Choice Properties and KingSett Capital Agree to Acquire First Capital REIT in $9.4 Billion Real Estate Deal

Choice Properties (TSX: CHP.UN) and KingSett Capital have entered into an agreement to acquire First Capital REIT (TSX: FCR.UN) in a transaction valued at approximately $9.4 billion, including the assumption of debt, the companies announced April 16, 2026. The deal will divide First Capital's retail real estate portfolio between the two acquirers, with Choice Properties taking on approximately $5.0 billion in necessity-based neighbourhood shopping centres and KingSett acquiring roughly $4.4 billion in needs-based retail, high-street retail properties, development assets, and other financial assets.

Under the terms of the arrangement agreement, First Capital unitholders will receive $19.24 in cash and 0.3186 units of Choice Properties per First Capital unit, for total consideration of $24.40 per unit based on Choice Properties' closing unit price on April 15, 2026. The transaction price represents a premium of 17% to First Capital's 20-day volume-weighted average price through April 15, 2026, a premium of 8% to First Capital's net asset value of $22.57 per unit, a premium of 12% to First Capital's closing unit price, and a premium of 21% to its 90-day volume-weighted average price — marking an all-time high unit price for First Capital.

Transaction Structure and Financing

Choice Properties intends to finance its $5.0 billion real estate acquisition through a combination of debt and equity. The financing structure includes the issuance of 68.6 million Choice Properties units to First Capital unitholders, valued at $1.1 billion; a $0.6 billion equity investment from George Weston Limited (TSX: GWL) for 38.0 million units; the assumption of First Capital's $2.3 billion in outstanding unsecured debentures; and the assumption of approximately $0.4 billion in existing in-place mortgages. The remaining consideration is expected to be financed through the issuance of new unsecured debentures by Choice Properties.

Choice Properties expects its pro forma annualized net debt to adjusted EBITDA to reach approximately 8.5x following the close of the transaction, with a stated path to deleveraging toward low-8x in the near term and a long-term target of 7.5x. The company cited strong EBITDA growth from its combined portfolio and disciplined capital recycling as the primary mechanisms for reducing leverage. Choice Properties referenced its 2018 acquisition of Canadian REIT for $6.0 billion as a precedent for its ability to reduce leverage following large-scale transactions.

KingSett Capital, acting on behalf of KingSett Real Estate Growth LP No. 8 and other investors, has secured committed financing for its portion of the transaction through TD Securities Inc. and Desjardins Group. The transaction is not subject to any financing condition on KingSett's side.

Choice Properties Acquisition Portfolio Details

The Choice Properties Acquisition Portfolio comprises approximately $4.8 billion, or 8.0 million square feet, of income-producing assets, along with approximately $0.2 billion of properties under development. The portfolio is expected to generate full-year net operating income of approximately $235 million in 2027, with an annual growth rate of approximately 3.5% in the near term.

According to the announcement, the portfolio carries approximately 83% exposure to MTV markets and approximately 92% exposure to VECTOM markets. The acquisition is also expected to increase Choice Properties' third-party retail tenant exposure by nearly 50% on a gross leasable area basis.

Rael Diamond, President and Chief Executive Officer of Choice Properties, said the transaction would "solidify Choice Properties as Canada's leading REIT," adding that the company is "acquiring best-in-class, necessity-based neighbourhood shopping centres that will significantly strengthen our portfolio." Diamond said the deal would "increase our presence in urban markets and further diversify our tenant base" and that the combination of assets is expected to "deliver enhanced long-term growth and value for our unitholders."

Strategic Rationale

Rob Kumer, Chief Executive Officer at KingSett Capital, said the transaction "comes at a time when we are seeing renewed optimism and positive momentum in Canadian real estate," and that the two buyers had "partnered with Choice Properties to align the right assets with our respective strategies to deliver maximum value to First Capital's unitholders."

Adam Paul, First Capital's President and Chief Executive Officer, said the deal reflects the work of the company's executive leadership team and employees, many of whom "will continue to support the assets acquired by KingSett and Choice."

Paul Douglas, Chair of First Capital's Board of Trustees, said the board "believes this Transaction is in the best interests of First Capital unitholders" and unanimously recommends that unitholders vote in favour of the deal.

Approvals, Timeline, and Next Steps

The transaction will be implemented through a statutory plan of arrangement under the Canada Business Corporations Act. Completion is subject to approval by at least two-thirds of votes cast by First Capital unitholders, as well as a simple majority of votes cast by unitholders excluding those required to be excluded under Multilateral Instrument 61-101 governing minority security holder protections. The deal also requires court approval and compliance with the Competition Act, among other customary closing conditions.

The arrangement agreement includes non-solicitation covenants from First Capital and a fiduciary out provision allowing the Board of Trustees to accept a superior proposal, subject to a right-to-match in favour of KingSett and Choice Properties and a $187.5 million termination fee.

First Capital expects to hold a special meeting of unitholders to vote on the transaction in June 2026, with closing anticipated in the second half of 2026. First Capital will continue to pay its normal monthly distributions through closing. Following completion, First Capital units are expected to be delisted from the TSX and the REIT will cease to be a reporting issuer in applicable Canadian jurisdictions.

RBC Capital Markets and National Bank Capital Markets each provided fairness opinions to the First Capital Board of Trustees, concluding that the consideration to be received by unitholders is fair from a financial point of view, subject to the assumptions, limitations, and qualifications set out in those opinions.