First Capital, Inc.

Hello everyone, and thank you for joining us for today's first Capital Reads Q4 2025 results webcast and conference call. As a reminder, all phone lines are in a listen only mode to prevent any background noise, but later you will have the opportunity to ask a question during our question and answer session. To signal for a question at that time, you may press star and one on your telephone keypad. And now to get us started, With opening remarks and introductions, I am pleased to turn the floor over to Allison Harnick. Please go ahead, Allison.

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 31st, 2025, and our current AIF, which are available on CR Plus and our website. These forward-looking statements are made as of today's date and accept 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.

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 bed 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 remains 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 one of the renewal terms saw an average increase of nearly 15% over expiring net rents. Approximately three quarters 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 one net rent of $28.23 per square foot. Following a strong Toronto ICSE last fall, we've recently concluded another productive ICSE 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 portfolios. We're now two-thirds of our way through the three-year strategic plan that we presented to our investors at the beginning of 2024. At its heart, the plan is focused on delivering on three 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 three-year plan. For the first two 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 nines and is on track to improve further by the end of 2026. While we've 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, affected with the January 2026 distribution that will be paid next week. As we've discussed, stable and growing distributions 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 three-year plan, we're very pleased with our progress to date.