The Successful Investor Hotline – Friday, October 30, 2009

Article Excerpt

RIOCAN REAL ESTATE INVESTMENT TRUST, $18.34, Toronto symbol REI.UN, announced its first expansion into the U.S. this week. The trust has formed a joint venture with Cedar Shopping Centers, Inc. (New York symbol CDR). Cedar owns shopping centres in northeastern and mid-Atlantic regions of the U.S. The new joint venture will hold seven of Cedar’s malls in Massachusetts, Pennsylvania and Connecticut. RioCan will own 80% of this new company. It will also receive common shares and warrants in Cedar. Exercising these warrants would give RioCan a 15% stake in Cedar. In return, RioCan will pay Cedar $181 million (all amounts except share price in U.S. dollars). This figure includes $75 million of mortgages related to the seven shopping centres that will belong to the joint venture. RioCan will assume these mortgages as part of the deal, which will close in stages, and should be completed during the first quarter of 2010. To put this investment in context, RioCan earned $27.2 million (Canadian), or $0.12…