First Capital Realty’s Earnings Call Highlights Strong Performance

First Capital Realty (($TSE:FCR.UN)) has held its Q3 earnings call. Read on for the main highlights of the call.

First Capital Realty’s recent earnings call painted a picture of strong operational performance, marked by robust same-property NOI growth and high occupancy levels. The company achieved record in-place net rental rates and successful lease renewals, reflecting positive momentum in its strategic plan. However, challenges were noted with declines in operating FFO, interest income, and valuation losses on residential development properties, alongside some restructuring costs.

Strong Same-Property NOI Growth

Same-property cash NOI saw a significant increase of 6.4% in Q3, excluding lease termination fees and bad debt expense. This growth outperformed initial expectations, with a year-to-date growth rate of 6%, underscoring the company’s strong operational capabilities.

High Occupancy Rate

Occupancy levels remained robust at 97.1%, only slightly down from the record high of 97.2% in Q2. This stability highlights First Capital Realty’s ability to maintain high occupancy rates despite market fluctuations.

Record In-Place Net Rental Rate

The average in-place net rental rate reached an unprecedented high of over $24.50 per square foot, showcasing the company’s success in maximizing rental income from its properties.

Successful Lease Renewals

The company successfully renewed approximately 550,000 square feet of leases, achieving an average year 1 renewal rent increase of over 13%. Notably, 75% of these renewed leases included contractual rent escalations, ensuring future revenue growth.

Positive Strategic Plan Progress

First Capital Realty’s 3-year strategic plan is progressing well, with an operating FFO per unit CAGR of approximately 5%. The company’s debt-to-EBITDA ratio improved to the low 9s, indicating financial health and strategic discipline.

Notable Dispositions

The company completed several property sales, including Place Anjou in Montreal, which was sold at a 30% premium over its IFRS value, highlighting effective asset management and capital recycling.

Decline in Operating FFO

Operating FFO for Q3 was $72 million, slightly down from $73 million in Q2 2025 and $77 million in Q3 2024, reflecting some operational challenges that the company is addressing.

Interest and Other Income Decrease

Interest and other income decreased by $2.5 million year-over-year, primarily due to lower interest income on cash balances, which impacted overall financial performance.

Valuation Losses on Residential Development Properties

The company reported $75 million in fair value losses, mainly attributed to lower valuations for residential development properties in the Greater Toronto Area, affecting the overall asset valuation.

Some Restructuring Costs

First Capital Realty recorded approximately $2 million in restructuring and advisory costs during the quarter, with an additional $3 million expected in Q4 related to internal reorganization efforts.

Forward-Looking Guidance

The company remains optimistic about its future, expecting same-property NOI growth of at least 5% for 2025. With a stable occupancy rate of 97.1% and a record-high average in-place net rental rate, First Capital Realty anticipates continued robust performance. The REIT’s NAV per unit increased to $22.29, supported by capital investments totaling $160 million year-to-date.

In summary, First Capital Realty’s earnings call revealed a strong operational performance with significant growth in same-property NOI and high occupancy levels. While there are challenges with declines in operating FFO and valuation losses, the company’s strategic plan is on track, and forward-looking guidance remains positive, indicating a promising outlook for the future.