RioCan Real Estate Investment Trust

RioCan Real Estate Investment Trust

August 25, 2010 11:35 ET

RioCan Real Estate Investment Trust Announces Firm Contracts on Two Walmart Anchored Shopping Centres in Canada

TORONTO, ONTARIO--(Marketwire - Aug. 25, 2010) - RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) today announced that it has waived conditions and expects to close on two new format retail shopping centres during the third quarter of 2010. These two properties, which are located in the primary markets of Hamilton, Ontario and Gatineau, Quebec (considered part of the Ottawa area market), have all been developed within the last several years by the vendors. The aggregate gross leaseable area of the two properties is 558,881 square feet. Walmart represents approximately 53% of the occupied space by gross leasable area and generates 35% of the rental revenue. The average remaining lease term for Walmart is approximately 17.1 years and the average lease term for both properties is approximately 15.5 years at a weighted average lease rate of approximately $13.80 per square foot.

The total purchase price for these two properties is approximately $102 million at a weighted average cap rate of approximately 6.65%. The properties are being acquired unencumbered.

Properties under firm contract

Gatineau Walmart is a 287,765 square foot new format shopping centre, completed in 2006, located in the Ottawa area market Gatineau, QC. The property is situated on a 48 acre site and is anchored by a 158,800 square foot Walmart (lease expiry 2026). Other national tenants include GolfTown, Dollarama, BouClair and Tommy Hilfiger. An additional phase of the property currently under construction will include a 27,000 square foot Winners and will be acquired through an earnout mechanism with the vendor. The property is currently 98% occupied and there is the potential to add an additional 115,150 square feet of density that would be paid for at a prescribed cap rate once built and tenants are in place and paying rent. This earnout space, if completed within the first year after closing will be paid for at a cap rate of 6.65% and 6.90% thereafter. The property is being acquired unencumbered.

Hamilton Southeast Walmart is a recently completed 271,117 square foot new format retail centre located in Hamilton, Ontario. The property is anchored by a 133,500 square foot Walmart (lease expiry 2028) that is currently expanding and will be 172,500 square feet when complete. The property will be shadow anchored by a Canadian Tire. Other national tenants at the property include Staples and Winners, which are expected to open in late September or early October of 2010. The property is currently 99.5% occupied with an additional 78,348 square feet of additional density available that if completed, within the first year after closing will be paid for at a cap rate of 6.65% and 6.90% thereafter. The property is being acquired unencumbered.  

"RioCan is excited to be able to acquire two strong anchored centres that are well located in high growth urban markets" said Edward Sonshine, Q.C., President and CEO of RioCan. "The acquisition of these two high quality properties enables RioCan to secure a long term stable cash flow stream with a high quality tenant such as Walmart, which is RioCan's third largest tenant by rental revenue."

About RioCan

RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $8.6 billion as at June 30, 2010. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 267 retail properties, including 11 under development, containing an aggregate of over 60 million square feet. RioCan owns an 80% interest in nine grocery anchored shopping centres in the United States through its joint venture arrangement with Cedar. In addition, RioCan owns a 14% equity interest in Cedar Shopping Centers, Inc., 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

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 "Properties under firm 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 June 30, 2010 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