-- First Capital REIT (FCR-UN.TO) said Thursday it had entered into an agreement that will see it acquired by KingSett Capital and Choice Properties REIT (CHP-UN.TO) in a unit and cash transaction valued at $9.4 billion, including the assumption of certain debt. The deal also involves George Weston Limited (WN.TO).
Under the terms of the arrangement agreement, First Capital unitholders will receive $19.24 in cash and 0.3186 units of Choice Properties per unit, amounting to $24.40 per First Capital unit. The transaction price represents a premium of 17% to First Capital's 20-day volume-weighted average price through April 15, and a premium of 8% to First Capital's Net Asset Value of $22.57 per unit. Additionally, the transaction price represents a premium of 12% and 21% to First Capital's closing unit price and 90-day volume-weighted average price through April 15, 2026, respectively.
The transaction will see Choice Properties acquire $5.0 billion of retail assets from First Capital. KingSett will acquire approximately $4.4 billion of First Capital assets and all of First Capital's issued and outstanding units.
The Choice Properties Acquisition Portfolio is expected to generate full-year net operating income (NOI) of $235 million in 2027, with an annual growth rate of 3.5% in the near-term.
Choice Properties will finance its acquisition of the portfolio through a combination of debt and equity. This includes issuing 68.6 million Choice units to First Capital unitholders valued at $1.1 billion, and a $0.6 billion equity investment from George Weston for 38 million units, the assumption of First Capital's $2.3 billion of outstanding unsecured debentures, and the assumption of $0.4 billion of in-place mortgages. The remaining consideration is expected to be financed via the issue of new unsecured debentures by Choice Properties.
KingSett has secured, on a firm, committed basis, all financing required to complete the transaction.
First Capital units closed up $0.14, to $21.84, on Wednesday, on the Toronto Stock Exchange. Choice Properties REIT closed up $0.04, to $16.19.
George Weston shares closed up $0.80, to $97.03.