RioCan Real Estate Investment Trust

RioCan Real Estate Investment Trust

December 19, 2011 08:30 ET

RioCan Real Estate Investment Trust Announces Total Acquisitions in 2011 of More Than One Billion Dollars and Provides an Update on Recent Acquisition Activities

TORONTO, ONTARIO--(Marketwire - Dec. 19, 2011) - RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) is pleased to provide an update on its acquisitions in Canada and the United States ("US"). With the acquisitions included in this release now completed, RioCan has purchased an interest in a total of 38 income properties at an aggregate purchase price of $1.1 billion, at RioCan's interest, at a weighted average capitalization rate ("cap rate") of 6.7% in Canada and the US in 2011. These figures include $29.4 million of earnouts from previous acquisitions at a 7.1% cap rate.

In Canada, RioCan acquired an interest in 24 income properties at an aggregate purchase price of $505.9 million at a weighted average cap rate of 6.4% during 2011. RioCan also paid an additional $19.2 million for earnouts at a weighted average cap rate of 6.8%. In the US, RioCan acquired an interest in 14 income properties at an aggregate purchase price of $565.3 million at a weighted average cap rate of 6.9% in 2011. RioCan also paid an additional $10.2 million for earnouts at a weighted average cap rate of 7.8%. In addition to RioCan's $1.1 billion of income property acquisitions, RioCan completed the acquisition of an additional $70.6 million of development properties in 2011.

"RioCan is very pleased to have accomplished another strong year of acquisition activity, that for the second year in a row has surpassed $1 billion," said Edward Sonshine, President and Chief Executive Officer of RioCan. "We have remained disciplined as we developed our acquisition platform in the US and strengthened RioCan's portfolio in Canada with a number of very high quality properties this past year."

Recent Acquisition Activities - Canada

On December 15, 2011, RioCan completed the acquisition of the Runnymede Portfolio. The Runnymede Portfolio consists of five grocery anchored properties in the Greater Toronto Area. RioCan acquired a 100% interest in five properties containing an aggregate of 360,600 square feet with a weighted average remaining lease term of 4.6 years for $91.2 million, which equates to a cap rate of 6.4%. The five properties have a weighted average occupancy of 99%. RioCan assumed the in-place financing, which totals $15.3 million and carries a weighted average interest rate of 5.5% with maturities in 2014, 2015 and 2022. RioCan purchased the portfolio from the vendor through the assumption of the aforementioned debt and otherwise, entirely through the issuance of exchangeable units, resulting in the issuance of $74.9 million of equity after taking into account the assumed debt. The exchangeable units were issued to the vendor at a price of $25.44 per exchangeable unit based on a volume weighted average price for the seven-day period ending December 9, 2011, resulting in the issuance of 2,945,320 exchangeable units.

Sage Hill Lands

RioCan had previously announced that it waived conditions pursuant to a purchase agreement for the acquisition of a 32 acre greenfield development site ("Sage Hill Lands") in Northwest Calgary for a purchase price of $31.6 million. RioCan has assigned a 50% interest in the acquisition of the Sage Hill Lands to KingSett Capital, on behalf of its KingSett Canadian Real Estate Income Fund ("KingSett"). Upon completion of this acquisition, which is expected to occur in 2012, RioCan will act as development and property manager on behalf of its partner KingSett. This purchase will represent an expansion of the relationship with its partner, and is the first greenfield development property to be acquired with KingSett. Development of this site is expected to commence in 2013 and once completed, the property is expected to contain 347,000 square feet of retail use.

Recent Acquisition Activities - US

On December 16, 2011, RioCan completed the purchase of the Shoppes at Salem. The property is located along Route 28 in Salem, New Hampshire, approximately 45 kms north of Boston, Massachusetts. The 170,270 square foot property was built in 1999. The centre is 100% occupied and has a weighted average lease term of 7.4 years. The property is occupied by five national retailers, Best Buy, Sports Authority, PetSmart, Michaels, and DSW. RioCan purchased a 100% interest in the property for US$39.9 million, at a 7.0% cap rate. Cedar Shopping Centers, Inc. will provide property management services. RioCan assumed the in place secured debt of US$17.8 million that carries an interest rate of 6.2% and is scheduled to mature in December 2012.

On December 14, 2011, RioCan purchased the Market Street Portfolio. The Market Street Portfolio is comprised of two grocery anchored shopping centres located in Dallas, Texas. RioCan acquired a 100% interest in both properties at an aggregate purchase price of US$29.9 million, which equates to a capitalization rate of 7.6%. Sterling Organization ("Sterling") will manage the properties on behalf of RioCan. In connection with the acquisition, RioCan assumed the in-place financing of US$15.2 million that carries an average interest rate of approximately 6.0% with maturities in 2014 (US$3.3 million), 2024 (US$.8.6 million) and 2023 (US$7.7 million).

The properties comprising the Market Street Portfolio are:

• Market Street at Stonebridge Ranch is a 88,389 square foot grocery anchored centre in McKinney, Texas, located approximately 50 kms north of Dallas. The property, built in 2004, has a weighted average lease term of 9.5 years and is anchored by a Market Street grocery store.

• Market Street at Colleyville is a 72,617 square foot stand-alone Market Street grocery store that is part of a larger retail centre in Colleyville, Texas, a suburb of Dallas. The property, built in 2003, has a remaining lease term of 12.2 years.

Market Street Grocers, which is owned by United Supermarkets, is a Texas-based family owned grocery store chain with 51 stores across Texas. Market Street focuses on everyday grocery items combined with speciality items, whole-health and gourmet items as well as prepared items.

About RioCan

RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $11.9 billion as at September 30, 2011. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 314 retail properties, including 10 under development, containing an aggregate of over 75 million square feet. RioCan owns an interest in 38 grocery anchored and new format retail centres in the United States through various joint venture arrangements. 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 "Recent Acquisition Activities", 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 period ending September 30, 2011, 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.

Contact Information

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