TORONTO — Canada’s largest real estate investment trust is selling off its U.S. portfolio and reaping close to $1 billion in profit with about half it coming from the sinking loonie.
RioCan Real Estate Investment Trust said Friday it is selling its U.S. portfolio of 49 retail properties located in the northeastern U.S. and Texas for US$1.9 billion — a move chief executive Ed Sonshine said was at least partially driven by the dollar.
“I won’t say we have been cheering it down because that would be unpatriotic, but the trajectory of the dollar has certainly helped our decision-making,” Sonshine said in an interview.
RioCan is selling to Blackstone Real Estate Partners VIII for what amounts to $2.7 billion based on an exchange rate of $1.397 at noon on Thursday. That amount is $200 million less than the reported value of $2.9 billion established Sept 30. under international financial reporting standards or IFRS.
“I’ll be honest, I was hoping for US$2 billion, but the market got a little bit quieter,” Sonshine said, adding REITs in the United States have watched their share prices decline, making them unable to compete with a institutional buyer like Blackstone. “I think we suffered a portfolio discount rather than a portfolio premium. We wanted to sell in one chunk, we might have done better price-wise if we had done piece-by-piece. But that would take a long time and wouldn’t be a smart move.”