First Capital Real Estate Investment Trust, announced Tuesday financial results for the quarter ended September 30, 2025, with near record occupancy.
First Capital owns and operates, acquires, and develops open-air grocery-anchored shopping centres in neighbourhoods with the strongest demographics in Canada.
“We are pleased to report another strong quarter of operating and financial results, highlighted by near record occupancy, solid same-property NOI growth and robust lease renewal spreads”, said Adam Paul, President & CEO.
“Our results continue to reflect the successful execution of our strategy and the strong fundamentals of FCR’s grocery anchored retail portfolio, which positions us well for continued stability and growth in cash flow.”
EARNINGS HIGHLIGHTS
- Operating FFO per Diluted Unit of $0.33: Operating Funds from Operations of $71.6 million decreased $5.2 million, or $0.03 per unit, over the same prior year period. The decrease was primarily due to the recognition of a density bonus of $11.3 million in connection with a previously sold property in the third quarter of 2024. Excluding the density bonus, Operating FFO increased $6.1 million or approximately 9% over the prior year period primarily due to higher NOI of $4.7 million and interest expense savings of $3.5 million.
- FFO per Diluted Unit of $0.32: Funds From Operations of $69.6 million decreased $2.7 million, or $0.01 per unit, over the same prior year period. The decrease was driven by lower Operating FFO of $5.2 million, partially offset by a year-over-year increase in other gains (losses) and (expenses) of $2.5 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 September 30, 2025, First Capital recognized net income (loss) attributable to Unitholders of $66.6 million or $0.31 per diluted unit compared to $81.1 million or $0.38 per diluted unit for the same prior year period. The decrease in net income over prior year was primarily due to a $1.1 million increase in value of investment property in the third quarter of 2025 versus a $18.9 million increase in value of investment property recognized in the third quarter of 2024, on a proportionate basis.
OPERATING PERFORMANCE AND CAPITAL ALLOCATION HIGHLIGHTS
- Same Property NOI Growth: Total Same Property NOI increased 7.2% over the prior year period. The growth was primarily due to rental rate growth, higher year-over-year occupancy, and a year-over-year increase in lease termination fees of $0.9 million. Same Property NOI excluding bad debt expense (recovery) and lease termination fees increased 6.4%.
- Portfolio Occupancy: On a quarter-over-quarter basis, total portfolio occupancy decreased 0.1% to 97.1% at September 30, 2025, from 97.2% at June 30, 2025. On a year-over-year basis, total portfolio occupancy increased 0.6% from 96.5% at September 30, 2024 to 97.1% at September 30, 2025.
- Lease Renewal Rate Increase: During the quarter, net rental rates increased 13.5% on a volume of 543,000 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 18.7% 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 0.5% or $0.13 per square foot over the prior quarter to a record $24.57 per square foot, primarily due to rent escalations and renewal lifts.
- Property Investments: During the third quarter, First Capital invested approximately $49 million into property development, redevelopment and acquisitions, including the purchase of a 50% interest in an 18 acre retail development site located in Ottawa.
- Property Dispositions: During the third quarter, First Capital completed $35 million of dispositions, including Place Anjou, a development site located in Montreal.
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