* Transaction valued at C$114.9 million
* Most of the properties are in greater Montreal area
* Also to sell non-strategic portfolio in Atlantic Canada
(Adds details from fourth paragraph)
By Pav Jordan
TORONTO, Sept 16 Homburg Canada Real Estate
Investment Trust HCR_u.TO said on Friday it agreed to buy a
portfolio of 29 neighborhood shopping centers in Quebec for
C$114.9 million ($116.7 million) as it expands in the
The properties, 26 of which are located in the greater
Montreal area, are anchored by Canadian pharmacy chain the Jean
Coutu Group (PJCa.TO), and are to be acquired from a group led
by Delek Global Real Estate (DGRE).
"With this acquisition, the REIT continues to grow its
retail footprint in Quebec and particularly in Montreal," said
Homburg President and Chief Executive Jim Beckerleg.
Homburg will finance the purchase through the assumption of
C$74.6 million in existing mortgages and through net equity of
C$40.3 million. The equity portion will be funded through cash
on hand, the proceeds of a Sept. 13 bought deal and an existing
line of credit.
Canadian REITs have benefited in the wake of the global
financial crisis as investors looked to them for a high-yield
haven for retirement savings and other capital.
Homburg, which raised about C$250 million ($255 million) in
an initial public offering in May, has been an aggressive buyer
this year, particularly in Montreal, where it is based.
Montreal is enjoying an extended real estate boom as
occupancy rates rise and little new development comes on line.
Homburg said that Jean Coutu Group stores anchor 24 of the
29 properties in it acquired under the deal, making up about
half of the portfolio's net income.
Other brand-name tenants with long-term leases in the
portfolio include IGA, METRO, Shoppers Drug Mart SC.TO and
"This broad portfolio provides us with additional access to
Jean Coutu Group and other high quality tenants, enabling us to
further leverage our existing retail platforms in the Greater
Montreal Area," said Beckerleg.
The transaction is expected to close in late September.
Homburg also said on Friday it agreed to sell its
non-strategic, multi-residential portfolio in Atlantic Canada
for some C$65 million. After repayment of mortgages and
mortgage-related costs, net proceeds will be about C$37
(Reporting by Pav Jordan, editing by Dave Zimmerman)