In a landmark deal, private equity real estate investment firm KingSett Capital and retail-focused Choice Properties REIT (TSX: CHP.UN) announced last week that they had partnered and entered into an agreement to acquire First Capital REIT (TSX: FCR.UN) in a $9.4 billion transaction inclusive of debt.
Unitholders of First Capital will receive $19.24 in cash and 0.3186 units of Choice Properties per First Capital unit, which totals to $24.40 per First Capital unit based on the closing unit price of Choice Properties on April 15, according to a joint press release.
The companies said that the transaction price represents a premium of 17% on First Capital’s 20-day volume-weighted average price through April 15, a premium of 8% on First Capital’s Net Asset Value (NAV) of $22.57 per unit, a 12% premium on First Capital’s closing unit price on April 15, and a 21% premium on First Capital’s 90-day volume-weighted average price through April 15.
As of December 31, 2025, First Capital’s portfolio consisted of 21.8 million square feet of gross leasable area in 136 neighbourhoods across the country.
The transaction is the latest that sees a publicly-traded REIT being swallowed up and taken private. Earlier this year, Minto Group and Crestpoint Real Estate Investments announced that they were acquiring Minto Apartment REIT for $2.3 billion, while CLV Group and Singaporean sovereign wealth fund GIC announced last year that they were acquiring InterRent REIT for $4 billion.
But both of those transactions are dwarfed by this deal, which sees Canada’s largest REIT by market cap (Choice) partnering with private equity (KingSett) to buy Canada’s fifth-largest REIT by market cap (First Capital).
Choice Properties REIT
Choice Properties REIT — of which Loblaw Companies Limited is a majority unitholder — is acquiring approximately $5.0 billion of high-quality retail assets from First Capital REIT. The portfolio of both REITs were retail-focused and are thus a natural fit to be merged.
Choice described the portfolio being acquired as “strategically aligned and highly complementary,” said it would “enhance Choice Properties’ ability to outperform across market cycles and deliver higher cash flow and net asset value growth over the long-term,” and said the acquisition would strengthen its capital markets profile.
“This is an exciting and transformative transaction that will solidify Choice Properties as Canada's leading REIT,” said Choice Properties President & CEO Rael Diamond. “Choice Properties is acquiring best-in-class, necessity-based neighbourhood shopping centres that will significantly strengthen our portfolio. We believe this is a unique and compelling opportunity that will increase our presence in urban markets and further diversify our tenant base.”
Of the $5.0 billion in assets, $4.8 billion consists of income-producing assets and $0.2 billion consists of properties under development, and Choice said the portfolio being acquired is expected to generate a full-year net operating income (NOI) of around $235 million in 2027, with an annual growth rate estimated at 3.5%. As part of their side of the transaction, Choice Properties will be assuming First Capital’s $2.3 billion of outstanding unsecured debentures.
KingSett Capital
KingSett Capital is then acquiring approximately $4.4 billion of First Capital assets, including needs-based retail assets, high-street retail assets, development assets, and other financial assets.
“This Transaction comes at a time when we are seeing renewed optimism and positive momentum in Canadian real estate,” said KingSett Capital CEO Rob Kumer. “We have partnered with Choice Properties to align the right assets with our respective strategies to deliver maximum value to First Capital’s unitholders. We look forward to working with First Capital’s tenants, partners and other stakeholders in the years ahead.”
KingSett Capital says it has secured all financing required to complete the transaction from its KingSett Real Estate Growth LP No. 8 fund, with fully underwritten debt financing from TD Securities Inc. and Desjardins Group.
In their own announcement, TD said it also acted as Administrative Agent, Lead Left Underwriter and Joint Bookrunner & Co-Lead Arranger to KingSett on its fully underwritten credit facilities including an acquisition term loan, revolving credit facility, and mortgage backstop facility. The TD Securities team consisted of Jason Murison, Atif Zia, Adam Gagnon, and Sviat Romaniuk.
First Capital REIT
After selling some its planned projects over the past year, including 34-70 Montgomery Avenue and 895 Lawrence Avenue East, First Capital is now selling the entire REIT.
“The Transaction provides First Capital unitholders with the opportunity to participate in the continued growth of many of First Capital’s assets, as well as the broader Choice Properties portfolio, through ownership of Choice Properties units,” the REIT said. “The combined portfolio delivers enhanced national scale, enabling greater support for tenant growth and attracting best-in-class talent, while also benefiting from Choice Properties’ proven ability to create value at the property level.”
“This is an excellent transaction for our investors, which recognizes their longstanding support and commitment to First Capital,” added First Capital President & CEO Adam Paul. “I am deeply grateful to our employees — many of whom will continue to support the assets acquired by KingSett and Choice — as well as to my partners on the executive leadership team, who have remained singularly focused on what was in the best interests of First Capital unitholders, and whose diligence and work ethic were critical in bringing us to this point.”
First Capital said it has received unanimous support from its Board of Trustees and obtained fairness opinions from RBC Capital Markets and National Bank Capital Markets. The transaction still requires court approval and unitholder approval, with a unitholder meeting to vote on the transaction currently scheduled for June.
