First Capital Real Estate Investment Trust Stock

Hey everyone. I'm Adam Paul, I serve as President and CEO of First Capital REIT. And it is my pleasure to welcome you to the special meeting of First Capital unitholders. The purpose of today's meeting is for unitholders have the opportunity to vote on a transaction that effectively amounts to the sale of the company at a very compelling valuation.

Chair of the Board, Paul Douglas, will chair a formal meeting, which will include the results of the unitholder vote. But before the formal meeting begins, I wanted to take this opportunity to share a few reflections on how FCR has evolved over the last few years.

So going back to early 2024, we held our Investor Day, during which we introduced a very clear 3-year strategic plan. And that plan is built on the optimization plan that we had first outlined in 2022. At its core, the 3-year plan focused on how best to achieve the following 3 objectives for our investors. Stability and growth on a consistent basis of FFO per unit, growth in net asset value per unit and reliable, consistent monthly cash distributions to our investors and growth in those distributions over time.

We also presented the strategy we developed to achieve both the plan and the strategy. And notably, we received very strong support from our investors for both the plan and the strategy. Since we introduced the plan a little over 2 years ago, operating FFO per unit has grown at an average rate of roughly 6% per annum. Net asset value has increased by 3% in total and we increased our monthly distributions by 3% at the beginning of last year, and we increased them by another 2.5% at the beginning of this year. And notably, we were able to achieve those strong results while simultaneously strengthening our balance sheet with debt to EBITDA improving by roughly 100 basis points to the low 9s.

These results reflect discipline, they reflect focus and they reflect effective execution across the entire organization. And most importantly, those results have translated into value for our investors. As of the date, just prior to the announcement of the proposed transaction, First Capital's total unitholder returns outperformed all of our retail peers and the TSX REIT index on a 1, 3 and a 5-year basis. That performance and that consistency has led us to the compelling transaction before you today.

Unitholder voting will be finalized during the formal meeting in a few minutes. But based on the results as of the end of the day yesterday, we have received overwhelming investor support to approve the transaction. So with that, we are approaching the close of the FCR era.

Behind the results behind the strategy behind the proposed transaction is a remarkable group of people. First and foremost, my partners on the executive leadership team; Neil Downey, Alison Harnick, Jordie Robbins, Carm Francella, Michele Walkau. This executive team has consistently demonstrated best-in-class leadership, especially in achieving the objectives set out in our 3-year plan. And beginning on the date that the opportunity to pursue this transaction first emerged and extending through to, to date, we require this executive team to perform beyond reasonable expectations, and they have done just that.

So on behalf of our investors, thank you for your unwavering focus in achieving what is in the best interest of our unitholders. So all other First Capital employees, both past and present, thank you for your dedication, for your resilience and for your pride in what we have built together. So next, our Board of Trustees, Ira Gluskin, Al Mawani, Gary Whitelaw, Leonard Abramsky, Vivian Abdelmessih, Ian Clarke, Annalisa King, Dayna Gibs and, of course, Paul Douglas.

We have been tested over these past few years, and you have consistently demonstrated sound judgment and integrity at the highest level. As we close this chapter, I also want to acknowledge Gazit because Gazit effectively founded First Capital roughly 25 years ago. And on a personal note, I want to thank Chaim Katsman and Dori Segal for the opportunity to lead this organization nearly 12 years ago. It has been a great privilege.

Finally, to our investors, who I'd like to thank for their trust, your support, your long-term commitment to First Capital. And just before I pass the podium over to Paul Douglas, who will start the formal chair of the meeting, Paul, I know that I speak on behalf of the entire Board when I say that your steady leadership has been absolutely critical through our journey, including getting through this transaction. And thank you very much for everything you've done for me. Thank you very much.

Thank you, Adam for the kind words. Good morning. My name is Paul Douglas, and I'm Chair of the Board of the Trustees of First Capital Real Estate Investment Trust and I would like to welcome everyone to our special meeting of unitholders in connection with the proposed acquisition of First Capital pursuant to a court-approved plan of arrangement.

Our meeting is being held in hybrid format virtually through the Lumi platform and in person at the offices of Stikeman, Elliott in Toronto. I will chair the meeting and then Alison Harnick will act as Secretary.

First, we would like to discuss how voting and questions will be addressed in this hybrid format. Registered unitholders or duly appointed proxy holders who wish to vote at the meeting may vote either in person or online through the online platform. Registered unitholders who submitted a valid proxy events of the meeting do not need to vote again by electronic ballot or at the meeting. If you do not vote at the meeting, your previously submitted proxy will continue to be counted in the vote tabulation.

Voting in person on all matters will take place by the ballot that was provided to you when you arrived today. The ballot distributed to you includes the only item of business being voted on today, the arrangement resolution. You will be given the opportunity to vote after the presentation of the arrangement resolution. Please do not return your ballot until told to do so. That time, the scrutineer will come around and collect your ballot.

Once the ballots are collected, we will take a short recess to allow the scrutineer to tabulate the ballot results and report the results of the vote. For the purposes of meeting today, voting online will be conducted by a single electronic ballot. Registered unitholders and duly appointed proxy holders will be given the opportunity to vote after the presentation of the arrangement resolution.

Registered unitholders who choose to vote by electronic ballot at the meeting will be revoking any previously submitted proxies, and only the electronic ballots submitted at the meeting will be counted in the vote tabulation. Again, if you have previously voted, there is no need to vote again.

When the registered unitholders and duly appointed proxy holders are given the opportunity to vote you will receive a message on the Lumi virtual interface requesting you to register your votes should you choose to do so. Please note that you will only have a certain amount of time to vote. In this hybrid format, questions will be accepted from registered unitholders and proxy holders in person and through the online platform.

Once all motions being considered as part of the formal business meeting have been induced and prior to the voting period, we will only address any questions related to such motions. All other unrelated questions will not be addressed. When prompted, registered unitholders or duly appointed proxy holders attending the meeting in person may raise questions in respect of a motion by raising their hand and when recognized by the chair, addressing their comments or questions to the Chair.

When asking a question, please indicate your name, which entity you represent, if any, and confirm if you are a registered unitholder or a duly appointed proxy holder. For those attending the meeting virtually, questions in respect of a motion may be submitted by any registered unitholder or be the appointed proxy holder using the instant messaging service of the Lumi virtual interface.

During the formal portion of the meeting, please note that there will be a slight delay in the publication of the questions received, and we will address any questions relating to the formal business portion of the meeting after the introduction of the arrangement, resolution and prior to the voting period. When asking a question, please indicate your name, which entity you represent, if any, and confirm if you are a registered unitholder or a duly appointed proxy holder.

To ensure fairness for all attendees, the Chair will decide on the amount of time allocated to each question and may limit, consolidate or decline questions. Questions with common themes may be grouped together for efficiency. To make the best use of our time, certain unitholders have been asked to move and second the proposal, which is called for in the notice of the meeting.

We only have 1 formal matter of business to be voted on today, which is a special resolution approving a proposed plan of arrangement pursuant to Section 192 of the Canada Business Corporations Act and Section 60 of the Trustee Act Ontario, involving First Capital 17853335 Canada, Inc., Premier Acquisition LP, KingSett Real Estate growth LP #8 and Choice Properties Real Estate Investment Trust. We are very pleased to be bringing this important matter before our unitholders to vote on today. For all of the reasons set forth in the management information circular, your trustees have unanimously recommended that unitholders vote their REIT units in favor of the arrangement resolution.

Before we start, I would ask Alison to provide the necessary caution regarding forward-looking statements.

Thanks, and good morning. On behalf of those speaking today, both as part of the formal meeting and before and after the formal parts of the meeting, I would like to note that their comments may include forward-looking information and forward-looking statements within the Canadian securities laws, and they may refer to non-IFRS financial measures.

Details regarding forward-looking statements and non-IFRS financial measures can be found in the REIT's period securities filings including our most recent MD&A, current annual information form and annual report to unitholders. These can be found on SEDAR+ and on the REIT's website. Actual results could differ materially from the forecast, projections and conclusions in the forward-looking statements made today.

All of the forward-looking information and statements that we may provide includes all information other than statements of current and historical facts are qualified by the cautionary statements found in First Capital management information.

Thank you. The meeting will now come to order. I have appointed representatives of Odyssey Trust Company, the REIT's transfer agent to act as scrutineers. Notice of the meeting, together with the management information circular and other applicable meeting materials was mailed to unitholders on or about Monday, May 25, 2026.

I direct that a copy of the affidavit of mailing be attached as a schedule to the minutes of this meeting. Forum for the transaction of business at this meeting is 2 or more persons present in person or virtually or represented by proxy being unitholders or representing unitholders by proxy who hold in the aggregate not less than 25% of the votes attached to all the outstanding REIT units as at the record date.

The scrutineer has confirmed that 159,120,941 proxies representing 74.86% of the units entitled to vote at the meeting have been properly deposited prior to the meeting and that a quorum is present. I now declare that the meeting is properly constituted for the transaction of business and directed a copy of the final scrutineers' report on the attendance be attached as a schedule to the minutes of this meeting.

As mentioned, the only item of business at today's meeting is to consider and if thought advisable, to pass with or without variation, a special resolution to approve a proposed plan of arrangement pursuant to Section 192 of the Canada Business Corporations Act and Section 6 of the trustee ad Ontario, involving First Capital, 17853335 Canada Inc. Premier acquisition LP, KingSett Real Estate Growth LP #8 and Choice Properties Real Estate Investment Trust.

The full text of the arrangement resolution is set out in Appendix A as a management information circular of First Capital dated May 21, 2026. Each REIT unit carries 1 vote on the arrangement resolution. The arrangement resolution must be approved by at least 2/3 of the votes cast by all holders of the REIT units present in person or virtually or represented by proxy at the meeting; and b, a simple majority of the votes passed by the unitholders present in person or virtually or represented by proxy at the meeting, excluded for this purpose of votes of persons whose votes are required to be excluded pursuant to multilateral instrument 61-101.

The Board Trustees has unanimously determined that the arrangement is in the best interest of the REIT and recommend that unitholders vote in favor of the arrangement. Based on the proxies received by scrutineer in advance of the meeting, 99.78% of the units represented in person or by proxy at this meeting are in favor of the arrangement resolution. Furthermore, excluding the votes of persons whose votes are required to be excluded multilateral instrument 61-101, 99.71% of units represented in person or in proxy at this meeting are in favor of the arrangement resolution. Are there any questions or comments regarding this matter from registered unitholders or proxy holders in the room?

[indiscernible]?

No, the answer was we stuck to the deal that we had --

And then the next price change [indiscernible]?

The answer is no to the 2350.

And that resulted in a [indiscernible] and for [indiscernible]. My next question is [indiscernible].

I'm not sure we understand the question, [indiscernible]. A lot of partner [indiscernible].

So there's not a recommendation at a simply a statement that you do want to do that.

Very clear [indiscernible] is that you should see your own professional. So again, that -- we don't know the use getting the flight to the market per position if you choose the shelf, I get something more than that. inflow and I would like to --

Well, I'll have to before [indiscernible]. So my opinion has not changed all different [indiscernible] a long time. I look at the change [indiscernible].

Well, I want to give you the latitude to speak, but if you're going to make some kind of a --

[indiscernible].

Well, the facts that you are presenting.

[indiscernible]. However, in the month -- 4 months on demise thanks to seaports not impossibly taken first [indiscernible]. consistent long-term strategies and sponsorship. Moreover, in my opinion, this transaction finally crystallized is clearly quantified [indiscernible]. These field equity [indiscernible].

Sorry, this is I'm going to stop I think this is --

This is what happened in last year. So I'm actually very happy to start taking on exchange.

We're going to stop.

[indiscernible].

We're not going to debate history, and we're not going to speculate on what stock price -- enough. This has nothing to do with the motion. So I'm going to stop you there. Thank you. You're consistent in your views.

I will now entertain a motion to approve the arrangement resolution in the form attached as Appendix A to the management information circular. Could I please have a motion for such resolution?

Mr. Chair. My name is Michele Walkau, and I'm a unitholder of First Capital REIT. I move for the arrangement resolution to be approved.

Mr. Chair, my name is Noah Parker. I'm a unitholder of First Capital REIT and I second the motion. Thank you.

We'll now vote on the arrangement resolution. For those of you attending the meeting in person, please complete the ballot that was provided to you when you arrived today. Once voting is complete, the scrutineer will collect your ballot. For those of you attending the meeting online, please register your votes by accessing the voting page when prompted and make your selections in respect of the arrangement resolution. Once the electronic balloting closes, the voting page will disappear, and your vote will automatically be submitted. We will wait a few moments for the completion of the ballots and then move on with the remainder of the meeting.

We will provide registered unitholders and duly appointed proxy holders approximately 2 minutes to complete the ballots. Once voting is completed, I would ask that the scrutineer compile the report regarding the results of the voting on the arrangement resolution, we will reconvene in a few moments with the scrutineer's report and voting results.

[Voting]

This brings us to the end of voting on the arrangement resolution and I, therefore, declare the polls closed. Thank you for casting your votes. The scrutineer will tabulate the votes cast and we will report back on the results momentarily.

I'm pleased to report the arrangement resolution has received the required number of votes cast in favor by the unitholders. I declare that the motion is carried and the arrangement resolution is approved. I direct that the final results of the vote will be included with the minutes of this meeting. As noted, we will issue a news release with the voting results and detailed voting results will also be filed on SEDAR+.

I want to thank everyone here and all those who have worked so hard to bring us to this point today. We appreciate the support of our unitholders and look forward to continuing to move the proposed arrangement forward. As we have come to the end of the formal portion of the meeting and there being no further business to come before this meeting, we will terminate the meeting now. Now I have a motion to terminate the meeting.

Mr. Chair, I move that the meeting terminate.

Mr. Chair, I second the motion.

Thank you, both. I declare the meeting terminated. On behalf of the Board and management, thank you for taking the time to join us today for the First Capital REIT's Special Meeting of Unitholders.

Good morning, and welcome to the First Capital REIT's Special Meeting of Unitholders. I'm Paul Douglas, the Chair of First Capital REIT's Board of Trustees. Our meeting today is being held in a hybrid format, virtually through the Lumi platform and in person at the offices of Stikeman Elliott in Toronto. I will chair the meeting, and Alison Harnick will act as Secretary.

First, we would like to discuss how voting and questions will be answered or addressed and answered in this hybrid format. Usually, and this year is no exception, the vast majority of unitholders submit proxies or voting instructions in advance of the meeting, with only a small number of unitholders opting to vote their units at the meeting. Registered unitholders or duly appointed proxy holders who wish to vote at the meeting may vote either in person or online through the online platform. Registered unitholders who submitted a valid proxy in advance of the meeting do not need to vote again by electronic ballot or at the meeting.

If you do not vote at the meeting, your previously submitted proxy will continue to be counted in the vote tabulation. Voting in person on all matters will take place by the ballot that was provided to you when you arrived today. The ballots distributed to you includes each of the items of business being voted on today. You will be given the opportunity to vote on each business item after the presentation of all such business items. Please do not return your ballot until told to do so. At that time, the scrutineer will come around and collect your ballots. Once the ballots are collected, we will take a short recess to allow the scrutineer to tabulate the ballot results and report the results of the vote.

For the purposes of the meeting today, voting online will be conducted by a single electronic ballot. Registered unitholders and duly appointed proxy holders will be given the opportunity to vote on each business item after the presentation of all such business items. Registered unitholders who choose to vote by electronic ballot at the meeting will be revoking any previously submitted proxies, and only the electronic ballots submitted at the meeting will be counted in the vote tabulation. Again, if you have previously voted, there is no need to vote again. When registered unitholders and duly appointed proxy holders are given the opportunity to vote, you will receive a message on the Lumi virtual interface requesting you to register should you choose to do so.

Please note that you will only have a certain amount of time to vote. In this hybrid format, questions will be accepted from registered unitholders and proxy holders in person and through the online platform. Once all motions being considered as part of the formal business portion of the meeting have been introduced and prior to the voting period, we will address any questions related to such motions. When prompted, registered unitholders or duly appointed proxy holders attending the meeting in person may raise questions in respect of a motion by raising their hand and when recognized by the Chair, addressing their questions or comments to the Chair. When asking a question, please indicate your name, which entity you represent, if any, and confirm if you are a registered unitholder or a duly appointed proxy holder. If applicable, please also specify which formal business item your question pertains to.

For those attending the meeting virtually, questions in respect of a motion may be submitted by any registered unitholder or duly appointed proxy holder using the instant messaging service of the Lumi virtual interface. During the formal portion of the meeting.

Please note that there will be a slight delay in the publication of the questions received, and we will address any questions relating to the formal business portion of the meeting after the introduction of all business items and prior to the voting period. When asking a question, please indicate your name, which entity you represent, if any, and confirm you are a registered unitholder or a duly appointed proxy holder. If applicable, please also specify which formal business item your question pertains to. We will address any general questions that do not pertain to the formal business portion of the meeting during the question-and-answer period after the formal portion of the meeting has been concluded.

To ensure fairness for all attendees, the Chair will decide on the amount of time allocated to each question and may limit, consolidate or decline questions. Questions with common themes may be grouped together for efficiency. To make the best use of our time, certain unitholders have been asked to move and second the proposals, which are called for in the notice of the meeting. Before we start, I would ask Alison to provide the necessary caution regarding forward-looking statements.

Thank you. On behalf of those speaking today, I would like to note that their comments may include forward-looking information and forward-looking statements within the meaning of applicable Canadian securities laws and they may refer to non-IFRS financial measures. Details regarding forward-looking statements and non-IFRS financial measures are on screen and can be found in the REIT's various securities filings, including its most recent MD&A and current annual information form and annual report to unitholders. These can be found on SEDAR+ and on the REIT's website. Actual results could differ materially from the forecast, projections and conclusions in the forward-looking statements made today. All of the forward-looking information and statements that we may provide, which includes all information other than statements of current and historical fact are qualified by the cautionary statement posted on the screen.

Thank you, Alison. The meeting will now come to order. Representatives of the Odyssey Trust Company, the REIT's transfer agent, have been appointed to act as scrutineer. Notice of the meeting, including the agenda for today, was mailed to unitholders on or about Wednesday, March 16, 2026. The scrutineer has confirmed that proxies representing approximately 79% of units entitled to vote at the meeting have been properly deposited prior to the meeting and that a quorum is present. I now declare that the meeting is properly constituted for the transaction of business.

The first item of business is the tabling of our 2025 audited consolidated financial statements, together with the auditor's report. These can be retrieved from the Investors section of the First Capital website or SEDAR+. I will now proceed with the next item of business, the election of trustees. 10 trustees are to be elected and detailed information regarding each of the 10 nominees is set out in the circular. Based on the proxies received by the scrutineer in advance of this meeting, each trustee nominated has received votes in favor from a range of at least 97% to over 98% of the votes cast. Pursuant to Section 6.7 of the Declaration of Trust of the REIT, trustee nominations were required to be received 30 days prior to the meeting. As no such nominations were otherwise received, no one other than the proposed nominees are eligible to be nominated. Could I please have a motion for the election of trustees.

Mr. Chair, my name is Jennifer Santos, and I am a unitholder of First Capital REIT. I nominate the following persons for election as trustees of First Capital Real Estate Investment Trust to hold office as trustees of the REIT until the next Annual Meeting of Unitholders or until their successors are duly elected or appointed. Vivian Abdelmessih, Leonard Abramsky, Ian Clarke, Paul C. Douglas, Dayna Gibbs, Ira Gluskin, Annalisa King, Al Mawani, Adam E. Paul and Gary Whitelaw.

Thank you. May I have a second?

Mr. Chair, my name is Noah Parker, and I'm a unitholder of First Capital REIT. I second the motion.

Thank you. As mentioned at the beginning of this meeting, voting today will be conducted by a single ballot for those in person or an electronic ballot for those voting online. We will, therefore, continue with the next item of business, which is the appointment of the REIT's auditors. And you will be prompted to vote on the election of each trustee after the presentation of all business items for this meeting.

We will now move to the appointment of the auditors and authorization of the trustees to fix the remuneration. Based on the proxies received by the scrutineer in advance of the meeting, the auditors have received votes in favor, representing at least 99% of the votes cast. May I have a motion to appoint the auditors and authorize the trustees to fix their remuneration.

Mr. Chair, I move that Ernst & Young LLP be reappointed auditors of First Capital REIT to hold office until the next Annual Meeting of Unitholders or until their successors are appointed and to authorize the trustees to fix their remuneration.

Thank you, Jennifer. May I have a second?

Mr. Chair, I second the motion.

Thank you. The next item of business is the advisory resolution regarding First Capital's approach to executive compensation, which is disclosed in detail in the circular. A copy of the resolution is set out in the circular. Based on the proxies received by the scrutineer in advance of the meeting, the say-on-pay advisory vote has received votes in favor, representing at least 98% of the votes cast. May I have a motion to approve on a nonbinding advisory basis, First Capital's approach to executive compensation?

Mr. Chair, I move that the nonbinding advisory resolution on the REIT's approach to executive compensation in the form set out in the circular be approved.

Thank you. And second?

Mr. Chair, I second the motion.

Thanks, Noah. The next item of business is to consider a resolution reconfirming and approving First Capital REIT's second amended and restated unitholder rights plan. A copy of the resolution is set out as Appendix A1 of the circular. Over 91% of the votes cast in advance of this meeting are in favor of the resolution to reconfirm and approve First Capital REIT's second amended and restated unitholder rights plan. May I have a motion that the resolution in the form attached to the Appendix A1 to the circular reconfirming and approving First Capital REIT's second amended and restated unitholder rights plan be approved.

Mr. Chair, I move that the resolution in the form attached as Appendix A1 to the circular reconfirming and approving First Capital REIT's second amended and restated unitholder rights plan be approved.

And a second?

Mr. Chair, I second the motion.

Thank you. The next item of business is to consider and if deemed advisable, pass a resolution authorizing the proposed amendments to the REIT's Restricted Trust unit plan. A copy of the resolution is set out as Appendix E1 to the circular. Over 98% of the votes cast in advance of this meeting are in favor of the resolution to authorize the amendments to the REIT's Restricted Trust unit plan. May I have a motion that the resolution in the form attached to Appendix E1 to the circular authorizing amendments to the REIT's Restricted Trust unit plan be approved.

Mr. Chair, I move that the resolution in the form attached as Appendix E1 to the circular authorizing amendments to the REIT's Restricted Trust Unit Plan be approved.

Second?

Mr. Chair, I second the motion.

Thank you. As this is the last item of business, you will now be prompted to register your vote in respect of each of today's business items. For those of you attending the meeting in person, please complete the ballot that was provided to you when you arrived today. Once voting is complete, the scrutineer will collect your ballot. For those of you attending the meeting online, please register your votes by accessing the voting page when prompted and make your selections in respect of each of today's business items. Once the electronic balloting closes, the voting page will disappear and your votes will automatically be submitted.

Take a few moments for the completion of the ballots and then we'll move on with the remainder of the meeting. We will provide registered unitholders and duly appointed proxy holders approximately 2 minutes to complete the ballots. Once voting is completed, I would ask that the scrutineer compile the report regarding the results of voting on all business matters. We will reconvene in a few moments.

[Voting]

Questions about I noticed one of the members of [indiscernible].

I don't understand your question.

[indiscernible].

You're referring to the matrix of skills that...

[indiscernible].

I am comfortable with it. We have -- the directors are chosen through the Corporate Governance Committee and reviewed and the Board approves them. We will continue voting.

This brings us to the end of voting on items of business before this meeting, and I therefore declare the polls closed. Thank you for casting your votes. The scrutineer will tabulate the votes cast, and we will report back on the results momentarily. Following this formal portion of the meeting, there will be a question-and-answer period.

Okay. We have the results. I'm pleased to report we have now received the preliminary voting results from the scrutineer on the 6 items of business. The formal voting results will be made available on SEDAR+ following the meeting. On the election of trustees, the voting results show that each trustee nominee has received the required number of votes in favor of his or her election. Accordingly, I declare that the proposed trustee nominees have been duly elected as trustees of the First Capital REIT to hold office until the next AGM of unitholders or until they resign or their successors are duly elected or appointed. On the election of auditors, the voting results show that the required number of votes cast were in favor of the reappointment of Ernst & Young LLP as the auditors of First Capital REIT. I declare that Ernst & Young LLP are reappointed auditors of First Capital REIT and that the trustees are authorized to fix the auditor's remuneration.

On the advisory vote on First Capital's approach to executive compensation, the required number of the votes cast were voted in favor of First Capital's approach to executive compensation. The motion is carried and the resolution is approved. On the reconfirmation and approval of First Capital REIT's second amended and restated unitholder rights plan set out in the resolution attached as Appendix A1 to the circular, the required number of votes has been -- were voted in favor of the resolution. The motion is carried and the resolution is approved. On the authorization of the amendment to the REIT's restricted trust unit plan set out in the resolution attached as Appendix E1 to the circular, the required number of votes cast were voted in favor of the resolution.

The motion is carried and the resolution is approved. We've now come to the end of the formal portion of the meeting. We will terminate the meeting. Now may I have a motion to terminate the meeting?

Mr. Chair, I move that the meeting terminate.

Second?

Mr. Chair, I second the motion.

Thank you. I declare the meeting terminated.

We'll now move to the Q&A, the question-and-answer portion of the meeting. Alison, have we received any questions online?

No questions have been received online.

Are there questions in the room?

[indiscernible]

Adam?

Yes. Look, the strategy for First Capital, this is corroborated from feedback from the vast majority of investors has been very well articulated and well understood. No surprises. And this management group and Board have ensured very strong execution of that plan. And our unitholder returns support that. Our unitholders, the vast majority of the feedback for many years has been keep doing what you're doing. On any typical standard measure of time, whether it's 1 year, 3 year, 5 year, we have outperformed all of our retail peers. We have significantly outperformed the S&P/TSX CAP REIT Index, and we are going to continue to do what we said we will do and execute our strategy.

[indiscernible]

That's actually incorrect. And I'm not going to debate it.

[indiscernible]

No, would you mind putting up [indiscernible].

[indiscernible]

Our peer group as consistently laid out in our management information circular includes 2 groups that you mentioned. It includes CT REIT, it includes RioCan REIT and it includes SmartCentres REIT. The other peer group, and that's what our long-term performance is benchmarked off of when it comes to total unitholder returns. The other group is the TSX Cap REIT Index. Until quarter end, they're actually better today. But this takes you to March 31, 2026.

[indiscernible]

We've told you the competitors that we've identified as our peers.

[indiscernible]

I'm not going to debate story. It's in print.

Sorry, do you have questions...

[indiscernible]. My question to you, [indiscernible], you thought about North America for any period with the exception of the last year.

So this is the answer. We have not underperformed. What's your next question?

[indiscernible] consistent with anything else that the company...

What's your next question?

Are there other questions on the floor? If not, then I'll call the meeting closed. Thank you for attendance. Hope to see you again.

Hello, everyone, and thank you for joining us for today's First Capital REIT's Q4 2025 Results Webcast and Conference Call. [Operator Instructions]

And now to get us started with opening remarks and introductions, I am pleased to turn the floor over to Alison Harnick. Please go ahead, Alison.

Thank you, and good afternoon. 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 securities filings, including our MD&A for the year ended December 31, 2025, and our current AIF, which are available on SEDAR+ and our website.

These forward-looking statements are made as of today's date and except as required by securities law, we undertake no obligation to publicly update or revise any such statements. Also during today's call, we will reference certain non-IFRS financial measures. These do not have standardized meanings prescribed by IFRS and should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Management provides these as a complement to IFRS measures to aid in assessing the REIT's performance. These non-IFRS measures are further defined and discussed in our MD&A, which should be read in conjunction with this call.

I'll now turn it over to Adam.

Okay. Thank you very much, Alison. Good afternoon, everyone, and thank you for joining us today for our Q4 and year-end conference call. We're very pleased to deliver another strong set of operating and financial results in Q4, which rounded out a very solid year for First Capital. For the full 2025 year, same-property cash NOI grew by a healthy 5.9%. This excludes lease termination fees and bad debt expense. In round numbers, approximately 2% of the NOI growth was from increased occupancy and new tenants paying cash rent at One Bloor East. Primarily higher rents across the balance of the portfolio contributed roughly 4% of same-property NOI growth.

This is a very strong growth rate for our business. And as you heard from Neil on prior calls, it exceeded our expectation from the beginning of the year. The primary driver of this outperformance has been better-than-expected leasing. Following a record high occupancy level of 97.2% set in Q2, occupancy remained solid at 97.1% at year-end. Our average in-place net rental rate now stands at $24.73 per square foot, which is an all-time high.

During 2025, we renewed approximately 2.2 million square feet across 535 spaces. Net rental rates in year 1 of the renewal terms saw an average increase of nearly 15% over expiring their rents. Approximately 3/4 of our renewed leases in 2025 included contractual rent escalations during the renewal terms. This resulted in a renewal lift of nearly 20% when comparing net rents in the last year of the expiring terms to the average net rents during the renewal terms.

In addition to renewal leasing, we also completed approximately 500,000 square feet of new leasing last year. This related to 193 spaces with an average year 1 net rent of $28.23 per square foot. Following a strong Toronto ICSC last fall, we've recently concluded another productive ICSC in Whistler last month. Both conferences had a very positive tone with a notable increase in tenant attendance seeking additional First Capital locations.

With demand continuing to exceed supply for FCR-type retail space, leasing continues to be very strong. We own great assets in great markets and our leasing team's deep understanding of the strong fundamentals for our product type, which I discussed in detail a couple of quarters ago, positions us well to continue to capitalize on opportunities for rent growth. We continue to have confidence that market dynamics provide a very long runway for strong and sustained rent growth for our portfolio.

We're now 2/3 of our way through the 3-year strategic plan that we presented to our investors at the beginning of 2024. At its heart, the plan is focused on delivering on 3 primary investor objectives: stability and consistent growth in FFO per unit, growth in net asset value per unit and absolutely stable, reliable monthly cash distributions to our investors and growth in those distributions over time.

The business continues to perform exceptionally well. We remain on track to achieve the operating FFO per unit growth and debt-to-EBITDA metrics that are the core premise of our 3-year plan.

For the first 2 years of the plan, our OFFO per unit CAGR is approximately 6%. We're tracking ahead on operating FFO. Our debt-to-EBITDA has improved to the low 9s and is on track to improve further by the end of 2026.

While we strengthened our balance sheet, we've also extended the weighted average term of our debt in a meaningful way, which Neil will touch on. With strong results, significant balance sheet strength and positive outlook the Board approved a 2.5% increase to FCR's monthly distribution, effective with the January 2026 distribution that will be paid next week.

As we've discussed, stable and growing distribution is one of First Capital's key long-term objectives. We believe that we will look back on our 3% increase a year ago, together with the 2.5% increase this year as the beginning of a long-term track record of regular distribution increases for our investors, supported by healthy FFO growth. As we enter the final year of our 3-year plan, we're very pleased with our progress to date.

And with that, I will now pass things over to Neil.

Thanks, Adam, and good afternoon, everyone. Consistent with our usual practice, we have a slide deck available on our website at www.fcr.ca. And in my remarks today, I will make references to that presentation.

So starting with Slide 6. As shown here at the bottom of the page, FCR generated operating FFO of $72 million during the fourth quarter. This was an increase of 7% from $68 million in the fourth quarter of 2024 and a 1% increase sequentially from Q3. OFFO per unit was $0.34, representing a 6.6% increase from $0.32 earned 1 year ago and it was 1% higher than the $0.33 earned in the third quarter of 2025. Once again, we characterize the fourth quarter results as being very strong with same property NOI growth as the key driver.

Now moving back to the top of the slide to net operating income. Same-property NOI, excluding bad debt expense and lease termination fees was $112 million in Q4. This was a $6 million increase from $106 million in Q4 2024, representing growth of 5.7%. I also note that same property underlying represents 95% of FCR's total NOI. Below the same-property NOI line item, you can see that Q4 lease termination fees were $2.6 million. This was higher than the expectations stated on our third quarter results call.

During the fourth quarter, we ultimately secured these termination fees from 7 tenants, representing 47,000 square feet of space. While these vacancies will represent about 25 basis points of portfolio vacancy and they will result in a short-term loss of recurring rental income, we see strong backfill prospects through this year. And clearly, we expect these transactions to have a positive net present value.

Acquisition and disposition activity had very little impact on Q4. On the disposition front, we closed on 2 sales in the quarter for $67 million. Both were development sites and collectively, they provided a slightly negative NOI contribution.

Finally, within the other non-same-property NOI line, you'll see that there's a $3.5 million year-over-year decrease. A big piece of this, in fact, $2.9 million specifically relate to straight line rent. About $1.2 million is an accelerated straight-line rent charge-off that's actually related to the lease terminations that I just mentioned a minute ago. Most of the balance of the straight-line rent decrease related to the lease-up of our One Bloor East property, which turned cash NOI positive during the second quarter of 2025.

Moving further down the FFO statement. Interest and other income of $6.1 million was consistent with the $6.4 million earned in Q4 2024. And it was $700,000 higher sequentially from Q3 due to higher fee income and higher interest income. The increase in interest income occurred specifically because FCR carried about $300 million of cash for most of the month of December. Interest expense of $40 million was 5% lower year-over-year relative to $42 million, the year ago amount included a $1.7 million realized swap loss that was related to debt that we repaid early. So if you normalize for that amount, interest expense is a little changed year-over-year.

Moving to general and administrative expenses, which were $11 million. This was a 4% year-over-year increase for the quarter. Overall, we're very pleased to have held G&A flat at $43.5 million for the year. As I've noted on prior calls, we've been very focused on containing discretionary expenses.

Quickly moving to Slide 7, just to touch on the 2025 results. It included $466 million of NOI for the year, an $11 million increase. Same-property NOI, again, ex lease termination fees and bad debt expense increased by nearly $25 million, equating to a strong growth of 5.9%. Also benefiting from proactive management of the debt ladder, the good G&A expense containment, FCR was able to flow this growth through to operating FFO which reached $286 million for the year or $1.33 per unit, and that was relative to $270 million or $1.26 per unit in 2024 on what I'll refer to as a comparable basis.

Slides 8 and 9 cover key operating metrics, many of which Adam touched upon already. And at the risk of being repetitive, the theme really remained consistent again through the fourth quarter with continued and broad strength across key occupancy, leasing velocity, leasing spreads and rental rate metrics.

Slides 10 and 11 provide various distribution payout ratio metrics. FCR's OFFO payout ratio was 67% for 2025. Similarly, the ACFO payout ratio registered 83%.

Advancing to Slide 12. FCR's year-end net asset value was $22.57 per unit. Sequentially, this is an increase of $0.28 during Q4. The largest contributor to the change was a $36 million net fair value increase on investment properties. Beneath the surface of this net number, FCR recorder Q4 total fair value increases of $42 million related to higher NOI and cash flow assumptions and increases of just over $20 million related to mark to sale values across 4 newly announced disposition transactions. Offsetting these contributions were net fair value markdowns of $27 million related to development intensity properties and some very small asset specific adjustments to cap rates and discount rates.

For 2025, as a whole, FCR's NAV per unit increased by $0.52 or 2.4%. The primary drivers were retained FFO and net fair value increases on investment properties of approximately $160 million related to the passage of time and higher cash flows. The biggest offsetting factor was just over $100 million of fair value reductions related to density and development land and residential development properties.

Turning next to capital investments as outlined on Slide 13. During Q4, $63 million of capital was invested into the business, bringing the full year to $223 million. Q4 investments included $47 million of development-related expenditures and $16 million of leasing costs and CapEx into the operating portfolio. Full year 2025 development expenditures were $163 million, while operating capital was $60 million. The more significant development expenditures during the quarter and frankly, for the year for that matter related to our Yonge and Roselawn development, the Humbertown Shopping Centre redevelopment, where Phase 3 continues to advance very nicely and our 1071 King purpose-built rental project.

Moving to Slide 14. Q4 was a very productive quarter on the financing front with $531 million of originations, primarily comprised of the issuance of $500 million of senior unsecured debentures through 2 offerings. The newly issued bonds had an 8.7 year weighted average terms and a weighted average spread of 149 basis points. The net proceeds were principally applied towards the early repayment of $175 million term loan that was due in mid-April of this year, and the $300 million Series T unsecured debentures, which were callable in early February of this year.

One of the objectives we clearly stated at our 2024 Investor Day was to extend our debt ladder. And in just under 2 years, we've made very good progress on this front, which you can see on Slides 15 and 16. Including term loan extension options in the REIT's favor, the debt ladder now has a 4.6-year weighted average term to maturity. One year ago, this figure was 3.7 years and that the outset of our Investor Day and our 3-year plan, the weighted average term was 3.3 years. Therefore, over the past 2 years, the REIT debt ladder has been extended by approximately 40%.

Moreover, the Q4 financing activities dramatically reduced FCR's near-term debt maturity exposure. As of December 31, 2025, term debt maturities in 2026 totaled only $129 million or 3% of total debt. And notably, during the first 6 weeks of 2026, we have already paid out mostly from cash on hand approximately $85 million of maturing mortgages carrying a weighted average interest rate of 3.3%, thus further reducing 2026 debt roles.

Slide 17 summarizes a number of important credit metrics. FCR finished the year in an exceptional financial position with more than $700 million of liquidity in the form of cash on hand and availability under 3 revolving credit facilities, an unencumbered asset pool of $6.3 billion, equating to nearly 70% of total assets and a low 16% secured debt to total asset ratio.

Now before turning the call to Jordie, I will make a few comments related specifically to the year ahead. 2026 is the third and final year of our 3-year plan. And in this regard, we continue to track towards or ahead of the key 3-year objectives that we outlined at our 2024 Investor Day. So in terms of 2026, specifically, I'll speak to 3 items.

Firstly, we believe same-property NOI growth should be approximately 3% and for clarity, this growth excludes potential lease termination fees and bad debt expense or recovery. The important context here is that, look, we're comping against a very high growth year in 2025. And moreover, we took back some space late last year, as I discussed in my comments related to the Q4 lease termination fees. And with the failure of Toys "R" Us in Q1, we received some additional vacancy in the month of January. But to stand back, assuming FCR delivers 3% organic growth for the year, this means the 2-year stacked same-property NOI growth over the 2025, 2026 time frame will cumulatively be more than 9%.

Secondly, financing costs. A moment ago, I touched on the significant derisking benefits of our Q4 financing activities, in particular. Now these benefits do come with a short-term cost as they bring forward by a few months. Some of the higher interest expense that FCR was inevitably going to incur in 2026 and beyond. The $500 million of unsecured debentures issued in mid to late November carried a weighted average effective interest rate of 4.7%. The funds were applied to the early repayment of debentures and term loans that had a weighted average effective interest rate of 3.5%. So the impact of 120 basis point yield increase on $500 million of debt equates to an annual increase in funding costs or interest expense of $6 million. And beginning in Q1 2026, FCR will be subject to that full run rate impact.

Finally, turning to developments. We expect 2026 expenditures to be within a range of $200 million to $240 million. This is higher than the spend in each of the last 2 years and we expect it to be higher than the spend in each of the 2 years beyond 2026. So there will be a ramp-up in the pace of development spend, specifically at our 50% owned Yonge and Roselawn project, and this should be our single largest project development spend this year. As the year progresses, we also anticipate commencing a large-scale retail redevelopment initiative at our Westmount Shopping Centre in Edmonton. So I think this gives you a bit of flavor for the year ahead.

On the delivery side, we expect $55 million to $65 million of retail development and redevelopment to come online. The stabilized NOI yield on this capital should be between 6.5% and 7%. The NOI impact, however, will be quite weighted towards the end of the year and into 2027 based upon the timing of the deliveries. Phase 3 of our Humbertown Shopping Centre redevelopment and our Calgary and Bridgeland development are the largest components of these deliveries.

So this concludes my prepared remarks. I'm pleased now to turn the session to Jordie to elaborate further on FCR's investing and related activities.

Thank you, Neil, and good afternoon. Today, I plan to update you on our investment, development and entitlement activities. Starting with dispositions. It was a productive fourth quarter. We closed or entered into binding agreements to sell 5 properties for gross proceeds of $85 million, including $43 million of newly announced transactions. One of these sales that both went firm and close in the fourth quarter with the development site located to the southeast corner of Leslie Street in York Mills in Toronto. After assembling and entitling the property for midrise residential, we sold it to a seniors housing developer for $25 million.

We entered into binding agreements on 3 additional properties this past quarter for total sale proceeds of $18 million. The largest is the disposition of a 1.5-acre parcel of land adjacent to our Plateau Des Grives shopping center located in Gatineau, Quebec. This $10.5 million transaction is under contract to close in the first half of 2026. Altogether, in 2025, we completed or secured firm agreements to sell 10 properties for $193 million. The run rate NOI yield of these assets is well under 3% and the sale proceeds represent roughly a 40% premium to our pre-mark IFRS value.

Turning to active redevelopments. Our $45 million modernization and expansion of Humbertown Shopping Centre is advancing nicely and is on schedule. When completed, we will have demolished all of the common area and added 23,000 square feet of additional leasable area to the center. Humbertown will present as a brand-new unenclosed grocery and pharmacy-anchored shopping center. It will have modern prototypical retail units providing retailers with ideal space and reduced operating costs.

Considering this and the excellent surrounding neighborhood demographics, the center commands premium market rents. The Loblaws grocery store is scheduled to open and are enlarged 34,000 square foot premises towards the end of Q2. We will turn over the final phase, which includes a newly created 20,000 square foot Shoppers Drug Mart, a Scotiabank, a TD Bank, along with a number of other to-be-announced tenants in the second quarter of 2026.

The redevelopment of the former Molson building in Calgary is also tracking on time and on budget. This property is located in Bridgeland, a very desirable rapidly gentrifying neighborhood close to downtown. We demolished the former building on site and are well under construction of a new 29,000 square foot building that will be occupied by Shoppers Drug Mart. Shoppers took possession of their new premises in Q4 of 2025 and plan to open in Q3 of 2026.

Considering the locational advantage of our portfolio, we continue to source value creation opportunities by applying our retail redevelopment expertise, which is one of our core competencies. In this regard, and as Neil had touched on in his formal remarks, we are finalizing plans on several other shopping center redevelopments, including Westmount Centre in Edmonton.

We look forward to providing you with details on it and others we're working on in the coming months. Our mixed-use development program continues to advance as well. This quarter, we'll top off our 17-story 298-unit rental project at 1071 King Street West, in which we retained a 25% interest. Precast and window installations reached the fifth floor. 95% of the costs have been awarded, and we remain on budget. We expect first occupancy in mid-2027.

Structural formwork is also moving steadily at our Yonge and Roselawn project in Toronto. The 4th floor of the podium is nearing completion and decking has started on the 5th floor. We own a 50% interest in the 636-unit residential rental building and serve as its development manager. The Yonge and Roselawn project also includes 65,000 square feet of prime retail space. Unsurprisingly, tenant interest for the newly built retail space is very strong. 85% of the construction costs have been awarded, and we remain on budget. We expect first occupancy of the residential space in the first half of 2028.

Turning now to residential inventory. Registration and final closing and our even bridge condominium project will occur in Q1 2026. 177 owners now have taken occupancy with 3 additional contracted sales defaulting and for going on their 20% deposits.

2025 was another active and productive year for our entitlement program. We secured approvals for 3 million square feet of incremental density, and submitted rezoning applications for a further 1.7 million square feet. To date, net of the density we've already sold, we've submitted for approximately 18 million square feet or 75% of our 23 million square foot pipeline. Since initiating our entitlement program, we have sold over 5.5 million square feet of density at premium prices. As these entitlements are secured, our strategy remains to sell the majority of it while maintaining flexibility to retain partial interest in specific instances.

Thank you all for your time and your continued support of FCR. Operator, you can please open the line for questions.

[Operator Instructions] We'll hear first from Sam Damiani at TD Cowen.

Just on the 2026 outlook for same property. It's a tough year-over-year comp, as you said. But if you were to strip out the impact of One Bloor East last year and this year, what would the same property number look like for 2026 relative to that 3% you provided?

Sam, it's Adam. Thanks for the question. So we're not prepared with what the number is, excluding each property we own. So we can definitely get back to you on it, but leave it with us.

Okay. That would be great. And just on the condos, coming to sort of finalization this year, early next year? Any guidance on how that's going to impact financials in terms of FFO and capital repatriation?

Yes. Sam, it's Neil. We've not given specific profit guidance on that. And what we've really focused on, I would say, is our recurring FFO number at any rate. You've seen us exclude transactional type income in the past. So we just encourage you to focus on the core number.

And similarly, that's the way we look at metrics such as our debt-to-EBITDA. From a cash receipt perspective, it's obviously beneficial. For instance, Edenbridge at our share is a gross revenue opportunity of somewhere in the range of $115 million to $120 million. And at December 31, we had already collected in terms of initial deposits and then deposits as occupants move in about 33% of the gross revenue number.

So there's a round of closings that will occur. We anticipate in the first quarter, and that's another $50 million to $60 million of I'll call it proceeds. And then there is a balance of some unsold inventory, which we anticipate being spread over a number of quarters as we monetize those units.

400 King, is, as you know, a much larger building, although we have a smaller share. The gross revenue opportunity there is bigger and we currently anticipate it will be completed either late in 2026 or possibly turned over in early 2027. That would be a delevering event that you would measure in terms of somewhere in the range of 0.4 turns on a debt-to-EBITDA basis. So it's more significant.

And again, Neil, the impact on debt-to-EBITDA is purely from reduced debt? You're not including the EBITDA from the condo profits?

Well, there will be a headline EBITDA number, an impact to the extent there's profit, yes. But again, we focus on the trend of the core and you've seen us reference a normalized debt-to-EBITDA in the past when there's unusual or positive lumpy contributions in the EBITDA. So we look at the trend.

Okay. And the last one for me, just on -- I think the MD&A does reference that low 8x debt-to-EBITDA target for the end of 2026. Just wanted really to confirm that. And if there's any other I guess, information you want to relay as to sort of the building blocks getting from 9.1x to low 8 in the next 4 quarters.

Well, I would say, generally speaking, some growth in EBITDA and some continued execution on asset sales.

Our next question will come from Mike Markidis at BMO Capital Markets.

Congrats on the strong end to the year and the great outlook for this year, guys. Just with following up, and I hate -- it's ticky-tack, but on the condo gains, so your OFFO will include condo gains. I know you're encouraging us to focus on core, but we do have to tie a number to what you report for consensus numbers. So I just want to get some clarity there.

The short answer, Mike, is yes. It will be included in OFFO. It will be most [indiscernible] per unit number.

Okay. Got it. Okay. Just with respect to your mezz loan balance, I think maybe it was 2 or 3 quarters ago, you were expecting that number to come down, and it's actually been fairly stable. So maybe if you could just give us your outlook for that balance for the rest of this year? Is it expected to stay where it is currently? Or do you expect that number to -- that you're going to get some capital back from there as well?

Sorry, Mike. We just missed the question. Which balance is that?

Your loans receivable program, mezz loan balance.

Mezz loan balance. Yes, we actually did roll a couple of loans in the back half of the year. We actually also received repayments on some loans. So your point actually is valid. We had originally anticipated that balance might come down. Our current modeling for what it's worth, continues to anticipate that, that balance will come down. But look, we're always on the lookout for opportunities and ways to accretively deploy capital while still meeting our core objectives as it relates to leverage metrics.

Okay. And I'll ask one more before I turn it back. Just with respect to sources of capital coming in, you're still on track to hit your disposition target by the end of this year. Mezz loan balance, sounds like you're modeling it to come down, but who knows. But just from the early refis that you've done, where do you see the opportunities to repay debt early without any material frictional cost? Or is that opportunity to exists if you do get capital back?

Yes, Mike, there's actually -- there's not a lot of opportunity candidly. But we also, as I indicated, put capital out every quarter to remind everyone through development. So I would say in the first 6 months of this year, we actually don't contemplate much in the way of net debt repayment.

[Operator Instructions] Moving forward, we'll hear from Lorne Kalmar at Desjardins.

Maybe just on the Toys "R" Us just quickly. Obviously, they declared the CCAA. Can you remind us when does the -- when did they cease paying rent or when did they cease paying rent?

So 2 locations, Lorne, they ceased paying rent in January. So they paid December rent, they did not pay January rent.

That's very helpful. And then any plans -- early plans? I mean I'm sure you guys kind [ of the writing was on the wall ] for this one. Just wondering if there was any plans put in motion to backfill those spaces.

So it's Jordie. We have temp tenants in place at 2 of the locations and it gives us an opportunity to find permanent solutions. We have a couple of tenants that we're in negotiations with [indiscernible] park in particular. And interest seems to be, I'll say, fulsome. So we'll update you as that progresses.

Yes, just to expand on that. So we've got a roster of temp tenants that are a good, very quick plug, which, as Jordie mentioned are in place. So those rents would be lower than what Toys was paying. We are in negotiations with permanent tenants on both spaces. Those rents are clearly going to be higher than what Toys was paying.

Can you give a rough idea of what the type of tenant, is it grocery, value?

Look, we're dealing with more than one. They would be very typical core FCR tenants for that size of space. So you would recognize them in our existing portfolio.

Okay. Fair enough. And then maybe just lastly, on the lease term income, we hear how strong in demand for spaces. Can you give us a little bit of color on what happened there and maybe the NOI impact? Or was the NOI impact already realized in 4Q?

Yes. The 2 main ones are 2 beer store locations. So there was an opportunity to get both back. We ended up with roughly a little over 2 years of gross rent of the remaining term. We've got great prospects. They're fantastic spaces and great shopping centers. We will release them this year, but for certain at higher rents, but they primarily relate to 2 Beer Store locations.

Our next question will come from Matt Kornack at National Bank Financial.

Maybe a quick follow-up to that line of discussion and the context of your outlook for '26. Beyond Toys and what you experienced in Q4, are you expecting to see any additional kind of tenant turnover? And then if you could give us -- I know things don't change rapidly, but an updated lay of the land in terms of how tenants are approaching current economic uncertainty and immigration, everything that we've seen up to this point.

Yes. So nothing other than ordinary from what we see right now in terms of tenant turnover. For what it's worth in prior calls, we've been asked what's your watch list? Our response was you can count the retailers on one hand and the store locations on 2. We didn't give the names because they were current on their rent. We can tell you now one of those was toys. So no surprise.

Other than them, we're not -- and this will turn out to be an opportunity. There's no question about it at this point. But there's no one else that we're aware of that there's no large space we're aware of that's going to turn over this year. From what we see, it's going to be normal churn from this point.

In terms of tenant tone, you highlighted a couple of macroeconomic events that are sounded a bit negative, Matt. I can tell you, we're not seeing that at all in the lease negotiations. Things are just as robust as we've ever seen them. We're fresh off the ICSC in Whistler, very well attended. A lot of demand for FCR space. Our leasing pipeline is deep and very strong. So we are not seeing any pulling back whatsoever from tenants as a result of the things that you just mentioned or for anything else for that matter.

No, that's good to hear. And then maybe just a last quick one. Neil, it sounds like 2026's losses, to some extent, 2027's gain in terms of -- I'm looking at FFO growth and that the interest rate stuff's temporary. And it also sounds like towards the back half of this year, you'll see the benefits of lease-up and some of the vacant space. So am I thinking about that kind of an average between the next 2 years kind of a normal number for what you get from an FFO growth standpoint?

Well, Matt, you're as good at modeling as the next guy, I'm sure. I mean I brought these points to everyone's attention for a reason. Interest rate roll-up is a factor for FCR. It's not a unique factor to FCR. And I do think that actually when you look at the debt roll and the weighted average in place debt, it does actually extend through 2027 as well. So it's a challenge we're all facing. And we've got a plan that we're applying to deal with it. And we have, of course, strong core organic growth in the business, and we're dealing with it through an asset allocation strategy to continue to monetize low and no-yielding density value in other properties.

So our core objective is -- one of our core objectives is growth in FFO per unit. We have been dramatically exceeding our stated target for our 3-year plan to date. We're going to work hard to continue to exceed those numbers -- that number rather. But the interest rate headwind does kick in probably more so over the next 24 months than it actually has over the last 24...

That's fair. Sorry, I said that was the last one. But just quickly on your point with regards to disposition activity. It seems like it had moderated a bit, but then you've made good progress over the last call it, 6 months. So can you give us a sense of -- as investor demand remained very strong the type of assets that you're looking to dispose of? And it seems like the pricing is consistent with what you've said historically, if not a little bit ahead. So just a confirmation of that comment, if anything?

Yes. Look, it's definitely been a grind given the nature of the assets we're selling majority and the investment team have done a fantastic job of being very methodical, very tactical and selling assets at great prices. But yes, it's certainly been tough and tough for a couple of years, and we expect it to continue to be tough. It's not materially different today than it was 6 months ago or even 12 months ago. So we're about 66% of our way through our 3-year plan. We're about 60% of our way through the disposition volume, so still some wood to chop, but still generally on track.

Our next question today will come from Pammi Bir at RBC Capital Markets.

Can you just maybe sticking to that disposition theme. Can you maybe just speak to what's maybe currently being marketed for sale? And is there anything that might be in advanced stages? And how maybe that mix might have changed from a few months ago when we last spoke on the -- on that topic?

Yes. Not much of a change, Pammi. They are low and no-yielding assets. This has been a market where generally most of the stuff that Jordie and his group sold have not been broadly marketed. Some of them have been a more subtle marketing campaign through a broker, some we've done directly within our investments team. But it's the low, no-yielding assets -- some we think are more prime for sale than others. And so we're out there working on a bunch of them. Some we think we'll get done, some probably don't get done. But it'd be very similar in nature to what Jordie and his group has sold over the last couple of years.

Okay. And I think, Neil, your comment that I think you said no significant debt paydown in the first half of the year. Would -- are you implying then any transactions are probably more second half weighted in order to hit that -- your -- the balance of your $750 million target, $750 million?

Yes, Pammi. I mean debt that will get repaid is related to condo construction debt at Edenbridge, for instance. But I think the question really related to, is there any debt that we can prepay. So I guess that was more of the focus of my response. Having said that, we do anticipate that the reduction in net debt will be more weighted to the back half of the year than the front half of the year.

Yes. And the dispositions, just for clarity. So yes, you're right, Pammi.

[Operator Instructions] We'll move forward to Mario Saric at Scotiabank.

It may be a bit more granular, but just sticking to the disposition theme. Any relevant update in terms of selling some of the Yorkville assets that you talked about the last quarter or 2?

Yes. Well, there were 2 assets that were marketed. Jordie, do you want to give the update on those specific asset?

Yes. So we had listed, as you know, Mario, 2 properties in Yorkville. We were very clear from the outset that these were great assets, very attractive growth profiles. And by virtue of that, we would need a large premium to transact. Otherwise, we're very happy to keep them and take advantage of the NOI growth and value growth that would result. What I can say is we received offers for the properties. The offers we received were in excess of our IFRS value. But we really didn't see it as a high enough premium for us to agree to sell those assets now. So we'll continue to hold them until such time as we can transact at the prices we think makes sense.

Got it. Okay. And more of a broader question, Adam. I think you depicted the transaction environmental market for grocery anchored in Canada has been very strong, but largely kind of dominated by private smaller investors. To what extent has that changed in terms of incremental institutional capital, especially for institutional capital coming into the market?

Yes. So just so all my comments are clear. There are 2 main buckets of assets FCR holds and the disposition environment for the 2 are dramatically different. So the low and no-yielding properties, the ones that have a lot of residential development density. That's the one that I described has been more of a grind, but the sale of those are the ones that advance our strategic plan. So that's what we're focused on.

The core grocery-anchored shopping center portfolio, that's the area of our portfolio that we view as core and is an area we're actually keen to grow in. The demand for that type of space is much stronger, it's much deeper. The stuff we've been selling has been largely to smaller private type outfits.

There's a lot more institutional capital that would be interested in investing in grocery-anchored shopping centers. It's broad-based. We haven't seen a material change in foreign capital that you touched on foreign capital. So we haven't seen a meaningful change in that over the last year. I would still describe the demand as being heavily weighted to more domestic investors.

Got it. Okay. And my last question, in '24, you put out a 3-year business plan. Arguably, it was a transformational time for the REIT. Looking out, should our expectation be kind of similar 2, 3-year plan on a rolling basis? Or are we more likely to see annual updates in terms of the outlook?

Well, I mean, to be frank, that's to be determined. We thought it was an important time to put out a 3-year strategic plan. I'm glad you used the word transformational because that's how we viewed it as well. It was transformational from a real estate portfolio perspective and monetizing a lot of assets that don't contribute to our key objectives that we feel a lot of REIT investors perhaps don't fully value in the same way as the balance. And so monetizing those and deploying the capital that gets repatriated into lower debt, strengthening the balance sheet and into assets that do fit more appropriately. So we've made a lot of progress on that front.

We will continue selling those types of assets I mean, given the size of the pool we have probably for the next decade with just the assets we own today. And so it was transformational from that perspective. Our balance sheet has also been transformed on the debt side. Our credit has been totally rerated. I think in the last couple of years, our unsecured spreads are in over 200 basis points when the peers are in roughly half of that. So we're going to continue executing the plan where we've now entered our final year. It's gone exceptionally well. We still have wood to chop, and so we're focused on that.

And likely as we navigate throughout the balance of the year, we will certainly be coming to you and other stakeholders in a manner that describes how we're thinking about the future. It will likely be one of the 2 options you put out. I don't know for sure we're going to put out another 3-year plan, but we'll certainly provide some guidance in terms of how we're thinking about the business and what we think it can deliver on a regular annual basis at minimum.

We have no further signals from our phone audience today. I would like to turn the floor back to our management team for any additional or closing remarks.

Okay. Thank you very much, and thank you, everyone, for your time, your interest and support for First Capital. We look forward to continuing to execute well and keeping you updated on our activities. Have a great afternoon.

Ladies and gentlemen, this does conclude First Capital REIT's Q4 2025 Results Webcast and Conference Call. We thank you all for your participation, and you may now disconnect your lines.

Good day, everyone, and thank you for joining for today's First Capital REIT's Q3 2025 Results Webcast and Conference Call. [Operator Instructions] Also a reminder, today's session is being recorded. And it's my pleasure to turn the floor over for opening remarks and introductions to Mr. Neil Downey. Please go ahead, sir.

Thank you, Jim, 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 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+ and our website.

These forward-looking statements are made as of today's date, and except as required by securities law, we undertake no obligation to publicly update or revise any such statements. During today's call, we will also be referencing certain non-IFRS financial measures. These do not have standardized meanings prescribed by IFRS and should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Management provides these as a complement to IFRS measures and to aid in assessing the REIT's performance. These non-IFRS measures are further defined and discussed in our MD&A, which should be read in conjunction with this conference call. And with that, I will now turn the call to Adam.

Okay. Thank you very much, Neil. Good afternoon, everyone, and thank you for joining us today for our Q3 conference call. We're very pleased to deliver another strong quarter of operating and financial results. It has been a great start thus far in 2025 for FCR. In the third quarter, same-property cash NOI grew by a healthy 6.4%. This excludes lease termination fees and bad debt expense. In round numbers, a little over 2% of the NOI growth was from increased occupancy and new tenants paying cash rent at One Bloor East. All other factors, which are primarily higher rents across the balance of the portfolio, contributed a little over 4% of same-property NOI growth.

On a year-to-date basis, same property cash NOI, excluding lease termination fees and bad debt expense, has increased by 6%. This is a very healthy growth rate for our business. And as you've heard from Neil on prior calls, it has exceeded the expectation we had at the beginning of the year. The primary driver of this outperformance has been better-than-expected leasing. With demand continuing to exceed supply for FCR-type retail space, we expect our properties will continue to perform well.

Following a record high occupancy level of 97.2% in Q2, occupancy remained solid at 97.1% in the third quarter. Our average in-place net rental rate in Q3 stood at just over $24.50 per square foot, which is an all-time high. During Q3, we renewed approximately 550,000 square feet across 146 spaces. Net rental rates in year 1 of the renewal terms averaged $27.41 per square foot representing a year 1 renewal rent increase of over 13%. Approximately 3/4 of our renewed leases in the third quarter included contractual rent escalations throughout the renewal terms. This resulted in a renewal lift of over 18% when comparing net rents in the last year of the expiring terms to the average net rent during the renewal terms.

In addition to renewal leasing, we also completed approximately 150,000 square feet of new leasing at FCR share across 55 spaces. Leasing continues to be very strong. We own great assets and our leasing team's deep understanding of the strong fundamentals for our product type which I discussed in detail last quarter, positions them well to capitalize on countless opportunities for rent growth. We continue to have confidence that these market dynamics provide a very long runway for accelerated and sustained rent growth for our portfolio. We're now just over halfway through our 3-year strategic plan that we presented to our investors at the beginning of last year.

At its heart, the plan is focused on delivering on 3 primary investor objectives: stability and consistent growth in FFO per unit, growth in NAV per unit and absolutely stable, reliable monthly cash distributions to our investors and growth in those distributions over time. The business continues to perform exceptionally well. So we remain on track to achieve the operating FFO per unit growth and debt-to-EBITDA metrics that are the core premise of our 3-year plan. Through the first 21 months of the plan, our operating FFO per unit CAGR, excluding several positive but nonrecurring items, is approximately 5%. We're tracking ahead on OFFO. Our debt to EBITDA has improved to the low 9s and is on track to improve further throughout 2026. We're very pleased with our results to date. And with that, I will now pass things over to Neil to expand on them.

Thanks, Adam. Consistent with our usual practice, we also have a slide deck available on our website at www.fcr.ca. And in my remarks, I'll make a number of references to that presentation. So let's start with Slide 6. FCR generated operating FFO of approximately $72 million during the third quarter. This compared to $73 million in Q2 2025, and it was down from $77 million in the third quarter of 2024. The prior year results were elevated by the recognition of an $11 million density bonus, which was included in interest and other income. On a per unit basis, Q3 2025 OFFO was $0.33. This was down very slightly from Q2, and it was 7% lower than the $0.36 earned in the third quarter of 2024. Excluding the 2024 density bonus income of $0.053 per unit, the FFO growth rate was 9% during the quarter on a per unit basis.

So once again, we characterize the Q3 results as being very strong, with same-property NOI growth as the key driver. Now turning to net operating income specifically. Same-property NOI, excluding bad debt expense and lease termination fees was $111 million in Q3. This represents 95% of total NOI. The year-over-year growth was 6.4% or $6.7 million relative to approximately $105 million in Q3 2024. Results for the quarter also included $900,000 of lease termination income. We currently expect upwards of $1 million of additional lease termination income in the fourth quarter of this year. On a year-over-year basis, the NOI loss from dispositions was approximately $1.6 million.

This relates to property sales totaling $174 million from Q4 of last year through to the end of the third quarter of this year. And finally, within other non-same-property NOI, there's a $1.3 million year-over-year decrease. $1.2 million of this amount relates to lower straight-line rent. Further down the FFO statement, interest and other income of $5.4 million was $2.5 million lower year-over-year. This is due to lower interest income on cash balances. And it's really a function of timing in the prior period. FCR carried more than $400 million of cash in the early part of the third quarter of 2024. This was in preparation for funding a $300 million debt maturity.

Moving on to general and administrative expenses, which were $10.2 million. This was a 4% decline year-over-year. We've carried a handful of vacant positions this year, and we've been very focused on containing discretionary expenses. Turning to Slide 9. It summarizes the 9 months results. And here, we generated same-property NOI growth of 6%, excluding lease termination fees and bad debt expense. We expect a solid finish to the year, and as such, we believe FCR can deliver 2025 same-property NOI growth of at least 5%, which is ahead of prior expectations. Slides 8 and 9 cover key operating metrics, most of which Adam has already touched upon. And really, the theme remains quite consistent through the third quarter with continued and broad strength across our key occupancy, leasing velocity, leasing spread and rental rate metrics.

Slides 10 and 11 look at various distribution payout ratio metrics. During Q3 and on a year-to-date basis, FCR's FFO and AFFO payout ratios are running in the high 60% range and the mid-80% range, respectively. Advancing to Slide 12. The REIT's September 30 net asset value per unit was $22.29. This is an increase of $0.09 from midyear and it's a year-over-year increase of $0.37 or about 2% from $21.92 at September 30, 2024. The NAV change during the quarter included a very small net fair value increase of $1 million. Now for a bit more context, beneath the surface of this net number, FCR recorded total fair value increases of $68 million related to higher NOI and cash flow assumptions.

These principally related to our core multi-tenant grocery-anchored shopping center portfolio. There was also a fair value increase of approximately $8 million in the quarter related to the mark to sale price of our Anjou development site, which was sold during the quarter and 1 small other asset. These fair value increases were largely offset by $75 million of fair value losses. And really behind the losses were 2 themes: these included lower valuations for residential development properties in the Greater Toronto area and lower values for certain operating multi-res properties where market rental rates continue to be a bit soft.

Turning to capital investments as outlined on Slide 13. In the third quarter, $57 million of capital was invested into the business, bringing the 9-month to-date number to $160 million. Q3 capital investments included $43 million of development-related expenditures and $14 million of leasing costs and CapEx into the operating portfolio. The most significant development expenditures during the quarter related to our Yonge and Roselawn development, the Humbertown Shopping Center redevelopment where Phases II and III are advancing nicely and our 1071 King project. It was a fairly quiet quarter on the financing front, as summarized by Slide 14.

On July 31, we repaid the maturing Series S debenture, which has a principal amount of $300 million and an effective interest rate of 4.2%. The cash resources for this repayment had been raised in mid-June through the issuance of a $300 million Series E debenture. We and our partner also financed the Whitby property with a new 5-year $38 million mortgage having an effective rate of 4.7%. This financing provided cash to First Capital of $19 million. Slides 15 through 17 summarize some of the key credit metrics and the REIT's debt maturity profile. FCR is in a strong financial position. The business ended Q3 with more than $650 million of liquidity in the form of cash and availability on the 3 revolvers. The unencumbered asset pool had a total value of $6.4 billion, equating to nearly 70% of total assets and the secured debt to total asset ratio was a low 16%.

FCR has only 1 debt instrument maturing in Q4 which is at the $11 million share of a mortgage on Amberlee Shopping Center located in Pickering, the maturing debt has an interest rate of 6.2%. And this Friday, we'll be up-financing the property with a new $30 million 7-year mortgage of which FCR's share is 50%. The interest rate roll-down will be approximately 200 basis points and even though there will be only a small savings in our total interest expense, FCR will generate $4 million of cash proceeds from the up-financing.

Now before wrapping up my prepared remarks today, I'll make a few comments related to the upcoming special meeting of unitholders. The meeting relates to a planned internal reorganization that will simplify First Capital's structure. During the quarter, we recorded approximately $2 million of restructuring and advisory costs. And in the fourth quarter, we currently expect to incur roughly $3 million of additional costs related to the planned internal reorganization. These costs have and will be grouped with other gains, losses and expenses, and as such, they're excluded from operating FFO. In terms of time line, on October 1, the REIT Board of Trustees unanimously approved the proposed reorganization. Last week, on October 27, we announced the special meeting date which is Monday, November 24, and the meeting materials were also mailed to unitholders last week with those on record as of October 20 being entitled to vote.

This is a reorganization that FCR's tax team and advisers have been working on for many months. It will be completed by way of a plan of arrangement under the Business Corporations Act Ontario with an effective date of November 30. So what does this all mean. Well, in layman's terms, the effect of the arrangement will be to flatten and simplify First Capital's organizational structure. The reorganization will be accomplished through a series of steps that ultimately see the elimination of First Capital Realty Inc. as the REIT's wholly owned subsidiary that owns directly and indirectly all of the FCR property portfolio. First Capital has received an advanced income tax ruling from the Canada Revenue Agency in connection with the steps of the arrangement. The arrangement will not result in a change to FCR's overall strategy, portfolio or operations, and there's no change to FCR's outstanding units. They continue to trade on the TSX, same ticker symbol, same CUSIP number, current FCR unitholders continue to own the same number of trust units they held before the arrangement, and there will be no direct tax consequences at the time of the reorg.

Having said this, there are several key benefits from the arrangements, including, number one, simplification. The arrangement is expected to simplify First Capital's operating structure and reduce the significant complexity of legal and accounting and reporting as well as income tax compliance inherent in the existing structure. Part of the simplification will include the alignment of tax years across the REIT's subsidiary LPs, trusts and corporations. Secondly, tax efficiency. Post reorg, FCR will become a full -- fully flow-through entity holding its interest in the underlying trusts and LPs directly. This will allow income to pass to unitholders in a tax-efficient manner into perpetuity. And in this regard, the elimination of FCRI as the principal corporate subsidiary, means that substantially all of FCR's $740 million deferred tax liability will be credited to unitholders' equity through a deferred tax recovery in the fourth quarter of this year.

And the third benefit relates to unitholder taxation. Beginning in 2026, cash distributions to unitholders will mirror the income profile of FCR's underlying real estate business. Since converting to a REIT in 2019, distributions to date have been effectively 100% taxable. Future distributions, however, will include taxable income but we also expect there will be some periodic capital gains distributions, which are only 50% taxable as well as a tax deferred return of capital component within the regular distribution. Any return of capital, of course, is not taxable upon receipt by unitholders. Instead, it reduces the investors' adjusted cost base in the units and therefore, defers the taxation until the future sale of those units.

We, the REIT's executive leadership team, have a meaningful amount of our investable net worth in FCR units. We're financially aligned with investors, and we're very enthusiastic about the benefits of the reorganization. So this concludes my prepared remarks. I'm now pleased to turn the session to Jordi to elaborate further on FCR's recent investing and related activities.

Thank you, Neil, and good afternoon. Today, I will update you on our investment, development and entitlement activities. Starting with dispositions. During the third quarter, we closed or entered into binding agreements on 3 properties with gross proceeds of $39 million. The most notable of these sales was Place Anjou, a 4.7-acre site in Montreal's East End with 2 freestanding retail buildings totaling 52,000 square feet of GLA. The $33 million sale of this future residential development, which closed in July represented a 30% premium over our IFRS value and equated to a mid-2% yield based upon income in place.

During the third quarter, we also entered into a binding agreement to sell a property we own, located on [indiscernible] in Montreal. This is an IPP site tendered by an Avis car rent location. At $4.5 million, it's a small transaction of a nonstrategic FCR asset, but at a 3.4% yield on its income in place, it's a logical and an accretive sale. Closing is scheduled for December 2025. We are active on several other dispositions, and we will update you on these files as they advance. On the acquisition front, we completed the purchase of a 50% interest in an 18-acre vacant and unimproved development site located in the Ottawa suburb of Canada. Capitalizing on the property's 2 existing signalized access points and its strategic location within a major retail node, we plan to develop a large retail shopping center site.

Turning to development. Phases 2 and 3 of our modernization and expansion of Humbertown Shopping Center continues. On September 30, Loblaws, whose store sits in Phase 2 of our redevelopment took possession of their renovated and enlarged 34,000 square foot premises. They anticipate opening in Q2 2026. Phase 3, which includes a newly created 20,000 square foot Shoppers Drug Mart and the Scotiabank along with a number of other to-be-announced tenants are on target for completion in the second half of 2026. On completion of the redevelopment, we will have added a total of 23,000 square feet removed all of its enclosed common area and Humbertown will look and feel like a brand-new grocery and pharmacy-anchored shopping center with anchors in ideal formats paying market rents.

Looking at the associated financial returns, we will have invested approximately $45 million on this redevelopment and will generate an unlevered return that exceeds 7%. We are also redeveloping a small property that we own in Calgary, The property is located in Bridgeland, a very desirable and gentrifying neighborhood close to Downtown Calgary. The new building will be entirely occupied by Shoppers Drug Mart with a turnover scheduled in Q4 of 2025 and their opening is slated for Q2 2026. We currently have other opportunities in the planning stages, including the redevelopment of several other shopping centers. We look forward to providing in detail on this redevelopment work in future quarters. Our active mixed-use developments continue to advance as well.

At Yonge and Roselawn, we remain on schedule and on budget. We own 50% of the 636-unit residential rental building with 65,000 square feet of prime retail space and serve as its development manager. The second floor slab will be completed this month and formwork is progressing to the third floor. 82% of the project costs are now awarded. Construction of our 1071 King Street West development project in Liberty Village also remains on schedule and on budget. Formwork for the 11th floor slab is underway and precast and window installation is also underway. You'll recall, we own 25% of this 298-unit, 17 story, 225,000 square foot purpose-built residential rental project, including 6,000 square feet of at-grade retail space.

During this past quarter, residential occupancy commenced at our Edenbridge condominium development, which forms part of our residential inventory. Possessions have gone very well. To date, 124 owners of the 187 units sold have been given possession with 1 purchaser in the fall. Turning to entitlements. In 2025, we anticipate that we will receive approvals for 2.9 million square feet of incremental density at share. This year, we also expect to submit rezoning applications for a further 1.6 million square feet of incremental density. To date, netting out the density we've already sold, we've submitted for entitlements on approximately 18 million square feet of incremental density.

This represents 77% of our 23 million square foot pipeline. As the entitlements are secured and encumbrances removed, we plan to monetize its value through the sale of 100% interest like we did in Montgomery and Anjou or a partial sale to a strategic partner like Yonge and Roselawn. We look forward to sharing further details with you as we advance. Thank you for your time today and your continued support of FCR. And with that, operator, we can now open it up to questions.

[Operator Instructions] We'll take our first question today from the line of Lorne Kalmar at Desjardins.

On the disposition side of things, there was obviously a little bit of progress made this quarter. But there's still a decent amount of wood to chop in 2026. As we sit here in November, I guess, is achieving the $750 million target, and I guess, more importantly, the low 8x leverage target by the end of '26 still feel realistic?

Lorne, it's Adam. Well, short answer is yes. Agreed some wood to chop, always some wood to chop. Just for your reference, one of the things we do, do every quarter is review all of the key metrics outlined in the 3-year plan. And as you saw, I think it was a couple of quarters ago, we had a couple of changes versus what we presented initially and so we updated it. So what you should expect is that if we do expect changes to occur regardless of what they are in terms of the key metrics that we've outlined, we will be updating that on a quarterly basis. So where we sit today we're a little over halfway through the 3-year plan, metrics like same-property NOI, operating FFO tracking ahead of plan. .

Our view is debt-to-EBITDA is tracking on track relative to where we thought we'd be, dispositions based on the $750 million, again, a little over halfway through time-wise. Similarly a little over halfway through of the $750 million. We're about $400 million of what's closed or been announced as firm. So yes, the disclosure that we've got out is very current and at this point, we believe we will meet the objectives that we played in.

Okay. Fair enough. And then maybe just sticking with this. I think you guys listed a couple of Yorkville assets not too long ago. Just wondering if there was any update on how investor appetite and how that is progressing.

Yes. So normally, Jordi would answer this, but he's in the middle of a process, like right in the middle of the process. So the only thing we're going to say today about it is exceptionally high-quality assets. We require a significant premium to sell them. Otherwise, we're happy to keep them and grow their NOI and their value but we don't have anything further to report today on those assets.

Okay. Fair enough. And then just lastly on the, I guess, slightly revised same-property NOI target I mean, I guess, 2% next quarter gets you to 5%. Is there anything you're seeing out there that would indicate 4Q would be meaningfully below what you guys been able to do year-to-date? Or are you just erring on the side of being conservative?

Well, Lorne, to be precise, I said at least 5%. So it doesn't have to square up to your 2% interpolation, that's for sure. The bottom line is we perceive very solid results around the fourth quarter. I can't tell you that they'll match the 6% that we've been able to lay down for the first 9 months of the year. But I think you'll -- they'll stack up quite well versus our peers.

Next question will come from the line of Mark Rothschild at Canaccord.

And looking at the same property NOI growth, which is clearly strengthened, looking out longer term, I'm not asking for guidance or anything, but how does the slowing population growth impact the type of rent growth you can get at your properties or with the location of your properties? Does it really impact the ability of the retailers to drive sales growth and pay higher rents?

Mark, thanks for the question. Short answer is no. The main reason is that from our lens, the fundamentals that we have today are underpinned by 7 to 8 years of activity. And over those 7 to 8 years, we have seen a significant increase in the population within the trade areas of FCR properties and we have seen almost no supply of our product type during those 7 or 8 years to service those -- that growth in customer base for our tenants. And we've gone through a period now where sales across our tenant base have grown at a higher rate as a result of inflation and just as importantly, across our tenant base, the general norm is that profit margins have been protected.

And so that means that every store we have is making more profit than it used to meaning they can afford to pay more rent than they used to. So we believe that what's going on now with respect to store expansion is a catch-up phase over the last number of years. And so I can tell you discussions, live discussions with tenants today are very robust. And just as optimistic and aggressive as they have been over the last several quarters. So we see a lot of future runway for sustained growth. notwithstanding the change in the federal government's integration policy and what the impact will be on population, and we're looking forward to capturing the benefit of that opportunity.

Next question comes from Sam Damiani at TD Cowen.

Just on the renewal spreads in Q3, a little bit moderated from the record piece in Q2. Was there anything different or anything that was unexpected, surprising in Q3 that led to that result? And I guess a similar question in terms of how you're thinking about Q4 and 2026 leasing spreads. Is there anything idiosyncratic that might impact the average in any given quarter or next year?

Yes. Thanks, Sam. So look, posting up 13.5% year 1 renewal spreads north 18% blended. We're thrilled with that. That works very well for our business. So we wouldn't view it as moderated. As you know, our long-term average is lower than that. So I feel like we've kept pace with the trend that's been established over the last several quarters. So very happy with those results. And yes, generally, we expect above average -- certainly above our long-term average, continued growth. Touching on 2026 expiries, so there's nothing out of the norm with the exception that in most years, we have a small amount but an impactful amount of very low rent space that's maturing, call it, single-digit net rent space, most notably occupied by Walmart. And so if you look at our 2026 expiries, well, I guess if you look at our 2025 expiries and where they were heading into the year, what you saw was an average rent expiring at about $22 a square foot.

If you exclude that low rent space, I'm talking about like the Walmarts, it averaged about $27 a square foot. And so that's kind of the -- that's the baseline for where we're delivering these low double-digit renewal spreads. If you look at 2026, our average expiring rent is about $27. We view that as a very normal year. And the reason it's normal is that we don't have any Walmarts expiring in 2026. So other than that nuance, which I know last quarter, 1 of your peers asked a question about it. And so we wanted to take the opportunity to more directly answer it. But other than that, we expect a very normal expiry year next year.

Okay. Great. That's helpful. And last 1 for me, just on Deidsbury Road in Ottawa. I meanJordan, if you can provide little bit of color about what you're planning to build there, what kind of leasing interest you have already and zoning and credit line approvals in place are expected to be so...

Sam, thanks. In terms of what we're planning to build, I touched on it a bit in my formal remarks. It's, call it, a conventional unenclosed shopping center at this stage with respect to tenancy, very preliminary. We've had interest based on a very small period of time for which we've owned the asset. We've got some planning work to do and in that regard, we'll keep you posted as advances, but we like the site a lot and we like where it's located.

Yes. The only thing I'd add is a $10 million for 18 acres, we've got a lot of optionality.

We'll hear next from the line of Mario Saric at Scotiabank.

I wanted to stick to the leasing discussion, commented, we just talked about 26. 'And if I may, I know '27 is quite far out there, but you do have 14.5% of your total GLA expiring in '27. I was curious if there was anything within those maturities. So that may be a bit anomalous with respect to kind of low rent renewals, any known vacancies, anything kind of any idiosyncratic that may drive a blended lease spread that might be different than what you've been doing over the past 12 months.

Yes. Thanks for the question, Mario. So short answer is no. Nothing different as we look ahead other than what I mentioned. We don't have any really low rent, but Walmart spaces expiring next year, which when you park that aside, we look at it as a normal expiry year, no major tenants that we believe are going vacant. Strong, strong leasing environment. So happy to lease space. Certainly hope there is a little bit of turnover, the rate turnover, which is what we expect. Wouldn't read too much into 14.5% expiring in 2027. That's not abnormal looking out this far. I can assure you that in a year's time, we will not be having 14.5% of our space maturing in 2027. Some of that is already under negotiation. But we typically have between 10% and 15% maturing in any given year. And certainly from our perspective, when we look 2026, 2027, we don't see anything out of the norm, and we expect to continue to benefit from a very strong leasing environment. .

Got it. Okay. And then, Adam, I think you mentioned 75% of leasing completed this quarter included contractual annual escalators. If we sit back and look at the entire portfolio today, and that number has been increasing over the past couple of years for your entire portfolio today, if we were to exclude NOI growth on blended lease extensions or lease spreads, just the contractual rent growth in the portfolio today, what would that amount to from a same-store NOI perspective?

So I'll have Neil address that one. But just for clarity, what I said in my prepared remarks is 75% or 3/4 of the renewed leases have embedded contractual rent steps throughout the renewal term that does not necessarily mean every single one of them has an annual step. Neil?

Yes. So Mario, you can look at the business as having a contractual growth rate between 1% and 1.5% of the NOI line. And that's generally been the historic range. And I would say today, we're gradually gravitating towards the higher end of that bound.

Okay. Great. And my last question, just with respect to the 3-year plan that you announced that you're executing on, at what stage can we expect a 3-year plan to be rolled forward to include 2027?

Well, we're in year 2 too, yes. Yes, no, you're not the first person that's asked us that. So we're -- and we appreciate people are eager to look that far ahead. From our perspective, from what we're prepared to talk about right now is the fact that we're in -- we're still in our second year of the 3-year plan. And we very much look forward to addressing the investment community and the analyst community with where we're heading beyond 2026. It will be -- we will do that during the final year of the 3-year plan and likely during the first half of that year. So sometime in the early to mid part of next year.

Our next question comes from the line of Pammi Bir at RBC Capital Markets.

Just with respect to -- from a development standpoint, can you remind us how you see development spending through 2026?

Yes. So the way you should look at it is that we are on track for roughly $160 million, give or take, this year. And we have laid out in our 3-year plan, the total number that we expected for the 3 years. So I think from that, you can do a pretty simple rough plug, if you will, for 2026. And more specifically when we come out with our fourth quarter results in February. At that point, we'll be in a position to give you, I'll say, more targeted views on our expectations for the calendar year.

Okay. That kind of leads into my next question, which is around capitalized interest as some of these developments are delivered as part of that 3-year plan, including the condos, not sure if you're prepared to provide any sort of visibility on what the capitalized interest should trend down to in 2026.

Well, candidly, I don't have those numbers at my fingertips, which I hope that doesn't surprise you. But I would say in very generic modeling terms, you could probably decapitalize interest through a -- proportionate to the value space that's delivered. So I think that's a simple way to think of it. And that's rather -- that's agnostic to whether it's residential inventory being delivered or its investment properties being delivered.

Okay. And then just lastly, on Edenbridge, it sounds like the closings are going quite well. I think you mentioned only 1 default if I heard correctly. But are you anticipating sort of that pace to pick up over, I guess, from what we've seen in the last, I guess, through or what we'll see through Q4 and into 2026?

When you say pace to pick up, you're referring to the default?

Yes. I think you said -- I can't remember the exact number in terms of closing.

It was one. Yes, it was one.

Yes, only one default.

I would say, Pammi, this is Important to point out like this is an entirely owner-occupied building. The majority of the buyers have to live in the neighborhood today. They love the neighborhood, they want to stay in the neighborhood. We've sold, as I think I mentioned, 90% of the 209 units to date. And we expect that no major deviation from the pace that we've experienced certainly based on the first 124 deliveries.

Right. So those suites will continue to be delivered through year-end and into early Q1. And at that point, we'll have a closeout process where we turn ownership or time over to the owners and we effectively book the sales. So that's the way to think about the 90% that's sold, Pammi.

Got it. And then just lastly, on 400 King West, I think some of those closings should start next year as well. Is the assumption there that based on what you see today, I guess it might be early, but that the default rate would be similarly low there? Or is that less owner occupied?

Ami, it's Jordi again. Yes, I would say that building is, in fact, less owner occupied, I would say it's more, call itconventional. That being said, we've sold 97% of the units there, we have sold the majority of those units before really pricing peak. So we feel pretty good about its prospects going forward. I would suggest the default rate there will likely be higher, but it's not something that we're especially concerned about .

Well, it can't be lower.

We'll move on to the question from Matt Kornack at National Bank Financial.

Just wanted to quickly turn back because presumably in the '25 remaining lease amount, there is either a Walmart or a similar type tenancy in that figure. Is that subject to a fixed renewal rate? Or would that go to market in the remainder of the year? Or is it going to [indiscernible].

You're talking remaining 2025 lease expiries?

Yes.

Yes, there's no major fixed rate flat option, if that's what you're asking.

Okay. So that you could have a pretty sizable spread then if you're getting 20% -- high 20s versus the 18% that's maturing?

Correct. Yes. I mean, Matt, the only thing I would say is, as you get into the final quarter or any individual quarter, of course, the sample size is smaller. So a 40,000 square foot space is more impactful than 100,000 square foot space on a 12 month of inventory roll.

Fair enough. And then I guess, just in terms of the building blocks, we understand lease renewal spreads, your retention rate is very high. You're getting more of these annual rent escalators in the blend. But is there anything that you're gaining on kind of efficiencies, recoveries or anything tangential to that, that would boost the NOI growth a little bit again on the margins probably not that much, but..

Yes. Well, it's something that our leasing team has been very focused on for quite some time, and they've done a great job over the last couple of years of anywhere between 50 and 100 leases where the recovery methodology has been less than proportionate share, and they've taken it generally to proportionate share which did not come through our lease renewal rates, that's strictly on net rent. So One of the things that is now cumulatively starting to augment the NOI growth is just better tenant recoveries on operating costs. I don't have the numbers to quantify specifically where you would put it to the building block, but it's starting to chip away and make a contribution.

Okay. Interesting. Last 1 for me. I mean we've heard kind of land values in Toronto, Vancouver, under some stress, given the condo market. When you look at transactions today or other people look at assets, how are they thinking about the value of density at the end of the day versus obviously, at an implied cap rate where you are, that's probably the value of the retail, but does it make sense to sell if in the future density is going to be worth a lot more.

Well, if we had a strong view on that, the answer is no. We wait to sell when it was worth a lot more. Jordi and his team have done a great job in a really tough market. to sell density in Montreal and Toronto at prices that we're very comfortable with and obviously don't feel like we're leaving a lot on the table. This has never been a fire sale. And if you look at our premium to net asset value on the stuff we've sold, it's been remarkable. It's been much better than we expected. And so we'll continue to take that disciplined methodical, tactical approach. And we own great real estate, even though we're selling it, we still understand the quality, and we will make sure we sell it at the appropriate time for the appropriate price.

Our next question today will come from Mike Markidis at BMO Capital Markets.

Quick question for me, technical in nature. Apologies. Just on Eden Bridge, I guess you're starting to residents are in occupancy, but you're not looking any inventory gains that might be in contrast to what we've seen elsewhere. Just to confirm, I guess, 2 questions on me, you won't book inventory gains until you register the units as condos [indiscernible] and number two, is with respect to Pammi's question on the decapitalization. Is there construction lines tied to that project and has, of course, effectively pay that down and therefore comes in the point.

Okay. Well, the short answer is yes and yes. So we will look at as closings, and therefore, the residential profit, if you will, will occur at the time of closing in Q1. And there's a significant cash repatriation from those sales processes, of course, but a lot of that goes directly to pay the construction loan. Now as you know well, Mike, the market doesn't do a particularly good job of differentiating debt within our capital stack. In other words, it treats a construction loan on a condominium project the same way it treats an unsecured debenture that's been used to finance the income portfolio. So if we pay down the construction loan, our net debt balance decreases.

Right. Okay. No, I got that. And then can you just remind me from a -- just from a time to how you're going to report for consensus and all that fun stuff. Are you going to book the condo gains in OFFO? Or are you going to exclude it from OFFO?

A good question. So it will be included in OFFO. But importantly, we benchmarked ourselves in terms of our 3-year plan to OFFO prior to any condominium profit. So that was the baseline on which we gave that 3-year guidance of average annual -- or growth averaging at least 3% in FFO per unit was excluding any condo profits.

And also, we'll take a follow-up from Lorne Kalmar.

Sorry for having to get back in here. I just had 1 quick follow-up on Toys "R" Us. There's been a lot of chatter about a potential bankruptcy there. Just wondering if you've taken any provisions related to them and if you have plan if you do, in fact, get the space back.

So we really -- it's Jordi by the way, Lorne. We don't have anything to add, but what's really in the pump of domain. Our exposure to toys is really small, represents just under 0.4% of our rent. We had previously sold Anjou, which had toys in it. They recently closed another space that we own half of. So we have 2 remaining Toys locations, and they're current in their rent at both. Toys really in both these cases, pays below market rents, and they're located in very high demand centers, 1 in Toronto, 1 on Island in Montreal. We feel, to the extent we get them back, very confident about our ability to backfill them. And really, in the case of the Montreal property, it lends quite favorably to a grocery store, and we expect we'd be focused on that opportunity in particular to the extent this space does come back.

Ladies and gentlemen, that was our final question in the queue for today. I would like to thank you all for taking time to join today's First Capital REIT's Q3 2025 Results Webcast and Conference Call. We thank you all, and we hope that you enjoy the rest of your day.