Loblaw Cos., Canada’s largest grocery chain by market value, will create a real estate investment trust and sell units in the REIT in an initial public offering to help unlock shareholders’ value. Its shares soared the most ever in preliminary trading.
Loblaw plans to contribute about 35 million square feet of real estate with a current value of more than C$7 billion ($7.06 billion), and intends to retain a “significant” majority interest, according to a statement today.
The REIT will be one of Canada’s largest, Brampton, Ontario-based Loblaw said. The IPO is expected to be completed next year pending regulatory approvals and authorization to list the units on the Toronto Stock Exchange, the company said.
Loblaw soared 25 percent to C$42 at 9:05 a.m. before the open of the Toronto Stock Exchange today, the biggest jump since the shares began trading in 1983, according to data compiled by Bloomberg. The shares have declined 13 percent this year through yesterday.
“We expect the REIT to not only unlock value for our shareholders, but also increase our financial capacity to pay- down debt, buy back shares, and create a long-term source of capital to invest and grow,” Galen Weston, Loblaw executive chairman said in the statement.
The contributed real estate portfolio will be largely retail focused and comprise a geographically diverse mix of stores and shopping centers, and will also include warehouses and office buildings.