TORONTO—RioCan Real Estate Investment Trust will deepen its ownership stake in Canadian retail and exit the US market altogether, the Toronto-based REIT said in two separate but related announcements. On Friday the company said it would sell 49 shopping centers in the Northeastern US and Texas to Blackstone Real Estate Partners VIII, on the heels of RioCan closing the second phase of buying out joint venture partner Kimco Realty Corp. on a collection of 22 Canadian properties.

The US$1.9-billion sale to BREP VIII, which takes advantage of the US dollar's current strength relative to its Canadian counterpart, follows RioCan's strategic review of the future of its US portfolio. The properties were acquired between November 2009 and September at a cost totaling C$1.7 billion, or about US$1.22 billion. Accordingly, while the portfolio is coming in below its reported fair value of C$2.9 billion as of Sept. 30, it does represent a gain of C$930 million over the historical cost.

"The sale will enable management to focus exclusively on RioCan's operations in Canada, including its significant development pipeline, a key driver of the trust's future growth strategy," says CEO Edward Sonshine. "Our development pipeline is beginning to pick up speed, and we have a number of projects that have received final approvals where construction will commence within the next year." Sonshine adds that the sale also fortifies RioCan's balance sheet. Morgan Stanley and RBC Capital Markets are acting as financial advisors and Goodmans LLP is acting as legal advisor to RioCan.

On Thursday afternoon, RioCan said it would pay C$238 million for Kimco's interest in the remaining three properties in the portfolio. The sale price includes the assumption of New Hyde Park, NY-based Kimco's share of C$104 million in debt. In a separate deal, RioCan has acquired Kimco's 50% interest in Tillicum Centre, a 468,533-square-foot shopping center in Victoria, B.C. at a net purchase price of C$58.9 million.

Both JV partners are continuing to market a second group of eight retail assets, which are in various stages of marketing. There remains a third group of three transitional properties that were previously occupied by Target, which will be dealt with at a future date.