RioCan Real Estate Investment Trust
TSX : REI.UN

RioCan Real Estate Investment Trust

September 16, 2010 09:15 ET

RioCan Real Estate Investment Trust Announces Firm Contracts on Third Party Acquisitions Through Cedar Joint Venture

TORONTO, ONTARIO--(Marketwire - Sept. 16, 2010) -  RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) today announced that it has entered into firm contracts to acquire a portfolio of five grocery anchored and new format retail centres located in Pennsylvania, Maryland, and Virginia, and a new format retail centre located in New Jersey from third party vendors for a total of approximately US$118.5 million (at 100%) at a weighted average capitalization rate ("cap rate") of approximately 7.9% after deduction of a vacancy allowance and management fees. Completion of these acquisitions is expected by the middle of October 2010. These properties will be purchased on the same 80/20 basis as past joint venture acquisitions with Cedar Shopping Centers, Inc ("Cedar").

Edens and Avant Portfolio Acquisition

RioCan through its joint venture agreement with Cedar has entered into definitive agreements to acquire a portfolio of five grocery anchored and new format retail properties. The purchase price for these five properties is approximately US$92 million (at 100%) at a cap rate of approximately 7.8%. The portfolio is 96% occupied and Giant Supermarket (a subsidiary of Royal Ahold), the largest tenant, contributes approximately 18% of the rental revenues. The average lease term for these five properties is 5.8 years and the average lease rate is approximately US$12 per square foot. The five properties are being acquired unencumbered and it is expected that non-recourse first mortgage financing will be secured in due course.

The five properties to be acquired include the following (at 100%):

York Marketplace:

Located in York, PA, which is located approximately 40 kms south of Harrisburg, PA, York Marketplace is a 305,000 square foot grocery-anchored shopping centre that was constructed in 1955 and renovated in 2004. The property is anchored by a 75,000 square foot Giant Supermarket (lease expiry 2019) and a 125,000 square foot Lowe's Home Improvement Warehouse (lease expiry 2014). Other major tenants at the subject property include Office Max, Starbucks, Super Shoes and Red Lobster. The property has a weighted average remaining lease term of approximately 5.0 years.

Gettysburg Marketplace:

Gettysburg Marketplace is located in Gettysburg PA, which is located approximately 60 kms south of Harrisburg, PA. The property is an 85,800 square foot grocery-anchored shopping centre that was constructed in 1998 and is anchored by a 67,000 square foot Giant Supermarket (lease expiry 2018). Other major tenants at the subject property include Papa John's Pizza, Pet Valu, Hallmark, and Arby's. The property has a weighted average remaining lease term of approximately 7.4 years.

Northland Center:

Located in State College, PA home of the main campus of Pennsylvania State University, Northland Center is a 108,000 square foot grocery-anchored shopping centre that was constructed in 1988. The property is anchored by a 65,000 square foot Giant Supermarket (lease expiry 2014), and an 11,000 square foot CVS Pharmacy (lease expiry 2014). The property has a weighted average remaining lease term of approximately 4.2 years.

Marlboro Crossroads:

Located in Upper Marlboro, MD, which is located approximately 30 kms southeast of Washington, DC, Marlboro Crossroads is a 68,000 square foot grocery-anchored shopping centre that was constructed in 1993. The property is anchored by a 61,000 square foot Giant Supermarket (lease expiry 2023). Other major tenants at the subject property include Chevy Chase Bank and Sun Trust Bank. The property has a weighted average remaining lease term of approximately 10.7 years.

Towne Crossings:

Located in Midlothian, VA part of Richmond VA, Towne Crossings is a 111,000 square foot community shopping centre that was constructed in 1980. The major tenants at the property include a 40,000 square foot Bed Bath & Beyond (lease expiry 2014), and a 20,000 square foot Michaels (lease expiry 2013). The property has a weighted average remaining lease term of approximately 3.2 years.

Cross Keys Place

RioCan through its joint venture arrangement with Cedar has also entered into definitive agreements to acquire a retail strip shopping centre from a third party vendor. Cross Keys Place is located in Turnersville, NJ, a suburb of Philadelphia, PA. The property is a 148,000 square foot new format retail centre that is tenanted by national tenants such as a 42,000 square foot Sports Authority, a 35,000 square foot Bed Bath & Beyond, a 21,000 square foot AC Moore, a 19,000 square foot Old Navy, and a 16,000 square foot Petco. The property is shadow anchored by a Home Depot. The property has a weighted average lease term of approximately 7.8 years.

Cross Keys Place will be acquired for US$26.4 million (at 100%) at a cap rate of approximately 8.3%. The property is being acquired "free and clear" and it is expected that non-recourse first mortgage financing will be placed on the property in due course.

"Our joint venture platform with Cedar continues to attract high quality grocery anchored acquisition opportunities with a stable cash flow from national tenants" said Edward Sonshine, Q.C. President and CEO of RioCan.

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 269 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 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 this 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 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