Calloway REIT announced last week it's acquiring SmartCentres, Canada’s largest retail real estate developer, from founder Mitchell Goldhar in a deal worth $1.16B. Here’s what you need to know about the newly formed retail powerhouse that's being rechristened SmartREIT.
1. It's a $1.1B Portfolio
The deal includes interests in a $1.1B portfolio of 24 properties in Ontario and Quebec, with 16 of them open-format shopping centres anchored by Walmart Supercentres (Calloway now has 107 Walmarts in its portfolio). The SmartCentres platform Calloway is acquiring has developed over 50M SF of retail since launching two decades ago, including Canada's first-ever Walmart. The acquisition brings Calloway’s total assets to more than $8.3B (with 31M SF of retail). To mark the occasion, it’s changing its name to SmartREIT, reflecting its newly “enhanced capabilities” and the “considerable brand recognition” of SmartCentres and its trademark penguins.
2. It's Transformational
Calloway CEO Huw Thomas says the deal—which turns his firm into a fully integrated real estate developer and operator by incorporating SmartCentres' platform of development, leasing, planning, engineering, architecture and construction capabilities—is a “major, transformational move forward,” adding 3.6M SF of GLA in properties to his REIT’s current 27.3M SF of shopping centre space. “We will be able to better take advantage of new opportunities in the market and complete the entire development process in-house,” says Huw, from IDing sites to planning, development, construction, leasing and operations.
3. It'll Capitalize on Growth Potential
“I see this as the way forward,” says Mitchell, who owns a big stake in Calloway (SmartCentres provides the REIT development, leasing and property services). The combined entity (he’ll be board chair) is “well positioned to capitalize on SmartREIT’s growth potential.” SmartCentres has upped its focus on mixed-use projects via its SmartUrban brand, like Vaughan Metropolitan Centre (above), in which Calloway has a 50% stake. Calloway will continue owning/operating its open-format malls but can now pursue opportunities to develop and intensify sites, with 1.9M SF of retail development in the pipeline.
