RioCan Real Estate Investment Trust
TSX : REI.UN

RioCan Real Estate Investment Trust

January 19, 2015 08:30 ET

RioCan Real Estate Investment Trust Provides an Update on Recent Acquisition and Disposition Activities

TORONTO, ONTARIO--(Marketwired - Jan. 19, 2015) - RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) today is pleased to provide an update on its recent acquisition and disposition activities. RioCan has actively managed its capital recycling program with the sale of $172.5 million of assets since the beginning of 2014 that have a lower growth profile or are non-core. In doing so, there has been an increase in the Trust's portfolio concentration in Canada's six largest markets, as well as the overall quality of its portfolio. As a result of the completed sales and acquisitions, RioCan's concentration in Canada's six major markets is 73.9%.

"It was, and still is a challenging acquisition market, however RioCan has been able to complete more than $270 million of income property acquisitions in Canada and the United States at an attractive 5.8% weighted average yield since the beginning of 2014," said Edward Sonshine, Chief Executive Officer of RioCan. "These acquisitions demonstrate the strength of RioCan's relationships with its many partners that provide an important source of acquisition opportunities for the Trust. At the same time, RioCan has taken advantage of the market by disposing of non-core lower growth assets."

Acquisition Activity

BMO Portfolio

On January 15, 2015 RioCan completed the acquisition of 18 urban branch locations in a sale-leaseback transaction with the Bank of Montreal. The branches are located in British Columbia, Ontario, and Quebec. The portfolio was acquired at a purchase price of $49.4 million, which equates to a capitalization rate of 5.5% (based on the average rent for all branches for the first five years of the lease term). The portfolio was acquired free and clear of financing.

Properties acquired

Property Address Location GLA (sf)
1 1225 Douglas Street Victoria, BC 25,713
2 2219 Oak Bay Avenue Victoria, BC 3,605
3 5710 Victoria Drive Vancouver, BC 5,374
4 3290 Grandview Highway Vancouver, BC 4,414
5 585 England Avenue Courtenay, BC 5,768
6 7075 Kingsway Vancouver, BC 4,950
7 270 Dundas Street London, ON 21,867
8 81 King Street West Hamilton, ON 5,540
9 519 Brant Street Burlington, ON 5,096
10 145 Woodbridge Avenue Vaughan, ON 6,218
11 1293 Bloor Street West Toronto, ON 5,680
12 297 King Street East Kingston, ON 9,873
13 945 Smyth Road Ottawa, ON 8,554
14 1556 Bank Street Ottawa, ON 5,049
15 2 King Street West Bowmanville, ON 5,524
16 200 Ouellette Avenue Windsor, ON 21,238
17 79 Durham Street South Sudbury, ON 22,615
18 279 Rue St.-Charles Montreal, QC 6,640
TOTAL 173,718

The portfolio benefits from a high quality cash flow stream, and the leases are all triple net leases that provide for modest rent growth over the remaining lease term. Many of these properties are well located within the downtown cores of their respective markets. The individual lease terms of the portfolio are all ten years or longer with a weighted average lease term of 12.7 years for the overall portfolio.

Leaside Centre

On January 15, 2015, RioCan completed the acquisition of the remaining 50% interest in RioCan Leaside Centre, in Toronto, Ontario from Kimco Realty Corporation ("Kimco"). This 133,000 square foot new format centre is anchored by Canadian Tire. Other tenants include PetSmart, Pier One Imports, and Alexanian Carpet & Flooring. The property is very well located at the corner of Eglinton Avenue and Laird Avenue along the Eglinton Light Rail ("LRT") line, currently under construction. The site is planned to host a secondary entrance to the LRT stop at the southeast corner of Eglinton Avenue and Laird Avenue. The 50% interest in the centre was acquired from Kimco at a purchase price of $31.5 million, which equates to a capitalization rate of 5.5%. RioCan assumed Kimco's $16.5 million interest in the debt on the property, which carries an interest rate of 3.3% and matures in 2017.

Mayfield Common and Meadow Ridge Plaza

On December 12, 2014, RioCan completed the acquisition of an 80% interest and a 20% interest in two shopping centres from its partner Sun Life. The properties are located in Alberta and Ontario and the additional interests were purchased for a total of $56.6 million, which equates to a weighted average capitalization rate of 5.7%.

Meadow Ridge Plaza

On December 12, 2014, RioCan completed the acquisition of the remaining 80% interest in Meadow Ridge Plaza, in Ajax, Ontario. This 112,000 square foot grocery anchored centre is leased to Sobeys, GoodLife Fitness, and Dollarama. RioCan acquired the additional 80% interest from its partner Sun Life, at a purchase price of $30.0 million, which equates to a capitalization rate of 5.6%. The additional interest was purchased free and clear of financing, and as a result RioCan owns a 100% interest in this property.

Mayfield Common

On December 12, 2014, RioCan completed the acquisition of an additional 20% interest in Mayfield Common, in Edmonton, Alberta. This 430,000 square foot new format retail centre is anchored by Save-On-Foods and includes other major retailers such as Winners/HomeSense, JYSK and Dollarama. RioCan acquired an additional 20% interest from its partner Sun Life, at a purchase price of $26.6 million, which equates to a capitalization rate of 5.7%. There was no debt associated with this purchase and as a result RioCan owns a 50% interest in this property.

Disposition Activities

On January 6, 2015, as part of RioCan's program to recycle capital into the acquisition of higher growth assets in Canada's six major markets and the Trust's development pipeline, RioCan completed the sale of five properties located in Quebec at a total sale price of $120.1 million at a weighted average capitalization rate of 6.8%. The total debt associated with these assets was $21 million and carried an average interest rate of 4.1%.

Properties sold:

Property Name Location NLA Major Tenants
Carrefour Neufchatel Quebec City 205,477 Super C, Gold's Gym, Staples
Carrefour Carnaval St. Leonard 171,096 Super C, Value Village
Centre Carnaval Drummondville 146,961 Super C, Business Depot
Centre Commercial Forest Montreal 118,710 Staples, Rossy
Place Kennedy Levis 105,648 Bureau en Gros, Winners
Total 747,892

About RioCan

RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $14.7 billion as at September 30, 2014. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 340 retail properties containing more than 80 million square feet, including 48 grocery anchored and new format retail centres containing 13 million square feet in the United States as at September 30, 2014. RioCan's portfolio also includes 15 properties under development in Canada. For further information, please refer to RioCan's website at www.riocan.com.

Contact Information

  • RioCan Real Estate Investment Trust
    Rags Davloor
    President, Chief Operating Officer and,
    Interim Chief Financial Officer
    (416) 642-3554
    www.riocan.com