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RioCan Tells Analysts $500M in Assets Sold

CEO Ed Sonshine Says Another $200M Under Conditional Contract With Brokers Set to Sell $1 Billion
February 14, 2018
RioCan Real Estate Investment Trust told Bay St. analysts during a call to discuss fourth-quarter results that the firm has sold or has firm purchase agreements for more than $500 million of property as part of its plan to dispose of up to $2 billion of non-core assets.

In November, RioCan announced the first move in the strategy announced a month earlier with a $200 million sale of seven retail properties in Ontario, British Columbia and Saskatchewan to CT REIT, the real estate arm of Canadian Tire, which was the anchor tenant of the properties sold.

Ed Sonshine, chief executive of Canada's largest REIT, told analysts that another $200 million of deals are under conditional agreement.

Sonshine recalled to analysts their words that RioCan would have a difficult time disposing of the assets outside of Toronto, Montreal, Vancouver, Ottawa, Edmonton and Calgary, the key markets it plans to remain in.

"Great strategy guys but it will be difficult to achieve in the time and period to which you aspire," the CEO chided those analysts on the conference call.

The founder of RioCan, which was launched in 1993, was in a buoyant mood to discuss the plan, happily noting the date in the calendar the call was taking place on.

"It's appropriate to have this call on Valentine's Day because I'm deeply in love, not only with my wife, children and grandchildren but with the balance sheet, the solidity and growth potential in our portfolio and our team's proven success in surfacing that potential."

Sonshine noted all of the deals to date have been off market deals, with RioCan sourcing the purchasers directly. CoStar News has previously reported that RioCan has enlisted CBRE to list another set of properties including the Southbank Centre, about 25 KM from Calgary.

"We are in the market or have selected brokers with underwriting having commenced on assets with a value in excess of $1 billion," said Sonshine, noting not every asset is guaranteed to be sold. "There is no doubt we can easily meet our target of $2 billion in dispositions before the end of 2019. And will doing this generally in line with our IFRS values."

Asked if the disposition period could be moved up, the chief executive said it would depend on the market.

"We know that analysts like to see growth in (funds from operations and the REIT doesn't want sales to lower FFO)," said Sonshine, noting tax considerations for unitholders will also be a part of the consideration when it comes to the pace of sales. "We don't want to go faster."

Garry Marr, Toronto Market Reporter  CoStar Group   
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