TORONTO, ONTARIO--(Marketwire - July 26, 2012) - RioCan Real Estate Investment Trust (TSX:REI.UN) ("RioCan") is pleased to announce that it has waived conditions pursuant to a purchase and sale agreement to acquire a 100% interest in Georgian Mall in Barrie, Ontario. The purchase price of the property is $318 million, which equates to a capitalization rate of 5.5%. This property will add to RioCan's already strong presence in the GTA and surrounding markets. It is expected that the purchase will be completed during the third quarter of 2012. This acquisition will represent RioCan's largest and most prominent enclosed mall asset.
With more than 150 stores and the potential to add further retail space on the adjacent 6.6 acres of land, this property will provide RioCan greater reach to its retail tenant base and US retailers looking to expand into Canada across RioCan's diverse retail portfolio. With its acquisition of Georgian Mall, the dominant regional mall servicing the areas north of the GTA, RioCan will have the ability to provide retailers with strong locations in varying retail formats across a large geographic platform. In connection with the acquisition, RioCan has arranged six-year first mortgage financing in the amount of $185 million which carries an interest rate of 3.09%.
"This acquisition represents an excellent opportunity to acquire the dominant regional mall, in a fast growing community with great potential to create additional value and enhance RioCan's existing retail portfolio," said Edward Sonshine, CEO of RioCan. "This will strengthen RioCan's retail platform and will deepen our relationships with Canada's premier fashion retailers as RioCan is uniquely positioned to provide a full range of high quality retail opportunities in multiple formats, be it enclosed, urban, new format retail, lifestyle centre or outlet centre."
Georgian Mall is located near Highway 400 along Bayfield Street, a major commercial corridor through Barrie, and is the largest shopping centre in the Barrie-Huronia area. Barrie is located along the shores of Lake Simcoe, approximately 90 kms north of Toronto. It is one of Canada's fastest growing metropolitan areas with a population of 381,000 (for the Barrie region) and is projected to grow to nearly 463,000 by 2021. The property has a weighted average lease term of 4.5 years, is 97% leased, and contains more than 604,600 square feet of retail space. The mall has more than 150 stores and is anchored by The Bay and shadow anchored by Sears department stores. Major fashion tenants include H&M, American Eagle, Michael Hill, Mexx, The Garage Clothing Co., Melanie Lyne and Town Shoes. Other national tenants include Disney Store, SportChek, HomeSense and Shoppers Drug Mart. The average base rent for the non-anchor space is $52.19 per square foot and over 91% of the gross rental revenue is generated by national tenants. The site encompasses 61.9 acres (including 6.57 acres of excess lands), and has parking for 3,105 vehicles.
RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $13 billion as at March 31, 2012. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 333 retail properties containing an aggregate of 80 million square feet, including 46 grocery anchored and new format retail centres containing 12 million square feet in the United States through various joint venture arrangements as at March 31, 2012. RioCan's portfolio also includes 10 properties under development in Canada. For further information, please refer to RioCan's website at www.riocan.com.
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, 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 latest financial statements and management's discussion and analysis for the quarter ending March 31, 2012, 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 investment in the United States of America ("US"), US currency and RioCan's qualification as a real estate investment trust for tax purposes. 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 more robust retail environment compared to recent years; relatively 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; the availability of purchase opportunities for growth in Canada and the US; and the impact of accounting principles adopted by the Trust effective January 1, 2011 under International Financial Reporting Standards ("IFRS") which includes application to the Trust's 2010 comparative financial results. 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) (the "Act") contains legislation affecting the tax treatment of publicly traded trusts (the "SIFT Legislation"). The SIFT Legislation will not impose tax on a trust which qualifies under such legislation as a real estate investment trust (the "REIT Exception"). RioCan currently qualifies for the REIT Exception 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.