RioCan Real Estate Investment Trust

Second-quarter core FFO was CAD 0.40 per unit, up 5.3% year over year. Commercial same-property NOI increased 4.3% year over year, retail occupancy reached 98.8%, and the blended leasing spread was 23.1% (new leases 40.8%, renewals 20.7%); average net rent for new leasing was CAD 37.73 per square foot. Franca Smith said net asset value increased by CAD 0.23 per unit, or CAD 68 million, versus the prior quarter, driven largely by CAD 52 million of net fair value gains on investment properties. Guidance was raised for 2026 Commercial SPNOI to 4.0% to 4.5%, while 2026 core FFO per unit guidance was maintained at CAD 1.60 to CAD 1.62. Management also said full-year adjusted G&A should be below 4% of rental revenue, maintenance CapEx should be around CAD 55 million, and only CAD 30 million of debt maturities remain for the balance of the year.

Jonathan Gitlin framed the quarter as evidence that RioCan’s simplified retail-focused strategy is working, highlighting strong demand for necessity-based retail in supply-constrained Canadian markets. He emphasized that the business is producing durable growth through leasing, capital recycling, and disciplined capital allocation, while improving financial flexibility. His tone was confident, especially around the embedded mark-to-market opportunity in the portfolio and the view that the current leasing environment remains sustainable.

Franca Smith focused on the financial execution: core FFO of CAD 0.40 per unit, up 5.3% year over year, with the change driven by higher same-property NOI and NCIB accretion, partially offset by higher net interest expense and lower interest income. She noted the trailing 12-month core FFO payout ratio improved to 73.8%, adjusted G&A was 4.1% of rental revenue in the quarter and 3.7% year to date, and maintenance CapEx was CAD 14 million in the quarter and CAD 21 million year to date. She also pointed to a stronger balance sheet, including CAD 500 million of unsecured debentures repaid, CAD 91 million of maturing mortgages repaid, unsecured debt at about 70% of total debt, an unencumbered asset pool of about CAD 9.7 billion, and roughly CAD 700 million of available liquidity.

Analysts pressed on why the company raised same-property NOI guidance but kept core FFO guidance unchanged; management said core FFO depends on several moving parts beyond NOI, including capital recycling timing and interest expense, so the current CAD 1.60 to CAD 1.62 range still looks appropriate. Questions also focused on leasing spreads, cap rates, and whether RioCan might raise rent steps; management said the 15% leasing-spread assumption in the Investor Day plan is looking conservative, current trends are sustainable, and the team always pushes for the best going-in rents and annual bumps. On capital allocation, management said acquisitions are becoming more attractive as cost of capital falls, but they will still weigh them against pad/strip development, NCIB, debt paydown, and possible JV structures. Analysts also asked about residual RioCan Living inventory and density land; management said the remaining condo balance is de minimis at CAD 86 million, the density land market is still stagnant, and there are no green shoots yet.