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Riocan CEO Edward Sonshine speaks to shareholders during the RioCan annual general meeting held in Toronto, Ont. June 7, 2011.Kevin Van Paassen/The Globe and Mail

RioCan Real Estate Investment Trust is looking to have a new regional office open in the U.S. and staff on the ground by January as it works to expand its business south of the border.

Chief executive officer Edward Sonshine says the office, which will operate like the trust's other regional locations across Canada, will help RioCan improve operations.

"Not only do we expect that leasing and operations will be done at least as well, and hopefully better, they will be at a cost that will probably be less on Day 1 than we are currently paying out," Mr. Sonshine told a conference call with financial analysts.

He said the savings will become more apparent "as we scale up" in the U.S. Northeast.

The shopping mall trust reported Tuesday a third-quarter profit of $125-million, or 42 cents per unit, for the quarter ended Sept. 30, down from $168-million, or 63 cents per unit, a year ago. Total revenue for the quarter totalled $283-million, up from $246-million.

The trust attributed the drop in earnings to a smaller increase in the fair value of its investment properties. RioCan said the fair value of its properties in the quarter was up $7-million, compared with a gain of $73-million in the third quarter of 2011.

Adjusting to exclude the fair-value gains in both years, RioCan had $120-million of net income – up from $97-million a year earlier. Operating funds from operations for the quarter amounted to $115-million or 40 cents per unit, up from $97-million or 37 cents per unit in the third quarter of 2011.

RioCan has been developing its operations in the U.S. in recent years.

Mr. Sonshine reiterated Tuesday the trust's plan to expand its U.S. operations to as much as 20 per cent of its overall business from its current level about 15 per cent.

Last month, the trust signed a deal to end its joint venture agreement with Cedar Realty Trust Inc. and split up a portfolio of 22 properties in the U.S. owned by the partnership.

Mr. Sonshine said the new U.S. office will give the RioCan a platform for growth without the need for a large acquisition.

"It gives us the ability to be patient and wait for the perfect opportunity," Mr. Sonshine said.

"If it never comes along we're perfectly set up, if it does come along, having our own operation will certainly not be a bar to taking advantage of such an opportunity."

In Canada, RioCan has been ramping up operations in preparations for the arrival of U.S. retailer Target in Canada and releasing Zellers locations that Target is not taking over.

The trust has also been developing several outlet malls in Canada in a joint venture with U.S.-based Tanger Factory Outlets.

Last month, RioCan and Tanger signed a deal to buy two outlet centres in the Montreal area for $94.7-million.

The deal followed a deal for the Cookstown Outlet Mall north of Toronto and another for 20 hectares in the Ottawa suburb of Kanata to develop into a Tanger Outlet Center.

RioCan owns a portfolio of 338 retail properties containing more than 80 million square feet in Canada and the United States.