Choice Properties Real Estate Investment Trust (CHP.UN) M&A announcement summary

Deal rationale and strategic fit

• Acquisition valued at CAD 9.4 billion, combining stock and cash, including assumed debt, delivers immediate value and liquidity to unitholders at a premium to recent trading and NAV.

• Choice acquires CAD 5 billion of high-quality, necessity-based retail assets in dense urban markets, while KingSett acquires CAD 4.4 billion and all outstanding units.

• Portfolio consists of top-performing open-air shopping centers with 98% occupancy and over 8 million sq ft, enhancing urban market presence and tenant diversification.

• Transaction increases exposure to major markets and necessity-based tenants, aligning with long-term growth strategy and solidifying market leadership.

• Pro forma, third-party retail exposure rises by nearly 50%, with 83% of assets in Toronto, Vancouver, and Montreal.

Financial terms and conditions

• Total transaction value is approximately CAD 9.4 billion, including assumed debt; unitholders receive CAD 19.24 in cash and 0.3186 Choice Properties units per First Capital unit, totaling CAD 24.40 per unit.

• Financed through debt and equity: CAD 1.7 billion equity issuance, CAD 600 million private placement to George Weston Limited, assumption of CAD 2.3 billion unsecured debentures, and CAD 400 million mortgages.

• Remaining consideration via new unsecured debentures; transaction expected to deliver CAD 80 million aggregate FFO contribution.

• Pro forma debt to EBITDA at closing is 8.5x, with a target to reduce to 7.5x long-term; pro forma equity value of CAD 13 billion and enterprise value of CAD 24 billion.

• Represents a 17% premium to 20-day VWAP and 8% premium to NAV.

Synergies and expected cost savings

• Combined portfolio expected to deliver enhanced cash flow growth, with same asset growth of approximately 3.5% near term and higher net asset value over the long term.

• No significant asset dispositions required for deleveraging; organic EBITDA growth and disciplined capital management are primary levers.

• Incremental scale enables greater service and opportunities for tenants and partners.