First Capital Real Estate Investment Trust, announced Monday financial results for the quarter ended June 30, 2026, indicating same property NOI growth of 2.5%, excluding bad debt expense (recovery) and lease termination fees; a lease renewal lift of 14.4% on strong leasing volume; and total portfolio occupancy of 97.1%.
Its key financial results were outlined by the company:
- Operating FFO per Diluted Unit of $0.35: Operating Funds from Operations of $74.7 million increased $2.0 million, or $0.01 per unit, over the same prior year period. The increase in Operating FFO for the second quarter of 2026 was primarily due to higher NOI of $2.3 million and higher interest and other income of $2.1 million including $3.4 million of profits from the sale of residential condominiums recognized this quarter, partially offset by higher corporate G&A and interest expense.
- FFO per Diluted Unit of $0.28: Funds From Operations of $59.5 million decreased $14.0 million, or $0.07 per unit, over the same prior year period. The decrease was driven by a year-over-year decrease in other gains (losses) and (expenses) of $16.0 million, partially offset by higher Operating FFO of $2.0 million. The decrease was primarily due to $14.8 million of legal and advisory fees incurred in connection with the privatization of FCR.
- Net Income (Loss) Attributable to Unitholders: For the three months ended June 30, 2026, First Capital recognized net income (loss) attributable to Unitholders of $24.2 million or $0.11 per diluted unit compared to $63.5 million or $0.30 per diluted unit for the prior year period. The decrease in net income over prior year was primarily due to a $71.4 million residential development inventory impairment loss largely relating to a change in strategy for the 138 Yorkville Avenue ultra-luxury condominium project as a result of the previously announced agreement for FCR to be acquired, as well as $36.3 million of estimated credit losses recognized on loans receivable also connected with the project. These losses were partially offset by a year-over-year increase of $92.6 million related to the fair value of investment property, on a proportionate basis. Additionally, the Trust recognized an increase in the fair value of non-cash compensation plans of $15.8 million year-over-year as a result of FCR’s announced transaction with Kingsett Capital and Choice Properties REIT.
It outlined key performance and capital allocation highlights:
- Same Property NOI Growth: Total Same Property NOI increased 2.4% over the prior year period primarily due to rental rate growth. Same Property NOI excluding bad debt expense (recovery) and lease termination fees increased 2.5%. Same property NOI growth was adversely impacted by approximately 55 basis points during the second quarter due to the de-leasing initiatives at Westmount Shopping Centre, Edmonton. Under the REIT’s 2026 business plan, a major redevelopment of this property had commenced early in the second quarter, which would have excluded the shopping centre from the same property category. In accordance with the Arrangement Agreement with KingSett Capital and Choice Properties REIT, the redevelopment of the property has been paused and therefore Westmount Shopping Centre remains in the same property category.
- Portfolio Occupancy: On a quarter-over-quarter and year-over-year basis, total portfolio occupancy decreased 0.1% to 97.1% at June 30, 2026, from 97.2% at March 31, 2026 and June 30, 2025, respectively.
- Lease Renewal Rate Increase: During the quarter, net rental rates increased 14.4% on a volume of 612,000 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 19.4% 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 0.6% or $0.14 per square foot over the prior quarter to a record $24.95 per square foot, primarily due to rent escalations and renewal lifts.
- Property Investments: During the second quarter, First Capital invested approximately $40 million into property development, redevelopment, residential inventory and acquisitions.
- Property Dispositions: During the second quarter, First Capital completed the disposition of 121 Scollard Street, located in Toronto, for $13 million.
First Capital owns and operates, acquires, and develops open-air grocery-anchored shopping centres in neighbourhoods with the strongest demographics in Canada.
In early June, First Capital REIT unitholders overwhelmingly approved the previously announced $9.4 billion acquisition of the company by KingSett Capital and Choice Properties REIT, moving one of Canada’s most significant retail real estate transactions closer to completion.
The special resolution approving the plan of arrangement received strong support, with fewer than one per cent of votes cast against the proposal. First Capital said it intends to seek final approval from the Ontario Superior Court of Justice (Commercial List), with all other required approvals already obtained.
Under the arrangement, First Capital unitholders will receive $19.24 in cash and 0.3186 of a Choice Properties REIT unit for each First Capital unit they hold.
Once completed, the transaction will see Choice Properties acquire approximately $5 billion of First Capital’s retail assets, while KingSett Capital will acquire approximately $4.4 billion of First Capital assets and all of First Capital’s issued and outstanding units.
On Monday, it said the transaction is expected to close in the fourth quarter of 2026, assuming that required approvals are obtained and all other conditions are satisfied.
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