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The mixed retail-residential development will be in the Summerhill district, located among million-dollar homes and high-end boutiques.

RioCan Real Estate Investment Trust, Canada's largest REIT by market value, is teaming up with Tricon Capital Group Inc. and Diamond Corp. to develop a combined retail and residential project in Toronto's midtown core, according to people familiar with the deal.

The joint venture agreed to buy the real estate – a row of high-end boutiques and a block of land – for $85-million, said the people, who asked not to be identified because the purchase hasn't been announced publicly. RioCan's interest is in the retail portion, and it intends to buy into the high-rise rental tower and new retail development planned for the site, the people said.

Woodcliffe Landmark Properties, the closely held investor known for buying up brick-and-beam assets in Toronto, is selling the properties as part of its $230-million portfolio disposition, according to the people. Representatives for RioCan, Tricon, Diamond and Woodcliffe didn't immediately respond to requests seeking comment. Representatives for Jones Lang LaSalle Inc., which led the transaction, declined to comment.

RioCan and its partners have been seeking urban properties and land that allow for development, particularly on top of already existing retail buildings, as North American cities become more densely populated. RioCan is already developing about $855-million in properties across the country. Diamond, one of Toronto's largest condominium builders, has also teamed with RioCan on The Well project in downtown Toronto. Tricon manages residential real estate assets in Canada and the United States.

The joint venture's properties are in the Summerhill district, located among million-dollar homes and high-end boutiques. The deal is for the Shops of Summerhill, with about 31,000 square feet of fully occupied retail space, and an adjoining block of land that contains a four-storey office building and a parking lot with the potential for a high-rise tower, the people said.

Other investors have agreed to take stakes in two additional properties in Woodcliffe's Summerhill portfolio: a defunct train station built in 1915 that now houses one of the largest LCBO stores, and a development site that contains a low-rise office property that can be expanded to a nine-storey tower, the people said.