RioCan Real Estate Investment Trust

RioCan Real Estate Investment Trust

October 08, 2010 09:58 ET

RioCan Real Estate Investment Trust Reports on Recent Property Acquisitions in Canada and the US

TORONTO, ONTARIO--(Marketwire - Oct. 8, 2010) - RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) is pleased to provide an update on its ongoing acquisition program. Since the last acquisition completion announcement of September 13, 2010, it has closed the acquisition of twelve properties in Canada and the US that in total represent, at 100%, approximately US$284 million of acquisitions in the US and approximately $60 million of acquisitions in Canada. These twelve properties aggregate approximately 2.1 million square feet. The US acquisitions were completed at a weighted average cap rate of approximately 7.6%, and the Canadian acquisitions were completed at a weighted average cap rate of approximately 7.7%.

"With the completion of these acquisitions RioCan has added more than two million square feet of high quality retail properties to an already strong platform," said Edward Sonshine, Q.C., President and CEO of RioCan.

US Acquisitions

PREIT Portfolio

On September 30, 2010, RioCan completed the purchase of a portfolio of five grocery-anchored and new format retail properties in Pennsylvania, New Jersey, and Virginia, as first announced on August 16, 2010.

The purchase price for the portfolio of five properties was approximately US$134.7 million at 100%. RioCan has acquired these five properties through its joint venture platform with Cedar Shopping Centers, Inc. ("Cedar") on the same basis (80% RioCan and 20% Cedar) as previous joint venture acquisitions. Five year fixed rate financing on the five properties of US$72.5 million (at 100%) has also been arranged with an interest rate of 4.75%. RioCan's net equity commitment to the acquisition was approximately US$49 million.

The five properties that have been acquired are: Monroe Marketplace, Creekview Center, Sunrise Plaza, New River Valley Center, and Pitney Road Plaza.

Montville Commons

In addition to the five properties above, on September 29, 2010, RioCan completed the acquisition of Montville Commons, a grocery-anchored shopping centre in Connecticut. The purchase price for the property was US$18.9 million at 100% at a 7.65% cap rate. The property was acquired unencumbered. RioCan has acquired this property through its joint venture platform with Cedar on the same basis (80% RioCan and 20% Cedar) as past acquisitions. The property has an average remaining lease term of approximately 10 years and a weighted average in place lease rate of approximately $15 per square foot.

Montville Commons is a 118,000 sq. ft. grocery-anchored shopping centre that was completed in 2006. The property is located in Uncasville, Connecticut, which is located approximately 16 kms south of Norwich CT. The property is anchored by a 63,000 sq. ft. Stop & Shop (Royal Ahold) with a lease extending to March 2027; other tenants include Sleepy's and Chili's; and it is shadow-anchored by a Home Depot store. There is an additional 8,200 square feet of density, which would be built out on the basis of tenant demand.

Inland Western Retail REIT

On September 30, 2010, RioCan also completed the acquisition of three of the initial eight properties with Inland Western Retail REIT ("Inland Western") for a total purchase price of US$46.8 million at 100% at a cap rate of 7.7%. RioCan has acquired these three properties on a joint venture basis with Inland Western (80% RioCan and 20% Inland Western). The purchase of these three properties adds approximately 352,000 square feet to RioCan's portfolio. RioCan announced the agreement to purchase eight properties with Inland Western in Texas on May 20, 2010, the purchase of the remaining five properties are pending and are expected to be completed in the fourth quarter of 2010.

The three properties that were purchased are Bear Creek Shopping Center, Cypress Mill Plaza, and New Forest Crossing. The properties are subject to existing third party financing, which totals US$29.3 million at 100% and has a weighted average interest rate of 5.9%. This debt has been assumed on an 80% basis by RioCan's US holding entity.

Las Palmas Marketplace

On October 7, 2010, RioCan, through a joint venture arrangement with Kimco and Dunhill Partners has completed the acquisition of Las Palmas Marketplace in El Paso, Texas. Las Palmas is a 638,000 square foot new format retail center that was built in phases from 2002 to 2008 and is anchored by a 179,000 square foot Lowe's Home Improvement Warehouse and an 86,800 square foot Kohl's. Other major tenants at the property include Walgreens, Ross Dress for Less, Babies R'Us, Bed Bath & Beyond, Office Depot, and Michael's. The property is 98% leased and has an average lease term of approximately 7 years at an average lease rate of approximately $10.

Las Palmas has been acquired on a joint venture basis with Kimco (31.7%), Dunhill Partners (36.6%), and RioCan (31.7%). The property was acquired for US$83.5 million at 100% at a cap rate of 7.5%, and coincident with the closing 12 year, non-recourse first mortgage financing of US$58.9 million was arranged carrying an interest rate of 5.4%. RioCan's net equity investment in this asset was US$7.8 million.

Canadian Acquisitions

Wharncliffe Centre

On September 22, 2010, RioCan completed the purchase of Wharncliffe Shopping Centre in London, Ontario for a purchase price of $12.7 million at a cap rate of 7.0%. Wharncliffe Shopping Centre is a 60,700 square foot grocery-anchored shopping centre anchored by a 40,100 square foot No Frills (Loblaws). Other major tenants at the property include CIBC and Tim Hortons. The property has a weighted average lease term of approximately 7 years, and a weighted average lease rate of approximately $13. The property was acquired unencumbered.

Niagara Square

On September 23, 2010, RioCan completed the acquisition of an additional 15% interest in Niagara Square in Niagara Falls, ON, which brings RioCan's total interest to 30%. RioCan acquired its 30% interest from RRVLP (a partnership of which RioCan held a 15% interest) for a purchase price of $14.1 million at a cap rate of 8.4%. RioCan has not assumed any debt on its interests in the property. The remaining 70% was acquired by Bayfield Realty Advisors who are RioCan's partner at Timmins Square, Timmins, ON, Frontenac Mall, Kingston, ON, and Garden City Shopping Centre, Winnipeg, MB. RioCan will manage the property.

Niagara Square is a 382,300 square foot enclosed mall that is anchored by Cineplex. Other major tenants at the property include Winners, Future Shop, JYSK, Michaels and The Brick. This property was the last remaining real property asset of RioCan's RRVLP partnership.

Acquisition Pipeline

US Pipeline

RioCan has 13 properties that total approximately US$225 million of acquisitions that have been previously announced, but have not yet been completed. These acquisitions include the remaining 2 properties to be acquired in the PREIT portfolio, the remaining five properties to be acquired in the Inland Western portfolio, the acquisition of five properties known as the Edens and Avant portfolio, and the acquisition of Cross Keys Place. The Edens and Avant portfolio and Cross Keys Place were included in the announcement made by RioCan on September 16, 2010.

Canadian Pipeline

RioCan currently has three properties under contract in Canada that if acquired would represent approximately $56 million of acquisitions.

While RioCan will aim to complete these transactions in Canada and the US, no such assurance can be given. RioCan anticipates that these acquisitions will be completed sometime during the fourth quarter of 2010.

About RioCan

RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $10.0 billion as at September 30, 2010. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 280 retail properties, including 11 under development, containing an aggregate of over 60 million square feet. RioCan owns an 80% interest in 19 grocery anchored shopping centres in the United States through its joint venture arrangement with Cedar. 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

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 June 30, 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