Financial Post
Cleveland developer enters Toronto market with $150M project (Oct 3, 2007)
http://www.canada.com/nationalpost/financi...8b8&k=45319
QUOTE A major American real estate investment trust announced plans on Wednesday to enter the Canadian marketplace...
Cleveland-based Developers Diversified Realty, which has a market capitalization of about US$7-billion, said it is a partner in a 74-acre project north of Toronto to be developed for $150-million.
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"With this investment, Developers Diversified is giving a strong vote of confidence to the future of the Canadian retail real estate market. The REIT recognizes the positive fundamentals in Canada, including its strong demographic growth, relatively high per capita income and constrained supply of new retail properties,"
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The U.S. REIT said it will take a 50% equity stake in the project to be located in Richmond Hill. It is a mixed used development with 700,000 square feet of lifestyle, retail and office space. Developers Diversified is teaming up with Rice Commercial Group on the project which will begun construction in 2009 and open as early as 2011.
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"It is not likely to be worth the REIT`s efforts to come to Canada by making occasional investments in one-off projects that will take four years to complete. Rather, we would not be surprised if Developers Diversified, with its positive view of Canada, attempts to make much larger retail investments in this country in the short to medium term, perhaps by way of a takeover of an existing REIT or real estate operating company," said the analyst.
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Interestingly enough, the U.S. REIT`s top posted item on its Web site under what`s new is an overview of the Canadian marketplace. The company notes Canada is the world`s 8th largest economy with a gross domestic product of $1.3-trillion. In addition, Toronto is said to have generated $50-billion in retail sales last year.
It notes the wealth of residents surrounding the Richmond Hill location where it plans to build. "Over 470,000 residents with an average household income of $112,000 live within a 10 kilometre radius of the development site. These figures increase to over 1.1 million residents with an average household income of $98,000 that live within a 15 kilometre radius.
In Rice Commercial, Developers Diversified is teaming up with a company focused on the greater Toronto area. It owns and manages the development of 500 hundred acres of property with more than three million square feet of predominantly retail assets.
Developers Diversified presentation:
http://www.ddr.com/Canada%20RE%20Market%20...mber%202007.pdf
Press release:
http://media.corporate-ir.net/media_files/...nadian10207.pdf