First Capital REIT Delivers “Solid” Financial Results with Total Portfolio Occupancy up to 97.1%

Why It Matters

The near‑full occupancy and rising rental rates underscore the resilience of First Capital’s grocery‑anchored portfolio, boosting cash flow and supporting dividend sustainability. Investors view the tax‑driven earnings boost and active asset reallocation as positive signals for future growth.

Key Takeaways

• Occupancy reached 97.1%, up 30 bps YoY.
• Operating FFO per unit rose 7% YoY to $0.34.
• Lease‑renewal rates increased ~15% on renewed space.
• Net income surged to $1.1 billion, driven by tax recovery.
• $190 million invested in development and acquisitions.

Pulse Analysis

First Capital REIT continues to be a bellwether for Canada’s grocery‑anchored retail sector, where occupancy levels have traditionally been a leading indicator of market health. The REIT’s 97.1% occupancy at year‑end not only eclipses the industry average but also reflects the enduring demand for essential‑goods locations amid shifting consumer habits. By maintaining high occupancy, First Capital secures stable foot traffic, which translates into premium rental rates and reinforces its position as a reliable income generator for unitholders.

Financially, the 2025 results are anchored by a 7% increase in operating FFO per unit to $0.34 and a striking net income jump to $1.1 billion, driven primarily by a $763.5 million deferred‑income‑tax recovery. While the tax windfall inflates earnings, the underlying operational strength is evident in the 5.9% same‑property NOI growth and record‑high average net rental rate of $24.73 per ft². These metrics illustrate robust cash‑flow generation, essential for sustaining the REIT’s dividend policy and funding future growth initiatives.

Strategically, First Capital deployed $190 million into development, redevelopment, and strategic acquisitions, signaling confidence in expanding its asset base. Simultaneously, the firm executed $194 million of dispositions, achieving yields below 3% and premiums exceeding 40% to IFRS carrying values, thereby optimizing the portfolio’s risk‑return profile. This disciplined capital‑allocation approach, combined with strong leasing metrics, positions the REIT to capitalize on continued demand for grocery‑centric retail spaces while delivering value to investors.

First Capital REIT delivers “solid” financial results with total portfolio occupancy up to 97.1%

First Capital REIT announced Tuesday its financial results for the fourth quarter and year ended December 31, 2025.

Key highlights – Q4 2025

• Operating FFO per unit: $0.34, a 7 % year‑over‑year increase.

• Same‑property NOI growth: 5.7 %, excluding bad‑debt expense (recovery) and lease‑termination fees.

• Lease‑renewal lift: 15.8 % on strong leasing volume.

• Total portfolio occupancy: 97.1 %, up 30 basis points YoY.

“Strong fundamentals for FCR’s grocery‑anchored portfolio together with the disciplined execution of our capital‑allocation strategy delivered solid results again in 2025,” said Adam Paul, President & CEO.

“Healthy leasing metrics including same‑property NOI growth of more than 5 %, lease‑renewal spreads of nearly 15 % and occupancy of 97.1 % contributed to normalized Operating FFO per unit growth of 5.5 % for the year.” – Adam Paul

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Q4 earnings highlights

• Operating FFO per diluted unit: $0.34

  • Operating Funds from Operations: $72.3 million (up $4.6 million, or $0.02 per unit, YoY).

  • Drivers: higher NOI (+$3.3 million) and interest‑expense savings (+$2.1 million), partially offset by higher corporate G&A and lower interest/other income.

  • Net operating income included $2.6 million of lease‑termination income.

• FFO per diluted unit: $0.32

  • Funds From Operations: $68.4 million (flat YoY).

  • Offset by restructuring and advisory costs of $4.8 million ($0.02 per unit) related to an internal tax re‑organisation.

• Net income (loss) attributable to unitholders: $849.5 million, or $3.95 per diluted unit (up from $32.1 million, $0.15 per unit, in the prior year).

  • Primarily due to a deferred‑income‑tax recovery of $746.7 million versus a $39.3 million expense in Q4 2024.

  • Fair‑value increase of investment property: $36.1 million (vs. $3.6 million in Q4 2024).

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Q4 operating performance & capital‑allocation highlights

• Same‑property NOI growth: Total same‑property NOI up 7.9 % YoY; excluding bad‑debt expense and lease‑termination fees, growth was 5.7 %.

• Portfolio occupancy: 97.1 %, unchanged quarter‑over‑quarter.

• Lease‑renewal rate increase: Net rental rates rose 15.8 % on 522,000 sq ft of renewals (first‑year vs. last‑year rate). On a broader basis, net rates on renewed leases increased 20.2 % when comparing the average renewal‑term rate to the last year of the expiring term.

• Average net rental rate: $24.73 /ft², a 0.7 % (or $0.16) increase quarter‑over‑quarter, a record level.

• Property investments: Approximately $47 million invested in development, redevelopment and residential inventory.

• Property dispositions: $67 million of sales completed, including the Montgomery Assembly sale for $42 million, plus firm agreements to sell four additional properties valued at $43 million.

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Full‑year 2025 earnings highlights

• Operating FFO per diluted unit: $1.33

  • Operating Funds from Operations: $285.6 million (down $5.3 million, $0.03 per unit, YoY) due to non‑recurring items in the prior year.

  • Excluding those items, Operating FFO increased $15.4 million ($0.07 per unit) driven by higher NOI (+$11.2 million).

• FFO per diluted unit: $1.30

  • Funds From Operations: $279.2 million (down $10.5 million, $0.05 per unit, YoY).

  • Impacted by lower Operating FFO and restructuring/advisory costs of $6.8 million ($0.03 per unit).

• Net income (loss) attributable to unitholders: $1.1 billion, or $4.96 per diluted unit (up from $204.9 million, $0.96 per unit, in 2024).

  • Driven by a deferred‑income‑tax recovery of $763.5 million versus a $14.3 million expense in 2024.

  • Fair‑value increase of investment property: $44.2 million (vs. a $49.6 million decrease in 2024).

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Annual operating performance & capital‑allocation highlights

• Same‑property NOI growth: Total same‑property NOI up 5.2 % YoY; excluding bad‑debt expense and lease‑termination fees, growth was 5.9 %.

• Portfolio occupancy: 97.1 % at year‑end, up 0.3 % from 96.8 % in 2024.

• Lease‑renewal rate increase: Net rental rates rose 14.8 % on 2,201,000 sq ft of renewals (first‑year vs. last‑year rate). For all 2025 renewals, net rates increased 19.7 % when comparing average renewal‑term rate to the last year of the expiring term.

• Average net rental rate: $24.73 /ft², a $0.73 increase (3.0 % YoY).

• Property investments: Approximately $190 million invested in development, redevelopment, residential inventory and strategic acquisitions.

• Property dispositions: $194 million of dispositions completed or under firm agreement, yielding an in‑place yield < 3 % and an average premium of > 40 % to IFRS carrying value. As of December 31 2025, $106 million of investment properties were classified as held for sale.

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Images

Adam Paul

Central oval at Yorkville Village in Toronto. Photo: First Capital REIT

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Author

Mario Toneguzzi – based in Calgary, with more than 40 years of experience as a daily‑newspaper writer, columnist and editor. Formerly at the Calgary Herald covering sports, crime, politics, health, faith, city news and business. Co‑Editor‑in‑Chief of Retail Insider and freelance writer/consultant in communications and media relations/training. Named a RETHINK Retail Top Retail Expert in 2024.