FIRST CAPITAL REIT ANNOUNCES SOLID THIRD QUARTER 2024 RESULTS DRIVEN BY CONTINUED STRENGTH IN LEASING
TORONTO, Oct. 29, 2024 /CNW/ - First Capital Real Estate Investment Trust ("First Capital", "FCR", or the "Trust") (TSX:FCR), announced financial results for the quarter ended September 30, 2024. The 2024 Third Quarter Report is available in the Investors section of the Trust's website at www.fcr.ca and will be filed on SEDAR+ at www.sedarplus.ca.
KEY HIGHLIGHTS FROM THE THIRD QUARTER:
Same Property NOI growth of 3.7%, excluding bad debt expense (recovery) and lease termination fees
Strong leasing activity, including lease renewal spreads of 12.4%
Total portfolio occupancy of 96.5%, representing an increase of 60 basis points year-over-year
"The strong fundamentals of First Capital's grocery anchored retail portfolio contributed to solid operating and financial results once again this quarter," said Adam Paul, President and CEO.
"We are pleased with our progress and remain focused on continuing to successfully execute our strategy."
SELECTED FINANCIAL INFORMATION
Three months ended September 30
Nine months ended September 30
2024
2023
2024
2023
Operating FFO ($ millions) (1)(2)
$76.9
$68.8
$223.3
$185.6
FFO ($ millions) (1)
$72.3
$68.6
$222.2
$185.9
Operating FFO per diluted unit (1)(2)
$0.36
$0.32
$1.04
$0.87
Other gains and (losses) included in FFO per diluted unit (1)
($0.02)
$0.00
($0.01)
$0.00
FFO per diluted unit (1)
$0.34
$0.32
$1.04
$0.87
Total Same Property NOI growth (1)(3)
2.5 %
1.2 %
5.0 %
2.5 %
Total portfolio occupancy (4)
96.5 %
95.9 %
Total Same Property occupancy (1)(4)
96.7 %
95.8 %
Increase (decrease) in value of investment properties, net (1)
$18.9
($432.8)
($53.2)
($544.0)
Net income (loss) attributable to unitholders ($ millions)
$81.1
($327.5)
$172.9
($307.9)
Net income (loss) attributable to unitholders per diluted unit
$0.38
($1.53)
$0.81
($1.44)
Weighted average diluted units for FFO and net income (000s)
214,342
213,952
214,193
214,407
(1)
Refer to "Non-IFRS Financial Measures" section of this press release.
(2)
For the nine months ended September 30, 2024, Operating FFO includes $Nil (September 30, 2023 - approximately $7 million or 3 cents per unit) of non-recurring costs related to the Unitholder activism.
(3)
Prior periods as reported; not restated to reflect current period categories.
(4)
As at September 30.
THIRD QUARTER OPERATIONAL AND FINANCIAL HIGHLIGHTS
Same Property NOI Growth: Total Same Property NOI increased 2.5% over the prior year period. The growth was primarily due to higher base rent and higher net operating cost and tax recoveries, partially offset by a year-over-year decrease in bad debt recovery of $1.1 million to $Nil in the third quarter of 2024. Same Property NOI excluding bad debt expense (recovery) and lease termination fees increased 3.7%.
Portfolio Occupancy: On a quarter-over-quarter basis, total portfolio occupancy increased 0.2% to 96.5% at September 30, 2024, from 96.3% at June 30, 2024. On a year-over-year basis, total portfolio occupancy increased 0.6% to 96.5% at September 30, 2024, from 95.9% at September 30, 2023.
Lease Renewal Rate Increase: Net rental rates increased 12.4% on a volume of 437,000 square feet of lease renewals, when comparing the rental rate in the first year of the renewal term to the rental rate in the last year of the expiring term. Net rental rates on leases renewed in the quarter increased 16.9% when comparing the average rental rate over the renewal term to the rental rate in the last year of the expiring term primarily owing to higher contractual growth rates negotiated for the renewed lease terms.
Average Net Rental Rate: The portfolio average net rental rate increased by 0.5% or $0.12 per square foot over the prior quarter to a record $23.85 per square foot, primarily due to renewal lifts and rent escalations.
Property Investments: First Capital invested approximately $52 million into its properties during the third quarter, primarily through development and redevelopment.
Property Dispositions: During the third quarter, First Capital entered into a firm agreement to sell its 50% interest in 200 West Esplanade, North Vancouver for approximately $29 million. The property is encumbered by a secured construction facility that will be assumed by the purchaser on closing, which is expected in the fourth quarter of 2024. As at September 30, 2024, the Trust classified $236 million of investment properties as held for sale.
Balance Sheet and Liquidity: First Capital's September 30, 2024 net debt to Adjusted EBITDA multiple was 9.0x, an improvement from 9.9x at December 31, 2023. First Capital's September 30, 2024 liquidity position was approximately $0.8 billion, including $698 million of availability on revolving credit facilities and $67 million of cash on a proportionate basis. As at September 30, 2024, remaining 2024 debt maturities were only $39 million.
Operating FFO per Diluted Unit of $0.36: Operating Funds from Operations of $76.9 million increased $8.0 million, or $0.04 per unit, over the prior year period. The increase was primarily due to higher interest and other income of $9.6 million owing to the recognition of a density bonus payment of $11.3 million in connection with a previously sold property. This increase was partially offset by a non-recurring legal settlement of $3.8 million recognized in the third quarter of 2023. Excluding these identified items, Operating FFO increased $0.5 million or approximately 1% over the prior year period.
FFO per Diluted Unit of $0.34: Funds From Operations of $72.3 million increased $3.7 million, or $0.02 per unit, over the prior year period. The increase was primarily driven by higher Operating FFO of $8.0 million, partially offset by a year-over-year decrease in other gains (losses) and (expenses) of $4.3 million. These other gains (losses) and (expenses) are comprised primarily of mark-to-market (non-cash) gains and losses related to derivative financial instruments employed by First Capital to reduce its borrowing costs and fix the rate of interest on certain variable-rate term loans. Over the life of each loan, the cumulative gain or loss on the related derivative instruments is expected to net to $Nil.
Net Income (Loss) Attributable to Unitholders: For the three months ended September 30, 2024, First Capital recognized net income (loss) attributable to Unitholders of $81.1 million or $0.38 per diluted unit compared to ($327.5) million or ($1.53) per diluted unit for the prior year period. The increase in net income over prior year was primarily due to a $432.8 million decrease in the fair value of ...
