First Capital Real Estate Investment Trust

Alex Correia – IR Dori Segal – President & CEO Kay Brekken – CFO Roger Chouinard – General Counsel Jodi Shpigel – SVP, Central Canada

Sam Damiani – TD Securities Mark Rothschild – Canaccord Genuity Heather Kirk – BMO Capital Markets Alex Avery – CIBC Matt Kornack – National Bank Financial Pammi Bir -Scotia Capital Michael Smith – RBC Capital Markets

Thank you Moore. Please note that forward-looking statements may be made during today's conference call.

Certain material assumptions were applied in providing these statements, many of which are beyond our control. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements.

A summary of these underlying assumptions, risks and uncertainties is contained in our various Securities filings including our Q3 results press release dated November 3rd, 2014, our Management Discussion & Analysis for the year-ended December 31, 2013 and our current Annual Information Form which are available on SEDAR and our website. These statements are made as of today's date, and except as required by Securities law, we undertake no obligation to publicly update or revise any such statements.

I'll now turn over the call to Dori.

Thank you Alex and good afternoon everyone for our Q3 conference call which I think is my last conference call as the CEO of this company. With me on the call as usual is our CFO, Kay, Jodi, Brian and Greg.

We had a strong quarter in the third quarter. I'll make a few comments about it and then Kay will review the numbers and then I will open the call as usual for questions.

Bottom line, clean one penny 4% growth over the prior year quarter and a small down-tick of half a penny in our guidance, given the excess cash we're carrying in the latter part of the year. So let me talk a little bit about the quarter; it was a very, very active quarter.

On the positive side first, our capital recycle program is going well, slightly ahead of forecasts, due to the closing of the Main & Main transaction and above that, Main & Main have joined forces with a prominent Canadian institutional investor who owned a lot of real estate, as well as they like what we're doing here. Basically, we've more than doubled the size of the business with a CAD20 million additional investment on our part over what we've committed in the past.

This will give us two things; one, a more diversified portfolio of assembled urban properties and a better use of our time and resources, given the various stages of municipal process and development that these properties are going through. Two, an opportunity to have another expertise and experience with another release estate investor at the table to help us move the business forward while we're earning customary management fees for running the business day to day.

The Main & Main venture has its own dedicated, very talented group of people, headed by our partner, (indiscernible) and will provide those services to the joint venture and benefit from the support of First Capital Realty. Second, we successfully completed an assembly of a third asset in South Oakville.

This is a thriving nodes with a very nice shopping experience of everyday life offerings including three grocery stores, Sobeys, Whole Foods and Longo's and a slew of other day to day services including all of our usual suspects, drug stores, banks, restaurants, fitness, liquor, beer, school. Everything that you can think of is in these nodes and we're very happy to own almost the majority of those services in that node.

It is a very nice assembly. In addition, we've added three more assets in Yorkville in Toronto which definitely are great assets, but they also enhance our position in that node and compliments our ongoing development of Yorkville Village, as you all know used to be Hazelton Lanes.

Third, record quarter for investments in development and improvements of assets; almost CAD80 million. Our development program, by and large, is moving on plan, with the exception of Class View, where we ended up investing more money than we initially anticipated, building the best product in the market.

And we now think it will take more time to bring this property to its full potential of NOI including of course phase two and phase three. Four, steady progress in leasing activity including leasing spread and also same property NOI coming in slightly ahead of our expectations in the last quarter.

Fifth while we're going through this extensive activity, we continue to maintain a very strong financial position, both from a leverage and a very comfortable long term maturity schedule perspective and liquidity. On the negative side first, we're carrying a lot more cash on the balance sheet than originally forecasted, at CAD220 million at the end of the quarter.

Second, this quarter was the lowest growth in top line NOI quarter we've had for a very, very long time and that is understandable, given the high level of recycle of capital into our development business. This will reverse itself when our large development assets will come online during the end of 2015, 2016 and 2017.

Let me hand over the call to Kay and then I'll come up in my final comments. Kay?

Thank you Dori. Good afternoon everyone and thank you for joining us on our third quarter conference call.

When I joined First Capital just a few months ago, Dori told me it was a boring company with not much going on. However, somewhere along the way from where I agreed to join and when I actually arrived, I think he decided that it was important to bring me up to speed as quickly as possible and therefore wanted this quarter to be a bit more active.

We invested a total of CAD195 million in the quarter including a record amount of development and redevelopment spend which Dori touched on. We sold a 46.9% interest in the real estate assets of Main & Main Developments, bringing our total dispositions for the quarter to CAD99 million.

There is a chart on page 29 of the MD&A that illustrates the ownership of Main & Main Developments. Additionally, we issued CAD100 million of equity; CAD60 million of senior unsecured debentures and redeemed CAD100 million of senior unsecured debentures.

Moving to our property portfolio status which is on slide 8, followed by NOI by property on slide 9. I'll make a few comments related to the numbers on both of these slides.

At the end of the quarter, the value of the stable properties and the stable properties with expansions was CAD5.5 billion, representing 73% of the total value of the portfolio. These properties contributed CAD78.4 million or 75% of NOI in the quarter.

Total same property NOI growth was 2.9% year-to-date and we've adjusted our full year guidance from growth of 2.5% to 3% previously to growth of 3% to 3.5%. At the end of the quarter we had CAD252 million of income properties and CAD20 million of development land parcels classified as held for sale.

We’ve finding agreements aggregating CAD80 million for the sale of four income properties in the fourth quarter of 2014 and our current intention is to market and sell the remainder of these properties subject to market conditions in 2015. During the quarter, we sold two income producing properties that were medical office buildings with no potential for retail and therefore, not core to our strategy.

These properties, combined with the land parcel sales and the Main & Main transaction bring our year-to-date disposition to CAD148.6 million. As a result, we've increased our full year disposition guidance to CAD230 million, from CAD150 million to CAD200 million previously.

Based on the acquisition activity in the quarter and the year-to-date acquisitions totaling CAD135 million, we've increased our acquisition guidance from CAD150 million previously to CAD180 million. Moving to slide 10, year-to-date net operating income increased 3.1% or CAD9 million due to a 90 basis point improvement in occupancy over the prior year period, with occupancy moving up from 95% to 95.9%.

Same property NOI growth on a year-to-date basis of 2.9% and 205,000 square feet of development and redevelopment projects coming on line. The year-over-year variance and other gains, losses and expenses is detailed on slide 11.

During the quarter, we redeemed CAD100 million of series F senior unsecured debentures at an effective rate of 5.47%. Related prepayment penalties on this totaled CAD1 million.

Year-to-date we've repaid or prepaid CAD138 million of mortgages at a weighted average weight of 5.88%, related prepayment penalties totaled CAD0.6 million. Slide 12 shows the comparative periods roll forward from FFO to AFFO.

Slide 13 shows the quarter and year-to-date, other gains, losses and expenses and AFFO. In the prior year-to-date period, we had CAD4.4 million of gains, due to the gain on the sale of our Fusion condo project and a onetime gain on the settlement of litigation.

Lastly, the actual FFO and AFFO results are summarized on a per share basis versus the comparative period on slides 14 and 15. Given the increased investment activity and our desire to maintain the strength of our balance sheet, we did issue CAD100 million of equity during the quarter as I previously mentioned.

The increase in the weighted average diluted share from the prior year period reflects the equity offering and as such, our guidance has been adjusted to reflect the higher number of shares outstanding, with the largest impact in the fourth quarter. Turning to our financing details, the information on our key financing activities year-to-date can be found on slide 16.

Here you can see the Series F redemption, the equity issued in the quarter as well as the issue of CAD60 million of Series F senior unsecured debentures at an effective rate of 4.33%. Slide 18, recaps our key financial metrics, our unencumbered assets have grown to CAD5 billion and comprised 62% of our total assets at quarter end.

Our net debt to total assets improved by 170 basis points since the start of the year to 42.9%. The weighted average term on our debt has increased to 6.1 years while our weighted average interest rate has declined 15 basis points.

On slide 19, we've an update on the debt maturity chart which reflects the impact of our financing activities net of cash through October 31st. The guidance forecast is on slides 20 and 21 and the assumptions of which are in the press release.

A number of the ranges on the assumptions have been narrowed as there is only one quarter remaining in the year. That concludes my comments, but I would like to take just a few minutes to say thank you to the senior management team and to Dori in particular for the guidance and support they have provided over my first three months in this role.

I would also like to add a very special thank you to my team, who have had to put up with an inordinate amount of questions from the new CFO this quarter. Thank you and I will turn the call back over to Dori.

Thank you Kay. And for my final comments, let me tell you what I really like about our company and about where we're today.

Other than the fact that we're finally getting rid of the CEO, what I really like about First Capital is that over the last 15 years .We've created a portfolio of shopping centers in the most attractive neighborhoods and communities in this country; major urban markets. One of the things that this portfolio allows us to do is to continue to put capital to work and earn returns which in the markets we're in, could not be achieved by acquiring properties or would be extremely hard to find the land to develop these properties.

All this is achieved with a portfolio with an average rent of CAD18.34 a foot which demonstrates the fact that you cannot replicate this portfolio neither by acquisitions or by development, given the cost of new land and construction. And in short, what I'm saying is that I strongly believe that over the next five years 10 years, 15 years particularly with the strong new leadership that this company is going to have, First Capital will deliver a high return with a low level of risk attached to it.

Obviously, we're going to keep our eyes open to external growth opportunities as well, but if we found none we will continue and accelerate to deliver superior returns with a low level of risk which I think is what is so unique about this business. And with that as I said, this is my last conference call as the CEO of this company.

I will join the next conference call to greet Adam in and to greet you guys for the last time on a conference call. So until then, I wish you a good week.

I'm sorry. We're actually going to questions.

I was a little out of my text. Anyway, we'll open the call for questions, so please Alex.

Just on the disposition program which has accelerated quite a bit here, is this primarily a function of raising capital or are there significantly more assets you're looking at selling potentially over the next couple of years? I'm just trying to get an early read on what your budget might be for 2015 and 2016 in terms of disposition.

I think we said in the last month, we're hoping to sell 400 million between 2014 and 2015. So I think generally speaking, we're in line with that number; maybe we'll do a little bit more.

But I think one of the things that we're seeing is that our level of investments is probably higher than what we would have anticipated maybe the end of last year. And to fund the equity portions of those investments, you can do it by either one or two things; you either sell assets or you raise equity.

Our goal is to still maintain a high rating. It's a very important part of the strategy of this company and I think it will continue to be.

So, I guess that's what it is. I assume next year will be another year of maybe a couple of hundred million dollars of disposition, maybe 150.

We'll probably inform you better in the next quarter, after we're done with all our budget. But we're investing a lot of money.

That's not always apparent, but we're investing a lot of money, as you guys can see 400 million year-to-date, actually quite a big number.

Absolutely. I was just trying to get a handle also on the impact on FFO with the yield differential between the dispositions and the investments, specifically on the budgeted yield on your major redevelopments and ground-up developments averaging about 6% or so, but there is quite a wide range.

Will the high end of that range sort of come on early, then will it be different later on? How should we expect that to sort of play out, just from a timing perspective over the next two or three years?

That I can give a very clear answer for you because this is obviously something that we analyze. The yields we're talking about are initial going in yield and the range does not suggest that the low yields come first and the high yields come after.

Those are the initial yields on delivery of everything we're investing in. The one thing that is not included in this calculation, Sam, is all the yields we're earning on small additions, pads and things that are not in the major program which typically earns higher yields because the land is for free.

We did a 5000 square foot pad on (indiscernible) shopping centers in Mississauga which were delivered in the end of the year. That will have a higher return that typical.

What I think we're going to try to do in the year-end number and going forward is add that disclosure as well to our yield on development. So if you're asking about the spread between disposition and development, if our average development yield is six basically going in, and we're selling at 6.5 and maybe something thereabouts, that would be the spread on delivery which I think is actually pretty good news given where we're developing assets.

As far as in the meantime, you are replacing a 6.5% income on dispositions with I guess a 4.9% capitalized interest and demand the same capital invested into development. So the spread is about 150 basis points initially.

Just lastly before I turn it back; the six major redevelopments on page 26 of the MD&A, there's not a budgeted total cost there yet. Any rough estimate on the dollars and timing on those six projects?

I believe like last year, we will give out this disclosure at the MD&A of the year-end, where we did disclose properties, the cost to complete and everything on each asset. Sorry Sam, I'm just looking at the page on which you were just asking.

The asset that you're referring to is on page 26 to the MD&A?

Yes.

Okay, so those assets, the reason why you don't find cost to complete is because we're not finalizing -- we haven't finalized it. So let's look at it quickly one by one, Humbertown, as I said we're fully approved and we expect to finalize our budget and start getting this developed in an active mode towards the end of next year, so fall of next year and this is subject to us reaching a couple of more agreements with two major tenants on the site.

Victoria Parks Centers, this is not something that is going to happen any time in the next 18 months. We have no plans of moving ahead with this one.

Same with Place Portobello. Same Young shopping center.

We are finalizing our plans for the redevelopment of it and I actually think we're very close to approval of what we want to do there, so I expect in the first quarter we'll have the number. Macleod Trail, we've no number.

We have not finalized anything. And 3080 Yonge, I would assume we'll have all the numbers budget approved in the first quarter of 2015 starting construction Q2.

Dori, in regards to the Main & Main transaction, if you could maybe expand on what led you to look to do this and if this is part of an attitude towards joint ventures in particular and earnings fees that we might see more of in the corporate capital portfolio?

So I'll start with the last part of the question because it's easiest to answer. Earning fees is not something that motivates us to do joint ventures because in our mind, let's take a hypothetical scenario where we're managing a billion dollars of other people's capital.

There will be more incremental expense and management time into those activities that will eat up some of the fee that you're earning. So these fees are not a motivation in my view at least to do joint ventures.

I'll tell you what the motivation is. The motivation is to do it either in assets that are purely income assets.

We think that having an institutional partner is a good idea to spread our risks. The other thing is, if we own a lot in a certain trade area which is a joint venture we're working on right now if we own a lot of assets in a certain trade area, and let's just say for the sake of arguments, you own three assets in a certain area and from a diversification point of view given our capital needs, we would need to sell one asset.

I think our view is that we'd rather sell 50% of the three assets and continue to own the portfolio with the partner than sell one asset and own 100% of the two remaining assets. From a business perspective, this is a better way to own real estate.

If we don't like the real estate, we won't own it to begin with, not 100% and not 50%. So I think the main benefit of having a partner is it allows you to be a bigger player in markets maybe that from a diversification standpoint, your allocation of capital is not that high, but you still like those markets and you want to be there.

And secondly, with bringing in a new CEO obviously it took place, you know, maybe this is asking you as a Board Member, is there a mandate from the Board to Adam to do anything different or focus on anything different and maybe you could expand on why you think he's the right person to take over for you in this job?

First of all, I think anybody is the right person to take over for me. You're starting at a very low threshold Mark.

That's not going to be a problem. But on a serious note for a second, I think the mandate that Adam will get from the Board of this company is a mandate of any other CEO in the industry.

As you know on a personal level, both the Chairman of this Board and myself have very, very good experience in other businesses which (indiscernible) is the largest shareholder in, brining very strong leader and that results in very good performance for the company in the following few years. You cannot have a CEO of a real estate company that does not run the business and his mandate is basically to run the business.

Is he going to run it differently than I do? I assume that any time there is a change of a CEO, there's going to be a different approach and a different style.

I think anybody who joined the company as a CEO and as a leader has to fundamentally believe in the strategy of the company because as you probably can imagine, to fundamentally change the strategy of a company is very difficult, particularly in this real estate environment. So let's just for the sake of argument if you come and you're going to head a company that has a certain strategy of assets and you want to completely change it that would be a very tough market to do it.

I think you can always make changes. We have made quite a bit of changes the last three years, we probably sold I don't know over CAD800 million or CAD900 million worth of real estate.

That's a change. Was it a fundamental change?

No. So you can steer it in a slightly different direction.

You can emphasize other things and I think that's probably what you're going to see. I can't really anticipate and predict because I also think that when Adam takes over, let's say three or four months into the road, his views are probably going to be somewhat different than looking at First Capital from the outside.

And I can tell you, I think that what we're bringing to the table for Adam is a very, very strong portfolio of assets with very, very strong business fundamentals. I think we've bringing a very strong bench of a senior management group that one, has been around for quite some time and two, understands and supports the strategy of First Capital quite full heartedly.

I am really looking forward to this new era in First Capital. I've had such a good experience doing that in Equity One and in Citycon [ph] and in Atrium that I'm really thrilled.

I'm really looking forward to it.

Just a follow-up on the Main & Main, you talked about the capital that you've committed and I'm just wondering over what timeframe and specifically what kind of markets and assets that JV is turning?

The joint venture right now is really shy of CAD160 million of assets. Our share of the investment deal is about CAD85 million, more or less, give or take.

Our total commitment is CAD167 million. So 167 minus 85 will be about I guess about CAD75, CAD80 million.

I would assume over the next probably two years, maybe three, remember this is an equity commitment. In other words, if Main & Main tomorrow invest CAD10 million, it will be allowed or if it's the intention of the partner to take a maximum of 40% or 50% debt.

Some of the developments include a residential portion which whatever you invest you get at the end of the project unless you keep it as rental. So in my mind, what we've done, we allow this business to be with a much better financial muscle and at the same time.

I'm extremely happy with the partner that we've found or we both found each other. I think it was a two-way process, they found us, we found them.

So I'm extremely happy. I think that we're going to get a lot of support from the other relationships in business through that venture.

And so is the expectation is that this just stays over an indefinite period or would these be assets that you would be partnering who will lend to First Capital?

Okay. So I'm going to talk about it, given the fact that we're still early in the (indiscernible) process.

Ultimately, why First Capital wants to be in this business to begin with is because it is, in Toronto and Ottawa which are two markets that we know, have significant activity today as it relates to retail. In assets with the size that I think in the way First Capital is structured, we would not be the best investors for those assets.

The other thing is we've some, I would say, notion of limitation as a publicly traded company in terms of the immediate returns versus future returns. So initially when we thought about doing that we realized that we could never be a big player in this business.

However, there is a lot that we can bring to the table without interrelationships and there is also, I think, a lot we can earn by being involved in this business in terms of the clout we've with tenants, with municipalities. I think most of the tenants know that this entity is related to us.

So, the whole platform, both main and main interest capital, enjoyed the benefits of this business. In terms of where is it going eventually, we're going to grow it as much as we can under the conformant without committing a lot more capital to it and see how it develops and what returns we can earn on that business.

And ultimately, could that be a completely separate business, could the joint venture decides to sell the business, the assets to float it as a REIT. I have no idea.

We’ve left all of it open. Our partner is very open, very businesslike, very practical.

So I think we're going to do what's right for the business.

In terms of the organic growth, in some of the previous conference calls you've talked about a highly competitive environment and sort of tempering expectations while on the other hand, you had a very solid quarter on organic growth and rental uptick. And I'm just looking for a little bit of color on your outlook and whether the positive signs of the quarter or something you see continuing?

So I want to separate between the results for one quarter of one year in my general opinion about the market. And I'm not sure if it was you, Heather or somebody else in the last call, asked me something that was similar to that.

I think what I was referring to with tapering expectation is I said and I've been saying it for a long time, and I think there is a lot more signs today than two or three years ago, this business is getting more competitive. Period, end of story, and it's in all aspects of this business.

It's not only the grocery business. It's not only fashion.

It's not only hardware. It's everything, maybe with the exception of the drugstore business which is also more competitive than it used to be, but it's still highly dominated by very, very few players and neither one is a U.S.

player for the moment. My view that this business is getting more competitive and growth is going to be harder to achieve when you just look at the averages, is due to a simple fact; there is more development and there's more development everywhere.

The word urban sounds like a magic word. But there is a lot of urban development too.

There is a lot of people out there that are developing retail and some of them I think are better at what they do, some of them are not as good. The retail business has not changed.

Any time you're going to build more retail, something is going to give. So if you build new retail and this is the best location in that trade area, the worst locations are going to give.

If you build more retail in a location that doesn't make sense for retail, that development is not going to be successful. If you build with higher expectations than what the market can support.

So what I am trying to say is I don't think the last 10 years is necessarily an indication for the next 10 years, and therefore, our strategy is extremely simple, we're going to focus on extremely well located assets, the best in every trade area. We're going to try to get critical mass in every trade area, so we can effectively compete with the large behemoths of the world and whether that is Wal-Mart or Loblaw's -- and I'm saying it in a positive way.

They're both our tenants and we love them; they're great operators. But, they are very tough competitors in the industry, Target, other players.

I was also referring to the fact that some of the retailers today are actually involved in real estate development and real estate ownership of shopping centers, that's a competitive threat, opportunity as well. And in this kind of environment, we all know that the Loblaw's and Sobeys, for instance, had their way and they're in a First Capital shopping center and they had a site down the street that was similar or better, of course they would rather own it.

So what does that mean for a company like First Capital or (indiscernible) or any one of us? That means that we either have the best location in the market or maybe not be in that market.

Or do what we do. I mean, a lot of the sales we're doing and we're seeing is to a local operator that are extremely competent, extremely quick, extremely entrenched with the local CRU retailers and maybe in certain markets actually has an advantage over a company like First Capital in terms of keeping the property leased.

So, all I'm saying is that you have to look at the business today and be a lot more specific. It's no longer let's buy a billion dollars of shopping center, (indiscernible) going in return is going to be there forever.

Thank you very much. That was what I meant.

You're going to have to earn the same property in a Whitegrove [ph], it's just not going to be there.

Just in Q2, you had some transition services and protective rights that you expensed and I was just wondering what the outlook for those might be in Q4 and Q1 of this year? What are the onetime costs?

I think if you're referring to my departure and transition costs, they are disclosed in, is it the IF or?

MIC.

Management circular. Roger?

Yes, that's correct, Management Information Circular.

In the Management Information Circular. They're not going to reach, I can tell you for sure, the higher range and that is being discussed with the Board.

We know the upper end. I'm going to treat this company extremely well.

This company is very dear to my heart and I think the Board is going to do whatever is fair. We do not have a final number yet, but I think both parties will act reasonably.

And presumably there is an additional cost related to Adam coming over on deferred compensation?

From accounting perspective, I think that everything that has to do with future is going to be part of normal earnings, I guess. I don't think there is a -- you know something Alex, I'm not sure there is something other than norm.

There's no specific treatment, right?

RSUs and options are expensed over their vesting period.

Yes, okay. So they are going to be in line with the company's existing equity program for senior management, similar to what I used to have and given the fact that I'm not going to be part of those anymore.

I don't expect any significant change.

Then just tying together a couple of other topics that you've talked about; you've got CAD220 million of cash. In recent conference calls you've talked about the potential for REIT conversion at some point in the future.

You've got a management transition going on and you recently entered into a joint venture through your Main & Main. Do all of those things tie together in some sense and perhaps point to how First Capital might be a little bit different in the future than it has been in the recent past?

There is a question that I no longer have to answer anymore. I can tell you this right now, we're not dealing with it.

As to the cash on the balance sheet, I don't think it's one of my achievements. That's not something I would look proudly at.

I think going forward we're going to have a much more prudent approach into the issue of carrying cash on the balance sheet. I don't think it's something a real estate company should do and I would say that that's something that needs to change.

We definitely carry too much cash on the balance sheet. That's not good.

And how do you think that CAD220 million might be deployed and over what kind of a time period?

Well, I can tell you that when we sit here next year this time, that will not be a discussion anymore. On a normal spending program today which is between CAD50 million to CAD70 million a quarter on development and opportunistic acquisitions of adjacent assets.

We will go through this capital by the beginning of next year and there is definitely. I can tell you, there was a very serious discussion on the Board in the last two quarters about it and as a senior management team, I think we've our marching orders.

And yet you're going to generate a fair bit of cash proceeds from dispositions over the next couple of years as well.

Yes, but we also have some investments and remember, I don't expect our liquidity position to change materially, but it's not going to be from cash.

Just to the extent that this is somewhat of a deleveraging as you deploy this capital, it might suggest that you'd be closer to looking at a REIT conversion.

I don't think REIT conversion and leverage is anything. Listen, there is no need for this company right now -- there's no need to consider converting into a REIT.

That's not to suggest that the Board should not look at it occasionally, there is no need. There is no pressure to convert into a REIT tomorrow morning.

In fact, maybe one of the things that I'm happy as I transition, there is actually no pressure to do anything. This company is extremely organized in the sense of what needs to be done over the next 18 months.

There are no, I believe major decisions that needs to be made. I hope that every decision that's going to be made over the next 12 months is going to be improving what we already have.

So I wouldn't expect anything earth shattering until Adam really feels comfortable and that probably is going to take a few months to start looking at things in a more thorough way.

That's great and congratulations on what has been a remarkable 15 year transformation of the company.

You know something, it's actually been, believe it or not -- First Capital started at a private company in 1997. I took over the company in August 2000.

When I started at a private company by the name of First Capital in 1997 and so for me personally, I've been doing it now for 18 years pretty much the same thing. Yes, you know something, I feel very good.

Quickly, on the additions and subtractions from the portfolio, it looks like there was about 162,000 added, is that 50,000 that VO and 85 that Greaves property? Is there anything else in there?

Greaves is 85, 50 is VO, that's true. I think so 50.

So that together is 135 and there's probably a lot of small spaces all around.

And on the demolition side--.

Wait I think we've that. So on page 36 of the MD&A, there is actually a space by space.

And in terms of when it came off versus came on, should we assume in the middle of the quarter, is there one that would have benefited more so just from an NOI coming on versus going off perspective?

So the big take off for redevelopment purposes would be Yorkville Village, i.e. Hazelton and I'm getting charged 5 bucks every time I say Hazelton, just so you know, internally.

So that's twice. So it will be Hazelton and VMR in Montreal in terms of space coming off line.

And just on the divestiture side, also from a timing perspective, for the ones that closed during the quarter that were income generating or NOI generating was that at the beginning of the quarter or towards the end?

Mid.

And the same for when you anticipate closing the acquisitions that will close in Q4?

Two already closed this week. I believe and two will close towards November.

So yes, more or less mid.

And then just one last timing related question. On Main & Main, from an FFO per unit or just an FFO perspective, what is the impact?

I know not all of it was income generating, but what should we be modeling going forward as an impact to FFO from that transaction?

I don't think it can be material because we're going to continue to own in effect, 53% of the assets and whatever came on line was partially offset by us investing additional -- I'm going to have to get back to you. You know something, I don't have this number in front of me, sorry.

I'm sure we can give you this, but I don't have it here. One second.

Do we? It's a little over a million 1.4 million.

So just looking maybe at the 2014 FFO per share guidance, you're calling for I guess 1% to 2% year-over-year growth this year, if you exclude the other gains and losses. But when we look at 2015.

I know it's early and you don't typically provide guidance until your report with Q4, but what's your sense early on, just considering all the development activity that should come on line next year and then coupled with the capital recycling activities?

I will actually give you a comment that might be helpful I hope, without giving guidance. I do not expect any unordinary activity past April 1st of 2015.

If you think about 2013 and 2014, those were extensive years in terms of extending our maturities, capital recycle, money going from income into development. I think coming April 1st, if you look at our financing needs, there's hardly any financing need in 2015 and 2016.

I don't think this company is going to raise money to put it in cash until 2017, it makes no sense. So I think without getting into numbers because we're not past our budget, but it is out of the noise that was very typical to 2013, 2014 is not going to be here past April 1st, 2015.

So, that's the only comment I can provide to help a little bit. Other than that, we're going to have to wait until we issue guidance which will be in the next call.

Okay maybe phrasing it in a different way, in the past. I think you talked about First Capital being in a position to deliver say on average, roughly maybe 4% or maybe a little bit better in terms of the FFO per share growth or AFFO per share growth.

Do you still see that as a reasonable longer term expectation?

Yes. And I've got to tell you something; I think it requires maybe somewhat, as I said, maybe slightly different approach, maybe slightly different way of doing things.

You know, the difference between delivering two pennies and four pennies is not a fundamental change in the business. Unfortunately there is a saying, you don't teach old dogs new tricks.

I think it's very much true with me. When somebody builds a company from the first few assets and on, I think you see things in a different perspective.

Throughout the whole process of finding the change of guard, as you call it, I had a lot of time to think and one of the things that I thought about is what is actually more difficult; is it more difficult to build a company or to take over an $8 billion company and manage it and I have to tell you that I don't have a clear answer for that. One thing I can tell you for sure is that when you start a business is the beginning, you get into a few habits that are very hard to get out of.

And I saw that in some of our other businesses in Europe and in the U.S. Somebody comes in with a fresh set of eyes with open mind that is not attached or emotionally attached to any of the things that I've done in the last 15 years, there is a lot of, in any company, no matter what, there is lot of interest.

And I think that that's part of the reason why you want to have a change of guard every 10, 15, 18 years, whatever it is. I think there is a huge advantage in this and I hope I'm right.

And then your comment on the financing side; I think the 2015 maturity is coming up I believe in June, your Series G note. Is there any intention to call those early?

We usually don't disclose this because it's usually will be subject to others. Calling a bond early, Pammi is really subject to the opportunities the existing debt market presents to you.

So if the debt market walks in to First Capital tomorrow with an offer we cannot say no, you do the math, the cost of the prepayment and you make the decision subject to what you can do. But if you look at the total debt which is $100 million next year and $200 million in 2016, our average debt maturities from 2017 to 2024 is about 300 a year.

So we've enormous amount of financial flexibility for the next two years or two years and two months and we're going to be very opportunistic, I can tell you that for sure.

Just maybe lastly, at Hazelton Lanes, can you give us an update on the re-leasing progress there and the tenant interest in some of the new space or the repositioned space and are you hitting your target rent objectives?

Sure. I'll let Jodi take it up.

It's the Oakville Village, it's not Hazelton Lane. I think you get five strikes without charging him five bucks?

You get a freebie here. Thanks Dori.

So Pammi, to answer your question, we've launched the Yorkville Village at the last (indiscernible) in Toronto just not long ago. Leasing is very well underway.

We're having very strong interest, lots of excitement over the project. Construction is well advanced.

Anyone that goes there can see all the activity. And also we had a big -- we had some positive news over the last couple of weeks.

We've been working on the construction for the main entrance off of Yorkville and we now have secured the last tenant relocation, so that construction is going to begin in the spring and will line up with the first phase of our launch next fall for Yorkville Village. So we're pretty excited about what's happened over the last number of weeks.

So I think the answer to your question is yes, we're very happy with the progress we're making and given the fact that we started marketing the property in October, we're signing leases and our rents projection so far Jodi are?

We're meeting our rent projections and we're pretty--.

Meeting our rent projections and so far we're meeting our budget. There are no surprises in terms of costs and most of the work or at least for the bulk of gutting the mall and reconstructing the inside of the mall are tendered.

You have to realize that what we're doing is we're changing this mall completely. There is going to be one main corridor, as you know, that's going to divide into two alleys of retail.

The fact that the main entrance is secured from overall [ph] to me is probably one of the most important things, both from a desirability perspective and actual rent. In terms of the area, the recent developments on (indiscernible) are quite amazing in terms of rents and what is going on there.

I think so far, everything we see is good news.

If you put on your Gazit-Globe hat, how does First Capital fit into the bigger family in terms of size? Is it about the right size, a little bit too big, a little bit too small?

Well first of all, I didn't bring the hat. Give me a minute, I'm going to go get the hat.

I haven't wore it yet, but to say that I'm completely not aware of what Gazit is going would be not accurate. I'm very much aware of Gazit.

First Capital is the largest asset that Gazit owns today which only reemphasize that in the fact that in the last equity offering, Gazit bought $17 million worth of stock. It didn't need it to maintain its position in First Capital it's oversized as it is in terms of a comparison to Europe or to the U.S..

However, I would say that Gazit is extremely happy with its position in First Capital. It's looking very much forward to the change of guard and I expect that Gazit is going to be a very supportive investor in First Capital for a very long period of time.

I remember days where people said Equity One didn't have a lot of upside, the U.S. market doesn't have a lot of upside.

I think Gazit has a different view in terms of long term. When I joined this business, Haem [ph] told me that real estate is a great business.

It was a little slow in the first 30 years, after that it gets a lot better. So Gazit is even I think slightly different than most investors.

So I would absolutely expect Gazit would stay very supportive investors for a very long period of time. And I reside in Toronto, so I want to have a place that I can go and hang out in the afternoon and to into the Starbucks and to the Aroma and I don't know a better place than Liberty Village at the moment.

Well, I just want to point out that the first time I heard you talk about Haem's quote about it's a slow business, you said 20 years, now it's 30.

No, I've always said 30. I've been in it 20.

I tell you what, when I said it, I said I've been in it 20 years and it was really two or three years ago, so I have 10 years to go. Now being in this business, '92, I'm at 22 years, I've got eight years to go.

Let me remind you that Haem had already been in this business for 35 years, so actually probably I hate to say this. He probably hates if I say this, but probably more than 35 years.

So I think that when you look at First Capital, if you told me 10 years ago or five years ago where we would be today, I would not believe you. I would say that this is not possible.

I really like this company and now probably maybe next year I'll probably be a lot more objective in saying it because today I'm still not so objective. But as I said, Gazit is going to stay a very supportive investor for a very long time and so it me, personally.

Just two more quick questions. First off, could you see yourself taking on a partner for your Yorkville Village and secondly, do you have any other Main & Main type of arrangements in your other or Gazit's other companies like Citycon, Atrium or the private companies?

The second question, the answer is yes. The first question, could we see ourselves taking a partner in Yorkville.

I would say that this partner, if we ever take one, would have to bring something extremely lucrative for us to the table. So, I cannot think of a similar asset in the city once this project is completed that is probably going to be the jewel of this company.

If you look at sort of the final stage or the final possibility in Yorkville Village which is the corner of Avenue Road and Yorkville which is so suitable to be integrated into our existing development and there are serious discussions with the city and the developer who owns this corner to incorporate that corner into our property. There will have to be a compelling reason for us to part ways with Yorkville Village.

I'll never say no, but there has to be a strategical benefit for it.

Just a few short questions. On the Yorkville Village, you're getting the entrance through to Yorkville Avenue regardless of what the developer on the corner is doing, is that right?

Yes.

And if and when you have a deal there, would you have to reconstruct that entrance?

We will have to be creative in maintaining access from Yorkville which we will be. But that will have to be altered for a period of probably a year to accommodate that development.

But let me remind you that we've other interests in the area including in very close by buildings. So I think we have a way of maintaining a long term viable access even if we'll have to go for a year or a little bit more of construction, we thought about that.

Then the number for square footage and cost are a little bit different this quarter in the MD&A. Does everything now include the hotel mortgage including the GLA?

The numbers are only different because we took some square footage on line. The numbers do not include the hotel.

The hotel is excluded in those numbers, but let me just, again, it's in the MD&A but I think it's probably by and large, Sam including cost to complete, we will have spent in 2016 when it's all over. I would say about 330, is that correct?

CAD325 million for an ownership of 285,000 feet. That includes also a couple of the properties that we acquired in the last quarter, ongoing spending.

Those are the correct numbers, so in terms of cost you're talking about 1100 a foot and change. And Sam, this does not include 515 parking spots.

So, when we do the calculation per square foot that includes 515 parking spots for free.

But neither the costs nor the square footage includes the hotel?

No, the hotel is a mortgage. That's what it is right now with a put call option, a put option in favor of the owner of the hotel and a call option in favor of First Capital and a separate agreement.

It's just happens to be the same dates, but this is--.

And then just on the Main & Main, just reading through the disclosures, there was CAD11 million valuation gain or profit I guess; is that essentially the list that you got on the real estate within the joint venture?

There is a College Square property that we own in the joint venture with the fair market value gain in the quarter.

It wasn't Main & Main. Main & Main was sold for the first [ph] values and the values on our books.

Is there a list on those assets over cost?

It was sold for what we carry it on our books. There are some costs, associated related expenses of carrying those assets of managing them, of bringing them to where they are today that was obviously incorporated in the costs, but basically that's the value carried on our books for those assets.

And just in your top tenancies, you've got four Hudson's Bay tenancies, could you just review if there's any likely vacancies out of those four tenants over the next little while?

There are two Zellers, one in Semiahmoo which is gone as of October 1st and remember I told you you're going to see the numbers for Semiahmoo in the first quarter; that is it. And there was one more Zellers closed in Quebec that is part of our disposition program.

The other two are just smaller?

Home outfitters, yes. Are small home outfitters that are just operating.

Okay. Fine, I thought you just already just bring him over.

Just wait a month. Okay.

Anyway, folks thank you very much for listening to our Q3 call and we'll talk to you again on the year-end call sometime in February. Thank you very much.

Bye.