RioCan sells 50% stake in Westgate apartment development

Rhythm rendering
A rendering of the under-construction Rhythm development. (RioCan image)

The owner of the Westgate Shopping Centre is selling a 50 per cent stake in a residential apartment development at the mall to a Toronto-based real estate investment firm for $5.4 million.

RioCan REIT said this week the deal ​– which equates to $51 per square foot of buildable gross floor area ​– is one of a number of transactions that will see it divest a portion of its interest in Ontario real estate projects to Woodbourne Capital Management. 

Woodbourne already partners with RioCan on several projects and said it’s making the buy on behalf of itself and one of its institutional pension fund clients.

“Such transactions not only allow us to realize inherent value and drive net asset value growth but also reduce the amount of capital required to build out our urban mixed-use development pipeline, enhance our balance sheet and liquidity position, and generate additional fee income,” RioCan chief executive Edward Sonshine said in a statement.

The Westgate apartment project, dubbed Rhythm, is part of RioCan’s plan to reinvigorate faltering mid-tier shopping centres that have been hit hard by the growing trend toward online shopping and changing consumer buying habits.

Already under construction, the 24-storey, 213-unit rental highrise will feature 20,000 square feet of retail space and is expected to be completed by 2023. 

Under the agreement, RioCan will manage the construction of the project and oversee the commercial component of the property. The transaction is expected to close in February.

RioCan says it ultimately plans to redevelop the entire nine-acre Westgate site in a multi-phased project that calls for almost 730,000 square feet of residential property with nearly 1,200 units as well as about 88,000 square feet of retail space.

The Westgate overhaul is part of a series of redevelopments across RioCan's Canadian portfolio that also includes plans for mixed-use projects at Elmvale Acres, Gloucester Centre and Lincoln Fields Shopping Centre.