RioCan Real Estate Investment Trust

RioCan Real Estate Investment Trust

December 22, 2009 13:33 ET

RioCan Real Estate Investment Trust Announces Firm Contract on Third Party Acquisition Through Cedar Joint Venture

TORONTO, ONTARIO--(Marketwire - Dec. 22, 2009) - RioCan Real Estate Investment Trust (TSX:REI.UN) ("RioCan") today announced that it has waived conditions and expects to acquire a grocery anchored shopping centre located in Reading, Pennsylvania, which is located approximately 100 kilometres west of Philadelphia, PA. This represents the first purchase from a third party on a joint venture basis with Cedar Shopping Centers, Inc. ("Cedar"). This acquisition is being completed on the same 80/20 joint venture arrangement established between Cedar and RioCan that was announced on October 26, 2009. The purchase is expected to close during the first quarter of 2010.

Towne Square Plaza is a 127,636 square foot grocery anchored shopping centre anchored by a 73,327 square foot Giant Foods supermarket (lease expiry 2028) and is shadow anchored by a Target. The property is currently 98% occupied and is tenanted by other national and regional tenants such as PetSmart and AC Moore. Other tenants include Verizon, Five Guys Burgers, and Super Cuts. The property is recently completed and is being acquired from the developer. The weighted average lease term for the property is approximately 14 years, and short term lease renewal risk is minimal as only about 3.3% of leases by square feet come due within the next five years.

The property will be acquired at a cap rate of approximately 8.25%. The total purchase price is expected to be approximately US$18.9 million; RioCan's interest will be approximately US$15.1 million. The property is being acquired unencumbered and RioCan expects that financing for the property will be arranged in due course.

Update on US property closings

RioCan has closed on Blue Mountain Commons, Harrisburg, PA and Sunset Crossing Shopping Center, Scranton, PA, the first two of seven announced property acquisitions with Cedar. The remaining five properties that will be acquired on a joint venture basis with Cedar are expected to close by the end of the first quarter of 2010.

"We are very pleased to show progress on our joint venture platform with Cedar. This opportunity evidences Cedar's ability to source quality grocery anchored shopping centres. First, with the closing of the first two grocery anchored shopping centres and now with this new acquisition opportunity," said Edward Sonshine, Q.C. President and CEO of RioCan. "This acquisition represents an excellent opportunity to grow this strategic acquisition platform in the US, and reiterates our commitment to make accretive acquisitions of defensive assets."

About RioCan

RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $7.8 billion as at September 30, 2009. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 253 retail properties, including 13 under development, containing an aggregate of over 60 million square feet. RioCan has also agreed to acquire an 80% interest in seven grocery anchored shopping centres in the United States and owns a 15% equity interest in Cedar, a real estate investment trust focused on supermarket-anchored shopping centres and drug store-anchored convenience centres located predominantly in the Northeastern United States. For further information, please refer to RioCan's website at Looking Information.

Forward-Looking Information

This news release contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements made in "Property Closings", "Properties Under Contract" and "Acquisition Pipeline", and other statements concerning RioCan's objectives, its strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "would", "expect", "intend", "estimate", "anticipate", "believe", "should", "plan", "continue", or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. All forward-looking statements in this Press Release are qualified by these cautionary statements.

These statements are not guarantees of future events or performance and, by their nature, are based on RioCan's estimates and assumptions, which are subject to risks and uncertainties, including those described under "Risks and Uncertainties" in its management discussion and analysis dated September 30, 2009 which could cause actual events or results to differ materially from the forward-looking statements contained in this News Release. Those risks and uncertainties include, but are not limited to, those related to: liquidity in the global marketplace associated with current economic conditions, tenant concentrations, occupancy levels, access to debt and equity capital, interest rates, joint ventures/partnerships, the relative illiquidity of real property, unexpected costs or liabilities related to acquisitions, construction, environmental matters, legal matters, reliance on key personnel, unitholder liability, income taxes, the conditions to the transactions not being satisfied resulting in the failure to complete some or all of the proposed transactions, real estate and capital market conditions. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include: a less robust retail environment than has been seen for the last several years; relatively stable interest costs; an increase in acquisition capitalization rates; a decrease in land costs for greenfield development; a continuing trend towards land use intensification in high growth markets; more limited but available access to equity and debt capital markets to fund, at acceptable costs, the future growth program and to enable the Trust to refinance debts as they mature and the availability of purchase opportunities for the joint venture. Although the forward-looking information contained in this Press Release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Certain statements included in this Press Release may be considered "financial outlook" for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this Press Release.

Contact Information

  • RioCan Real Estate Investment Trust
    Rags Davloor
    Senior Vice President & CFO
    (416) 642-3554