RioCan REIT is partnering with Concert Real Estate Corporation to redevelop the Sunnybrook Plaza in Toronto.

The Sunnybrook Plaza in Toronto will be redeveloped into two mixed-use residential towers by RioCan and Concert.

The two firms made the announcement this week, with RioCan selling a 50 per cent interest in the plaza to Concert for $26.3 million. It’s the latest transaction in a series of deals RioCan (REI.UN-T) is facilitating as it moves to redevelop several dozen of its retail properties across Canada. 

Sunnybrook Plaza is located at Bayview and Eglinton Avenue, adjacent to a station on the new Eglinton Crosstown LRT project which is currently under construction.

The partners will share the redevelopment costs on a 50/50 basis with the transaction closing in June.

RioCan has already received approval for the development proposal, which will see 16- and 11-storey mixed-use residential towers constructed on the property. The buildings’ 375,000 square feet of space will include 43,000 square feet of retail.

RioCan and Concert are currently planning to create the residential component as rental suites.

“Our agreement with Concert brings to the table a terrific partner with nearly 30 years of experience developing apartments, condominiums and other commercial properties, with an excellent property management platform that will ensure the success of this exciting mid-town Toronto development,” RioCan chief executive officer Ed Sonshine said in a release.

RioCan will be the interim property manager until the redevelopment begins, and will be the retail property manager on completion. Concert will be the development manager and property manager for the residential portion.

“Building on a solid track record of creating award-winning master-plan communities that leverage our experience, the Sunnybrook redevelopment represents as opportunity to integrate our multi-faceted expertise into an asset that will generate attractive, long-term returns for the pension funds who own Concert,” said Concert president and chief operating officer Brian McCauley in the release.

Local shopping mall

The existing Sunnybrook Plaza contains 50,766 square feet of retail space and is anchored by stores such as Rexall Pharma Plus, Home Hardware, The Source, Rogers and CIBC.

In recent months, Sonshine told RENX RioCan has been continually reassessing the performance of up to 50 of its existing retail properties. The company currently has a list of about 20 sites it feels are ripe for redevelopment and RioCan has been seeking partners with residential and other expertise, he said.

Among its other current projects are:

– The Gloucester City Centre in Ottawa, where it has partnered with Killam Apartment REIT (KMP.UN-T) to construct up to four residential towers and up to 840 rental units at a site beside RioCan’s Gloucester Silver City Shopping Centre, and adjacent to the city’s new LRT Blair Station, set to open in 2018;

– The Brentwood Village Shopping Centre in Calgary, where it is redeveloping a 161,000-square-foot, 11-storey mixed-use tower which will contain approximately 165 units. The partner on this project is Boardwalk REIT (BEI.UN-T), and the building also contains about 10,000 square feet of at-grade retail space. It’s sited along the Northwest Light Rail Transit Line. 

“Over the past 24 years we have amassed a strong portfolio of retail assets in Canada’s six major markets,” Sonshine said. “Some of these properties now provide the opportunity to be redeveloped and intensified to make better use of the lands and improve the quality of our portfolio and the net asset value for our unitholders.”

The players

RioCan is Canada’s largest REIT with a total enterprise value of approximately $14.6 billion. It owns and manages Canada’s largest portfolio of shopping centres with ownership interests in a portfolio of 300 Canadian retail and mixed-use properties, including 15 properties under development, containing an aggregate net leasable area of 46 million square feet.

Concert was founded in 1989 and is 100 per cent pension fund owned. It specializes in developing rental apartments, condominiums and retirement communities, acquiring and developing office, industrial and infrastructure properties and in property management. Concert’s assets are valued at more than $2 billion.