RioCan CEO Edward SonshineCharla Jones/The Globe and Mail
You can mark Edward Sonshine's words: RioCan REIT will expand south of the U.S. border.
And it will grow all by itself.
RioCan's first foray into the United States came almost three years ago when the REIT signed a joint-venture agreement with Cedar Shopping Centers Inc. Together, the two companies scooped up 25 retail properties in the U.S. northeast, with RioCan taking 80 per cent stakes and Cedar taking the remaining portions. RioCan's U.S. properties now generate about 15 per cent of the REIT's revenues.
While Mr. Sonshine said before that he wants to see this figure climb to 20 per cent, he's now stressing that he'd like to see it happen soon. The U.S. catches his eye because, as he said on a conference call Tuesday,"the velocity of the recovery and the growth in rents is better [than in Canada] because they had such a big falloff in 2009."
Seeing potential, Mr. Sonshine recently did away with the Cedar joint venture.
"After considering more alternatives than I can even count, we finally realized that managing properties in the United States is no more difficult than operating them in B.C., Newfoundland and Quebec, all of which we, of course, do." By January, 2013, RioCan will set up its own office in the U.S. northeast, and the REIT intends to buy properties "at a cost that will probably be less on day one than we are currently paying out." RioCan, effectively, is going all-in on the U.S.
As for what exactly he'll buy, Mr. Sonshine plans on being picky. "At the moment, we are looking at a couple of possible [acquisitions], but neither are certainly at a stage where they're even worth talking about or taking too seriously right now. But discussions always continue," he said. "We're just looking for the one perfect one."
Tim Kiladze