TORONTO — RioCan Real Estate Investment Trust reported a rise in profits and a boost in payouts to shareholders as it saw high demand for its existing locations and held off on new construction.
The company said it earned $125.6 million in the fourth quarter compared with a loss of $117.7 million a year earlier.
RioCan’s swing to profit came as it recorded a $29.4-million reduction in the fair value of its investment properties in the quarter ending Dec. 31, far less than the $450.4-million writedown a year earlier.
The company also benefited from a slight increase in occupancy rates to record levels, including 98.7 per cent committed occupancy in retail.
The high occupancy rates are happening even as leasing rates have jumped. RioCan said new leases in the quarter were 52.5 per cent higher than for the outgoing tenants. The spread is much higher than the 13.2 per cent it saw in the same quarter last year.
The U.S. imposing tariffs could affect retail demand going forward, but chief executive Jonathan Gitlin said on a call with analysts that RioCan’s portfolio is resilient.
“RioCan’s strategy has resulted in a portfolio of assets and tenants that, while not totally immune to the impact of tariffs, are certainly well suited to withstand them and any accompanying economic downturn.”
The company did not incorporate tariff impacts in its outlook for 2025, where it sees between $1.89 and $1.92 of funds from operation per unit, because there’s too little clarity on what could happen, said Gitlin.
“Understandably, there’s been concerns about the impact of tariffs on the Canadian economy. Predicting next steps, or quantifying the impact right now, well it’s virtually impossible.”
Gitlin said that during the global financial crisis, RioCan saw about a one percentage point decline in occupancy but it has a better portfolio mix now, while a slowdown in the economy would also likely lead to lower interest rates that could help offset any impacts.
While the company is seeing high demand for its existing space, it has also said it’s not initiating new capital-intensive construction projects for the foreseeable future.
The pullback in new construction, which comes amid high costs and a softening in the residential market, can be seen in the 43,000 square feet of developments it completed in the quarter, down from 272,000 a year earlier.
RioCan is still working to complete some projects, with 2025 spending to include about $110 million for condos in progress, $50 million for mixed-use project construction and around $70 million for retail infill.
With a wind-down of new construction, RioCan is focused more on payouts to unitholders. It said it had increased its monthly distribution to unitholders by 4.3 per cent to 9.65 cents per unit.
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