Here’s who just acquired First Capital for $9.4B

Key Takeaways:

• The deal splits First Capital assets by risk level with Choice Properties taking stable grocery-anchored retail while KingSett handles high-street properties and the development pipeline
• This transaction consolidates significant urban land holdings in Canada specifically in the Montreal Toronto and Vancouver markets where Choice Properties now has 83 percent of its acquisitions
• Choice Properties is leveraging a 600 million dollar equity injection from George Weston Limited to become Canada’s dominant REIT while maintaining a disciplined capital structure

The Whole Story:

First Capital REIT has entered into a definitive agreement to be acquired by KingSett Capital and Choice Properties REIT in a transaction valued at approximately $9.4 billion, including the assumption of debt.

The deal, announced Thursday, will result in the division of First Capital’s extensive Canadian real estate holdings between the two purchasers. Choice Properties is set to acquire a $5-billion portfolio consisting primarily of necessity-based neighbourhood shopping centres. KingSett Capital will acquire the remaining $4.4 billion in assets, which include high-street retail properties and First Capital’s development pipeline.

For the construction and development sector, the acquisition reshapes the ownership of significant urban land banks in Canada’s largest markets. Choice Properties’ portion includes approximately 8 million square feet of income-producing properties and $200 million in properties currently under development.

The assets are heavily concentrated in high-density areas, with Choice noting that 83% of its new acquisitions are located in the Montreal, Toronto, and Vancouver (MTV) markets.

“This is an exciting and transformative transaction,” said Rael Diamond, President and CEO of Choice Properties, in a statement. “Choice Properties is acquiring best-in-class, necessity-based neighbourhood shopping centres that will significantly strengthen our portfolio.”

Rob Kumer, CEO of KingSett Capital, noted the timing of the deal reflects “renewed optimism and positive momentum” in the Canadian real estate market. KingSett’s share of the acquisition includes First Capital’s “high-street” assets—typically premium retail locations in luxury or high-traffic urban corridors—along with various development and financial assets.

The financial structure of the deal involves Choice Properties assuming $2.3 billion of First Capital’s outstanding unsecured debentures and approximately $400 million in existing mortgages. To fund the cash portion, Choice will utilize a $600-million equity investment from George Weston Limited and the issuance of new unsecured debentures.

Choice Properties stated it expects the combined portfolio to generate approximately $235 million in Net Operating Income (NOI) by 2027. The REIT also indicated it will maintain its investment-grade credit rating, targeting a long-term net debt to adjusted EBITDA ratio of 7.5x.

Here are some of the biggest projects included in the deal:

• Shops at King Liberty: This core retail hub is situated in the heart of Toronto’s Liberty Village and serves as a major shopping destination for the local community. The property is anchored by essential services and high traffic retail tenants that provide consistent returns. Choice Properties REIT will add this property to its retail portfolio.
• 2150 Lake Shore Boulevard West: This project involves the massive redevelopment of the 28 acre former Mr Christie factory site into a master planned community featuring 36 buildings ranging from 4 to 71 storeys. The development plan includes approximately 7500 residential units along with 1 million square feet of retail and office space anchored by a transit hub. KingSett Capital will manage this high density urban infill project.
• Yorkville Village: This is a 232000 square foot luxury shopping centre located in the heart of Toronto’s prestigious Yorkville district. The asset serves as a cornerstone of the portfolio’s high street retail holdings and features a mix of upscale boutiques and gourmet eateries. Under the terms of the transaction this property will transition to KingSett Capital as part of its focus on high street retail and urban financial assets.
• 138 Yorkville: This active development project consists of a 31 storey luxury residential tower situated at the corner of Avenue Road and Yorkville Avenue. The building will provide over 60 high end units and 31000 square feet of street level retail once completed. KingSett Capital is acquiring this asset to continue its growth in the luxury urban residential and high street retail sectors.
• 1071 King Street West: This 14 storey mixed use building is a recently completed signature property in Liberty Village featuring a flatiron design. It contains 227 rental apartments and ground floor retail space designed to cater to the dense urban population of the neighbourhood. As an urban retail and residential asset this property is part of the portfolio being transferred to KingSett Capital.
• King High Line: This significant mixed use property in Toronto provides 160000 square feet of retail space anchored by major necessity tenants and includes over 500 residential units. The site is located along a key transit corridor and serves as a primary retail hub for the surrounding community. Choice Properties REIT will acquire to strengthen its national retail platform.
• Shops at New West: This 207000 square foot retail destination is located in New Westminster British Columbia and is uniquely integrated with a major SkyTrain transit station. The property features a variety of necessity based tenants including grocery and drug stores that provide stable cash flow. Choice Properties REIT is acquiring this asset as part of its strategy to increase its presence in high density urban markets.
• One Bloor East: This flagship retail asset occupies 85000 square feet at one of the most prominent intersections in Canada at Yonge and Bloor. The property consists of multiple levels of high profile commercial space that attracts significant pedestrian traffic. This high street retail location is being transferred to KingSett Capital.
• Humbertown Shopping Centre: This neighbourhood shopping centre in Etobicoke is currently undergoing a multi phase redevelopment that includes residential intensification. The first phase of the project is already complete with the second and third phases scheduled for completion in 2026. Choice Properties REIT will be the new owner.
• Edenbridge Kingsway: This joint venture development is a luxury residential and retail project located in the Kingsway neighbourhood of Etobicoke. The site features 7600 square feet of retail space and high end condominium units with construction wrapping up in 2026. Choice Properties REIT is acquiring the retail component as part of its necessity based acquisition portfolio.