First Capital Real Estate Investment Trust, announced Tuesday financial results for the fourth quarter and year ended December 31, 2025.
It noted the following key highlights from the quarter:
- Operating FFO per unit of $0.34, representing YoY growth of 7%
- Same Property NOI growth of 5.7%, excluding bad debt expense (recovery) and lease termination fees
- Lease renewal lift of 15.8% on strong leasing volume
- Total portfolio occupancy of 97.1%, representing an increase of 30 basis points year-over-year
“Strong fundamentals for FCR’s grocery anchored portfolio together with the disciplined execution of our capital allocation strategy delivered solid results again in 2025,” said Adam Paul, President & CEO.
“Healthy leasing metrics including same property NOI growth of more than 5%, lease renewal spreads of nearly 15% and occupancy of 97.1% contributed to normalized Operating FFO per unit growth of 5.5% for the year”. Mr. Paul continued, “As we commence the final year of our three-year strategic plan, I am pleased that we continue to track well against the metrics we presented to our investors in early 2024.”
The REIT said its Q4 earnings highlights were:
- Operating FFO per Diluted Unit of $0.34: Operating Funds from Operations of $72.3 million increased $4.6 million, or $0.02 per unit, over prior year. Supported by strong operating metrics, the increase in Operating FFO year-over-year was primarily due to higher NOI of $3.3 million and interest expense savings of $2.1 million, partially offset by higher corporate G&A and lower interest and other income. Net operating income in the fourth quarter of 2025 included $2.6 million of lease termination income.
- FFO per Diluted Unit of $0.32: Funds From Operations of $68.4 million, or $0.32 per unit, remained consistent with prior year. On a year-over-year basis, Funds From Operations was driven by higher Operating FFO of $4.6 million, largely offset by a year-over-year decrease in other gains (losses) and (expenses) of $3.8 million, which included $4.8 million ($0.02 per unit) of restructuring and advisory costs related to the Trust’s internal tax reorganization.
- Net Income (Loss) Attributable to Unitholders: For the three months ended December 31, 2025, First Capital recognized net income (loss) attributable to Unitholders of $849.5 million or $3.95 per diluted unit compared to $32.1 million or $0.15 per diluted unit for the prior year period. The increase in net income over prior year was primarily due to the remeasurement of deferred income taxes in the fourth quarter of 2025 as a result of the Trust’s internal tax reorganization resulting in a deferred income tax recovery of $746.7 million versus $39.3 million of deferred income tax expense in the fourth quarter of 2024. Additionally, the fair value of investment property increased $36.1 million in the fourth quarter of 2025 versus a $3.6 million increase in fair value of investment property recognized in the fourth quarter of 2024, on a proportionate basis.
First Capital said its Q4 operating performance and capital allocation highlights were:
- Same Property NOI Growth: Total Same Property NOI increased 7.9% 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 $2.1 million. Same Property NOI excluding bad debt expense (recovery) and lease termination fees increased 5.7%.
- Portfolio Occupancy: On a quarter-over-quarter basis, total portfolio occupancy remained consistent at 97.1% compared to September 30, 2025.
- Lease Renewal Rate Increase: During the quarter, net rental rates increased 15.8% on a volume of 522,000 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 20.2% 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 embedded within the renewed lease terms.
- Average Net Rental Rate: The portfolio average net rental rate increased by 0.7% or $0.16 per square foot over the prior quarter to a record $24.73 per square foot, primarily due to rent escalations and renewal lifts.
- Property Investments: During the fourth quarter, First Capital invested approximately $47 million into property development, redevelopment and residential inventory.
- Property Dispositions: During the fourth quarter, First Capital completed property dispositions totalling $67 million, including the previously announced sale of the Montgomery Assembly in Toronto for $42 million. In addition, during the fourth quarter the Trust entered into firm agreements to sell four properties having a total value of $43 million. The largest of these transactions is a residential development site in Toronto which closed during the fourth quarter. The other three property sales are expected to close in the first and third quarters of 2026.
For the year, First Capital cited the following as its earnings highlights:
- Operating FFO per Diluted Unit of $1.33: Operating Funds from Operations of $285.6 million decreased $5.3 million, or $0.03 per unit, over prior year. The decrease was primarily due to non-recurring items recognized in the prior year, including a $9.5 million assignment fee related to a small development parcel located in Montreal as well as a density bonus of $11.3 million in connection with a previously sold property. Excluding these amounts, Operating FFO increased $15.4 million, or $0.07 per unit, over prior year primarily due to higher NOI of $11.2 million.
- FFO per Diluted Unit of $1.30: Funds From Operations of $279.2 million decreased $10.5 million, or $0.05 per unit, over prior year. The decrease was driven by lower Operating FFO of $5.3 million, and a year-over-year decrease in other gains (losses) and (expenses) of $5.2 million, which included $6.8 million ($0.03 per unit) of restructuring and advisory costs related to the Trust’s internal tax reorganization.
- Net Income (Loss) Attributable to Unitholders: For the year ended December 31, 2025, First Capital recognized net income of $1.1 billion or $4.96 per diluted unit compared to $204.9 million or $0.96 per diluted unit for the prior year. The increase in net income over prior year was primarily due to the remeasurement of deferred income taxes as a result of the Trust’s internal tax reorganization resulting in a deferred income tax recovery of $763.5 million for the year versus $14.3 million of deferred income tax expense in 2024. Additionally, the fair value of investment property increased $44.2 million in 2025 versus a $49.6 million decrease in fair value of investment property recognized in 2024, on a proportionate basis.
First Capital said the following were the REIT’s annual operating performance and capital allocation highlights:
- Same Property NOI Growth: Total Same Property NOI increased 5.2% over prior year, primarily due to rental rate growth and higher year-over-year occupancy, partially offset by a year-over-year decrease in lease termination fees of $2.5 million. Same Property NOI excluding bad debt expense (recovery) and lease termination fees increased 5.9%.
- Portfolio Occupancy: On a year-over-year basis, total portfolio occupancy increased by 0.3%, to 97.1% at December 31, 2025, from 96.8% at December 31, 2024.
- Lease Renewal Rate Increase: Net rental rates increased 14.8% on 2,201,000 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 during 2025 increased 19.7% 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 embedded within the renewed lease terms.
- Average Net Rental Rate: The portfolio average net rental rate increased $0.73 to $24.73 per square foot representing year-over-year growth of 3.0%. The strong growth was primarily due to rent escalations, renewal lifts and dispositions.
- Property Investments: First Capital invested approximately $190 million into its properties during 2025, primarily through development, redevelopment, residential inventory and strategic acquisitions.
- Property Dispositions: During 2025, First Capital completed or entered into firm agreements for $194 million of property dispositions. Reflecting FCR’s disciplined approach to asset sales, the collective transaction values equated to an in-place yield that is less than 3% and an average premium to IFRS carrying value of more than 40%. As at December 31, 2025, the Trust classified $106 million of investment properties as held for sale.
More from Retail Insider:
