- RioCan Real Estate Investment Trust (REI.UN) capital recycling transactions total $880.5 million
- RioCan’s capital recycling program provides an attractively priced source of funding for existing growth opportunities that are expected to generate higher returns
- RioCan and its 50 per cent co-owner, First Gulf, have agreed to sell Kennedy Commons for $215.0 million, or $107.5 million at RioCan’s interest
- RioCan Real Estate Investment Trust (REI.UN) is up 0.18 per cent, trading at C$22.39 at 11:07 am ET
RioCan Real Estate Investment Trust (REI.UN) transactions total $880.5 million at a weighted average capitalization rate of 3.74 per cent.
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,” added Gitlin.
RioCan’s recent capital recycling activities include the sale of Kennedy Commons, an open-air shopping centre in Scarborough, Ontario, for $215.0 million representing a capitalization rate of 4.49 per cent based on in-place net operating income.
The sale, along with its 50 percent 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 per cent, and the sale of its 100 per cent interest in Impact Plaza, an open-air shopping centre in Surrey, British Columbia, for $73.0 million at a capitalization rate of 4.50 per cent.
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 values.
In addition, capital partnerships established through the divestiture of partial interests further mitigate risk and generate 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 per cent 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 per cent 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.
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 per cent co-owner, Groupe Harden, sold a 100 per cent 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 per cent. 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.
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.
RioCan Real Estate Investment Trust (REI.UN) is up 0.18 per cent, trading at C$22.39 at 11:07 am ET.
