Q3 2024 First Capital Real Estate Investment Trust Earnings Call Transcript
Key Points
- First Capital REIT (FCXXF) reported a strong quarter with solid leasing performance, leading to increased portfolio occupancy and same-property NOI.
- The company achieved a 12.4% lease renewal spread in Q3, with further contractual rent steps negotiated beyond the first year.
- Year-to-date adjusted operating funds from operations (OFFO) growth rate is approximately 7%, indicating strong underlying business performance.
- First Capital REIT (FCXXF) has made significant progress in its asset divestiture plan, achieving over $750 million in asset sales with an average premium to IFRS values of over 20%.
- The company is well-positioned for continued outperformance in total unitholder returns, with a unit price target in the low to mid-20s as part of its three-year plan.
- The reported 20% OFFO growth rate includes several nonrecurring items, which when adjusted, reduces the growth rate to 7%.
- Higher interest rates have negatively impacted IFRS property values, affecting net asset value (NAV) despite strong operational performance.
- The market for density sales in Toronto remains challenging, with demand shrinking and execution becoming more difficult.
- Interest expenses increased by about 10% year-over-year due to higher interest rates affecting the debt capital stack.
- The company faces interest rate roll-up challenges over the next three years, particularly with $442 million of maturing mortgages and term loans in 2025.
Good afternoon. Thank you for standing by. Welcome to the Q3 2024 conference call. (Operator Instructions).
I would now like to turn the conference over to Alison. Please proceed with your presentation.
Thank you, and good afternoon, everyone. In discussing our financial and operating performance and in responding to your questions during today's call, we may make forward-looking statements. These statements are based on our current estimates and assumptions, many of which are beyond our control and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements.
A summary of these underlying assumptions, risks and uncertainties is contained in our various securities filings, including our Q3 MD&A, our MD&A for the year ended December 31, 2024, and our current AIF, which are available on SEDAR-plus and our website. These
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