RioCan to sell U.S. retail properties for about $2.7 billion, reaping big gain

TORONTO – RioCan Real Estate Investment Trust is planning to exit the U.S. market by sell selling its portfolio of 49 properties for about $2.7 billion to a fund managed by Blackstone.

The trust says funds from the sale will be used in Canada, where RioCan has a leading portfolio of shopping centres and other retail properties.

The actual price of the Blackstone deal is US$1.9 billion but the Canadian value may fluctuate because of exchange rates.

That represents a sizeable gain on RioCan’s investment — about C$1.2 billion based the dollar’s recent value.

RioCan acquired the U.S. properties — mainly in the northeastern states and Texas — over about six years beginning in November 2009, when the U.S. economy was in a deep recession, until last September.

RioCan (TSX:REI) says it expects the transaction to be completed on April 30.

“The sale will enable management to focus exclusively on RioCan’s operations in Canada, including its significant development pipeline, a key driver of the trust’s future growth strategy,” RioCan chief executive Edward Sonshine said in a statement.