November 25, 2015
TORONTO & NEW YORK--(BUSINESS WIRE)--
Hudson's Bay Company ('HBC') (TSX:HBC) and RioCan Real Estate Investment
Trust ('RioCan') (TSX:REI.UN) announced today that they have closed the
second tranche of their joint venture (the 'RioCan-HBC JV') focused on
real estate growth opportunities in Canada. The joint venture will
enable HBC and RioCan to build on the strength of existing real estate
assets and identify new real estate growth opportunities. Unless
otherwise indicated, all amounts are expressed in Canadian dollars.
As part of the second tranche closing:
-
HBC indirectly contributed three ground-leased properties consisting
of Yorkdale Shopping Centre, Scarborough Town Centre and Square One
(collectively the 'YSS Properties') totaling 735,926 square feet to
the RioCan-HBC JV.
-
The transaction values this second tranche of the HBC real estate
contribution at approximately $379 million based on a capitalization
rate of 5.26%. As part of the transaction, the HBC mortgage on the
Yorkdale ground lease of approximately $48 million was assumed by an
entity related to the RioCan-HBC JV, resulting in a total HBC equity
stake of $1,281 million or 89.7% in the RioCan-HBC JV.
RioCan has committed to contribute a total of $325 million to the
RioCan-HBC JV for an eventual pro forma equity stake of approximately
20%. The balance of these contributions will consist of $52.5 million in
tenant allowances, and $125.4 million to be used to fund future property
acquisitions to increase the value and diversify the tenant base of the
RioCan-HBC JV. These contributions will be made by the third anniversary
of the first tranche closing date.
On August 4, 2015, HBC obtained a favourable court declaration and order
from the Superior Court of Justice-Ontario which permits the indirect
contribution of the three ground-leased YSS Properties to RioCan-HBC JV.
This court order has been appealed by the related landlords. If the
landlords' appeal is successful, HBC and RioCan have agreed to unwind
HBC's capital contribution of these ground leases, in whole or in part,
if required to protect the value of these assets.
About Hudson's Bay Company
Hudson's Bay Company is one of the fastest-growing department store
retailers in the world, based on its successful formula of driving the
performance of high quality stores and their all-channel offerings,
unlocking the value of real estate holdings and growing through
acquisitions. Founded in 1670, HBC is the oldest company in North
America. With the recent completion of its acquisition of GALERIA
Kaufhof Group, HBC's portfolio today includes nine banners, in formats
ranging from luxury to better department stores to off price, with more
than 460 stores and 65,000 employees around the world.
In North America, HBC's leading banners include Hudson's Bay, Lord &
Taylor, Saks Fifth Avenue and Saks OFF 5TH, along with Find @ Lord &
Taylor and Home Outfitters. In Europe, its banners include GALERIA
Kaufhof, the largest department store group in Germany, Belgium's only
department store group Galeria INNO, as well as Sportarena.
HBC has significant investments in real estate joint ventures. It has
partnered with Simon Property Group Inc. in the HBS Global Properties
Joint Venture, which owns properties in the United States and Germany.
In Canada, it has partnered with RioCan Real Estate Investment Trust in
the RioCan-HBC Joint Venture.
About RioCan
RioCan is Canada's largest real estate investment trust with a total
enterprise value of approximately $15.1 billion as at September 30,
2015. It owns and manages Canada's largest portfolio of shopping centres
with ownership interests in a portfolio of 354 retail properties
containing approximately 78 million square feet, including 49 retail
properties containing 13 million square feet in the United States as at
September 30, 2015. RioCan's portfolio also includes 16 properties under
development in Canada. For further information, please refer to RioCan's
website at www.riocan.com.
Forward-Looking Statements - Hudson's Bay Company
Certain statements made in this news release, including, but not limited
to, statements relating to the strategies, objectives and benefits of
the RioCan-HBC joint venture, and RioCan's commitment to make future
contributions to the RioCan-HBC JV, and other statements that are not
historical facts, are forward-looking. Often but not always,
forward-looking statements can be identified by the use of
forward-looking terminology such as 'may', 'will', 'expect', 'believe',
'estimate', 'plan', 'could', 'should', 'would', 'outlook', 'forecast',
'anticipate', 'foresee', 'continue' or the negative of these terms or
variations of them or similar terminology.
Although HBC believes that the forward-looking statements in this news
release are based on information and assumptions that are current,
reasonable and complete, these statements are by their nature subject to
a number of factors that could cause actual results to differ materially
from management's expectations and plans as set forth in such
forward-looking statements for a variety of reasons. Some of the factors
- many of which are beyond HBC's control and the effects of which can be
difficult to predict - include, among others: (a) the risk that the
anticipated benefits from the RioCan-HBC joint venture cannot be
realized, (b) the risk that the RioCan-HBC JV is unable to make future
acquisitions and diversify its tenant base, (c) the risk that RioCan
fails to satisfy its future contribution commitments, (d) the risk that
the purchase price paid by the RioCan-HBC JV to acquire the properties
is greater than the accounting fair market value of such properties that
will be determined by third party appraisals; (d) the risk that the
landlords of the YSS Properties will be successful in their appeal of
the August 4, 2015 court order and HBC will have to unwind all or a part
of the contribution of the YSS Properties; and (e) the risk that the
RioCan-HBC JV is unable to complete a future monetization transaction.
HBC cautions that the foregoing list of important factors and
assumptions is not exhaustive and other factors could also adversely
affect its results. For more information on the risks, uncertainties and
assumptions that could cause HBC's actual results to differ from current
expectations, please refer to the 'Risk Factors' section of HBC's Annual
Information Form dated April 30, 2015, HBC's second quarter Management
Discussion & Analysis dated September 10, 2015, as well as HBC's other
public filings, available at www.sedar.com
and at www.hbc.com.
The forward-looking statements contained in this news release describe
HBC's expectations at the date of this news release and, accordingly,
are subject to change after such date. Except as may be required by
applicable Canadian securities laws, HBC does not undertake any
obligation to update or revise any forward-looking statements contained
in this news release, whether as a result of new information, future
events or otherwise. Readers are cautioned not to place undue reliance
on these forward-looking statements.
Forward-Looking Statements - RioCan Real Estate Investment Trust
This news release contains forward-looking statements within the meaning
of applicable securities laws. These statements include, but are not
limited to, statements made in this News Release relating to the
strategies, objectives and benefits of the RioCan-HBC joint venture,
RioCan's commitment to make future contributions to the RioCan-HBC JV,
and other statements concerning RioCan's objectives, its strategies to
achieve those objectives, as well as statements with respect to
management's beliefs, plans, estimates, and intentions, and similar
statements concerning anticipated future events, results, circumstances,
performance or expectations that are not historical facts.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as 'outlook', 'objective', 'may',
'will', 'would', 'expect', 'intend', 'estimate', 'anticipate',
'believe', 'should', 'plan', 'continue', or similar expressions
suggesting future outcomes or events. Such forward-looking statements
reflect management's current beliefs and are based on information
currently available to management. All forward-looking statements in
this News Release are qualified by these cautionary statements.
These forward-looking statements are not guarantees of future events or
performance and, by their nature, are based on RioCan's current
estimates and assumptions, which are subject to risks and uncertainties,
including those described under 'Risks and Uncertainties' in RioCan's
Management's Discussion and Analysis for the period ended September 30,
2015, which could cause actual events or results to differ materially
from the forward-looking statements contained in this News Release.
Those risks and uncertainties include, but are not limited to, those
related to: liquidity and general market conditions; tenant
concentrations and related risk of bankruptcy or restructuring (and the
terms of any bankruptcy or restructuring proceeding), occupancy levels
and defaults, including the failure to fulfill contractual obligations
by the tenant or a related party thereof; lease renewals and rental
increases; the ability to re-lease and find new tenants for vacant
space; retailer competition; access to debt and equity capital; interest
rate and financing risk; joint ventures and partnerships; the relative
illiquidity of real property; unexpected costs or liabilities related to
acquisitions and dispositions; development risk associated with
construction commitments, project costs and related approvals;
environmental matters; litigation; reliance on key personnel; management
information systems; unitholder liability; income and indirect taxes;
U.S. investments, property management and foreign currency risk; and
credit ratings.
RioCan currently qualifies as a real estate investment trust for tax
purposes and intends to continue to qualify for future years. The Income
Tax Act (Canada) contains provisions which potentially impose tax on
publicly traded trusts which qualify as specified investment
flow-through entities (the SIFT Provisions). However, the SIFT
Provisions do not impose tax on a publicly traded trust which qualifies
as a real estate investment trust (REIT). Should RioCan no longer
qualify as a REIT under the SIFT Provisions, certain statements
contained in RioCan's MD&A may need to be modified. RioCan is still
subject to Canadian tax in their incorporated Canadian subsidiaries.
The Trust's U.S. subsidiary qualifies as a REIT for U.S. income tax
purposes. The subsidiary expects to distribute all of its U.S. taxable
income (if any) to Canada and is entitled to deduct such distributions
for U.S. income tax purposes. The subsidiary's qualification as a REIT
depends on the REIT's satisfaction of certain asset, income,
organizational, distribution, unitholder ownership and other
requirements on a continuing basis. The Trust anticipates that the
subsidiary will continue to qualify as a U.S. REIT in the future. The
Trust's U.S. subsidiary is subject to a 30% or 35% withholding tax on
distributions to Canada.
Other factors, such as general economic conditions, including interest
rate and foreign exchange rate fluctuations, may also have an effect on
RioCan's results of operations. Material factors or assumptions that
were applied in drawing a conclusion or making an estimate set out in
the forward-looking information may include, but are not limited to: a
stable retail environment; relatively low and stable interest costs; a
continuing trend toward land use intensification, including residential
development in high growth and urban markets; access to equity and debt
capital markets to fund, at acceptable costs, future capital
requirements and to enable the Trust to refinance debts as they mature;
and the availability of investment opportunities for growth in Canada
and the U.S..
For a description of additional risks that could cause actual results to
materially differ from management's current expectations, see 'Risks and
Uncertainties' in RioCan's Management's Discussion and Analysis in its
2014 Annual Report, and for the period ended September 30, 2015, and in
'Risks and Uncertainties' in RioCan's AIF. Although the forward-looking
information contained in this News Release is based upon what management
believes are reasonable assumptions, there can be no assurance that
actual results will be consistent with this forward-looking information.
Certain statements included in this News Release may be considered
'financial outlook' for purposes of applicable Canadian securities laws,
and as such the financial outlook may not be appropriate for purposes
other than this News Release. The forward-looking information contained
in this News Release is made as of the date of this News Release, and
should not be relied upon as representing RioCan's views as of any date
subsequent to the date of this News Release.
Management undertakes no obligation, except as required by applicable
law, to publicly update or revise any forward-looking information,
whether as a result of new information, future events or otherwise.
View source version on businesswire.com : http://www.businesswire.com/news/home/20151125005886/en/
Hudson's Bay Company
INVESTOR RELATIONS:
416-256-6745
investorrelations@hbc.com
or
MEDIA
RELATIONS:
Tiffany Bourré
905-595-7184
Director, External
Communications
tiffany.bourre@hbc.com
or
RioCan
Real Estate Investment TrustEdward Sonshine, O. Ont., Q.C.
416-866-3018
Chief
Executive Officer
orCynthia Devine
647-253-4973
Executive
Vice President, Chief Financial Officer and Corporate Secretary
www.riocan.com
Source: Hudson's Bay Company
News Provided by Acquire Media
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