In exiting the JV, Cedar is taking
ownership of Franklin Village Plaza
in Franklin, MA.

PORT WASHINGTON, NY-Locally based retail REIT Cedar Realty Trust said Thursday afternoon that it’s exiting its three-year-old joint venture with RioCan Real Estate Investment Trust. Under terms of the agreement between the two REITs, Cedar will acquire RioCan’s ownership in a Massachusetts shopping center and sell its 20% ownership in the JV’s remaining properties.

Cedar (formerly known as Cedar Shopping Centers) is now taking 100% ownership of Franklin Village Plaza, a grocery-anchored 304,347-square-foot shopping center in Franklin, MA for about $60.1 million including the assumption of $34.7 million of in-place mortgage financing. Its sale to Toronto-based RioCan of a 20% interest in 21 other properties across six states entails RioCan paying $119.5 million, including the assumption of $54.4 million in debt. When the debt assumptions and Cedar’s acquisition of Franklin Village are factored in, the deal comes out to $39 million in cash paid by RioCan to Cedar.

Following the sale, Cedar will continue to manage the properties it’s selling to RioCan, subject to a one-year management agreement that RioCan can terminate on 90 days’ notice. A 6.5% capitalization rate is the basis for valuing all of the properties, the two companies said in separate statements.

As a result of this transaction, along with the plan announced last fall to sell off 50 non-core assets, “Cedar will be a more streamlined and less levered company, with an attractive wholly-owned portfolio of primarily grocery-anchored shopping centers situated between Washington, DC and Boston,” Bruce Schanzer, Cedar’s president and CEO, says in a release. “While we believe exiting our joint venture with RioCan is an important step for Cedar, RioCan has been an exceptional partner for many years and we look forward to our continued cordial relationship.”

For his part, RioCan CEO Edward Sonshine says in a statement, “While RioCan’s objective is maintaining its growth trajectory in the northeastern US through acquisitions, Cedar is seeking to consolidate its portfolio. Given these diverging objectives, both parties have agreed that the dissolution of our joint venture is the sensible path to take.”