TORONTO, ONTARIO--(Marketwired - Jan 13, 2014) - RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) today is pleased to provide an update on its capital recycling program and recent financing activities. RioCan's capital recycling program is serving to increase portfolio concentration in Canada's six largest markets. In addition, RioCan expects to add $215 million of additional capacity to its operating facilities to a total of $644 million, which will further improve the Trust's liquidity profile.
Edward Sonshine, Chief Executive Officer of the Trust said, "The proceeds generated through RioCan's asset sales have been effectively redeployed to improve RioCan's internal growth by investing in our development and redevelopment portfolio, the acquisition of higher growth assets in Canada and the United States, as well as ensuring that we maintain a conservative debt profile.
Through the sale of some of our lower growth properties and assets that require disproportionally higher demands on management, we can better devote our human capital towards projects that we believe will generate greater returns for the Trust.
Also, given the substantial growth of RioCan over the past five years, management felt that it was prudent to increase RioCan's credit facilities in order to provide enhanced liquidity. The added flexibility afforded to RioCan through the increased and extended lines of credit, in combination with our sizeable unencumbered asset portfolio, is a powerful tool that RioCan is able to utilize. This added liquidity also ensures that RioCan has the capital available to pursue its development and acquisition opportunities as they arise."
Disposition and Capital Recycling Program Update
In 2013, as part of RioCan's program to recycle capital into the acquisition of higher growth assets in Canada's six major markets and the Trust's development pipeline, RioCan completed the sale of thirteen Canadian properties at a total sale price of $616 million at a weighted average capitalization rate of 5.9%. The total debt associated with these assets was $159 million.
On December 17, 2013, RioCan completed the sale of its 50% share in Quartiers Dix/30, a 581,121 square foot new format retail property in Brossard, Quebec, to its partner Devimco at a sale price of $193 million, which equates to a capitalization rate of 5.4%. The partner assumed RioCan's share of the outstanding debt on the property of $92 million that carried a weighted average interest rate of 4.8%. The outstanding debt had a weighted average term to maturity of approximately 3.7 years.
On December 2, 2013, RioCan sold The Brick Plaza, a 49,079 square foot non-grocery anchored retail centre in Windsor, Ontario at a sale price of $2 million. The property was sold free and clear of financing.
RioCan has also entered into a firm contract where conditions have been waived to sell Mega Centre Beauport, located in Quebec City, Quebec at a sale price of $47 million, which equates to a capitalization rate of 6.0%. The property will be sold free and clear of financing. Mega Centre Beauport is a 183,130 square foot new format retail centre that is tenanted by Cineplex, Sports Experts and Future Shop. The sale is expected to be completed in the first quarter of 2014.
RioCan has entered into a firm contract where conditions have been waived to sell Madawaska Centre, located in Edmundston, New Brunswick at a sale price of $0.9 million. The property will be sold free and clear of financing. Madawaska Centre is a 271,924 square foot enclosed mall, which was formally anchored by Zellers, and is tenanted by Staples, Bargain Giant, Dollarama and Mark's Work Wearhouse.
Recent Financing Activities
In the fourth quarter of 2013, RioCan renegotiated the terms of two of its operating lines by increasing the capacity of the facilities, extending the maturity dates, and reducing the interest rate spreads associated with these facilities as follows:
|Operating Line as of Sept. 30, 2013 (millions)||Spread*||Maturity||Operating Line as of Dec. 31, 2013 (millions)||Revised Spread*||Revised Maturity|
|$125||BA's/LIBOR +150 bps||Dec. 2013||$185||BA's/LIBOR +125 bps||Dec. 2016|
|$200||BA's/LIBOR +150 bps||Nov. 2014||$250||BA's/LIBOR +125 bps||Nov. 2016|
|* Lines are available in Canadian or US Dollars. Canadian draws are priced off of BA's and US draws are priced off of LIBOR.|
RioCan is also in the process of renegotiating a third existing operating facility and adding a fourth operating line. It is anticipated that the existing line will be increased from $100 million to $130 million and the new facility will have a capacity of $75 million; both are expected to have pricing similar to RioCan's other operating lines and maturity dates of June 2017. RioCan expects that these facilities will be in place during the first quarter of 2014.
When complete, RioCan will have access to $644 million under its credit facilities. The reduced costs and the extended maturity dates for RioCan's lines will provide an efficient and flexible source of liquidity for the Trust. Based on September 30, 2013 fair values, at December 31, 2013, RioCan had approximately $2.0 billion of unencumbered assets, an increase of $19 million from September 30, 2013.
RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $13.6 billion as at September 30, 2013. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 346 retail properties containing more than 83 million square feet, including 51 grocery anchored and new format retail centres containing 14 million square feet in the United States as at September 30, 2013. RioCan's portfolio also includes 15 properties under development in Canada. For further information, please refer to RioCan's website at www.riocan.com.
This News Release contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements made in this News Release (including the sections entitled, "Disposition and Capital Recycling Program Update" and "Recent Financing Activities") concerning RioCan's, intention to complete the disposition of certain assets, increases to its operating facilities, as well as other statements concerning RioCan's objectives, its strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "objective", "may", "will", "expect", "intend", "should", "continue", or similar expressions suggesting future outcomes or events.
These forward-looking statements are not guarantees of future events or performance and, by their nature, are based on RioCan's current estimates and assumptions, which are subject to risks and uncertainties, including those described under "Risks and Uncertainties" in RioCan's Management's Discussion and Analysis for the period ended September 30, 2013 and in RioCan's annual information form dated March 28, 2013, which could cause actual events or results to differ materially from the forward-looking statements contained in this News Release. Those risks and uncertainties include, but are not limited to, those related to: liquidity and general market conditions, tenant concentrations, occupancy levels and defaults, access to debt and equity capital, interest rates, joint ventures/partnerships, the relative illiquidity of real property, unexpected costs or liabilities related to acquisitions, construction, environmental matters, legal matters, reliance on key personnel, unitholder liability, income taxes, United States of America ("US") investment and currency risk, and RioCan's qualification as a real estate investment trust for tax purposes. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a stable retail environment; relatively low and stable interest costs; a continuing trend toward land use intensification in high growth markets; access to equity and debt capital markets to fund, at acceptable costs, the future growth program to enable the Trust to refinance debts as they mature; the availability of purchase opportunities for growth in Canada and the US. Although the forward-looking information contained in this News Release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Certain statements included in this News Release may be considered "financial outlook" for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this News Release.
The Income Tax Act (Canada) contains provisions which potentially impose tax on publicly traded trusts (the "SIFT Provisions"). However, the SIFT Provisions do not impose tax on a publicly traded trust which qualifies as a real estate investment trust ("REIT"). RioCan currently qualifies as a REIT and intends to continue to qualify for future years. Should this not occur, certain statements contained in this News Release may need to be modified.
Except as required by applicable law, RioCan under takes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.