Choice Properties, KingSett Capital to Acquire First Capital REIT in $9.4B Retail Real Estate Deal

Choice Properties Real Estate Investment Trust (TSX: CHP.UN) and KingSett Capital have entered into an agreement to acquire First Capital Real Estate Investment Trust in a transaction valued at approximately $9.4 billion, including the assumption of certain debt, the Toronto-based REIT disclosed in its first-quarter 2026 earnings release on April 29, 2026.

The deal, announced on April 16, 2026, would divide First Capital's portfolio between the two acquirers: Choice Properties would take on approximately $5.0 billion of First Capital's retail real estate assets, while KingSett Capital would acquire approximately $4.4 billion of First Capital's remaining assets along with all of First Capital's issued and outstanding units.

A Transformational Retail Real Estate Acquisition

Choice Properties President and Chief Executive Officer Rael Diamond described the pending transaction as a strategic milestone for the trust. "With our business in excellent shape and an industry-leading balance sheet, we announced a transformational acquisition subsequent to quarter end," Diamond said. "The potential opportunity to add high-quality urban retail assets will meaningfully strengthen our national platform and enhance long-term value for Unitholders."

The timing of the deal announcement, which came after the close of the first quarter, means its financial impact is not reflected in Choice Properties' Q1 2026 results. The trust noted it cannot predict the timing of closing or its effect on future financial results.

Q1 2026 Operating Performance

Separate from the pending acquisition, Choice Properties reported first-quarter operational results for the three months ended March 31, 2026. The trust posted funds from operations (FFO) per unit diluted of $0.271, a 2.7% increase year-over-year. Excluding lease surrender revenue and a reduction in Allied Properties REIT's distribution, FFO per unit diluted growth was 3.5%.

Same-asset net operating income on a cash basis rose 3.0% year-over-year to $255.5 million, while total NOI on a cash basis increased 4.2% to $273.1 million. The trust's retail segment posted same-asset NOI growth of 3.2%, and its industrial segment grew 6.2%. The mixed-use and residential segment declined 15.4%, which Choice Properties attributed to a property tax incentive recognized in the prior-year period; excluding that segment, same-asset NOI on a cash basis grew 3.8%.

Portfolio occupancy remained stable at 98.1% at period end, with retail at 97.9%, industrial at 98.6%, and mixed-use and residential at 93.8%. Long-term renewal leasing spreads reached 21.8% overall — 17.2% in the retail portfolio and 46.2% in the industrial portfolio.

The trust reported a net loss of $87.2 million for the quarter, an improvement from a net loss of $96.2 million in the prior-year period. The improvement was driven primarily by non-cash fair value adjustments, including a $49.0 million favorable change in investment property valuations and a $19.8 million favorable change related to the trust's Exchangeable Units, partially offset by a $40.5 million unfavorable change in the fair value of its investment in Allied Properties REIT securities and an $18.9 million decrease in income from equity-accounted joint ventures.

Net asset value per unit rose to $14.53, up 2.5% from $14.17 in the prior-year period.

Development and Transaction Activity

During the first quarter, Choice Properties completed $28.5 million in real estate transactions on a proportionate share basis and delivered $9.3 million in development projects, adding approximately 21,900 square feet of new commercial gross leasable area through retail intensifications.

Outlook

For full-year 2026, and excluding the impact of the pending First Capital acquisition, Choice Properties is targeting same-asset NOI cash basis growth of approximately 2% to 3%, annual FFO per unit diluted in a range of approximately $1.08 to $1.10, and an adjusted debt-to-EBITDAFV ratio below 7.5x.

The trust noted that its portfolio is primarily leased to necessity-based tenants and logistics providers, which it views as less sensitive to economic volatility.

The pending acquisition is subject to customary closing conditions. Choice Properties has not disclosed a projected closing date. KingSett Capital is acting on behalf of its investors in the transaction.

On April 29, 2026, Choice Properties also issued its 2025 Environmental, Social and Governance Report, available on the trust's website.

About the Parties

Choice Properties Real Estate Investment Trust is a national owner, operator, and developer of commercial and residential real estate in Canada, trading on the Toronto Stock Exchange under the symbol CHP.UN. KingSett Capital is acting on behalf of its investors in the transaction. First Capital Real Estate Investment Trust is a Canadian REIT.

Sources: Choice Properties Q1 2026 Press Release, April 29, 2026. https://www.choicereit.ca/wp-content/uploads/2026/04/CHP-Q1-2026-Press-Release-English.pdf