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Ed Sonshine, the 70-year-old chief executive officer of RioCan REIT, is in the planning stages for several large sites this year that may push the company beyond an original goal of building 10,000 residential units in the next decade.

Charla Jones/The Globe and Mail

The head of Canada's largest real estate investment trust is adding more projects to his redevelopment pipeline amid unprecedented heat in Toronto's housing market.

Ed Sonshine, the 70-year-old chief executive officer of RioCan REIT, is in the planning stages for several large sites this year that may push the company beyond an original goal of building 10,000 residential units in the next decade. The Toronto-based company has a portfolio of about 300 shopping malls across the country, and is seeking to redevelop stores and add housing to at least 50 of them.

"The real estate market is so hot right now, there's no way it's going to stay like this forever," Mr. Sonshine said in an interview. "But you can't do too many projects or you just won't have the cash, and you don't want your leverage to go up. We just got our credit rating upgraded, we don't want it to go right down again."

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The company's funds from operations are a "guardrail" and RioCan will stay about 40 per cent leveraged, Mr. Sonshine said.

Mr. Sonshine has been adding apartments to his company's retail locations, most anchored by big-box stores such as Loblaws and Wal-Mart, as demand for housing skyrockets in Canada's largest cities. The REIT is focused on building rental apartments and aims to partner with developers on any condominiums.

RioCan, with a market value of about $8.3-billion, has returned 19 per cent in the past 12 months including reinvested units.

RioCan is currently redeveloping a $1.4-billion, 7.6-acre site in Toronto's west end with Allied Properties REIT and Diamond Corp., to become 3.1 million square feet of mixed-use space. Also under construction in the city are two towers of at least 36 storeys at the intersection of Yonge and Eglinton streets in midtown, and two buildings comprising about 420 units in the same neighbourhood, replacing a parking lot and shopping centre.

RioCan also is seeking approval to build on 54 acres in the suburbs. Shoppers World, a site in Brampton located near a large planned transit area, is currently a "broken down, old mall built in the early '70s that we've been trying to figure out what to do with," Mr. Sonshine said.

RioCan is working with the city to develop a master plan, he said, which will include 300,000 square feet of retail – less than half the current amount – and about 1,500 residential units, the majority being rental units. Those would be on top of the 10,000 units originally forecast. These projects would typically cost at least $150-million.

Mr. Sonshine is betting on increased demand for rental properties as buyers are priced out of the housing market in Toronto, with about half of the company's development projects in Canada's largest city.

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Average detached house prices surged 20 per cent to $1.25-million in 2016 from the prior year, and sales hit a record, according to Toronto's real estate board. Aside from Toronto, the developer also is targeting Vancouver and Ottawa, building a rental tower across the street from CSIS, Canada's spy agency.

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