Canadian Tire plans C$3.5 billion REIT, shares soar

Thu May 9, 2013 1:33pm EDT
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By Krithika Krishnamurthy

(Reuters) - Canadian Tire Corp (CTCa.TO: Quote), best-known for its namesake automotive and homeware stores, said it plans to create a C$3.5 billion ($3.5 billion) real estate investment trust through an initial public offering in the fall of 2013.

The company, which has one of the largest commercial real estate portfolios in Canada, said it would retain 80-90 percent of the REIT after the IPO, which could raise up to $700 million.

Shares of the company rose as much as 18 percent to their highest in nearly six years on the Toronto Stock Exchange.

The REIT would own about 18 million square feet of property after acquiring a majority of the company's real estate, including its namesake retail stores, retail developments and a distribution center.

Canadian Tire-owned properties currently occupy about 25 million square feet across Canada. The company had over 1,700 retail and gasoline outlets as of March 30.

Canadian Tire currently owns 350 of its 490 namesake stores.

"The REIT over time clearly will acquire more properties from Canadian Tire. That's the likelihood as a source of growth with respect to the REIT," Chief Financial Officer Dean McCann said on a conference call.

Canadian Tire joins a growing list of Canadian and U.S. retailers and other companies with large real estate holdings in opting for a REIT structure, which offers tax advantages.   Continued...

Customers arrive at the Canadian Tire store in North Vancouver, British Columbia February 10, 2011. REUTERS/Andy Clark