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Canada's largest grocer, Loblaw Cos. Ltd., has filed a preliminary prospectus aimed at creating one of Canada’s largest commercial real estate trusts, including some 75 percent of the company’s real estate assets.
Choice Properties Real Estate Investment Trust will hold 415 retail properties, one office complex and nine warehouse properties, for a total of 35.3 million square feet of gross leasable area. Loblaw valued the properties at $7 billion when it first announced the plan in December.
Loblaw has said it is creating the real estate investment trust (REIT) in order to optimize the value of its real estate portfolio, lower the cost of capital for real estate and increase the speed of development of new retail sites.
REITs are an asset class that have enjoyed strong growth in performance in the past few years, in part because they generate regular distributions. The grocery chain will be the REIT’s most significant tenant for the foreseeable future, accounting for 88 percent of gross leasable area on closing.
“I am excited about the potential of Choice Properties REIT to maximize the value of Loblaw’s real estate over time while ensuring that Loblaw remains well positioned to grow the business going forward,” George Weston executive chairman W. Galean Weston said in a statement.
Loblaw owns more than 1,000 corporate and franchised stores throughout Canada.