2018 Annual Report 2018 First First Fi Capicapi Capital Realty Inc
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FirstFirst CapitalCapi FIRS FIRSFIRS T T T CAPITAL REALTY INC. CAPITALCAPITAL REALTY REALTY INC. INC. Realty Inc. NNUANNUA NNUA A A A L L L REPORTREPORT 2018 2018 REPORT 2018 2018 Annual Report First Capital Realty Inc. Shops at King Liberty 85 Hanna Ave., Suite 400 Toronto, Ontario M6K 3S3 T 416.504.4114 F 416.941.1655 fcr.ca NOTE: Spine created using measurements of a previous Annual Report. Please adjust accordingly. Shareholder Information Head Office Transfer Agent Auditors Shops at King Liberty Computershare Trust Company Ernst & Young LLP 85 Hanna Avenue, Suite 400 of Canada Toronto, Ontario Toronto, Ontario M6K 3S3 100 UniversityShareholder Avenue, 11th Floor In- Tel: 416 504 4114 Toronto, Ontario M5J 2Y1 Directors Fax: 416 941 1655 Toll-free: 1 800formation 564 6253 Dori J. Segal Chairman, First Capital Realty Inc. Montreal Office Executive Leadership Team Toronto, Ontario Place Viau Adam E. Paul Jon Hagan, C.P.A., C.A. 7600 boulevard Viau, Suite 113 President and Chief Executive Officer Consultant, JN Hagan Consulting Montréal, Québec H1S 2P3 Kay Brekken Barbados Tel: 514 332 0031 Executive Vice President and Fax: 514 332 5135 Annalisa King Chief Financial Officer Corporate Director Calgary Office Jordan Robins Vancouver, British Columbia Mount Royal Block Executive Vice President and Aladin (Al) W. Mawani, C.P.A., C.A 815 – 17th Avenue SW, Suite 200 Chief Operating Officer Corporate Director Calgary, Alberta T2T 0A1 Carmine Francella Thornhill, Ontario Tel: 403 257 6888 Senior Vice President, Leasing Fax: 403 257 6899 Bernard McDonell Alison Harnick Corporate Director Edmonton Office Senior Vice President, General Counsel Apple Hill, Ontario and Corporate Secretary Edmonton Brewery District Adam E. Paul, C.P.A., C.A 12068 – 104 Avenue, Suite 301 Maryanne McDougald President and Chief Executive Officer, Edmonton, Alberta T5K 0K2 Senior Vice President, Operations First Capital Realty Inc. Tel: 780 475 3695 Toronto, Ontario Gregory J. Menzies Vancouver Office Project Lead, Yorkville Village Andrea Stephen, C.P.A., C.A. Corporate Director Shops at New West Jodi M. Shpigel Toronto, Ontario 800 Carnarvon Street, Suite 320 Senior Vice President, Development CORPORATE PROFILE New Westminster, BC V3M 0G3 Tel: 604 278 0056 Michele Walkau First Capital Realty Inc. (TSX: FCR) is one of the largest owners, developers and operators Senior Vice President, Brand & Culture of necessity-based real estate located in Canada’s most densely populated urban centres. Fax: 604 242 0266 As at December 31, 2018, the Company owned interests in 166 properties, totaling approximately 25.5 million square feet of gross leasable area. At December 31, 2018, First Capital Realty had an enterprise value of $9.2 billion. The common shares of the Company trade on the Toronto Stock Exchange. fcr.ca First Capital Realty’s primary strategy is the First Capital Realty’s primary strategy is the creation of value over the long term by creation of value over the long term by generating sustainable growth in cash flow generating sustainable growth in cash flow and capital appreciation of its portfolio. and capital appreciation of its portfolio. In February of 2019, the company announced an evolved urban In February of 2019, the company announced an evolved urban Evolved investment strategy to: Evolved investment strategy to: • continue to invest in high-quality, mixed-use properties with a • continue to invest in high-quality, mixed-use properties with a Urban focus on building large positions in targeted high growth urban Urban focus on building large positions in targeted high growth urban neighbourhoods; and to neighbourhoods; and to • complete strategic dispositions to provide capital for the Company’s • complete strategic dispositions to provide capital for the Company’s Investment investment programs. Investment investment programs. Strategy This evolved strategy will result in: Strategy This evolved strategy will result in: • a deeper focus on super urban neighbourhood markets that fully • a deeper focus on super urban neighbourhood markets that fully integrate retail with other uses e.g. Yorkville Village, Liberty Village, integrate retail with other uses e.g. Yorkville Village, Liberty Village, Griffintown, Brewery District, Mount Royal and numerous others; Griffintown, Brewery District, Mount Royal and numerous others; • surfacing substantial unrecognized value in the density pipeline, • surfacing substantial unrecognized value in the density pipeline, primarily through the development process; and primarily through the development process; and • optimizing the portfolio by further concentrating investment capital • optimizing the portfolio by further concentrating investment capital in dense, high growth neighbourhoods. in dense, high growth neighbourhoods. FFO/SHARE NAV/SHARE POPULATION FFO/SHARE NAV/SHARE POPULATION ($) ($) (100,000s) ($) ($) (100,000s) +22.2% since Jan 1, 2016 +23.8% since Jan 1, 2016 Within 5 Km radius +22.2% since Jan 1, 2016 +23.8% since Jan 1, 2016 Within 5 Km radius 1.21 22.59 250 1.21 22.59 250 1.16 21.85 1.16 21.85 1.11 215 1.11 215 207 207 19.53 186 19.53 186 16 17 18 16 17 18 15 16 17 18 16 17 18 16 17 18 15 16 17 18 All data as of December 31 All data as of December 31 Evolved Urban Investment Strategy Evolved Urban Investment Strategy HIGH-QUALITY PORTFOLIO HIGH-QUALITY PORTFOLIO OF URBAN ASSETS OF URBAN ASSETS Greater Toronto Area 40% Greater Toronto Area 40% Greater Montreal Area 14% Greater Montreal Area 14% Greater Calgary Area 12% Greater Calgary Area 12% Greater Vancouver Area 11% Greater Vancouver Area 11% Greater Edmonton Area 9% Greater Edmonton Area 9% Greater Ottawa Area 6% Greater Ottawa Area 6% Other 8% Other 8% Total 100% Total 100% IFRS Fair Values as at December 31, 2018 IFRS Fair Values as at December 31, 2018 US$120K US$120K 250K $113K 250K $113K NORTH AMERICAN $100K NORTH AMERICAN $100K LEADER IN POPULATION LEADER IN POPULATION DENSITY US Peers: Federal Realty and DENSITY US Peers: Federal Realty and 153K Regency Centres 153K Regency Centres Canadian Peers: Riocan, Canadian Peers: Riocan, 109K SmartCentres REIT, 109K SmartCentres REIT, Choice Properties (Retail only), Choice Properties (Retail only), CT REIT, Crombie REIT CT REIT, Crombie REIT Sources: Sitewise, Environics Sources: Sitewise, Environics Analytics & Company Reports Analytics & Company Reports 5 Km Population (2018) 5 Km Household Income (2018) 5 Km Population (2018) 5 Km Household Income (2018) TRACK RECORD OF 6.8% TRACK RECORD OF 6.8% INDUSTRY-LEADING 5 year average – 2.7% INDUSTRY-LEADING 5 year average – 2.7% SAME PROPERTY 10 year average – 3.2 % SAME PROPERTY 10 year average – 3.2 % NOI GROWTH NOI GROWTH 3.7% 3.7% 3.7% 3.7% 3.4% 3.4% 3.2% 3.1% 3.2% 3.1% 2.5% 2.3% 2.5% 2.5% 2.3% 2.5% 1.1% 1.1% Total Same Property Total Same Property NOI Growth NOI Growth 09 10 11 12 13 14 15 16 17 18 09 10 11 12 13 14 15 16 17 18 GROWING AVERAGE $20.24 22.6M SQ.FT. GROWING AVERAGE $20.24 22.6M SQ.FT. RENTAL RATE $19.69 OF INCREMENTAL DENSITY RENTAL RATE $19.69 OF INCREMENTAL DENSITY $19.39 $19.39 TERM ACTIVE SHORT/MEDIUM LONG VERY LONG TOTAL TERM ACTIVE SHORT/MEDIUM LONG VERY LONG TOTAL Weighted average $18.84 < 7 years 8–15 years > 15 years (millions) Weighted average $18.84 < 7 years 8–15 years > 15 years (millions) rental rate (psf) $18.42 rental rate (psf) $18.42 Retail/Commercial 0.2 0.9 1.0 0.2 2.3 Retail/Commercial 0.2 0.9 1.0 0.2 2.3 Residential 0.2 3.6 11.5 5.0 20.3 Residential 0.2 3.6 11.5 5.0 20.3 Total (millions) 0.4 4.5 12.5 5.2 22.6 Total (millions) 0.4 4.5 12.5 5.2 22.6 14 15 16 17 18 As at December 31, 2018 Identified Incremental Density (SF) 14 15 16 17 18 As at December 31, 2018 Identified Incremental Density (SF) Sustainable Cash Flow Sustainable Cash Flow HIGHLIGHTS NECESSITY BASED HIGHLIGHTS NECESSITY BASED RETAIL SERVICES RETAIL SERVICES Annual minimum rents Annual minimum rents Over 90% of revenue comes from necessity-based Over 90% of revenue comes from necessity-based retail retail Population density of 250,000 within 5 Km radius Population density of 250,000 within 5 Km radius 8 of the top 10 tenants have investment-grade 8 of the top 10 tenants have investment-grade credit ratings credit ratings Track record of consistently high occupancy Track record of consistently high occupancy Investment-grade credit ratings from Moody’s and DBRS Grocery stores 18% Investment-grade credit ratings from Moody’s and DBRS Grocery stores 18% Pharmacies 9% Pharmacies 9% 25 consecutive years of paying dividends Liquor stores 3% 25 consecutive years of paying dividends Liquor stores 3% Banks & Credit Unions 9% Banks & Credit Unions 9% Sustainability leader – listed on Corporate Knights Other necessity-based retailers 18% Sustainability leader – listed on Corporate Knights Other necessity-based retailers 18% Future 40 Responsible Corporate Leaders for Other tenants 9% Future 40 Responsible Corporate Leaders for Other tenants 9% five consecutive years Restaurants & cafes 14% five consecutive years Restaurants & cafes 14% Medical professional & personal services 15% Medical professional & personal services 15% Canada’s Most Gender Diverse Company* Fitness facilities 4% Canada’s Most Gender Diverse Company* Fitness facilities 4% Daycare & learning centres 1% Daycare & learning centres 1% Total 100% Total 100% *As part of Canada’s First Gender Diversity ETF launched in 2017 (TSX:HERS) *As part of Canada’s First Gender Diversity ETF launched in 2017 (TSX:HERS) TOP 10 TENANTS TOTAL PORTFOLIO OCCUPANCY TOP 10