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TORONTO-Locally based Canadian Tire has sold 12 of its stores for more than $164.5 million to three separate companies in sale-leaseback deals. Canadian Real Estate Investment Trust, based here, acquired eight of the properties for $137.3 million; Charter Real Estate Investment Trust, also based here, bought three of the sites for $27.2 million, and a private investor took the final store.

The retailer signed 15-year leases at all the stores, all recently constructed or expanded properties that are located across the country. The company could not be reached for comment, but said in a press release last month that it planned to sell-leaseback the stores for $174 million. The properties total almost one million sf. The firm, Canada’s largest tire retailer, owns about 74% of its properties and leases the rest. “Carefully selected sale-leasebacks enable us to monetize the value of select properties, creating financial flexibility while maintaining operating flexibility,” said Tom Gauld, president and CEO, in the statement. The retailer operates more than 1,170 general merchandise and apparel retail stores and gas stations.

Charter’s new properties total almost 200,000 sf, and are in Brockville, Strathroy and Wasaga Beach, Ontario. Ari Silverberg, president and CEO, says his REIT secured $10 million of corporate debt to fund the transaction, without borrowing additional amounts from its acquisition facility. Management expects the acquisition to add about one cent per unit to FFO in the next 12 months, a 5% increase in the REIT’s annualized FFO per unit. “We are a big believer in Canadian Tire, they are the best in Canada in terms of getting the market right,” he tells GlobeSt.com. He says the REIT, which was formed only last year, focuses mostly on national-type retailers.

The other REIT, known as Creit, purchased stores that range from 54,000 sf to 130,000 sf, with 740,000 sf in total. Three of the sites also include a freestanding Marks Work Wearhouse store. The properties are in British Columbia, Alberta, Ontario, Quebec and Nova Scotia.

Stephen Johnson, president and CEO of Creit, said in a statement that there are several reasons why the transaction was perfect for his trust. “Canadian Tire is an investment grade credit and has a market capitalization of almost $5 billion, so this transaction can be expected to deliver reliable rental revenue, and there will be consistent growth in the rental income as per the contractual terms of the 15-year lease,” he said his trust’s statement. Other benefits come from knowing the stores are new or expanded, and some are well-known to the trust, such as the Canadian Tire that’s in the Creit-owned Dartmouth Crossing Shopping Centre in Halifax, Nova Scotia. “Given the current uncertainty in both the economy and the credit markets, this transaction is a low-risk, sound investment,” Johnson said in the statement. Company officials did not return calls for comment.

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