RioCan Real Estate Investment Trust
TSX : REI.UN

RioCan Real Estate Investment Trust

April 05, 2011 10:44 ET

RioCan Real Estate Investment Trust Provides Update on Recent Acquisition Activities

TORONTO, ONTARIO--(Marketwire - April 5, 2011) - RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) is pleased to provide an update on its ongoing acquisitions in Canada and the United States. In the first quarter of 2011, RioCan completed the acquisition of varying interests in nine properties in Canada at an aggregate purchase price of $91.9 million with a weighted average cap rate of 6.6%.

Canadian Acquisitions from Partners:

In March 2011, RioCan acquired an additional interest in six properties from its partners in Ontario. In connection with its purchase from its partners, RioCan has assumed its proportionate share of the existing mortgage debt that is in place for these properties:

Silver City Gloucester

RioCan has acquired an additional 10% interest from Trinity Development Group ("Trinity"), in Silver City Gloucester, which brings RioCan's ownership for this property to 70%. Trinity will retain a 30% interest. RioCan will continue to manage the property. Silver City Gloucester is a 227,000 square foot new format retail centre located in Ottawa, Ontario and is a tenanted by national tenants such as Famous Players Silver City, Chapters, and Future Shop. The purchase price for RioCan's additional interest was $7.4 million which equates to a cap rate of 6.3%.

RioCan Colossus Centre

RioCan has acquired an additional 10% interest from Trinity in RioCan Colossus Centre, which brings RioCan's ownership for this property to 70%. Trinity will retain a 30% interest. RioCan will continue to manage the property. Located northwest of the Highway 400 and Highway 407 interchange in Vaughan, Ontario, RioCan Colossus Centre is a new format retail centre with approximately 713,000 square feet of leasable area. The site is anchored by a 121,000 square foot Rona, a 101,000 square foot Famous Players (Cineplex) theatre and a 130,000 square foot Costco (shadow anchor). The purchase price for RioCan's additional interest was $17.1 million which equates to a cap rate of 6.3%.

Trinity Common Brampton

RioCan has acquired an additional 10% interest from Trinity in Trinity Common Brampton, which brings RioCan's ownership for this property to 70%. Trinity will retain a 30% interest. RioCan will continue to manage the property. Located at the intersection of Highway 410 and Bovaird Drive, this 75-acre site has been developed into an 877,550 square foot new format retail centre. This property is anchored by Famous Players (Cineplex) Theatre, Zellers and Metro, as well as by Canadian Tire and Home Depot, which both own their own premises. The purchase price for RioCan's additional interest was $18.1 million which equates to a cap rate of 6.3%.

RioCan Elgin Mills

RioCan has acquired an additional 12.5% interest from its partner Tamuz Investments Limited at RioCan Elgin Mills Crossing. The ownership structure for this property is now 75% RioCan and 25% Trinity. RioCan will continue to manage the property. This site has been developed into a 441,000 square foot new format retail centre. The site is anchored by Home Depot and is shadow anchored by Costco. The centre has a strong mix of national tenants that include PetSmart, Staples, Michaels, Marks Work Wearhouse (Canadian Tire), Scotia Bank, and TD Canada Trust. The purchase price for RioCan's additional interest was $9.9 million which equates to a cap rate of 6.25%.

RioCan Centre Belcourt

RioCan has acquired an additional 13.3% interest from each of its existing partners in RioCan Centre Belcourt. The ownership structure for this property is now 60% RioCan, and 20% each for Trinity and Shenkman Corp. ("Shenkman"). RioCan Centre Belcourt, located at the intersection of Innes and Belcourt in Orleans, Ontario a suburb of Ottawa, is a 39 acre site that is currently being developed into a 397,000 square foot new format retail centre. The site is shadow anchored by a 142,000 square foot Lowe's. The purchase price for RioCan's additional interest was $6.0 million which equates to a cap rate of 6.8%. An additional $800,000 is expected to be paid later in 2011 for earnouts, and a further amount of approximately $10.7 million is expected to be paid for additional phases as they are completed.

Grant Crossing

RioCan has also acquired an additional 13.3% interest from each of its existing partners in Grant Crossing. The ownership structure for this property is now 60% RioCan, and 20% each for Trinity and Shenkman. Grant Crossing, is a 33 acre site being developed into a 401,000 square foot new format retail centre. The site is shadow anchored by a 128,000 square foot Lowe's. Other major tenants include Winners, Homesense and Michaels. The purchase price for RioCan's additional interest was $6.2 million which equates to a cap rate of 6.8%. An additional $800,000 is expected to be paid later in 2011 for earnouts, and a further amount of approximately $13.8 million is expected to be paid for additional phases as they are completed.

Additional Canadian Acquisitions

In addition, RioCan has also completed the following acquisitions during the first quarter of 2011:

Shoppers Drug Mart Pembroke

RioCan has acquired Shoppers Drug Mart Pembroke, located in Pembroke, Ontario. The property is a 17,035 square foot stand alone Shoppers Drug Mart (lease expiry 2020). The property was acquired at a purchase price of $5.1 million which equates to a cap rate of 7.3%.

Rexall Pharma Plus - Ottawa

RioCan has acquired Rexall Pharma Plus – Ottawa, located in the high traffic area of Carling Avenue in Ottawa, Ontario. The property is a 10,422 square foot stand alone Rexall Pharma Plus (lease expiry 2023). The property was acquired at a purchase price of $4.1 million which equates to a cap rate of 6.85%.

White Shield Plaza

White Shield Plaza is located in the high traffic area of Kennedy Road and Lawrence Avenue East in Toronto, Ontario. The property is a 155,910 square foot grocery anchored centre. Major tenants include Lone Tai a specialty food retailer (subleased from Metro Inc.), CIBC, Dollarama, and Harvey's. The property was acquired at a purchase price of $18.0 million which equates to a cap rate of 6.5%.

Walmart Acquisitions (Earnouts paid to date and going forward):

The purchase of Grandview Corners, Edmonton Walmart Centre, Lethbridge Walmart Centre, and Lowe's Sunridge Centre, which were completed in 2009, and RioCan's purchase of Gatineau Walmart and Hamilton Southeast Walmart completed in 2010, remain subject to earnouts paid to SmartCentres for the delivery of completed and leased additional space. To date, RioCan has paid $29.2 million at RioCan's interest to SmartCentres for 168,554 square feet of additional space delivered at a cap rate of 6.93% for Grandview Corners and 7.32% for the acquisitions completed in 2009. For the assets acquired in 2010 the earnouts will be calculated based on a 6.9% cap rate. An additional $12.5 million is expected to be paid for earnouts in 2011 and there remains 286,000 square feet between the six properties to be built over the next several years by SmartCentres.

Canadian Acquisitions Under Contract

RioCan has entered into an agreement of Purchase and Sale with respect to two Canadian properties that represent $41 million of additional acquisitions. It is expected that these transactions will be completed in the second quarter of 2011. Due diligence conditions have been waived in both cases and while efforts will be made to complete these acquisitions no assurance can be given.

US Acquisitions Under Contract

RioCan has entered into an agreement of Purchase and Sale with respect to four US properties, one in the northeast US and three in Texas that represent in aggregate approximately US$95 million of additional acquisitions at RioCan's interest. It is expected that these transactions will be completed in the second 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.

"The acquisitions market is becoming increasingly competitive and we are pleased with our ability to continue to purchase quality assets in Canada and the US. Our additional investment in four of our core properties along with two of our recent developments is a good opportunity for RioCan to enhance returns in our portfolio," said Edward Sonshine, President and CEO of RioCan. "Our acquisition pipeline is filling in nicely and we expect to see solid growth to our portfolio on both sides of the border in 2011."

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 302 retail properties, including 10 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, 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 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 December 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, 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 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