RioCan's capital recycling program 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.
Kennedy Commons
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.
Impact Plaza
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.
https://www.globenewswire.com/en/news-release/2021/11/02/2325314/0/en/RioCan-s-capital-recycling-program-continues-to-provide-attractively-priced-capital.html