By Carolyn King
Calloway Real Estate Investment Trust on Thursday said it would
acquire the SmartCentres retail platform from Canadian real-estate
developer Mitchell Goldhar in a deal worth 1.16 billion Canadian
dollars ($950 million), including debt assumption.
The REIT said the deal will transform it into a fully integrated
real-estate developer and operator. The transaction includes stakes
in a C$1.1 billion portfolio of 24 shopping center properties
located mainly in Ontario and Quebec, many of which house stores
operated by Wal-Mart Stores Inc.'s Canada unit. Mr. Goldhar
developed the first Wal-Mart store in Canada and has built
SmartCentres into the country's largest developer of retail real
estate.
The Canadian retail sector has seen a number of dramatic shifts
in recent years, including the influx of several U.S. retailers,
expansion moves by domestic retailers and the high-profile exit of
Target Corp. after an ambitious but short-lived foray into Canada.
Those shifts have created opportunities but also pressures for
commercial landlords.
Calloway said it would fund the purchase through a combination
of about C$644 million of assumed debt, cash from a C$200 million
equity offering and the issuance of about C$160 million in units of
subsidiary limited partnerships to Mr. Goldhar and certain other
vendors. It will also use cash on hand and existing credit
facilities. It valued the deal at C$1.16 billion ($950
million).
SmartCentres has a network of more than 50 million square feet
of retail space, including more than 170 Walmart Canada stores, and
provides various property services. It has more recently increased
its focus on mixed-use development opportunities through its
SmartUrban brand, Calloway noted. The REIT said the acquisition
will position Calloway for longer-term growth.
Calloway said it would change its name to SmartREIT after the
deal closes. Mr. Goldhar's stake in Calloway will rise to 23% from
21%, it added.
Write to Carolyn King at carolyn.m.king@wsj.com
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