Choice Properties, KingSett to Acquire First Capital REIT in $9.4B Deal

KingSett and Choice Properties will acquire First Capital in a unit and cash transaction valued at approximately $9.4 billion, including the assumption of certain debt, the three companies announced Thursday. As part of the agreement, Choice Properties will acquire approximately $5.0 billion of high-quality retail assets from First Capital, while KingSett will acquire approximately $4.4 billion of First Capital assets and all of First Capital’s issued and outstanding units. 

Rael Diamond, President and CEO of Choice Properties, said, “This is an exciting and transformative transaction that will solidify Choice Properties as Canada’s leading REIT. Choice Properties is acquiring best-in-class, necessity-based neighbourhood shopping centres that will significantly strengthen our portfolio.

“We believe this is a unique and compelling opportunity that will increase our presence in urban markets and further diversify our tenant base. Importantly, we expect the combination of these assets with our existing portfolio will deliver enhanced long-term growth and value for our unitholders,” he continued.

At First Capital, board chairman Paul Douglas said, “Supported by the recommendation of a Special Committee comprised of independent trustees, the First Capital Board believes this Transaction is in the best interests of First Capital unitholders. Accordingly, the Board recommends that unitholders vote in favour of the transaction.”

The $5-billion Choice Properties Acquisition Portfolio comprises approximately $4.8 billion, or 8.0 million square feet, of income producing assets, along with approximately $200 million of properties under development. The portfolio is expected to generate full-year NOI of approximately $235 million in 2027, with an annual growth rate of approximately 3.5% in the near term.

RBC Capital Markets is acting as financial advisor to First Capital. Stikeman Elliott LLP is acting as legal counsel to First Capital. National Bank Capital Markets is acting as financial advisor to the Special Committee.

Desjardins Capital Markets is acting as exclusive financial advisor and Bennett Jones LLP is acting as legal counsel to KingSett.

TD Securities Inc. is acting as exclusive financial advisor and Osler, Hoskin & Harcourt LLP is acting as legal counsel to Choice Properties and McCarthy Tétrault LLP is acting as competition counsel to Choice Properties.

Pictured: Shops at New West in New Westminster, BC.