RioCan Real Estate Investment Trust (“RioCan" or the "Trust”) (TSX: REI.UN) announced today its financial results for the three and six months ended June 30, 2024.
“The demand for RioCan's well-located, open-air, necessity-based properties, coupled with our team's deep experience, continues to deliver positive outcomes for our business. The strength of our assets and favourable market conditions resulted in record-breaking leasing spreads as we strategically selected resilient tenants while achieving higher rents, further improving our portfolio quality and our future growth potential,” said Jonathan Gitlin, President and CEO of RioCan. “RioCan is proud to have launched the Wellington Market at our flagship development, The Well. The remarkable success of this premier asset is delivering new income that continues to ramp up, strengthening our balance sheet and bolstering our growth trajectory."
Financial Highlights |
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Three months ended June 30 |
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Six months ended June 30 |
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(in millions, except where otherwise noted, and per unit values) |
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2024 |
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2023 |
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2024 |
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2023 |
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FFO 1 |
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$ |
127.8 |
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$ |
131.6 |
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$ |
263.7 |
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$ |
263.0 |
FFO per unit - diluted 1 |
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$ |
0.43 |
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$ |
0.44 |
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$ |
0.88 |
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$ |
0.88 |
Net income |
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$ |
122.4 |
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$ |
112.0 |
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$ |
251.0 |
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$ |
230.0 |
Weighted average Units outstanding - diluted (in thousands) |
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300,463 |
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300,500 |
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300,461 |
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300,524 |
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As at |
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June 30, 2024 |
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December 31, 2023 |
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Net book value per unit |
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$ |
25.02 |
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$ |
24.76 |
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Outlook
Operational Highlights (i)
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Three months ended June 30 |
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Twelve months ended June 30 |
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2024 |
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2023 |
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2024 |
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2023 |
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Occupancy - committed (ii) |
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97.5 |
% |
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97.4 |
% |
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97.5 |
% |
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97.4 |
% |
Retail occupancy - committed (ii) |
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98.3 |
% |
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98.0 |
% |
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98.3 |
% |
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98.0 |
% |
Blended leasing spread |
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23.4 |
% |
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9.0 |
% |
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14.5 |
% |
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9.3 |
% |
New leasing spread |
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52.5 |
% |
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11.3 |
% |
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29.8 |
% |
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13.2 |
% |
Renewal leasing spread |
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10.7 |
% |
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8.2 |
% |
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10.4 |
% |
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8.4 |
% |
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(i) Includes commercial portfolio only. |
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(ii) Information presented as at respective periods then ended. |
RioCan Living Update 1
Development Highlights
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Three months ended June 30 |
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Six months ended June 30 |
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(in millions except square feet) |
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2024 |
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2023 |
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2024 |
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2023 |
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Development Completions - sq. ft. in thousands (i) |
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53.0 |
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110.0 |
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107.0 |
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176.0 |
Development Spending |
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$ |
102.9 |
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$ |
103.0 |
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$ |
192.3 |
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$ |
191.3 |
Development Projects Under Construction - sq. ft. in thousands (ii) |
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1,074.0 |
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1,850.0 |
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1,074.0 |
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1,850.0 |
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(i) At RioCan's ownership. Represents net leasable area (NLA) of property under development completions. Excludes NLA of residential inventory completions. |
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(ii) Information presented as at the respective periods then ended, includes properties under development and residential inventory, equity-accounted joint ventures and represents gross floor area of the respective projects. |
Investing and Capital Recycling
Capital Management Update
Balance Sheet Strength
(in millions except percentages) As at |
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June 30, 2024 |
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December 31, 2023 |
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Liquidity (i) 1 |
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$ |
1,523 |
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$ |
1,964 |
Adjusted Debt to Adjusted EBITDA (i) 1 |
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9.18x |
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9.28x |
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Unencumbered Assets (i) 1 |
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$ |
8,132 |
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$ |
8,090 |
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(i) At RioCan's proportionate share. |
Conference Call and Webcast
Interested parties are invited to participate in a conference call with management on Friday, August 9, 2024 at 10:00 a.m. (ET). Participants will be required to identify themselves and the organization on whose behalf they are participating.
To access the conference call, click on the following link to register at least 10 minutes prior to the scheduled start of the call: Pre-registration link. Participants who pre-register at any time prior to the call will receive an email with dial-in credentials including a login passcode and PIN to gain immediate access to the live call. Those that are unable to pre-register may dial-in for operator assistance by calling 1-833-950-0062 and entering the access code: 684427.
For those unable to participate in the live mode, a replay will be available at 1-866-813-9403 with access code: 596512.
To access the simultaneous webcast, visit RioCan’s website at Events and Presentations and click on the link for the webcast.
About RioCan
RioCan is one of Canada’s largest real estate investment trusts. RioCan owns, manages and develops retail-focused, mixed-use properties located in prime, high-density transit-oriented areas where Canadians want to shop, live and work. As at June 30, 2024, our portfolio is comprised of 187 properties with an aggregate net leasable area of approximately 33 million square feet (at RioCan's interest). To learn more about us, please visit www.riocan.com.
Basis of Presentation and Non-GAAP Measures
All figures included in this News Release are expressed in Canadian dollars unless otherwise noted. RioCan’s unaudited interim condensed consolidated financial statements ("Condensed Consolidated Financial Statements") are prepared in accordance with International Financial Reporting Standards (IFRS). Financial information included within this News Release does not contain all disclosures required by IFRS, and accordingly should be read in conjunction with the Trust's Condensed Consolidated Financial Statements and MD&A for the three and six months ended June 30, 2024, which are available on RioCan's website at www.riocan.com and on SEDAR+ at www.sedarplus.com.
Consistent with RioCan’s management framework, management uses certain financial measures to assess RioCan’s financial performance, which are not in accordance with generally accepted accounting principles (GAAP) under IFRS. Funds From Operations (“FFO”), FFO per unit, Net Operating Income ("NOI"), Same Property NOI, Commercial Same Property NOI ("Commercial SPNOI"), Commercial Same Property NOI excluding provision, Residential Same Property NOI ("Residential SPNOI"), Development Spending, Ratio of floating rate debt to total debt, Liquidity, Adjusted Debt to Adjusted EBITDA, RioCan's Proportionate Share, Unencumbered Assets and Percentage of Normalized NOI Generated from Unencumbered Assets, as well as other measures that may be discussed elsewhere in this News Release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. RioCan supplements its IFRS measures with these Non-GAAP measures to aid in assessing the Trust’s underlying performance and reports these additional measures so that investors may do the same. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of RioCan’s performance, liquidity, cash flow, and profitability. For full definitions of these measures, please refer to the "Non-GAAP Measures” section in RioCan’s MD&A for the three and six months ended June 30, 2024.
The reconciliations for non-GAAP measures included in this News Release are outlined as follows:
RioCan's Proportionate Share
The following table reconciles the consolidated balance sheets from IFRS to RioCan's proportionate share basis as at June 30, 2024 and December 31, 2023:
As at |
June 30, 2024 |
December 31, 2023 |
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(thousands of dollars) |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
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Assets |
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Investment properties |
$ |
13,847,439 |
$ |
409,997 |
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$ |
14,257,436 |
$ |
13,561,718 |
$ |
411,811 |
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$ |
13,973,529 |
Equity-accounted investments |
|
384,161 |
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(384,161 |
) |
|
— |
|
383,883 |
|
(383,883 |
) |
|
— |
Mortgages and loans receivable |
|
394,713 |
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(5,337 |
) |
|
389,376 |
|
289,533 |
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(6,707 |
) |
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282,826 |
Residential inventory |
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266,677 |
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382,178 |
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648,855 |
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217,186 |
|
407,946 |
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|
625,132 |
Assets held for sale |
|
8,850 |
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— |
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8,850 |
|
19,075 |
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— |
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|
19,075 |
Receivables and other assets |
|
269,900 |
|
55,069 |
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324,969 |
|
246,652 |
|
50,681 |
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|
297,333 |
Cash and cash equivalents |
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50,789 |
|
7,321 |
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58,110 |
|
124,234 |
|
14,506 |
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|
138,740 |
Total assets |
$ |
15,222,529 |
$ |
465,067 |
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$ |
15,687,596 |
$ |
14,842,281 |
$ |
494,354 |
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$ |
15,336,635 |
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Liabilities |
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Debentures payable |
$ |
3,689,225 |
$ |
— |
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$ |
3,689,225 |
$ |
3,240,943 |
$ |
— |
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$ |
3,240,943 |
Mortgages payable |
|
2,806,952 |
|
159,960 |
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|
2,966,912 |
|
2,740,924 |
|
158,292 |
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|
2,899,216 |
Lines of credit and other bank loans |
|
645,092 |
|
215,015 |
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|
860,107 |
|
879,246 |
|
231,963 |
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|
1,111,209 |
Accounts payable and other liabilities |
|
562,727 |
|
90,092 |
|
|
652,819 |
|
543,398 |
|
104,099 |
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|
647,497 |
Total liabilities |
$ |
7,703,996 |
$ |
465,067 |
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$ |
8,169,063 |
$ |
7,404,511 |
$ |
494,354 |
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$ |
7,898,865 |
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Equity |
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Unitholders’ equity |
|
7,518,533 |
|
— |
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|
7,518,533 |
|
7,437,770 |
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— |
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|
7,437,770 |
Total liabilities and equity |
$ |
15,222,529 |
$ |
465,067 |
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$ |
15,687,596 |
$ |
14,842,281 |
$ |
494,354 |
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$ |
15,336,635 |
The following tables reconcile the consolidated statements of income from IFRS to RioCan's proportionate share basis for the three and six months ended June 30, 2024 and 2023:
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Three months ended June 30, 2024 |
Three months ended June 30, 2023 |
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(thousands of dollars) |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
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Revenue |
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Rental revenue |
$ |
275,863 |
$ |
8,089 |
|
$ |
283,952 |
|
$ |
270,913 |
|
$ |
9,982 |
|
$ |
280,895 |
|
Residential inventory sales |
|
12,866 |
|
6,914 |
|
|
19,780 |
|
|
— |
|
|
517 |
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|
517 |
|
Property management and other service fees |
|
3,469 |
|
(348 |
) |
|
3,121 |
|
|
5,139 |
|
|
— |
|
|
5,139 |
|
|
|
292,198 |
|
14,655 |
|
|
306,853 |
|
|
276,052 |
|
|
10,499 |
|
|
286,551 |
|
Operating costs |
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|
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|
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Rental operating costs |
|
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|
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Recoverable under tenant leases |
|
91,021 |
|
806 |
|
|
91,827 |
|
|
93,622 |
|
|
905 |
|
|
94,527 |
|
Non-recoverable costs |
|
7,889 |
|
638 |
|
|
8,527 |
|
|
3,594 |
|
|
451 |
|
|
4,045 |
|
Residential inventory cost of sales |
|
7,600 |
|
5,412 |
|
|
13,012 |
|
|
— |
|
|
261 |
|
|
261 |
|
|
|
106,510 |
|
6,856 |
|
|
113,366 |
|
|
97,216 |
|
|
1,617 |
|
|
98,833 |
|
Operating income |
|
185,688 |
|
7,799 |
|
|
193,487 |
|
|
178,836 |
|
|
8,882 |
|
|
187,718 |
|
Other income (loss) |
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|
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Interest income |
|
10,839 |
|
438 |
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|
11,277 |
|
|
5,701 |
|
|
665 |
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|
6,366 |
|
Income from equity-accounted investments |
|
2,115 |
|
(2,115 |
) |
|
— |
|
|
5,830 |
|
|
(5,830 |
) |
|
— |
|
Fair value gain (loss) on investment properties, net |
|
5,887 |
|
(1,810 |
) |
|
4,077 |
|
|
(10,594 |
) |
|
(1,072 |
) |
|
(11,666 |
) |
Investment and other income (loss) |
|
609 |
|
(1,378 |
) |
|
(769 |
) |
|
1,657 |
|
|
123 |
|
|
1,780 |
|
|
|
19,450 |
|
(4,865 |
) |
|
14,585 |
|
|
2,594 |
|
|
(6,114 |
) |
|
(3,520 |
) |
Other expenses |
|
|
|
|
|
|
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Interest costs, net |
|
64,393 |
|
2,867 |
|
|
67,260 |
|
|
49,974 |
|
|
2,724 |
|
|
52,698 |
|
General and administrative |
|
14,611 |
|
24 |
|
|
14,635 |
|
|
14,846 |
|
|
20 |
|
|
14,866 |
|
Internal leasing costs |
|
3,092 |
|
— |
|
|
3,092 |
|
|
3,018 |
|
|
— |
|
|
3,018 |
|
Transaction and other costs |
|
679 |
|
43 |
|
|
722 |
|
|
1,594 |
|
|
24 |
|
|
1,618 |
|
|
|
82,775 |
|
2,934 |
|
|
85,709 |
|
|
69,432 |
|
|
2,768 |
|
|
72,200 |
|
Income before income taxes |
$ |
122,363 |
$ |
— |
|
$ |
122,363 |
|
$ |
111,998 |
|
$ |
— |
|
$ |
111,998 |
|
Current income tax expense |
|
— |
|
— |
|
|
— |
|
|
31 |
|
|
— |
|
|
31 |
|
Net income |
$ |
122,363 |
$ |
— |
|
$ |
122,363 |
|
$ |
111,967 |
|
$ |
— |
|
$ |
111,967 |
|
|
Six months ended June 30, 2024 |
Six months ended June 30, 2023 |
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(thousands of dollars) | IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
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Revenue |
|
|
|
|
|
|
||||||||||||
Rental revenue |
$ |
564,243 |
|
$ |
16,262 |
|
$ |
580,505 |
|
$ |
545,594 |
|
$ |
17,432 |
|
$ |
563,026 |
|
Residential inventory sales |
|
23,334 |
|
|
77,931 |
|
|
101,265 |
|
|
— |
|
|
2,880 |
|
|
2,880 |
|
Property management and other service fees |
|
8,008 |
|
|
(597 |
) |
|
7,411 |
|
|
9,958 |
|
|
— |
|
|
9,958 |
|
|
|
595,585 |
|
|
93,596 |
|
|
689,181 |
|
|
555,552 |
|
|
20,312 |
|
|
575,864 |
|
Operating costs |
|
|
|
|
|
|
||||||||||||
Rental operating costs |
|
|
|
|
|
|
||||||||||||
Recoverable under tenant leases |
|
202,220 |
|
|
1,731 |
|
|
203,951 |
|
|
192,430 |
|
|
1,786 |
|
|
194,216 |
|
Non-recoverable costs |
|
16,640 |
|
|
1,343 |
|
|
17,983 |
|
|
11,043 |
|
|
1,145 |
|
|
12,188 |
|
Residential inventory cost of sales |
|
14,622 |
|
|
62,934 |
|
|
77,556 |
|
|
— |
|
|
1,387 |
|
|
1,387 |
|
|
|
233,482 |
|
|
66,008 |
|
|
299,490 |
|
|
203,473 |
|
|
4,318 |
|
|
207,791 |
|
Operating income |
|
362,103 |
|
|
27,588 |
|
|
389,691 |
|
|
352,079 |
|
|
15,994 |
|
|
368,073 |
|
Other income (loss) |
|
|
|
|
|
|
||||||||||||
Interest income |
|
19,786 |
|
|
1,075 |
|
|
20,861 |
|
|
12,742 |
|
|
1,268 |
|
|
14,010 |
|
Income from equity-accounted investments |
|
18,821 |
|
|
(18,821 |
) |
|
— |
|
|
11,344 |
|
|
(11,344 |
) |
|
— |
|
Fair value gain (loss) on investment properties, net |
|
9,138 |
|
|
(2,202 |
) |
|
6,936 |
|
|
(27,959 |
) |
|
(451 |
) |
|
(28,410 |
) |
Investment and other income (loss) |
|
3,639 |
|
|
(1,831 |
) |
|
1,808 |
|
|
4,544 |
|
|
(213 |
) |
|
4,331 |
|
|
|
51,384 |
|
|
(21,779 |
) |
|
29,605 |
|
|
671 |
|
|
(10,740 |
) |
|
(10,069 |
) |
Other expenses |
|
|
|
|
|
|
||||||||||||
Interest costs, net |
|
125,832 |
|
|
5,902 |
|
|
131,734 |
|
|
97,957 |
|
|
5,218 |
|
|
103,175 |
|
General and administrative |
|
28,527 |
|
|
25 |
|
|
28,552 |
|
|
30,464 |
|
|
31 |
|
|
30,495 |
|
Internal leasing costs |
|
6,685 |
|
|
— |
|
|
6,685 |
|
|
5,743 |
|
|
— |
|
|
5,743 |
|
Transaction and other costs |
|
2,278 |
|
|
(118 |
) |
|
2,160 |
|
|
1,982 |
|
|
5 |
|
|
1,987 |
|
|
|
163,322 |
|
|
5,809 |
|
|
169,131 |
|
|
136,146 |
|
|
5,254 |
|
|
141,400 |
|
Income before income taxes |
$ |
250,165 |
|
$ |
— |
|
$ |
250,165 |
|
$ |
216,604 |
|
$ |
— |
|
$ |
216,604 |
|
Current income tax recovery |
|
(794 |
) |
|
— |
|
|
(794 |
) |
|
(13,367 |
) |
|
— |
|
|
(13,367 |
) |
Net income |
$ |
250,959 |
|
$ |
— |
|
$ |
250,959 |
|
$ |
229,971 |
|
$ |
— |
|
$ |
229,971 |
|
NOI and Same Property NOI
The following table reconciles operating income to NOI and Same Property NOI to NOI for the three and six months ended June 30, 2024 and 2023:
|
Three months ended June 30 |
Six months ended June 30 |
||||||||||
(thousands of dollars) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Operating Income |
$ |
185,688 |
|
$ |
178,836 |
|
$ |
362,103 |
|
$ |
352,079 |
|
Adjusted for the following: |
|
|
|
|
||||||||
Property management and other service fees |
|
(3,469 |
) |
|
(5,139 |
) |
|
(8,008 |
) |
|
(9,958 |
) |
Residential inventory gains |
|
(5,266 |
) |
|
— |
|
|
(8,712 |
) |
|
— |
|
Operational lease revenue from ROU assets |
|
1,783 |
|
|
1,571 |
|
|
3,478 |
|
|
3,428 |
|
NOI |
$ |
178,736 |
|
$ |
175,268 |
|
$ |
348,861 |
|
$ |
345,549 |
|
|
Three months ended June 30 |
Six months ended June 30 |
||||||
(thousands of dollars) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Commercial |
|
|
|
|
||||
Commercial Same Property NOI |
$ |
150,724 |
$ |
150,306 |
$ |
294,919 |
$ |
293,818 |
NOI from income producing properties: |
|
|
|
|
||||
Acquired (i) |
|
987 |
|
8 |
|
2,434 |
|
635 |
Disposed (i) |
|
136 |
|
4,821 |
|
721 |
|
9,928 |
|
|
1,123 |
|
4,829 |
|
3,155 |
|
10,563 |
|
|
|
|
|
||||
NOI from completed commercial developments |
|
11,070 |
|
7,946 |
|
20,634 |
|
13,840 |
NOI from properties under de-leasing (ii) |
|
4,826 |
|
5,852 |
|
9,442 |
|
11,594 |
Lease cancellation fees |
|
1,600 |
|
179 |
|
1,711 |
|
4,741 |
Straight-line rent adjustment |
|
2,179 |
|
1,027 |
|
5,426 |
|
1,600 |
NOI from commercial properties |
|
171,522 |
|
170,139 |
|
335,287 |
|
336,156 |
Residential |
|
|
|
|
||||
Residential Same Property NOI |
|
5,205 |
|
4,795 |
|
9,226 |
|
8,668 |
NOI from income producing properties: |
|
|
|
|
||||
Acquired (i) |
|
950 |
|
197 |
|
1,772 |
|
197 |
Disposed (i) |
|
17 |
|
1 |
|
17 |
|
48 |
|
|
967 |
|
198 |
|
1,789 |
|
245 |
NOI from completed residential developments |
|
1,042 |
|
136 |
|
2,559 |
|
480 |
NOI from residential rental |
|
7,214 |
|
5,129 |
|
13,574 |
|
9,393 |
NOI |
$ |
178,736 |
$ |
175,268 |
$ |
348,861 |
$ |
345,549 |
(i) Includes properties acquired or disposed of during the periods being compared. |
||||||||
(ii) NOI from limited number of properties undergoing significant de-leasing in preparation for redevelopment or intensification. |
|
Three months ended June 30 |
Six months ended June 30 |
||||||
(thousands of dollars) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Commercial Same Property NOI |
$ |
150,724 |
$ |
150,306 |
$ |
294,919 |
$ |
293,818 |
Residential Same Property NOI |
|
5,205 |
|
4,795 |
|
9,226 |
|
8,668 |
Same Property NOI |
$ |
155,929 |
$ |
155,101 |
$ |
304,145 |
$ |
302,486 |
Commercial Same Property NOI excluding provision
|
Three months ended June 30 |
Six months ended June 30 |
||||||||||
(thousands of dollars) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Commercial Same Property NOI |
$ |
150,724 |
|
$ |
150,306 |
|
$ |
294,919 |
|
$ |
293,818 |
|
Add (exclude): |
|
|
|
|
||||||||
Same property (recovery) provision for credit losses |
|
(600 |
) |
|
(4,036 |
) |
|
(863 |
) |
|
(3,876 |
) |
Commercial Same Property NOI excluding provision |
$ |
150,124 |
|
$ |
146,270 |
|
$ |
294,056 |
|
$ |
289,942 |
|
|
Three months ended March 31 |
|||||
(thousands of dollars) |
|
2024 |
|
|
2023 |
|
Commercial Same Property NOI |
$ |
145,122 |
|
$ |
144,598 |
|
Add (exclude): |
|
|
||||
Same property (recovery) provision for credit losses |
|
(264 |
) |
|
177 |
|
Commercial Same Property NOI excluding provision |
$ |
144,858 |
|
$ |
144,775 |
|
FFO
The following table reconciles net income attributable to Unitholders to FFO for the three and six months ended June 30, 2024 and 2023:
|
Three months ended June 30 |
Six months ended June 30 |
||||||||||
(thousands of dollars, except where otherwise noted) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net income attributable to Unitholders |
$ |
122,363 |
|
$ |
111,967 |
|
$ |
250,959 |
|
$ |
229,971 |
|
Add back (deduct): |
|
|
|
|
||||||||
Fair value (gains) losses, net |
|
(5,887 |
) |
|
10,594 |
|
|
(9,138 |
) |
|
27,959 |
|
Fair value losses included in equity-accounted investments |
|
1,810 |
|
|
1,072 |
|
|
2,202 |
|
|
451 |
|
Internal leasing costs |
|
3,092 |
|
|
3,018 |
|
|
6,685 |
|
|
5,743 |
|
Transaction losses on investment properties, net (i) |
|
1,508 |
|
|
176 |
|
|
1,457 |
|
|
112 |
|
Transaction gains on equity-accounted investments |
|
— |
|
|
— |
|
|
(31 |
) |
|
— |
|
Transaction costs on sale of investment properties |
|
73 |
|
|
344 |
|
|
947 |
|
|
511 |
|
ERP implementation costs |
|
1,874 |
|
|
2,454 |
|
|
4,410 |
|
|
6,408 |
|
ERP amortization |
|
(409 |
) |
|
— |
|
|
(409 |
) |
|
— |
|
Change in unrealized fair value on marketable securities |
|
142 |
|
|
(173 |
) |
|
1,260 |
|
|
813 |
|
Current income tax expense (recovery) |
|
— |
|
|
31 |
|
|
(794 |
) |
|
(13,367 |
) |
Operational lease revenue from ROU assets |
|
1,427 |
|
|
1,196 |
|
|
2,772 |
|
|
2,550 |
|
Operational lease expenses from ROU assets in equity-accounted investments |
|
(17 |
) |
|
(13 |
) |
|
(34 |
) |
|
(25 |
) |
Capitalized interest on equity-accounted investments (ii) |
|
1,810 |
|
|
966 |
|
|
3,455 |
|
|
1,843 |
|
FFO |
$ |
127,786 |
|
$ |
131,632 |
|
$ |
263,741 |
|
$ |
262,969 |
|
Add back: |
|
|
|
|
||||||||
Restructuring costs |
|
— |
|
|
11 |
|
|
646 |
|
|
624 |
|
FFO Adjusted |
$ |
127,786 |
|
$ |
131,643 |
|
$ |
264,387 |
|
$ |
263,593 |
|
|
|
|
|
|
||||||||
FFO per unit - basic |
$ |
0.43 |
|
$ |
0.44 |
|
$ |
0.88 |
|
$ |
0.88 |
|
FFO per unit - diluted |
$ |
0.43 |
|
$ |
0.44 |
|
$ |
0.88 |
|
$ |
0.88 |
|
FFO Adjusted per unit - diluted |
$ |
0.43 |
|
$ |
0.44 |
|
$ |
0.88 |
|
$ |
0.88 |
|
Weighted average number of Units - basic (in thousands) |
|
300,463 |
|
|
300,386 |
|
|
300,461 |
|
|
300,374 |
|
Weighted average number of Units - diluted (in thousands) |
|
300,463 |
|
|
300,500 |
|
|
300,461 |
|
|
300,524 |
|
|
|
|
|
|
||||||||
FFO for last four quarters |
|
|
$ |
532,053 |
|
$ |
525,415 |
|
||||
Distributions paid for last four quarters |
|
|
$ |
327,471 |
|
$ |
313,887 |
|
||||
FFO Payout Ratio |
|
|
|
61.5 |
% |
|
59.7 |
% |
||||
(i) Represents net transaction gains or losses connected to certain investment properties during the period. |
||||||||||||
(ii) This amount represents the interest capitalized to RioCan's equity-accounted investment in WhiteCastle New Urban Fund 2, LP, WhiteCastle New Urban Fund 3, LP, WhiteCastle New Urban Fund 4, LP, WhiteCastle New Urban Fund 5, LP, RioCan-Fieldgate JV, RC (Queensway) LP, RC (Leaside) LP - Class B, PR Bloor Street LP and RC Yorkville LP. This amount is not capitalized to development projects under IFRS but is allowed as an adjustment under REALPAC’s definition of FFO. |
Development Spending
Total Development Spending for the three and six months ended June 30, 2024 and 2023 is as follows:
|
Three months ended June 30 |
Six months ended June 30 |
||||||
(thousands of dollars) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Development expenditures on balance sheet: |
|
|
|
|
||||
Properties under development |
$ |
52,475 |
$ |
67,610 |
$ |
96,748 |
$ |
134,522 |
Residential inventory |
|
33,108 |
|
31,640 |
|
63,592 |
|
49,191 |
RioCan's share of Development Spending from equity-accounted joint ventures |
|
17,289 |
|
3,749 |
|
32,002 |
|
7,634 |
Total Development Spending |
$ |
102,872 |
$ |
102,999 |
$ |
192,342 |
$ |
191,347 |
|
Three months ended June 30 |
Six months ended June 30 |
||||||
(thousands of dollars) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Mixed-use projects |
$ |
94,739 |
$ |
84,045 |
$ |
178,905 |
$ |
165,269 |
Retail projects |
|
8,133 |
|
18,954 |
|
13,437 |
|
26,078 |
Total Development Spending |
$ |
102,872 |
$ |
102,999 |
$ |
192,342 |
$ |
191,347 |
Total Contractual Debt
The following table reconciles total debt to Total Contractual Debt as at June 30, 2024 and December 31, 2023:
As at |
June 30, 2024 |
December 31, 2023 |
||||||||||||||||
(thousands of dollars) |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
||||||||||||
Debentures payable |
$ |
3,689,225 |
|
$ |
— |
|
$ |
3,689,225 |
|
$ |
3,240,943 |
|
$ |
— |
|
$ |
3,240,943 |
|
Mortgages payable |
|
2,806,952 |
|
|
159,960 |
|
|
2,966,912 |
|
|
2,740,924 |
|
|
158,292 |
|
|
2,899,216 |
|
Lines of credit and other bank loans |
|
645,092 |
|
|
215,015 |
|
|
860,107 |
|
|
879,246 |
|
|
231,963 |
|
|
1,111,209 |
|
Total debt |
$ |
7,141,269 |
|
$ |
374,975 |
|
$ |
7,516,244 |
|
$ |
6,861,113 |
|
$ |
390,255 |
|
$ |
7,251,368 |
|
Less: |
|
|
|
|
|
|
||||||||||||
Unamortized debt financing costs, premiums and discounts on origination and debt assumed, and modifications |
|
(32,285 |
) |
|
(531 |
) |
|
(32,816 |
) |
|
(24,019 |
) |
|
(484 |
) |
|
(24,503 |
) |
Total Contractual Debt |
$ |
7,173,554 |
|
$ |
375,506 |
|
$ |
7,549,060 |
|
$ |
6,885,132 |
|
$ |
390,739 |
|
$ |
7,275,871 |
|
Floating Rate Debt and Fixed Rate Debt
The following table summarizes RioCan's Ratio of floating rate debt to total debt as at June 30, 2024 and December 31, 2023:
As at |
June 30, 2024 |
December 31, 2023 |
||||||||||||||
(thousands of dollars, except where otherwise noted) |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
||||||||||
Total fixed rate debt |
$ |
6,716,501 |
|
$ |
187,975 |
$ |
6,904,476 |
|
$ |
6,543,106 |
|
$ |
212,554 |
$ |
6,755,660 |
|
Total floating rate debt |
|
424,768 |
|
|
187,000 |
|
611,768 |
|
|
318,007 |
|
|
177,701 |
|
495,708 |
|
Total debt |
$ |
7,141,269 |
|
$ |
374,975 |
$ |
7,516,244 |
|
$ |
6,861,113 |
|
$ |
390,255 |
$ |
7,251,368 |
|
Ratio of floating rate debt to total debt |
|
5.9 |
% |
|
|
8.1 |
% |
|
4.6 |
% |
|
|
6.8 |
% |
Liquidity
As at June 30, 2024, RioCan had approximately $1.5 billion of Liquidity as summarized in the following table:
As at |
June 30, 2024 |
December 31, 2023 |
||||||||||
(thousands of dollars) |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
||||||
Undrawn revolving unsecured operating line of credit |
$ |
1,042,000 |
$ |
— |
$ |
1,042,000 |
$ |
1,250,000 |
$ |
— |
$ |
1,250,000 |
Undrawn construction lines and other bank loans |
|
287,545 |
|
135,716 |
|
423,261 |
|
385,715 |
|
189,563 |
|
575,278 |
Cash and cash equivalents |
|
50,789 |
|
7,321 |
|
58,110 |
|
124,234 |
|
14,506 |
|
138,740 |
Liquidity |
$ |
1,380,334 |
$ |
143,037 |
$ |
1,523,371 |
$ |
1,759,949 |
$ |
204,069 |
$ |
1,964,018 |
Adjusted EBITDA
The following table reconciles consolidated net income attributable to Unitholders to Adjusted EBITDA:
Twelve months ended |
June 30, 2024 |
December 31, 2023 |
||||||||||||||||
(thousands of dollars) |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
||||||||||||
Net income attributable to Unitholders |
$ |
59,790 |
|
$ |
— |
|
$ |
59,790 |
|
$ |
38,802 |
|
$ |
— |
|
$ |
38,802 |
|
Add (deduct) the following items: |
|
|
|
|
|
|
||||||||||||
Income tax recovery: |
|
|
|
|
|
|
||||||||||||
Current |
|
(792 |
) |
|
— |
|
|
(792 |
) |
|
(13,365 |
) |
|
— |
|
|
(13,365 |
) |
Fair value losses on investment properties, net |
|
413,311 |
|
|
15,874 |
|
|
429,185 |
|
|
450,408 |
|
|
14,123 |
|
|
464,531 |
|
Change in unrealized fair value on marketable securities (i) |
|
1,312 |
|
|
— |
|
|
1,312 |
|
|
865 |
|
|
— |
|
|
865 |
|
Internal leasing costs |
|
12,861 |
|
|
— |
|
|
12,861 |
|
|
11,919 |
|
|
— |
|
|
11,919 |
|
Non-cash unit-based compensation expense |
|
10,007 |
|
|
— |
|
|
10,007 |
|
|
10,154 |
|
|
— |
|
|
10,154 |
|
Interest costs, net |
|
236,823 |
|
|
12,023 |
|
|
248,846 |
|
|
208,948 |
|
|
11,339 |
|
|
220,287 |
|
Restructuring costs |
|
1,390 |
|
|
— |
|
|
1,390 |
|
|
1,368 |
|
|
— |
|
|
1,368 |
|
ERP implementation costs |
|
10,034 |
|
|
— |
|
|
10,034 |
|
|
12,032 |
|
|
— |
|
|
12,032 |
|
Depreciation and amortization |
|
2,057 |
|
|
— |
|
|
2,057 |
|
|
2,632 |
|
|
— |
|
|
2,632 |
|
Transaction losses (gains) on the sale of investment properties, net (ii) |
|
2,312 |
|
|
(114 |
) |
|
2,198 |
|
|
1,180 |
|
|
(83 |
) |
|
1,097 |
|
Transaction costs on investment properties |
|
6,043 |
|
|
1 |
|
|
6,044 |
|
|
5,606 |
|
|
1 |
|
|
5,607 |
|
Operational lease revenue (expenses) from ROU assets |
|
5,338 |
|
|
(64 |
) |
|
5,274 |
|
|
5,116 |
|
|
(55 |
) |
|
5,061 |
|
Adjusted EBITDA |
$ |
760,486 |
|
$ |
27,720 |
|
$ |
788,206 |
|
$ |
735,665 |
|
$ |
25,325 |
|
$ |
760,990 |
|
(i) The fair value gains and losses on marketable securities may include both the change in unrealized fair value and realized gains and losses on the sale of marketable securities. By adding back the change in unrealized fair value on marketable securities, RioCan effectively continues to include realized gains and losses on the sale of marketable securities in Adjusted EBITDA and excludes unrealized fair value gains and losses on marketable securities in Adjusted EBITDA. |
||||||||||||||||||
(ii) Includes transaction gains and losses realized on the disposition of investment properties. |
Adjusted Debt to Adjusted EBITDA Ratio
Adjusted Debt to Adjusted EBITDA is calculated as follows:
Twelve months ended |
June 30, 2024 |
December 31, 2023 |
||||||||||||||||
(thousands of dollars, except where otherwise noted) |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
||||||||||||
|
|
|
|
|
|
|
||||||||||||
Adjusted Debt to Adjusted EBITDA |
|
|
|
|
|
|
||||||||||||
Average total debt outstanding |
$ |
6,995,346 |
|
$ |
358,122 |
|
$ |
7,353,468 |
|
$ |
6,879,087 |
|
$ |
317,231 |
|
$ |
7,196,318 |
|
Less: average cash and cash equivalents |
|
(103,374 |
) |
|
(10,911 |
) |
|
(114,285 |
) |
|
(120,952 |
) |
|
(11,408 |
) |
|
(132,360 |
) |
Average Total Adjusted Debt |
$ |
6,891,972 |
|
$ |
347,211 |
|
$ |
7,239,183 |
|
$ |
6,758,135 |
|
$ |
305,823 |
|
$ |
7,063,958 |
|
Adjusted EBITDA (i) |
$ |
760,486 |
|
$ |
27,720 |
|
$ |
788,206 |
|
$ |
735,665 |
|
$ |
25,325 |
|
$ |
760,990 |
|
Adjusted Debt to Adjusted EBITDA |
|
9.06 |
|
|
|
9.18 |
|
|
9.19 |
|
|
|
9.28 |
|
||||
(i) Adjusted EBITDA is reconciled in the immediately preceding table. |
Unencumbered Assets
The tables below summarize RioCan's Unencumbered Assets and Percentage of Normalized NOI Generated from Unencumbered Assets as at June 30, 2024 and December 31, 2023:
As at |
|
June 30, 2024 |
December 31, 2023 |
||||||||||||||
(thousands of dollars, except where otherwise noted) |
Targeted Ratios |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
||||||||||
Investment properties |
|
$ |
13,847,439 |
|
$ |
409,997 |
$ |
14,257,436 |
|
$ |
13,561,718 |
|
$ |
411,811 |
$ |
13,973,529 |
|
Less: Encumbered investment properties |
|
|
5,775,322 |
|
|
350,261 |
|
6,125,583 |
|
|
5,531,177 |
|
|
352,425 |
|
5,883,602 |
|
Unencumbered Assets |
|
$ |
8,072,117 |
|
$ |
59,736 |
$ |
8,131,853 |
|
$ |
8,030,541 |
|
$ |
59,386 |
$ |
8,089,927 |
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
||||||||||
Annual Normalized NOI - total portfolio (i) |
|
$ |
700,180 |
|
$ |
25,692 |
$ |
725,872 |
|
$ |
692,092 |
|
$ |
25,664 |
$ |
717,756 |
|
Annual Normalized NOI - Unencumbered Assets (i) |
|
$ |
413,832 |
|
$ |
3,728 |
$ |
417,560 |
|
$ |
396,888 |
|
$ |
3,736 |
$ |
400,624 |
|
Percentage of Normalized NOI Generated from Unencumbered Assets |
> 50.0% |
|
59.1 |
% |
|
|
57.5 |
% |
|
57.3 |
% |
|
|
55.8 |
% |
||
(i) Annual Normalized NOI is reconciled in the table below. |
|
Three months ended
|
Three months ended
|
||||||||||||||
(thousands of dollars) |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
IFRS basis |
Equity-accounted investments |
RioCan's proportionate share |
||||||||||
NOI (i) |
$ |
178,736 |
|
$ |
6,423 |
$ |
185,159 |
|
$ |
176,306 |
|
$ |
6,416 |
$ |
182,722 |
|
Adjust the following: |
|
|
|
|
|
|
||||||||||
Miscellaneous revenue |
|
(704 |
) |
|
— |
|
(704 |
) |
|
(874 |
) |
|
— |
|
(874 |
) |
Percentage rent |
|
(1,387 |
) |
|
— |
|
(1,387 |
) |
|
(2,339 |
) |
|
— |
|
(2,339 |
) |
Lease cancellation fees |
|
(1,600 |
) |
|
— |
|
(1,600 |
) |
|
(70 |
) |
|
— |
|
(70 |
) |
Normalized NOI - total portfolio |
$ |
175,045 |
|
$ |
6,423 |
$ |
181,468 |
|
$ |
173,023 |
|
$ |
6,416 |
$ |
179,439 |
|
Annual Normalized NOI - total portfolio (ii) |
$ |
700,180 |
|
$ |
25,692 |
$ |
725,872 |
|
$ |
692,092 |
|
$ |
25,664 |
$ |
717,756 |
|
|
|
|
|
|
|
|
||||||||||
NOI from Unencumbered Assets |
$ |
106,204 |
|
$ |
932 |
$ |
107,136 |
|
$ |
101,349 |
|
$ |
934 |
$ |
102,283 |
|
Adjust the following for Unencumbered Assets: |
|
|
|
|
|
|
||||||||||
Miscellaneous revenue |
|
(554 |
) |
|
— |
|
(554 |
) |
|
(796 |
) |
|
— |
|
(796 |
) |
Percentage rent |
|
(1,029 |
) |
|
— |
|
(1,029 |
) |
|
(1,331 |
) |
|
— |
|
(1,331 |
) |
Lease cancellation fees |
|
(1,163 |
) |
|
— |
|
(1,163 |
) |
|
— |
|
|
— |
|
— |
|
Normalized NOI - Unencumbered Assets |
$ |
103,458 |
|
$ |
932 |
$ |
104,390 |
|
$ |
99,222 |
|
$ |
934 |
$ |
100,156 |
|
Annual Normalized NOI - Unencumbered Assets (ii) |
$ |
413,832 |
|
$ |
3,728 |
$ |
417,560 |
|
$ |
396,888 |
|
$ |
3,736 |
$ |
400,624 |
|
(i) Refer to the NOI and Same Property NOI table of this section for reconciliation from NOI to operating income. |
||||||||||||||||
(ii) Calculated by multiplying Normalized NOI by a factor of 4. |
Forward-Looking Information
This News Release contains forward-looking information within the meaning of applicable Canadian securities laws. This information reflects RioCan’s objectives, our strategies to achieve those objectives, as well as statements with respect to management’s beliefs, estimates and intentions concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information can generally be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcomes or events. Such forward-looking information reflects management’s current beliefs and is based on information currently available to management. All forward-looking information in this News Release is qualified by these cautionary statements. Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan’s current estimates and assumptions, which are subject to numerous risks and uncertainties, including those described in the “Risks and Uncertainties” section in RioCan's MD&A for the three and six months ended June 30, 2024 and in our most recent Annual Information Form, which could cause actual events or results to differ materially from the forward-looking information contained in this News Release. Although the forward-looking information contained in this News Release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information.
The forward-looking statements contained in this News Release are made as of the date hereof, and should not be relied upon as representing RioCan’s views as of any date subsequent to the date of this News Release. Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240808717180/en/
RioCan Real Estate Investment Trust
Dennis Blasutti
Chief Financial Officer
416-866-3033 | www.riocan.com