TORONTO, ONTARIO–(Marketwired – June 1, 2016) – RioCan Real Estate Investment Trust (“RioCan”) (TSX:REI.UN) today is pleased to announce that it has successfully closed on a new $1 billion unsecured operating credit facility (“Operating Facility”), which replaces RioCan’s secured operating credit facilities. The Operating Facility will mature in May, 2021, and provides for a mechanism to extend the facility on an annual basis.
“We are very pleased with the successful execution of this new credit agreement, the largest unsecured operating line ever provided for a Canadian REIT,” said Edward Sonshine, Chief Executive Officer of RioCan. “This facility provides RioCan with ample access to short-term liquidity, and enhanced flexibility for our operations and capital needs. In addition, the conversion from secured operating facilities to an unsecured operating facility substantially increases the size of our portfolio of unencumbered properties.”
The Operating Facility enables RioCan to unencumber 24 properties that were previously used as collateral support for the former secured credit facilities. The pro forma IFRS fair value of RioCan’s unencumbered asset pool (based on valuations as at March 31, 2016), which includes the value of assets unencumbered as a result of the new operating facility together with other assets where loan repayments were made to date in the second quarter, is in excess of $5 billion, as compared to $3.3 billion as at March 31, 2016. In addition, RioCan’s key performance metrics regarding unencumbered assets are anticipated to improve substantially, the most notable being the Trust’s unencumbered assets to unsecured debt ratio and the percentage of net operating income generated from unencumbered assets.
The interest rate charged on draws made against the Operating Facility is based on a pricing grid depending on RioCan’s credit rating and the type of borrowing, with the current rates for Canadian dollar Banker’s Acceptances and US dollar LIBOR loans being 120 basis points plus the underlying rate.
The Credit Facility was arranged by BMO Capital Markets, RBC Capital Markets (“RBC”), and TD Securities (“TD”) as Co-Lead Arrangers and Joint Book Runners. Bank of Montreal will act as the Administrative Agent, and RBC and TD will act as Co-Syndication Agents for the facility.
Forward-Looking Advisory
This news release contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements made in this News Release regarding RioCan’s unencumbered asset portfolio, and access to additional liquidity as a result of the described credit facility, 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, leverage ratios, circumstances, performance or expectations that are not historical facts, including but without limitation to the intended use of proceeds from the sale. 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 year ended March 31, 2016 (“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. Those risks and uncertainties include, but are not limited to, those related to: liquidity and general market conditions; tenant concentrations and related risk of bankruptcy or restructuring (and the terms of any bankruptcy or restructuring proceeding), defaults, including the failure to fulfill contractual obligations by the tenant or a related party thereof; retailer competition; access to debt and equity capital; interest rate and financing risk; joint ventures and partnerships; the relative illiquidity of real property; development risk associated with construction commitments, project costs and related approvals; environmental matters and property management. Although the forward looking information contained in this News Release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Certain statements included in this News Release may be considered “financial outlook” for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this News Release.
The Income Tax Act (Canada) contains provisions which potentially impose tax on publicly traded trusts (the SIFT Provisions). However, the SIFT Provisions do not impose tax on a publicly traded trust which qualifies as a REIT. RioCan currently qualifies as a real estate investment trust for Canadian tax purposes and intends to qualify for future years. Should this not occur, certain statements contained in this News Release may need to be modified.
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.
About RioCan
RioCan is Canada’s largest real estate investment trust with a total enterprise value of approximately $16 billion as at March 31, 2016. RioCan owns and manages Canada’s largest portfolio of shopping centres with ownership interests in a portfolio of 303 Canadian retail and mixed use properties, including 16 properties under development, containing an aggregate net leasable area of 46 million square feet. For further information, please refer to RioCan’s website at www.riocan.com.
Cynthia J. Devine
Executive Vice President, Chief Financial Officer and
Corporate Secretary
(647) 253-4973
www.riocan.com