BRAMPTON, ON,
Dec. 6, 2012 /CNW/ - Loblaw Companies
Limited (TSX: L) ("Loblaw" or the "Company") today announced its
intention to create a Real Estate Investment Trust ("REIT") to
acquire a significant portion of Loblaw's real estate assets and to
sell units of the REIT by way of an Initial Public Offering
("IPO"). Loblaw estimates that it will initially contribute real
estate with a current market value exceeding $7 billion to the REIT and intends to retain a
significant majority interest. The IPO is expected to be completed
in mid-2013, subject to prevailing market conditions and receipt of
required regulatory approvals including approval to list the units
on the Toronto Stock Exchange.
Highlights:
- Unlock value for Loblaw shareholders
- Create a standalone real estate-focused vehicle to maximize the
value of the Company's real estate portfolio
- Lower the cost of capital for real estate and accelerated store
development projects
"The creation of the REIT is expected to build long-term value
both for Loblaw and the REIT," said Galen
G. Weston, Executive Chairman, Loblaw Companies
Limited. "This strategic initiative positions Loblaw's core
businesses well for the future. We expect the REIT to not
only unlock value for our shareholders, but also increase our
financial capacity to pay-down debt, buy back shares, and create a
long-term source of capital to invest and grow.
"The REIT - which we expect to be one of Canada's largest - builds on our longstanding
commitment to owning and developing quality real estate," continued
Mr. Weston. "It will be a vehicle to manage and enhance our
real estate portfolio with the potential for future expansion
through incremental vending in of our own real estate and external
investment opportunities."
Loblaw's real estate portfolio spans an estimated 47 million
square feet and has a current estimated market value of
$9 billion to $10 billion. As part of
the transaction, Loblaw intends to contribute approximately 35
million square feet to the REIT, and will enter into long-term
lease arrangements with the REIT on those properties. The
contributed real estate portfolio will be largely retail focused
and comprise a geographically diverse mix of stores and shopping
centres, and will also include warehouses and office buildings.
Loblaw expects that as a standalone entity, the REIT will
benefit from a lower cost of capital, which will support its
development and expansion. Growth will also come from Loblaw's
contribution of additional properties over time as well as
opportunities outside of the Loblaw footprint. The REIT will have a
dedicated management team focused on overseeing the contributed
properties and growing the portfolio, while Loblaw will provide
support and various services.
Loblaw expects to consolidate the REIT's financial results for
financial reporting purposes and believes the Company's
consolidated profitability will be minimally impacted. The
contemplated transaction is not expected to affect Loblaw's
investment grade credit rating.
The company will host a conference call at 9:00 a.m. (ET), as well as an audio webcast. To
access via tele-conference please dial (647) 427-7450. The playback
will be made available two hours after the event at (416) 849-0833,
access code: 78891090. To access via audio webcast please go to the
"Investor Centre" section of loblaw.ca. Pre-registration will be
available.
Forward-Looking Statements
This News Release contains forward-looking statements about the
Company's objectives, plans, goals, aspirations, intentions,
strategies, prospects and opportunities. Forward-looking statements
in this News Release include statements relating to the proposed
REIT transaction and expected future attributes of the REIT
following the transaction; the anticipated benefits of the
transaction to Loblaw and its shareholders; the expected ratings
impact to Loblaw; Loblaw's expected ownership level in the REIT;
the timing of the potential transactions; and that applicable
regulatory approvals will be obtained. These forward-looking
statements are not historical facts but reflect the Company's
current expectations concerning future plans, actions and
results. These statements are subject to a number of risks
and uncertainties that could cause actual plans, actions and
results to differ materially from current expectations including,
but not limited to, unanticipated developments that may delay or
negatively impact the proposed transaction, changes in economic and
market conditions, and other risks and uncertainties discussed in
the Company's materials filed with the Canadian securities
regulatory authorities from time to time, including the Enterprise
Risks and Risk Management section of the Management's Discussion
and Analysis ("MD&A") and the MD&A included in the
Company's 2011 Annual Report - Financial Review. There can be
no assurance that the proposed transaction will be completed as
anticipated or at all. Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect the
Company's expectations only as of the date of this News Release.
The Company disclaims any intention or obligation to update or
revise these forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
About Loblaw Companies Limited
Loblaw Companies Limited, a subsidiary of George Weston Limited, is
Canada's largest food retailer and
a leading provider of drugstore, general merchandise and financial
products and services. Loblaw is one of the largest private sector
employers in Canada. With more
than 1,000 corporate and franchised stores from coast to coast,
Loblaw and its franchisees employ more than 135,000 full-time and
part-time employees. Through its portfolio of store formats, Loblaw
is committed to providing Canadians with a wide, growing and
successful range of products and services to meet the everyday
household demands of Canadian consumers. Loblaw is known for the
quality, innovation and value of its food offering. It offers
Canada's strongest control
(private) label program, including the unique President's Choice®,
no name® and Joe Fresh® brands. In addition, the Company makes
available to consumers President's Choice Financial® services and
offers the PC® points loyalty program.
SOURCE Loblaw Companies Limited