TORONTO, Aug. 02, 2019 (GLOBE NEWSWIRE) -- RioCan Real Estate Investment Trust (“RioCan" or the "Trust”) today announced its financial results for the three and six months ended June 30, 2019 ("Second Quarter").
“RioCan continued to deliver strong unitholder value in the second quarter of 2019 as a result of the successful execution of our major market strategy. The quality of our income has never been higher with 87.8% of our revenue derived from Canada’s major markets and almost three quarters of our rental revenue generated from necessity-based and service-oriented tenants,” said Edward Sonshine, Chief Executive Officer of RioCan. “The results of our strategy are beginning to be evident in all key operational metrics, including our highest quarterly FFO per unit in our history excluding Q4 2015 when we received a one-time substantial settlement income. This quarter's performance is a direct result of the strength of RioCan’s leadership team and positioning as a major market and urban mixed-use focused REIT.”
|Three months ended June 30||Six months ended June 30|
|(in millions except percentages, square feet and per unit values)||2019||2018||2019||2018|
|Weighted average units outstanding - diluted (in thousands)||304,636||316,329||304,829||319,143|
|FFO per unit – diluted (i)||$||0.48||$||0.46||$||0.94||$||0.92|
|Same property NOI growth - six major markets (i) (ii)||2.9||%||2.5||%||2.4||%||2.8||%|
|Same property NOI growth - overall portfolio (i) (ii)||2.2||%||2.1||%||1.9||%||2.3||%|
|Six major markets - % of total annualized revenue (iii)||87.8||%||81.4||%||87.8||%||81.4||%|
|Greater Toronto Area - % of total annualized revenue (iii)||48.6||%||43.5||%||48.6||%||43.5||%|
|Occupancy - committed six major markets (iii)||97.8||%||98.0||%||97.8||%||98.0||%|
|Occupancy - committed (iii)||97.1||%||96.8||%||97.1||%||96.8||%|
|Blended leasing spread||11.3||%||4.0||%||11.0||%||5.8||%|
|Renewal leasing spread||10.9||%||4.2||%||9.4||%||4.2||%|
|Development completions - sq ft in thousands||269.0||119.0||361.0||237.0|
|Development expenditures (iv)||$||102.5||$||117.2||$||195.0||$||219.3|
|Properties under development and residential inventory as a percentage of consolidated gross book value of assets (maximum permitted: 15%) (iii) (iv)||8.0||%||10.1||%||8.0||%||10.1||%|
|Balance Sheet Strength Highlights|
|Debt to Adjusted EBITDA (i) (v)||7.92||x||7.74x||7.92||x||7.74x|
|Ratio of total debt to total assets (i) (iii) (v)||42.9||%||42.4||%||42.9||%||42.4||%|
|Unencumbered assets (i) (iii) (v)||$||8,104||$||8,036||$||8,104||$||8,036|
|Unencumbered assets to unsecured debt (i) (iii) (v)||225||%||222||%||225||%||222||%|
|(i)||A Non-GAAP measurement. For definitions and 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 and six months ended June 30, 2019.|
|(ii)||Refers to same property NOI (SPNOI) growth on a year-over-year basis. Prior periods as reported; not restated to reflect current period categories. For the three months ended June 30, 2019, excluding the impact of disclaimed Bombay/Bowring and Payless Shoe leases, same property NOI grew by 3.9% for the Trust's six major market portfolio and by 3.1% for its overall commercial portfolio, and by 3.3% and 2.7%, respectively, for the six months ended June 30, 2019. When completed properties under development are further included in same property NOI and the impact of disclaimed Bombay/Bowring and Payless Shoe leases are excluded, same property NOI grew by 5.4% for the Trust's six major market portfolio and by 4.5% for its overall commercial portfolio for the three months ended June 30, 2019 and by 4.3% and 3.6%, respectively, for the six months ended June 30, 2019. Such completed developments have been owned by the RioCan in the comparative periods and are generating cash rent.|
|(iii)||Information presented as at June 30.|
|(iv)||Includes costs incurred for various properties under development and for residential inventory in respective reporting periods.|
|(v)||At RioCan's proportionate share.|
FFO Per Unit Growth and Capital Recycling
Major Market Focus
Same Property NOI Growth
Commercial Operation Highlights
Residential Operation Highlights
Strategic Acquisitions and Partnerships
RioCan's development program is a significant component of its growth strategy to unlock the intrinsic value of its existing properties and deliver strong Net Asset Value (NAV) growth to its unitholders. The head start that RioCan has in its development program in terms of the extent of zoning approvals achieved and zoning applications submitted, recent completion or near substantial completion of a number of large mixed-use projects, and the experience and scale of our development team, gives the Trust distinct competitive advantages.
RioCan continued to exercise sound capital management in the first half of 2019 and maintained a strong balance sheet. Debt to Adjusted EBITDA at RioCan's proportionate share was at 7.92x as at June 30, 2019, a modest improvement from 7.94x at the end of the first quarter of 2019, and below the Trust's 8.0x target despite the completion of substantial secondary market asset dispositions and a development balance of $1.2 billion as of June 30, 2019. Debt to total assets at RioCan's proportionate share was 42.9%, as at June 30, 2019 due to the timing of acquisitions and dispositions. The Trust remains committed to a strong balance sheet. On a proportionate share basis, the Trust continued to maintain a large unencumbered asset pool of $8.1 billion as of June 30, 2019, which provided 225% coverage over its unsecured debt, well above its 200% target.
During the Second Quarter, the Trust exercised its option to extend the maturity date on its operating line of credit to May 31, 2024. All other terms and conditions remained the same. On June 28, 2019, RioCan redeemed, in full, its $350 million 3.85% Series Q senior unsecured debentures in accordance with its terms.
Conference Call and Webcast
Interested parties are invited to participate in a conference call with management on Friday, August 2, 2019 at 10:00 a.m. (ET). You will be required to identify yourself and the organization on whose behalf you are participating.
In order to participate, please dial 647-427-3230 or 1-877-486-4304. If you cannot participate in the live mode, a replay will be available. To access the replay, please dial 1-855-859-2056 and enter passcode 2493324#.
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 with a total enterprise value of approximately $14.3 billion as at June 30, 2019. 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. Our portfolio is comprised of 230 properties, including 13 development properties, with an aggregate net leasable area of approximately 39.1 million square feet including residential rental 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 and six months ended June 30, 2019, 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 and six months ended June 30, 2019.
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 period ended June 30, 2019 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.
Our 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 our 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. Our U.S. subsidiary was subject to a 30% or 35% withholding tax on distributions of its U.S. taxable income to Canada. We did not distribute any withholding taxes paid or payable to our 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 period ending June 30, 2019 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