RioCan Real Estate Investment Trust is looking at acquisition opportunities in Canada in the short term and will likely close a deal by the end of the year, Chief Executive Edward Sonshine said in an interview with Reuters.
RioCan has enough cash in hand to fund the deal with C$300 million ($278.8 million) in cash, plus an additional C$200 million in operating lines, the CEO said, adding that the company is not planning any more equity offerings in the short term.
We keep looking outside the country but haven't found anything substantial. So the short-term answer is it will be in Canada, longer-term it will change, Sonshine said.
I suspect toward the end of the third quarter, the beginning of the fourth is when we'll be able to actually close some acquisitions, Sonshine added.
The CEO hopes to extend his reach abroad in the long-term, either in the United States or the UK, where he is looking for companies that are not distressed but could certainly use a capital infusion.
Last month, RioCan, which owns more than 200 retail properties, closed a C$150 million public offering, saying it would use the money to cash in on potential acquisition opportunities that may arise.
Canada's retail landscape has not been as badly hit by the economic downturn as its neighbor down south. The CEO said there were not many distressed assets available for purchase in the country.
Sonshine does, however, see the retail landscape in Canada changing, saying tenants are not expanding the way they were a year ago. Most of them would rather wait until 2011 to open new stores, he added.
Q3 TO BE MARGINALLY BETTER
Though Canada's retail landscape performed better than Sonshine expected, RioCan's quarterly results were hurt by unexpected vacancies, including bankruptcies from tenants like privately held Petcetera and Linens 'N Things.
RioCan posted a 22 percent fall in second quarter funds from operations.
The third quarter will be marginally better for RioCan, said Sonshine, because of the six month gap in lease-starts and lease-stops.
Sonshine said a lot of RioCan's premises became vacant in the first three months of the year, so as the company heads into the third quarter, he expects those properties to generate income once again.
The company will remain focused in the big six markets of Canada -- Toronto, Vancouver, Alberta, Montreal, Calgary and Edmonton.
Sonshine, who has not bought any new properties recently, said all the projects he has on hand will be pre-leased before they are built up.
What I would say, (for) the rest of the pipeline, if you averaged a year onto the completion dates you wouldn't be wrong.
Toronto-based RioCan's shares, which have gained nearly 20 percent over the past six months, closed at C$15.15 Monday on the Toronto Stock Exchange.
($1=1.076 Canadian Dollar)
(Editing by Jarshad Kakkrakandy)