RioCan Nears Closing on Two Canadian Shopping Centers

September 12, 2010
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RioCan Real Estate Investment Trust has waived conditions and expects to close on two new format retail shopping centers during the third quarter of 2010. These two properties, which are located in Hamilton, Ontario and Gatineau, Quebec, have all been developed within the last several years by the vendors.

The aggregate gross leasable area of the two properties is 558,881 square feet. Walmart represents approximately 53 percent of the occupied space by gross leasable area and generates 35 percent of the rental revenue. The average remaining lease term for Walmart is approximately 17.1 years and the average lease term for both properties is approximately 15.5 years at a weighted average lease rate of approximately $13.80 per square foot.

The total purchase price for these two properties is approximately $102 million at a weighted average cap rate of approximately 6.65 percent. The properties are being acquired unencumbered.

Completed in 2006, Gatineau Walmart is on a 48-acre site and is anchored by a 158,800-square-foot Walmart (lease expires in 2026). Other national tenants include GolfTown, Dollarama, BouClair, and Tommy Hilfiger. An additional phase of the property currently under construction will include a 27,000 square foot Winners and will be acquired through an earnout mechanism with the vendor. The property is currently 98 percent occupied.

Hamilton Southeast Walmart, recently completed, is anchored by a Walmart that is expanding and has a lease that will expire in 2028. The property will be shadow anchored by a Canadian Tire. Other national tenants at the property include Staples and Winners, which are expected to open in late September or early October. The property is currently 99.5 percent occupied.

RioCan owns and manages Canada’s largest portfolio of shopping centers with ownership interest in 267 retail properties, including 11 under development. It also owns an 80 percent interest in nine grocery-anchored shopping centers in the U.S. through its joint venture with Cedar Shopping Centers.