Canadian Tire Enters $196 Million Sale Leaseback on Two Distribution Centers

Excite / Dow Jones - November 29, 2005

Canadian Tire Corp. (CTR.T) has reached agreement for the sale and leaseback of two distribution centers, one in Brampton, Ont. and the other in Calgary, to H&R Real Estate Investment Trust (CA:HR.UN) (HR.UN.T), for total proceeds of C$229 million (US$196 million).

In a news release, Canadian Tire said it will use the proceeds to fund the strategic initiatives outlined in its 2005-2009 Strategic Plan. In a separate release, H&R said Canadian Tire will lease back the properties for 21 years, with options to renew. The facilities comprise a total of 2.1 million square feet on 249 acres of land. H&R noted that the acquisition will be "accretive" to its unitholders. The acquisition increases the size of its portfolio by almost 6%.

Canadian Tire said Tuesday the agreement of purchase and sale is conditional on the completion of due diligence by H&R and approval of the purchase by competition authorities. The transaction is expected to close in January.

Canadian Tire added that it expects to realize a pretax gain of about C$50 million, which will be amortized over the initial 21-year term of the negotiated lease agreements. Sphere: Related Content