Q4 2019 CONFERENCE CALL
Forward-looking Statements and Non-IFRS Financial Measures This material may contain forward- looking statements, including those identified by the expressions “anticipate”, “believe”, “plan”, “estimate”, “expect”, “intend” and similar expressions to the extent they relate to First Capital REIT (“First Capital”) or its management. The for ward-looking statements are not historical facts but reflect First Capital’s current beliefs and are based on information currently available to manageme nt. Certain material factors and assumptions were applied in providing these forward-looking statements, many of which are beyond our control. Management believes that the forward-looking statements are based upon reasonable assumptions; however, management can give no assurance that actual results will be consistent with those expressed or implied in these forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied in these forward-looking statements. Additional information about the risks and uncertainties that could cause actual results to differ materially, and the material factors or assumptions that were applied in providing these forward-looking statements, are contained in our various securities filings, including our fourth quarter and 2019 annual results press release dated February 11, 2020, our Management’s Discussion and Analysis for the year ended December 31, 2019 (“MD&A”) and our current Annual Information Form, all of which are available on SEDAR at www.sedar.com and on our website at www.fcr.ca. You should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. These forward-looking statements are made as of February 11, 2020. Except as required by securities law, First Capital undertakes no obligation to publicly update or revise any such statements whether to reflect new information, the occurrence of future events or circumstances, or otherwise. This material references certain non-IFRS financial measures, including but not limited to FFO, FFO per share, NOI and NAV. These non-IFRS measures are further defined and discussed in First Capital’s MD&A, which should be read in conjunction with this material and the con ference call. Since these non-IFRS measures do not have standardized meanings prescribed by IFRS, they may not be comparable to similar measures reported by other issuers. First Capital uses and presents the above non-IFRS measures as management believes they are commonly accepted and meaningful financial measures of operating performance. Reconciliations of certain non-IFRS measures to their nearest IFRS measures are included in First Capi tal’s MD&A. These non - IFRS measures should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS as measures of First Capital’s operating performance. All figures in this presentation are as of February 11, 2020 unless otherwise noted. First Capital 2
Opening Remarks ADAM PAUL PRESIDENT & CHIEF EXECUTIVE OFFICER First Capital 3
2019 Highlights Average Net NAV per FFO per Occupancy Rental Rate unit unit 96.9% $21.25 $23.39 Key Metrics: $1.234 3.5% Year over Year Growth: 2.0% 20bps 5.0% One Bloor East Griffintown Centre Toronto, ON Montreal, QC First Capital 4
Financial Overview KAY BREKKEN EVP & CHIEF FINANCIAL OFFICER First Capital 5
Q4 and 2019 FFO Results 2019 FFO per unit up 2.0% Q4 2019 Q4 2018 Variance % Change 2019 2018 Variance % Change FFO/unit $0.288 $0.287 $0.001 0.3% $1.234 $1.210 $0.024 2.0% FFO ($ millions) $63.4 $73.4 ($9.9) (13.5%) $284.9 $303.0 ($18.1) (6.0%) Major Contributors (YOY Change in $ millions) Q4 2019 vs Q4 2018 2019 vs 2018 NOI: Same Property $2.5 $10.9 Acquisitions 0.2 4.7 Dispositions (7.3) (14.6) Other Non-Same Property NOI 2.8 2.4 ($1.8) $3.4 Other: Interest and Other Income (1.9) 3.9 Interest Expense (3.9) (19.0) G&A (0.7) (1.8) Other Gains (Losses) and (Expenses) (1.5) (3.1) Other (1) (0.1) (1.5) (8.1) (21.5) Change in FFO: ($9.9) ($18.1) (1) Comprised of amortization expense and abandoned transactions costs First Capital 6
Q4 and 2019 Highlights – Operating Metrics 2019 Same Property NOI increase of 3.3% Q4 2018 (1) 2018 (1) Same Property NOI Growth Q4 2019 2019 Same Property – Stable 2.6% 2.1% 2.7% 2.7% Total Same Property 3.0% 3.1% 3.3% 3.1% (1) Prior periods as reported; not restated to reflect current period property categories Shops at King Liberty False Creek Village Toronto, ON Vancouver, BC First Capital 7
Q4 and 2019 Highlights – Operating Metrics 2019 strong lease renewal rate increases of 10.7% and 12.4% Q4 2019 Q4 2018 2019 2018 Total Same Other Property Total (GLA reported at FCR %) Property Categories Portfolio Total Portfolio 571,000 135,000 706,000 825,000 2,454,000 2,868,000 Renewal leasing (sq. ft.) $22.13 $19.52 $21.63 $18.96 $21.17 $18.58 Renewal leasing (average rate psf) Lease renewal rate increase 10.9% 6.8% 10.1% 9.2% 10.7% 8.4% (first year of renewal term) Lease renewal rate increase 11.6% 11.9% 12.4% 10.9% (average rent in renewal term) Hazelton Hotel Edmonton Brewery District Toronto, ON Edmonton, AB First Capital 8
Q4 and 2019 Highlights – Operating Metrics Average Net Rental Rate grew 5.0% over prior year Q4 2019 Q4 2018 2019 2018 Total Same Other Property Total (GLA reported at FCR %) Property Categories Portfolio Total Portfolio 5,000 18,000 23,000 86,000 201,000 283,000 Commercial Developments coming online (sq. ft.) (1) Commercial Developments coming online occupied $30.43 $89.44 $76.10 $29.65 $35.89 $37.33 (average rate per occupied sq. ft.) Average net rental rate per occupied square foot $20.61 $23.86 $21.25 $20.24 $21.25 $20.24 (entire portfolio) (1) In addition to Commercial Developments coming online, First Capital completed the transfer of 247 residential units to the income-producing portfolio Yorkville Village Mount Royal West Toronto, ON Calgary, AB First Capital 9
Q4 and 2019 Highlights – Operating Metrics Occupancy rate up 20 basis points from Q4 2018 to 96.9% Q4 2019 Q4 2018 Q3 2019 Total Same Total Total Same Total Total Same Total (GLA reported at FCR %) Property Portfolio Property (1) Portfolio Property (1) Portfolio Gross Leasable Area (sq. ft.) 16,733,000 20,927,000 16,727,000 23,854,000 16,735,000 22,936,000 97.5% 96.9% 97.4% 96.7% 97.4% 96.7% End of Period Occupancy Average Occupancy 97.4% 96.6% 97.4% 96.6% 97.1% 96.4% (1) Prior periods restated to reflect current property categories First Capital 10
Investment in Development and Redevelopment $165.8 million during 2019 Yorkville Village Assets 3080 Yonge Street Toronto, ON Toronto, ON King High Line Edmonton Brewery District Centre Commercial Wilderton Toronto, ON Edmonton, AB Montreal, QC First Capital 11
FFO 2019 FFO per unit up 2.0% ($ millions) Q4 2019 Q4 2018 Variance 2019 2018 Variance Net operating income $114.3 $116.1 ($1.8) $463.8 $460.3 $3.4 Interest and other income 4.3 6.2 (1.9) 32.2 28.4 3.9 Interest expense (43.3) (39.3) (172.9) (153.9) (3.9) (19.0) Corporate expenses (7.7) (7.0) (31.3) (29.5) (0.7) (1.8) Abandoned transaction costs - (0.1) 0.1 (0.7) (0.2) (0.5) Amortization expense (1.0) (0.9) (0.2) (3.8) (2.8) (1.0) Other gains (losses) and (expenses) (3.1) (1.6) (1.5) (2.4) 0.7 (3.1) FFO $63.4 $73.4 ($9.9) $284.9 $303.0 ($18.1) Weighted average diluted units 220.5 255.8 (35.3) 230.8 250.5 (19.7) FFO per unit (diluted) $0.288 $0.287 $0.001 $1.234 $1.210 $0.024 0.3 0. 3 % 2.0 2. 0 % FFO Payout Ratio (1) 74.7% 74.9% 0.2% 69.7% 71.1% 1.4% (1) For 2019 only, FFO payout ratio was calculated using cash dividends First Capital 12
Other Gains (Losses) and (Expenses) - FFO Excluding REIT conversion costs, 2019 Other Gain of $2.6 million ($ millions) Q4 2019 Q4 2018 Variance 2019 2018 Variance Realized gain (loss) on marketable $ - $ - $ - $1.2 $4.2 ($3.0) securities Unrealized gain (loss) on marketable 0.2 (0.9) 1.1 0.5 (0.6) 1.1 securities Net gain (loss) on prepayments of debt (1) - - - - (0.7) 0.7 Gain on investment (2) - - - 4.0 - 4.0 Proceeds from Target (3) - - - 0.7 - 0.7 REIT conversion costs (3.0) (0.9) (2.1) (5.0) (1.5) (3.5) Transaction costs (4) - - - (3.4) - (3.4) Other (0.3) 0.2 (0.5) (0.4) (0.7) 0.3 Total OGLE for FFO ($3.1) ($1.6) ($1.5) ($2.4) $0.7 ($3.1) (1) Primarily non-cash losses on early redemption of convertible debentures (2) One of First Capital’s other investments was acquired for cash and share consideration resulting in the recognition of a $4.0 million gain on investment (3) In connection with proceeds recognized under Target Canada’s CCAA plan of arrangement related to the closure of two Target st ore s in First Capital’s portfolio in 2015 (4) Transaction costs related to Gazit secondary offering First Capital 13
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