H&R Real Estate Investment Trust Acquires Winnipeg Center for $138.5M

H&R Real Estate Investment Trust has acquired Kildonan Place, a shopping center located in Winnipeg, for $138.5 million from a joint venture consisting of Ivanhoé Cambridge and Sears Canada.

kildonianWinnipeg, Ont.—H&R Real Estate Investment Trust has acquired Kildonan Place, a shopping center located in Winnipeg, for $138.5 million from a joint venture consisting of Ivanhoé Cambridge and Sears Canada.

H&R REIT will assign an undivided 50 percent interest to Montez Income Properties Corp. prior to closing, expected in mid-September.

Ivanhoé Cambridge owned 80 percent of the property, with Sears Canada holding the remaining 20 percent. Sears will continue to operate its department store in the mall.

“From a retailer point of view, we see Kildonan Place as a mall that is a central shopping destination for the people of Winnipeg who live close by and those from surrounding areas who drive from outside the city to do their shopping,” Vincent Power, Sears Canada’s divisional vice president, corporate affairs, told Commercial Property Executive. “We do not believe that we have to be owners of mall property to enjoy the successes that a retailer seeks when conducting business in that mall.”

Located at 1555, Regent Ave. West, the mall includes more than 100 stores and services, a six-screen movie theater and a food court.

Primaris Retail REIT, a wholly owned subsidiary of H&R REIT, will manage the property.

“We are pleased to increase Primaris’ portfolio in the Winnipeg market with the acquisition of Kildonan Place,” Patrick Sullivan, Primaris’ chief operating officer, said in a prepared release. “The acquisition of this shopping center is part of our defined property strategy to own properties dominant in their trade area throughout Canada. This is our niche and we excel at managing, leasing and developing this type of property.”

Ivanhoé Cambridge will receive $110.8 million in the deal.

“The freed-up capital from this transaction will allow us to strengthen our Canadian retail portfolio, including our Mills and Outlet Collection retail development projects across the country,” Arthur Lloyd, Ivanhoé Cambridge’s executive vice president, global investments, said in the release.

Sears opened the Kildonan Place location in 1980, its third full-line department store in the Winnipeg area following the opening of Polo Park in 1959 and Garden City in 1970. In 2000, it opened our newest Sears store at St. Vital Centre.

According to Powers, Sears received $27.7 million in the deal, which helps the company create value through the optimization of its network without having any adverse impact on customers or associates working in the store.

“Conditions were such that Sears believes this was an opportunity on both the selling side and the buying side to make this a pleasing transaction for all parties concerned,” Powers said. “Our aim is to enrich the lives of Canadians through products, services, community involvement and shopping experiences that help make every day a great day. We want to be the number one retailer that Canadians think about when they think of shopping for themselves or for their homes.  Sears can achieve this with our Kildonan store, without having to have ownership in the mall itself.”

H&R also owns Winnipeg interests in Garden City Square and the Grant Park Shopping Centre.