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 Jul 31, 2024 8:43am

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Post# 36155849

TD

Q2/24: NEAR RECORD LEASING SPREADS REFLECT STRENGTH OF TENANT DEMAND

THE TD COWEN INSIGHT

FCR delivered a solid quarter with OFFO/unit ~6% ahead of our estimate/consensus,
aided by some non-recurring NOI. Robust demand for FCR's grocery-anchored properties translated into strong leasing spreads, while occupancy remained elevated. FCR remains on solid footing in meeting its low-9's leverage target with ND/EBITDA falling a further 0.1x q/ q to 9.2x.

Impact: SLIGHTLY POSITIVE

Q2 results (see page 2 exhibits) were strong with reported OFFO/unit of $0.32 beating our estimate/consensus of $0.30. NOI was ahead by $5mm, although mostly due to anomalous items and timing on recognition of new rents at One Bloor East. Most of the Q2 beat should not carry through into Q3, in our view. The +2% y/y growth in our calculation of Q2 AFFO/unit was hindered by elevated SLR accruals, but these should taper off and become tailwinds by early 2025. Management's 2024 and three-year targets to 2026E were all left unchanged.

Operations continued to demonstrate Canada's tight retail leasing market for grocery- anchored centres with high and growing population density.

Adjusted SPNOI growth (excluding BDE and LTFs) was 3.7%. We estimate SPNOI growth would have been low-3's further adjusting for Q2 NOI anomalies and last year's Nordstrom Rack departure (replacement tenants' rents are much higher, which bodes well for SPNOI growth later in H2/24 and 2025).
Renewal leasing rent uplifts of +13% were back near all-time highs. The +19% uplift achieved including full-term average rents and the 6% differential between these two measures both hit new historic highs, as FCR is able to negotiate higher and higher contractual rent increases.
Occupancy was +10bps q/q and +40bps y/y to 96.3% (increases occurred in Toronto, Calgary and Vancouver).

Balance Sheet

FCR entered into $66mm of new, all-cash disposition agreements (incl. 1629-1633 The Queensway and 895 Lawrence Avenue East in Toronto) and completed ~$9mm, pushing held-for-sale assets up to $204mm. Deals overall appear to be taking longer to close.
Net debt/EBITDA of 9.2x (-0.1x q/q) continues to track well against management's low-9x year-end 2024 target. Liquidity stood at ~$1.2bln, ahead of the $281mm Series R debenture maturity on August 30.
FCR recorded a $74mm FV loss mostly on development and density sites. FCR's average IFRS cap rate was steady at 5.5% (+10bps in Toronto and Montreal, -10bps in Calgary).

Conference call at 2:00 PM ET today (416-406-0743, passcode: 1247278#