\n| <\/td>\n | \n 2014<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 2013(5)<\/sup> <\/span><\/span><\/p>\n<\/td>\n| <\/td>\n | <\/td>\n | \n 2014<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 2013(5)<\/sup> <\/span><\/span><\/p>\n<\/td>\n| <\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \n| \n Number of properties <\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | \n 454<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n 425<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n 454<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n 425<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \n| \n Gross Leasable Area (\u00ab\u00a0GLA\u00a0\u00bb) (in millions of square feet) <\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | \n 37.6<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n 35.3<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n 37.6<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n 35.3<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \n| \n Occupancy <\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | \n 97.9<\/b><\/span><\/span><\/p>\n<\/td>\n | \n %<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 97.6<\/span><\/span><\/p>\n<\/td>\n | \n %<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 97.9<\/b><\/span><\/span><\/p>\n<\/td>\n | \n %<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 97.6<\/span><\/span><\/p>\n<\/td>\n | \n %<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n<\/tr>\n | \n| \n Rental revenue <\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 170,293<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 153,655<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 507,677<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 153,655<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \n| \n Net Operating Income (\u00ab\u00a0NOI\u00a0\u00bb)(1)<\/sup> <\/span><\/span><\/p>\n<\/td>\n| <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 118,551<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 108,159<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 352,564<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 108,159<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \n| \n Net Income <\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 122,306<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 73,626<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 112,597<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 73,626<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \n| \n Net Income per unit diluted <\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 0.318<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 0.205<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 0.297<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 0.205<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \n| \n Funds from Operations (\u00ab\u00a0FFO\u00a0\u00bb)(1)<\/sup> per unit diluted (2)(3)<\/sup> <\/span><\/span><\/p>\n<\/td>\n| <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 0.229<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 0.220<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 0.682<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 0.220<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \n| \n Adjusted Funds from Operations (\u00ab\u00a0AFFO\u00a0\u00bb)(1)<\/sup> per unit diluted <\/span><\/span><\/p>\n<\/td>\n| <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 0.189<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 0.184<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 0.558<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 0.184<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \n| \n Adjusted Funds from Operations(1)<\/sup> payout ratio <\/span><\/span><\/p>\n<\/td>\n| <\/td>\n | \n 86.0<\/b><\/span><\/span><\/p>\n<\/td>\n | \n %<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 85.0<\/span><\/span><\/p>\n<\/td>\n | \n %<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 87.4<\/b><\/span><\/span><\/p>\n<\/td>\n | \n %<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 85.0<\/span><\/span><\/p>\n<\/td>\n | \n %<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n<\/tr>\n | \n| \n Distributions per unit <\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 0.162501<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 0.156416<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 0.487503<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 0.156416<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n | \n| \n Total assets (in millions) <\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 7,774<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 7,174<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/b><\/span><\/span><\/p>\n<\/td>\n | \n 7,774<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | \n $<\/span><\/span><\/p>\n<\/td>\n | \n 7,174<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n<\/tr>\n | \n| \n Debt to total assets(4)<\/sup> <\/span><\/span><\/p>\n<\/td>\n| <\/td>\n | \n 45.7<\/b><\/span><\/span><\/p>\n<\/td>\n | \n %<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 49.4<\/span><\/span><\/p>\n<\/td>\n | \n %<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 45.7<\/b><\/span><\/span><\/p>\n<\/td>\n | \n %<\/b><\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 49.4<\/span><\/span><\/p>\n<\/td>\n | \n %<\/span><\/span><\/p>\n<\/td>\n | <\/td>\n<\/tr>\n | \n| \n Debt service coverage(4)<\/sup> <\/span><\/span><\/p>\n<\/td>\n| <\/td>\n | \n 3.4x<\/b> <\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 3.3x <\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 3.4x<\/b> <\/span><\/span><\/p>\n<\/td>\n | <\/td>\n | <\/td>\n | \n 3.3x <\/span><\/span><\/p>\n<\/td>\n | <\/td>\n<\/tr>\n | \n| <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n | <\/td>\n<\/tr>\n<\/table>\n<\/div>\n\n \n\n| <\/td>\n | <\/td>\n<\/tr>\n | \n| \n (1)<\/span><\/span><\/p>\n<\/td>\n | \n See \u00ab\u00a0Non-GAAP Financial Measures\u00a0\u00bb beginning on page 4. <\/span><\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n (2)<\/span><\/span><\/p>\n<\/td>\n | \n Including internalization costs in 2014 and start-up costs in 2013, FFO per unit on a diluted basis for third quarter 2014 and 2013 were $0.223 and $0.212, respectively. <\/span><\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n (3)<\/span><\/span><\/p>\n<\/td>\n | \n Including internalization costs and the reversal of the finance charge associated with the Transferor Note transactions as described in the MD&A Section 6, \u00ab\u00a0Long Term Debt and Class C LP Units\u00a0\u00bb in 2014 and start-up costs in 2013, FFO per unit on a diluted basis for the year-to-date periods ended 2014 and 2013 were $0.546 and $0.212, respectively. <\/span><\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n (4)<\/span><\/span><\/p>\n<\/td>\n | \n Debt ratios include Class C LP Units but exclude Exchangeable Units. The ratios are non-GAAP financial measures calculated based on the Trust Indenture, as supplemented. <\/span><\/span><\/p>\n<\/td>\n<\/tr>\n\n| \n (5)<\/span><\/span><\/p>\n<\/td>\n | \n Based on operations beginning July 5, 2013. <\/span><\/span><\/p>\n<\/td>\n<\/tr>\n<\/table>\n<\/div>\nFinancial Highlights for the Quarter:<\/b><\/span> <\/p>\n\n- Net Operating Income(1)<\/sup> \u2013 <\/b><\/span>Third quarter NOI(1)<\/sup><\/span> of $118.6 million<\/span> represented an increase of $10.4 million<\/span>, or 9.6%, over the third quarter of 2013. The positive variance was driven primarily by acquisitions, which contributed $5.9 million<\/span> to NOI(1)<\/sup><\/span>. Based on a portfolio of 423 properties that were owned throughout both the current and comparative period, same properties NOI(1) <\/sup><\/span>of $112.1 million<\/span> increased $4.1 million<\/span> or 3.8% over the comparative period. This improvement was primarily attributable to the shorter operating period in 2013. Year-to-date NOI(1)<\/sup><\/span> was $352.6 million<\/span>, of which $337.6 million<\/span> was attributed to same properties, $13.9 million<\/span> to acquisitions and $1.1 million<\/span> to dispositions. <\/li>\n
- Net Income \u2013 <\/b><\/span>Third quarter net income was $122.3 million<\/span>, an increase of $48.7 million<\/span> or 66.1% over the third quarter of 2013. Excluding a $84.8 million<\/span> (2013 \u2013 $40.1 million<\/span>) net gain from fair value adjustments, net income was $37.5 million<\/span>, an increase of $4.0 million<\/span> or 11.9% over net income of $33.5 million<\/span> in third quarter of 2013. This increase was primarily attributable to NOI(1)<\/sup><\/span> from acquisitions and lower general and administrative expenses of $1.0 million<\/span>, which were partially offset by higher financing charges of $7.7 million<\/span>. Year-to-date net income, excluding fair value adjustments, was $64.9 million<\/span>. <\/li>\n
- Funds from Operations(1)<\/sup> \u2013 <\/b><\/span>Third quarter FFO(1)<\/sup><\/span> was $88.0 million<\/span> or $0.229<\/span> per unit, compared with $79.1 million<\/span> or $0.220<\/span> per unit in the third quarter of 2013. Including one-time internalization costs of $2.4 million<\/span> or $0.006<\/span> per unit, FFO per unit was $0.223<\/span>. Third quarter 2013 FFO was impacted by one-time start-up costs of $3.0 million<\/span> or $0.008<\/span> per unit; including these costs, third quarter 2013 FFO per unit was $0.212<\/span>. The year-over-year improvement in FFO(1)<\/sup><\/span> was driven by acquisitions and lower general and administrative expenses, partially offset by higher financing charges. Year-to-date FFO(1)<\/sup><\/span> was $258.1 million<\/span>, excluding internalization costs and $48.9 million<\/span> of non-cash finance charges related to the replacement of Transferor Notes with senior unsecured debentures, which were recorded in the previous quarters. <\/li>\n
- Adjusted Funds from Operations(1) <\/sup>\u2013 <\/b><\/span>Third quarter AFFO(1)<\/sup><\/span> was $72.7 million<\/span> or $0.189<\/span> per unit, compared to $66.3 million<\/span> or $0.184<\/span> per unit in the third quarter of 2013. Similar to FFO(1)<\/sup><\/span>, the improvement in AFFO(1)<\/sup><\/span> was driven by NOI(1)<\/sup><\/span> from acquisitions and lower general and administrative expenses, which were partially offset by higher financing charges. Year-to-date AFFO(1)<\/sup><\/span> was $211.1 million<\/span> or $0.558<\/span> per unit. <\/li>\n
- Distributions<\/b><\/span> declared during the quarter totaled $0.162501<\/span> per unit, for an AFFO(1)<\/sup><\/span> payout ratio of 86.0%. <\/li>\n<\/ul>\n
Operational Highlights:<\/b><\/span> <\/p>\n\n- Leasing Profile \u2013 <\/b><\/span>During the third quarter of 2014, Choice Properties entered into binding leases or offers to lease for 234,874 square feet of gross leasable area (\u00ab\u00a0GLA\u00a0\u00bb), of which 143,158 square feet, or 60.9% represented the renewal of expiring leases. Year-to-date binding leases or offers to lease totaled 417,763 square feet. <\/li>\n
- Occupancy \u2013 <\/b><\/span>At September 30, 2014<\/span>, the Trust\u2019s portfolio occupancy rate was 97.9%, compared to 97.6% at the end of the third quarter of 2013. <\/li>\n
- Development Program<\/b><\/span> \u2013<\/b><\/span> During the quarter, construction of a new Fortinos food store in Stoney Creek, Ontario<\/span> was completed. This project, along with new GLA recently completed for two retail tenants in Toronto, Ontario<\/span>, opened for business in the quarter as planned. Construction of a Real Canadian Superstore food store in Surrey, British Columbia<\/span> continued to proceed on plan to open in 2015. Subsequent to the quarter, Choice Properties acquired, for $18 million<\/span>, a 70% interest in a limited partnership which holds 21 acres of land in Brampton, Ontario<\/span> intended for future retail development. <\/li>\n
- Active Management \u2013<\/b><\/span> During the quarter, hiring and training of new employees continued in preparation for the internalization of leasing and property management functions that were previously outsourced to a third party. In addition, as part of building its business platform, Choice Properties successfully completed the implementation of a real-estate focused enterprise resource planning system. <\/li>\n
- Accretive Acquisitions \u2013 <\/b><\/span>As previously announced, subsequent to the third quarter of 2014, Choice Properties acquired a 16-property portfolio from Loblaw Companies Limited (\u00ab\u00a0Loblaw\u00a0\u00bb) for an aggregate purchase price of approximately $211.9 million<\/span>, excluding transaction costs. The acquisition, with an overall year-one capitalization rate of 6.56%, excluding the $4 million<\/span> cost of land purchased with the portfolio and available for immediate development, will be immediately accretive. The portfolio spans the country, adds approximately 1.3 million square feet of GLA and is expected to provide an estimated annual stabilized NOI1<\/sup><\/span> of approximately $13.6 million<\/span>. The portfolio also offers potential to develop up to 280,000 square feet of additional GLA within five years and mixed-use redevelopment potential for three urban Toronto<\/span> sites over the medium to long-term. In particular, Choice Properties expects to commence development of 200,000 square feet of the new GLA to expand the warehouse in Boucherville, Quebec<\/span> in the fourth quarter of 2014. This project is expected to return a yield of 7.50%. Separately, Choice Properties entered into an agreement with Loblaw to acquire a warehouse of approximately 921,000 square feet in Pickering, Ontario<\/span> for a purchase price of approximately $81.5 million<\/span>, which represents a capitalization rate of 6.50%. The transaction is expected to close in the first quarter of 2015. <\/li>\n<\/ul>\n
Capital Structure:<\/b><\/span> <\/p>\n\n- Capacity to invest for further growth \u2013 <\/b><\/span>For the third quarter and year-to-date period ended September 30, 2014<\/span>, the Trust\u2019s debt service coverage ratio(2)<\/sup><\/span> was 3.4 times. With stable cash flow from operations and access to a $500 million<\/span> unsecured revolving credit facility, the Trust has the capacity to meet ongoing obligations and invest for further growth. <\/li>\n<\/ul>\n
Outlook<\/b><\/span>
Choice Properties expects that its solid balance sheet and secure and reliable cash flows from long-term leases will enable it to meet its ongoing obligations and invest in further growth, even though the economic environment, particularly with respect to interest rates, creates some uncertainty. Choice Properties believes that the current Canadian retail and commercial real estate markets are relatively stable, and present development, acquisition and improved tenancy potential for future growth. As a result, the Trust expects to execute on its opportunities to develop and redevelop existing at-grade excess land, acquire assets from a dedicated pipeline from Loblaw\u2019s remaining portfolio and strengthen its underlying operations through improved leasing strategies and active property management. Over the longer-term, Choice Properties will seek to further expand through its development program with Loblaw and third parties, and the acquisition of properties from third-parties that meet its investment criteria. <\/p>\n | | | | | | | | | | | | | |