In its second major grocery-anchored deal in recent weeks, Nova Scotia’s Crombie REIT (CRR-UN-T) has agreed to acquire a portfolio of 15 retail properties for $216.2 million.

Crombie said Monday it has entered a binding agreement to buy out the remaining 89 per cent from its co-ownership partner, taking full ownership of plazas anchored by Empire-bannered grocery stores.

The properties are located in Alberta, British Columbia, Manitoba, Newfoundland, Nova Scotia, Ontario and Quebec.

The move follows a $134-million acquisition of 13 necessity-based retail properties in Ontario which was announced last week in the trust's Q3 financial report. 

"Together, the acquisitions will add approximately 1.2 million square feet of GLA at Crombie’s share, for an aggregate purchase price of approximately $350 million, excluding closing and transaction costs, at an estimated blended going-in capitalization rate of approximately 6.0%," Crombie said in a press release.

$200-million equity raise announced

To fund the acquisition announced yesterday, Crombie announced it will sell 7,312,500 trust units at $16.00 each through a public offering for gross proceeds of $117 million to a syndicate led by Scotiabank and BMO Capital Markets.

Concurrently, ECL Developments, a wholly-owned subsidiary of Empire Company Limited, will purchase approximately $83 million of Class B LP Units of Crombie Limited Partnership in a private deal.

The Class B LP Units are exchangeable on a one-for-one basis for units. Following closing of the equity financing, Empire will continue to hold an approximate 41.5 per cent economic and voting interest in Crombie.

The offering is expected to close on or about November 18. Closing is not conditional on completion of either of the acquisitions, Crombie said in the announcement.

While Crombie noted in its Q3 disclosures that the $134-million Ontario deal would initially draw on its revolving credit line, proceeds from this new $200-million equity offering will help pay down that credit facility and fund the purchase, the REIT said on Monday.

The co-owned portfolio

Crombie will be taking back full possession of the 15 properties after selling the 89 per cent interest in them to Oak Street in 2019 for $193 million.

The REIT had acquired the properties between 2008 and 2014 and continued to manage and operate them when they were sold to U.S.-based Oak Street.

Crombie is acquiring the stake under its right of first refusal in the co-ownership agreement.

The portfolio comprises approximately 721,000 square feet of GLA, including Crombie's existing 11-per-cent-share.

The properties are:

• 94 McLeod Ave. (51,000 sq. ft.) in Spruce Grove, Alta., anchored by Safeway;
• 55 Castleridge Blvd. (56,000 sq. ft.) in Calgary, anchored by Safeway;
• 9601 Franklin Ave. (41,000 sq. ft.) in Wood Buffalo, Alta., anchored by FreshCo;
• 850 Saddletowne Cir. (51,000 sq. ft.) in Calgary, anchored by FreshCo Chalo!;
• 4202 South Park Dr. (45,000 sq. ft.) in Stony Plain, Alta., anchored by Safeway;
• 3664 Yellowhead Hwy. (43,000 sq. ft.) in Smithers, B.C., anchored by Safeway;
• 945 Columbia St. W. (50,000 sq. ft.) in Kamloops, B.C., anchored by FreshCo;
• 45850 Yale Rd. (52,000 sq. ft.), in Chilliwack, B.C., anchored by FreshCo;
• 318 Manitoba Ave. (42,000 sq. ft.) in Selkirk, Man., anchored by Safeway;
• 45 Ropewalk Ln. (50,000 sq. ft.) in St. John's, N.L., anchored by Sobeys;
• 610 Panavista Dr. (48,000 sq. ft.) in Dartmouth, N.S., anchored by Sobeys;
• 500 Riddell Rd. (46,000 sq. ft.) in Orangeville, Ont., anchored by Sobeys;
• 20 Melbourne Dr. (35,000 sq. ft.) in Bradford, Ont., anchored by Sobeys;
• 3950 Rue King O. (52,000 sq. ft.) in Sherbrooke, Que., anchored by IGA Extra; and
• 5555 boul. des Gradins (59,000 sq. ft.), in Quebec City, anchored by IGA Extra.

The $216.2-million purchase price includes the assumption of $56M of existing mortgage debt and excludes closing and transaction costs.

The properties are 100 per cent occupied and anchored by Safeway, Sobeys, FreshCo and IGA Extra stores, with approximately 98 per cent of annual minimum rent from Empire and a weighted average lease term of approximately 15.9 years, Crombie said. 

The transaction is expected to close late in Q4 or early 2027.

The Ontario portfolio

Crombie also released details on its $134-million acquisition in Ontario, which adds 588,000-sq.-ft. to its portfolio across 13 properties, located at:

• 4610 Ontario St. (50,000 sq. ft.) in Beamsville, anchored by Sobeys;
• 110 Hwy 20 E. (48,000 sq. ft.) in Pelham, anchored by Sobeys;
• 231-247 Mill St. (48,000 sq. ft.) in Angus, anchored by Sobeys;
• 315 Grand River St. N. (46,000 sq. ft.) in Paris, anchored by Sobeys;
• 2080 Jans Blvd. (44,000 sq. ft.) in Innisfil, anchored by Sobeys;
• 812, 814 & 818 Durham St. (42,000 sq. ft.) in Kincardine, anchored by Sobeys;
• 20210 Communication Rd. (35,000 sq. ft.)in Blenheim, anchored by Sobeys;
• 1012 Broad St. E. (30,000 sq. ft.) in Dunnville, anchored by Sobeys;
• 14 Main St. (30,000 sq. ft.) in Brighton, anchored by Sobeys;
• 2755 Laurier St. (17,000 sq. ft.) in Rockland, anchored by Shoppers Drug Mart;
• 902 Mohawk Rd. E. (16,000 sq. ft.) in Hamilton, anchored by Shoppers Drug Mart;
• 1550 & 1580 Cameron St. (104,000 sq. ft.) in Hawkesbury, anchored by Walmart; and
• 1058-1100 10th St. (78,000 sq. ft.) in Hanover, anchored by Walmart.

The portfolio is 100 per cent occupied. In its Q3 conference call, Crombie executives declined to disclose the vendor of the Ontario portfolio, noting only that the acquisition was made in an off-market deal which Crombie sourced from a private seller.

Upon completion, Crombie’s portfolio will comprise 324 properties totalling approximately 20.7 million square feet of GLA, inclusive of joint ventures at Crombie’s share, with committed occupancy of approximately 97.9 per cent and a weighted average lease term of approximately 7.9 years.