Toronto-based Choice Properties Real Estate Investment Trust has agreed to buy Canadian Real Estate Investment Trust for $3.9B (US$3.1B), forming Canada’s largest REIT.

"We are excited to be creating Canada's leading diversified REIT,” Choice Properties President and CEO John Morrison said in a statement. “Choice Properties' expanded diversified real estate portfolio, anchored by Canada's largest retailer, will provide unit holders of both Choice Properties and CREIT the opportunity to capitalize on the future growth and value creation opportunities of this strategic transaction.”

Under the deal, CREIT holders will get $53.61/unit in cash and stock, according to a news release. Together, Choice Properties — the real estate arm of Loblaw Cos. — and CREIT will have a value of approximately $16B with a diversified portfolio comprising 752 properties with 69M SF of GLA.

The transaction requires the approval of shareholders of CREIT. The vote is expected in April.

"This transformational combination creates immediate value for CREIT and provides tremendous opportunity for Choice Properties to capitalize on Canada's leading development pipeline and create long term value,” CREIT CEO Stephen Johnson said in the statement.

“Together, the combined REIT is uniquely positioned to deliver results for unitholders as the owner, manager and developer of a high quality portfolio of diversified assets."

Upon closing, Morrison will step down as president and CEO of Choice Properties and will serve as non-executive vice chairman of the combined REIT, while Johnson will become president and CEO.