TORONTO, May 05, 2020 (GLOBE NEWSWIRE) -- RioCan Real Estate Investment Trust (“RioCan” or the “Trust”) (TSX: REI.UN) announced today its financial results for the three months ended March 31, 2020 (“First Quarter”).
“For the first quarter of 2020, RioCan delivered not only strong 3.0% same property NOI growth for our commercial portfolio but also strong residential rental leasing and condominium pre-sales for our residential portfolio,” said Edward Sonshine, Chief Executive Officer of RioCan. “At the outbreak of the COVID-19 pandemic, with pre-planning and forethought, we were able to rapidly mobilize our pre-established crisis management team, execute on our business continuity plan and seamlessly adapt to working and staying connected remotely while maintaining our commitment to providing access to essential services in a safe and responsible way. I am very proud of the RioCan team and confident in our ability to continue to execute and adapt our strategies for long-term growth and value creation for our unitholders given our portfolio strength, tenant composition, ample liquidity and experienced management team. The strength of our results this quarter is an indication of this portfolio's growth prospect in the normal course.”
|Three months ended March 31|
|(in millions except percentages, square feet and per unit values)||2020||2019|
|Weighted average Units outstanding - diluted (in thousands)||317,725||305,046|
|FFO per unit – diluted (i)||$||0.46||$||0.47|
|Same property NOI growth - six major markets (i)||3.1||%||1.7||%|
|Same property NOI growth - overall portfolio (i)||3.0||%||1.4||%|
|Six major markets - % of total annualized revenue (ii)||90.2||%||87.5||%|
|Greater Toronto Area - % of total annualized revenue (ii)||51.0||%||47.6||%|
|Occupancy - committed six major markets (ii)||97.3||%||97.5||%|
|Occupancy - committed (ii)||96.8||%||96.9||%|
|Blended leasing spread||5.6||%||10.7||%|
|Renewal leasing spread||5.3||%||8.2||%|
|Development completions - sq ft in thousands||133.0||92.0|
|Development expenditures (iii)||$||103.0||$||92.5|
|Properties under development and residential inventory as a percentage of consolidated gross book value of assets (maximum permitted: 15%) (ii) (iii)||9.4||%||8.4||%|
|Balance Sheet Strength Highlights|
|Debt to Adjusted EBITDA (i) (iv)||8.22||x||7.94x|
|Ratio of total debt to total assets (i) (ii) (iv)||43.0||%||42.2||%|
|Unencumbered assets (i) (ii) (iv)||$||9,156||$||8,000|
|Unencumbered assets to unsecured debt (i) (ii) (iv)||222||%||229||%|
|(i)||A Non-GAAP measurement. For definitions and the basis of presentation of RioCan's Non-GAAP measures, refer to the Non-GAAP Measures section in RioCan's Management's Discussion and Analysis (MD&A) for the three months ended March 31, 2020.|
|(ii)||Information presented as at March 31 for the years then ended.|
|(iii)||Includes costs incurred for various properties under development and for residential inventory in respective reporting periods.|
|(iv)||At RioCan's proportionate share.|
Same Property NOI Growth - Commercial
Acquisitions and Dispositions
COVID-19 Related Business Update
Since the COVID-19 pandemic outbreak, the Trust's top priority has been the health and safety of its employees, tenants, and the communities that its properties serve, while remaining committed to a high level of responsibility, access and support for its various stakeholders. On April 21, 2020, RioCan provided a business update related to the COVID-19 pandemic. As discussed in that press release, although the ultimate impact of the health crisis is difficult to predict, RioCan is well positioned to withstand challenges and adversity with a solid foundation based on its major markets focused portfolio and defensive property and tenant make-up. The Trust is in good financial health with a strong balance sheet, ample liquidity, staggered debt maturities and multiple sources of financing combined with a large unencumbered asset pool. However, given the risks and uncertainties arising from the COVID-19 health crisis, the Trust has withdrawn its same property NOI growth guidance for 2020.
With respect to development, most of RioCan's construction activities continue under the provincial regulations, albeit at a slower pace. Given the flexibility offered by its staggered development program, the Trust has put a temporary hold on new or early stage projects, resulting in an estimated $100 million to $150 million reduction in development spend for 2020. In addition, RioCan continues identifying areas to manage expenses and drive further operational efficiencies.
Management will proactively adapt its strategy to address the economic, social and health care impact of this pandemic, which could be material and adverse including its impact on RioCan. The Trust is already in the process of developing post-pandemic best practice protocols for our operations and development once businesses and people’s daily lives start to go back to normal over time. It is confident in the long term growth of its portfolio once businesses and the economy absorb the effects of the pandemic and its strong Q1 2020 results are indicative of that growth prospect.
Conference Call and Webcast
Interested parties are invited to participate in a conference call with management on Tuesday, May 5, 2020 at 10:00 a.m. (ET). Participants will be required to identify themselves and the organization on whose behalf they are participating.
In order to participate, please dial 647-427-3230 or 1-877-486-4304. For those unable to participate in the live mode, a replay will be available at 1-855-859-2056, passcode 9538679#.
For a copy of the slides to be used for the conference call or, to access the simultaneous webcast, visit RioCan’s website at http://investor.riocan.com/investor-relations/events-and-presentations/ and click on the link for the webcast.
RioCan is one of Canada’s largest real estate investment trusts. RioCan owns, manages and develops retail-focused, increasingly mixed-use properties located in prime, high-density transit-oriented areas where Canadians want to shop, live and work. As at March 31, 2020, our portfolio is comprised of 222 properties with an aggregate net leasable area of approximately 38.6 million square feet (at RioCan's interest) including office, residential rental and 16 development properties. 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 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 unaudited interim condensed consolidated financial statements ("Consolidated Financial Statements") and MD&A for the three months ended March 31, 2020, which is available on RioCan's website at www.riocan.com and on SEDAR at www.sedar.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”), Same Property NOI, Debt to Adjusted EBITDA, RioCan's Proportionate Share, Unencumbered Assets to Unsecured Debt and Total Enterprise Value, 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 earnings 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 months ended March 31, 2020.
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 generally can 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 months ended March 31, 2020 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. General economic conditions, including interest rate fluctuations, may also have an effect on RioCan’s results of operations. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a stable retail environment; relatively historically low interest costs; a continuing trend toward land use intensification, including residential development in urban markets; access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable our refinancing of debts as they mature; the availability of investment opportunities for growth in Canada; the timing and ability for RioCan to sell certain properties; the valuations to be realized on property sales relative to current IFRS values; and the Trust's ability to utilize the capital gain refund mechanism. 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.
Given the current level of uncertainty due to the COVID-19 pandemic, there can be no assurance regarding the impact of COVID-19 on the businesses, operations, liquidity positions and financial performance of RioCan and its tenants, as well as on consumer behaviors and the economy in general. General risks and uncertainties related to the COVID-19 pandemic also include, but are not limited to, the length, spread and severity of the pandemic; the nature and length of the restrictive measures, implemented or to be implemented by various levels of governments in Canada; RioCan's tenants' ability to pay rents as required under their leases; the availability of various support programs that are or may be offered by the various levels of government in Canada; domestic and global supply chains; timelines and costs related to the Trust’s development projects; the pace of property lease-up and rents and yields achieved upon development completion; potential changes in leasing activities, market rents and property valuations; the availability and extent of rent deferrals offered or to be offered by the Trust; domestic and global credit and capital markets, and the Trust's ability to access capital on favourable terms or at all and its ability to maintain its credit ratings; the total market return and dividend yield of RioCan's Units; and the health and safety of our employees, tenants and people in the communities that our properties serve.
RioCan's U.S. subsidiary qualified as a REIT for U.S. income tax purposes up to May 25, 2016, subsequent to the closing date of the sale of its U.S. property portfolio. For U.S. income tax purposes, the subsidiary distributed all of its U.S. taxable income and is entitled to deduct such distributions against its taxable income. The subsidiary’s qualification as a REIT depends on the REIT’s satisfaction of certain asset, income, organizational, distribution, Unitholder ownership and other requirements up until May 25, 2016. RioCan's U.S. subsidiary was subject to a 30% or 35% withholding tax on distributions of its U.S. taxable income to Canada. The Trust did not distribute any withholding taxes paid or payable to its Unitholders related to the disposition. Should RioCan’s U.S. subsidiary no longer qualify as a U.S. REIT for U.S. tax purposes prior to May 25, 2016, certain statements contained in this News Release or the MD&A for the three months ended March 31, 2020 may need to be modified.
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.
RioCan Real Estate Investment Trust
Senior Vice President and Chief Financial Officer
416-866-3033 | www.riocan.com
Source: RioCan Real Estate Investment Trust