Bullboard - Stock Discussion Forum First Capital Real Estate Investment Trust FCXXF

Primary Symbol: T.FCR.UN

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 May 03, 2023 8:06am

TD

Is on their Action Buy List with a $22.00 target. GLTA

First Capital REIT

(FCR.UN-T) C$15.60

Q1/23 First Look: Ops Strengthen as Activism Costs Hit FFO

Event

Q1/23 results. Conference call is at 2:00 p.m. (416-406-0743; code 6415917#).

Impact: MIXED

Our Take: After backing out activism-related costs, FCR's Q1/23 results were only slightly below our forecast, and largely flat y/y despite the rise in interest rates and FCR's ongoing dispositions. FCR delivered strong operational performance in Q1/23, with occupancy back above 96% and nearly the fastest adjusted SPNOI growth in several years. These results are indicative of the solid leasing fundamentals we have been seeing in the Canadian shopping centre industry, as demonstrated by the fast take-up of the 65 spaces that Bed, Bath & Beyond will soon vacate. This now includes ten spaces being acquired by Canadian Tire (link). FCR's leverage ticked up very modestly due to NCIB activity (1.3mm units @ $15.32) and no disposition completions during Q1.

Results vs. Forecast (Exhibit)

FCR expensed $7mm of activism-related costs, which dragged Q1 FFO/unit down by $0.03/unit. Adjusting for that, Q1/23 FFO/unit (excluding unusual items) was $0.28 and slightly below our $0.29 estimate. While consensus recently declined to $0.28, we believe some activism costs may have been embedded in some street estimates. The variances to our forecast included higher interest expense, seasonally-weaker results for the Hazelton Hotel (expected to be sold by late Q2), and higher operating expenses.

Operations

Total occupancy of 96.2% increased +40bps q/q (monthly average occupancy +20bps to 95.8%), and is above 96% for the first time since Q4/21.
Adjusted SPNOI growth (excluding BDE and LTF) of 4.0% that was at a near record pace versus the past several years.
Lease renewal uplift to initial rents averaged +9.3% (+10.8% to average full-term rents), slightly ahead of FCR's 2017-2019 average performance.

Balance Sheet

There were no new dispositions disclosed since the $184mm announcement early last month (link). This, together with no dispositions completed during Q1, pushed assets held-for-sale up to $327mm.
ND/Assets increased to 44.6% (q/q: 44.0%). ND/EBITDA increased to 10.4x (q/ q: 10.2x), but was unchanged q/q excluding the activism costs.