RioCan Real Estate Investment Trust

RioCan Real Estate Investment Trust

December 01, 2011 08:17 ET

RioCan Real Estate Investment Trust Provides Update on Recent Acquisition Activities and Announces Senior Management Promotions

TORONTO, ONTARIO--(Marketwire - Dec. 1, 2011) - RioCan Real Estate Investment Trust ("RioCan")(TSX:REI.UN) is pleased to provide an update on its recent acquisition activities in Canada and the United States ("US").

Recent Acquisition Activities - Canada

RioCan has waived conditions pursuant to a Purchase and Sale agreement with respect to the acquisition of the Runnymede Portfolio. The Runnymede Portfolio consists of five grocery anchored properties in the Greater Toronto Area. RioCan will acquire 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 at an expected purchase price of $91.1 million, which equates to a cap rate of 6.4%. The five properties have a weighted average occupancy of 99%. RioCan will assume 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 will acquire the portfolio from the vendor entirely through the issuance of exchangeable units, resulting in the issuance of $75.8 million in equity after taking into account the assumed debt.

The five properties included in the portfolio are:

Ajax Marketplace, located in Ajax, Ontario, is a 70,724 square foot grocery anchored retail centre built in 1988 anchored by Food Basics (Metro Inc). Other major tenants at the property include Pharma Plus and Bank of Montreal.

Glendale Marketplace, located in Pickering, Ontario, is a 53,963 square foot grocery anchored retail centre built in 1988 anchored by Your Independent Grocer (Loblaw). The other major tenant at the property is Pharma Plus.

Victoria Crossing Marketplace, located in Toronto, Ontario, is a 64,859 square foot grocery anchored retail centre built in 1986 anchored by Freshco (Sobeys). Other major tenants at the property include McDonalds, Tim Hortons and Rogers.

Spring Farm Marketplace, located in Vaughan, Ontario, is a 73,202 square foot grocery anchored retail centre built in 1987 anchored by Sobeys. Other major tenants at the property include Shoppers Drug Mart and TD Canada Trust.

Dundas/427 Marketplace I&II, located in Mississauga, Ontario, is a 97,860 square foot grocery anchored retail centre built in 1987 anchored by Starsky Fine Foods. Other major tenants at the property include Staples and Reitmans.

It is expected that this now firm transaction will be completed in December 2011. While efforts will be made to complete this acquisition, no assurance can be given.

Recent Acquisition Activities - United States

On November 23, 2011, RioCan completed the acquisition of Timber Creek Crossing, a 470,354 square foot new format retail centre located in Dallas, Texas. The property, built in 2011, is 100% leased and is anchored by Walmart, Sam's Club, and JC Penney all on ground leases. Other tenants include Del Taco, Sears, SportClips, Verizon, Chick-Fil-A and Bank of America. The weighted average lease term for the property is 17 years. The property was acquired on an 80/20 joint venture basis with Dunhill Partners ("Dunhill"), a commercial real estate investment firm (80% RioCan/20% Dunhill) at a purchase price of US$82 million (at 100%) or US$65.6 million at RioCan's interest, which equates to a capitalization rate of 6.1%. Dunhill will manage the property on behalf of the joint venture. In connection with the purchase the joint venture has procured conventional third party financing on the property of US$45.3 million (at 100%) or US$36.2 million at RioCan's interest with an interest rate of 4.15% for a ten-year term.

"We are pleased to be able to acquire these five solid grocery anchored centres with exciting expansion and or intensification opportunities in one of Canada's six high growth markets, a core strategy of RioCan," said Edward Sonshine President and CEO of RioCan. "Furthermore, our recent acquisition in Texas adds a very high quality asset in the Dallas market to RioCan's portfolio."

Senior Management Promotions

Edward Sonshine, O.Ont., Q.C. is pleased to announce that RioCan's Board of Trustees has approved the following promotions effective January 1, 2012. In recognition of his long standing service to RioCan, Fred Waks will be named President and Chief Operating Officer of RioCan. Also, in recognition of his efforts and contributions to the Trust, Rags Davloor will be promoted to Executive Vice President and Chief Financial Officer. While the duties of each and reporting lines will remain the same, the promotions reflect the contributions made by Mr. Waks and Mr. Davloor in the tremendous growth of RioCan.

Mr. Sonshine will remain Chief Executive Officer of RioCan. He has committed to remain in that position at least until 2015. Mr. Sonshine founded RioCan, Canada's first real estate investment trust, in 1994 and has served as the Trust's Chief Executive Officer since its inception.

"The Board of Trustees is pleased to recognize the tremendous efforts of Mr. Sonshine and his team, particularly Fred Waks and Rags Davloor," said Paul Godfrey, C.M. Chairman of RioCan's Board of Trustees. "We look forward to continuing to work with Mr. Sonshine as Chief Executive Officer and his senior management team for many more years."

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