(Source: MARKETWIRE)RioCan Real Estate Investment Trust ("RioCan") (TSX: REI.UN) today announced the execution of definitive agreements with Cedar Shopping Centers, Inc. ("Cedar") (NYSE: CDR), a self-managed U.S. based real estate investment trust focused on supermarket-anchored shopping centres and drugstore anchored convenience centres located predominantly in the Northeastern and Mid-Atlantic states of the United States. Cedar presently has interests in and operates approximately 13.2 million square feet of gross leasable area at 124 shopping centre properties.

Under the terms of the agreements, RioCan will:

-   Form a joint venture for the acquisition of retail real estate in the
    United States to be owned 80% by RioCan and 20% by Cedar, with the first
    properties in the joint venture being seven grocery-anchored shopping
    centres in Massachusetts (MA), Pennsylvania (PA), and Connecticut (CT)
    currently owned by Cedar (the "Initial Portfolio"); and 
-   Acquire on a fully diluted basis 15% of Cedar, with the acquisition of
    6.7 million shares and 1.4 million warrants (the "Equity Investment"). 

The total consideration to be paid by RioCan is approximately US$181 million resulting in a net equity investment of US$106 million after the assumption of US$75 million of property level mortgage debt (RioCan's share) on the Initial Portfolio. RioCan's equity investment will be funded from existing cash resources.

"RioCan's objective is to take a measured and defensive approach to investment in the U.S. market." said Edward Sonshine Q.C. President and CEO of RioCan. "We believe that this joint venture with Cedar permits RioCan to team up with a very strong, experienced and well established management platform, for our first acquisition in the US."

Initial Portfolio Acquisition

RioCan will acquire from Cedar an 80% interest in seven grocery-anchored shopping centres that comprises approximately 1.1 million square feet for a total purchase price of US$141 million (US$176 million at 100%) and will assume US$75 million of property level debt (US$94 million at 100%). The existing non-recourse first mortgage financing bears interest at a weighted average rate of 5.7% and has a weighted average term to maturity of approximately 3 years. Two of the assets will be unencumbered at closing and it is the intention of the joint venture to seek term financing on these assets.

Grocery-anchored centres have traditionally been viewed as the most defensive category of retail properties due to the non-discretionary nature of their merchandise. Approximately 40% of the gross rents from the Initial Portfolio is generated by grocery tenants and 75% of the gross rents are generated by national or regional tenants. The weighted average remaining lease term of the grocery anchors in the Initial Portfolio is approximately 10 years.

The properties are well located within established communities in Massachusetts, Pennsylvania and Connecticut and include grocery anchor tenants such as Giant Foods and Stop & Shop, two grocery retailers owned by Royal Ahold, and Super Fresh, which is owned by Great Atlantic and Pacific Tea Company, Inc. ("A&P"). Royal Ahold has a strong market share in Pennsylvania and Massachusetts and is one of the world's largest grocery retailers with global sales of over US$35 billion for the fiscal year ended December 31, 2008. A&P operates 435 stores in eight states and had sales of over US$9.5 billion for the fiscal year ended February 28, 2009.

The Initial Portfolio will continue to be managed by Cedar, a seasoned property manager pursuant to a standard property management agreement. Cedar will also receive customary fees for property level accounting, disposition and financing activities. A management committee will be established with two members from RioCan and one member from Cedar to decide upon any material decisions regarding the properties in the joint venture.

Properties in the Initial Portfolio (at 100%)

-   Loyal Plaza is a 293,825 square foot grocery-anchored shopping centre
    located in Williamsport PA, anchored by 66,935 square foot Giant Foods
    (lease expiry 2019). Other major tenants include, K-Mart, Staples, and
    Eckerd's Drugs. The property is currently encumbered by first mortgage
    financing of US$12.6 million bearing 7.2% interest maturing in June
    2011. 
-   Blue Mountain Commons is a recently completed 123,354 square foot
    grocery-anchored shopping centre located in Harrisburg PA, anchored by a
    97,707 square foot Giant Foods (lease expiry 2029). Other tenants
    include PNC Bank. The property will be unencumbered at closing. 
-   Sunset Crossing Shopping Center is a 74,142 square foot grocery-anchored
    shopping centre located in Scranton PA, and is anchored by 54,332 square
    foot Giant Foods (lease expiry 2022). The property will be 
    unencumbered at closing. 
-   Columbus Crossing Shopping Center is a 142,167 square foot
    grocery-anchored shopping centre located in Philadelphia PA, anchored by
    a 61,506 square foot Super Fresh (lease expiry 2020). Other major
    tenants include Old Navy and AC Moore.