FIRST CAPITAL REIT REPORTS STRONG SECOND QUARTER 2025 RESULTS WITH 6% OPERATING FFO PER UNIT GROWTH

First Capital Real Estate Investment Trust

FIRST CAPITAL REIT REPORTS STRONG SECOND QUARTER 2025 RESULTS WITH 6% OPERATING FFO PER UNIT GROWTH

Jul 29 2025 22:02 BST

TORONTO , July 29, 2025 /CNW/ - First Capital Real Estate Investment Trust ("First Capital", "FCR", or the "Trust") (TSX: FCR.UN), announced financial results for the quarter ended June 30, 2025. The 2025 Second Quarter Report is available in the Investors section of the Trust's website at www.fcr.ca and will be filed on SEDAR+ at www.sedarplus.ca.

KEY HIGHLIGHTS FROM THE SECOND QUARTER:

Operating FFO per unit of $0.34, representing year-over-year growth of 6.2%
Same Property NOI growth of 6.2%, excluding bad debt expense (recovery) and lease termination fees
Lease renewal spreads of 16.2%
Total portfolio occupancy of 97.2%, a record high

"We are pleased to deliver a very strong quarter of operating and financial results, underpinned by solid leasing and record occupancy", said Adam Paul, President & CEO.

"We continue to be encouraged by positive leasing momentum that is in part the result of numerous years of population growth set against very low supply growth in grocery-anchored shopping centres". Mr. Paul continued, "With many retailers seeking to expand their store networks, in an environment where there are physical and economic barriers to new shopping centre development, we expect our portfolio will continue to perform well."

Key Earnings Metrics	Three months ended June 30		Six months ended June 30
($ millions unless otherwise noted)	2025	2024	2025	2024
Operating FFO ⁽¹⁾	72.8	68.4	141.7	146.4
Operating FFO per diluted unit⁽¹⁾	$0.34	$0.32	$0.66	$0.68

FFO ⁽¹⁾	73.5	68.2	141.2	149.9
FFO per diluted unit ⁽¹⁾	$0.34	$0.32	$0.66	$0.70

Net income (loss) attributable to unitholders	63.5	16.9	147.9	91.7
Net income (loss) attributable to unitholders per diluted unit	$0.30	$0.08	$0.69	$0.43

Weighted average diluted units for FFO and net income (000s)	214,729	214,287	214,616	214,137

⁽¹⁾ Refer to "Non-IFRS Financial Measures" section of this press release.

Key Operating Performance and Capital Allocation Metrics	Three months ended June 30		Six months ended June 30
($ millions unless otherwise noted)	2025	2024	2025	2024
Operating Metrics
Total Same Property NOI growth excluding lease termination fees and bad debt expense ⁽¹⁾⁽²⁾	6.2 %	3.7 %	5.7 %	3.0 %
Total Same Property NOI growth ⁽¹⁾⁽²⁾	5.6 %	4.6 %	2.8 %	6.2 %

Total portfolio occupancy ⁽³⁾			97.2 %	96.3 %
Total Same Property occupancy ⁽¹⁾⁽³⁾			97.3 %	96.4 %

Lease renewal volume (square feet)	626,000	720,000	1,137,000	1,186,000
Lease renewal lift (first year rent of renewal term)	16.2 %	13.2 %	15.0 %	12.3 %
Lease renewal lift (average rent of renewal term)	20.9 %	18.9 %	19.9 %	16.7 %
Average Net Rental Rate per occupied square foot			$24.44	$23.73

Capital Allocation
Acquisition of investment properties	—	—	22.2	33.5
Development expenditures ⁽⁴⁾	21.3	10.0	38.6	24.5
Investment in residential inventory⁽⁴⁾	15.9	11.4	34.2	23.8
Property disposition proceeds⁽⁴⁾	2.4	4.7	74.4	152.0

Key Balance Sheet Metrics	June 30		December 31
($ millions unless otherwise noted)	2025	2024	2024
Total assets ⁽⁵⁾	9,389.1	9,476.1	9,181.2
Assets held for sale ⁽⁵⁾	176.3	204.5	196.6
Net Debt ⁽⁴⁾	4,065.2	4,069.7	4,019.1

Increase (decrease) in value of investment properties, net⁽¹⁾	4.4	(74.2)	3.6
Unencumbered assets ⁽⁴⁾	6,556.9	6,355.6	6,249.8

Net Asset Value per unit	$22.20	$21.82	$22.05
Net debt to total assets ⁽⁴⁾⁽⁶⁾	44.6 %	45.1 %	44.5 %
Net debt to Adjusted EBITDA ⁽⁴⁾	9.0x	9.2x	8.7x

⁽¹⁾	Refer to "Non-IFRS Financial Measures" section of this press release.
⁽²⁾	Prior periods as reported; not restated to reflect current period categories.
⁽³⁾	As at June 30.
⁽⁴⁾	Reflects joint ventures proportionately consolidated.
⁽⁵⁾	Presented in accordance with IFRS.
⁽⁶⁾	Total assets excludes cash balances.

EARNINGS HIGHLIGHTS

Operating FFO per Diluted Unit of $0.34: Operating Funds from Operations of $72.8 million increased $4.4 million, or $0.02 per unit, over the same prior year period. Supported by strong operating metrics, the increase in Operating FFO for the second quarter of 2025 was primarily due to higher NOI of $3.3 million, and interest expense savings of $2.1 million, partially offset by lower interest and other income over the prior year period.
FFO per Diluted Unit of $0.34: Funds From Operations of $73.5 million increased $5.2 million, or $0.02 per unit, over the same prior year period. The increase was driven by higher Operating FFO of $4.4 million, and a year-over-year increase in other gains (losses) and (expenses) of $0.8 million. These other gains (losses) and (expenses) are comprised primarily of mark-to-market (non-cash) gains and losses related to derivative financial instruments employed by First Capital to reduce its borrowing costs and fix the rate of interest on certain variable-rate term loans. Over the life of each loan, the cumulative gain or loss on the related derivative instruments is expected to net to $Nil.
Net Income (Loss) Attributable to Unitholders: For the three months ended June 30, 2025, First Capital recognized net income (loss) attributable to Unitholders of $63.5 million or $0.30 per diluted unit compared to $16.9 million or $0.08 per diluted unit for the same prior year period. The increase in net income over prior year was primarily due to a $74.2 million decrease in value of investment property recognized in the second quarter of 2024 versus a $4.4 million increase in value of investment property in the second quarter of 2025, on a proportionate basis. This increase was partially offset by an increase in deferred income taxes of $29.9 million over the prior year period.

OPERATING PERFORMANCE AND CAPITAL ALLOCATION HIGHLIGHTS

Same Property NOI Growth: Total Same Property NOI increased 5.6% over the prior year period. Same Property NOI excluding bad debt expense (recovery) and lease termination fees increased 6.2%. The growth was primarily due to rental rate growth and higher year-over-year occupancy.
Portfolio Occupancy: On a quarter-over-quarter basis, total portfolio occupancy increased 0.3% to 97.2% at June 30, 2025, from 96.9% at March 31, 2025. On a year-over-year basis, total portfolio occupancy increased 0.9% from 96.3% at June 30, 2024 to 97.2% at June 30, 2025.
Lease Renewal Rate Increase: During the quarter, net rental rates increased 16.2% on a volume of 626,000 square feet of lease renewals, when comparing the rental rate in the first year of the renewal term to the rental rate in the last year of the expiring term. Net rental rates on leases renewed in the quarter increased 20.9% when comparing the average rental rate over the renewal term to the rental rate in the last year of the expiring term owing to higher contractual growth rates negotiated throughout the renewed lease terms.
Average Net Rental Rate: The portfolio average net rental rate increased by 0.9% or $0.21 per square foot over the prior quarter to a record $24.44 per square foot, primarily due to rent escalations and renewal lifts.
Property Investments: During the second quarter, First Capital invested approximately $37 million into property development and redevelopment.
Property Dispositions: First Capital continued to execute on its capital allocation strategy including property dispositions. During the second quarter, First Capital entered into a firm agreement to sell its Montgomery land assembly located in mid-town Toronto for approximately $42 million. Closing is expected to occur in December.
$300 Million Series E Senior Unsecured Debenture Offering: On June 13, 2025, First Capital completed the issuance of $300 million aggregate principal amount of Series E senior unsecured debentures (the "Debentures") on a private placement basis. The Debentures were issued at par, bear interest at a rate of 4.832% per annum and mature on June 13, 2033. Net proceeds from the offering will be used to repay existing debt, including the repayment in full of the REIT's $300 million of Series S debentures due July 31, 2025.

BALANCE SHEET HIGHLIGHTS

First Capital's June 30, 2025 net debt to Adjusted EBITDA multiple was 9.0x, a 0.3x increase from 8.7x at December 31, 2024 and an improvement of 0.2x from June 30, 2024. First Capital'sJune 30, 2025 liquidity position was approximately $1.0 billion, including $677 million of availability on revolving credit facilities and $276 million of cash on a proportionate basis. As at June 30, 2025, First Capital had approximately $6.6 billion of unencumbered assets, representing 70% of total assets.

ADVANCING ENVIRONMENTAL AND SOCIAL INITIATIVES

First Capital continued to demonstrate leadership in Environmental and Social matters throughout the second quarter, which included the following highlights:

Released its 2024 Sustainability Impact Report (FCR's 15th annual report), highlighting progress on its priorities, including greenhouse gas reductions, climate resilience, community engagement, and sustainable operations
Achieved a 19% reduction in Scope 1 & 2 absolute GHG emissions since 2019 base year (2019 to 2024)
Released its 2024 FCR Thriving Neighbourhoods Foundation Impact Report, highlighting the Foundation's 2024 community initiatives and impact, including $445,000+ raised for Community Food Centres of Canada during the year

SUBSEQUENT EVENTS

Subsequent to quarter end, the Trust completed the sale of Place Anjou, a development site in Montreal for approximately $33 million.

MANAGEMENT CONFERENCE CALL AND WEBCAST

First Capital invites you to attend the live conference call at 2:00 p.m. (ET) on Wednesday, July 30, 2025, with senior management to discuss financial results for the second quarter ended June 30, 2025.

First Capital's financial statements and MD&A for the second quarter will be released prior to the call and will be available on its website at www.fcr.ca in the 'Investors' section, and on the Canadian Securities Administrators' website at www.sedarplus.ca.

Teleconference

You can attend the live conference call by dialing 416-340-2217 or toll-free 1-800-806-5484 with access code 5713675#. The call will be accessible for replay until August 6, 2025, by dialing 905-694-9451 or toll-free 1-800-408-3053 with access code 6977878#.

Webcast

To access the live audio webcast and conference call presentation, please go to First Capital's website or click on the following link Q 2 2025 Conference Call. The webcast will be accessible for replay in the 'Investors' section of the website.

ABOUT FIRST CAPITAL REIT (TSX: FCR.UN)

First Capital owns, operates and develops grocery-anchored, open-air centres in neighbourhoods with the strongest demographics in Canada.

NON-IFRS FINANCIAL MEASURES

First Capital prepares and releases unaudited interim and audited annual consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS"). As a complement to results provided in accordance with IFRS, First Capital discloses certain non-IFRS financial measures in this press release, including but not limited to FFO, Operating FFO, NOI, Same Property NOI, and proportionate interest. Since these non-IFRS measures do not have standardized meanings prescribed by IFRS, they may not be comparable to similar measures reported by other issuers. First Capital uses and presents the above non-IFRS measures as management believes they are commonly accepted and meaningful financial measures of operating performance. Reconciliations of certain non-IFRS measures to their nearest IFRS measures are included below. These non-IFRS measures should not be construed as alternatives to net income (loss) or cash flow from operating activities determined in accordance with IFRS as measures of First Capital's operating performance.

Funds from Operations ("FFO")

FFO is a recognized measure that is widely used by the real estate industry, particularly by publicly traded entities that own and operate income-producing properties. First Capital calculates FFO in accordance with the recommendations of the Real Property Association of Canada ("REALPAC") as published in its most recent guidance on "Funds from Operations and Adjusted Funds From Operations for IFRS" dated January 2022. Management considers FFO a meaningful additional financial measure of operating performance, as it excludes fair value gains and losses on investment properties as well as certain other items included in FCR's net income (loss) that may not be the most appropriate determinants of the long-term operating performance of FCR, such as investment property selling costs; tax on gains or losses on disposals of properties; deferred income taxes; fair value gains or losses on unit-based compensation; and any gains, losses or transaction costs recognized in business combinations. FFO provides a perspective on the financial performance of FCR that is not immediately apparent from net income (loss) determined in accordance with IFRS.

Operating Funds from Operations ("OFFO")

In addition to REALPAC FFO described above, Management also discloses OFFO. Management considers OFFO as its key operating performance measure that, when compared period over period, reflects the impact of certain factors on its core operations, such as changes in net operating income, interest expense, corporate expenses and interest and other income. OFFO excludes the impact of the items in other gains (losses) and (expenses) that are not considered part of First Capital's on-going core operations.

A reconciliation from net income (loss) attributable to Unitholders to FFO and OFFO can be found in the table below:

Three and six months ended June 30, respectively ($ millions)	2025	2024	2025	2024
Net income (loss) attributable to Unitholders	$ 63.5	$ 16.9	$ 147.9	$ 91.7
Add (deduct):
(Increase) decrease in value of investment properties ⁽¹⁾	(4.4)	74.2	(7.0)	72.2
Adjustment for equity accounted joint ventures ⁽²⁾	0.1	0.1	0.2	0.2
Adjustment for capitalized interest related to equity accounted joint ventures ⁽²⁾	1.1	1.0	2.2	2.0
Incremental leasing costs ⁽³⁾	2.0	1.9	3.9	3.9
Increase (decrease) in value of unit-based compensation ⁽⁴⁾	4.1	(3.2)	2.7	(0.9)
Investment property selling costs ⁽¹⁾	0.2	0.3	1.7	2.6
Deferred income taxes (recovery) ⁽¹⁾	6.8	(23.0)	(10.4)	(21.8)
FFO	$ 73.5	$ 68.2	$ 141.2	$ 149.9
Other gains (losses) and (expenses) ⁽⁵⁾	(0.7)	0.1	0.5	(3.4)
OFFO	$ 72.8	$ 68.4	$ 141.7	$ 146.4

⁽¹⁾	At FCR's proportionate interest.
⁽²⁾	Adjustment related to FCR's equity accounted joint ventures in accordance with the recommendations of REALPAC.
⁽³⁾	Adjustment to capitalize incremental leasing costs in accordance with the recommendations of REALPAC.
⁽⁴⁾	Adjustment to exclude fair value adjustments on unit-based compensation plans in accordance with the recommendations of REALPAC.
⁽⁵⁾	At FCR's proportionate interest, adjusted to exclude investment property selling costs in accordance with the recommendations of REALPAC.

Net Debt

Net debt is a measure used by Management in the computation of certain debt metrics, providing information with respect to certain financial ratios used in assessing First Capital's debt profile. Net debt is calculated as the sum of principal amounts outstanding on credit facilities and mortgages, bank indebtedness and the par value of senior unsecured debentures reduced by the cash balances at the end of the period on a proportionate basis.

As at ($ millions)	June 30, 2025		December 31, 2024
Liabilities (principal amounts outstanding)
Mortgages ⁽¹⁾		$ 1,262.7		$ 1,336.6
Credit facilities ⁽¹⁾		678.9		741.4
Senior unsecured debentures		2,400.0		2,100.0
Total Debt ⁽¹⁾		$ 4,341.5		$ 4,178.0
Cash and cash equivalents ⁽¹⁾		(276.4)		(158.9)
Net Debt ^{(1) (2)}		$ 4,065.2		$ 4,019.1
Equity market capitalization ⁽³⁾		3,855.9		3,601.0
Enterprise value ⁽¹⁾		$ 7,921.1		$ 7,620.1
Trust Units outstanding (000's)		212,445		212,323
Closing market price		$ 18.15		$ 16.96

⁽¹⁾	At First Capital's proportionate interest.
⁽²⁾	Net Debt is a non-IFRS measure that is calculated as the sum of total debt including principal amounts outstanding on credit facilities and mortgages, bank indebtedness and the par value of senior unsecured debentures reduced by the cash balances at the end of the period on a proportionate basis.
⁽³⁾	Equity market capitalization is the market value of FCR's units outstanding at a point in time. The measure is not defined by IFRS, does not have a standard definition and, as such, may not be comparable to similar measures disclosed by other issuers.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")

Adjusted EBITDA is a measure used by Management in the computation of certain debt metrics. Adjusted EBITDA, is calculated as net income (loss), adding back income tax expense, interest expense and amortization and excluding the increase or decrease in the fair value of investment properties, fair value gains or losses on unit-based compensation and other non-cash or non-recurring items on a proportionate basis. FCR also adjusts for incremental leasing costs, which is a recognized adjustment to FFO, in accordance with the recommendations of REALPAC. Management believes Adjusted EBITDA is useful in assessing the Trust's ability to service its debt, finance capital expenditures and provide for distributions to its Unitholders.

A reconciliation from net income (loss) attributable to Unitholders to Adjusted EBITDA can be found in the table below:

Three and six months ended June 30, respectively ($ millions)	2025	2024	2025	2024
Net income (loss) attributable to Unitholders	$ 63.5	$ 16.9	$ 147.9	$ 91.7
Add (deduct) ⁽¹⁾:
Deferred income tax expense (recovery)	6.8	(23.0)	(10.4)	(21.8)
Interest Expense	40.4	42.4	80.3	82.5
Amortization expense	0.7	0.7	1.4	1.5
(Increase) decrease in value of investment properties	(4.4)	74.2	(7.0)	72.2
Increase (decrease) in value of unit-based compensation	4.1	(3.2)	2.7	(0.9)
Incremental leasing costs	2.0	1.9	3.9	3.9
Other non-cash and/or non-recurring items	(0.4)	0.4	2.2	(0.9)
Adjusted EBITDA ⁽¹⁾	$ 112.7	$ 110.4	$ 221.0	$ 228.2

⁽¹⁾ At First Capital's proportionate interest.

FORWARD-LOOKING STATEMENT ADVISORY

This press release contains forward-looking statements and information within the meaning of applicable securities law, including with respect to the anticipated execution and impact of the REIT's three-year business plan on its stated objectives, including FFO growth, distribution growth and improved debt ratios, as well as the REIT's ability to execute its disposition program and the anticipated contribution of dispositions to the REIT's three-year business plan objectives. These forward-looking statements are not historical facts but, rather, reflect First Capital's current expectations and are subject to risks and uncertainties that could cause the outcome to differ materially from current expectations. Such risks and uncertainties include, among others, First Capital's ability to close all announced disposition transactions and execute on its three-year business plan to achieve its stated objectives, general economic conditions; tenant financial difficulties, defaults and bankruptcies; increases in operating costs, property taxes and income taxes; First Capital's ability to maintain occupancy and to lease or re-lease space at current or anticipated rents; development, intensification and acquisition activities; residential development, sales and leasing; risks in joint ventures; environmental liability and compliance costs and uninsured losses; and risks and uncertainties related to pandemics, epidemics or other outbreaks on First Capital which are described in First Capital's MD&A for the year ended December 31, 2024. Additionally, forward-looking statements are subject to those risks and uncertainties discussed in First Capital's MD&A for the year ended December 31, 2024 and in its current Annual Information Form. Readers, therefore, should not place undue reliance on any such forward-looking statements.

First Capital undertakes no obligation to publicly update any such forward-looking statement or to reflect new information or the occurrence of future events or circumstances except as required by applicable securities law. All forward-looking statements in this press release are made as of the date hereof and are qualified by these cautionary statements.

SOURCE First Capital Real Estate Investment Trust