2020 Third Quarter Report West Block | Toronto ON 175 Bloor St East | Toronto ON Letter to Unitholders Fellow Unitholders, The COVID-19 pandemic continues to evolve, impacting quality of our portfolio. This focus was evident in the past our communities and our day-to-day lives. In response, quarter as we completed $32.3 million of dispositions and we are taking thoughtful actions to mitigate the effects of $248.0 million of acquisitions, including the acquisition the pandemic on our business operations and focusing of the Weston Centre, a multi-tenant office and retail on the best interests of our employees, tenants and other site that includes a Loblaw grocery store located in mid- stakeholders. While we are encouraged by signs of the town Toronto, and the remaining ownership interest in economy reopening in some areas and the positive impact West Block, a mixed-use site that combines retail shops that is having on most of our tenants, we acknowledge anchored by a Loblaw grocery store and office space that uncertainty persists. With that backdrop in mind, we located in downtown Toronto. are pleased with our financial results this past quarter, demonstrating that our business model, stable tenant Subsequent to the quarter end we completed or entered base and disciplined approach to financial management into agreements to complete additional dispositions of continue to position us well. $309.0 million and acquisitions of $85.9 million of highly sought-after industrial assets. This transaction activity Our diversified portfolio of office, retail and industrial demonstrates our ability to generate stable and growing properties is well occupied at 97.0% and leased to high- net operating income through strategic acquisitions and quality tenants across Canada. Our retail portfolio is highlights the liquidity in our existing portfolio. primarily leased to either grocery stores, pharmacies or other necessity-based tenants, who continue to perform Our business is supported by an industry leading balance well in this environment. sheet that provides Choice Properties flexibility in the face of broader market volatility. From a liquidity perspective, Rent collection for the third quarter was approximately we have approximately $1.5 billion available under our 98%, reflecting the stability of our necessity-based credit facility. In 2020, we have made significant progress portfolio. We have supported those tenants most impacted in further strengthening our balance sheet, including by the pandemic by participating in the government’s refinancing our debt maturities, increasing our weighted CECRA program. For the quarter, we reported a average term of debt and increasing our available liquidity $4.7 million bad debt expense for uncollected rents on a by issuing $1 billion of unsecured debentures, the proportionate share basis, the majority of which relates to proceeds of which were primarily used to meet all debt abatements for tenants participating in CECRA. maturities until the third quarter of 2021. In the quarter, DBRS Limited upgraded our issuer rating to BBB(high). Our development program provides us with opportunities to add high-quality real estate to our portfolio at a Our operating results for the third quarter were strong and reasonable cost. We continue to deliver commercial reflect the strength and stability of our income producing properties through a mix of at-grade retail intensification portfolio. We are confident that the strategic and operating and larger scale greenfield development. In the quarter, decisions we have made across our business positions we completed and transferred $88.2 million of properties us well to withstand the pandemic and assist our tenants under development. Through our active pipeline, we where we can. Our top priority remains ensuring the health are also expanding our growing presence in the rental and well- being of our employees and tenants, and we are residential market, and we expect two of our larger rental working diligently to ensure that our business continues residential projects in Toronto to be completed in 2021. to run as smoothly and effectively as possible. Beyond our development program, we continue to focus on our capital recycling program to improve the overall We thank you for your continued support and confidence. Rael L. Diamond President & Chief Executive Officer November 4, 2020 1 North Barrie Crossing | Barrie ON Management’s Discussion and Analysis (1) See Section 13, “Non-GAAP Financial Measures”, of this MD&A. (2) To be read in conjunction with the “Forward-Looking Statements” included in the Notes for Readers located on page 4 of this MD&A. Notes for Readers Please refer to the Choice Properties Real future developments, as well as other factors it Choice Properties’ financial results are Estate Investment Trust (“Choice Properties” believes are appropriate in the circumstances. impacted by adjustments to the fair value of the or the “Trust”) unaudited consolidated financial Exchangeable Units, unit-based compensation statements for the three and nine months ended Choice Properties’ expectation of operating and investment properties. Exchangeable Units September 30, 2020 and accompanying notes and financial performance is based on certain and unit-based compensation liabilities are (“Q3 2020 Financial Statements”) when reading assumptions, including assumptions about the recorded at their fair value based on the market this Management’s Discussion and Analysis Trust’s future growth potential, prospects and trading price of the Trust Units, which results in (“MD&A”) as well as the Trust’s Audited opportunities, industry trends, future levels of a negative impact to the financial results when Financial Statements and MD&A for the year indebtedness, tax laws, economic conditions the Trust Unit price rises and a positive impact ended December 31, 2019. In addition, this and competition. Management’s estimates, when the Trust Unit price declines. Investment MD&A should be read in conjunction with the beliefs and assumptions are inherently subject to properties are recorded at fair value based on Trust’s “Forward-Looking Statements” as listed significant business, economic, competitive and valuations performed by the Trust’s internal below. Choice Properties’ Q3 2020 Financial other uncertainties and contingencies regarding valuation team. These adjustments to fair value Statements have been prepared in accordance future events and as such, are subject to change. impact certain of the GAAP reported figures of with International Financial Reporting Standards Choice Properties can give no assurance that the Trust, including net income. (“IFRS” or “GAAP”) and were authorized for such estimates, beliefs and assumptions will issuance by the Board of Trustees (“Board”). prove to be correct. Additional risks and uncertainties are discussed in Choice Properties’ materials filed In addition to using performance measures Numerous risks and uncertainties could cause with the Canadian securities regulatory determined in accordance with IFRS, Choice the Trust’s actual results to differ materially authorities from time to time, including without Properties’ management also measures from those expressed, implied or projected limitation, the Trust’s AIF for the year ended performance using certain additional non-GAAP in the forward-looking statements, including December 31, 2019. Readers are cautioned measures and provides these measures in those described in the “Enterprise Risks and not to place undue reliance on these forward- this MD&A so that investors may do the same. Risk Management” section of this MD&A and looking statements, which reflect Choice Such measures do not have any standardized the Trust’s Annual Information Form (“AIF”) for Properties’ expectations only as of the date of definitions prescribed under IFRS and are, the year ended December 31, 2019. Selected this Third Quarter Report. Except as required therefore, unlikely to be comparable to similar highlights of such risks and uncertainties include: by applicable law, Choice Properties does not measures presented by other real estate • the duration and impact of the COVID-19 undertake to update or revise any forward- investment trusts or enterprises. Please refer to pandemic on the business, operations and looking statements, whether as a result of new Section 13, “Non-GAAP Financial Measures” for financial condition of Choice Properties information, future events or otherwise. a list of defined non-GAAP financial measures and its tenants, as well as on consumer and reconciliations thereof. behaviours and the economy in general; Choice Properties is an unincorporated, open- • failure by Choice Properties to realize the ended mutual fund trust governed by the laws of On May 4, 2018, Choice Properties completed anticipated benefits associated with its the Province of Ontario and established pursuant the acquisition of Canadian Real Estate strategic priorities and major initiatives, to a declaration of trust amended and restated Investment Trust (“CREIT”) for total consideration including failure to develop quality assets as of May 2, 2018, as may be amended from of $3.7 billion (the “Acquisition Transaction”). and effectively manage development, time to time (the “Declaration of Trust”). Choice The impact of the Acquisition Transaction on the redevelopment, and renovation initiatives; Properties’ Trust Units are listed on the Toronto Trust’s operating results and key performance • failure by Choice Properties to effectively