RioCan Real Estate Investment Trust (REI-UN) Q1 2025 earnings summary

Executive summary

• Q1 2025 featured strong operational and financial results, with robust leasing demand, record-high occupancy, and resilience amid macroeconomic turbulence and HBC's insolvency.

• 94% of rent is from major Canadian markets, 88% from stable, necessity-based tenants; retail committed occupancy at 98.7%, overall at 98.0%.

• HBC JV now represents 4.4% of FFO and 3.3% of equity; $209M write-down taken, reducing carrying value to $41M.

• Management confident in preserving value and income from HBC JV, leveraging contingency planning and prior experience with retailer insolvencies.

• Monetization of residential assets continued, with deals for four additional asset sales and high success rates in condominium closings.

Financial highlights

• FFO per unit (diluted) rose to $0.49, up 8.9% year-over-year, driven by strong same-property NOI growth and higher condo gains, partially offset by increased interest expense.

• $22M in condo gains, with interim occupancy for 310 units (96% of expected Q1 amount); 97% interim occupancy over last two quarters.

• Net income impacted by $209M impairment on HBC JV investment; net loss per unit was $0.28, $0.71 lower than last year.

• NAB per unit at $24.62, down from $25.16 at year-end 2024, due to HBC impairment.

• Units trading at a 31% discount to NAB per unit.

Outlook and guidance

• 2025 FFO per unit guidance revised to $1.85–$1.88 (from $1.89–$1.92), reflecting HBC impact; all other KPI guidance, including ~3.5% same-property NOI growth, remains intact.

• No sales of unsold condo units assumed in forecast until 2027; risk isolated to defaults on pre-sold units, with a 6% default rate assumption.

• Asset sales and condo/townhome development expected to generate $340M–$350M in 2025 and $180M–$190M in 2026–2027.

• Payout ratio expected to remain within long-term target range of 55%–65%.