RioCan strikes $181 million deal with U.S.-based Cedar Shopping Centers

TORONTO — RioCan Real Estate Investment Trust (TSX:REI.UN) is making its first major U.S. acquisition, with a US$181-million deal to acquire shopping malls in the northeastern and Mid-Atlantic states as well as a minority stake in a U.S. developer.

TORONTO — RioCan Real Estate Investment Trust (TSX:REI.UN) is making its first major U.S. acquisition, with a US$181-million deal to acquire shopping malls in the northeastern and Mid-Atlantic states as well as a minority stake in a U.S. developer.

Canada’s largest shopping mall owner said Monday it had struck definitive agreements with Cedar Shopping Centers Inc. (NYSE:CDR) to take an equity stake in the Port Washington, N.Y. real estate investment trust, owner of 124 shopping centres.

Under the deals, RioCan will form a joint venture to acquire retail properties to be owned 80 per cent by the Canadian company and 20 per cent by Cedar. The first properties in the joint venture are seven grocery store-anchored shopping centres in Massachusetts, Pennsylvania and Connecticut currently owned by Cedar.

RioCan will also take a 15 per cent stake in Cedar, with the acquisition of 6.7 million shares and 1.4 million warrants of the U.S. company.

RioCan said it will invest US$181 million in the transaction, including a net equity investment of US$106 million after assumption of US$75 million of property level mortgage debt.

“RioCan’s objective is to take a measured and defensive approach to investment in the U.S. market.” president and CEO Edward Sonshine said after stock markets closed Monday.

“We believe that this joint venture with Cedar permits RioCan to team up with a very strong, experienced and well established management platform, for our first acquisition in the U.S.”

RioCan reported Monday a profit of $28.4 million or 12 cents per unit for the quarter ended Sept. 30 compared with a profit of $40.9 million or 19 cents per unit a year ago.

Cedar said the two companies expect to acquire up to $500 million worth of supermarket-anchored properties in the northeast and mid-Atlantic states in the next two years. The companies will also enter into a three-year standstill agreement on RioCan’s minority stake in Cedar.

“We expect the great financial strength of RioCan and its commitment to our company to be beneficial for both companies in the coming years,” Cedar CEO Leo Ullman said.

“We believe that this important investment in our company will lead to the creation of meaningful added value for the benefit of shareholders as we move forward.”

RioCan said the properties are well located within established communities in Massachusetts, Pennsylvania and Connecticut and include grocery anchor tenants such as Giant Foods and Stop & Shop, two grocery retailers owned by Royal Ahold, and Super Fresh, which is owned by Great Atlantic and Pacific Tea Company Inc.

The initial property portfolio will continue to be managed by Cedar.

“We believe that this transaction with Cedar presents an excellent opportunity for RioCan to make a cautious introduction into the United States and to build a defensive portfolio which includes the potential to achieve greater returns not only from organic rent growth but through the leasing of vacant space over the next 12-24 months,” added Sonshine.

“The combination of assets in Canada’s fastest growing markets with a stabilized portfolio of high quality retail assets in the U.S. will give RioCan a greater presence as one of North America’s leading retail landlords as well as providing another avenue for growth.”

RioCan is Canada’s largest real estate investment Trust with a total capitalization of C$7.8 billion and 247 retail properties, including 13 under development.

The deal was announced after the close of stock market trading Monday. Earlier, RioCan units fell 15 cents to C$17.75 on the TSX. In trading on the New York Stock Exchange, Cedar shares fell four cents to US$5.64.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Blockades remain in place as Wet’suwet’en hereditary chiefs returning to B.C.

Hereditary chiefs from Wet’suwet’en First Nation are expected to return to British… Continue reading

Fort Macleod, Alta., to get special advance screening of new ‘Ghostbusters’ film

There will be something strange in the neighbourhood of Fort Macleod, Alta.,… Continue reading

Hundreds turn up at Coldest Night of Year walk in Red Deer

It wasn’t the coldest night of the year, which probably helped the… Continue reading

Police in Saskatoon shoot two dogs that attacked man, then advanced on officers

SASKATOON — Police in Saskatoon say officers had to open fire at… Continue reading

13-year-old Maskwacis teen missing

Maskwacis RCMP are asking for public assistance to locate 13-year-old Rebecca Soosay.… Continue reading

Fashion Fridays: The 8 best quality online stores! Shop the ultimate sales

Kim XO, helps to keep you looking good on Fashion Fridays on the Black Press Media Network

Your community calendar

Feb. 19 A Liberation of Holland event is being held at the… Continue reading

Wranglers win wild Game 1 double OT thriller over Red Deer Vipers

The best-of-seven series continues Sunday in Sylvan Lake

Kings and Queens basketball triumph over Ambrose, keep playoff hopes alive

Guard Sandra Garica-Bernal sets new Queens all-time steals mark

Five things to watch for in the Canadian business world in the coming week

TORONTO — Five things to watch for in the Canadian business world… Continue reading

View of a longtime economist: Slower growth but no recession

WASHINGTON — In this high-profile election year, the U.S. economy boasts an… Continue reading

Amy, chasing: Klobuchar, already beating odds, faces uphill climb

WASHINGTON — It’s been a running gag ever since she launched her… Continue reading

B.C. money laundering inquiry to begin amid hopes for answers, accountability

VANCOUVER — British Columbia’s attorney general hopes an inquiry into money laundering… Continue reading

Russian spy case documents missing or destroyed, Canada’s info watchdog finds

OTTAWA — Federal officials lost or possibly destroyed sensitive records about the… Continue reading

Most Read