Mr. Adam Paul reports

FIRST CAPITAL REIT ANNOUNCES STRONG SECOND QUARTER 2023 RESULTS UNDERPINNED BY CONTINUED STRENGTH IN LEASING AND EXECUTION OF CAPITAL ALLOCATION PLAN

First Capital Real Estate Investment Trust has released solid financial results for the quarter ended June 30, 2023. The 2023 second quarter report is available in the investors section of the trust's website and has been filed on SEDAR.

KEY HIGHLIGHTS FROM THE SECOND QUARTER:

• FFO per unit of $0.30, representing year-over-year growth of 7.6%
• Strong leasing activity, including lease renewal spreads of 14%
• Announces $91 million of new dispositions, bringing the total under the Plan to approximately $460 million

"Our high-quality, grocery-anchored retail portfolio delivered another quarter of solid results, including 8% growth in FFO per unit, supported by sustained strength in leasing and continued execution of our capital allocation initiatives" said Adam Paul, President & CEO.

"Including those announced today, total dispositions under the Plan are now approximately $460 million or 46% of our target at pricing that is, in aggregate, at a 17% premium to IFRS carrying values". Paul continued, "The continued execution of the Plan, particularly the monetization of zoned density, remain important elements of our objectives of driving FFO per unit growth, while simultaneously strengthening First Capital's debt metrics."

ENHANCED CAPITAL ALLOCATION & PORTFOLIO OPTIMIZATION PLAN

First Capital continues to execute on the Portfolio Optimization Plan to monetize over $1 billion by the end of 2024 of low-yielding assets where value enhancing goals have been achieved in order to reorient its portfolio by increasing short-to medium-term FFO growth while continuing to reduce debt. To date, First Capital has completed or has under firm agreement, approximately $460 million of dispositions under the Plan, with a cumulative in-place yield that is less than 3%.

Execution of the Plan progressed well during and subsequent to the quarter as summarized below:

• Property Dispositions: First Capital completed or entered into firm agreements for property dispositions of approximately $213 million, consisting of:
  • $122 million of previously announced dispositions completed during the quarter, including (i) the Hazelton Hotel, together with its 50% interest in ONE Restaurant, located in Toronto and (ii) 5146-5164 Queen Mary Road, located in Montreal, and
  • $91 million of new dispositions being announced today that are subject to firm agreements entered into by the Trust which include (i) remaining development land at Place Panama, located in Brossard (ii) Yonge-Davis Centre, located in Newmarket and (iii) 30, 30A Hazelton Avenue, located in Toronto. The aggregate sales price of these three properties reflects a 40% premium to their IFRS carrying value. The properties are debt-free and subject to all-cash purchase agreements with scheduled closing dates ranging from August 2023 to January 2024.
• Property Investments: First Capital invested approximately $120 million into its properties during the second quarter, primarily through development, redevelopment and a strategic acquisition of the land under its Centre Commercial Maisonneuve property in Montreal for $55 million, in which it held a leasehold interest since 2003 that was set to expire. The Centre is a highly productive and exceptionally well-located open-air shopping centre, anchored by Canadian Tire and Loblaws. The tenant leases at the Centre were set to expire contemporaneously with the land lease, which provided an opportunity for First Capital to create significant value. During 2023, First Capital entered into a conditional agreement to acquire the land based on fair market value for the site as vacant. During the conditional period, First Capital negotiated new lease agreements with all the major tenants at market rents which tripled the weighted average net rent at the Property resulting in immediate value creation, consistent with the capital allocation objectives of the Plan.

SECOND QUARTER OPERATIONAL AND FINANCIAL HIGHLIGHTS

• Same Property NOI Growth: Total Same Property NOI increased 2.2% over the prior year period. The growth was primarily due to higher base rent and variable revenues.
• Portfolio Occupancy: On a quarter-over-quarter basis, total portfolio occupancy decreased, as expected by 0.3%, to 95.9% at June 30, 2023, from 96.2% at March 31, 2023 primarily due to the closures of two large tenants whose rents were below market, namely, Nordstrom Rack at One Bloor East and Walmart at Westmount Shopping Centre which collectively represent nearly 70 basis points of portfolio vacancy. On a year-over-year basis, total portfolio occupancy increased 0.3% from 95.6% at June 30, 2022 to 95.9% at June 30, 2023.
• Lease Renewal Rate Increase: During the quarter, net rental rates increased 14.0% on a volume of 510,000 square feet of lease renewals, when comparing the rental rate in the first year of the renewal term to the rental rate in the last year of the expiring term. Net rental rates on the leases renewed in the quarter increased 16.0% when comparing the average rental rate over the renewal term to the rental rate in the last year of the expiring term.
• Average Net Rental Rate: The portfolio average net rental rate decreased by 0.4% or $0.09 per square foot over the prior quarter to $22.97 per square foot, primarily due to net closures, including Nordstrom Rack at One Bloor East as well as temporary tenants and dispositions, partially offset by rent escalations and renewal lifts.
• Normal course issuer bid ("NCIB") : During the second quarter, First Capital received TSX approval to renew its NCIB pursuant to which it may repurchase and cancel up to 10% of its public float or 21.1 million units until May 17, 2024. Since instituting the NCIB in May 2022, the REIT has repurchased, cumulatively, 7.8 million trust units for approximately $118.1 million as of June 30, 2023.
• Balance Sheet and Liquidity: Excluding non-recurring costs related to Unitholder activism, First Capital's June 30, 2023 net debt to Adjusted EBITDA multiple was 10.1x, an improvement from 10.9x at June 30, 2022. First Capital's June 30, 2023 liquidity position was $938 million, including $796 million of availability on revolving credit facilities and $142 million of cash on a proportionate basis. In June 2023, First Capital extended the maturity date of its $450 million unsecured revolving operating facility by one-year, to June 30, 2028.
• Advancing ESG initiatives: First Capital continued to demonstrate leadership in Environmental, Social and Governance ("ESG") matters throughout the second quarter, which included the following highlights:
  • Released its 2022 ESG Report (FCR's 13th annual report) which presents the material issues and impacts of ESG activities for the past fiscal year as well as its assurance report on selected sustainability performance indicators
  • Achieved a 9% reduction in Scope 1 & 2 GHG emissions since 2019 base year (2019-2022)
  • Awarded Outstanding Building of the Year ("TOBY") for the Barrymore Building in Liberty Village at the 2023 BOMA Toronto Awards
  • Awarded the TOBY for 85 Hanna Ave. in Liberty Village at the 2023 BOMA International Awards
  • Completed its Board refreshment with three new Trustees and reconstituted the Board committees
• FFO per Diluted Unit of $0.30: Funds From Operations of $63.8 million increased $2.5 million, or $0.02 per unit, over the prior year period. The increase was primarily driven by a year-over-year increase in other gains (losses) and (expenses), totaling $3.9 million ($0.02 per unit). This was largely offset by a year-over-year increase in interest expense and corporate G&A, collectively totaling $2.9 million ($0.01 per unit). In addition, unit repurchases through First Capital's NCIB resulted in a lower weighted average unit count, thus driving a further increase of approximately $0.01 in FFO per unit.
• Net Income (Loss) Attributable to Unitholders: For the three months ended June 30, 2023, First Capital recognized net income (loss) attributable to Unitholders of ($29.0) million or ($0.14) per diluted unit compared to ($42.1) million or ($0.19) per diluted unit for the prior year period. The net income increase over prior year was primarily due to a $12.8 million decrease in deferred income tax expense.

MANAGEMENT CONFERENCE CALL AND WEBCAST

First Capital invites you to participate at 2:00 p.m. (ET) on Wednesday, August 2, 2023, in a live conference call with senior management to discuss financial results for the second quarter ended June 30, 2023.

First Capital's financial statements and MD&A for the second quarter will be released prior to the call and will be available on its website in the 'Investors' section, and on the Canadian Securities Administrators' website on SEDAR.

Teleconference

You can participate in the live conference by dialing 416-406-0743 or toll-free 1-800-898-3989 with access code 4501769#. The call will be accessible for replay until August 9, 2023, by dialing 905-694-9451 or toll-free 1-800-408-3053 with access code 7225961#.

Webcast

To access the live audio webcast and conference call presentation, please go to First Capital's website or click on the following link Q2 2023 Conference Call . The webcast will be accessible for replay in the 'Investors' section of the website.

ABOUT FIRST CAPITAL REIT (TSX: FCR.UN)

First Capital owns, operates and develops grocery-anchored, open-air centres in neighbourhoods with the strongest demographics in Canada.

We seek Safe Harbor.