RioCan's anticipated foray into the U.S. commercial real estate market came to fruition Monday.
The Canadian REIT announced it has agreed to acquire acquire shopping malls in the northeastern and Mid-Atlantic states as well as a minority stake in a U.S. developer for $181 million US. RioCan, Canada's largest shopping mall owner, has struck definitive agreements with Cedar Shopping Centers Inc., to take an equity stake in the Port Washington, N.Y. real estate investment trust, owner of 124 shopping centres, The Canadian Press reported.
RioCan and the U.S. firm will form a joint venture with the Canadian REIT owning 80 per cent of the assets. Continuing the emphasis on food-and-drug-based assets, the partners' first properties are seven grocery store-anchored shopping centres in Massachusetts, Pennsylvania and Connecticut currently owned by Cedar.
RioCan has also agreed to take a 15-per-cent stake in Cedar that comprises 6.7 million shares and 1.4 million warrants of the U.S. company. The Canadian REIT will invest $181 million, furnishing $106 million in net equity and assuming $75 million in mortgage debt on properties.
“RioCan's objective is to take a measured and defensive approach to investment in the U.S. market,” said president and CEO Edward Sonshine.
The announcement coincided with RioCan's third-quarter report, which included a profit of $28.4-million or 12 cents per unit for the quarter ended Sept. 30 compared with a profit of $40.9 million or 19 cents per unit a year ago.
Cedar said the two companies expect to acquire up to $500-million worth of supermarket-anchored properties in the northeast and mid-Atlantic states in the next two years.
RioCan is Canada's largest REIT with a total capitalization of $7.8-billion (Canadian) and 247 retail properties, including 13 under development.
Showing posts with label REITs. Show all posts
Showing posts with label REITs. Show all posts
Tuesday, October 27, 2009
Monday, October 26, 2009
REITs hungry to buy as economy recovers
Canadian REITs continue to shore up their balance sheets in an expected run on acquisitions over the rest of this year.
Analysts estimate more than a billion dollars have been raised by Canadian REITs in the last year, says a story in Monday's The Globe and Mail.
“We think the next 18 months will be a very fruitful time for listed [property companies],” AMP Capital Brookfield chief investment officer Kim Redding told the Globe. “They are one of the few investors in the world that have capital.”
RioCan, the largest REIT in Canada, has said it would make a major purchase in the U.S. as it deploys $150 million that it raised on capital markets. Scott's REIT chief executive officer John Bitove told the Globe his company will “certainly be a buyer,” and Whiterock REIT has already jumped in by taking a large stake in an $82-million deal for Toronto office towers, which are definitely in play these days as tenants look for better deals as leases roll over.
But questions remain about whether REITs are raising capital for investment to deal with internal financial issues as they continue to recover from the global financial meltdown.
“Most REITs have taken advantage of the open capital markets,” said Mark Rothschild, an analyst at Genuity Capital Markets. “Most management teams have expressed confidence this capital will be used to take advantage of distressed opportunities – we believe that there will not be many extremely accretive acquisition opportunities and ultimately many of the recent offerings will prove dilutive.”
And despite the rash of fundraising, Mr. Rothschild told the Globe, REITs face challenges in their everyday operations that should be highlighted over the next two weeks as they report earnings. Funds from operations – a key gauge of health – are expected to have slipped lower for the first time this recession for residential REITs, while the commercial REITs could see the second decline in a row.
“Fundamentals have softened across most Canadian markets as a result of the weakening economy … vacancy rates have increased” he said.
Whiterock CEO is Jason Underwood is on the lookout for deals after his firm raised $30 million. He's confident that he has a cushion behind him in the event of another downturn, even if he can't find enough assets worth $30 million.
“REITs have raised all that money and you know they don't need a billion dollars to bolster their balance sheets,” he told the Globe. “That doesn't mean it all needs to be spent at once – I'd characterize our outlook as cautiously optimistic, so it's not a bad thing to have some money in the bank.”
Analysts estimate more than a billion dollars have been raised by Canadian REITs in the last year, says a story in Monday's The Globe and Mail.
“We think the next 18 months will be a very fruitful time for listed [property companies],” AMP Capital Brookfield chief investment officer Kim Redding told the Globe. “They are one of the few investors in the world that have capital.”
RioCan, the largest REIT in Canada, has said it would make a major purchase in the U.S. as it deploys $150 million that it raised on capital markets. Scott's REIT chief executive officer John Bitove told the Globe his company will “certainly be a buyer,” and Whiterock REIT has already jumped in by taking a large stake in an $82-million deal for Toronto office towers, which are definitely in play these days as tenants look for better deals as leases roll over.
But questions remain about whether REITs are raising capital for investment to deal with internal financial issues as they continue to recover from the global financial meltdown.
“Most REITs have taken advantage of the open capital markets,” said Mark Rothschild, an analyst at Genuity Capital Markets. “Most management teams have expressed confidence this capital will be used to take advantage of distressed opportunities – we believe that there will not be many extremely accretive acquisition opportunities and ultimately many of the recent offerings will prove dilutive.”
And despite the rash of fundraising, Mr. Rothschild told the Globe, REITs face challenges in their everyday operations that should be highlighted over the next two weeks as they report earnings. Funds from operations – a key gauge of health – are expected to have slipped lower for the first time this recession for residential REITs, while the commercial REITs could see the second decline in a row.
“Fundamentals have softened across most Canadian markets as a result of the weakening economy … vacancy rates have increased” he said.
Whiterock CEO is Jason Underwood is on the lookout for deals after his firm raised $30 million. He's confident that he has a cushion behind him in the event of another downturn, even if he can't find enough assets worth $30 million.
“REITs have raised all that money and you know they don't need a billion dollars to bolster their balance sheets,” he told the Globe. “That doesn't mean it all needs to be spent at once – I'd characterize our outlook as cautiously optimistic, so it's not a bad thing to have some money in the bank.”
Thursday, October 1, 2009
North American REITs trading above net asset values
REITs are causing quite a stir in the markets these days.
North American-based REITs are trading at a three per cent premium above net asset value (NAV) while U.K. REITs go for an 18 per cent discount to NAV. These were just some of the findings gleaned from the RealREIT conference held recently in Toronto, says Avison Young commercial real estate broker Sam Fogell .
Conference goers also heard the REIT market’s bottom point was a 45 per cent discount to NAV in all markets simultaneously, which was unusual because they usually flucturate, notes Fogell. North American REITs have since increased 95 per cent from their bottom prices, European REITs are trading 80 per cent higher, and Asia-Pacific region REITS are up 80 per cent.
Meanwhile, says Fogell, there was considerable discussion around proposed upcoming accounting rule changes. In the next year or so, Canadian and U.S. REITS may be required to employ International Financial Reporting Systems (IFRS) for their financial reports after using Generally Accepted Accounting Principals (GAAP) for decades.
IFRS are common in Europe. The change may reduce REIT portfolio values, because totals will be based on each property’s market value rather than its actual purchase price.
In recent months, REITs have raised $30 billion worth of new equity. It was previously believed the money was intended for the purpose of distressed properties. However, conference goers suspect REITs could use the money to pay down debt instead, say Fogell.
To contact Fogell, click on the link below.
http://www.avisonyoung.com/Our_Professionals/Vancouver/Bio/Fogell~Samuel/
North American-based REITs are trading at a three per cent premium above net asset value (NAV) while U.K. REITs go for an 18 per cent discount to NAV. These were just some of the findings gleaned from the RealREIT conference held recently in Toronto, says Avison Young commercial real estate broker Sam Fogell .
Conference goers also heard the REIT market’s bottom point was a 45 per cent discount to NAV in all markets simultaneously, which was unusual because they usually flucturate, notes Fogell. North American REITs have since increased 95 per cent from their bottom prices, European REITs are trading 80 per cent higher, and Asia-Pacific region REITS are up 80 per cent.
Meanwhile, says Fogell, there was considerable discussion around proposed upcoming accounting rule changes. In the next year or so, Canadian and U.S. REITS may be required to employ International Financial Reporting Systems (IFRS) for their financial reports after using Generally Accepted Accounting Principals (GAAP) for decades.
IFRS are common in Europe. The change may reduce REIT portfolio values, because totals will be based on each property’s market value rather than its actual purchase price.
In recent months, REITs have raised $30 billion worth of new equity. It was previously believed the money was intended for the purpose of distressed properties. However, conference goers suspect REITs could use the money to pay down debt instead, say Fogell.
To contact Fogell, click on the link below.
http://www.avisonyoung.com/Our_Professionals/Vancouver/Bio/Fogell~Samuel/
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