TORONTO, Canada, 2017-Sep-08 — /EPR Retail News/ — RioCan Real Estate Investment Trust(“RioCan”) (TSX:REI.UN) is pleased to provide an update on the development of its landmark, mixed-use, transit oriented project at the northeast corner of Yonge Street and Eglinton Avenue, also known as ePlace. The development is located in the heart of midtown Toronto at the intersection of Yonge Street and Eglinton Avenue, directly above the existing Yonge subway line and the new Eglinton Crosstown LRT.
The project is on track to be substantially completed in late 2018 or early 2019, and all of the residential units in the condominium portion of the development have been sold. Additionally, RioCan has entered into the following agreements with its partners with respect to the residential and retail components of the development:
1) On completion, RioCan, which currently owns a 50% interest in the rental residential tower, will purchase the remaining 50% interest in the rental residential tower; and
2) RioCan will acquire the remaining 50% interest in the retail component based on a 7% capitalization rate on the stabilized NOI on completion.
Additional details for both transactions are included below.
“This site represents the first of our purpose built rental residential assets that will be completed, and it is a prime example of the transit oriented, mixed-use urban developments that RioCan is undertaking in order to create substantial value across our portfolio,” said Edward Sonshine, CEO of RioCan. “As the project approaches completion over the next 12 to 16 months, we will recognize the residential inventory gains from the condominium tower and generate consistent rental income from the commercial and rental residential portions of the property.
“Over the next decade, as we transform many of our other urban, transit-oriented shopping centres, we will become the leading owner of newly constructed, retail focused, urban mixed-use properties in Canada’s major markets,” added Mr. Sonshine.
In the second quarter of 2014, RioCan (50% ownership) and its partners Metropia and Bazis International Inc. (50% ownership) commenced construction at ePlace. The project is comprised of three major components, a condominium tower, a rental residential tower, and the commercial/street retail space along Yonge and Eglinton at the base of the project. Excluding 152 parking stalls that have been sold with the condominium units, there remains 227 parking stalls allocated to the latter two components that will be used as rental parking for the rental residential tower and as fee parking for the retail and commercial space, which will generate additional income at the property.
The rental tower, currently under construction, will reach 36 storeys and contain 466 apartment units. On completion, RioCan, which currently owns a 50% interest in the tower, will purchase the remaining 50% interest in the rental residential tower from its partners for $10 million plus the partners’ pro rata share of costs related to this portion of the development. The total purchase price for the remaining 50% interest is expected to be in the range of $95 to $105 million and is subject to final cost amounts.
The condominium portion of the project will reach 59 storeys containing 623 units, all of which were sold by the second quarter of 2015. The construction of the condominium tower is well advanced and all construction contracts have been awarded, with completion anticipated in late 2018 and residents taking possession in the fourth quarter of 2018 and early 2019.
Retail and Commercial
Included in the overall development project is approximately 43,500 square feet of net leasable area (“NLA”) at the base of the development. There are two floors of retail (one below grade retail) and two floors of office space. The retail component, which is approximately 23,000 square feet of NLA features street level and underground retail, will be anchored by an approximately 18,000 square foot full service TD Bank providing traditional banking as well as investment services.
RioCan has entered into an agreement to acquire the remaining 50% interest in the retail component from its partners based on a 7% capitalization rate on the stabilized NOI on completion, which is expected to be approximately $2 million per annum (at 100%). Considering the location and the quality of the lead tenant, current estimates place the market value of the retail portion to be approximately $40 million (at 100%).
The partners are currently marketing for sale the office space on the third floor and the office space not occupied by TD Bank on the second floor in the commercial component of the site.
RioCan is Canada’s largest real estate investment trust with a total enterprise value of approximately $13.9 billion as at June 30, 2017. RioCan owns and manages Canada’s largest portfolio of retail focused and mixed-use transit-oriented properties with ownership interests in a portfolio of 299 Canadian properties, including 15 properties under development, containing an aggregate net leasable area of 45 million square feet. For the past 25 years, we have shaped the future, sensibly cultivated growth, and taken our stakeholders and partners wherever they needed to go. Currently, we have more than 6,350 retail tenants and approximately 660 employees with a presence from coast to coast. We deliver real vision, solid ground. For more information, visit www.riocan.com.
Forward Looking Information
This news release contains forward-looking information within the meaning of applicable Canadian securities laws. This information includes, but is not limited to, statements made with respect to RioCan’s Northeast Corner, Yonge and Eglinton development project, its overall development program together with other statements concerning RioCan’s objectives, its strategies to achieve those objectives, as well as statements with respect to management’s beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. All forward-looking statements in this News Release are qualified by these cautionary statements.
Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan’s current estimates and assumptions, which are subject to numerous risks and uncertainties, including those described under “Risks and Uncertainties” in RioCan’s Management’s Discussion and Analysis for the period ended June 30, 2017(“MD&A”) and the Trust’s most recent Annual Report and Annual Information Form, which could cause actual events or results to differ materially from the forward-looking information contained in this News Release.
Except as required by applicable law, RioCan undertakes no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
RioCan Real Estate Investment Trust
Edward Sonshine, O. Ont., Q.C.
Chief Executive Officer
Source: RioCan Real Estate Investment Trust/ GLOBE NEWSWIRE