RioCan REIT closes acquisition of 50% interest in Yonge Sheppard Center
RioCan Real Estate Investment Trust announced that it has completed the acquisition of KingSett Capital's Canadian Real Estate Income Fund non-managing, 50% co-ownership interest in Yonge Sheppard Centre for $357.6M, based on KingSett's share of costs as of August 30, 2019, net of certain working capital adjustments. As part of the transaction, KingSett took a material equity position in RioCan through an investment of $100M in RioCan units with a one-year lock-up agreement commencing August 30, 2019. This transaction brings RioCan's ownership of the nearly one million square foot, urban mixed-use property at the intersection of Yonge Street and Sheppard Avenue in Toronto, Ontario to 100%. The fully revitalized property serves as the hub of this important and rapidly growing Toronto neighbourhood. As part of the transaction, RioCan assumed KingSett's share of the existing property debt and has issued $100M of RioCan units out of treasury to KingSett at the 5-day volume weighted average unit trading price of $26.25 as of June 5, 2019, the date the firm agreement was entered into by the parties. Subsequent to the transaction closing, RioCan effectively used a portion of the net proceeds from its recently announced $500.0 million Series AB debenture issuance, which carries a coupon rate of 2.576% per annum, to repay without prepayment penalty $265.6 million of existing property debt on Yonge Sheppard Centre. The existing property debt was a floating rate loan which carried an interest rate of 3.15% based on prevailing rates, resulting in further interest savings for RioCan. The acquisition of the remaining interest in this important asset accelerates RioCan's major market and Greater Toronto Area presence, expands our RioCan Living portfolio and provides significant income and value growth potential.