JV Snaps Up 1.1MSF Canadian Retail Portfolio for $156M

RioCan Real Estate Investment Trust and Kimco Realty Corp. have teamed up to acquire a 10-property portfolio of retail assets in central and eastern Canada. The joint venture, RioKim II, will shell out approximately $156 million for the shopping centers, which encompass a total of 1.1 million square feet. Seven of the properties–accounting for an aggregate 540,000 square feet–are located in Ontario and span the cities of Belleville, Chatham, Fergus, Hawkesbury, London and Ottawa. The remaining assets cover 535,000 square feet in Montreal and Gatineau, QC, and Halifax, NS. Six of the properties count Shoppers Drug Mart, Wal-Mart or Zellers as a lead tenant. The retail market in many of Canada’s leading cities is thriving, spurred in part by such factors as low unemployment rates, which is the case in Montreal. The total portfolio of high-quality new format retail centers and neighborhood strip centers has an average age of 11.4 years, and an average occupancy level nearing 98 percent. RioCan will provide source, lease, asset and property management services for the joint venture’s real estate in return for market fees. The acquisition agreement includes the assumption of $82.6 million in existing debt on the properties. RioCan and Kimco, equal owners in the partnership, expect the transaction to close on or around June 25. The two real estate companies have joined forces on transactions in the past, and have an existing joint venture portfolio encompassing over 8.2 million square feet. Among their previous deals was the $170 million acquisition in 2001 of a four-property portfolio of grocery-anchored shopping centers in British Columbia totaling 1 million square feet. The two have since made several other purchases together, most of which involved portfolios totaling at least 1 million square feet. Headquartered in Toronto, RioCan is Canada’s largest REIT with a total capitalization of approximately $7.7 billion. The company owns and manages a 57 million-square-foot portfolio of 216 retail proprieties, 14 of which are in the development phase. New Hyde Park, N.Y.-based Kimco is the owner and operator of the largest portfolio of neighborhood and community shopping centers in the United Stats. As of the close of the first quarter, the REIT owned interests in 1,948 assets with a combined total of 180 million square feet of retail space in 45 states, as well as Canada, Chile, Mexico and Puerto Rico. Company stock opened at $38.45 today.