RioCan to Buy Montreal Retail Portfolio from ING for $67M

Toronto-headquartered RioCan Real Estate Investment Trust has just struck a deal to take six grocery-anchored shopping centers in suburban Montreal off the hands of ING Real Estate Canada L.P. RioCan REIT will shell out $67.5 million for the portfolio, which encompasses an aggregate 454,000 square feet. “These are safe assets you buy for the income with a little bit of growth through rent,” Jonathan Gitlin, vice president of investments for RioCan REIT, told CPN. Sicard Centre in Sainte-Thérèse and Saint-Jean Centre in Saint-Jean-sur-Richelieu are the two largest assets in the group, featuring approximately 107,000 and 103,000 square feet, respectively. The remaining properties include the 69,000-square-foot La Prairie Centre in La Prairie; the 63,300-square-foot Concorde Centre in Laval; the 52,000-square-foot René Robert Centre in Sainte-Thérèse; and Sainte-Julie Centre in Sainte-Julie, a 49,000-square-foot property that is being expanded to 60,000 square feet. The shopping centers have an average age of 14.5 years, and lease agreements with an average 7.9 years remaining. Approximately 82.8 percent of the collective tenant roster consists of both national and regional businesses, with 74 percent of the income being produced by grocery, pharmacy and bank tenants. And the average occupancy level, presently 99.4 percent, is indicative of a particularly tight segment of the retail market in Montreal, and pretty much all of Canada. “Grocery-anchored centers’ occupancy rates are still really strong,” Gitlin said. Grocery stores in Canada are doing well–a sign of, or in spite of the economy–so there’s not much in terms of tenant fallout.” Aside from the grocery stores, he said, the major tenants in the ING portfolio are highly coveted national and regional retailers, as opposed to local shops that may be more vulnerable in a changing economic climate. Occupancy levels for Canada’s retail market overall have been kept in line by the fact that Canada did not build as much as the U.S. over the last few years. “In the States, the barriers to entry weren’t there, and capital was easily attainable,” Gitlin noted. “Now, it’s a better market in general up here, especially for uses like this portfolio.” Brookfield Financial listed the six shopping centers on behalf of ING as part of a 37-property offering.