TORONTO, July 31 (Reuters) - Canada's largest real estate
investment trust RioCan REI_u.TO said on Friday it is
exploring a potential sale of its assets in the United States,
valued by analysts at between $2 billion and $2.25 billion.
The company, which acquired most of its assets on the cheap
in the midst of the global financial crisis, said it has
benefited from the growth in the value of its U.S. portfolio and
the cash flow generated from the business.
Toronto-based RioCan said that not only has the asset value
of the portfolio grown, but it has also benefited significantly
since buying the assets when the Canadian dollar was largely at
par with the greenback.
As the loonie has now weakened quite significantly against
the U.S. dollar, RioCan said it stands to reap big gains if it
opts to sell the U.S. assets.
"With increased competition for U.S. assets, it would be an
opportune time to consider divesting this portfolio," Mark
Rothschild, an analyst at Canaccord Genuity, said in a note to
clients.
RioCan said it has retained Morgan Stanley (NYSE:MS) and RBC Capital
Markets to explore "strategic options" around the U.S. assets,
adding the strategic alternatives will include, but are not
limited to, continuing to operate and invest in the United
States, a sale of some or all of its properties there and other
strategic joint venture alternatives.
On a conference call with analysts, RioCan Chief Executive
Edward Sonshine said it was way too early to say whether a sale
of the assets would result in any tax hit in Canada, adding that
the company has many options beyond an outright sale of the U.S.
assets.
The company also reported funds from operations of some 43
Canadian cents a share in its second quarter ended June 30. That
was in line with the average forecast of analysts polled by
Thomson Reuters I/B/E/S.
Units in RioCan were up about 1.84 percent at C$26.55 in
late morning trading on the Toronto Stock Exchange on Friday.
($1 = 1.3015 Canadian dollars)