On Wednesday, Toronto-based Choice Properties REIT (TSX: CHP.UN) published its Q1 2025 results, simultaneously revealing several transactions that occurred subsequent to the quarter that ended on March 31.
"Choice Properties delivered a solid first quarter of 2025," said President & CEO Rael Diamond. "Occupancy remained high, and same-asset NOI growth and leasing spreads continued to be strong. Supported by a resilient tenant base and our industry leading balance sheet, we continue to pursue growth opportunities, including the acquisition of $340 million of investment properties subsequent to quarter end."
That total consisted of just two transactions, with the largest being their acquisition of a distribution centre in Ajax, Ontario from Loblaw — the REIT's majority unit holder and major tenant in its properties — for $182.3 million, excluding related costs.
The press release and quarterly report do not identify the property, but CFO Erin Johnston confirmed in an email to STOREYS that the property is the Loblaw distribution centre located at 500 Bayly Street E.
According to Turner Fleischer Architects, who designed the building, the property is approximately 1,000,000 sq. ft and "has been adopted as the national prototype" for this kind of building.
"With many components, and integrated systems, this massive facility contains warehousing, frozen storage, refrigerated storage and associated office facilities which meet Canadian Food Inspection Agency standards," said the architects. "Sustainable in nature, an important aspect for a site this size, the design has incorporated numerous environmental low impact and energy efficiency features. The project also includes a 24,000 sf dunnage facility and gas bar. Since opening, this distribution centre has become a hub for local employment, and takes advantage of a strategic location to maximize the efficiency of the flow of products throughout the Loblaw's network."
Concurrent with the transaction, Choice Properties REIT leased the property back to Loblaw, and the transaction is the latest example of the "strategic alliance agreement" between the two companies. Under the agreement, Choice Properties REIT has the right of first offer to purchase any property in Canada that Loblaw is seeking to sell, Loblaw is required to present shopping centre acquisitions in Canada to the REIT to allow the REIT a first opportunity to acquire the property, and the REIT has the right to participate in future shopping centre developments involving Loblaw.
The initial term of the strategic alliance agreement expired on July 5, 2023, but was renewed and now expires on either July 5, 2033 or the date on which George Weston Limited (GWL) — Loblaw's parent company — and its affiliates own less than 50% of the Trust on a fully diluted basis.
The Loblaw distribution centre at 500 Bayly Street E in Ajax, Ontario. / Turner Fleischer
The other transaction is Choice Properties REIT's acquisition of eight industrial outdoor storage sites from a third party for $158.0 million, excluding related costs. The REIT did not disclose the vendor or properties.
While those two acquisitions occurred after Q1, the REIT also made a purchase during Q1, acquiring a 100% ownership interest in a retail property in Brampton, Ontario from Loblaw for $33.7 million. The quarterly report identifies the property to be 35 Worthington Avenue, which is occupied by a Fortinos store — a supermarket chain also owned by Loblaw that operates in the Greater Toronto and Hamilton Area. The acquisition date was February 4 and the property was also leased back to Loblaw.
On the other side of the ledger, the REIT completed the sale of four properties for a total of $61.5 million in Q1, consisting of:
- 6750-6800 rue Jean-Talon E, Montreal, QC (100%) - $28,585,000
- 15820-15830 Bayview Ave., Aurora, ON (100%) - $7,370,000
- Aurora Market Place, Aurora, ON (50%) - $17,565,000
- Harvest Hills Market, Edmonton, AB (50%) - $7,965,000
Also during the quarter, Choice Properties REIT invested $44.1 million in its development program and transferred $13.4 million of properties under development to income producing status, delivering approximately 97,600 sq. ft of new commercial GLA on a proportionate share basis through retail intensifications.
Q1 financial performance at debt metrics. / Choice Properties REIT
