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 Oct 29, 2024 11:44am

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Post# 36286869

TD

Currently have a $20.00 target. GLTA

Q3/24: OCCUPANCY NEARS 5-YEAR HIGH AND LEASING SPREADS REMAIN STRONG

THE TD COWEN INSIGHT

Q3 results demonstrated continued strength across FCR's grocery-anchored portfolio, with elevated leasing spreads and occupancy rising a further 20bps q/q (to near-record highs) driving +3.7% SPNOI growth. Despite no dispos completed in Q3, ND/EBITDA (LTM basis) decreased 0.2x q/q to 9.0x and meeting management's low-9s FY2024 target. We continue to expect AFFO growth acceleration next year.

Impact: NEUTRAL

Q3 results (see page 2 exhibits). AFFO/unit (TD calc) of $0.272 was in-line and -2% y/y as interest expense, dispos, and temporary downtime at One Bloor continue to offset very strong leasing performance. FFO/unit (f.d., ex-items) of $0.306 narrowly missed
our estimate/consensus of $0.31 after adjusting for a one-time $11.3mm density bonus payment relating to the 2023 sale of 5051 Yonge Street. NOI (on a cash-basis) was slightly ahead of our forecast. Management's 2024 and three-year targets to 2026E were all left unchanged.

Q3 interest expense per-unit increased 10% y/y whereas in 2025 we forecast little or no increase. This is key to the AFFO growth acceleration we forecast for FCR and many peers.

Operations continued to demonstrate Canada's tight shopping centre leasing market.

Adjusted SPNOI growth (excluding BDE and LTFs) was 3.7% and matched the pace from Q2. We see room for continued strong SPNOI growth through Q4 and into 2025, including the tailwind of cash rents ramping up at One Bloor East.
Renewal leasing rent uplifts of +12.4% remained strong and near historical highs. FCR achieved +16.9% uplifts including average rents across the full renewal terms, indicating continued ability to achieve strong contractual rent increases.
Occupancy was +20bps q/q and +60bps y/y to 96.5%, and rising closer to the 96.9% record high in 2019. Q/Q increases occurred in Montreal, Calgary and Vancouver.

Balance Sheet

FCR agreed to sell its 50% interest in 200 West Esplanade, North Vancouver (newly- built rental residential/retail property) for $29mm. YTD completed asset sales were unchanged at $152mm, signaling continued long deal completion timelines. Assets held- for-sale increased to $236mm.
Net debt/EBITDA of 9.0x (-0.2x q/q) has now met management's low-9x year-end 2024 target. Liquidity was back to $0.9bln after repaying the $281mm Series R debenture in August. FCR recorded a $19mm FV gain. FCR's average IFRS cap rate was steady q/q at 5.5% (+10bps in Vancouver).

Valuation: FCR trades at 15.4x 2025E P/AFFO, vs Cdn peers 13.4x and US peers 17.8x. Conference call at 2:00 PM (416-406-0743, passcode: 5419028