BRAMPTON, ON-The RioCan Retail Value Limited Partnership has acquired the 235,000-sf Brampton Super Centre here for $26.8 million, including assumed mortgage debt of $18.7 million.

The 98.5%-occupied unenclosed center is the inaugural acquisition of the partnership, formed by Toronto-based RioCan Real Estate Investment Trust, the Ontario Municipal Employees Retirement System and the U.S.-based Teachers Insurance and Annuity Association-College Retirement Equities Fund. The funds strategy is to acquire underperforming shopping centers in Canada that have the potential for significant value-added, redevelopment or repositioning opportunities, make the appropriate changes and then dispose of these assets over a period of years.

Located in the city’s primary commercial corridor at the southwest corner of Queen Street East and Highway 410, Brampton Super Centre is currently anchored by Sears and a No Frills (Loblaws) supermarket, whose tenancies both expire within the next two years. Other national tenants include National Sports, Remax Realty, TD Bank, Bulk Barn, Pizza Hut, Kelsey’s and Burger King.

“This property is one type of the opportunities available to the partnership where the value creation potential lies in the imminent lease (expiration) of both anchor tenants,” says RioCan president and CEO Edward Sonshine. He tells that both the supermarket and the department store are out of renewal options and want to stay at the project, and that their current rents are below market by $2 or $3 per sf. Sears occupies 80,000 sf at the center and Lowblaws also leases 80,000 sf, though it has downsized to 50,000 sf and subleased the excess space to local retailers, says Sonshine.

“Just by entering into long-term leases at reasonable rates, it becomes an investment grade property,” he adds. “Hopefully we can come to terms that makes all parties happy, and in the meantime we will look at alternatives.”

The partnership is set up such that RioCan will use its expertise in redevelopment and leasing to improve the cash flow quality and liquidity of properties acquired, while 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. “We are very pleased at being able to have already begun deploying the partnership’s capital,” says Sonshine.

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