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RioCan Real Estate Investment Trust (TSE:REI.UN)
TSX:REI.UN

RioCan Real Estate Investment (REI.UN) AI Stock Analysis

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RioCan Real Estate Investment

(TSX:REI.UN)

Rating:69Neutral
Price Target:
C$19.00
▲(7.47%Upside)
RioCan's strong operational metrics, high dividend yield, and strategic focus on debt reduction are significant strengths. However, challenges such as declining net profitability and the impact of HBC's insolvency on FFO guidance slightly offset these positives.
Positive Factors
Debt Management
More than 50% of 2025 debt maturities have already been addressed, with significant repayments and attractive refinancing options.
Earnings
RioCan generated strong financial performance in Q1/25, driven by healthy operating performance and profits from condo completions.
Negative Factors
Property Re-tenanting
Re-tenanting large spaces due to HBC's exit could take an extended period and be costly, impacting RioCan's revenue.
Tenant Issues
The bankruptcy court has allowed HBC to stop paying rent to RioCan, impacting RioCan's financials.

RioCan Real Estate Investment (REI.UN) vs. iShares MSCI Canada ETF (EWC)

RioCan Real Estate Investment Business Overview & Revenue Model

Company DescriptionRioCan Real Estate Investment Trust (REI.UN) is one of Canada's largest real estate investment trusts, primarily focused on owning, managing, and developing retail and mixed-use properties. The company's portfolio includes shopping centers, mixed-use developments, and residential properties located in prime, high-density urban areas across Canada. RioCan's strategic focus is on urbanizing its portfolio with a significant emphasis on mixed-use development, combining residential, retail, and office spaces to create vibrant communities.
How the Company Makes MoneyRioCan makes money through the rental income generated from its diverse portfolio of retail and mixed-use properties. The primary revenue stream comes from leasing retail space to a variety of tenants, including national and international retailers, supermarkets, and service providers. Additionally, RioCan generates income from its residential properties through leasing units to tenants, contributing to its revenue diversification efforts. The company also engages in property development, creating new commercial and residential spaces, which can be sold or leased to generate additional revenue. Strategic partnerships with other real estate developers and institutional investors further enhance its financial performance, allowing for shared investment risks and expanded development capabilities.

RioCan Real Estate Investment Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q1-2025)
|
% Change Since: 4.45%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
Despite the challenges presented by the HBC insolvency and the necessary revision of FFO guidance, RioCan delivered strong operational performance with record-high occupancy rates and NOI growth. The company successfully executed asset sales and maintained a strong balance sheet, which supports their ability to navigate through the current macroeconomic volatility.
Q1-2025 Updates
Positive Updates
Strong Operational Performance
RioCan achieved record-breaking operational results with committed occupancy at a record high of 98%, retail committed occupancy at 98.7%, and double-digit blended and new leasing spreads for the fifth consecutive quarter at 17.5% and 18.3% respectively.
Residential Rental NOI Growth
RioCan Living's residential rental operations generated $7.5 million in NOI, an 18% increase over the same period last year.
Successful Asset Dispositions
Completed $16.7 million in dispositions including the sale of a Cineplex anchor property and post quarter-end, the sale of a less productive portion of an open-air retail site in Quebec for $37.5 million.
Debt Reduction and Strong Balance Sheet
Improved unsecured debt to total debt ratio to 58.6% and increased unencumbered asset pool by $605 million to $8.8 billion, maintaining $1.4 billion of liquidity.
FFO Per Unit Growth
FFO per unit increased by 9% to $0.49 compared to the same quarter of the previous year.
Negative Updates
Hudson's Bay Company Insolvency Impact
HBC's CCAA filing led to a $209 million write-down of RioCan's investment in the joint venture, impacting net income.
Revised FFO Guidance
Revised FFO guidance for 2025 from $1.89-$1.92 per unit to $1.85-$1.88 per unit due to HBC's insolvency and related impacts.
Company Guidance
During the RioCan Real Estate Investment Trust's first quarter 2025 conference call, significant guidance was provided about the company's financial outlook and strategic initiatives. The company revised its 2025 funds from operations (FFO) guidance from $1.89-$1.92 per unit to $1.85-$1.88 per unit, primarily due to the anticipated impact of the Hudson's Bay Company (HBC) insolvency proceedings. Despite these challenges, RioCan's core retail portfolio demonstrated strong performance, with a committed occupancy rate of 98% and a commercial same-property net operating income (NOI) growth of 3.6%. The call detailed the company's strategy to divest its interests in RioCan Living's residential rental assets within the next 12 to 24 months, with proceeds aimed at reducing debt and supporting the NCIB program. RioCan also highlighted a strategic focus on maintaining strong free cash flow and enhancing its balance sheet, aiming to achieve an unsecured debt to total debt ratio of 60% by the end of the year.

RioCan Real Estate Investment Financial Statement Overview

Summary
RioCan demonstrates stable revenue growth and strong operational cash flow, yet faces challenges with declining net profitability and free cash flow. The balance sheet is solid with a moderate debt-to-equity ratio, although high debt levels require careful management.
Income Statement
70
Positive
The company demonstrates stable revenue growth, with a 4.9% increase from 2023 to 2024. The gross profit margin for TTM is 59.7%, which is consistent with previous periods, reflecting stable cost management. However, the net profit margin for TTM has decreased significantly to 20.0% from 36.6% in 2024, indicating pressure on net profitability. EBIT and EBITDA margins are relatively strong at 55.4% and 39.7% respectively, but the decline in EBITDA compared to 2024 suggests potential efficiency issues.
Balance Sheet
65
Positive
The balance sheet shows a stable equity base with a debt-to-equity ratio of 1.02, indicating moderate leverage. Return on equity for TTM is 3.6%, which is a decline from previous years, reflecting lower profitability. The equity ratio is 47.8%, suggesting a solid financial structure. However, high debt levels could pose a risk if not managed properly, especially in a rising interest rate environment.
Cash Flow
60
Neutral
The company shows a decrease in free cash flow for TTM. Free cash flow to net income ratio is 0.54, indicating that only a portion of net income is being converted into free cash flow. The operating cash flow to net income ratio is higher at 1.40, reflecting strong operational cash generation. Nevertheless, the decline in free cash flow growth rate highlights potential challenges in maintaining liquidity.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
1.30B1.29B1.16B1.21B1.18B1.14B
Gross Profit
778.20M794.30M714.41M700.49M689.86M670.09M
EBIT
721.75M740.95M679.19M669.30M671.31M648.15M
EBITDA
516.98M731.66M237.02M674.08M675.34M652.50M
Net Income Common Stockholders
260.71M473.46M38.80M236.77M598.39M-64.78M
Balance SheetCash, Cash Equivalents and Short-Term Investments
59.49M190.24M128.44M86.23M77.76M238.46M
Total Assets
15.31B15.47B14.84B15.10B15.18B15.27B
Total Debt
7.43B7.35B6.90B6.78B6.71B6.97B
Net Debt
7.37B7.16B6.77B6.69B6.63B6.73B
Total Liabilities
7.99B7.91B7.40B7.37B7.27B7.53B
Stockholders Equity
7.32B7.56B7.44B7.73B7.91B7.73B
Cash FlowFree Cash Flow
140.84M81.34M-5.48M113.15M26.52M35.95M
Operating Cash Flow
364.48M378.28M385.52M506.12M490.40M552.58M
Investing Cash Flow
-324.30M-360.77M-200.15M-79.69M94.39M-469.34M
Financing Cash Flow
-25.36M48.49M-147.37M-417.97M-745.49M61.69M

RioCan Real Estate Investment Technical Analysis

Technical Analysis Sentiment
Positive
Last Price17.68
Price Trends
50DMA
17.03
Positive
100DMA
17.59
Negative
200DMA
18.01
Negative
Market Momentum
MACD
0.13
Negative
RSI
56.61
Neutral
STOCH
66.89
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:REI.UN, the sentiment is Positive. The current price of 17.68 is above the 20-day moving average (MA) of 17.35, above the 50-day MA of 17.03, and below the 200-day MA of 18.01, indicating a neutral trend. The MACD of 0.13 indicates Negative momentum. The RSI at 56.61 is Neutral, neither overbought nor oversold. The STOCH value of 66.89 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:REI.UN.

RioCan Real Estate Investment Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
82
Outperform
C$3.87B8.6011.23%5.71%4.54%68.32%
78
Outperform
C$4.40B18.524.75%7.17%10.06%-19.26%
76
Outperform
C$1.56B27.162.99%5.54%22.60%-48.92%
74
Outperform
C$428.45M17.584.57%7.21%6.36%13.91%
74
Outperform
C$3.75B17.495.40%4.98%3.11%
69
Neutral
$5.25B20.303.61%6.43%13.66%426.86%
61
Neutral
$2.85B10.720.40%6.07%5.80%-21.26%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:REI.UN
RioCan Real Estate Investment
17.56
1.86
11.85%
TSE:FCR.UN
First Capital Realty
17.64
3.67
26.27%
TSE:SRU.UN
SmartCentres Real Estate Investment Trust
25.59
5.17
25.32%
TSE:PLZ.UN
Plaza Retail REIT
3.93
0.67
20.55%
TSE:CRT.UN
CT Real Estate Investment
16.00
3.33
26.28%
TSE:PMZ.UN
Primaris Real Estate Investment Trust
15.32
2.61
20.54%

RioCan Real Estate Investment Corporate Events

Business Operations and StrategyFinancial Disclosures
RioCan Reports Strong Q1 2025 Results Amid Economic Challenges
Positive
May 6, 2025

RioCan Real Estate Investment Trust reported strong first-quarter results for 2025, with significant leasing spreads and same property NOI growth despite global economic volatility. The company achieved a 96% completion rate for condominium interim closings and is proceeding with the sale of four additional assets as part of its monetization strategy. Despite a net loss per unit due to valuation losses in its joint venture with HBC, RioCan’s financial position remains robust, supported by a strong balance sheet and liquidity. The company has revised its FFO per unit guidance for 2025, maintaining a focus on capital management and growth.

Legal ProceedingsBusiness Operations and Strategy
RioCan Addresses Impact of Hudson’s Bay CCAA Filing
Neutral
Mar 19, 2025

RioCan Real Estate Investment Trust has provided an update regarding its exposure to Hudson’s Bay Company’s recent CCAA filing. As a landlord and partner in the RioCan-HBC Joint Venture, RioCan is committed to protecting its stakeholders’ interests by exploring all business and legal options. The company aims to leverage its leasing and development expertise to safeguard the value of its properties, which include prime real estate in major Canadian markets. Despite the challenges posed by HBC’s restructuring, RioCan’s strong core business and financial position enable it to navigate the situation effectively.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.