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.

Just Posted

Avid Penhold climber Catlin Hannah’s death a reminder of the dangers of scrambling

Hannah never returned from his Mount Smuts attempt on Aug. 12.

Children, elderly at risk as smoke from distant fires hangs over parts of B.C.

VANCOUVER — Thick smoke blanketing British Columbia communities far from any flames… Continue reading

Trudeau: no apologies for heckler encounter, pledges to call out ‘hate speech’

OTTAWA — Hate speech and the politics of division are creating a… Continue reading

Rocky Mountain House RCMP charge woman with drug trafficking

Rocky Mountain House RCMP have charged a woman with drug trafficking after… Continue reading

WATCH: Medicine River Wildlife Centre opens new playground

The grand opening of the playground was Saturday morning

Police chiefs want new data-sharing treaty with U.S. as privacy questions linger

OTTAWA — Canada’s police chiefs are pressing the Trudeau government to sign… Continue reading

Pope on sex abuse: “We showed no care for the little ones”

VATICAN CITY — Pope Francis issued a letter to Catholics around the… Continue reading

Ottawa announces $189M to extend employment insurance for seasonal workers

ESCUMINAC, N.B. — Ottawa has announced $189 million for an employment insurance… Continue reading

Trudeau formally announces he’ll run again in next year’s election

MONTREAL — Justin Trudeau will run again in the 2019 federal election.… Continue reading

Smoke from B.C. wildfires prompts air quality advisories across Western Canada

VANCOUVER — More smoky, hazy air is expected to blanket much of… Continue reading

Anti-pipeline protesters released days before weeklong jail sentences end

MAPLE RIDGE, B.C. — Several pipeline protesters were released from a British… Continue reading

All eyes on Andrew Scheer as Conservative convention set for Halifax

OTTAWA — After a week of internal caucus squabbles, Conservative Leader Andrew… Continue reading

Trump says his White House counsel not a ‘RAT’ like Nixon’s

BRIDGEWATER, N.J. — President Donald Trump insisted Sunday that his White House… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month