Just a week after reiterating it was in the market for acquisitions, Choice Properties REIT (CHP-UN-T) says it will spend $206 million to acquire two Toronto mixed-use office and retail properties from Wittington Properties Ltd.
The acquisition involves:
- the remaining 60 per cent interest in West Block, a mixed-use site that combines retail shops anchored by a Loblaws grocery store and office space. It’s located on the northeast corner of Lake Shore Boulevard and Bathurst Street in Toronto, and;
- the Weston Centre, a multi-tenant office and retail site, including a Loblaws grocery store at Yonge Street and St. Clair Avenue in Toronto.
“We are pleased to acquire these high-quality, well-located properties in Toronto,” said Rael Diamond, president and chief executive officer of Choice Properties, in a release issued Tuesday night.
“George Weston Limited and affiliated companies account for approximately 55 per cent of the net operating income with a weighted average lease term of approximately nine years, which demonstrates Choice Properties’ ability to generate stable and growing net operating income through strategic acquisitions.”
The properties comprise approximately 585,000 square feet of gross leasable area.
The purchase price, which does not include transaction costs, will be satisfied via the issuance of 16.5 million Choice Properties trust units, the REIT says in the release.
Choice, Wittington joint venture
Choice had been involved in a joint venture with Wittington to “revitalize and restore” the original Loblaw Groceterias building to create West Block. When this transaction closes, Choice will own 100 per cent of the West Block property.
In addition, the Weston Centre will continue to serve as the head office of Choice Properties and its parent company, George Weston Limited.
The Weston family is also the majority owner of Wittington, holding 79.2 per cent of the private investor through the Garfield Weston Foundation. The U.K.-based Wittington is involved in a number of ventures, including foods, retail, real estate, hotels and other investments.
It was established in 1941 by Garfield Weston, and in 1958 was placed under the effective control of the trust. It supports a number of charitable causes in the U.K.
The purchase price for the acquisition was established in consultation with RBC Capital Markets (on behalf of Choice Properties) and CIBC Capital Markets (Wittington).
The acquisition is subject to customary closing conditions, including approval from the Toronto Stock Exchange, and is expected to be completed by July 31.
Choice Properties looking for acquisitions
During the REIT’s Q2 2020 financials call a week ago with analysts, CFO Mario Barrafato noted Choice had been focused on solidifying its balance sheet, and preparing for what could be an extended challenging period due to the ongoing COVID-19 pandemic.
“Our focus has been pushing out our debt maturities, minimizing refinancing risk and making liquidity,” he said during the conference call.
“Right now we are using whatever capital we can into our development program. It has slowed down a little bit but it will get ramped back up.”
He then said Choice remained in the market for new acquisitions.
“When opportunities arise, we’ll get back into capital recycling,” he said, adding that if properties become available “we would be active in purchasing high-quality assets.”
About Choice Properties REIT
Choice Properties is the owner, manager and developer of a portfolio comprising 724 properties, totalling 65.6 million square feet of gross leasable area.
The portfolio is comprised of retail properties predominantly leased to necessity-based tenants; industrial, office and residential assets. It also offers a substantial development pipeline.
Choice Properties has a strategic alliance with its principal tenant, Loblaw Companies Limited, offering it a competitive advantage providing long-term growth opportunities.