RioCan Real Estate Investment Trust (REI-UN) Q3 2024 earnings summary

Executive summary

• Achieved record-high committed occupancy of 97.8% and retail occupancy of 98.6%, driven by robust leasing demand, high lease renewal retention, and a necessity-focused, major market retail portfolio.

• Portfolio includes 186 properties with approximately 33 million sq. ft. net leasable area and 18 million sq. ft. zoned for development, with 94% of rent from Canada’s six largest cities.

• Strategic focus on high-quality tenants, responsible growth, prudent financial management, and workforce restructuring to enhance efficiency.

• Achieved top GRESB sustainability ranking, LEED Platinum, and AA ESG rating from MSCI, with a commitment to net-zero GHG emissions by 2050.

• Year-to-date FFO per unit reached $1.34, on track for annual guidance of $1.79–$1.82, excluding restructuring charges.

Financial highlights

• FFO per unit for Q3 was CAD 0.46, up 2.2% year-over-year, with net income of $96.9 million, aided by a $159 million favorable change in fair value.

• Leasing spreads reached 14.2% overall, with renewals at 12.6% and new leases at 24.2%; blended leasing spread at 14.8% on a rolling twelve-month basis.

• Committed and retail occupancy hit record highs of 97.8% and 98.6%, respectively, with 3.8 million sq. ft. of leases completed year-to-date.

• FFO payout ratio at 61.7%, the lowest among peers, preserving over CAD 150 million in annual free cash flow.

• Proforma liquidity remains strong at CAD 1.3–1.7 billion, with recent $700 million unsecured debenture issuances and extended credit facilities.

Outlook and guidance

• On track to achieve annual FFO per unit guidance of $1.79–$1.82, excluding a Q4 restructuring charge of approximately $9 million or CAD 0.03 per unit.

• Targeting Adjusted Debt to Adjusted EBITDA in the 8.0x–9.0x range by year-end, supported by condo sales and EBITDA growth.

• No new mixed-use construction starts planned through 2025; development spending for ongoing projects expected at $250–$300 million, retail in-fill at $30–$40 million.

• More refined guidance on same property NOI growth and other key metrics to be provided in 2025.

• Annualized cash savings from restructuring expected to be ~$8 million, with net G&A impact of ~$4 million.