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.