RioCan REIT
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| Public | |
| Traded as | : REI.UN S&P/TSX Composite Component |
| Industry | REIT - Retail |
| Headquarters | Toronto, Ontario, Canada |
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Number of locations
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289 |
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Area served
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Canada |
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Key people
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Edward Sonshine, CEO and founder |
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Number of employees
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669 (2016) |
| Website | www.riocan.com |
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 square feet. The company properties are located across Canada. The current chief executive officer is Edward Sonshine.
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.
In 2006, RioCan announced a planned expansion into the United States, through a $1 billion joint-venture with Ramco-Gershenson Properties Trust. 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.
In 2011, RioCan announced a $1 billion joint venture with Tanger Factory Outlet Centers to develop 10-15 centres in Canada. RioCan was significantly affected by the sale of Zellers to Target, 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.
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