RioCan Real Estate Investment Trust
TSX : REI.UN

RioCan Real Estate Investment Trust
CPP Investment Board

CPP Investment Board

June 25, 2008 15:00 ET

RioCan Real Estate Investment Trust to Sell Interests in Two Developments to CPP Investment Board

Total aggregate development costs of the two projects expected to be approximately $440 million

TORONTO, ONTARIO--(Marketwire - June 25, 2008) - RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN), Trinity Development Group Inc. ("Trinity") and CPP Investment Board ("CPPIB") today announced that they have entered into a firm agreement for RioCan and Trinity to sell a 50% non-managing interest in two developments to CPPIB. The transaction is expected to close by June 30, 2008.

The two developments are Jacksonport located in Calgary, Alberta and St. Clair Avenue and Weston Road located in Toronto, Ontario. The total development cost of the two projects is expected to aggregate approximately $440 million. Under the agreement, RioCan and Trinity will each retain a 25% ownership interest in the two developments.

The new joint venture, which will develop two premier new format retail centres, will expand RioCan's relationship with one of Canada's largest pension funds. RioCan and CPPIB are currently partners at three projects: RioCan Beacon Hill located in Calgary, Alberta; RioCan Centre Burloak located in Oakville, Ontario; and RioCan Meadows located in Edmonton, Alberta. The closing of the previously announced forward purchase transaction for these three shopping centres is substantially complete.

Jacksonport, located at 36th Street NE and Country Hills Boulevard NE in Calgary, is a 100-acre development that will consist predominately of new format retail. RioCan currently owns 60% of the project, while Trinity owns 40%. Both RioCan and Trinity will be reducing their interest to 25% and CPPIB will be acquiring 50% of the development. Negotiations with a number of national anchor tenants are well advanced and strong expressions of interest have been received from a wide range of tenants. The aggregate cost of the development is expected to be approximately $230 million and upon completion, will feature approximately 1.1 million square feet of retail space. Site servicing commenced in June 2008 and tenant turnover is expected to commence by June 2010, with overall project completion by late 2011.

The St. Clair and Weston development benefits from a well-established urban node at the intersection of St. Clair Avenue and Weston Road in the "Stockyards" area of Toronto. The development features over 19 acres, with 1,182 feet of frontage on Weston Road and 828 feet of frontage on St. Clair Avenue West. RioCan currently owns 60% of the project, while Trinity owns 40%. Both RioCan and Trinity will be reducing their interest to 25% and CPPIB will be acquiring 50% of the development. This urban retail project will ultimately feature approximately 570,000 square feet of retail space. The project concept features a unique urban, two-storey retail prototype that has been successfully utilized in the United States. A number of national tenants have expressed interest in the site. The aggregate cost of the development is expected to be approximately $210 million. Pending municipal approvals, it is anticipated that site servicing will commence in June 2009 and overall project completion by late 2010.

RioCan, along with its development partner Trinity, will manage all aspects of the development, construction and leasing of the properties and will earn market based fees for doing so. Upon completion, RioCan will be responsible for property management.

"This investment represents a further expansion of our real estate portfolio with the addition of major, high quality assets and builds on our relationship with RioCan and Trinity, one of Canada's best and largest retail operator and development teams," said Graeme Eadie, Senior Vice-President, Real Estate Investments for CPPIB.

Edward Sonshine, Q.C., President and CEO of RioCan, said, "RioCan is pleased to have CPPIB as a partner for these new development projects. We have enjoyed our existing relationship with them at three other RioCan properties located in Calgary, Edmonton and Oakville. These two projects will result in regional new format retail centres that simply are rarely available for purchase. Working together with Trinity and CPPIB to create long term assets of this nature will be exciting and we expect, profitable for all the partners."

About RioCan

RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $7.7 billion. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 217 retail properties, including 15 under development, containing an aggregate of almost 58 million square feet. For further information, please refer to RioCan's website at www.riocan.com.

About CPP Investment Board

The CPP Investment Board is a professional investment management organization that invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, the CPP Investment Board is investing in public equities, private equities, real estate, inflation-linked bonds, infrastructure and fixed income instruments. Headquartered in Toronto, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm's length from governments. At March 31, 2008, the CPP Fund totaled C$122.7 billion of which $6.4 billion represents private real estate investments. For more information about the CPP Investment Board, visit www.cppib.ca.

About Trinity

Trinity is a leader and innovator in the development and leasing of high quality shopping centres. Established in 1991, Trinity has created over 15 million square feet of large format retail space across Canada. For more information about Trinity, visit www.trinity-group.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 concerning our objectives, our 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", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "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.

These statements are not guarantees of future events and are based on our estimates and assumptions that are subject to risks and uncertainties, which could cause actual events or results described above to differ materially from the forward-looking statements contained herein. Those risks and uncertainties include risks associated with real property ownership, financing and interest rates, environmental matters and construction. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information include: an increasing divergence in the general economy between eastern and western Canada; a less robust retail environment than we have seen for the last few years; interest costs to us remain relatively stable; acquisition capitalization rates increase and land costs for greenfield development decrease; a continuing and accelerating trend towards land use intensification in high growth markets; and equity and debt capital markets will continue to provide access to capital to fund at acceptable costs our future growth program and refinance our debts as they mature. Although the forward-looking information contained herein 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. All forward-looking statements in this press release are qualified by these cautionary statements. Except as required by applicable law, RioCan undertakes 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
    Edward Sonshine, Q.C.
    President & CEO
    (416) 866-3018
    or
    RioCan Real Estate Investment Trust
    Rags Davloor
    Senior Vice President & CFO
    (416) 642-3554
    Website: www.riocan.com
    or
    CPP Investment Board
    May Chong
    Director, Communications
    (416) 868-8657
    Email: mchong@cppib.ca
    Website: www.cppib.ca