RioCan Exercising Purchase Options

TORONTO-RioCan Real Estate Investment Trust has exercised its options to acquire interests in two new retail centers in Ontario for which it provided development financing. The locally based retail REIT closed one deal at the end of March and expects to close the second later this month. Both properties are being acquired without any net cash requirement.In the deal that closed last week, RioCan acquired a 50% interest in RioCan Marketplace in Ottowa. RioCan previously provided mezzanine financing for the development of the 450,000-sf center anchored by Wal-Mart and a non-owned Loblaws. RioCan acquired a 25% interest from each of the developers, First Pro Shopping Centres and The Trinity Development Group. RioCan satisfied the purchase price by assuming about $12.75 million of mortgage debt and with proceeds of the partial repayment of its mezzanine financing.Next week, RioCan is expected to close on its acquisition of 33.3% interest in Green Lane Center, a 434,000-sf center in Newmarket that is anchored by a non-owned Costco and Loblaws. This center also was developed by Trinity using mezzanine financing from RioCan. RioCan is satisfying the purchase price through the assumption of $8 million in mortgage debt and with proceeds from the partial repayment of its mezzanine financing. Upon completion of the transaction, RioCan, Kimco Realty Corp. and Trinity will be equal owners.RioCan president and CEO Ed Sonshine says the two centers provide unleveled yields in excess of 10%. Sonshine adds that RioCan “should enable us to add almost one million square feet of high quality retail to our portfolio for each of the next few years.”RioCan is Canada’s largest real estate investment trust with total assets in excess of $3.7 billion. It has ownership interests in a portfolio of 172 retail properties across Canada containing an aggregate of almost 35 million sf.