Loblaw To Create One Of The Largest Real Estate Investment Trusts In Canada

BRAMPTON, ON, Dec. 6, 2012 /CNW/ - Loblaw Companies Limited (TSX: L) ("Loblaw" or the "Company") today announced its intention to create a Real Estate Investment Trust ("REIT") to acquire a significant portion of Loblaw's real estate assets and to sell units of the REIT by way of an Initial Public Offering ("IPO"). Loblaw estimates that it will initially contribute real estate with a current market value exceeding $7 billion to the REIT and intends to retain a significant majority interest. The IPO is expected to be completed in mid-2013, subject to prevailing market conditions and receipt of required regulatory approvals including approval to list the units on the Toronto Stock Exchange.

Highlights:

• Unlock value for Loblaw shareholders
• Create a standalone real estate-focused vehicle to maximize the value of the Company's real estate portfolio
• Lower the cost of capital for real estate and accelerated store development projects

"The creation of the REIT is expected to build long-term value both for Loblaw and the REIT," said Galen G. Weston, Executive Chairman, Loblaw Companies Limited.  "This strategic initiative positions Loblaw's core businesses well for the future.  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.

"The REIT - which we expect to be one of Canada's largest - builds on our longstanding commitment to owning and developing quality real estate," continued Mr. Weston.  "It will be a vehicle to manage and enhance our real estate portfolio with the potential for future expansion through incremental vending in of our own real estate and external investment opportunities."

Loblaw's real estate portfolio spans an estimated 47 million square feet and has a current estimated market value of $9 billion to $10 billion. As part of the transaction, Loblaw intends to contribute approximately 35 million square feet to the REIT, and will enter into long-term lease arrangements with the REIT on those properties. The contributed real estate portfolio will be largely retail focused and comprise a geographically diverse mix of stores and shopping centres, and will also include warehouses and office buildings.

Loblaw expects that as a standalone entity, the REIT will benefit from a lower cost of capital, which will support its development and expansion. Growth will also come from Loblaw's contribution of additional properties over time as well as opportunities outside of the Loblaw footprint. The REIT will have a dedicated management team focused on overseeing the contributed properties and growing the portfolio, while Loblaw will provide support and various services.

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