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Loblaw files a preliminary prospectus to create one of Canada’s largest commercial real estate trusts.Fernando Morales/The Globe and Mail

One of the first questions coming up in the wake of the announcement of Loblaw Cos. Ltd.'s plan to buy Shoppers Drug Mart Corp. for $12.4-billion is: What does it mean for the Loblaw REIT?

The answer, it seems, is not very much. Loblaw just completed the initial public offering of Choice Properties Real Estate Investment Trust, which will hold the grocer's huge real estate portfolio.

That was a large part of getting the Shoppers deal done as it raised cash for Loblaw and cranked up the company's valuation. But when it comes to putting Shoppers' real estate into Choice, the fact is there's just not much real estate there.

According to Shoppers filings, the company leases almost all of its more than 1,300 locations, and owns only 27 stores. Of seven distribution centres, Shoppers owns four and leases three. So don't look for a big dropdown transaction where Loblaw sells Shoppers properties to the REIT to raise money.

(As an aside, the fact that the first question from so many people on such a massive deal is "what does it mean for the real estate" is pretty telling about what investors are fixated on these days.)

(Boyd Erman is a Globe and Mail Capital Markets Reporter & Streetwise Columnist.)

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