First Capital REIT, a property investment giant known for its grocery-anchor-based, open-air retail portfolio, announced this morning that they are selling their remaining 50% non-managing interest in the residential portion of the King High Line.

In a release, FCR confirmed it has entered into a firm agreement to offload the component for gross proceeds of $149M, while retaining 100% interest in its retail and commercial parking elements. The buyer has not yet been disclosed.

Situated at a prime location at 1100 King Street West and neighbouring the Liberty Village community, the King High Line is a mixed-use property featuring 160,000 sq. ft of retail, 650 ft of which run along the King St. W frontage. Retail tenants include Longos, Canadian Tire, Shoppers Drug Mart, Winners, and a Petsmart, among others. It is the site of three residential towers, with a total of 506 units, currently 96% occupied. The site is also accessible to transit, situated directly on the TTC’s King St. streetcar line.

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Adam Paul, President and CEO of First Capital said, "This transaction represents the immediate execution of our recently announced Enhanced Capital Allocation and Portfolio Optimization Plan and is indicative of the type of value surfacing transactions that we have identified. Consistent with our Plan, we have realized FCR's short to medium term objectives for this asset and will reallocate the proceeds to more productive uses, including our NCIB. The sale of our interest in King High Line residential at a premium to IFRS value is accretive to both NAV and FFO per unit while at the same time positively impacts our key debt metrics."

According to FCR’s release, the sale price equates to a capitalization rate of less than 3% on in-place net operating income. The site was recently financed with a 10-year, interest-only $160M first mortgage ($80M of which is FCR’s share), with a 4.8% fixed rate. The mortgage is to be assumed by the purchaser upon the transactions scheduled Q4 closing.

Added Paul, "We have an exceptional portfolio and remain confident in our ability to unlock value for our unitholders through the ongoing monetization of low-yielding and non-core properties while progressing our necessity-based retail properties and maintaining a significant density pipeline for future development."