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RioCan to Shed 100 Smaller Retail Properties Across Canada Valued at Over $1.6 Billion

After Pulling Out of U.S. REIT Ramps Up Portfolio Realignment to Focus on Toronto, Calgary and Other Major Markets in Canada
October 2, 2017
RioCan is selling 100 smaller properties to focus on its properties and development projects  in Canada, including Brentwood Village in Calgary, which opened in 2016.
RioCan is selling 100 smaller properties to focus on its properties and development projects in Canada, including Brentwood Village in Calgary, which opened in 2016.
Toronto-based RioCan Real Estate Investment Trust announced plans to sell off about 100 retail properties located outside its core markets over the next two to three years and plans to recycle proceeds into new developments within the country’s six largest metros.

RioCan said it expects to see about US $1.2 billion in proceeds from the $1.6 billion in dispositions but did not identify the properties it plans to shed. In 2015, RioCan exited the U.S. via the sale of 49 retail properties in Texas and the northeastern U.S.

By the end of 2019, as the company sells off the properties in phases, it expects its holdings concentreated in major Canadian markets will make up well over 90% of total revenue, according to RioCan CEO Edward Sonshine.

"While the properties we intend to sell are solid, reliable income properties, their annual NOI growth lags the growth we’re able to achieve in our primary market portfolio," Sonshine said. "At the same time, the current phase of our development program will have sufficient completions over the next few years to more than make up for what we will be selling."

RioCan said it plans to continue investing about $300 million to $400 million annually into its development pipeline, which is already focused exclusively in Canada’s six major markets.

Through the realignment of the portfolio, the trust seeks to reach annual same-property net operating income (NOI) growth rate of 3% or more, resulting in annual funds from operations (FFO) per unit growth of 5% or more, before gains from securities, residential inventory and fee income.

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