RioCan REIT (REI-UN-T) has begun the selloff of up to $2 billion in properties in secondary Canadian markets, and the first buyer is fellow retail real estate holder CT Real Estate Investment Trust (CRT-UN-T). 

CT REIT will purchase 7 Canadian Tire-anchored properties from RioCan REIT.

The companies announced this morning CT REIT will purchase seven properties, all anchored by Canadian Tire stores, for $200 million.

“We are delighted to be purchasing these well-located properties, each of which is tenanted by Canadian Tire, and in some cases, other members of the Canadian Tire Family of Companies,” said Ken Silver, president and chief executive officer, CT REIT, in a release this morning.

“With the insight we have into retail store performance as well as the attractive fundamentals of the markets in which these properties are located, we are extremely pleased with these additions to our growing portfolio.”

The properties are located in Collingwood, Hamilton, Orillia, St. Catharines and Sudbury, Ont; Yorkton, Sask.; and Oliver, B.C.

Together, they represent approximately 1,283,000 square feet of gross leasable area.

CT REIT is acquiring the portfolio at a weighted average going-in cap rate of 6.3 per cent and will be funding the purchases through its credit facilities.

Properties included in the transaction

The properties are:

* Collingwood Centre, 210,000 square feet, major tenants Canadian Tire and gas bar, Sport Chek, Mark’s, Bed Bath & Beyond, Winners, FreshCo, Dollarama;
* Upper James Plaza, Hamilton, 126,000 square feet, Canadian Tire and gas bar, Metro;
* Orillia Square Mall, 318,000 square feet, Canadian Tire, No Frills, The Brick, Dollar Tree;
* GoodLife Centre, St. Catharines, 144,000 square feet, Canadian Tire (call centre), GoodLife Fitness;
* Sudbury Place, 148,000 square feet, Canadian Tire, LCBO, BMO;
* Parkland Mall, Yorkton, 264,000 square feet, Canadian Tire, Save-On-Foods, Shoppers Drug Mart, Winners;
* Southwinds Crossing, Oliver, 73,000 square feet, Canadian Tire, Mark’s, Buy-Low Foods.

RioCan announced in early October it would be selling off about $2 billion in properties (see RioCan to sell $2 billion in properties, focus on major markets) as it makes a final push to achieve its strategic plan to focus on Canada’s six largest retail markets.

This is the first announced transaction related to the strategy. CEO Ed Sonshine said when the strategy was announced, RioCan plans to sell up to 12.5 million square feet during this reorganization of its portfolio — which could take up to two years.

When complete, RioCan expects to earn close to 95 per cent of its revenues from properties in the six major Canadian markets of Toronto, Montreal, Vancouver, Calgary, Edmonton and Ottawa. 

“The success of the program will, quite frankly, dictate the timing. If we find big appetites out there which will lead to better pricing, then obviously we may accelerate,” Sonshine said in October.  “Conversely we may slow it down. . . . But there are lots of interested buyers. We have been pleasantly surprised by the numbers of people who have expressed interest.”

The company is also already redeveloping, or has plans to redevelop, up to three dozen of its retail/commercial properties as part of a program to revitalize underperforming assets.

About RioCan, CT REIT

RioCan is Canada’s largest real estate investment trust with a total enterprise value of approximately $13.9 billion as at June 30. RioCan owns, manages and develops retail-focused, increasingly mixed-use properties located in prime, high-density transit-oriented areas. RioCan’s portfolio (before this transaction) was comprised of 299 properties, including 15 development properties, with an aggregate net leasable area of approximately 45 million square feet.

CT REIT’s portfolio is comprised of more than 300 properties totalling approximately 25 million square feet of gross leasable area, consisting primarily of retail properties located across Canada. The majority are anchored by Canadian Tire sites, or other retailers in the CT family of brands.

Canadian Tire Corporation is its most significant tenant and controlling shareholder.

RENX will update this breaking story with more details as they become available.