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RioCan Real Estate Investment Trust is the second-largest
real estate investment trust
A real estate investment trust (REIT) is a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, including office and apartment buildings, warehouses, hospitals, shopping cente ...
(REIT) in Canada.
It has an enterprise value of approximately $14 billion, and owns 289 primarily retail properties, with a net leasable area of 44 million square feet. The company properties are located across Canada. The current
chief executive officer
A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especial ...
is Edward Sonshine.
History
Early history
RioCan was founded in 1993, by its current CEO Edward Sonshine, as Counsel REIT.
It was one of the first real estate investment trusts in Canada.
The company held an IPO on the Toronto Stock Exchange in 1994.
In 1995, it re-structured to internalize its asset management responsibilities, in return for a $5 million payment.
As part of the re-structuring, the company was renamed RioCan REIT, a short form for "Retail Industrial Office Canadian".
RioCan achieved significant growth in its early history, with an annualized 16% return from its IPO to 2013.
This growth was achieved in part through acquisitions. In 1995, it acquired five shopping centres in Ottawa from
Ivanhoe Inc. for $42.5 million, almost doubling the size of the company (at the time, it had 29 properties). In 1998, it acquired nine shopping centres from Burnac Inc, its largest acquisition up to that time.
Also in 1998, the company launched an ultimately successful hostile takeover bid for Realfund REIT. The new company had a market value of more than $1 billion, and was Canada's largest REIT.
US expansion
In 2006, RioCan announced a planned expansion into the United States, through a $1 billion joint-venture with
Ramco-Gershenson Properties Trust
RPT Realty, formerly known as RAMCO Properties Trust and Ramco-Gershenson Properties Trust, is a publicly traded real estate investment trust that owns and operates open-air shopping centers. As of August 4, 2021, the company owned 50 shopping ...
. However, this deal fell apart before closing.
In 2010, the firm launched a successful expansion into the United States, taking advantage of low real estate prices there.
By 2012, 15% of RioCan's revenue was from the United States, and it planned to expand the percentage to 20%. In December 2015, RioCan sold its U.S. portfolio to
Blackstone Real Estate Partners VIII, for C$2.7 billion.
The deal was triggered by the low value of the Canadian dollar. RioCan used some of the proceeds of the deal to fund its previously announced buyout of
Kimco Realty's joint venture stake for $715 million.
Recent history
In 2011, RioCan announced a $1 billion joint venture with
Tanger Factory Outlet Centers
Tanger Factory Outlet Centers, Inc. ( ) is a real estate investment trust headquartered in Greensboro, North Carolina that invests in shopping centers containing outlet stores in the United States and Canada.
As of December 31, 2019, the com ...
to develop 10-15 centres in Canada. RioCan was significantly affected by the sale of
Zellers
Zellers was a Canadian discount department retail chain and is currently a brand name owned by the Hudson's Bay Company (HBC). Founded in 1931 in London, Ontario, in later decades it was based in Brampton, Ontario. Zellers was acquired by HBC ...
to
Target
Target may refer to:
Physical items
* Shooting target, used in marksmanship training and various shooting sports
** Bullseye (target), the goal one for which one aims in many of these sports
** Aiming point, in field artillery, f ...
, and the resulting closure of Zellers stores in Canada, as well as the closure of Target Canada. Target eventually paid RioCan $132 million to get out of its leases.
Change of strategy
Starting around 2015, RioCan entered the residential real estate market, due to the threat from e-commerce to traditional retail. The company plans to re-develop many of its malls with high-rise apartments, including
Westgate Mall in Ottawa. By March 2018, when the company announced the RioCan Living Brand, it had 2,800 units being planned in eight of its shopping centres.
In October 2017, the firm announced it would sell about $2 billion worth of properties by 2019. The sales would mainly be in smaller urban centres; the company plans to focus on the six largest Canadian cities of Toronto, Montreal, Ottawa, Calgary, Edmonton, and Vancouver.
At the time of the announcement, RioCan had 299 properties, and it plans to sell about 100.
RioCan's six largest markets already accounted for 75% of revenue, and it plans to increase that percentage to 90%.
Properties
RioCan invests primarily in supermarket and junior department store-anchored, neighbourhood, convenience-oriented shopping centres. It owns both enclosed malls and power centres, in a large range of sizes RioCan tries to ensure that no one tenant makes up more than 10% of its rental revenue, in contrast to some other retail REITS (such as
Choice Properties REIT) whose revenues are dominated by a single tenant.
As of 2017, its largest tenant was
Loblaw
Loblaw Companies Limited is a Canadian retailer encompassing corporate and franchise supermarkets operating under 22 regional and market-segment banners (including Loblaws), as well as pharmacies, banking and apparel. Loblaw operates a private ...
, with about 5% of rental revenue.
[{{Cite web, url=https://s1.q4cdn.com/847730316/files/documents_financial/2017/AR/Riocan_2017_AR_FINAL_032918.pdf, title=RioCan 2017 Annual Report] As of 2017, 66% of revenue was from Ontario, 15% was from Alberta, 9% was from Quebec, 8% was from British Columbia, and the rest was from the rest of Canada.
Properties owned by RioCan include
Lawrence Allen Centre
The Lawrence Allen Centre, formerly Lawrence Square Shopping Centre, is a Shopping center, shopping centre located in Toronto, Ontario, Canada. Owned by RioCan Real Estate Investment Trust, RioCan, it is one of the city's twenty largest malls. I ...
in Toronto,
Chapman Mills Marketplace
Chapman Mills Marketplace is a shopping centre located in the Barrhaven neighbourhood of Ottawa, Ontario, Canada. The borders for the shopping district are Strandherd Drive to the north, Greenbank Road to the west, Longfields Drive to the east, a ...
in Ottawa,
RioCan Centre Kingston
RioCan Real Estate Investment Trust is the second-largest real estate investment trust (REIT) in Canada. It has an enterprise value of approximately $14 billion, and owns 289 primarily retail properties, with a net leasable area of 44 million ...
in Kingston, and
Burlington Centre
Burlington Centre (formerly known as Burlington Mall) is a shopping mall located in Burlington, Ontario, Canada. It is one of the two enclosed malls in Burlington, Ontario, the other being the Mapleview Centre. The stores at Burlington Centre i ...
in Burlington.
References
Companies listed on the Toronto Stock Exchange
Real estate investment trusts of Canada
Canadian companies established in 1993
1993 establishments in Ontario
Real estate companies established in 1993
Real estate companies of Canada
Shopping center management firms
Companies based in Toronto
2013 initial public offerings