RioCan Real Estate Investment Trust

RioCan Real Estate Investment Trust
Kimco Realty Corp.

Kimco Realty Corp.

March 27, 2015 16:00 ET

RioCan and Kimco Jointly Announce Agreement for RioCan to Acquire Kimco's Interest in Two Canadian Properties and Kimco's Purchase of RioCan's Interest in One U.S. Property

TORONTO, ONTARIO and NEW HYDE PARK, NEW YORK--(Marketwired - March 27, 2015) - All figures in this release are in Canadian dollars other than where specified

RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) and Kimco Realty Corp. ("Kimco") (NYSE:KIM) are pleased to announce that RioCan will acquire Kimco's 50% interest in two Canadian properties held in the RioKim joint venture, Brentwood Village and Grand Park, as part of a trade transaction whereby Kimco will purchase RioCan's 80% interest in Montgomery Plaza, a shopping center currently held in a joint venture with Kimco; Montgomery Plaza is located in the Dallas-Fort Worth area. The acquisition of Brentwood Village and RioCan Grand Park are expected to be completed on March 31, 2015, with the remaining closings to be completed upon obtaining customary lender consents.

"This transaction again showcases the importance of RioCan's strategic relationships with our partners as we have been able to secure the remaining 50% interest in two high quality assets in a very competitive market. The acquisition of Kimco's interest in these two properties also provides RioCan more flexibility in terms of managing potential future intensification in both instances," said Edward Sonshine, Chief Executive Officer of RioCan. "Also, by selling the only co-owned and non-managed U.S. property in RioCan's portfolio, RioCan will now own and operate 100% of its U.S. portfolio."

"This trade of property interests enables us to acquire Montgomery Plaza, a landmark property in a terrific area of Fort Worth, and is reflective of the wonderful partner relationship between Kimco and RioCan," said Dave Henry, Chief Executive Officer of Kimco. "In addition, the acquisition of Montgomery Plaza and the sale of our interest in these two Canadian properties help us further our goal of reducing the number of properties in joint ventures, especially those that we do not manage, while at the same time, expanding Kimco's ownership of larger, high quality properties in core U.S. markets."

Transaction Details

RioCan will acquire Kimco's 50% interest in Brentwood Village in Calgary, Alberta and Grand Park in Mississauga, Ontario at a total purchase price of $87.5 million net of in place debt of $8.0 million representing an equity commitment of $79.5 million by RioCan. RioCan will, in turn, sell its 80% interest in Montgomery Plaza in Fort Worth, Texas to Kimco at a sale price of US$58.3 million net of in place debt of US$23.6 million representing equity of US$34.7 million with the remaining purchase price to be paid in cash by RioCan.

Details of the Properties Included in the Transaction

Brentwood Village

Brentwood Village, located in Calgary, Alberta, is a grocery anchored shopping centre containing 294,310 square feet of gross leasable area. The shopping centre's anchor tenants include Safeway, London Drugs, and Sears Whole Home. Other national retailers at the site include Pier 1 Imports, Sleep Country, Penningtons, TD Canada Trust, Bank of Montreal and Harvey's. Approximately 50,000 square feet of retail space was demolished in 2011 and the air rights were sold to a residential developer who subsequently constructed four condo towers. The residential towers include retail podiums consisting of 39,510 square feet that are owned and leased by RioCan. RioCan will acquire Kimco's 50% interest at a purchase price of $65.1 million which equates to a capitalization rate of 5.25% on in place income and an additional $4.0 million as consideration for the potential residential density and existing podium retail space. The property will be acquired free and clear of financing. The property is located near Calgary's rapid transit line, hospitals, and the University of Calgary.

Grand Park

RioCan Grand Park, located in Mississauga, Ontario, is a 118,637 square foot new format retail property. The centre contains a mix of national tenants that includes Winners and Shoppers Drug Mart. RioCan will acquire Kimco's 50% interest at a purchase price of $18.4 million which equates to a capitalization rate of 6.0%. In connection with the purchase, RioCan will assume Kimco's 50% interest on the in place debt of $8.0 million (at 50%) which carries a weighted average interest rate of 6.35% and is scheduled to mature in 2019 and 2024 subject to a mark to market adjustment.

Montgomery Plaza

Montgomery Plaza is a 465,011 square foot shopping center located in Fort Worth, Texas that was originally developed by a subsidiary of Kimco. This center, located at the corner of Carroll Street and W Seventh Street on the edge of downtown Fort Worth, spans 46 acres and features a wide array of live, work and play opportunities including two luxury residential condo towers with the potential to add additional density in the future. The property is 97.4% occupied and shadow-anchored by Super Target and anchored by Marshalls, Ross Dress for Less, PetSmart, Michaels and Office Depot. The anchors are complemented by nationally recognized tenants including Pier 1 Imports, Starbucks and Chick-fil-A. RioCan will sell its 80% interest in the property to Kimco at a sale price of US$58.3 million which equates to a capitalization rate of 5.75%. Kimco will assume RioCan's 80% interest in the existing mortgage debt of US$23.6 (at 80%) million that carries an interest rate of 3.90% and is scheduled to mature in 2022 subject to a mark to market adjustment.

About RioCan

RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $15.1 billion as at December 31, 2014. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 340 retail properties containing more than 79 million square feet, including 48 grocery anchored and new format retail centres containing 13 million square feet in the United States as at December 31, 2014. RioCan's portfolio also includes 15 properties under development in Canada. For further information, please refer to RioCan's website at

About Kimco

Kimco Realty Corp. (NYSE:KIM) is a real estate investment trust (REIT) headquartered in New Hyde Park, N.Y., that owns and operates North America's largest publicly traded portfolio of neighborhood and community shopping centers. As of December 31, 2014, the company owned interests in 754 shopping centers comprising 110 million square feet of leasable space across 39 states, Puerto Rico, Canada, Mexico and Chile. Publicly traded on the NYSE since 1991, and included in the S&P 500 Index, the company has specialized in shopping center acquisitions, development and management for more than 50 years.

Forward-Looking Statements - RioCan

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 this News Release (including the sections entitled "Transaction Details", "Details of the Properties Included in the Transaction", 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 News Release are qualified by these cautionary statements.

These forward-looking statements are not guarantees of future events or performance and, by their nature, are based on RioCan's current estimates and assumptions, which are subject to risks and uncertainties, including those described under "Risks and Uncertainties" in RioCan's Management's Discussion and Analysis for the year ended December 31, 2014, 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 and general market conditions; tenant concentrations and related risk of bankruptcy, occupancy levels and defaults; lease renewals and rental increases; retailer competition; access to debt and equity capital; interest rate and financing risk; joint ventures and partnerships; the relative illiquidity of real property; unexpected costs or liabilities related to acquisitions and dispositions; development risk associated with construction commitments, project costs and related approvals; environmental matters; litigation; reliance on key personnel; management information systems; unitholder liability; income and indirect taxes; U.S. investments, property management and foreign currency risk; and credit ratings. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a stable retail environment; relatively low and stable interest costs; a continuing trend toward land use intensification in high growth markets; access to equity and debt capital markets to fund, at acceptable costs, the future growth program to enable the Trust to refinance debts as they mature; and the availability of purchase opportunities for growth in Canada and the U.S.. Although the forward- looking information contained in this News 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 News 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 News Release.

The Income Tax Act (Canada) contains provisions which potentially impose tax on publicly traded trusts (the "SIFT Provisions"). However, the SIFT Provisions do not impose tax on a publicly traded trust which qualifies as a real estate investment trust ("REIT"). RioCan currently qualifies as a REIT and intends to continue to qualify for future years. Should this not occur, certain statements contained in this News Release may need to be modified.

Except as required by applicable law, RioCan under takes no obligation to publicly update or revise any forward- looking statement, whether as a result of new information, future events or otherwise.

Forward-Looking Statements - Kimco

The statements in this news release state the company's and management's intentions, beliefs, expectations or projections of the future and are forward-looking statements. It is important to note that the company's actual results could differ materially from those projected in such forward-looking statements. Factors which may cause actual results to differ materially from current expectations include, but are not limited to, (i) general adverse economic and local real estate conditions, (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business, (iii) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms to the company, (iv) the company's ability to raise capital by selling its assets, (v) changes in governmental laws and regulations, (vi) the level and volatility of interest rates and foreign currency exchange rates and management's ability to estimate the impact thereof, (vii) risks related to the company's international operations, (viii) the availability of suitable acquisition and disposition opportunities, and risks related to acquisitions not performing in accordance with our expectations, (ix) valuation and risks related to the company's joint venture and preferred equity investments, (x) valuation of marketable securities and other investments, (xi) increases in operating costs, (xii) changes in the dividend policy for the company's common stock, (xiii) the reduction in the company's income in the event of multiple lease terminations by tenants or a failure by multiple tenants to occupy their premises in a shopping center, (xiv) impairment charges and (xv) unanticipated changes in the company's intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity. Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the company's SEC filings. Copies of each filing may be obtained from the company or the SEC.

The company refers you to the documents filed by the company from time to time with the SEC, specifically the section titled "Risk Factors" in the company's Annual Report on Form 10-K for the year ended December 31, 2014, as may be updated or supplemented in the company's Quarterly Reports on Form 10-Q and the company's other filings with the SEC, which discuss these and other factors that could adversely affect the company's results.

Contact Information

  • RioCan Real Estate Investment Trust
    Edward Sonshine, O. Ont., Q.C.
    Chief Executive Officer
    (416) 866-3018

    Kimco Realty Corp.
    David F. Bujnicki
    Vice President,
    Investor Relations and Corporate Communications