RioCan’s capital recycling program continues to provide attractively priced capital
TORONTO, Nov. 02, 2021 (GLOBE NEWSWIRE) — RioCan Real Estate Investment Trust (“RioCan” or the “Trust”) (TSX: REI.UN) today provided an update on its capital recycling program. For 2021, RioCan’s disposition transactions total $880.5 million at a weighted average capitalization rate of 3.74%, of which all but $16.5 million are closed or firm. These transactions provide an attractively priced source of funding for existing growth opportunities that are expected to generate higher returns.
“RioCan is seizing the opportunity arising from increased demand for convenience-based, well-located retail assets that are typical of those in our portfolio. The Trust is crystalizing the value inherent in our assets and redeploying proceeds into higher return initiatives. At the same time, we are positioning our portfolio and pipeline to accelerate growth,” said Jonathan Gitlin, President and Chief Executive Officer of RioCan. “These transactions reinforce the quality and value that exist within our well-positioned, major market property holdings. The proceeds will work hard for our Unitholders as the disposition program effectively repatriates capital to more beneficial uses, strengthening RioCan’s balance sheet and funding more diverse projects that generate higher returns.”
RioCan’s recent capital recycling activities include:
- The sale, along with its 50% co-owner, of Kennedy Commons, an open air shopping centre in Scarborough, Ontario, for $215.0 million representing a capitalization rate of 4.49% based on in-place net operating income (“NOI”);
- The sale, along with its 50% co-owner, of Centre Carnaval Lasalle, an open air shopping centre in Montreal, Quebec, for $70.0 million at a capitalization rate of 2.09%;
- The sale of its 100% interest in Impact Plaza, an open air shopping centre in Surrey, British Columbia, for $73.0 million at a capitalization rate of 4.50%; and
- The completion of its previously announced joint venture partnership with Bentall GreenOak / Sun Life Assurance Company of Canada (“BGO / Sun Life”) with the sale of a 50% non-managing interest in a three-property retail and residential portfolio for $151.2 million at a blended capitalization rate of 4.11%.
RioCan’s capital recycling program provides multiple benefits including, efficient capital to fund high growth value creation initiatives such as mixed-use development. It also allows for the monetization of embedded density value. In addition, capital partnerships established through the divestiture of partial interests further mitigates risk and generates consistent and sustainable fee income. RioCan has also achieved qualitative improvements through its continued disposition of certain secondary market, low growth assets.
RioCan and its 50% co-owner, First Gulf, have agreed to sell Kennedy Commons for $215.0 million, or $107.5 million at RioCan’s interest, to a local private investor. The sale price represents a capitalization rate of 4.49% based on in-place NOI. Acquired in 1999, the property is an approximately 412,000 square foot grocery anchored open air centre located in the Scarborough area of Toronto. The transaction is expected to close in the fourth quarter of 2021, subject to customary closing conditions.
Centre Carnaval LaSalle
Located in the LaSalle area of Montreal, Centre Carnaval LaSalle was acquired in 1998 and is an approximately 208,000 square foot grocery anchored open air centre. RioCan and its 50% co-owner, Groupe Harden, sold a 100% interest in the property to a local investment and development company for $70.0 million, or $35.0 million at RioCan’s interest. Based on in-place NOI, the sale price represents a capitalization rate of 2.09%. The sale price also reflects the redevelopment potential that RioCan and Harden were able to surface. This transaction was completed in the third quarter of 2021.
Acquired in 2006, Impact Plaza is an approximately 135,000 square foot grocery anchored open air centre located in Surrey, British Columbia. RioCan sold the property in the third quarter of 2021 to a local private developer for $73.0 million, representing a capitalization rate of 4.50% based on in-place NOI.
Bentall GreenOak / Sun Life Assurance Company Joint Venture
In October 2021, RioCan closed the sale of a 50% non-managing interest in a three-property portfolio expanding its existing partnership with BGO / Sun Life to deliver new growth and investment opportunities for both parties. The portfolio, based in the Greater Toronto Area, is comprised of a multi-family residential rental property called Pivot™, and two grocery anchored retail assets, RioCentre Oakville and Spring Farm Marketplace. The sale price for the 50% interest in the portfolio was $151.2 million, which represents a blended capitalization rate of 4.11% based on in-place NOI for the income-producing retail properties, and stabilized NOI for the residential property, which is currently in lease up. To date, Pivot is currently 68.4% leased despite being launched in the fourth quarter of 2020 during the second wave of the Pandemic.
RioCan is one of Canada’s largest real estate investment trusts. RioCan owns, manages and develops retail-focused, increasingly mixed-use properties located in prime, high-density transit-oriented areas where Canadians want to shop, live and work. As at June 30, 2021, our portfolio is comprised of 214 properties with an aggregate net leasable area of approximately 37.2 million square feet (at RioCan’s interest) including office, residential rental and 15 development properties. To learn more about us, please visit www.riocan.com.
Forward Looking Information
This News Release contains forward-looking information within the meaning of applicable Canadian securities laws. This information reflects RioCan’s objectives, our strategies to achieve those objectives, as well as statements with respect to management’s beliefs, estimates and intentions concerning anticipated future events or expectations that are not historical facts. Forward-looking information 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 information reflects management’s current beliefs and is based on information currently available to management. All forward-looking information in this News Release is qualified by these cautionary statements.
Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan’s current estimates and assumptions, which are subject to numerous risks and uncertainties, including those described in the “Risks and Uncertainties” section in RioCan’s MD&A for the period ended June 30, 2021 and in our most recent Annual Information Form, which could cause actual events or results to differ materially from the forward-looking information contained in this News Release.
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 this forward-looking information.
The forward-looking statements contained in this News Release are made as of the date hereof, and should not be relied upon as representing RioCan’s views as of any date subsequent to the date of this News Release. Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.