TORONTO, Oct. 01, 2019 (GLOBE NEWSWIRE) -- RioCan Real Estate Investment Trust (“RioCan”, TSX:REI.UN) is pleased to announce additional transactions with existing partners, Killam Apartment Real Estate Investment Trust (“Killam”, TSX:KMP.UN) and Boardwalk Real Estate Investment Trust (“Boardwalk”, TSX:BEI.UN). Killam has entered into a firm agreement to purchase a 50% interest in a discrete portion of RioCan’s Elmvale Acres Shopping Centre (“Elmvale Acres”) in Ottawa, Ontario and Boardwalk has purchased a 50% interest in a discrete portion of Sandalwood Square in Mississauga, Ontario, both for the purpose of joining in the development of mixed-use projects on the properties.
“These two transactions are the most recent examples of the inherent value in RioCan’s major market portfolio attracting interest from strong, respected, residential partners. RioCan saw the potential in these lands, which were either vacant or producing minimal income. Through obtaining zoning approvals for intensification, we drive net asset value (NAV) growth, create incremental, sustainable income streams and complement the adjacent retail space,” said Edward Sonshine, Chief Executive Officer of RioCan. “Because the developments will take place on discrete portions of existing sites, we are able to move forward with minimal disruption to the income currently generated from the RioCan owned shopping centres adjacent to the development area.”
On September 27, 2019, Killam agreed to acquire a 50% interest in an approximately 1.45 acre portion of Elmvale Acres for a purchase price of $3.7 million based on $45.00 per buildable square foot of expected future density. RioCan first acquired Elmvale Acres in 2004 and in July 2017 received zoning approval for mixed-use development including approximately 450,000 square feet of residential net leasable area (NLA) or 570 residential rental units, and approximately 123,000 square feet of at grade retail NLA. The mixed-use development is to be completed in five phases and this transaction pertains to the first phase of the project which is expected to close in mid-2020 once severance of the land is obtained. This first phase of development consists of 168 residential rental units and approximately 11,000 square feet of at grade retail NLA. Demolition and site servicing commenced in September 2019.
This transaction represents an expansion of an existing partnership with Killam. Killam recently purchased a 50% interest in Charlottetown Mall in Charlottetown, Prince Edward Island where there is potential to maximize the value inherent in the property including the possible addition of up to 300 new residential units. Killam has already proven itself to be a valued partner with deep local and residential expertise. It owns a 50% interest in FrontierTM in Ottawa, Ontario, one of RioCan Living’s first residential rental projects. Frontier is located adjacent to the new Blair Lite Rail Transit (LRT) station and adjacent to RioCan’s Gloucester Silver City Shopping Centre. Based on the zoning in place, RioCan and Killam can build a total of four residential towers on the site with up to 840 units. Leasing of the 228 units in Frontier phase one started in December 2018 and is proceeding at better than expected velocities and rent. As of September 30, 2019, 85% of the units have been leased at an average monthly rent of $2.49 per square foot. Given the success of the first phase, construction has commenced on the 209-unit second phase, with occupancy expected in 2021.
On July 24, 2019, Boardwalk acquired a 50% interest in just over two acres of a discrete portion of previously vacant land at Sandalwood Square, for a purchase price of $80.00 per buildable square foot based on the expected future density of the development project or $14.9 million in aggregate. Sandalwood Square shopping centre is situated within 100 meters of the future Hurontario – Bristol LRT station in Mississauga, Ontario.
RioCan has submitted a re-zoning application to construct a 25-storey mixed-use building on the site, which will include 470 residential rental units and approximately 12,000 square feet of retail NLA. Zoning approval is anticipated in early 2020, and future intensification phases on the site are envisioned.
The Sandalwood partnership is in addition to Boardwalk and RioCan Living’s BrioTM residential rental development. The 163-unit tower is located on a portion of RioCan’s Brentwood Village Shopping Centre, immediately adjacent to the Brentwood LRT station in Calgary, Alberta and is expected to be completed in 2020.
RioCan leverages strategic partnerships to drive growth through its dominant major market presence and development pipeline while mitigating risk and maintaining a strong balance sheet. RioCan’s development pipeline of major market mixed-use assets as of June 30, 2019 is estimated at 27.2 million square feet, 13.1 million square feet of which is already zoned for mixed-use developments. RioCan currently has 2,700 residential units under construction (at 100%), with an additional 2,100 units expected to be underway by 2021 (at 100%). Mixed-use development and residential intensification of RioCan’s existing assets benefits both retail and residential tenants, and in turn drives growth in rent per square foot. Residential tenants appreciate the convenience of amenities and services at their doorstep, while retail tenants profit from the built-in consumer traffic.
With their prominent, high-growth locations, attractive demographics, superior transit access, forward-looking design, and appealing amenity packages, the Elmvale Acres and Sandalwood Square projects will exemplify the RioCan Living residential rental offering. RioCan’s ongoing partnerships with Killam and Boardwalk allow for cost sharing thereby mitigating risks and at the same time bring a wealth of local residential rental management expertise.
RioCan is one of Canada’s largest real estate investment trusts with a total enterprise value of approximately $14.3 billion as at June 30, 2019. RioCan owns, manages and develops retail-focused, increasingly mixed-use properties located in prime, high-density transit-oriented areas where Canadians want to shop, live and work. As at June 30, 2019 RioCan’s portfolio is comprised of 230 properties with an aggregate net leasable area of approximately 39.1 million square feet, including residential rental and 13 development properties. To learn more about how we deliver real vision on solid ground, visit www.riocan.com.
Forward Looking Information
This News Release contains forward-looking information within the meaning of applicable Canadian securities laws. This information reflects RioCan’s objectives, our strategies to achieve those objectives, as well as statements with respect to management’s beliefs, estimates and intentions concerning anticipated future events or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcomes or events.
Such forward-looking information reflects management’s current beliefs and is based on information currently available to management. All forward-looking information in this News Release is qualified by these cautionary statements.
Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan’s current estimates and assumptions, which are subject to numerous risks and uncertainties, including those described in the “Risks and Uncertainties” section in RioCan's MD&A for the period ended June 30, 2019 and in our most recent Annual Information Form, which could cause actual events or results to differ materially from the forward-looking information contained in this News Release.
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 this forward-looking information.
The forward-looking statements contained in this News Release are made as of the date hereof, and should not be relied upon as representing RioCan’s views as of any date subsequent to the date of this News Release. Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
RioCan Real Estate Investment Trust
Senior Vice President and Chief Financial Officer
416-866-3033 | www.riocan.com
Source: RioCan Real Estate Investment Trust