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TORONTO-RioCan Real Estate Investment Trust of Toronto has formed the RioCan Retail Value Limited Partnership with the Ontario Municipal Employees Retirement System and the Teachers Insurance and Annuity Association – College Retirement Equities Fund.

The partners have committed to invest $200 million which, when taken together with third-party debt, will enable the partnership to invest more than $500 million in targeted investments. The Retail Value Limited Partnership will acquire under-performing shopping centers in Canada that have potential for significant value-added, redevelopment or repositioning opportunities and then dispose of these assets over a period of years.

RioCan is the dominant owner of community and new format retail shopping centers in Canada. While its core investment strategy is to focus on stabilized, low risk retail properties to satisfy our goal of maintaining and creating stable and growing recurring distributable income, company President/CEO Edward Sonshine says there are “significant opportunities” for investment in retail properties where value-added potential exists.

“We frequently encounter acquisition opportunities that are not suitable for RioCan as a sole investor; the Partnership will allow us to pursue these opportunities with a larger pool of capital in which we will also be an investor,” says Sonshine. “Not only will RioCan benefit as a minority investor, but we will also earn incentive compensation for out-performance by the Partnership.”

The partnership’s lead equity investor is TIAA-CREF. TIAA-CREF is headed into Canada after building up $1.2 billion of real estate assets under management throughout Western Europe. “We firmly believe in the unique dynamics of the Canadian real estate market,” says Thomas Garbutt, managing director of TIAA-CREF’s Real Estate Equities Group. “We see this investment as a large first step to expanding our international program into Canada.”

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