George Weston Limited ($WN)

Good morning, ladies and gentlemen, and welcome to George Weston Limited's conference call to discuss George Weston support of the Choice Properties and Kingsett Capital transaction to acquire First Capital REIT. [Operator Instructions] This call is being recorded today, Thursday, April 16, 2026. I would now like to turn the conference over to Roy MacDonald, Vice President of Investor Relations. Please go ahead.

Great. Thanks very much, Janine, and good morning, everybody, and thanks for jumping on the call on short notice. . Welcome to the George Weston Limited conference call to discuss its financial support of the Choice Properties and Kingsett Capital's transaction to acquire First Capital REIT. This morning's call will be hosted by Richard Dufresne, President and CFO of George. And we have joining us on the call for Q&A are Rael Diamond, President and CEO of Choice Properties; as well as Erin Johnston, the CFO of Choice Properties. And quickly, before we begin the call, I'll remind you that comments made on today's call may contain forward-looking information. This information, by its nature, is subject to risks and uncertainties, so actual results may differ materially from the views expressed today. And for further information on these risks and uncertainties, please consult the company's relevant filings on SEDAR and the documents available on our website. And with that, I'll turn the call over to Richard.

Thanks, Roy. Good morning, everybody. Great to have you this morning. This is an exciting morning for Choice Properties and George Weston. And so I'm happy to be sharing our perspective on this transaction. As you know, at George Weston, our value creation model is straightforward and disciplined. We are a long-term owner of 2 high-quality, publicly traded businesses, Loblaw Companies and Choice Properties. And one of our role is to allocate capital where it will generate the highest risk-adjusted returns over the long term. As you know, we take a rigorous approach to capital allocation, where we balance reinvestment, balance sheet strength and return to shareholders while maintaining the flexibility to act opportunistically. Today, Choice announced it will acquire a significant portion of the real estate assets of First Capital through a big private transaction with Kingsett Capital. Under this agreement, Choice will acquire approximately $5 billion worth of First Capital's real estate in an asset deal. This unique transaction will significantly enhance the quality of Choice's portfolio and strengthen its long-term growth profile. Choice will fund the real estate asset and will acquire through the issuance of $1.7 billion in equity with the balance in debt. The equity issuance includes $1.8 billion to First Capital unitholders and $600 million from George Weston. George Weston is excited to support Choice in the strategic acquisition through its equity participation. Following completion of the transaction, George Weston will maintain its majority control with an approximate 58% interest. Our continued majority of ownership underscores our confidence in the business' ability to deliver stable and growing cash flows and create long-term value for its unitholders. George Weston intends to finance its equity investment with the combination of existing credit facilities and the issuance of a term loan. This will not have an impact on our current share buyback program and is not a significant addition to our leverage. The transaction is cash flow positive from the get-go because of the additional distribution we'll receive will more than cover the interest on the new debt. So it's pretty straightforward from our perspective. It's a significant improvement in the quality of Choice's portfolio and growth profile and so we're very excited to support this transaction. So I'll now open the line to questions.

[Operator Instructions] We have a question from Michael Van Aelst from TD Cowen.

It's Evan in for Mike. So what can we expect in terms of the NCIB over the next few years? You said that it shouldn't materially affect it, but do you have a level that you're targeting?

Yes. I guess, what we're expecting, as you know, we're going to be closing the EQ Bank transaction soon, and this is going to bring in a significant amount of cash, and so it's forcing us to redo some work on buybacks at the Loblaw level. And while we have not committed on this yet, I think it will lead us to probably to most likely increase our buybacks at Loblaw, which will allow to further support the buyback in George Weston. And therefore, like this transaction won't have any impact. And so as we continue to finish the construction of our second automated DC in Caledon, that will further reduce our CapEx at Loblaw, which will allow again us to increase our buybacks towards the end of '27, early '28. So our plan, as you know, is to always try to seek to increase buybacks and dividends. And so with this and all the events I've just mentioned, we should -- you could expect an increase in buybacks over the coming years.

Okay. Great. And then final question is, in terms of George Weston portfolio acquisitions, are there any other holes that you would like to fill at Loblaw or a Choice or is this acquisition basically it?

Well, I guess, there's always a few things we look left and right, but nothing material. As you know, our strategy at Loblaw is pretty straightforward, like we've got a new store development strategy that's working really well. So -- and we see a lot of runway with that, so we'll keep that going. I think for Choice, this is -- these assets have been the ones we've been looking at for a long, long time. And so the ability to get to such a transaction today for us is a significant accomplishment, especially in the way it's structured in that we're buying the assets we want in an asset deal, so it's very clean from our perspective. So therefore, we think our shareholders will see this positively and not over -- if you look at it financially from the George Weston perspective, it's actually not material because we're going to be issuing about $600 million of debt to buy $600 million of equity, so that's pretty much neutral. But you look at the quality of the assets that we're buying and the additional growth that these assets have compared to our Loblaw portfolio today, so together, this positions Choice so well in the Canadian market that we feel that for our George Weston shareholders, they will benefit significantly over the long term.

[Operator Instructions] There are no further questions at this time. I'd now like to turn the call back over to Mr. Roy for closing remarks.

Great. Thanks very much for your time this morning, everybody, and feel free to give me a shout or drop me an e-mail if you have any follow-up questions. And we look forward to talking to you guys on Loblaw's upcoming Q1 results.

That concludes our conference call for today. You may now disconnect.