Bullboard - Stock Discussion Forum 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... see more

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TSX:FCR.UN - Post Discussion

First Capital Real Estate Investment Trust > TD

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Post by retiredcf on Aug 02, 2023 9:30am

TD

On their Action Buy List with a $19.00 target. GLTA

First Capital REIT

(FCR.UN-T) C$14.63

Q2/23 First Look: Leasing Spreads Jump; Dispos Continue Event

Q2/23 Results. Conference call is at 2:00 PM ET today (416-406-0743, passcode: 4501769#).

Impact: SLIGHTLY POSITIVE

Our Take: FCR's Q2 results demonstrated steady growth from the REIT's necessity- based property portfolio, while achieving near-record renewal leasing spreads and continuing to execute on its plan of reducing leverage by disposing of low-yielding assets.

Results vs. Forecast (Exhibit)

Q2 FFO/unit of $0.30 (vs. TD/consensus both at $0.29) increased +8% y/y, driven by SPNOI growth, NCIB accretion, and other gains/losses, all partially offset by higher interest costs and G&A. The favourable variance to our estimate largely resulted from the gain on the sale of ONE Restaurant. AFFO/unit (our calculation) was also slightly ahead and +5% y/y.

Operations

Total occupancy of 95.9% slipped 30bps q/q but would have risen +40bps q/q if not for two known vacancies (Nordstrom Rack at 1 Bloor East and Walmart at Westmount Centre).
Adjusted SPNOI growth decelerated to 2.2% from 4% TTM due to the Nordstrom Rack closure (40bps), tougher y/y occupancy comps, and unfavourable CAM/tax adjustments.
Lease renewal uplift to initial rents jumped to +14% (+16% to average full- term rents) — both excluding any pandemic relief impacts, and well ahead of the 9% historical average.

Balance Sheet

FCR announced $91mm of new dispositions under firm agreements that are in aggregate 40% above IFRS fair value, debt-free, and are all-cash deals (i.e., no VTBs). These include Yonge-Davis Centre (52,600sf, non-grocery anchored), 30/30A Hazelton Avenue, and the remaining Place Panama development lands. This brings cumulative activity under the $1bln+ disposition plan to $460mm (17% above FV) with a sub-3% average yield.
FCR acquired the lands at Centre Commercial Maisonneuve just prior to the ground lease's expiry (leasehold interest held since 2003) for $55mm (works out to $480/sf for the property's 114,400sf leasable area). Simultaneously, FCR tripled the property's average rent by negotiating new leases with all major tenants (e.g., Canadian Tire, Loblaw).
ND/Assets of 44.5% and ND/EBITDA of 10.3x (10.1x excluding activism costs), both declined marginally. IFRS NAV/unit slipped 1.5% q/q to $23.13 on ~$0.1bln of FV losses (cap rate +10bps).