Capitalizing on value-rich pipeline and fully-integrated in-house development platform
TORONTO, June 28, 2021 (GLOBE NEWSWIRE) — RioCan Real Estate Investment Trust (“RioCan” or the “Trust”) (TSX:REI.UN) is pleased to announce a new strategic approach for the development of its mixed-use residential condominium (“Condo”) projects, which provides additional sources of capital and alternative income streams for the Trust. Given RioCan’s long-standing track record, deep pipeline and extensive development platform, the Trust will continue to attract sophisticated investors and establish long-term relationships with capital partners for Condo development. This approach is exemplified by the Trust’s recent sale of an 80% interest in its Verge Condos (“Verge”), a mixed-use residential Condo development along The Queensway in Toronto, to a newly formed partnership. This agreement partners RioCan with recognized institutional investors whereby the Trust retains a 20% interest and maintains project oversight as general partner and sole development manager. The partnership structure enables RioCan to monetize 80% of the land density value that it created through a successful entitlement process; earn management fees and a promote; and participate in Condo sales profits. Verge will consist of two Condo towers totalling 545 units, including 12 affordable rental units, with a retail component at grade.
“This is an exciting progression for RioCan’s capital recycling initiatives. It is a clear indication of how our robust pipeline and established development platform provide a distinct advantage to raise capital efficiently to fuel long term growth and also augment our income streams with consistent and sustainable management fees,” said Jonathan Gitlin, President and Chief Executive Officer of RioCan. “Our partners were drawn to the prime location and compelling demographic attributes of our Verge project and importantly, recognized our expertise to manage complex development processes from zoning entitlement through to leasing and sales. As we progress, our unitholders will benefit from RioCan’s partnerships through additional transactions to raise capital, earn income, mitigate development risk and crystalize the value of our zoned excess density.”
Recognizing development potential to intensify for the highest and best use, RioCan’s best-in-class development team successfully rezoned its property located along The Queensway and adjacent to its previously co-owned Queensway Cineplex site. For the development of Verge, RioCan has structured a limited partnership with four institutional investors, resulting in sales proceeds to RioCan of approximately $30.4 million, including reimbursement of its share of development costs incurred to date. Through this structure, RioCan will oversee the entire development process including site plan approval; sales and marketing; and construction of the project, creating incremental value for unitholders along the way. Condo pre-sales are anticipated to launch in August 2021 and construction is expected to start in the second half of 2022.
Verge marks the first independent Condo launch under the RioCan Living™ banner adding to its portfolio of Condo and housing ownership developments that generate inventory profits. These inventory projects form a sustainable source of capital representing yet another lever for RioCan’s growth going forward. The prominence of this utilization will be governed by market conditions at the time and composition of the Trust’s balance sheet.
Verge is conveniently located minutes away from the TTC’s Bloor subway line and Mimico Go Station, at the corner of Islington Avenue and The Queensway in the west end of Toronto. It is the latest addition to the RioCan Living portfolio which combines great retail experiences with best-in-class, purpose-built rental and Condo residential along prominent transit corridors in Canada’s major markets. Leveraging RioCan’s scale and vast portfolio of retail and mixed-use properties, RioCan Living’s portfolio has grown to over 2,000 units1 in seven completed rental residential and Condo developments, including marquee Toronto-based condominium projects Kingly Condos and eCondos. Other notable Condo developments under pre-sale or construction include U.C. Tower, QA Condo and 11YV. As a key component of RioCan’s expanding mixed-use asset base, RioCan Living expects to have more than 10,000 residential units1 completed or in development by 2023.
1 Number of units are based on 100% ownership
RioCan is one of Canada’s largest real estate investment trusts. RioCan owns, manages and develops retail-focused, increasingly mixed-use properties located in prime, high-density transit-oriented areas where Canadians want to shop, live and work. As at March 31, 2021, our portfolio is comprised of 223 properties with an aggregate net leasable area of approximately 38.0 million square feet (at RioCan’s interest) including office, residential rental and 15 development properties. RioCan’s development pipeline as at March 31, 2021, is estimated at 41.8 million square feet, of which 14.1 million square feet is already zoned primarily for mixed-use developments. To learn more about us, please visit www.riocan.com.
Forward Looking Information
This News Release contains forward-looking information within the meaning of applicable Canadian securities laws. This information reflects RioCan’s objectives, our strategies to achieve those objectives, as well as statements with respect to management’s beliefs, estimates and intentions concerning anticipated future events or expectations that are not historical facts. Forward-looking information 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 information reflects management’s current beliefs and is based on information currently available to management. All forward-looking information in this News Release is qualified by these cautionary statements.
Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan’s current estimates and assumptions, which are subject to numerous risks and uncertainties, including those described in the “Risks and Uncertainties” section in RioCan’s MD&A for the period ended March 31, 2021 and in our most recent Annual Information Form, which could cause actual events or results to differ materially from the forward-looking information contained in this News Release.
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 this forward-looking information.
The forward-looking statements contained in this News Release are made as of the date hereof, and should not be relied upon as representing RioCan’s views as of any date subsequent to the date of this News Release. Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
CONTACT: Contact Information RioCan Real Estate Investment Trust Jonathan Gitlin President and Chief Executive Officer 416-866-3033 | www.riocan.com