With CPPIB deal, RioCan to fully own four more properties

RioCan Real Estate Investment Trust has announced an agreement to acquire the CPPIB’s interest in four properties

RioCan Real Estate Investment Trust (RioCan) has announced it has entered into a firm agreement with the Canada Pension Plan Investment Board (CPPIB) to acquire their interest in four currently co-owned properties.

The REIT will acquire CPPIB’s 50% interest at an aggregate price of $352m, after which they will not assume any additional mortgage debt in relation to the acquisition. Assuming the deal closes as planned, RioCan will have 100% ownership of the four assets before the end of the month.

The release reported the following details on the four properties:

Property Name Location Net Leasable Area
(NLA) at 100%
Grandview Corners Surrey, British Columbia 530,000  
RioCan Meadows Edmonton, Alberta 310,000  
RioCan Beacon Hill Calgary, Alberta 530,000  
RioCan Centre Burloak Oakville, Ontario 455,000  

"We are very pleased to be able to complete this transaction with CPPIB, further improving our focus on Canada's core urban markets to approximately 77%. These properties are all high-quality institutional properties, and as with our earlier acquisitions from our partners we are able to integrate this acquisition seamlessly into our portfolio," said Edward Sonshine, CEO of RioCan. "This acquisition, together with the acquisitions that have been completed since September 30, 2015, represents more than $1.2 billion dollars of acquisition activity… These acquisitions, together with organic growth, will be the key drivers to the short-term performance in our Canadian portfolio. Long-term, our active development pipeline of largely urban mixed use properties improves the overall quality of the portfolio and will further support our growth profile."

The acquisition is immediately accretive, from which the company expects additional annualized net operating income of approximately $18 million (net of fees previously earned from CPPIB). The transaction will be funded via internal resources including lines of credit.

The same release notes three other acquisition-related activities. The other activities consist of a firm purchase agreement with Trinity Development Group Inc. ("Trinity") to purchase their 25% interest in Chapman Mill Marketplace in Ottawa, Ontario for $35.6m; the acquisition of the remaining 50% interest in RioCan Thickson Ridge, located in Whitby, Ontario from its partner, Kimco Realty Corporation for $45.0m; and a $31.5 million joint acquisition of the Shops of Summerhill in Toronto, with RioCan acquiring a 75% interest and the remainder going to Tricon Capital Group Inc.

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