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“The REIT will free up a lot of cash that the company could inject into an acquisition,” Kathleen Wong, a Toronto- based analyst at Veritas, said in a telephone interview. Loblaw “said the priority of the cash is going to grow the business, but we speculate that if Canada’s Safeway or Overwaitea are for sale, maybe Loblaw will be interested.”

CEO Retiring

Julija Hunter, a Loblaw spokeswoman, declined to comment on how the company would spend the proceeds from the REIT sale. Teena Massingill, a spokeswoman for Safeway, declined to comment on whether it would entertain an offer from Loblaw for the Canadian division. Safeway announced Wednesday that Chairman and Chief Executive Officer Steve Burd will retire in May. An Overwaitea representative declined to comment on Loblaw.

Loblaw said Dec. 6 that it will transfer about 35 million square feet (3.3 million square meters) of property to a REIT that it will take public this year.

“The REIT will have a mandate to explore opportunities outside of Loblaw as part of its growth strategy,” Sarah Davis, Loblaw’s chief financial officer, said on a conference call with analysts last month. “We don’t plan on sitting on the money for five years or an extended period of time.”

Loblaw would raise $670 million by selling 20% of the REIT, according to Michael Van Aelst, a Montreal-based analyst with Toronto-Dominion. It could use the money to buy Safeway Canada as U.S. discount retailers expand in the country, boosting competition for traditional supermarkets, according to Veritas, Raymond James Financial Inc. and Edward Jones.