RioCan REIT Reports Solid Q1 2025 Results Amid Economic Volatility and HBC Headwinds

RioCan Real Estate Investment Trust (TSX:REI.UN) reported its latest earnings numbers on Monday, delivering strong operational and leasing performance in the first quarter of 2025, supported by robust demand for necessity-based retail and steady progress in its residential strategy, despite macroeconomic headwinds and the impact of Hudson’s Bay Company’s (HBC) CCAA filing.

Here are the key numbers from the filing:

• $1.4 billion in liquidity
• 208.8 million net loss, largely due to a write-down of its investment in the RC-HBC Joint Venture.
• 3.2 million units repurchased.
• 17.5% blended leasing spread
• 98% occupancy level (record high)
• $0.49 funds from operations (FFO) per unit, up from $0.45 in the prior-year period.
• $1.85 – $1.88 per unit FFO guidance (down from $1.89-$1.92). The adjustment due to the RC-HBC JV.
• 62% estimated FFO payout ratio, which is within its long-term target range of 55% to 65%.

Overall, it was a solid performance for the REIT as its FFO grew and the company’s dividend continues to look safe, with the payout ratio firmly within the company’s range. Year to date, shares of RioCan are down 6% but in five years the stock has risen by 15%. The stock can be a great option for dividend investors as its yield if up around 6.8%. If you wanted to collect $1,000 in annual dividends, at that rate, you would need to invest approximately $14,700 into the stock today.

Key terms:

CCAA filing: A CCAA (Companies’ Creditors Arrangement Act) filing is a legal process in Canada that allows financially distressed companies to restructure their operations and debts under court supervision while protecting them from creditor actions.

FFO (Funds From Operations): FFO is a key performance metric used by real estate investment trusts (REITs) that adjusts net income by adding back depreciation, amortization, and gains/losses from property sales to better reflect the cash-generating ability of the business.

Blended leasing spread: A blended leasing spread measures the average percentage difference between the rental rates of new or renewed leases and the rates of expiring leases, indicating how much a REIT is increasing or decreasing rent on a per-square-foot basis.