RioCan Real Estate Investment Trust
TSX : REI.UN

RioCan Real Estate Investment Trust

July 13, 2010 14:36 ET

RioCan Real Estate Investment Trust Announces Firm Contract With Inland Western Retail Real Estate Trust, Inc. to Acquire Eight Retail Properties in Texas

TORONTO, ONTARIO--(Marketwire - July 13, 2010) - RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) today announced that it has waived conditions and expects to acquire eight properties with Inland Western Retail Real Estate Trust, Inc. ("Inland Western"), as announced in an earlier release dated May 20, 2010. Inland Western is a self-administered, publicly registered, non-listed U.S. based real estate investment trust. Inland Western is focused on the acquisition, development, and management of retail properties including lifestyle, power, neighbourhood, and community centres.

Through RioCan Holdings USA Inc., RioCan will acquire on an 80/20 joint venture basis a portfolio of eight retail properties with Inland Western. The properties are located in three major markets within Texas; Dallas-Fort Worth, Houston, and Austin. In aggregate, these three markets have a total population in excess of 14 million people, and together provide a diverse economic base with exposure to energy, government services, and technology sectors; with a large concentration of corporate headquarters.

This portfolio of eight new format and grocery-anchored shopping centres totals approximately 1.1 million square feet. The total consideration to be paid by RioCan for its 80% interest is approximately US$123.3 million resulting in a net equity investment of US$55.1 million after the assumption of US$68.2 million of property level mortgage debt (RioCan's share) on the portfolio. The existing non-recourse first mortgage financing has a weighted average interest rate of 5.6%. The weighted average cap rate for the portfolio will be approximately 7.7%.

In keeping with RioCan's strategy to acquire high quality defensive assets in large and growing major markets, these properties benefit from strong anchor tenants, are well located in strong urban markets, and are well occupied (Portfolio occupancy of 97%). Approximately 90% of the gross rents from the portfolio are generated by national or regional tenants and approximately 29% from grocery and pharmacy tenants. The weighted average remaining lease term of the grocery anchors in the portfolio is approximately 12 years. Of the properties that were listed in RioCan's initial press release, a 63,000 square foot component of Riverpark Shopping Center II will not be included in the acquisition. Going forward, while there is no formal agreement between RioCan and Inland Western, it is anticipated that future acquisitions from third parties with Inland Western in Texas would be completed on the same basis.

RioCan has completed and waived its conditions respecting conventional property level diligence matters and anticipates that these acquisitions will be completed sometime during the third quarter of 2010. Closings will be staggered as the transaction remains subject to the receipt of lender consents.

"This acquisition represents an excellent opportunity to acquire high quality assets in a second geographic market with a strong partner," said Edward Sonshine, Q.C., President and CEO of RioCan. "This accretive acquisition enables RioCan to build a position in three large and growing urban markets with eight high quality defensive assets."

About Inland Western

Inland Western Retail Real Estate Trust, Inc. is a self-managed real estate investment trust that acquires, manages and develops a diversified portfolio of real estate, primarily multi-tenant shopping centres across the United States. As of March 31, 2010, the portfolio under management totalled in excess of 46 million square feet, consisting of 298 consolidated operating properties. The company also has interests in 11 unconsolidated operating properties and 11 properties under development.

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 265 retail properties, including 12 under development, containing an aggregate of over 60 million square feet. RioCan owns an 80% interest in eight grocery anchored shopping centres and 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 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 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 March 31, 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, lack of availability of future acquisition opportunities and exposure to economic, real estate and capital market conditions in the United States. 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 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.

Contact Information

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