First Capital restructures work force under new CEO Adam Paul

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It is easy to chalk up First Capital Realty's corporate restructuring to a new chief executive putting his mark on the company.

Adam Paul swears it isn't so.

On Tuesday the company, which specializes in urban retail development, shuffled its executive team and cut 85 jobs. First Capital also added 25 vacant roles, resulting in net loss of 13 per cent of its work force.

It is an odd time to make such sweeping changes. The broad S&P/TSX REIT Index is down 6.5 per cent this year, yet First Capital's shares have climbed 1.3 per cent. And when Mr. Paul took over earlier this year, he inherited a company widely thought to be in fine form.

The assumption, then, could be that Mr. Paul is starting to remake First Capital in his own name – something new CEOs are prone to do during their first few years in the hot seat. Mr. Paul stressed this is not the case.

"This is not about me making my stamp on the company," he said in an interview. "The truth is, I haven't been here long enough … [and] I don't have exposure to certain areas of the business to the level that would be required to make these decisions," he added. Instead, it was a "team approach" – though he was laser-focused on it, acknowledging corporate structure is "probably the single area where I spent the most amount of time."

Although First Capital is performing well, the new CEO, who used to be an executive vice-president at Canadian Real Estate Investment Trust, believes some tweaking was necessary. "This initiative is not about fixing something that is broken, but improving how we perform."

One tangible example of the restructuring: Until now, First Capital had regional heads that oversaw five or six functions within their geographic area; going forward, there will be senior executives for each function who oversee these duties for the entire country.

The news shouldn't surprise investors. On the company's last quarterly call, Mr. Paul said there are "many areas of our business that are being assessed right now." However, no one knew just how far the new CEO would go, and if First Capital would alter course from the strategy put in place by former chief Dori Segal, who took a back seat as executive vice chairman when Mr. Paul took over. Mr. Segal, one of the best-known names in Canadian real estate, is now focused on building Gazit-Globe, Israel's largest REIT which now trades on the Toronto Stock Exchange.

Anyone worried about any radical changes can rest easy. "There's no major change to the strategy of being in the business of owning, developing and managing urban retail assets," Mr. Paul assures, nor will there be a shift away from high-quality properties. "I didn't come here with the intention of trying to change that."

But the company will continue to review its assets and capital levels. In 2013 and 2014, First Capital was a net seller of properties because the company is rejigging its portfolio and more divestitures could come – though, "I don't expect anything as dramatic as [the internal restructuring]," Mr. Paul said.