WINNIPEG'S third-largest regional shopping mall -- Kildonan Place -- has been sold to a Toronto-based investment trust for $138.5 million.
H&R Real Estate Investment Trust acquired the 460,498-square-foot mall from Toronto-based Ivanhoé Cambridge, which had an 80 per cent ownership stake in the property, and Sears Canada Inc., which owned the other 20 per cent.
H&R said it intends to sell a 50 per cent interest in the mall to Montez Income Properties Corp. before the deal closes Sept. 17.
Although H&R and Montez will own the mall, it will be managed by H&R's wholly owned subsidiary, Primaris Retail REIT.
Primaris also manages Grant Park Shopping Centre and Garden City Square in Winnipeg.
The sale of Kildonan Place comes a little more than three months after the sale of the city's tallest office tower -- 201 Portage -- to two Regina-based investors, Harvard Developments Inc. and Greystone Managed Investments Inc. One local investment-properties specialist said it's further evidence of the renewed interest out-of-province investors have in the Winnipeg market.
"It proves liquidity, and it proves there's interest in our market, which is a positive thing," said Don White of Collier's International.
Primaris's chief operating officer agreed.
"I think a lot of the large, institutional investors right now are looking to buy in the major markets in Canada," Patrick Sullivan said, "and Winnipeg is one of them."
Sullivan said from an investor's standpoint, there's lots to like about Kildonan Place.
"I like where it sits in Winnipeg. It's a little further distance from the other (regional) malls. I also look at Kildonan Place and it just owns its area, which is exactly the kind of mall we like. And I like the trade area. It's a growing area."
He said there's also room to expand the mall, which Primaris is keen to do if gets the go-ahead from the city. But that likely won't get underway for another two years, he added.
He said it's also too soon to say how big the expansion would be, how much it would cost, or what new tenants might be added.
"It's really going to be driven by what the demand is from retailers," said Sullivan.
"I'd like to say we'd like to add more fashion (stores), but it depends (on the demand)."
Sullivan said Primaris also plans to overhaul the food court/movie theatre section of the mall, which had been on Ivanhoé's to-do list.
Sears Canada president and chief executive officer Douglas Campbell said although Sears will no longer have an ownership stake in the mall, it will continue to operate its department store.
"This transaction will have no effect on associates employed at the store, or on the operation of the store...," he said in a statement.
Sullivan said he also doesn't foresee making major changes to the mall's existing management team, "but we have to finish doing our homework on everything."