong performance in the industrial sector.

Positive NAV Growth

IFRS NAV increased by 1.5% over the last quarter, driven by a fair value gain on investment properties and investment in Allied Properties.

Negative Updates

Mixed-Use & Residential Market Softening

Observed some softening in residential markets as new supply comes online, though assets maintained solid occupancy.

Strategic Lease Terminations

Tenant retention in the retail sector was impacted by strategic lease terminations, affecting retention rates.

Company Guidance

During the Choice Properties Real Estate Investment Trust Second Quarter 2025 Earnings Call, several key metrics were highlighted demonstrating the company's robust performance. The occupancy rate was near full at 97.8%, while the industrial portfolio saw a slight increase to 98%. The company achieved a 3.9% growth in Funds From Operations (FFO) per unit, with leasing spreads reaching 24%. Same-Asset Net Operating Income (NOI) growth was healthy, and the retail portfolio achieved a renewal spread of 13.2%. The call also noted industrial lease renewals averaging 38.9% above expiry rates. Furthermore, the company completed approximately $427 million in real estate transactions, which included $351 million in acquisitions and $76 million in noncore asset dispositions. The strategic relationship with Loblaw was underscored by a notable transaction involving a $183 million industrial distribution asset acquisition. The company continues to maintain a strong balance sheet, with a debt-to-EBITDA ratio of 7.2x and $1.3 billion of available credit.

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

Very Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Positive

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.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.37B	1.43B	1.26B	1.29B	1.27B
Gross Profit	978.57M	1.04B	900.64M	912.01M	886.60M
EBITDA	1.37B	1.14B	1.28B	956.90M	981.61M
Net Income	784.44M	796.69M	744.25M	23.01M	450.69M
Balance Sheet
Total Assets	17.56B	17.31B	16.82B	16.17B	15.65B
Cash, Cash Equivalents and Short-Term Investments	63.39M	252.42M	64.74M	84.30M	207.22M
Total Debt	6.68B	6.70B	6.55B	6.23B	6.49B
Total Liabilities	12.66B	12.94B	13.00B	12.86B	12.12B
Stockholders Equity	4.90B	4.37B	3.82B	3.31B	3.51B
Cash Flow
Free Cash Flow	724.73M	641.97M	1.01B	773.41M	507.76M
Operating Cash Flow	724.73M	641.97M	633.15M	669.43M	621.18M
Investing Cash Flow	-584.21M	-361.35M	-616.73M	-64.12M	155.19M
Financing Cash Flow	-329.56M	-92.94M	-35.99M	-728.22M	-611.15M

Choice Properties Real Estate Investment Technical Analysis

Technical Analysis Sentiment

Positive

Last Price14.89

Price Trends

50DMA

14.72

Positive

100DMA

14.32

Positive

200DMA

13.83

Positive

Market Momentum

MACD

0.05

Negative

RSI

56.95

Neutral

STOCH

38.67

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 14.89 is above the 20-day moving average (MA) of 14.74, above the 50-day MA of 14.72, and above the 200-day MA of 13.83, indicating a bullish trend. The MACD of 0.05 indicates Negative momentum. The RSI at 56.95 is Neutral, neither overbought nor oversold. The STOCH value of 38.67 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 (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CHP.UN	76 Outperform	$10.67B	19.54	11.80%	5.20%	0.70%	-18.29%
Sector *	63 Neutral	$6.98B	18.44	-1.93%	6.77%	4.67%	-25.44%
RIOCF	―	$3.85B	20.53	3.61%	6.50%	―	―
CRT.UN	82 Outperform	C$3.76B	8.54	11.23%	6.03%	4.54%	68.32%
SRU.UN	78 Outperform	C$4.41B	18.73	4.75%	7.14%	10.06%	-19.26%
FCR.UN	74 Outperform	C$3.94B	18.34	5.40%	4.80%	3.11%	―
PMZ.UN	73 Outperform	C$1.56B	26.61	2.99%	5.71%	22.60%	-48.92%

* Real Estate Sector Average

Performance Comparison

TSE:CHP.UN

Choice Properties Real Estate Investment

14.89

1.77

13.46%

RIOCF

RioCan Real Estate Investment

13.06

1.04

8.65%

TSE:CRT.UN

CT Real Estate Investment

15.87

2.49

18.61%

TSE:FCR.UN

First Capital Realty

18.53

3.28

21.51%

TSE:SRU.UN

SmartCentres Real Estate Investment Trust

25.87

3.88

17.64%

TSE:PMZ.UN

Primaris Real Estate Investment Trust

15.05

2.34

18.41%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Apr 27, 2025