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Owner of Giant Eagle properties to fuel expansion with proceeds from $294M deal

| Thursday, Aug. 8, 2013, 5:15 p.m.

A real estate developer whose holdings include 161 Giant Eagle Inc. supermarket sites will continue its expansion with $294 million from the sale of a one-third ownership stake to a Toronto investment trust.

Echo Realty LP in O'Hara sold the stake to H&R Real Estate Investment Trust, Canada's second-largest, which received an option to buy up to 49.9 percent of Echo within five years.

Echo's portfolio includes Giant Eagle, Market District, GetGo and Good Cents discount food stores among its 176 properties in the eastern United States. It was founded by Giant Eagle in 2001, and is in the same building in O'Hara as Giant Eagle Inc. Echo Realty CEO Thomas Karet is married to Giant Eagle CEO Laura Shapira Karet.

Privately owned Giant Eagle is the largest supermarket chain in Western Pennsylvania with $9.9 billion in annual revenue as of June 30, 2012. It has 175 corporate-owned and 54 franchised supermarkets, and 168 convenience stores in four states.

“H&R is thrilled to be a partner in Echo, which provides H&R with a professional platform to consolidate and expand its U.S. retail holdings,” H&R CEO Tom Hofstedter said in a statement.

The proceeds from the sale will be used by Echo to acquire additional retail properties, H&R said in the statement.

Echo and Giant Eagle executives were not available for comment. They were at an opening of a Market District store in Solon, Ohio, said spokesman Victor Kimmel.

“It's a big move into the U.S. for H&R,” which has a large portion of its holdings in Canada, said Jenney Ma, an analyst with Canaccord Genuity in Toronto. “It's also a way for Echo to grow its own platform.”

In addition to its Giant Eagle real estate holdings, Echo has 15 other properties: four office buildings, six industrial properties, four retail projects and two parcels of land.

Echo and Giant Eagle possess a number of common shareholders, but they are two independently governed and operated entities, according to a statement issued by Kimmel.

Echo is expected to generate more than $84 million in operating income a year and has an average remaining lease term on its properties of 12.9 years. Giant Eagle contributes about 79 percent of Echo's annual revenue, the H&R statement said.

H&R paid one-third of the purchase price when the transaction closed. Another one-third will be paid in 18 months and the balance in 30 months. H&R will have the right to appoint two of the six Echo board members.

Sam Spatter contributed to this report. John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or joravecz@tribweb.com.

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