RioCan Real Estate Investment Trust Announces Sale of a 37.5% Interest in East Hills to CPP Investment Board: Financial News

RioCan Real Estate Investment Trust Announces Sale of a 37.5% Interest in East Hills to CPP Investment Board
Thursday October 23, 2008 4:39 pm ET

TORONTO, ONTARIO--(MARKET WIRE)--Oct 23, 2008 -- RioCan Real Estate Investment Trust ("RioCan") (Toronto:REI-UN.TO - News) and Trinity Development Group Inc. ("Trinity") today announced that they have sold a 37.5% non-managing ownership interest in East Hills, phases I and III, a development featuring approximately 115 acres in Calgary, Alberta, to CPP Investment Board ("CPPIB"). The purchase price is $28.5 million subject to holdback conditions.

The East Hills development is located at the East Freeway and 17th Avenue SE. RioCan owned 50% of phase I and III, while Trinity and the original vendor each owned 25%. RioCan, Trinity and the original vendor reduced their ownership interests to 37.5%, 12.5% and 12.5% respectively, with CPPIB acquiring a 37.5% non-managing ownership interest.

Upon completion, it is expected that the site will feature almost 1.2 million square feet of new format retail space, with substantial completion of the development to be staggered between late 2009 (phase I) and late 2012 (phase III).

"As a long-term investor, the CPPIB seeks out high quality assets which will generate revenue and help pay future retirement benefits. The East Hills development will, as a part of our larger real estate portfolio, help secure our future returns as we build assets in the Canadian retail sector," said Graeme Eadie, Senior Vice President, Real Estate Investments for CPPIB.

Edward Sonshine, Q.C., President and CEO of RioCan, said, "RioCan is pleased to partner once again with CPPIB. This sale expands our relationship with one of Canada's largest pension funds and we are excited to have them as a partner for this new development."

RioCan, along with its development partner Trinity, will manage all aspects of the development, construction and leasing of the project and will earn market based fees for doing so. Upon completion, RioCan will be responsible for property management.

This agreement regarding the East Hills development follows an announcement made in June 2008 that RioCan and Trinity had sold a 50% non-managing ownership interest in two developments to CPPIB. The two developments are Jacksonport located in Calgary, Alberta and St. Clair Avenue and Weston Road located in Toronto, Ontario. Jacksonport is a 100-acre development that will consist predominately of new format retail. The St. Clair and Weston development features over 19 acres and will ultimately feature approximately 570,000 square feet of retail space. Under the agreement, RioCan and Trinity will each retain a 25% ownership interest in these two developments.

About RioCan

RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $7.2 billion. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 238 retail properties, including 14 under development, containing an aggregate of over 58 million square feet. For further information, please refer to RioCan's website at www.riocan.com.

About CPP Investment Board

The CPP Investment Board is a professional investment management organization that invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, the CPP Investment Board invests in public equities, private equities, real estate, inflation-linked bonds, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in London and Hong Kong, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm's length from governments. At June 30, 2008, the CPP Fund totaled C$127.7 billion. For more information, please visit www.cppib.ca.

The Chief Actuary of Canada estimates that CPP contributions will exceed annual benefits paid through to the end of 2019, providing a 12-year period before a portion of the CPP Fund's investment income is needed to help pay CPP benefits.

About Trinity

Trinity is a leader and innovator in the development and leasing of high quality shopping centres. Established in 1991, Trinity has created over 20 million square feet of large format retail space across Canada. For more information about Trinity, visit www.trinity-group.com.

Forward-Looking Information

This news release contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements concerning our objectives, our 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", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "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.

These statements are not guarantees of future events and are based on our estimates and assumptions that are subject to risks and uncertainties, which could cause actual events or results described above to differ materially from the forward-looking statements contained herein. Those risks and uncertainties include risks associated with real property ownership, financing and interest rates, environmental matters and construction. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information include: an increasing divergence in the general economy between eastern and western Canada; a less robust retail environment than we have seen for the last few years; interest costs to us remain relatively stable; acquisition capitalization rates increase and land costs for greenfield development decrease; a continuing and accelerating trend towards land use intensification in high growth markets; and equity and debt capital markets will continue to provide access to capital to fund at acceptable costs our future growth program and refinance our debts as they mature. Although the forward-looking information contained herein is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. All forward-looking statements in this press release are qualified by these cautionary statements. Except as required by applicable law, RioCan undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.