TORONTO, Sept. 27, 2019 (GLOBE NEWSWIRE) -- RioCan Real Estate Investment Trust (“RioCan”, TSX:REI.UN) is pleased to announce that it has acquired the remaining 50% interest of the residential rental component, eCentralTM, the remaining 50% interest in the retail component and 70 commercial parking stalls of the ePlace mixed-use development at the northeast corner of Yonge Street and Eglinton Avenue in Toronto, Ontario. The total purchase price of $114.1 million is determined based on cost plus $10.0 million for eCentral, and a 7.0% capitalization rate on the stabilized Net Operating Income (NOI) for the retail component. The development yield for the commercial and retail components is estimated at 5.3% and the total value creation is estimated at approximately $120.0 million including gains from the condominium component of the project.
Residential leasing commenced at eCentral in December 2018 and is progressing ahead of expected leasing velocities and rents. As of September 26, 2019, 72% of the units have been leased at an average monthly rent of $3.88 per square foot for market rent units.
RioCan has secured $150.0 million of financing to replace the existing construction financing for both the residential and retail components of the development at an attractive, fixed interest rate of 2.58% for an 11-year term, which was advanced upon closing. Upon stabilization which is expected to occur by the end of the first quarter of 2020, it is anticipated that the loan will become CMHC insured at which time the interest rate of such advance will be reduced to 2.33%. In addition, upon stabilization a second tranche of funding estimated to be approximately $40.0 million will be advanced at an interest rate to be determined at such time.
“This acquisition represents another important step forward in our transformation to a major market, mixed-use focused REIT. RioCan recognizes that the thriving, transit-oriented intersection of Yonge and Eglinton has significant income and value growth potential, and we are well positioned as the dominant landlord in the area,” said Edward Sonshine, Chief Executive Officer of RioCan. “ePlace joins, among others, Yonge Eglinton Centre, Yonge Sheppard Centre, King Portland Centre and The Well, all in Toronto, Ontario, as part of RioCan’s expanding portfolio of dynamic mixed-use urban assets”.
ePlace is a 705,000 square foot mixed-use development comprising: 22,000 square feet of retail space; 20,000 square feet of fully sold out commercial office condominium space; eCondos, a 58 storey, 623 unit fully sold out condominium tower; and eCentral, a 36-storey, 466-unit rental residential tower. Retail leasing at ePlace is essentially complete with leases in place for a flagship TD Bank and innovative food service tenants.
eCentral is a prototypical RioCan LivingTM development, with an emphasis on design, quality, professional management, customized amenities, retail integration and access to transit. The development is perfectly situated, as it will have direct underground access to the Yonge/University subway line and the future Eglinton Crosstown LRT. Adjacent to the retail space in ePlace, and across the street from Yonge Eglinton Centre, eCentral residents will enjoy a direct connection to the vast retail and service options at their doorstep. Yonge Eglinton Centre retailers will benefit from additional consumer traffic as residents move into their new homes.
The completion of ePlace signifies the end of the transformation of the North side of the Yonge and Eglinton intersection. This acquisition deepens RioCan’s Greater Toronto Area presence and enhances its ability to drive value within this dynamic and growing area.
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