RioCan Real Estate Investment Trust
TSX : REI.UN

RioCan Real Estate Investment Trust

July 14, 2011 13:21 ET

RioCan Real Estate Investment Trust Provides Update on Acquisition Activities

TORONTO, ONTARIO--(Marketwire - July 14, 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") as well as provide an update on the acquisition activities announced earlier on June 7, 2011.

US Acquisition Activity – Completed Transactions

RioCan has completed the following previously announced acquisitions in the US:

Lincoln Square

Lincoln Square, located in the Dallas Fort-Worth submarket of Arlington, Texas, in close proximity to Cowboys Stadium, home of the National Football League's Dallas Cowboys, is a 444,500 square foot new format shopping centre. The property is anchored by Ross Dress for Less, Best Buy, Bed, Bath & Beyond, and PetSmart. Other national fashion retailers on the property include Stein Mart, Gap, Ann Taylor, and Lane Bryant. The weighted average lease term for the property is 4.2 years. The property was acquired with Dunhill Partners ("Dunhill") on an 82/18 joint venture basis (82% RioCan / 18% Dunhill). Dunhill manages the property on behalf of the co-ownership. The property was acquired at a purchase price of US$70.7 million (100%), which equates to a cap rate of 7.2% on existing income. Growth in cash flow is possible through lease up of existing vacancy of 40,850 square feet and expansion density of 40,000 square feet. In conjunction with the acquisition, the joint venture secured US$42.4 million 10 year financing at an interest rate of 5.05%.

Property Commerce Portfolio

Of the previously announced acquisition of the Property Commerce Portfolio RioCan has completed the acquisition of one of the two properties.

RioCan has purchased Sawyer Heights Village, a 107,500 square foot new format retail centre located in a high density area of downtown Houston, Texas. The property is shadow anchored by Target. Other major tenants include Staples and PetSmart. The property has a weighted average lease term of 6.5 years. The property was purchased for US$35 million (100%) which equates to a cap rate of approximately 6.2%. Upon lease-up of the newly constructed 12,400 square feet of vacancy, it is anticipated that the yield will be approximately 7%.

Sawyer Heights Village was acquired with Inland Western and is owned on an 80/20 joint venture basis (80% RioCan / 20% Inland Western). Inland Western manages the property on behalf of the co-ownership on terms similar to previous joint venture acquisitions. In conjunction with the closing the joint venture secured US$18.7 million financing for a 10 year term carrying an interest rate of 5.0% on an interest only basis.

RioCan has elected not to proceed with the purchase of League City Towne Center a 185,000 square foot new format retail centre located in the Houston, Texas submarket of League City.

US Acquisition Activity – Firm Contracts

RioCan has waived conditions pursuant to Purchase and Sale agreements and expects to complete the previously announced acquisitions of a 100% interest in Huntington Square and Stop & Shop Plaza in the Northeastern US. These properties represent US$52 million of acquisitions, at a weighted average cap rate of 6.5%. Both will be acquired free and clear of financing and will be managed by Cedar Shopping Centers, Inc. on behalf of RioCan.

It is expected that these now firm transactions will be completed in the third quarter of 2011. While efforts will be made to complete these acquisitions, no assurance can be given.

US Acquisition Pipeline – Under Contract

RioCan has entered into Purchase and Sale agreements with respect to the acquisition of three properties in Texas that total 258,835 square feet. If completed these three properties represent additional acquisitions of US$47.4 million (at 100%) at a weighted average cap rate of 7.5%.

It is expected that these transactions will be completed in the third quarter of 2011. These properties are in various stages of due diligence and while efforts will be made to complete these acquisitions, no assurance can be given.

Canada Acquisition Activity – Completed Transactions

Urban Development Acquisitions

RioCan has purchased the first two pieces (at a purchase price of $6.6 million) of a four parcel assembly that will, upon completion, aggregate a total land area of 1.3 acres at a total cost of approximately $15 million. The site is located just west of the downtown core in the Greater Toronto Area ("GTA") and will become part of RioCan's Urban Development portfolio. When developed, the site has the potential for 150,000 square feet of urban retail space. These first two parcels have been acquired free and clear of financing.

RioCan has also acquired its partners' interests in its Windfield Farms development. RioCan acquired a 66.66% interest in Windfield Farms, in Oshawa, Ontario, at a cost of $29.33 million, bringing RioCan's ownership interest to 100%. Windfield Farms is a 160 acre site located at Simcoe Street, in the suburban GTA market of Oshawa, Ontario, adjacent to the proposed Highway 407 extension. The site is designated as a regional retail site and will be able to accommodate up to 1.5 million square feet of development. Development is expected to commence in 2014.

Canada Acquisition Activity – Firm Contracts

RioCan has waived conditions pursuant to a Purchase and Sale agreement and expects to complete the following acquisitions in Canada:

Megacentre Rive-Sud is a 207,200 square foot new format retail centre located in the Quebec City market of Levis, Quebec. The property, built in 2006, is anchored by a 111,930 square foot Walmart, and is shadow anchored by Canadian Tire and Home Depot. Other major tenants include Sports Experts (Forzani Group), Reitmans, and TD Bank. The property has a weighted average remaining lease term of 8.7 years. RioCan expects to acquire a 100% interest in the property at a purchase price of $48.8 million, which equates to a cap rate of 6.25%. The property will be acquired free and clear of financing.

RioCan, with its partner Trinity Development Group Inc. ("Trinity"), has waived conditions pursuant to a Purchase and Sale agreement and expects to complete the purchase of the previously announced acquisition of Herongate Mall at a purchase price of $18 million (at 100%) during the third quarter of 2011. The property will be acquired on a 75/25 joint venture basis (75% RioCan / 25% Trinity). The property is situated on a 16 acre site in a mature area of Ottawa, Ontario. This is a redevelopment project which, when completed, will be anchored by many of the existing tenants at the property including, Metro, Pharma Plus, and Scotiabank.

It is expected that these transactions will be completed in the third quarter of 2011. While efforts will be made to complete these acquisitions, no assurance can be given.

Canada Acquisition Pipeline – Under Contract

RioCan has executed Purchase and Sale agreements with respect to two acquisitions in Canada. The properties, located in British Columbia and the GTA, if completed would total 108,000 square feet and represent $33.9 million (at 100%) of acquisitions at a weighted average cap rate of 6.5%.

It is expected that these transactions will be completed in the third quarter of 2011. These properties are in various stages of due diligence and while efforts will be made to complete these acquisitions, no assurance can be given.

Acquisition Pipeline

RioCan is currently in negotiations regarding property acquisitions in Canada and the US that, if completed, represent in excess of $300 million of additional acquisitions. These transactions are in various stages of negotiations and while efforts will be made to complete these negotiations, no assurance can be given.

Year to Date Acquisitions

In the first six months of 2011 RioCan purchased or increased its ownership interest in 16 properties at a total purchase price of $230 million ($139 million in Canada and $91 million in the US, in C$). By the end of the third quarter of 2011, if all of the above acquisitions under contract are completed, RioCan will have acquired or increased its ownership interest in an additional 11 properties with a total purchase price of approximately $245.9 million in C$, which would bring RioCan's total acquisitions to approximately $475.9 million in C$.

About RioCan

RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $11.2 billion as at March 31, 2011. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 300 retail properties, including 8 under development, containing an aggregate of over 70 million square feet. RioCan owns an 80% interest in 31 grocery anchored and new format retail centres in the United States through various joint venture arrangements. 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 News Release (including the section entitled, "US Acquisition Activity – Completed Transactions, "US Acquisition Activity – Firm Contracts", "US Acquisition Pipeline – Under Contract", "Canada Acquisition Activity – Completed Transactions", "Canada Acquisition Activity – Firm Contracts", "Canada Acquisition Pipeline – Under Contract", and "Acquisition Pipeline"), 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 this News Release, 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