RioCan Buys Out Partners at Toronto Mixed-Use

The Canadian REIT's purchase of the retail and residential rental components of the 705,000-square-foot ePlace marks another step in its transformation into a major market REIT focused on mixed-use.
eCentral at ePlace. Image courtesy of RioCan Real Estate Investment Trust
eCentral at ePlace. Image courtesy of RioCan Real Estate Investment Trust

RioCan Real Estate Investment Trust is now the full owner of the rental residences and the retail segment at ePlace, a new 705,000-square-foot mixed-use destination in Toronto. RioCan acquired the remaining 50 percent interest in each component from its development partners, Metropia and Bazis International Inc., for a total of $86.2 million (C$114.1 million).

The transaction at ePlace included eCentral, the mixed-use-property’s 36-story residential building featuring 466 rental units; 22,000 square feet of retail space, with a flagship TD Bank serving as anchor; and 70 accompanying parking spaces. In addition, ePlace also encompasses 20,000 square feet of office condominium space, fully sold; a 58-story residential condominium tower with 623 homes, all sold; and 300-plus additional parking spaces.

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RioCan’s purchase of its partners’ stake at ePlace comes two years after the team commenced construction of the transit-oriented development. It also comes as planned, as the partners had agreed at that time that RioCan would acquire Metropia and Bazis’ 50 percent interest in the residential rental building and retail segment upon completion.

Reinvention of a REIT

RioCan’s acquisitions at ePlace dovetail with the company’s planned transformation into a mixed-use focused REIT with a strong presence in prime, high-density Canadian markets. In early September, RioCan took another notable move toward solidifying its conversion by acquiring the 50 percent co-ownership interest in the 1 million-square-foot Yonge Sheppard Centre in Toronto from KingSett Capital’s Canadian Real Estate Income Fund.

New developments are also part of RioCan’s transformation strategy. The REIT’s current pipeline includes several large mixed-use destinations, including The Well, a nearly 3 million-square-foot joint venture project in Toronto that will ultimately feature office and retail components, as well as a residential condominium segment to be built by a third party. Just a few years ago, RioCan held the distinction of being owner and manager of Canada’s largest shopping center portfolio, a collection spanning 82 million square feet.

The company’s change of focus is a sign of the times. As noted last year in PwC and the Urban Land Institute’s Emerging Trends in Canadian Real Estate 2019, “Some large retail REITs have responded to the sector’s difficulties by diversifying their positions to include residential and mixed-use development.” Today, RioCan’s retail-focused and increasingly mixed-use portfolio encompasses approximately 230 properties totaling 39.1 million square feet.