Canada’s biggest real estate investment trust has shot on a $200 million offer, the very first move in a plan to offer $2 billion in possessions that will refocus RioCan REIT on 6 core markets.
Toronto-based RioCan will sell 7 retail homes to CT REIT, the realty arm of Canadian Tire, which is the anchor tenant of the properties being sold. The annualized income from the homes is $12 million, based upon the very first nine months of 2017.
RioCan chief executive Edward Sonshine informed CoStar News that the REIT’s scheduled property sale of 100 residential or commercial properties in secondary markets far from metropolitan cores cities that include Toronto, Vancouver, Edmonton, Calgary, Montreal and Ottawa is going “very well” and his company is selling properties in “plans,” the very first one being the deal with CT REIT.
In Ontario, the assets include the 210,000-square-foot Collingwood Centre; the 144,000-square-foot GoodLife Centre in St. Catharines; the 318,000-square-foot Orillia Square Shopping Center; the 148,000-square-foot Sudbury Location and the 126,000-square-foot Upper James Shopping Mall in Hamilton. The other two residential or commercial properties are the 73,000-square-foot Southwinds Crossing in Oliver, British Columbia, and the 264,000-square-foot Parkland Shopping Center in Yorkton, Saskatchewan.
” The first $500 million to $600 million will be exactly what I call direct offers,” stated Sonshine, adding a half dozen offers are in settlement. “When we announced this (in October), and this is why I’m so encouraged, is we were inundated with inbound calls from actual purchasers, not simply brokers.”
RioCan’s first $200 million transaction is expected to see the majority of the shopping malls close in December 2017, and the rest to close in the first quarter of 2018. The net proceeds are being used to pay for financial obligation, fund unit repurchases through a regular course issuer program and fund the trust’s advancement activities.
” I don’t believe our unit worth comes even near recognizing the value of our portfolio,” said Sonshine, in describing the buyback. His business likewise plans to spend $400 million on advancement every year for the next five years.
The CEO said the sale procedure is accelerating but it will most likely still take two years to sell all $2 billion in real estate being targeted, which is expected to deliver $1.5 billion in net profits but still leave RioCan the largest REIT in Canada.
CT REIT stated the 1,283,000 square feet of incremental gross leasable area being acquired features a weighted typical going-in cap rate of 6.3% and that the offer will be moneyed through credit centers.
” We are happy to be purchasing these well-located residential or commercial properties, each which is tenanted by Canadian Tire, and in many cases, other members of the Canadian Tire Household of Companies,” stated Ken Silver, president and CEO of CT REIT, in a statement. “With the insight we have into retail store efficiency in addition to the attractive basics of the marketplaces where these residential or commercial properties are located, we are exceptionally pleased with these additions to our growing portfolio.”