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Choice Properties REIT and KingSett have agreed to acquire First Capital REIT in a unit and cash transaction valued at approximately $9.4 billion, including the assumption of certain debt. The three companies announced the agreement on Thursday, outlining how the portfolio and units of First Capital will be divided between the two buyers.
Under the terms described, Choice Properties will acquire approximately $5.0 billion of high-quality retail assets from First Capital. KingSett will acquire approximately $4.4 billion of First Capital assets and all of First Capital’s issued and outstanding units. The assets being acquired by Choice Properties are described as necessity-based neighbourhood shopping centres, with a focus on urban markets.
Rael Diamond, president and CEO of Choice Properties, said the transaction will reinforce Choice Properties’ position as a leading Canadian REIT and significantly strengthen its retail portfolio. He emphasized that the assets being acquired are best-in-class, necessity-based neighbourhood shopping centres that are expected to enhance the company’s presence in urban areas and diversify its tenant base. Diamond added that combining these properties with the existing Choice Properties portfolio is expected to support long-term growth and value for unitholders.
First Capital’s board chairman, Paul Douglas, said the transaction follows the recommendation of a special committee composed of independent trustees. According to Douglas, the board of First Capital believes the deal is in the best interests of the REIT’s unitholders and is recommending that unitholders vote in favor of the transaction.
The $5.0 billion Choice Properties acquisition portfolio is comprised of approximately $4.8 billion of income-producing assets totaling about 8.0 million square feet, along with approximately $200 million of properties under development. The portfolio is expected to generate full-year net operating income of approximately $235 million in 2027, with an anticipated annual growth rate of roughly 3.5% in the near term.
Several advisory firms are involved in the transaction. RBC Capital Markets is serving as financial advisor to First Capital, with Stikeman Elliott LLP acting as its legal counsel. National Bank Capital Markets is financial advisor to the special committee of independent trustees. For KingSett, Desjardins Capital Markets is acting as exclusive financial advisor, and Bennett Jones LLP is providing legal counsel. TD Securities Inc. is acting as exclusive financial advisor to Choice Properties, while Osler, Hoskin & Harcourt LLP is serving as legal counsel and McCarthy Tétrault LLP is acting as competition counsel to Choice Properties.
The transaction involves retail real estate assets located across First Capital’s portfolio. An image associated with the announcement features the Shops at New West in New Westminster, British Columbia.
The post Choice Properties and KingSett to Acquire First Capital REIT in $9.4 Billion Deal appeared first on CRE Market Beat.
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