RioCan and Kimco Announce Agreement for RioCan to Acquire Kimco's Interest in 22 Canadian Properties

TORONTO, ONTARIO and NEW HYDE PARK, NEW YORK–(Marketwired – Sept. 24, 2015) – RioCan Real Estate Investment Trust (“RioCan”) (TSX:REI.UN) and Kimco Realty Corp. (“Kimco”) (NYSE:KIM) announce that after fifteen successful years as partners, RioCan and Kimco have agreed to unwind their Canadian joint venture. The portfolio of 35 jointly owned properties (“RioKim Portfolio”) will be divided into three groups:

• the first group is a collection of 22 properties selected by RioCan that will be acquired in two stages: 19 properties during the third quarter of 2015 and three properties in the first quarter of 2016;
• the second group consists of ten institutional-quality retail assets which the partners have agreed to market for sale, one of which is currently under a conditional contract to be sold; and
• the third group of assets includes three transitional properties that were previously occupied by Target, which will be dealt with at a future date.

In March 2015, RioCan acquired Kimco’s 50% interest in Grand Park and RioCan Leaside Centre in Toronto, Ontario, as well as Brentwood Village in Calgary, Alberta. The joint venture partners also completed the sale of Centres Jacques Cartier on July 31, 2015 at a sale price of $18 million ($9 million at RioCan’s interest). The property was sold free and clear of financing.

“The management team at RioCan is familiar with every aspect of the portfolio, as they have been providing leasing, asset, and property management duties for these properties since the inception of this very successful joint venture relationship that we have enjoyed with Kimco. It is an exceptionally rare opportunity to acquire a selection of properties from a portfolio of this scale that can be easily absorbed by the Trust,” said Edward Sonshine, Chief Executive Officer of RioCan. “This acquisition improves RioCan’s Canadian portfolio by increasing the concentration of the Trust’s portfolio located in Canada’s six largest markets, most notably in the Greater Toronto Area.”

“Our long-standing relationship with RioCan has been excellent and this transaction allows both companies to pursue their own longer term strategic objectives,” said Dave Henry, Chief Executive Officer of Kimco. “This sale enables Kimco to continue simplifying its operations by reducing the number of properties in joint ventures, including those that we do not manage, and provides an important source of capital to fund redevelopment activities and further strengthen our balance sheet.”

Transaction Details

RioCan will acquire Kimco’s interest in a portfolio of 22 Canadian properties at a purchase price of $715 million. Under the terms of the transaction, RioCan will assume Kimco’s share of the existing in place debt, subject to conventional closing conditions, of $231 million, which carries an average interest rate of 4.1% with a weighted average term to maturity of approximately 3.5 years.

The initial closing of RioCan’s acquisition of Kimco’s interest in 19 properties is expected to occur by September 30, 2015 (subject to Competition Bureau approval) at a purchase price of $477 million. RioCan will assume Kimco’s share of the existing in place debt of $127 million, representing a cash commitment of approximately $350 million by RioCan. RioCan will fund its acquisition through a combination of internal resources and credit facilities. The remaining three properties will be acquired at a purchase price of $238 million. RioCan will assume Kimco’s share of the existing in place debt of $104 million. This phase of the transaction is expected to be completed in January 2016.

Properties to be acquired by RioCan

RioCan Transaction Impact

The portfolio to be acquired will be immediately accretive, and upon completion of the second phase of the transaction the portfolio is expected to generate additional annualized net operating income of approximately $45 million and will require no additional resources by management. RioCan’s cash commitment of approximately $485 million needed to complete the transaction will be funded from a combination of internal resources and credit facilities.

Kimco Transaction Impact

The initial sale of its ownership interests in the 19 properties will result in approximately USD $220 million in cash proceeds, net of its pro-rata share of debt and the impact of currency and taxes.

Remaining Properties in the Joint Venture

RioCan and Kimco will seek to dispose of nine of the remaining thirteen co-owned properties, which total approximately 783,000 square feet, in the first half of 2016. These properties are in the early stages of being marketed and there is no assurance that a sale transaction will be completed. The remaining three properties will be dealt with at a future date.

About RioCan

RioCan is Canada’s largest real estate investment trust with a total enterprise value of approximately $15.6 billion as at June 30, 2015. It owns and manages Canada’s largest portfolio of shopping centres with ownership interests in a portfolio of 353 retail properties containing approximately 79 million square feet, including 48 retail properties containing 13 million square feet in the United States as at June 30, 2015. RioCan’s portfolio also includes 15 properties under development in Canada. For further information, please refer to RioCan’s website at www.riocan.com.

About Kimco

Kimco Realty Corp. (NYSE:KIM) is a real estate investment trust (REIT) headquartered in New Hyde Park, N.Y., that is North America’s largest publicly traded owner and operator of open-air shopping centers. As of June 30, 2015, the company owned interests in 727 shopping centers comprising 107 million square feet of leasable space across 39 states, Puerto Rico, Canada and Chile. Publicly traded on the NYSE since 1991, and included in the S&P 500 Index, the company has specialized in shopping center acquisitions, development and management for more than 50 years.

Forward-Looking Statements – RioCan

This news release contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements concerning our objectives, our 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”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “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 our 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 June 30, 2015, which could cause actual events or results described above to differ materially from the forward-looking statements contained herein. Those risks and uncertainties include, but are not limited to, RioCan’s future acquisition or disposition activities with its joint venture partners.

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; 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; and the availability of purchase opportunities for growth in Canada and the US. 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.

Except as required by applicable law, including compliance by RioCan of all obligations under securities laws, to the extent applicable, RioCan undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Forward-Looking Statements – Kimco

The statements in this release state the company’s and management’s intentions, beliefs, expectations or projections of the future and are forward-looking statements. It is important to note that the company’s actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from current expectations include, but are not limited to, (i) general adverse economic and local real estate conditions, (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business, (iii) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms to the company, (iv) the company’s ability to raise capital by selling its assets, (v) changes in governmental laws and regulations, (vi) the level and volatility of interest rates and foreign currency exchange rates and management’s ability to estimate the impact thereof, (vii) risks related to the company’s international operations, (viii) the availability of suitable acquisition, disposition, development and redevelopment opportunities, and risks related to acquisitions not performing in accordance with the company’s expectations, (ix) valuation and risks related to the company’s joint venture and preferred equity investments, (x) valuation of marketable securities and other investments, (xi) increases in operating costs, (xii) changes in the dividend policy for the company’s common stock, (xiii) the reduction in the company’s income in the event of multiple lease terminations by tenants or a failure by multiple tenants to occupy their premises in a shopping center, (xiv) impairment charges and (xv) unanticipated changes in the company’s intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity. Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the company’s SEC filings. Copies of each filing may be obtained from the company or the SEC.

The company refers you to the documents filed by the company from time to time with the SEC, specifically the section titled “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended December 31, 2014, as it may be updated or supplemented in the company’s Quarterly Reports on Form 10-Q and the company’s other filings filed with the SEC, which discuss these and other factors that could adversely affect the company’s results.