RioCan Realizes Density Value Through New Joint Venture Partnerships and Provides Update on RioCan Living Projects
An ownership agreement was established with a new partner, Maplelands Development Inc. (Maplelands), marking its first Canadian venture.
TORONTO, Aug. 11, 2020 (GLOBE NEWSWIRE) -- RioCan Real Estate Investment Trust (“RioCan”) (TSX:REI.UN) announced today the sale of 50% interests in density primed for mixed-use residential development at two of its properties in Toronto and Ottawa. An ownership agreement was established with a new partner, Maplelands Development Inc. (“Maplelands”), marking its first Canadian venture. The other ownership agreement represents RioCan’s third partnership with existing partner, Killam Apartment Real Estate Investment Trust (“Killam”, TSX:KMP.UN).
“These two transactions are a continuation of RioCan’s strategy to monetize the value that is inherent in our development pipeline as well as to reduce the amount of capital required to build out our urban mixed-use developments that are an important part of RioCan’s evolution. Our assets, with prominent, high-growth locations, attractive demographics and superior transit access as well as our head start with zoning entitlements, have drawn interest and commitment not only from Canada but also from abroad,” said Edward Sonshine, Chief Executive Officer of RioCan. “These partnerships, attractive deal pricing and the ongoing momentum of our residential projects during the current global pandemic, reflect the demand for well-located, high quality residential assets and the significant value creation opportunities that RioCan’s pipeline offers. We remain committed to our robust development strategy to drive sustainable and diversified income and to continue to expand the net asset value of our portfolio.”
Joint Venture with a Large International Company for its First Investment in Canada at Dufferin Plaza in Toronto
On August 10, 2020, RioCan sold a 50% interest of its Dufferin Plaza property to Maplelands for total sale proceeds of $28.8 million, representing approximately $115 per square foot of future density, of which $11.3 million will be paid as several pre-construction development phases are achieved over the next 18 to 24 months. The sale price represents a capitalization rate of 2.62% based on in-place net operating income but is more relevant to the density created by RioCan through the zoning process commenced several years ago. This is $11.6 million above carrying value of which approximately $10.5 million will be recognized as inventory gains in the third quarter of 2020.
Dufferin Plaza is an open air centre on approximately four acres of land at the intersection of Dufferin Street and Apex Road in Toronto. The site is in close proximity to the Lawrence West TTC station, Yorkdale Shopping Centre, Allen expressway and Highway 401. As joint venture partners, RioCan and Maplelands will redevelop the site into a mixed-use property with approximately 608 units or a 417,000 square feet condominium tower and 32,000 square feet of retail space. The project has already received Official Plan approval. RioCan will be the development and retail property manager for the property. RioCan will develop this site in conjunction with its recently acquired 50% interest at adjacent 3180 Dufferin Street. 3180 Dufferin is the third project that RioCan is developing in partnership with Woodbourne. This project is a mixed-use development with a potential 440,000 square feet of gross floor area intended as residential rental and some ground floor commercial. The two projects will complement each other and result in a mixed-use development of nearly 1.0 million square feet.
Maplelands is a newly formed Canadian real estate development company and an affiliate of ASGC Construction (“ASGC”), a United Arab of Emirates based real estate conglomerate with a comprehensive network of vertically integrated subsidiaries. Over the last three decades, ASGC has delivered a considerable number of projects covering the residential, commercial, retail, industrial and hospitality sectors. Maplelands chose the Dufferin Plaza project as its first entry into the Canadian real estate market, given its superior quality and attractive attributes, combined with RioCan’s development expertise.
Joint Venture with Killam for Mixed-use Development of Elmvale Acres in Ottawa
On July 30, 2020, RioCan sold to Killam a 50% co-ownership interest in its Luma™ residential rental property for a purchase price of $3.8 million. This price was based on approximately $45 per square foot of zoned future density. Luma, the first phase of RioCan’s Elmvale Acres Shopping Centre mixed-use development, spans a discrete 1.45 acre portion of the centre that had no existing income. Luma will consist of 168 units and approximately 9,500 square feet of at grade retail net leasable area. RioCan is the development manager of the project and Killam will be the property manager upon completion.
Elmvale Acres Shopping Centre is an open air, grocery-anchored property located in the Elmvale Acres neighbourhood of East Ottawa. The site has immediate access to major arterial roads and transit arteries with an adjacent Bus Rapid Transit (BRT) station. RioCan first acquired Elmvale Acres Shopping Centre in 2004 and in July 2017 received zoning approval for mixed-use development. The first phase of the project, Luma, is already under construction with initial residential occupancy targeted to commence in the third quarter of 2022.
Killam is a recognized apartment REIT with a successful track record of owning, managing and developing apartments and manufactured home communities in Atlantic Canada, Ontario, Alberta and British Columbia. RioCan’s existing partnerships with Killam include RioCan’s mixed-use development project in Gloucester, Ottawa, Ontario with zoning on the site for four residential towers with up to 840 units. Frontier™, the first phase of the development, has been completed and achieved stabilization in the first quarter of 2020. Construction of the phase two, Latitude™, has already commenced. RioCan and Killam also have a 50/50 joint venture for the mixed-use development of Charlottetown Mall in Charlottetown, Prince Edward Island, which has the potential for residential density.
RioCan Living™ Projects Update: Pivot and Latitude
RioCan Living projects, Pivot™ at Yonge and Sheppard in Toronto and Latitude in Ottawa, currently under construction on discrete and previously underutilized parcels of existing RioCan properties, are progressing well. Pivot is a 36-storey, 361 unit residential rental building located at one of Toronto’s busiest intersections, with access to the Yonge and Sheppard subway lines and conveniently located near Highway 401. Initial occupancy at Pivot is on track for the fourth quarter of 2020 and interest in leasing at Pivot has achieved over 800 registrants. Latitude is a 20-storey, 209 unit residential rental building located in close proximity to the Blair Light Rail Transit station. Adjacent to RioCan’s Silver City Gloucester open air centre in Ottawa, Latitude residents will be just steps away from a grocery store and other essential services. While leasing at Latitude is targeted to commence in the fourth quarter of 2021, the site has already achieved over 200 registrants.
About RioCan
RioCan is one of Canada’s largest real estate investment trusts. 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, 2020, our portfolio is comprised of 221 properties with an aggregate net leasable area of approximately 38.6 million square feet (at RioCan's interest) including office, residential rental and 15 development properties. RioCan’s development pipeline as at June 30, 2020, is estimated at 42.7 million square feet, of which 14.8 million square feet is already zoned primarily for mixed-use developments. To learn more about us, please 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, 2020 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.
Contact Information
RioCan Real Estate Investment Trust
Qi Tang
Senior Vice President and Chief Financial Officer
416-866-3033 | www.riocan.com
