RioCan says portfolio resilient to tariff threats as it reports $125.6M Q4 profit.
While tariffs would mean a hit to the economy, RioCan Real Estate Investment Trust says its lease portfolio should be resilient to the effects.
The lack of new retail construction and its high occupancy rates means RioCan has been able to be more selective and screen potential tenants for financial health, said chief executive Jonathan Gitlin on Wednesday.
The company, which reported a 98.7 per cent committed retail occupancy last quarter, also said 88 per cent of tenants are strong and stable.
That means their balance sheets have been screened for their ability to pay the rent, and their business plans have been assessed for longevity.
He said the pandemic had also already weeded out many of the weaker retailers, while sectors like apparel that have been struggling have consolidated enough to strengthen.
High demand has also helped RioCan boost rental rates, reporting new leases in the quarter ending Dec. 31 were 52.5 per cent higher than for the outgoing tenants.
On a blended basis, which also factors in lease renewals, the quarter had a 25.5 per cent spread and the year was 18.7 per cent.
Higher rents and especially a smaller writedown on its real estate values helped the company earn $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, far less than the $450.4-million writedown a year earlier.
The trust reported funds from operation per unit of $1.78 for 2024 as a whole, up from $1.77 in 2023.
Looking ahead to this year, its outlook is for somewhere between $1.89 and $1.92 of funds from operation per unit.
Source: BNNBLOOMBERG
