RioCan Real Estate Investment Trust Announces Firm Contract On Third Party Acquisitions Through Cedar Joint Venture

Toronto, Ontario - (Marketwire) - RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) today announced that it has entered into a firm contract to acquire a portfolio of five grocery anchored and new format retail centres located in Pennsylvania, Virginia, and New Jersey from Pennsylvania Real Estate Investment Trust ("PREIT") for approximately $134 million (at 100%). Purchase of a sixth property located in Pennsylvania is subject to certain conditions, and subject to reaching agreement with a third party joint-venture partner of PREIT. These properties will be purchased on the same 80/20 basis as past joint venture acquisitions with Cedar Shopping Centers, Inc ("Cedar").

RioCan has, through its joint venture arrangement with Cedar, also agreed to purchase from PREIT a seventh property, also located in Pennsylvania, which will be owned on a 50-50 basis with Cedar with the expectation that the parties will eventually redevelop this property. Closing of the purchase of this property is subject to reaching agreement with a third-party joint venture partner of PREIT.

The portfolio to be acquired has a weighted average remaining lease term of approximately 9.2 years, and an average lease rate of US$10.06 per square foot. Four of the properties are anchored or shadow-anchored by supermarkets. The aggregate owned-gross leasable area ("owned-GLA") of the initial five properties is approximately 936,000 square feet; for the seven properties the total owned-GLA is approximately 1.8 million square feet. The aggregate purchase price for the initial five properties is approximately $107 million at RioCan's interest; for all seven properties, the aggregate purchase price for RioCan's interest would be approximately $150 million, exclusive of closing costs and adjustments. The purchase price may be increased by certain "earnout" arrangements with respect to lease-up of certain vacant premises and/or outparcels during the two year period following closing of the purchase of the properties.

The initial five properties include the following (at 100%):
Monroe Marketplace:
Located in Sellinsgrove, PA, which is located in central Pennsylvania along the Susquehanna River, Monroe Marketplace is a 335,000 square foot grocery-anchored shopping centre that was constructed in 2008. The property is anchored by a 76,000 square foot Giant Supermarket (lease expiry 2028), a 68,000 square foot Kohl's Department Store (lease expiry 2029), and is shadow anchored by a 127,000 square foot Target. Other major tenants at the subject property include Best Buy, Dick's Sporting Goods, Bed Bath & Beyond, Michael's and PetSmart. The property has a weighted average remaining lease term of 11.7 years.

Creekview Center:
Located in Warrington, PA, a suburb of Philadelphia, Creekview Center is a 136,000 square foot grocery-anchored shopping centre that was constructed in 2001. The property is anchored by a 49,000 square foot Genuardi's Supermarket (Safeway) (lease expiry 2021) and is shadow anchored by a 126,000 square foot Target and an approximately 163,000 square foot Lowe's Home Improvement Warehouse ("Lowe's"). Other major tenants at the subject property include Bed Bath & Beyond and LA Fitness. The property has a weighted average remaining lease term of 7.2 years.

Sunrise Plaza:
Located in Forked River, NJ approximately 90 kilometres east of Philadelphia, Sunrise Plaza is a 254,000 square foot new format retail centre that was constructed in 2007. The property is anchored by a 131,000 square foot Home Depot (lease expiry 2038), a 96,000 square foot Kohl's Department Store (lease expiry 2029), and a 20,000 square foot Staples. The property has a weighted average remaining lease term of 22.2 years.

New River Valley Center:
Located in Christiansburg, VA approximately 90 kilometres north of the Virginia / North Carolina state border in close proximity to Virginia Tech University, New River Valley is a 165,000 square foot new format retail centre that was constructed in 2007. The tenants at the property include a 30,000 square foot Best Buy (lease expiry 2018), Old Navy, Ross Dress for Less, Bed Bath & Beyond, Staples, and PetSmart. The property has a weighted average remaining lease term of 7.1 years.

Pitney Road Plaza:
Located in Lancaster, PA, which is situated midway between Philadelphia and Harrisburg Pennsylvania, Pitney Road Plaza is a new format retail centre that was constructed in 2009. The property to be acquired is a 46,000 square foot freestanding Best Buy (lease expiry 2020), which is part of the overall centre that is shadow anchored by Costco and Lowe's.

The two properties presently owned by PREIT together with joint venture partners, which are under contract to be sold, but subject to closing conditions, as indicated above, including purchase of the interests of the third party partners, are:

Red Rose Commons:
Located in Lancaster, PA, which is situated about midway between Philadelphia and Harrisburg Pennsylvania, Red Rose Commons is a 263,000 square foot new format retail centre, built in 1998, that is shadow anchored by a Weis Markets grocery store, and Home Depot. Major tenants at the site include Sports Authority, H. H. Gregg, PetSmart Office Max, and Barnes & Noble. The property has a weighted average remaining lease term of 4.6 years.

Whitehall Mall:
Located in Whitehall Township a suburb of Allentown, PA, Whitehall Mall is a 558,000 square foot enclosed mall that was built in 1964 and was redeveloped in 1998. The property is anchored by a 213,000 square foot Sears and an 82,000 square foot Kohl's Department Store. Other major tenants at the property include Bed Bath & Beyond, Michael's, and Gold's Gym. The property has a weighted average remaining lease term of 5.7 years. This property will be acquired with Cedar on a 50/50 joint venture basis.

The closing of the initial five properties and Red Rose Commons is presently expected prior to year end. It is expected that fixed-rate financing at approximately 50-60% loan-to-value will be procured for those properties in due course.

The Whitehall Plaza property is subject to a first mortgage which matures in November 2018. The current remaining balance on the loan is presently less than $12 million; the interest rate is 7% and amortization is on a 20-year schedule. The loan is not assumable by right and is subject to a prepayment penalty.

The five initial properties being acquired have a weighted average occupancy of approximately 97%; occupancy at Red Rose Commons is 85% and at Whitehall Mall (including the covered mall area) is approximately 92% occupied.

PREIT will continue to provide certain property management and leasing services for the properties under an agreement for a 3-year period to be entered into with the joint venture, terminable by the parties after twelve months. Cedar will retain overall asset and financial management responsibilities.

"We are very pleased with the progress we have had through our joint venture platform with Cedar to attract high quality acquisition opportunities," said Edward Sonshine, Q.C. President and CEO of RioCan. "This portfolio of new format retail and grocery anchored retail centres in well established markets represents an excellent opportunity for RioCan to expand its portfolio in the Northeastern US at an attractive cap rate and with an excellent opportunity to realize additional growth through leasing."

About RioCan
RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $8.6 billion as at June 30, 2010. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 267 retail properties, including 11 under development, containing an aggregate of over 60 million square feet. RioCan owns an 80% interest in nine grocery anchored shopping centres in the United States through its joint venture arrangement with Cedar. In addition, RioCan owns a 14% equity interest in Cedar Shopping Centers, Inc., a real estate investment trust focused on supermarket-anchored shopping centres and drug store-anchored convenience centres located predominantly in the Northeastern United States. For further information, please refer to RioCan's website at www.riocan.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 made in this news release, and other statements concerning RioCan's objectives, its 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", "would", "expect", "intend", "estimate", "anticipate", "believe", "should", "plan", "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. All forward-looking statements in this Press Release are qualified by these cautionary statements.

These statements are not guarantees of future events or performance and, by their nature, are based on RioCan's estimates and assumptions, which are subject to risks and uncertainties, including those described under "Risks and Uncertainties" in its management discussion and analysis dated June 30, 2010 which could cause actual events or results to differ materially from the forward-looking statements contained in this News Release. Those risks and uncertainties include, but are not limited to, those related to: liquidity in the global marketplace associated with current economic conditions, tenant concentrations, occupancy levels, access to debt and equity capital, interest rates, joint ventures/partnerships, the relative illiquidity of real property, unexpected costs or liabilities related to acquisitions, construction, environmental matters, legal matters, reliance on key personnel, unitholder liability, income taxes, the conditions to the transactions not being satisfied resulting in the failure to complete some or all of the proposed transactions, real estate and capital market conditions. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include: a less robust retail environment than has been seen for the last several years; relatively stable interest costs; an increase in acquisition capitalization rates; a decrease in land costs for greenfield development; a continuing trend towards land use intensification in high growth markets; more limited but available access to equity and debt capital markets to fund, at acceptable costs, the future growth program and to enable the Trust to refinance debts as they mature and the availability of purchase opportunities for the joint venture. Although the forward-looking information contained in this Press Release 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. Certain statements included in this Press Release may be considered "financial outlook" for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this Press Release.

SOURCE: RioCan Real Estate Investment Trust