Strategy focused on high-growth, high population hubs in Canada’s six major markets
Approximately 100 properties valued at over $2.0 billion to be sold over next two to three years
Sale expected to generate total net proceeds of approximately $1.5 billion; net proceeds to be used to repurchase units under its NCIB and fund its development program
Suspension of the Distribution Reinvestment Plan effective November 1, 2017
Conference call October 2, 2017 at 10:00 am ET
TORONTO, Oct. 02, 2017 (GLOBE NEWSWIRE) — RioCan Real Estate Investment Trust (“RioCan”) (TSX:REI.UN) today announced its plan to accelerate its portfolio focus in Canada’s six major markets through the sale of approximately 100 properties located primarily in secondary markets across Canada over the next two to three years. On completion, RioCan expects to generate in excess of 90% of its annualized rental revenue from Canada’s six major markets (currently 75%). This strategy will further enhance the quality, growth profile and resilience of the Trust’s portfolio of retail focused, increasingly mixed-use properties located in prime, high density, transit oriented areas where Canadians want to shop, live and work.
The key elements of RioCan’s strategy include:
- The sale of over $2.0 billion of income properties primarily located in Canada’s secondary markets, including certain non-core assets in major markets, representing approximately 100 of RioCan’s properties to be sold in phases over the next two to three years. The sales are expected to generate total net proceeds of approximately $1.5 billion;
- Repurchase and cancellation of the Trust’s units through the Trust’s Normal Course Issuer Bid (“NCIB”) program while maintaining its strong credit fundamentals. It is estimated that approximately half of the net proceeds will be used for its NCIB program;
- Continued investment of approximately $300 million to $400 million per year into RioCan’s robust development pipeline, which is focused exclusively in Canada’s six major markets; and
- Suspension of its Distribution Reinvestment Plan (“DRIP”) effective November 1, 2017, in order to maximize the effectiveness of the NCIB
Through the realignment of the portfolio, RioCan is targeting to achieve an annual same property net operating income growth rate of 3% or better, which would result in annual funds from operations per unit growth of 5% or more before gains from marketable securities, gains from residential inventory and fee income in years subsequent to the completion of our disposition program. The enhanced business profile will facilitate growth in RioCan’s distributions and net asset value creation for our unitholders.
“Our strategy to accelerate our portfolio’s focus on Canada’s six major markets will streamline our business model, advance the growth profile of RioCan to one of the strongest organic growth models in Canada, and improve the resilience of our portfolio in the ever changing retail environment,” said Edward Sonshine, CEO of RioCan. “Under this strategy, we will continue to be Canada’s largest REIT, with an enhanced focus on optimizing the value of our existing properties through redevelopment and intensification, diversifying our portfolio into residential real estate, and advancing our robust development pipeline to deliver distribution growth and enhanced net asset value creation for the benefit of our unitholders while meeting the evolving needs of our tenants and the communities we serve.”
RioCan intends to complete the sales in a targeted and phased approach over the next two to three years, which will help mitigate the risks associated with the sale of a portfolio of this size. Given the preliminary nature of these planned dispositions and the flexibility that the Trust intends to maintain over the disposition process, there can be no assurance regarding the timing or expected proceeds of the planned asset sales.
As noted earlier, the proceeds from completed sales will be used to repurchase units under RioCan’s NCIB program, maintain RioCan’s strong credit profile, and fund the Trust’s development activities. The current NCIB will expire on October 19, 2017 and the Trust has received approval from the Board of Trustees to file an application to renew its NCIB program, subject to TSX approval.
In order to maximize the effectiveness of the NCIB, RioCan will suspend its DRIP until further notice effective November 1, 2017. Unitholders that are enrolled in the DRIP will receive the future distributions in cash commencing with any distribution declared in November 2017. If RioCan elects to reinstate the DRIP in the future, unitholders that were enrolled in the DRIP at the time of its suspension and remain enrolled at the time of its reinstatement will automatically resume participation in the DRIP.
Rags Davloor, President and COO of RioCan, said, “The repositioning of RioCan’s portfolio to further prioritize high-growth, high-population hubs will streamline our property and asset management platform, improve operating efficiencies and enhance the Trust’s competitive advantage. Further, this will enable RioCan to capitalize on its portfolio of well-located properties, and support the ongoing development pipeline that will contribute to both RioCan’s long term cash flow growth and net asset value creation.”
CONFERENCE CALL ON OCTOBER 2, 2017
Management will hold a conference call on October 2, 2017 at 10:00am ET to discuss its plan to accelerate its portfolio focus in Canada’s six major markets. Interested participants may take part by dialing 647-427-3230 or toll-free at 1-877-486-4304. A replay of this call will be available until November 3, 2017 by dialing 1-855-859-2056 and entering the passcode 92513086#.
Alternatively, to access the simultaneous webcast, go to the following link on RioCan’s website http://investor.riocan.com/investor-relations/events-and-presentations/ and click on the link for the webcast. The webcast will be archived 24 hours after the end of the conference call and can be accessed for 120 days.
RioCan is Canada’s largest real estate investment trust with a total enterprise value of approximately $13.9 billion as at June 30, 2017. 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. Our portfolio is comprised of 299 properties, including 15 development properties, with an aggregate net leasable area of approximately 45 million square feet. To learn more about how we deliver real vision on solid ground, visit www.riocan.com.
FORWARD LOOKING INFORMATION
This news release contains forward-looking information within the meaning of applicable Canadian securities laws. This information includes, but is not limited to, statements concerning RioCan’s strategic objectives to increase its focus in Canada’s six major markets, the ability and timing needed to complete the sale of assets in its disposition program, as well as statements with respect to management’s beliefs, plans, estimates, and intentions, and similar statements 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 “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “plan”, 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, as described under “Risks and Uncertainties” in RioCan’s Management’s Discussion and Analysis for the period ended June 30, 2017 (“MD&A”) and the Trust’s most recent Annual Information Form, and including that the transactions contemplated herein are completed, 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 these forward-looking statements. Certain statements included in this News Release may be considered “financial outlook” for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this News Release.
Except as required by applicable law, RioCan undertakes no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
Edward Sonshine, O. Ont., Q.C.
Chief Executive Officer
(416) 866-3018 | firstname.lastname@example.org
AVP Investor Relations and Compliance
(416) 864-6483 | email@example.com