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RioCan Real Estate Investment Trust (TSE:REI.UN)
TSX:REI.UN
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RioCan Real Estate Investment
(TSX:REI.UN)
Rating:75Outperform
Price Target:
C$20.50
▲(10.81% Upside)
Positive Factors
Asset Management
Divesting residential assets could provide additional capital for the unit buyback, particularly if the unit price remains at current levels.
Earnings
Solid leasing spreads and residential profits drive 9% growth in FFO per unit.
Financial Performance
RioCan generated strong financial performance in Q1/25, driven by healthy operating performance and profits from condo completions.
Negative Factors
Cash Flow
The bankruptcy court has allowed HBC to stop paying rent to RioCan, impacting RioCan's financials.
Retail Exposure
RioCan has significant exposure to Hudson's Bay Co., which is undergoing full liquidation, leading to a negative near-term impact on RioCan's portfolio and cash flow.
Re-Tenanting Costs
Re-tenanting large spaces due to HBC's exit could take an extended period and be costly, impacting RioCan's revenue.
RioCan Real Estate Investment (REI.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$5.48B
Dividend Yield6.15%
Average Volume (3M)678.07K
Price to Earnings (P/E)19.6
Beta (1Y)0.83
Revenue Growth17.42%
EPS Growth377.43%
CountryCA
Employees496
SectorReal Estate
Sector Strength49
IndustryREIT - Retail
Share Statistics
EPS (TTM)0.49
Shares Outstanding294,467,770
10 Day Avg. Volume604,672
30 Day Avg. Volume678,074
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap2.31
Enterprise Value/Revenue9.12
Enterprise Value/Gross Profit16.17
Enterprise Value/Ebitda22.81
Forecast
1Y Price Target
$19.90Price Target Upside7.55% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
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, focused primarily on the ownership, operation, and development of retail and mixed-use properties across major urban markets in Canada. The company invests in a diversified portfolio that includes shopping centers, retail plazas, and residential developments, aiming to create sustainable and vibrant communities. With a commitment to responsible management and growth, RioCan also emphasizes the integration of innovative solutions in its property management and development practices.
How the Company Makes MoneyRioCan generates revenue primarily through rental income from its diverse portfolio of retail and mixed-use properties. The company leases spaces to a variety of tenants, including national and local retailers, service providers, and residential units, which contribute to stable and recurring cash flow. Additionally, RioCan pursues development projects that add value to its existing properties, increasing overall income potential. The company also benefits from strategic partnerships with various stakeholders in the real estate sector, enhancing its ability to acquire, develop, and manage properties efficiently. Factors such as market demand, property location, and the overall economic environment significantly influence its earnings.
RioCan Real Estate Investment Earnings Call Summary
Earnings Call Date:Aug 07, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 30, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong operational performance with significant leasing spreads, increased funds from operations, and successful capital management strategies. However, challenges with the HBC joint venture and a slight decrease in retail occupancy were noted. The overall tone suggests optimism due to strategic management and financial health.Q2-2025 Updates
Positive Updates
Strong Leasing Spreads
New leasing spreads reached 51.5%, with blended leasing spreads at 20.6% this quarter, demonstrating strong tenant relationships and asset quality.
Increased Funds from Operations
Funds from operation per unit increased to $0.47, up 9.3% year-over-year, driven by strong operating performance and reduced G&A expenses.
High Retail Occupancy
Committed retail occupancy remains high at 98.2%, despite a slight decrease from the previous quarter.
Successful Capital Recycling Strategy
Year-to-date closed dispositions totaled $230.4 million, consistent with IFRS values and at a weighted average cap rate of 4.3%.
Balance Sheet Improvements
Adjusted debt to adjusted EBITDA improved to 8.88x, with ample liquidity at $1.3 billion.
NCIB Program Success
Acquired and canceled 2.3 million units at an average price of $17.25 per unit, with total units acquired and canceled reaching 5.6 million year-to-date.
Negative Updates
Slight Decrease in Retail Occupancy
The committed retail occupancy decreased slightly from 98.7% to 98.2% due to the closure of 3 HBC locations.
Challenges with HBC Joint Venture
RioCan decided not to participate financially in 5 of the 12 assets in the HBC joint venture, indicating challenges and financial decisions impacting certain assets.
Higher Interest Expenses
The positives in FFO growth were partially offset by higher interest expenses.
Company Guidance
During the RioCan Real Estate Investment Trust Second Quarter 2025 Conference Call, several key metrics and guidance were provided. Jonathan Gitlin, the President and CEO, highlighted an impressive new leasing spread of 51.5% and blended leasing spreads of 20.6% for the quarter. Additionally, RioCan executed 1.3 million square feet of leases, with 1.2 million being renewals, contributing to a same-property NOI growth of 4% after adjustments. The committed retail occupancy rate remained strong at 98.2%, reflecting a slight decrease from the previous quarter due to the closure of three HBC locations. Financially, the funds from operations per unit increased by 9.3% year-over-year to $0.47, driven by strong operating performance and reduced G&A expenses. The company also reported an adjusted debt to adjusted EBITDA ratio of 8.88x, with a liquidity position of $1.3 billion. RioCan anticipates repatriating $1.3 to $1.4 billion in capital over 2025 and 2026, primarily from the sale of RioCan Living assets and condominium transactions. The net asset value per unit at the end of the quarter was $24.89, with an emphasis on a significant gap between this value and the current unit price, indicating undervaluation.RioCan Real Estate Investment Financial Statement Overview
Summary
RioCan Real Estate Investment demonstrates stable revenue growth and a 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. Overall, the company shows resilience but needs to address profitability pressures and liquidity challenges to sustain its financial health.Income Statement
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.70
Positive
Balance Sheet
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.65
Positive
Cash Flow
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.60
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.38B | 1.29B | 1.16B | 1.21B | 1.18B | 1.14B |
| Gross Profit | 781.12M | 831.61M | 714.41M | 700.49M | 689.86M | 670.09M |
| EBITDA | 553.70M | 731.66M | 237.02M | 674.08M | 675.34M | 652.50M |
| Net Income | 283.96M | 473.46M | 38.80M | 236.77M | 598.39M | -64.78M |
Balance Sheet | ||||||
| Total Assets | 15.38B | 15.47B | 14.84B | 15.10B | 15.18B | 15.27B |
| Cash, Cash Equivalents and Short-Term Investments | 72.32M | 190.24M | 128.44M | 86.23M | 77.76M | 238.46M |
| Total Debt | 7.46B | 7.35B | 6.90B | 6.78B | 6.71B | 6.97B |
| Total Liabilities | 8.04B | 7.91B | 7.40B | 7.37B | 7.27B | 7.53B |
| Stockholders Equity | 7.34B | 7.56B | 7.44B | 7.73B | 7.91B | 7.73B |
Cash Flow | ||||||
| Free Cash Flow | 220.06M | 81.34M | -5.48M | 113.15M | 26.52M | 35.95M |
| Operating Cash Flow | 487.81M | 378.28M | 385.52M | 506.12M | 490.40M | 552.58M |
| Investing Cash Flow | -286.57M | -360.77M | -200.15M | -79.69M | 94.39M | -469.34M |
| Financing Cash Flow | -179.70M | 48.49M | -147.37M | -417.97M | -745.49M | 61.69M |
RioCan Real Estate Investment Technical Analysis
Positive
18.50
Price Trends
17.82
Positive
17.40
Positive
17.51
Positive
Market Momentum
0.23
Negative
62.00
Neutral
75.38
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 18.5 is above the 20-day moving average (MA) of 18.16, above the 50-day MA of 17.82, and above the 200-day MA of 17.51, indicating a bullish trend. The MACD of 0.23 indicates Negative momentum. The RSI at 62.00 is Neutral, neither overbought nor oversold. The STOCH value of 75.38 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 (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | C$3.90B | 8.79 | 11.08% | 5.92% | 4.26% | 72.02% | |
77 Outperform | C$461.60M | 13.27 | 6.45% | 6.67% | 5.14% | 209.83% | |
75 Outperform | $5.48B | 19.59 | 3.81% | 6.15% | 17.42% | 377.43% | |
75 Outperform | C$1.62B | 25.89 | 3.26% | 5.64% | 23.01% | -50.29% | |
73 Outperform | C$4.13B | 15.81 | 6.58% | 4.72% | 2.53% | ― | |
72 Outperform | C$4.57B | 20.76 | 4.42% | 6.93% | 7.01% | -15.80% | |
63 Neutral | $7.05B | 13.45 | -0.34% | 6.91% | 4.08% | -25.24% |
* Real Estate Sector Average
Performance Comparison
TSE:REI.UN
RioCan Real Estate Investment
18.50
-0.16
-0.86%
TSE:CRT.UN
CT Real Estate Investment
16.21
1.32
8.87%
TSE:FCR.UN
First Capital Realty
19.26
2.03
11.78%
TSE:PLZ.UN
Plaza Retail REIT
4.19
0.66
18.70%
TSE:SRU.UN
SmartCentres Real Estate Investment Trust
26.69
1.97
7.97%
TSE:PMZ.UN
Primaris Real Estate Investment Trust
15.15
0.26
1.75%
RioCan Real Estate Investment Corporate Events
Business Operations and StrategyFinancial Disclosures
RioCan Reports Robust Q2 2025 Results with Strong Leasing Performance
Positive
Aug 7, 2025
RioCan Real Estate Investment Trust reported strong financial results for the second quarter of 2025, with a notable 9.3% increase in FFO per unit. The company achieved impressive leasing spreads and high tenant retention, underscoring its operational excellence and strategic focus on capital recycling. These results highlight RioCan’s robust portfolio and financial flexibility, reinforcing its market position and ability to drive sustained growth.
The most recent analyst rating on ($TSE:REI.UN) stock is a Hold with a C$20.25 price target. To see the full list of analyst forecasts on RioCan Real Estate Investment stock, see the TSE:REI.UN Stock Forecast page.
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.