Choice Properties Real Estate Investment Trust (TSX:CHP.UN) swung to a net profit of $87 million in the fourth quarter as the real estate spinoff of grocer Loblaw (TSX:L) reported fair value adjustment gains of $46.4-million.
Choice said net income in the three months ended Dec. 31 amounted to 22 cents per diluted unit and compared with a net loss of $6.5 million or 18 cents in the same 2013 period, when it posted fair value adjustment losses of $43.2 million.
Excluding such adjustments on exchangeable units and investment properties, net income in the most recent quarter was $40.6 million, an increase of $3.8 million or 10.6 per cent over adjusted net income of $36.7 million in the fourth quarter of 2013.
The adjusted income gain was primarily due to an increase in net operating income or NOI from acquisitions, partially offset by higher financing charges of $4.3 million.
NOI, defined as cash rental revenue less operating costs,, was $123.2 million in the quarter, up $9.1 million or 7.9 per cent from the fourth quarter of 2013. Acquisitions contributed $7.7 million.
Rental revenue in the latest period was $175.2 million from 472 properties, versus $164.9 million from 435 properties in the 2013 quarter.
In its earnings report, issued Tuesday after markets closed, the company said that despite economic uncertainty posed by volatile commodity prices and the lower Canadian dollar, it believes fundamentals of the Canadian retail real estate market remain stable.
And, apparently alluding to the exit of Target from the Canadian retail landscape and the expected arrival of other well-known American brands, Choice said its own "grocery-anchored real estate focus and its stable and reliable cash flows from long-term leases position it well to execute on potential opportunities to drive growth."
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