RioCan Announces Strong Second Quarter Results - Continued Operational Excellence and Strategic Capital Recycling Advancements

Executive Summary

• RioCan Real Estate Investment Trust reported financial results for the three and six months ended June 30, 2025, highlighting a 9.3% year-over-year growth in Funds From Operations (FFO) per unit to $0.47.
• The company achieved strong leasing momentum with a new leasing spread of 51.5% and a blended leasing spread of 20.6% in Q2 2025, driven by mark-to-market opportunities and high retention rates.
• Significant capital recycling activities included the closure of four RioCan Living asset sales and total year-to-date dispositions of $230 million, alongside the acquisition of a 90% interest in Phase Two and Three of Market in Montreal for $125.3 million.

Key Details

• FFO Performance: FFO per unit (diluted) increased to $0.47 for the three months ended June 30, 2025, up from $0.43 in the prior year period (9.3% growth). For the six months ended June 30, 2025, FFO per unit was $0.96, up from $0.88 in the prior year.
• Net Income: Net income per unit (diluted) was $0.49 for Q2 2025, an increase of $0.08 from the prior year, largely due to fair value gains of $15.9 million on investment properties compared to $5.9 million in the prior year.
• Leasing Metrics:
  • New leasing spread: 51.5% (Q2 2025) vs. 52.5% (Q2 2024).
  • Blended leasing spread: 20.6% (Q2 2025) vs. 23.4% (Q2 2024).
  • Renewal leasing spread: 17.4% (Q2 2025) vs. 10.7% (Q2 2024).
  • 1.3 million square feet leased in Q2 2025, including 1.2 million square feet of renewals.
  • Retention ratio was 91.6%, with 72% of renewals at market rates.
• Occupancy: Committed occupancy stood at 97.5% and retail committed occupancy at 98.2% as of June 30, 2025.
• Same Property NOI (SPNOI): Commercial SPNOI growth was 2.0% in Q2 2025; excluding prior year legal/CAM settlements and provision reversals, growth was 4.0%. Full-year guidance remains at ~3.5%.
• Capital Recycling & Dispositions:
  • Total year-to-date closed dispositions reached $230 million at an average capitalization rate of 4.3%.
  • Closed four previously announced firm sales of RioCan Living™ assets (totaling five sold properties including Strada in 2024).
  • Entered into a conditional agreement for the sale of an additional RioCan Living asset.
• Acquisitions: Acquired a 90% interest in Phase Two and Three of Market in Montreal, Quebec, for $125.3 million on April 1, 2025, pursuant to a forward purchase agreement.
• Balance Sheet & Liquidity:
  • Adjusted Debt to Adjusted EBITDA improved to 8.88x (from 8.98x at year-end 2024).
  • Liquidity stood at $1.3 billion, including a $1.1 billion revolving unsecured operating line of credit.
  • Unencumbered assets increased to $9.0 billion (from $8.2 billion at year-end 2024).
  • Ratio of unsecured debt to total contractual debt reached 61% (from 56% at year-end 2024).
• Financing Activities:
  • Closed a $200.0 million 5.3-year non-revolving unsecured credit facility on June 23, 2025, at a floating rate of 4.49%.
  • Extended the maturity of the revolving unsecured operating line of credit to May 31, 2030.
• Normal Course Issuer Bid (NCIB): Acquired and cancelled 5.6 million units at a weighted average price of $17.99 for a cost of $100.1 million during the six months ended June 30, 2025.
• RC-HBC LP: Transitioned into court-approved receivership on June 3, 2025. RioCan’s net investment in the LP was $40.2 million (0.5% of total equity) as of June 30, 2025.
• RioCan Living Residential:
  • Generated $9.0 million of NOI in Q2 2025, a 25% increase year-over-year.
  • Construction loan for U.C. Tower 2 & 3 fully repaid; 11YV construction loan balance reduced to $3.6 million.
  • Interim closings commenced at Queen & Ashbridge and U.C. Tower 3.
• Outlook 2025:
  • FFO per unit: $1.85 to $1.88.
  • FFO Payout Ratio: ~62%.
  • Commercial Same Property NOI growth: ~3.5%.

Notable Quotes

• “RioCan delivered another quarter of strong results and sustained leasing momentum, highlighted by exceptional leasing spreads and a high retention rate. The continued demand from high-quality retailers underscores the strength of the RioCan portfolio and reinforces our position as the landlord of choice,” said Jonathan Gitlin, President and CEO of RioCan.
• “We continue to simplify our business, progress our capital recycling initiatives, and successfully execute our de-leveraging plan. These initiatives sharpen the operational focus of the Trust and enhance our financial flexibility to drive sustained growth.” — Jonathan Gitlin, President and CEO