RioCan Real Estate Investment Trust (REI-UN) Q4 2023 earnings summary

Executive summary

• 2023 FFO per diluted unit rose 3.5% to $1.77; commercial SPNOI grew 4.8%, blended leasing spreads reached 10.7% and commercial committed occupancy was 97.4%.

• A 42.5M sq. ft. development pipeline, including 17.4M sq. ft. of zoned density, supports future growth; 600,000 sq. ft. was completed in 2023.

Financial highlights

• 2023 FFO was $531.3M versus $524.7M in 2022; diluted FFO per unit was $1.77 versus $1.71.

• Q4 FFO was $132.9M, or $0.44 per diluted unit, versus $127.6M and $0.42; net loss was $117.7M versus $5.0M.

• Net income was $38.8M, down $198.0M YoY, reflecting a $450.4M investment-property fair value loss versus $241.1M in 2022.

• Annualized distributions rose 2.8% to $1.11 per unit; the monthly distribution increased to $0.0925 beginning with February 2024.

Outlook and guidance

• 2024 FFO per unit guidance is $1.79–$1.82; commercial SPNOI growth is expected at ~3%, with an FFO payout ratio of 55%–65%.

• 2024 mixed-use development spending is forecast at $250M–$300M and retail project construction spending at $50M–$60M; no new mixed-use physical construction is planned while financing costs persist.

• Expected development completions total $1.7B from 2022–2026, excluding residential inventory deliveries; 2,573 condo and townhouse units are expected to generate over $780M in sales revenue from 2024–2026.

• The 42.5M sq. ft. pipeline includes 14.5M sq. ft. with zoning approved, 1.7M sq. ft. shovel-ready and 1.2M sq. ft. underway.