RioCan REIT Selling Seven Enclosed Malls for $145M

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TORONTO-Locally based RioCan REIT is selling seven enclosed malls to Ontario-based Retrocom Mid-Market REIT for CA$182 million (US$145.19 million). Three are in Quebec, three are in Saskatchewan and one is in Quebec. The properties have a combined 1.8 million sf of lettable space. The sale is expected to close in mid-July, 20 days after a scheduled vote by Retrocom shareholders. As per the agreement, Retrocom will assume about $90 million of existing mortgages and RioCan will receive a secured convertible debenture for $30 million for a term of three years at an interest rate of 4.5%. The balance of the purchase price will be paid in cash. In addition, RioCan will retain the property management assignment for the portfolio for a period of three years. The seven properties are South Hill Mall, Prince Albert, Saskatchewan; Southland Mall, Regina, Saskatchewan; Town N Country Mall, Moose Jaw, Saskatchewan; Elgin Mall, St. Thomas, Ontario; Mountainview Mall, Midland, Ontario; Orangeville Mall, Orangeville, Ontario; and Plaza LaSarre, LaSarre, Quebec. RioCan is Canada’s largest REIT with total assets of approximately CA$4.1 billion. It has ownership interests in a portfolio of 186 retail properties across Canada containing an aggregate of 46 million sf, including partners’ and shadow anchors’ interests. RioCan REIT chief executive Ed Sonshine was not immediately available Monday morning for comment on the strategy behind the disposition, and neither was Retrocom CFO Chris Geddes.Retrocom is an open-end REIT focused on owning and acquiring mid-market commercial properties in primary and secondary cities across Canada. The company went public on March 22, 2004, selling 11.9 million shares for about $118 million. Net proceeds were used to acquire its current portfolio, which includes 3.7 million sf in 29 properties in British Columbia (7), Ontario (5), Alberta (5), Manitoba (4), Saskatchewan (4), Quebec (1), New Brunswick (1), Nova Scotia (1) and Yukon (1).Twenty-two of the 29 properties were acquired from Retrocom Growth Fund Inc., a publicly owned labor-sponsored investment fund. Interests in the other seven properties were acquired from four other vendors. In addition, Retrocom Mid-Market REIT has the preferential right to acquire from Retrocom Growth Fund income-producing commercial properties upon completion of development and lease-up.