RioCan Real Estate Investment Trust Announces Dissolution of Joint Venture Agreement With Retail Properties of America, Inc.

RioCan Real Estate Investment Trust Announces Dissolution of Joint Venture 
Agreement With Retail Properties of America, Inc. 
TORONTO, ONTARIO -- (Marketwired) -- 05/06/13 -- RioCan Real Estate
Investment Trust ("RioCan") (TSX:REI.UN) today announced that it has
entered into an agreement to dissolve its joint venture arrangement
with Retail Properties of America, Inc. ("RPAI"). Since 2010, RioCan
and RPAI have amassed a high quality portfolio of 13 properties in
Dallas, Houston, Austin, San Antonio and Temple, Texas that are owned
on an 80/20 basis (80% owned by RioCan and 20% owned by RPAI). Under
the terms of the dissolution, RPAI will convey its 20% managing
interest in eight properties to RioCan. RioCan will, in turn, convey
its 80% interest in the remaining five properties to RPAI. The
transaction is expected to close on October 1 2013.  
When completed, RioCan will increase its ownership in eight high
quality retail assets in Texas from 80% to 100%, including the
dominant power centres in Austin and San Antonio. The portfolio
includes four Target shadow anchored centres in Austin, San Antonio
and Temple, as well as four exceptional grocery anchored or shadow
anchored centres in Houston and Dallas. The additional 20% interest
will provide RioCan with a 100% ownership interest for 2.5 million
square feet of RioCan's 4.3 million square foot portfolio in Texas.
The aggregate value of the eight properties exceeds $480 million.
RioCan will take over the leasing and management functions of the
properties on closing, thereby establishing the basis for a second
regional office in Texas, which is in addition to RioCan's
northeastern US office that was opened earlier this year.  
Included in the transaction are properties such as Southpark Meadows
and 1890 Ranch, which serve as two of Austin's dominant power
centres. Both are shadow anchored by a Super Target. Southpark
Meadows is also anchored by a Super Walmart on a ground lease. At
over one million square feet, Southpark Meadows is a key shopping
destination in the Austin market, one of America's top performing
local economies.  
Similarly, Alamo Ranch, shadow anchored by a Super Target, serves as
the dominant power centre in the growing northwest region of San
Antonio.  
Riverpark Shopping Center, is a domina
nt shopping centre located in
the Houston submarket of Sugar Land, with more than 300,000 square
feet that is anchored by a 80,460 square foot HEB Supermarket on a
long term lease (2023 maturity). Bear Creek Crossing, also in
Houston, benefits from a HEB anchor. HEB is one of the United States'
largest independent food retailers and the dominant grocer in Texas.  
RioCan sees a meaningful growth trajectory in the eight asset
portfolio it is acquiring as a result of both absorption of vacant
units (the portfolio is currently 94.4% occupied) and organic rental
growth.  
"Our relationship with RPAI has been a great experience for RioCan,
as we have amassed an exceptional portfolio of thirteen retail assets
in Texas, the second region that RioCan has entered into in the
United States. We have been able to acquire from RPAI a number of
grocery anchored or Target anchored centres consistent with our
disciplined approach to expansion in the United States," said Edward
Sonshine Chief Executive Officer of RioCan. "We have developed a
great deal of local knowledge these past three years and RPAI has
been an important partner in their contribution to the acquisition
and management of these assets. When complete, RioCan will manage a
portfolio of 2.5 million square feet in Texas, and we are excited
about opening RioCan's second office in the United States. Our
presence in Texas will provide RioCan the ability to take advantage
of the opportunities within our portfolio and will substantially
increase the scale of our operating platform in the United States." 
Texas Properties to be owned 100% by RioCan: 


 
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Property                  NLA        Major Tenants                          
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Austin Properties                                                           
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1890 Ranch                486,896    Super Target (shadow), Ross Dress for  
                                     Less, Beall's, PetSmart                
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Southpark Meadows I & II  921,141    Walmart (ground lease), Super Target   
                                     (Shadow), Bed Bath & Beyond, Marshalls,
                                     Ross Dress for Less, Sports Authority  
----------------------------------------------------------------------------
Dallas                                                                      
----------------------------------------------------------------------------
Great Southwest Crossing  92,270     Sam's Club (shadow), Kroger (Shadow),  
                                     PetSmart, Office Depot                 
----------------------------------------------------------------------------
Suntree Square            99,269     Tom Thumb (Safeway)                    
----------------------------------------------------------------------------
Houston                                                                     
----------------------------------------------------------------------------
Bear Creek Shopping       87,912     HEB                                    
 Center                                                                     
----------------------------------------------------------------------------
Riverpark Phase I & II    253,011    HEB, LA Fitness, Dollar Tree           
----------------------------------------------------------------------------
San Antonio                                                                 
----------------------------------------------------------------------------
Alamo Ranch               465,371    Super Target (shadow), Ross Dress for  
                                     Less, Dick's Sporting Goods, PetSmart, 
                                     Michaels                               
----------------------------------------------------------------------------
Temple                                                                      
----------------------------------------------------------------------------
Bird Creek Crossing       124,941    Target (Shadow), Home Depot (Shadow),  
                                     PetSmart, Michaels, Office Max         
----------------------------------------------------------------------------
Total                     2,530,811                                         
----------------------------------------------------------------------------

 
Terms of the transaction: 
The gross purchase price for the 20% interest in the eight properties
to be acquired by RioCan is $96.6 million, representing a
capitalization rate of 6.9%. Under the terms of the transaction,
RioCan will assume RPAI's share of the existing in place mortgage
financing on five of the properties aggregating $41.8 million, which
carries an average interest rate of 3.7% and has an average term to
maturity of 2.9 years. Three of the properties will be acquired free
and clear of financing. The properties to be acquired have an average
occupancy of 94.4%. 
The gross sale price for the 80% interest in the five properties
owned by RioCan is $102.8 million, representing a capitalization rate
of 6.8% and represents a total of approximately 600,000 square feet
(at a 100% interest). RPAI will assume RioCan's portion of the in
place mortgage financing of $54.3 million that carries a weighted
average interest rate of 4.8%.  


 
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                                                                 US$ Amount 
                                                                in millions 
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Purchase Price for eight properties from RPAI                   $      96.6 
Less Debt Assumed by RioCan from RPAI                           $     (41.8)
Less mark to market debt adjustment                             $      (1.1)
----------------------------------------------------------------------------
Net Purchase Price by RioCan                                    $      53.7 
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Sale price of RioCan's 80% interest in five properties to RPAI  $     102.8 
Less debt assumed by RPAI from RioCan                           $     (54.3)
Less mark to market debt adjustment                             $      (2.9)
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Net Proceeds from Sale to RPAI                                  $      45.6 
----------------------------------------------------------------------------

 
Texas Properties to be sold to RPAI: 


 
--  Coppell Town Center, Dallas 
--  Cypress Mill, Houston 
--  New Forest Crossing, Houston 
--  Southlake Corners, Dallas 
--  Sawyer Heights, Houston

 
Once completed, in Texas, RioCan will own a 100% interest in eight
properties that were previously owned jointly with RPAI in addition
to two properties that were previously owned 100%, and a majority
interest in eleven properties that are owned jointly with its
partners Dunhill, Kimco and Sterling Corporation, which are
unaffected by this announcement. RioCan also owns a 100% interest in
26 properties located in the Northeastern United States. 
RioCan's total portfolio in the US will include 45 properties
totalling 8.9 million square feet. This portfolio includes 26
properties totalling 4.6 million square feet are located in the
northeastern US and 19 properties totalling 4.3 million square feet
are located in Texas. 
About RioCan 
RioCan is Canada's largest real estate investment trust with a total
capitalization of approximately $14.4 billion as at March 31, 2013.
It owns and manages Canada's largest portfolio of shopping centres
with ownership interests in a portfolio of 344 retail properties
containing more than 84 million square feet, including 50 grocery
anchored and new format retail centres containing 13.7 million square
feet in the United States through various joint venture arrangements
as at March 31, 2013. RioCan's portfolio also includes 11 properties
under development in Canada. For further information, please refer to
RioCan's website at www.riocan.com. 
Forward-Looking Information 
This News Release contains forward-looking statements within the
meaning of applicable securities laws. These statements include, but
are not limited to, statements made in this News Release, and other
statements concerning RioCan's objectives, its strategies to achieve
those objectives, as well as statements with respect to management's
beliefs, plans, estimates, and intentions, and similar statements
concerning anticipated future events, results, circumstances,
performance or expectations that are not historical facts.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "outlook", "objective", "may",
"will", "would", "expect", "intend", "estimate", "anticipate",
"believe", "should", "plan", "continue", or similar expressions
suggesting future outcomes or events. Such forward-looking statements
reflect management's current beliefs and are based on information
currently available to management. All forward-looking statements in
this News Release are qualified by these cautionary statements.  
These forward-looking statements are not guarantees of future events
or performance and, by their nature, are based on RioCan's current
estimates and assumptions, which are subject to risks and
uncertainties, including those described under "Risks and
Uncertainties" in RioCan's latest financial statements and RioCan's
Management's Discussion and Analysis for the period ended March 31,
2013, which could cause actual events or results to differ materially
from the forward-looking statements contained in this News Release.
Those risks and uncertainties include, but are not limited to, those
related to: liquidity in the global marketplace associated with
economic conditions, tenant concentrations, occupancy levels, access
to debt and equity capital, interest rates, joint
ventures/partnerships, the relative illiquidity of real property,
unexpected costs or liabilities related to acquisitions,
construction, environmental matters, legal matters, reliance on key
personnel, unitholder liability, income taxes, the investment in the
United States of America ("US"), fluctuations in the currency
exchange rate between the Canadian and US dollar and RioCan's
qualification as a real estate investment trust for tax purposes.
Material factors or assumptions that were applied in drawing a
conclusion or making an estimate set out in the forward-looking
information may include, but are not limited to: a stable retail
environment; relatively low and stable interest costs; a continuing
trend toward land use intensification in high growth markets; access
to equity and debt capital markets to fund, at acceptable costs, the
future growth program to enable the Trust to refinance debts as they
mature; the availability of purchase opportunities for growth in
Canada and the US; and the impact of accounting principles adopted by
the Trust effective January 1, 2011 under International Financial
Reporting Standards ("IFRS"). 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.  
The Income Tax Act (Canada) (the "Act") contains legislation
affecting the tax treatment of publicly traded trusts (the "SIFT
Legislation"). The SIFT Legislation will not impose tax on a trust
which qualifies under such legislation as a real estate investment
trust (the "REIT Exception"). RioCan currently qualifies for the REIT
Exception and intends to continue to qualify for future years. Should
this not occur, certain statements contained in this News Release may
need to be modified. 
Except as required by applicable law, RioCan under takes no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise. 
Contacts:
RioCan Real Estate Investment Trust
Edward Sonshine, O.Ont, Q.C.
Chief Executive Officer
(416) 866-3018
www.riocan.com
 
 
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