TORONTO--(BUSINESS WIRE)--August 07, 2025--
RioCan Real Estate Investment Trust ("RioCan" or the "Trust") (TSX: REI.UN) announced today its financial results for the three and six months ended June 30, 2025.
-- 9.3% growth of FFO per unit to $0.47
-- Capitalizing on mark-to-market opportunities, generated new leasing
spreads of 51.5%; blended leasing spreads of 20.6%
-- Closed four previously announced firm sales of RioCan Living$(TM)$ assets,
bringing total RioCan Living asset dispositions to five; total
year-to-date closed dispositions of $230 million at an average
capitalization rate of 4.3%
"RioCan delivered another quarter of strong results and sustained leasing momentum, highlighted by exceptional leasing spreads and a high retention rate. The continued demand from high-quality retailers underscores the strength of the RioCan portfolio and reinforces our position as the landlord of choice," said Jonathan Gitlin, President and CEO of RioCan. "We continue to simplify our business, progress our capital recycling initiatives, and successfully execute our de-leveraging plan. These initiatives sharpen the operational focus of the Trust and enhance our financial flexibility to drive sustained growth."
Financial
Highlights
----------- ----------- ---------- ------------ -----------
Three months ended June
30 Six months ended June 30
------------------------ -------------------------
2025 2024 2025 2024
----------- --- ------ ------ ---- ------ -------
FFO per
unit -
diluted
(1) $ 0.47 $ 0.43 $ 0.96 $ 0.88
Net income
per unit
-
diluted $ 0.49 $ 0.41 $ 0.21 $ 0.84
June 30, December
As at 2025 31, 2024
----------- ----------- ---------- ------------ -----------
Net book
value per
unit $ 24.89 $ 25.16
-- FFO per unit increased to $0.47, up $0.04 or 9.3% from the same period
last year. This growth was driven by strong operating performance,
reduced G&A expenses, accretion from unit buybacks in the current year
and higher residential inventory gains. Higher interest expense partially
offset these increases in FFO.
-- Net income per unit of $0.49 was $0.08 per unit higher than the same
period last year, reflecting greater fair value gains of $15.9 million on
investment properties, compared to $5.9 million in the prior year quarter,
in addition to the items noted for FFO above.
-- Adjusted Debt to Adjusted EBITDA1 improved to 8.88x, ratio of unsecured
to secured debt reached 61% to 39% and the FFO Payout Ratio1 was 60.5%.
RioCan's strong balance sheet, reinforced by $1.3 billion of Liquidity1
and $9.0 billion in Unencumbered Assets1, enables flexibility and
optimization of capital allocation.
1. A non-GAAP measurement. For reconciliations and the basis of presentation
of RioCan's non-GAAP measures, refer to the Basis of Presentation and
Non-GAAP Measures section in this News Release.
Outlook
-- Our outlook remains aligned with the guidance provided in Q1 2025:
Outlook 2025
-------------------------------------------- --------------
FFO per unit (i) $1.85 to $1.88
FFO Payout Ratio 62%
Commercial Same Property NOI growth (i) (1) 3.5%
-------------------------------------------- --------------
(i) Refer to the Outlook section of the Management Discussion and Analysis
for the three and six months ended June 30, 2025 for further details.
1. A non-GAAP measurement. For reconciliations and the basis of presentation
of RioCan's non-GAAP measures, refer to the Basis of Presentation and
Non-GAAP Measures section in this News Release.
Selected Financial and Operational Highlights
--------------------------------------------------------------
(in millions, except where
otherwise noted, and
percentages)
------------------------------- ------ ------- ------------
June
30, June 30,
As at 2025 2024
--------------- ------------- ------ ------- ------------
Occupancy -
committed (i)
(ii) 97.5 % 97.5 %
Retail
occupancy -
committed (i)
(ii) 98.2 % 98.3 %
Three months ended Twelve months ended
June 30 June 30
--------------- --------------------- ---------------------
2025 2024 2025 2024
--------------- ------------- ------ ------ -----------
Blended
leasing
spread 20.6 % 23.4 % 19.2 % 14.5 %
New leasing
spread 51.5 % 52.5 % 36.0 % 29.8 %
Renewal
leasing
spread 17.4 % 10.7 % 16.1 % 10.4 %
June
30, December 31,
As at 2025 2024
--------------- ------------- ------ ------- ------------
Liquidity
(iii) (1) $ 1,336 $ 1,694
Adjusted Debt
to Adjusted
EBITDA (iii)
(1) 8.88x 8.98x
Adjusted Spot
Debt to
Adjusted
EBITDA (iii)
(1) 9.02x 9.12x
Unencumbered
Assets (iii)
(1) $ 8,956 $ 8,201
(i) Includes commercial portfolio only. Excludes income producing
properties that are owned through joint ventures and reported under
equity-accounted investments.
(ii) Information presented as at respective periods then ended.
(iii) At RioCan's Proportionate Share.
-- Leasing Progress: 1.3 million square feet were leased in the Second
Quarter, including 1.2 million square feet of renewals.
-- Leasing Spreads: In the Second Quarter, RioCan achieved a blended
leasing spread of 20.6% with a new leasing spread of 51.5% and a renewal
leasing spread of 17.4%, marking three consecutive quarters of leasing
spreads at least in the high-teens. RioCan continued to capitalize on
mark-to-market opportunities, achieving an average blended leasing spread
of 23.5% on market deals. 72% of renewals were at market rates, while
retaining high-quality essential retailers, including the renewal of
eight grocery anchors in the quarter. The retention ratio of 91.6%
reflects an effective balance between upgrading tenant quality and
preserving strong tenancies, with elevated leasing spreads confirming the
success of this strategy.
-- Same Property NOI: Commercial Same Property NOI1 growth was 2.0% in the
Second Quarter. Excluding the impact of higher legal and CAM/property tax
settlements and a provision reversal in the prior year, Commercial Same
Property NOI growth is 4.0%. Full year guidance for SPNOI is unchanged at
3.5%.
-- Occupancy: RioCan's committed occupancy and retail committed occupancy
were strong at 97.5% and 98.2%. Committed occupancy benefited from strong,
more resilient retailers replacing transitional tenants who were paying
under-market rents and offset the impact of recently vacated HBC units at
Georgian Mall, Oakville Place and Tanger Ottawa. Our leasing team is
actively working toward backfilling these units.
-- Market Demographics: Average population and household income within a
five-kilometre radius of RioCan's portfolio increased by 1% and 5% to
277,000 and $155,000, respectively from the previous year.
-- RioCan Living - Residential Rental: Residential rental operations
generated $9.0 million of NOI, an increase of $1.8 million or 25.0% over
the same period last year. As of June 30, 2025, there are 14 buildings in
operation with a total fair value of $1.1 billion. RioCan continues to
execute on its strategy of unlocking the value in its residential
portfolio. Refer to the Capital Recycling section in this News Release
for further details.
-- RioCan Living - Residential Condominium: The construction loan for U.C.
Tower 2 & 3 was fully repaid in the Second Quarter. The outstanding
balance on the 11YV construction loan was reduced to $3.6 million
reflecting payments made through to August 7, 2025. As a result, as of
August 7, 2025, RioCan's debt decreased by $124.2 million, and its
outstanding guarantees related to 11YV declined by $298.0 million
compared to Q1 2025. Full repayment of the remaining 11YV construction
loan balance is expected in Q3 2025. Interim closings have commenced at
Queen & Ashbridge and U.C. Tower 3.
-- Adjusted G&A Expense as a percentage of rental revenue1: Improved to
3.7% on a YTD basis, down from 4.1% from net G&A savings from the 2024
restructuring.
-- Capital Recycling: As of August 7, 2025, closed dispositions totalled
$230.4 million, aligning with IFRS values. For the six months ended June
30, 2025, we completed $53.0 million of lower-growth asset dispositions
including the sale of a Cineplex-anchored property, a single-tenant
property and part of an open-air retail site in Quebec. Subsequent to
quarter end, RioCan closed four previously announced firm sales of its
50% interest in RioCan Living properties. Including Strada, which closed
in 2024, five RioCan Living properties have been sold. RioCan has also
entered into a conditional agreement for the sale of an additional RioCan
Living asset.
-- Normal Course Issuer Bid (NCIB): The Trust believes that the market
price of its units does not fully reflect the underlying value and future
prospects of its business, making purchasing its own units an attractive
investment opportunity. During the six months ended June 30, 2025, the
Trust acquired and cancelled 5.6 million Units at a weighted average
price of $17.99 per unit for a cost of $100.1 million. Purchases were
funded through proceeds from mortgages and other loan receivables
repayments of $66.6 million received by the Trust during the Second
Quarter, and the sale of two low-growth assets: RioCan Centre Vaughan,
which closed in Q4 2024, and the aforementioned Cineplex-anchored
property, which closed in Q1 2025.
-- Investing: On April 1, 2025, RioCan acquired, upon stabilization, a 90%
interest in Phase Two and Three of Market in Montreal, Quebec for the
purchase price of $125.3 million. This acquisition was pursuant to a
forward purchase agreement previously announced during the purchase of
Phase One of the project in 2022.
-- Balance Sheet and Liquidity: As of June 30, 2025, the Trust's Adjusted
Debt to Adjusted EBITDA ratio improved to 8.88x from 8.98x at the end of
2024, in line with its target range of 8.0x - 9.0x. The Adjusted Spot
Debt to Adjusted EBITDA ratio improved to 9.02x from 9.12x at the end of
2024, and we expect this metric to be well within the 8.0x - 9.0x range
next quarter. The Trust has $1.3 billion of Liquidity to meet its
financial obligations, including a $1.1 billion from its revolving
unsecured operating line of credit.
-- On June 23, 2025, the Trust enhanced its liquidity position by closing
on a $200.0 million 5.3-year non-revolving unsecured credit facility,
with a floating interest rate of 4.49%, which was negotiated on terms and
pricing that is consistent with our revolving unsecured operating line of
credit. On June 25, 2025, the maturity date of the revolving unsecured
operating line of credit was extended to May 31, 2030 and certain
covenants were amended to provide the Trust with additional operational
and financial flexibility. The Trust's unencumbered asset pool increased
to $9.0 billion at the end of the Second Quarter from $8.2 billion at the
end of 2024 as the Trust progressed towards its target Ratio of Unsecured
Debt to Total Contractual Debt1.
-- As of June 30, 2025, the Ratio of Unsecured Debt to Total Contractual
Debt increased to 61% from 56% and the weighted average term to maturity
of its debt portfolio was extended to 3.81 years from 3.72 years, both
compared to the end of 2024 and on a proportionate share basis.
-- The Trust continues to improve its mix of unsecured debt to total debt,
growing its unencumbered asset pool. After factoring in the closed RioCan
Living sales and repayment of maturing mortgages payable and construction
lines subsequent to quarter end, RioCan's pro forma metrics on a
proportionate share basis are as follows:
As at June 30, 2025 Pro forma
------------------------------------------ ------------- ---------
Ratio of Unsecured Debt to Total Contractual
Debt 61 % 63 %
Unencumbered Assets $8,956 $9,280
1. A non-GAAP measurement. For reconciliations and the basis of presentation
of RioCan's non-GAAP measures, refer to the Basis of Presentation and
Non-GAAP Measures section in this News Release.
RC-HBC LP
-- On June 3, 2025, RC-HBC LP ("RC-HBC LP" or "the LP") was transitioned
into a court-approved receivership (the "Receivership Proceedings"),
which was a process requested by RioCan. RioCan is working with the
receiver and other stakeholders to swiftly advance and execute solutions
for the LP's properties to benefit the limited partners and its
stakeholders.
-- RioCan's net investment in the LP as at June 30, 2025 was $40.2 million
or 0.5% of total RioCan's equity.
Changes to the Board of Trustees
-- Effective June 30, 2025, Richard Dansereau resigned from his position
as a Trustee on RioCan's Board of Trustees. Mr. Dansereau's resignation
follows his recent appointment to an executive role at Desjardins Global
Asset Management, the terms of which do not permit him to serve on
outside public Boards. "On behalf of the entire Board, I want to extend
our sincere gratitude to Richard for his years of dedicated service,"
said Ed Sonshine, Chairman of the Board. "Richard was deeply committed
and brought expertise, thoughtful perspective and integrity to the Board.
We wish him all the best in his future endeavors." As a result of this
resignation, RioCan's Board of Trustees is now comprised of nine
members.
Conference Call and Webcast
Interested parties are invited to participate in a conference call with management on Friday, August 8, 2025 at 10:00 a.m. $(ET)$. Participants will be required to identify themselves and the organization on whose behalf they are participating.
To access the conference call, click on the following link to register at least 10 minutes prior to the scheduled start of the call: Pre-registration link. Participants who pre-register at any time prior to the call will receive an email with dial-in credentials including a login passcode and PIN to gain immediate access to the live call. Those that are unable to pre-register may dial-in for operator assistance by calling 1-833-950-0062 and entering the access code: 830267.
For those unable to participate in the live mode, a replay will be available at 1-866-813-9403 with access code: 781825.
To access the simultaneous webcast, visit RioCan's website at Events and Presentations and click on the link for the webcast.
About RioCan
RioCan meets the everyday shopping needs of Canadians through the ownership, management and development of necessity-based and mixed-use properties in densely populated communities. As at June 30, 2025, our portfolio is comprised of 178 properties with an aggregate net leasable area of approximately 32 million square feet (at RioCan's interest). To learn more about us, please visit www.riocan.com.
Basis of Presentation and Non-GAAP Measures
All figures included in this News Release are expressed in Canadian dollars unless otherwise noted. RioCan's unaudited interim condensed consolidated financial statements ("Condensed Consolidated Financial Statements") are prepared in accordance with International Financial Reporting Standards (IFRS). Financial information included within this News Release does not contain all disclosures required by IFRS, and accordingly should be read in conjunction with the Trust's Condensed Consolidated Financial Statements and MD&A for the three and six months ended June 30, 2025, which are available on RioCan's website at www.riocan.com and on SEDAR+ at www.sedarplus.com.
Consistent with RioCan's management framework, management uses certain financial measures to assess RioCan's financial performance, which are not in accordance with generally accepted accounting principles (GAAP) under IFRS. Funds From Operations ("FFO"), FFO per unit, Net Operating Income ("NOI"), Same Property NOI, Commercial Same Property NOI ("Commercial SPNOI"), FFO Payout Ratio, Adjusted G&A Expense as a percentage of rental revenue, Ratio of Unsecured Debt to Total Contractual Debt, Liquidity, Adjusted Debt to Adjusted EBITDA, Adjusted Spot Debt to Adjusted EBITDA, RioCan's Proportionate Share, Unencumbered Assets as well as other measures that may be discussed elsewhere in this News Release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. RioCan supplements its IFRS measures with these Non-GAAP measures to aid in assessing the Trust's underlying performance and reports these additional measures so that investors may do the same. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of RioCan's performance, liquidity, cash flow, and profitability. For full definitions of these measures, please refer to the "Non-GAAP Measures" section in RioCan's MD&A for the three and six months ended June 30, 2025.
The reconciliations for non-GAAP measures included in this News Release are outlined as follows:
RioCan's Proportionate Share
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