Choice Properties' $9.4B Deal to Dominate Canada's Urban Retail

TORONTO, ON – April 29, 2026 – Choice Properties Real Estate Investment Trust has unveiled a landmark transaction that promises to reshape Canada's urban retail landscape, announcing a plan to acquire a massive portfolio of high-quality retail assets from First Capital Real Estate Investment Trust (FCR) as part of a $9.4 billion privatization deal. The move, made in partnership with KingSett Capital, comes as Choice Properties reported a strong first quarter for 2026, demonstrating the solid operational foundation underpinning its ambitious expansion.

Subsequent to the quarter's end, on April 16, the Trust entered into an agreement that will see it acquire approximately $5.0 billion of FCR’s prime assets. KingSett Capital will acquire the remaining $4.4 billion of assets and all of FCR's outstanding units, taking the company private. This acquisition is poised to significantly bolster Choice Properties' portfolio with top-tier, necessity-based shopping centers in Canada's most dense and valuable urban markets.

“Choice Properties started the year strong, with stable occupancy and robust leasing spreads,” said Rael Diamond, President and Chief Executive Officer of the Trust, in the company’s earnings release. “With our business in excellent shape and an industry‑leading balance sheet, we announced a transformational acquisition subsequent to quarter end. The potential opportunity to add high‑quality urban retail assets will meaningfully strengthen our national platform and enhance long‑term value for Unitholders.”

A Transformational Move to Solidify Market Leadership

The scale of the acquisition is one of the largest in recent Canadian real estate history and marks a pivotal moment for Choice Properties. The $5.0 billion portfolio it is set to acquire comprises 101 properties, representing 8.0 million square feet of gross leasable area. These are not just any retail assets; they are described as best-in-class, open-air shopping centers with a commanding 98% occupancy rate.

Critically, 83% of these assets are located in the core urban markets of Toronto, Vancouver, and Montreal, aligning perfectly with the growing institutional demand for properties in high-density, high-traffic areas. The portfolio also boasts a strong concentration of necessity-based tenants, with 83% of its income derived from grocers, pharmacies, and other essential service providers. This focus on non-discretionary retail provides a defensive moat, ensuring stable and resilient cash flows across different economic cycles.

Financial analysts have reacted positively to the strategic rationale, viewing the FCR portfolio as a “strong fit” with Choice Properties’ existing assets. The move is expected to upgrade the overall quality of the Trust's portfolio, enhance its long-term growth profile, and solidify its status as the undisputed leader in the Canadian REIT sector.

Strong Fundamentals Pave the Way for Expansion

This bold strategic leap is built upon a foundation of robust operational performance, as detailed in the Trust’s first-quarter 2026 results. Choice Properties reported Funds from Operations (FFO), a key metric of profitability for REITs, of $0.271 per diluted unit, a 2.7% increase from the prior year. When excluding certain one-time items, the underlying growth was even stronger at 3.5%.

Further demonstrating the health of its existing assets, Same-Asset Net Operating Income (NOI) on a cash basis grew by 3.0%, driven by strong performance in its retail (up 3.2%) and industrial (up 6.2%) segments. The Trust also achieved impressive long-term renewal leasing spreads of 21.8%, indicating significant demand for its space and its ability to command higher rents upon renewal.

While the company reported a net loss of $87.2 million for the quarter, this figure is primarily the result of non-cash, fair-value adjustments required by accounting standards. These adjustments, related to the fluctuating market prices of the Trust's units and real estate securities, do not reflect the cash-generating performance of its properties. In fact, the reported net loss was an improvement over the $96.2 million loss from the same period last year, thanks in part to favorable changes in property valuations.

The Architecture of a Multi-Billion Dollar Transaction

The financing for Choice Properties' $5.0 billion portion of the deal is structured through a balanced mix of equity and debt, designed to maintain financial discipline. The Trust will issue 68.6 million new units valued at $1.1 billion to First Capital unitholders. This will be bolstered by a substantial $0.6 billion equity investment from George Weston Limited (GWL), Choice Properties' majority unitholder, which will see its ownership stake settle at approximately 58% post-transaction.

On the debt side, Choice Properties will assume $2.3 billion of FCR’s outstanding unsecured debentures and about $0.4 billion in existing mortgages. The remainder is expected to be funded with new unsecured debentures and available liquidity. To support this, the Trust plans to upsize its corporate revolving credit facility to $2.0 billion.

Following the transaction, the company’s pro-forma net debt to adjusted EBITDA is expected to rise to approximately 8.5x. However, management has articulated a clear deleveraging strategy, aiming to bring this metric down to the low-8x range in the near term and back to its long-term target of 7.5x, supported by strong EBITDA growth from the combined portfolio. This disciplined approach was recognized by credit rating agency Morningstar DBRS, which affirmed the Trust’s BBB (high) rating with a positive outlook following the announcement.

Reshaping the Retail Landscape for a New Era

The acquisition is more than an expansion; it is a strategic repositioning that reflects major trends in the Canadian retail market. By acquiring the FCR portfolio, Choice Properties meaningfully diversifies its tenant base. While Loblaw Companies Limited remains a key strategic partner, its pro-forma share of Choice Properties' retail portfolio will decrease from 69% to approximately 61%, reducing tenant concentration while still benefiting from the foot traffic generated by a leading grocer.

The deal significantly increases exposure to a broader array of high-growth, third-party necessity-based retailers, tapping into a segment of the market known for its resilience. This focus on grocery-anchored urban centers aligns with evolving consumer habits, which continue to favor convenience and essential shopping trips. The acquisition positions Choice Properties to capitalize on the stability of physical retail, especially in formats that are less susceptible to e-commerce disruption.

Looking ahead, the integration of these prime urban assets is expected to generate a full-year NOI of approximately $235 million in 2027, with a projected near-term annual growth rate of 3.5%. While the acquisition is expected to cause a minor near-term dilution to FFO per unit, the long-term strategic benefits—enhanced portfolio quality, increased scale, and a stronger growth trajectory—are anticipated to create significant and enduring value for unitholders for years to come.