Teevee
I've been following REI's annual and quarterly reports as well as press releases and must admit that the information you provide does not jive with them.
Their tenants are companies like Wal-Mart, Loblaws Superstore, Save-On-Foods, Office Depot, Home Depot, Famous Players, Canadian Tire, Pennington's, Danier Leather, etc.
The press release about the takeover gave some comparative figures for performance between REI and RFN which I have no reason to question. I've excerpted below. It seems to me that REI has done better than RFN in the past few years. The fact that they have also just increased their distribution for the next quarter from 8.125 cents to 8.5 cents gives me confidence.
Greg
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RioCan Real Estate Investment Trust -
RioCan REIT to acquire RealFund
Mr. Edward Sonshine reports: RioCan Real Estate Investment Trust (RioCan), Canada's largest REIT, announced today that it has made an unsolicited proposal to acquire RealFund, the country's fifth largest REIT, to create a stronger force in an industry that is ready for consolidation. Under the terms of the proposal, RealFund's unit holders would be entitled to receive 1.35 RioCan units for each RealFund unit now held. Based on current unit prices, the total value of the offer is approximately $700-million. RioCan proposes to acquire RealFund through a takeover bid for all the outstanding units of RealFund that will allow RealFund unit holders to exchange their units on a tax-free rollover basis. RioCan will provide details of the proposed transaction in the takeover bid circular to be distributed to RealFund unit holders shortly. The combination of RioCan and RealFund will benefit both REITs. RealFund unit holders should consider the advantages of accepting the proposed offer which include: Becoming unit holders in what would become, by far, the largest REIT in Canada, with total assets of approximately $2-billion and an equity market capitalization of approximately $1.1-billion which should result in improved liquidity for all unit holders. The application of RioCan's proven management skills to RealFund's assets. Combined with an improved market position for the combined portfolios, which will remain focused on community-oriented neighbourhood shopping centres and new format retail centres, RioCan management would provide a superior operating platform from which to increase cash flow and value. Significant cost savings, not only from the obvious reduction of overhead costs but also in the areas of leasing, renewals, lease administration, property management and, possibly, lower cost of funds for debt and equity financings. A transaction structure that would permit RealFund unit holders to customize their tax treatment for the exchange of their units for RioCan units. "The prospects for the combined entity are exciting," said Edward Sonshine, Q.C., president and chief executive officer of RioCan. "With more than 125 shopping centres, we would enjoy a dominant position in Canada's community shopping centre industry. That dominance would enable us to grow cash flow and value as we have for RioCan unit holders, but for the benefit of both our existing unit holders and those of RealFund." RioCan currently derives more than 73 per cent of its gross revenue from national and anchor tenants and enjoys an occupancy rate of 96 per cent. "Immediately after combining the two REITS, we will start to work on bringing RealFund's ratios up to RioCan's levels," Mr. Sonshine said. "We can best assure the reliability and solidity of distributable income by continually enhancing the percentage of gross revenue coming from credit-worthy tenants, and by continuously increasing the occupancy rates of owned properties. "We intend to deliver reliable and dependable distributions - without sacrificing growth - through this upgrading, and by continuing to hold our maximum debt levels to 50 per cent, compared with RealFund's 60 per cent," he said. Since January 1994, RioCan has achieved a total return to unit holders of 127 per cent, compared with RealFund's 46 per cent. RioCan's compound annual growth rate over the same period was 17.0 per cent, compared with RealFund's 7.5 per cent. During that time, the CIBC Wood Gundy REIT index gained 86 per cent and the TSE 300 Composite Index rose by 63 per cent. RioCan has increased distributable income per unit since January 1994 by 25 per cent per year, compounded, while RealFund's compounded rate was 9 per cent per year. (c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com |
