more Andrew Moffs First Capital REIT (FCR.UN TSX)
First Capital REIT owns interests in over 22 million square feet of retail real estate located in Canada’s major urban centers. More than 85 per cent of the portfolio is leased to tenants providing essential goods and services and the portfolio has over 24 million square feet of future development potential. Vision believes this is the highest quality and best-located grocery and pharmacy-store-anchored portfolio globally.
The supply and demand backdrop for grocery-anchored shopping centers is increasingly favourable in the current economic environment with minimal new supply and a high degree of economic resilience. In a recessionary environment, First Capital’s necessity-based retailers will experience minimal disruption in sales which will outperform peers more exposed to discretionary retailers.
Over the last six months, due to significant unitholder activism, First Capital has made substantial improvements to portfolio strategy, balance sheet, and corporate governance. On Sept. 22, 2022, the REIT announced an enhanced capital allocation and portfolio optimization plan that will rebalance the portfolio to monetize excess density improving both earnings growth and corporate debt metrics. This plan is the culmination of years of re-zoning work to unlock embedded value within the portfolio.
In addition, the REIT has continued to substantially refresh the board of trustees, changing the chair of the board and adding two new trustees, including Ira Gluskin and Richard Nesbitt. This is in addition to the retirement of Andrea Stephen for whom Dayna Gibbs will now stand for election at the REIT’s upcoming AGM. Seven of the current 10 trustees at First Capital, including the new chair, have joined since 2018 as part of First Capital’s ongoing board refreshment.
First Capital is well positioned for strong unit price outperformance with the REIT trading approximately 35 per cent below the private market value of the assets (the most discounted valuation in the Canadian shopping center REIT space).