If you read the headline and saw the cover picture, you may think we’re talking about Rogers Place or Stantec Tower. However, in this case the big dog is Choice Properties Real Estate Investment Trust and the town is all of Canada. Admittedly, we might be guilty of click-bait here, but if we haven’t lost you we’ll explain why this is a big development. Choice Properties REIT, which is majority owned by the Loblaw Group and the Weston Family, just agreed to buy Canadian Real Estate Investment Trust (CREIT) for $3.93 billion. With the acquisition, Choice Properties REIT will have an enterprise value of about $16 billion, comprised of 752 properties and 69 million square feet of leasable space. From an enterprise standpoint, this will make it the largest REIT in Canada and also put it as a top 5 REIT by market capitalization.
What’s interesting is that they will move from being a retail-property focused REIT to one that owns properties in each of the three main commercial asset classes (industrial, office and retail). In stock market parlance, they will be moving from a pure-play retail REIT to a diversified REIT. On the pure-play side, there are a number of REITs that focus specifically on one asset class. There are even a few REIT’s that further define their mandate by focusing on subsections of those asset classes such as health care, hotels or automotive.
This weeks announcement follows another large acquisition from last month when the Blackstone Group and Ivanhoe Cambridge agreed to purchase Pure Industrial REIT (Piret) for roughly $2 billion. Riocan, who is currently the largest REIT by market capitalization, also announced last year that they would be selling up to $2 billion in properties as they diverted attention strictly to the major Canadian markets.
There’s a website that tracks the stock price of all Canadian REIT’s. You’ll see that most are down year-to-date but a few have fared quite well.
It will be an interesting year in Canada’s commercial real estate market as we’ve already seen more than $5 billion in transactions and it’s not even March yet.
Jon Germain / Richardson GMP, ycharts, Choice Properties