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Changes in Business Philosophy at RiocanRioCan Real Estate Investment Trust Announces Plan to Accelerate Its Major Market Strategy 2017-10-02 07:00:34 AM ET (GlobeNewswire) Strategy focused on high-growth, high population hubs in Canada's six major markets Approximately 100 properties valued at over $2.0 billion to be sold over next two to three years Sale expected to generate total net proceeds of approximately $1.5 billion; net proceeds to be used to repurchase units under its NCIB and fund its development program Suspension of the Distribution Reinvestment Plan effective November 1, 2017 Conference call October 2, 2017 at 10:00 am ET RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) today announced its plan to accelerate its portfolio focus in Canada's six major markets through the sale of approximately 100 properties located primarily in secondary markets across Canada over the next two to three years. On completion, RioCan expects to generate in excess of 90% of its annualized rental revenue from Canada's six major markets (currently 75%). This strategy will further enhance the quality, growth profile and resilience of the Trust's portfolio of retail focused, increasingly mixed-use properties located in prime, high density, transit oriented areas where Canadians want to shop, live and work. The key elements of RioCan's strategy include: -- The sale of over $2.0 billion of income properties primarily located in Canada's secondary markets, including certain non-core assets in major markets, representing approximately 100 of RioCan's properties to be sold in phases over the next two to three years. The sales are expected to generate total net proceeds of approximately $1.5 billion; -- Repurchase and cancellation of the Trust's units through the Trust's Normal Course Issuer Bid ("NCIB") program while maintaining its strong credit fundamentals. It is estimated that approximately half of the net proceeds will be used for its NCIB program; -- Continued investment of approximately $300 million to $400 million per year into RioCan's robust development pipeline, which is focused exclusively in Canada's six major markets; and -- Suspension of its Distribution Reinvestment Plan ("DRIP") effective November 1, 2017, in order to maximize the effectiveness of the NCIB Through the realignment of the portfolio, RioCan is targeting to achieve an annual same property net operating income growth rate of 3% or better, which would result in annual funds from operations per unit growth of 5% or more before gains from marketable securities, gains from residential inventory and fee income in years subsequent to the completion of our disposition program. The enhanced business profile will facilitate growth in RioCan's distributions and net asset value creation for our unitholders. "Our strategy to accelerate our portfolio's focus on Canada's six major markets will streamline our business model, advance the growth profile of RioCan to one of the strongest organic growth models in Canada, and improve the resilience of our portfolio in the ever changing retail environment," said Edward Sonshine, CEO of RioCan. "Under this strategy, we will continue to be Canada's largest REIT, with an enhanced focus on optimizing the value of our existing properties through redevelopment and intensification, diversifying our portfolio into residential real estate, and advancing our robust development pipeline to deliver distribution growth and enhanced net asset value creation for the benefit of our unitholders while meeting the evolving needs of our tenants and the communities we serve." RioCan intends to complete the sales in a targeted and phased approach over the next two to three years, which will help mitigate the risks associated with the sale of a portfolio of this size. Given the preliminary nature of these planned dispositions and the flexibility that the Trust intends to maintain over the disposition process, there can be no assurance regarding the timing or expected proceeds of the planned asset sales. As noted earlier, the proceeds from completed sales will be used to repurchase units under RioCan's NCIB program, maintain RioCan's strong credit profile, and fund the Trust's development activities. The current NCIB will expire on October 19, 2017 and the Trust has received approval from the Board of Trustees to file an application to renew its NCIB program, subject to TSX approval. In order to maximize the effectiveness of the NCIB, RioCan will suspend its DRIP until further notice effective November 1, 2017. Unitholders that are enrolled in the DRIP will receive the future distributions in cash commencing with any distribution declared in November 2017. If RioCan elects to reinstate the DRIP in the future, unitholders that were enrolled in the DRIP at the time of its suspension and remain enrolled at the time of its reinstatement will automatically resume participation in the DRIP. Rags Davloor, President and COO of RioCan, said, "The repositioning of RioCan's portfolio to further prioritize high-growth, high-population hubs will streamline our property and asset management platform, improve operating efficiencies and enhance the Trust's competitive advantage. Further, this will enable RioCan to capitalize on its portfolio of well-located properties, and support the ongoing development pipeline that will contribute to both RioCan's long term cash flow growth and net asset value creation." CONFERENCE CALL ON OCTOBER 2, 2017 I've held and added to Riocan since 2004. Good Luck, Brian |
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