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File photo of RioCan chief executive officer Edward Sonshine.

Kevin Van Paassen/The Globe and Mail

After spending more than $1-billion on acquisitions in 12 months, RioCan Real Estate Investment Trust is tapping out – at least for now.

"It's a very, very scarce acquisition market out there," chief executive officer Ed Sonshine explained on a quarterly conference call Thursday. "Anything that we would like to own isn't for sale."

When a property does pop up, the purchase price just doesn't make sense. "By and large, when the odd piece does come for sale, it's priced, quite frankly, where it doesn't make sense for us to buy it," he said.

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The comments are arguably at odds with what RioCan said the last time it reported quarterly earnings. In July, chief financial officer Cynthia Devine said the REIT's recent repositioning, which included selling its property portfolio in the United States, provided "more financial flexibility than ever to take advantage of acquisition opportunities."

Only three months later, RioCan let everyone know they've refined their focus. The REIT spent the last year buying joint venture partners such as Canada Pension Plan Investment Board and Kimco out of properties they co-own, but that game is largely over.

"We're starting to run out of partners' assets to buy," Mr. Sonshine said. "There are still a few that we're working on, but the third-party acquisition market, I suspect in 2017, will be very, very low, shallow pool."

RioCan's focus now: Developing urban properties that have a combination of retail, office and residential components. The Well, located just west of Toronto's downtown core, and co-owned with Allied Properties and Diamond Corp., is getting the most love.

This strategy isn't brand new for the REIT – RioCan's talked about it for some time – but it's become clear management is counting on it even more.

It's a bold bet, because development is inherently riskier, but already there are some signs it could pay off. Earlier this year, RioCan and its partners on The Well announced the sale of the project's residential component for $180-million. That's more than the $170-million they paid for the entire parcel of land -- and the partners still own the retail and office pieces.

(That the partners have already made millions of dollars on this land is a little funny, because it is currently occupied by The Globe and Mail – we leave later this year.)

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The risk has also been lowered by RioCan's newfound financial flexibility. After making huge gains on its U.S. portfolio, which it first started buying 2010 and sold last year amid a strong economic recovery and heavy currency appreciation, the company paid down a good chunk of debt.

In July, its leverage relative to total assets fell below 40 per cent, its lowest level ever. The same ratio was above 50 per cent at the start of the decade.

RioCan's development emphasis comes as the REIT moves toward a new vision. The retail-oriented trust made a name for itself owning power shopping centres in urban areas, but its tenant mix is quickly changing. Key tenants now are retailers who emphasize bargains and necessity purchases, such as Dollarama.

RioCan is also big on "experiences."

"What's happening with people is they're prepared to spend a lot of money on experience, whether that experience is foreign travel, which has nothing to do with us, or it's going out to restaurants, it's going to the movies, browsing in a bookstore, eating much finer foods," Mr. Sonshine said in July.

To cater to this trend, RioCan is adding tenants such as Pusateri's Fine Foods, which was a recent addition to its Oakville, Ont. mall.

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