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.

Loblaw expects to consolidate the REIT's financial results for financial reporting purposes and believes the Company's consolidated profitability will be minimally impacted.  The contemplated transaction is not expected to affect Loblaw's investment grade credit rating.

The company will host a conference call at 9:00 a.m. (ET), as well as an audio webcast. To access via tele-conference please dial [phone]. The playback will be made available two hours after the event at [phone], access code: 78891090. To access via audio webcast please go to the "Investor Centre" section of loblaw.ca. Pre-registration will be available.

Forward-Looking Statements

This News Release contains forward-looking statements about the Company's objectives, plans, goals, aspirations, intentions, strategies, prospects and opportunities. Forward-looking statements in this News Release include statements relating to the proposed REIT transaction and expected future attributes of the REIT following the transaction; the anticipated benefits of the transaction to Loblaw and its shareholders; the expected ratings impact to Loblaw; Loblaw's expected ownership level in the REIT; the timing of the potential transactions; and that applicable regulatory approvals will be obtained. These forward-looking statements are not historical facts but reflect the Company's current expectations concerning future plans, actions and results.  These statements are subject to a number of risks and uncertainties that could cause actual plans, actions and results to differ materially from current expectations including, but not limited to, unanticipated developments that may delay or negatively impact the proposed transaction, changes in economic and market conditions, and other risks and uncertainties discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time, including the Enterprise Risks and Risk Management section of the Management's Discussion and Analysis ("MD&A") and the MD&A included in the Company's 2011 Annual Report - Financial Review.  There can be no assurance that the proposed transaction will be completed as anticipated or at all. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company's expectations only as of the date of this News Release. The Company disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

About Loblaw Companies Limited
Loblaw Companies Limited, a subsidiary of George Weston Limited, is Canada's largest food retailer and a leading provider of drugstore, general merchandise and financial products and services. Loblaw is one of the largest private sector employers in Canada. With more than 1,000 corporate and franchised stores from coast to coast, Loblaw and its franchisees employ more than 135,000 full-time and part-time employees. Through its portfolio of store formats, Loblaw is committed to providing Canadians with a wide, growing and successful range of products and services to meet the everyday household demands of Canadian consumers. Loblaw is known for the quality, innovation and value of its food offering. It offers Canada's strongest control (private) label program, including the unique President's Choice®, no name® and Joe Fresh® brands. In addition, the Company makes available to consumers President's Choice Financial® services and offers the PC® points loyalty program.

SOURCE: Loblaw Companies Limited

Kim Lee
Vice President, Investor Relations
905-459-2500
[email protected]