First Capital Real Estate Investment Trust T.FCR.UN

Alternate Symbol(s): FCXXF

First Capital Real Estate Investment Trust is a Canada-based open-ended mutual fund trust. The Company owns, operates and develops grocery-anchored, open-air centers in neighborhoods with various demographics in Canada. The Company targets specific urban and suburban neighborhoods, which are located in Toronto, Montreal, Vancouver, Edmonton, Calgary, and Ottawa. Its portfolio of properties include Shops at King Liberty, 3080 Yonge Street, 2150 Lake Shore Boulevard West, Avenue and Lawrence Assets, Bayside Village, Leaside Village, Olde Oakville Market Place, Rutherford Marketplace, Edmonton Brewery District, King High Line, York Mills Gardens, False Creek Village, Carre Lucerne, Shops at New West, Wilderton Centre, One Bloor East, 775 King Street West, Yorkville Village, 78-100 Yorkville Avenue, 101 Yorkville Avenue, and 102-108 Yorkville Avenue. Its properties also include 897-901 Eglinton Avenue West, Griffintown-100 Peel, and Griffintown-1000 Wellington Street, among others.

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First Capital Real Estate Investment Trust

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Post by retiredcfon May 03, 2023 8:39am

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Post# 35427023

RBC

May 2, 2023

First Capital REIT
Underlying Q1 print a bit ahead of us, in line with Street; strong organic growth

TSX: FCR.UN | CAD 15.60 | Outperform | Price Target CAD 21.00

Sentiment: Neutral

Our view: FCR reported headline Q1/23 FFOPU of $0.25, below RBC/Street at $0.27E/$0.28E, and flat with last year ($0.25). However, excluding $7MM ($0.03/unit) of unitholder activism related costs, Q1/23 FFOPU was $0.28, slightly ahead of our call on higher interest/other income. Overall, strong operational results, with occupancy edging up, high-single-digit renewal leasing spreads, and solid organic growth. As previously announced, progress is also being made on the disposition program, while the IFRS NAV held steady. Conference call May-3 (2 pm ET; 1-800-898-3989; passcode 6415917).

Highlights:

SP-stable NOI up strong 3.9% YoY, with total SP NOI (incl. redevelopments) +4% YoY. Growth was driven by rent escalations and higher variable revenues.
Total occupancy improved to 96.2% (+40 bps QoQ, +70 bps YoY), with SP-occupancy at 96.3% (+20 bps QoQ, +40 bps YoY).
Renewal leasing spreads were strong at +9.3%, or +10.8% using the average renewal term rent vs. the final year expiring rent. In-place net rent rose to $23.06/sf (+0.5% QoQ, +2.2% YoY).
Reported NAVPU stable at $23.48 (flat QoQ, -4% YoY). In Q1, FCR booked a nominal net $3MM fair value charge on the portfolio to reflect market conditions and rising interest rates. The IFRS cap rate was flat QoQ at 5.2% (+20 bps YoY) vs. our 5.4% NAV cap rate and the current 6.5% implied cap.
Good execution on disposition program. As announced on Apr-11, FCR has entered into agreements to sell four properties for an aggregate $184MM (3.3% yield), raising total dispositions to $360MM (<3% yield) vs. its ~$1B target by the end of 2024. Assets held for sale at Q1/23 total $327MM.
Limited acquisitions. In Q1, FCR acquired a 50% interest in a Toronto property for $16MM, completing its assembly on the northeast corner of Bloor St. W. & Spadina Road. A rezoning application was filed for 336K sf of mixed-use high-rise density.
NCIB was active in Q1, with $20MM of units repurchased (1.3MM units @ $15.32/unit).
Net debt/assets increased to 44.6% (+60 bps QoQ, +80 bps YoY); 10.4x debt/EBITDA (+0.2x QoQ, -0.7x YoY), or 10.2x excluding activism related costs.