First Capital REIT (FCR-UN-T) plans to reorganize its corporate structure by eliminating its real property subsidiary First Capital Realty and moving all of its assets into subsidiary partnerships and trusts, the REIT has announced.

The proposal has the unanimous support of First Capital REIT’s board of trustees, but remains subject to a range of approvals including a vote by its unitholders. First Capital plans a special meeting of unitholders later this year to seek that approval.

“The arrangement is expected to simplify First Capital's operating structure and reduce the significant complexity of accounting and legal reporting as well as income tax compliance inherent in the existing structure,” the announcement states.

First Capital owns, operates and develops grocery‐anchored, open‐air centres in neighbourhoods with strong demographics across Canada.

As of June 30, the REIT held $9.4 billion in assets and had net debt of just over $4 billion (representing 44.6 per cent of total asset value). Approximately 70 per cent of its assets were unencumbered, according to its Q2 2025 financial report.

No change to First Capital's strategy

The proposal will not result in changes to First Capital's overall strategy, portfolio or operations, the company states in the announcement. After completing the arrangement, unitholders will continue to hold the same number and percentage of trust units as they previously held. The REIT's units will continue to be listed on the TSX.

The new structure will be effected according to a plan of arrangement under the Business Corporations Act (Ontario). It will be subject to the approval of 66⅔ per cent of the votes cast by unitholders. First Capital’s trustees and officers intend to vote in favour of the arrangement.

Further details are to be provided to investors in an information circular on or before Oct. 23. Management anticipates the new structure will be effected by the end of 2025, pending all relevant approvals.

The trust’s management team was involved in a public and at times acrimonious battle with several unhappy investors in late 2022 and into 2023, which resulted in several changes to its board of trustees before the matter was put to rest by a settlement agreement in March, 2023.

The dissident group was led by First Capital founder and former CEO Dori Segal and Artis REIT and Sandpiper Group head Samir Manji, who were unhappy with the management of the trust and its portfolio, including a strategy at the time to divest up to $1 billion of its assets.

Investors Ewing Morris and Co. and Vision Capital Corp. had also supported the activist group.

After trading as low as below $14 in 2023, the trust's stock has been buoyed over the past few months and was just below the $20 mark in Thursday morning trading on the TSX.