RioCan Real Estate Investment Trust
TSX : REI.UN

RioCan Real Estate Investment Trust

November 18, 2009 12:58 ET

RioCan Real Estate Investment Trust Announces Firm Contracts on Retail Properties in Canada

TORONTO, ONTARIO--(Marketwire - Nov. 18, 2009) - RioCan Real Estate Investment Trust (TSX:REI.UN)("RioCan") today announced that it has waived conditions and expects to close on eight retail properties located in Alberta, Ontario, and Manitoba in the fourth quarter of 2009, or in January of 2010. These eight properties will total approximately 1.4 million square feet, of which, RioCan's interest will be approximately 894,000 square feet. The total purchase price for RioCan's interest in these properties is approximately $170 million. National and anchor tenants occupy 82% of the gross leasable area for these eight properties. The weighted average cap rate for these acquisitions is approximately 7.9%.

Properties under firm contract

Summerwood Centre is an 84,279 square foot newly developed grocery and drugstore anchored retail property located in Sherwood Park, Alberta, a suburb east of Edmonton. The property is in the final stages of completion and, as such, occupancy at the property is currently 82%. The vacant space is subject to a head lease to the vendor. Summerwood Centre is anchored by a 41,265 square foot Save-On-Foods and 16,911 square foot Shoppers Drug Mart, as well as other national tenants such as TD Bank and Bank of Montreal. The property is being acquired unencumbered.

The Market at Citadel Village is a 51,028 square foot recently developed drugstore anchored retail property located in St. Albert, Alberta, a suburb northwest of Edmonton. The property is 91.2% occupied and is anchored by a 17,020 square foot Shoppers Drug Mart as well as other national tenants such as HSBC and Bank of Nova Scotia. The vacant space is subject to a head lease to the vendor. The property which was completed in 2008 will be acquired unencumbered.

Timberlea Landing is a 135,802 square foot mixed use property containing office and retail uses as well as 34 residential units located in Fort McMurray, Alberta. The retail and office components of the property are 100% occupied and include tenants such as The Regional Municipality of Wood Buffalo, TD Bank, and Bank of Nova Scotia. The property is being acquired unencumbered.

Wanless Centre is a 103,607 square foot grocery anchored shopping centre located in the GTA market of Brampton, Ontario. The property is 96.3% occupied and is anchored by a 40,475 square foot Food Basics (Metro Inc). Other national tenants include TD Bank, Sleep Country, and Swiss Chalet. The property is being acquired unencumbered.

Chapman Mills Marketplace is a 432,000 square foot shopping centre located in Ottawa, Ontario. The property is anchored by a 130,000 square foot Wal-Mart, a 26,905 square foot Galaxy Cinemas, a 26,240 square foot Winners, and a 25,890 square foot Staples. Other national tenants include Chapters, SportChek, and the Liquor Control Board of Ontario. The property is shadow anchored by Loblaws. RioCan will purchase an additional 12.5% interest in the property which will bring its overall ownership interest to 75%.

Garden City Shopping Centre is a 285,000 square foot enclosed shopping centre located in Winnipeg, Manitoba and is anchored by a 94,267 square foot Canadian Tire and a 26,838 square foot Winners. The property also benefits from a 92,604 square foot shadow anchored Sears department store which is connected to the property and has an interior entrance to the centre. The property is 93.4% occupied. RioCan will acquire the property with its partner Bayfield Realty Advisors Inc. (Bayfield). RioCan will own a 30% interest in the property as well as serve as the property manager. RioCan has arranged financing of $23.5 million at a 5.5% interest rate for a five-year term.

Frontenac Mall is a 289,700 square foot grocery anchored shopping centre, located in Kingston Ontario. The property is anchored by a 39,953 square foot Food Basics. Other national tenants include Premier Fitness, Value Village, Dollarama, and Swiss Chalet. RioCan will acquire an additional 15% interest in the property, which was previously owned on a joint venture basis in RioCan's RRVP partnership. RioCan's total ownership interest will be 30%. RioCan will own the property with its joint venture partner Bayfield, and will continue to serve as the property manager for the property. The property is 85.3% occupied, 88.8% excluding the basement space. RioCan has arranged financing of $14.3 million at a 6.1% interest rate for a five-year term.

March Road is a 22,509 square foot unanchored retail centre located in Ottawa and is largely tenanted by a number of local, regional, and national food service tenants such as Wendy's and Cora's.

Where a property is currently unencumbered, RioCan will, in the normal course, seek conventional secured financing.

Acquisition Pipeline

In addition to the properties mentioned above, RioCan currently has six properties located in western Canada that are under conditional contract and comprise approximately 1.4 million square feet. These properties represent an additional $335 million of acquisition opportunities. RioCan anticipates that it will complete its due diligence during the next two weeks and will close on these acquisitions before the end of the year. The acquisitions under consideration are in various stages of due diligence and while RioCan will aim to complete these transactions, no such assurance can be given.

All of the above acquisitions are in addition to RioCan's previously announced joint venture acquisition of seven grocery anchored properties with Cedar Shopping Centers, Inc. in the North-eastern United States. Two of these property acquisitions are expected to be completed this quarter with the remaining five properties closing in the first quarter of 2010.

"These acquisitions represent an excellent opportunity to put to work some of the capital raised over the course of this year in a manner that is accretive to our unitholders," said Edward Sonshine, Q.C. President and CEO of RioCan. "These largely grocery and drugstore anchored retail properties represent a continued execution of RioCan's growth strategy in Canada. They are primarily located in well established urban centres with strong national and anchor tenants that will provide a stable source of cash flow as well as the potential to enhance returns through the leasing of currently vacant space."

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 247 retail properties, including 13 under development, containing an aggregate of over 59 million square feet. For further information, please refer to RioCan's website at www.riocan.com.

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
    www.riocan.com