RioCan Real Estate Investment Trust (“RioCan" or the "Trust”) (TSX:
REI.UN) announced today its financial results for the three months
ended March 31, 2023 (the "First Quarter").
“RioCan had a solid start to 2023 with strong
first quarter results. Our occupancy, retention rates and leasing
spreads remain high as demand continues to intensify for quality
retail space that is short in supply. This operating strength drove
same-property NOI while contributions from completed developments
also added to our growth,” said Jonathan Gitlin, President and CEO
of RioCan. “As always, we are prudently managing risk, and
maintaining a healthy balance sheet with strong liquidity and
access to various financing channels. The quality of our
properties and tenants, along with our operational excellence,
provides us with growing income that supports our asset
values, outweighing the volatile macro-economic environment and
reinforcing our confidence to reaffirm our FFO/unit growth guidance
for the year."
Financial Highlights |
|
|
|
|
|
(in
millions, except where otherwise noted, and per unit values) |
|
|
|
|
|
Three months ended March 31 |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
FFO 1 |
|
$ |
131.3 |
|
|
$ |
130.6 |
FFO per unit - diluted 1 |
|
$ |
0.44 |
|
|
$ |
0.42 |
Net income |
|
$ |
118.0 |
|
|
$ |
160.1 |
Weighted average Units outstanding - diluted (in thousands) |
|
|
300,547 |
|
|
|
310,114 |
|
|
|
|
|
|
|
|
|
|
|
|
As at |
|
March 31, 2023 |
|
|
December 31, 2022 |
|
|
|
|
|
|
Net book value per unit |
|
$ |
25.83 |
|
|
$ |
25.73 |
|
|
|
|
|
|
1. A non-GAAP measurement. For definitions,
reconciliations and the basis of presentation of RioCan's non-GAAP
measures, refer to the Basis of Presentation and Non-GAAP Measures
section in this News Release.
FFO per Unit and Net Income
- FFO per unit was $0.44, $0.02 per
unit or 4.8% higher than the same period last year.
- Same Property NOI1 growth of 3.4%
contributed a $0.02 increase in FFO per unit.
- Additional FFO increases,
predominantly from completed commercial developments and
residential rental operations, drove FFO per unit higher by
$0.02.
- Higher lease cancellation fees
increased FFO by an additional $0.01 per unit.
- Higher interest expense, net of
higher interest income, decreased FFO by $0.01.
- The reduction in FFO per unit from
properties sold was partly offset by FFO per unit accretion from
prior year unit buybacks, a net reduction of $0.02 per unit.
- Net income for the
First Quarter of $118.0 million was $42.1 million lower than the
comparable period last year mainly due to a fair value loss on
investment properties of $17.4 million compared to a $35.4 million
fair value gain in 2022.
- Our FFO Payout
Ratio1 of 59.3%, Liquidity1 of $1.7 billion, Unencumbered Asset1
pool of $8.3 billion, floating rate debt at 5.4% of total debt and
staggered debt maturities, all contribute to our financial
flexibility and balance sheet strength.
- For 2023, we anticipate FFO per
unit to be within the range of $1.77 to $1.80, SPNOI growth of 3%,
and an FFO Payout Ratio of between 55% to 65%. Development
Spending1 is expected to be between $400 million to $450
million.
1. A non-GAAP measurement. For definitions,
reconciliations and the basis of presentation of RioCan's non-GAAP
measures, refer to the Basis of Presentation and Non-GAAP Measures
section in this News Release.
Operation Highlights
Three months ended March 31 |
|
2023 |
|
|
|
2022 |
|
Operation Highlights (i) |
|
|
|
|
|
Occupancy - committed (ii) |
|
97.4 |
% |
|
|
97.0 |
% |
Retail occupancy - committed (ii) |
|
98.0 |
% |
|
|
97.4 |
% |
Blended leasing spread |
|
12.3 |
% |
|
|
8.9 |
% |
New leasing spread |
|
14.8 |
% |
|
|
13.5 |
% |
Renewal leasing spread |
|
11.6 |
% |
|
|
6.7 |
% |
|
|
|
|
|
|
(i) Includes commercial portfolio
only.(ii) Information presented as at respective periods then
ended.
- Our core retail portfolio continues to produce solid operating
results. Same Property NOI grew by 3.4%, driven by increases in
rent growth from contractual rent steps, rent upon renewal and
occupancy.
- A strong blended
leasing spread of 12.3% resulted from new leasing and renewal
leasing spreads of 14.8% and 11.6%, respectively. A retention
ratio of 91.2% was achieved in the quarter.
- Average net rent
per occupied square foot of $21.13 improved 4.4% over the same
period last year while new leasing in the First Quarter generated
average net rent per square foot of $28.57.
- Retail committed
occupancy increased by 10 basis points to 98.0% when compared to
the previous quarter.
- As at May 10,
2023, 10 of the 13 Bed, Bath and Beyond leases have been sold as a
result of court ordered liquidation resulting in those leases
continuing without modification or downtime. With respect to
the three leases that were not sold, we have one unit with a
completed lease and two leases in final stages of
negotiation. While Bed, Bath and Beyond's bankruptcy was not
material to RioCan, we highlight this activity as it reaffirms the
demand for our well-located retail space.
RioCan Living Update
1
- As at May 10,
2023, eight of the 10 RioCan Living™ buildings are stabilized
and are 96.5% leased. Lease-up at the two remaining buildings is
tracking ahead of expectations as leasing velocity continues to be
robust. Total NOI generated from our residential rental operations
for the First Quarter was $4.3 million, an increase of $1.9 million
or 81.7% over the same period last year.
- Pre-leasing of the
592 rental residential units at FourFifty The Well™ started in
March 2023 in anticipation of the phased completion in the second
half of 2023 through to early 2024.
- As of
March 31, 2023, 2,575 condominium and townhouse units are
under construction and are expected to generate combined sales
revenue of over $860.0 million between 2023 and 2026 that can be
redeployed to fund our development pipeline. Of RioCan’s six active
condominium construction projects, 86% of the total units have been
pre-sold, representing 96% of pro-forma revenues.
1. Units at 100% ownership interest.
Development Highlights
(in millions except square
feet) |
|
|
|
|
|
Three months ended March 31 |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Development
Highlights |
|
|
|
|
|
Development Completions - sq. ft. in thousands (i) |
|
|
66.0 |
|
|
|
145.0 |
Development Spending |
|
$ |
88.3 |
|
|
$ |
91.9 |
Development Projects Under Construction - sq. ft. in thousands
(ii) |
|
|
1,890.0 |
|
|
|
2,206.0 |
|
|
|
|
|
|
(i) At RioCan's ownership. Represents net
leasable area (NLA) of property under development completions.
Excludes NLA of residential inventory completions.(ii) Information
presented as at the respective periods then ended, includes
properties under development and residential inventory,
equity-accounted joint ventures and represents gross floor area of
the respective projects.
- During
the First Quarter, 66,000 square feet of NLA was completed,
comprised mainly of office space at The Well™.
- As at May 10,
2023, approximately 1,280,000 square feet (at 100% ownership
interest) of commercial space at The Well is in tenant possession
and 12 tenants are now operating in their respective units.
Approximately 94% of the total commercial space is leased. The
retail component is 82% leased, as compared with 72% as at our
prior quarterly release, with another 6% in late stage
negotiations.
- Our total zoned
square footage was 13.9 million at the end of March 31, 2023,
including 1.9 million square feet of projects under construction
and 1.5 million square feet of shovel ready development sites.
Investing and Capital
Recycling
- As of May 10,
2023, closed or firm dispositions totalled $66.4 million, including
$42.1 million of completed dispositions during the quarter at a
weighted average capitalization rate of 7.2%. Completed
dispositions included the sale of a non-core asset located in
Calgary, Alberta, consistent with our strategy to improve portfolio
quality.
- In the First
Quarter, Total Acquisitions1 totalled $28.8 million including the
acquisition of a parking lease at RioCan Hall, which removed a
significant encumbrance in advancing the redevelopment of this
Focus Five project2 and also provides interim recurring operating
income.
- Subsequent to
quarter end, the Trust entered into a firm purchase agreement to
acquire a 100% interest in three phases of a four phase new build
residential rental complex in Montreal, Quebec for the gross
purchase price of $55.3 million. Phases One and Two consist of 124
units and Phase Four consists of vacant land that is zoned
residential. Closing is expected to occur at the end of May 2023,
subject to customary closing conditions. As part of the purchase,
RioCan will assume $42.3 million of pre-existing debt at a blended
contractual interest rate of 2.64%. The Trust also has entered into
an agreement to acquire a 100% interest in Phase Three, which
consists of 60 units, and will be closed no later than March 2026,
upon satisfaction of certain conditions and receipt of substantial
notice of completion.
1. A non-GAAP measurement. For definitions,
reconciliations and the basis of presentation of RioCan's non-GAAP
measures, refer to the Basis of Presentation and Non-GAAP Measures
section in this News Release.2. Focus Five projects are large
scale, transit-oriented, mixed-use developments in the Greater
Toronto Area that the Trust is currently advancing through zoning
and the site plan approval process.
Capital Management Update
- On January 31,
2023, RioCan refinanced its $200 million non-revolving unsecured
credit facility with two Schedule I financial institutions, with a
weighted average annual all-in fixed rate of 4.93% through interest
rate swaps and a maturity date of February 3, 2025, with an option
to extend to January 30, 2026. All other terms were similar to the
matured facility.
- On March 6,
2023, RioCan issued $200.0 million of Series AG senior
unsecured debentures. These debentures were issued at a coupon rate
of 5.611% per annum and will mature on October 6, 2027.
Inclusive of the benefit of bond forward hedges, the all-in rate is
5.184%.
- On March 6, 2023,
in conjunction with the offering of the Series AG debenture, the
Trust settled $200.0 million of bond forward contracts entered into
on November 24, 2022, resulting in a total realized gain of $6.5
million, of which $3.9 million of the gain was applied to the
all-in rate of the above-noted debenture. A hedge ineffectiveness
gain of $2.6 million, arising from issuing a debenture with
less tenor than the underlying bond was recorded to other income
during the First Quarter.
- On March 13, 2023,
the Trust entered into bond forward contracts to sell on September
15, 2023 $300.0 million Government of Canada Bonds due June 1, 2030
with an effective bond yield of 2.629%, to hedge its exposure to
movements in underlying risk-free interest rates.
- On April 18,
2023, RioCan redeemed, in full, its $200.0 million, 3.725% Series T
unsecured debenture upon maturity.
- During the quarter,
RioCan, along with its partner Context Development, closed on a
$126.0 million ($63.0 million at RioCan’s share) construction
(converting to term upon stabilization) loan provided by the Canada
Mortgage and Housing Corporation for the rental component of its
Queen & Ashbridge development in Toronto. The interest rate on
both the construction advances and the term component was fixed at
3.07%, the term of the loan is 10 years and the amortization period
upon conversion to a term loan is 50 years.
- On May 4, 2023, the
Trust extended the maturity on its operating line of credit by
a year to May 31, 2028. All other terms and conditions remained the
same.
- In addition to the
bond forward hedging, the Trust's limited exposure to floating rate
debt at 5.4% of total debt, serves to mitigate short-term interest
rate volatility.
Balance Sheet Strength
(in millions except percentages)As at |
March 31, 2023 |
|
|
December 31, 2022 |
|
|
|
|
|
|
|
Balance Sheet Strength Highlights |
|
|
|
|
|
Liquidity (i) 1 |
|
$ |
1,728 |
|
|
|
$ |
1,548 |
|
Adjusted Debt to Adjusted EBITDA (i) 1 |
|
|
9.48 |
x |
|
|
|
9.51 |
x |
Total Adjusted Debt to Total Adjusted Assets (i) 1 |
|
|
45.4 |
% |
|
|
|
45.2 |
% |
Unencumbered Assets (i) 1 |
|
$ |
8,275 |
|
|
|
$ |
8,257 |
|
Unencumbered Assets to Unsecured Debt (i) 1 |
|
|
215 |
% |
|
|
|
218 |
% |
|
|
|
|
|
|
(i) At RioCan's proportionate share.
- As at
March 31, 2023, the Trust had $1.7 billion of Liquidity in the
form of a $1.3 billion undrawn revolving line of credit, $0.4
billion undrawn construction lines and other bank loans and $0.1
billion cash and cash equivalents. Subsequent to quarter end,
Liquidity was reduced by $137.8 million to $1.6 billion due to the
redemption of $200.0 million Series T senior unsecured debentures
and the receipt of $62.2 million cash from funds held in trust for
a loan receivable repayment. Pursuant to the terms of its credit
agreement, the Trust has an option to increase the commitment under
its revolving line of credit by $250 million.
- RioCan’s
unencumbered asset pool of $8.3 billion, which can be used to
obtain secured financing, to provide additional liquidity at
generally lower interest rates than unsecured debt, generated 57.5%
of Annual Normalized NOI1 and provided 2.15x coverage over
Unsecured Debt1.
- Adjusted Debt to
Adjusted EBITDA was 9.48x on a proportionate share basis, as at
March 31, 2023, compared to 9.51x as at the end of 2022. The
decrease was primarily due to higher Adjusted EBITDA, partially
offset by higher Average Total Adjusted Debt balances.
1. A non-GAAP measurement. For definitions,
reconciliations and the basis of presentation of RioCan's non-GAAP
measures, refer to the Basis of Presentation and Non-GAAP Measures
section in this News Release.
Conference Call and Webcast
Interested parties are invited to participate in
a conference call with management on Thursday, May 11, 2023
at 10:00 a.m. (ET). Participants will be required to
identify themselves and the organization on whose behalf they are
participating.
To access the conference call, click on the
following link to register at least 10 minutes prior to the
scheduled start of the call: Pre-registration link. Participants
who pre-register at any time prior to the call will receive an
email with dial-in credentials including a login passcode and PIN
to gain immediate access to the live call. Those that are unable to
pre-register may dial-in for operator assistance by calling
1-833-950-0062 and entering the access code: 895958.
For those unable to participate in the live
mode, a replay will be available at 1-866-813-9403 with access code
642360.
To access the simultaneous webcast, visit
RioCan’s website at Events and Presentations and click on the link
for the webcast.
About RioCan
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, 2023, our portfolio is
comprised of 191 properties with an aggregate net leasable area of
approximately 33.5 million square feet (at RioCan's interest)
including office, residential rental and 11 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
unaudited interim condensed consolidated financial statements
("Condensed 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 Condensed Consolidated
Financial Statements and MD&A for the three months ended
March 31, 2023, which are 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”), FFO per unit, Net
Operating Income ("NOI"), Same
Property NOI, Development
Spending, Total Acquisitions,
Liquidity, Adjusted Debt to Adjusted
EBITDA, Total Adjusted Debt to
Total Adjusted Assets, RioCan's
Proportionate Share, Unencumbered
Assets to Unsecured Debt and
Percentage of Normalized NOI Generated from Unencumbered
Assets, 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 income 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, 2023.
The reconciliations for non-GAAP measures
included in this News Release are outlined as follows:
RioCan's Proportionate
Share
The following table reconciles the consolidated
balance sheets from IFRS to RioCan's proportionate share basis as
at March 31, 2023 and December 31, 2022:
As at |
March 31, 2023 |
December 31, 2022 |
(in thousands of dollars) |
IFRS basis |
Equity-accountedinvestments |
|
RioCan'sproportionateshare |
|
IFRS basis |
Equity-accountedinvestments |
|
RioCan'sproportionateshare |
Assets |
|
|
|
|
|
|
Investment properties |
$ |
13,874,919 |
$ |
400,031 |
|
$ |
14,274,950 |
|
$ |
13,807,740 |
$ |
398,701 |
|
$ |
14,206,441 |
Equity-accounted investments |
|
373,339 |
|
(373,339 |
) |
|
— |
|
|
364,892 |
|
(364,892 |
) |
|
— |
Mortgages and loans receivable |
|
206,668 |
|
— |
|
|
206,668 |
|
|
269,339 |
|
— |
|
|
269,339 |
Residential inventory |
|
289,556 |
|
228,416 |
|
|
517,972 |
|
|
272,005 |
|
214,536 |
|
|
486,541 |
Assets
held for sale |
|
23,500 |
|
— |
|
|
23,500 |
|
|
42,140 |
|
— |
|
|
42,140 |
Receivables and other assets |
|
313,998 |
|
38,531 |
|
|
352,529 |
|
|
259,514 |
|
37,779 |
|
|
297,293 |
Cash and cash equivalents |
|
97,133 |
|
11,852 |
|
|
108,985 |
|
|
86,229 |
|
8,001 |
|
|
94,230 |
Total assets |
$ |
15,179,113 |
$ |
305,491 |
|
$ |
15,484,604 |
|
$ |
15,101,859 |
$ |
294,125 |
|
$ |
15,395,984 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Debentures payable |
$ |
3,141,869 |
$ |
— |
|
$ |
3,141,869 |
|
$ |
2,942,051 |
$ |
— |
|
$ |
2,942,051 |
Mortgages payable |
|
2,721,509 |
|
173,758 |
|
|
2,895,267 |
|
|
2,659,180 |
|
172,100 |
|
|
2,831,280 |
Lines of
credit and other bank loans |
|
952,425 |
|
96,331 |
|
|
1,048,756 |
|
|
1,141,112 |
|
89,187 |
|
|
1,230,299 |
Accounts payable and other liabilities |
|
605,383 |
|
35,402 |
|
|
640,785 |
|
|
630,624 |
|
32,838 |
|
|
663,462 |
Total liabilities |
$ |
7,421,186 |
$ |
305,491 |
|
$ |
7,726,677 |
|
$ |
7,372,967 |
$ |
294,125 |
|
$ |
7,667,092 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Unitholders’ equity |
|
7,757,927 |
|
— |
|
|
7,757,927 |
|
|
7,728,892 |
|
— |
|
|
7,728,892 |
Total liabilities and equity |
$ |
15,179,113 |
$ |
305,491 |
|
$ |
15,484,604 |
|
$ |
15,101,859 |
$ |
294,125 |
|
$ |
15,395,984 |
The following tables reconcile the consolidated
statements of income from IFRS to RioCan's proportionate share
basis for the three months ended March 31, 2023 and 2022:
|
Three months ended March 31, 2023 |
|
Three months ended March 31, 2022 |
|
(in
thousands of dollars) |
IFRS basis |
|
Equity-accountedinvestments |
|
RioCan'sproportionateshare |
|
IFRS basis |
|
Equity-accountedinvestments |
|
RioCan'sproportionateshare |
|
Revenue |
|
|
|
|
|
|
Rental revenue |
$ |
274,681 |
|
$ |
7,404 |
|
$ |
282,085 |
|
$ |
272,131 |
|
$ |
6,938 |
|
$ |
279,069 |
|
Residential inventory sales |
|
— |
|
|
2,363 |
|
|
2,363 |
|
|
15,969 |
|
|
936 |
|
|
16,905 |
|
Property management and other service fees |
|
4,819 |
|
|
— |
|
|
4,819 |
|
|
5,882 |
|
|
— |
|
|
5,882 |
|
|
|
279,500 |
|
|
9,767 |
|
|
289,267 |
|
|
293,982 |
|
|
7,874 |
|
|
301,856 |
|
Operating costs |
|
|
|
|
|
|
Rental
operating costs |
|
|
|
|
|
|
Recoverable under tenant leases |
|
98,808 |
|
|
880 |
|
|
99,688 |
|
|
100,122 |
|
|
622 |
|
|
100,744 |
|
Non-recoverable costs |
|
7,449 |
|
|
647 |
|
|
8,096 |
|
|
6,056 |
|
|
588 |
|
|
6,644 |
|
Residential inventory cost of sales |
|
— |
|
|
1,126 |
|
|
1,126 |
|
|
13,936 |
|
|
422 |
|
|
14,358 |
|
|
|
106,257 |
|
|
2,653 |
|
|
108,910 |
|
|
120,114 |
|
|
1,632 |
|
|
121,746 |
|
Operating income |
|
173,243 |
|
|
7,114 |
|
|
180,357 |
|
|
173,868 |
|
|
6,242 |
|
|
180,110 |
|
Other income (loss) |
|
|
|
|
|
|
Interest
income |
|
7,041 |
|
|
601 |
|
|
7,642 |
|
|
4,061 |
|
|
570 |
|
|
4,631 |
|
Income
from equity-accounted investments |
|
5,514 |
|
|
(5,514 |
) |
|
— |
|
|
4,090 |
|
|
(4,090 |
) |
|
— |
|
Fair
value (loss) gain on investment properties, net |
|
(17,365 |
) |
|
621 |
|
|
(16,744 |
) |
|
35,432 |
|
|
(790 |
) |
|
34,642 |
|
Investment and other income (loss) |
|
2,887 |
|
|
(336 |
) |
|
2,551 |
|
|
(185 |
) |
|
(58 |
) |
|
(243 |
) |
|
|
(1,923 |
) |
|
(4,628 |
) |
|
(6,551 |
) |
|
43,398 |
|
|
(4,368 |
) |
|
39,030 |
|
Other expenses |
|
|
|
|
|
|
Interest
costs, net |
|
47,983 |
|
|
2,495 |
|
|
50,478 |
|
|
41,766 |
|
|
1,842 |
|
|
43,608 |
|
General
and administrative |
|
15,618 |
|
|
10 |
|
|
15,628 |
|
|
11,463 |
|
|
16 |
|
|
11,479 |
|
Internal
leasing costs |
|
2,725 |
|
|
— |
|
|
2,725 |
|
|
2,985 |
|
|
— |
|
|
2,985 |
|
Transaction and other costs |
|
388 |
|
|
(19 |
) |
|
369 |
|
|
1,175 |
|
|
16 |
|
|
1,191 |
|
|
|
66,714 |
|
|
2,486 |
|
|
69,200 |
|
|
57,389 |
|
|
1,874 |
|
|
59,263 |
|
Income before income taxes |
$ |
104,606 |
|
$ |
— |
|
$ |
104,606 |
|
$ |
159,877 |
|
$ |
— |
|
$ |
159,877 |
|
Current
income tax recovery |
|
(13,398 |
) |
|
— |
|
|
(13,398 |
) |
|
(181 |
) |
|
— |
|
|
(181 |
) |
Net income |
$ |
118,004 |
|
$ |
— |
|
$ |
118,004 |
|
$ |
160,058 |
|
$ |
— |
|
$ |
160,058 |
|
NOI and Same Property NOI
The following table reconciles operating income
to NOI and Same Property NOI to NOI for the three months ended
March 31, 2023 and 2022:
(thousands of dollars) |
|
|
Three months ended March 31 |
|
2023 |
|
|
2022 |
|
Operating Income |
$ |
173,243 |
|
$ |
173,868 |
|
Adjusted for the following: |
|
|
Property management and other service fees |
|
(4,819 |
) |
|
(5,882 |
) |
Residential inventory gains |
|
— |
|
|
(2,033 |
) |
Operational lease revenue from ROU assets |
|
1,858 |
|
|
1,346 |
|
NOI |
$ |
170,282 |
|
$ |
167,299 |
|
(thousands of dollars) |
|
|
Three months ended March 31 |
|
2023 |
|
2022 |
Same Property NOI |
$ |
151,790 |
$ |
146,760 |
NOI from income producing
properties: |
|
|
Acquired (i) |
|
149 |
|
93 |
Disposed (i) |
|
477 |
|
9,619 |
|
|
626 |
|
9,712 |
NOI from completed properties
under development |
|
6,006 |
|
4,187 |
NOI from properties under
de-leasing under development |
|
2,460 |
|
2,495 |
Lease cancellation fees |
|
4,562 |
|
883 |
Straight-line rent
adjustment |
|
573 |
|
915 |
NOI
from residential rental |
|
4,265 |
|
2,347 |
NOI |
$ |
170,282 |
$ |
167,299 |
(i) Includes properties acquired or
disposed of during the periods being compared.
Same Property NOI including completed
properties under development (PUD)
(thousands of dollars, except
where otherwise noted) |
|
|
|
Three months ended March
31 |
|
2023 |
|
2022 |
% change |
Same Property NOI |
$ |
151,790 |
$ |
146,760 |
3.4 |
% |
Add: |
|
|
|
NOI
from completed PUD |
|
6,006 |
|
4,187 |
|
Same Property NOI including completed
PUD |
$ |
157,796 |
$ |
150,947 |
4.5 |
% |
Adjusted Same Property NOI
(thousands of dollars,except
where otherwise noted) |
|
|
|
Three
months ended March 31 |
|
2023 |
|
|
2022 |
|
% change |
Same Property NOI |
$ |
151,790 |
|
$ |
146,760 |
|
3.4 |
% |
Add (exclude): |
|
|
|
Same property provision for
credit losses |
|
86 |
|
|
20 |
|
|
CAM/property tax settlements |
|
(929 |
) |
|
(381 |
) |
|
Adjusted Same Property NOI |
$ |
150,947 |
|
$ |
146,399 |
|
3.1 |
% |
FFO
The following table reconciles net income
attributable to Unitholders to FFO for the three months ended
March 31, 2023 and 2022:
(thousands of dollars, except
where otherwise noted) |
|
|
Three months ended March 31 |
|
2023 |
|
|
2022 |
|
Net income attributable to Unitholders |
$ |
118,004 |
|
$ |
160,058 |
|
Add back/(Deduct): |
|
|
Fair value losses (gains), net |
|
17,365 |
|
|
(35,432 |
) |
Fair value (gains) losses included in equity-accounted
investments |
|
(621 |
) |
|
790 |
|
Internal leasing costs |
|
2,725 |
|
|
2,985 |
|
Transaction (gains) losses on investment properties, net (i) |
|
(64 |
) |
|
384 |
|
Transaction costs on sale of investment properties |
|
167 |
|
|
600 |
|
ERP implementation costs |
|
3,954 |
|
|
— |
|
Change in unrealized fair value on marketable securities |
|
986 |
|
|
— |
|
Current income tax recovery |
|
(13,398 |
) |
|
(181 |
) |
Operational lease revenue from ROU assets |
|
1,354 |
|
|
946 |
|
Operational lease expenses from ROU assets in equity-accounted
investments |
|
(12 |
) |
|
(11 |
) |
Capitalized interest on equity-accounted investments (ii) |
|
877 |
|
|
436 |
|
FFO |
$ |
131,337 |
|
$ |
130,575 |
|
Add back: |
|
|
Restructuring costs |
|
613 |
|
|
609 |
|
FFO Adjusted |
$ |
131,950 |
|
$ |
131,184 |
|
|
|
|
FFO per
unit - basic |
$ |
0.44 |
|
$ |
0.42 |
|
FFO per
unit - diluted |
$ |
0.44 |
|
$ |
0.42 |
|
FFO
Adjusted per unit - diluted |
$ |
0.44 |
|
$ |
0.42 |
|
Weighted
average number of Units - basic (in thousands) |
|
300,362 |
|
|
309,837 |
|
Weighted average number of Units - diluted (in thousands) |
|
300,547 |
|
|
310,114 |
|
|
|
|
FFO for
last 4 quarters |
$ |
525,440 |
|
$ |
531,521 |
|
Distributions paid for last 4 quarters |
$ |
311,603 |
|
$ |
304,433 |
|
FFO Payout Ratio |
|
59.3 |
% |
|
57.3 |
% |
(i) Represents net transaction gains or
losses connected to certain investment properties during the
period.(ii) This amount represents the interest capitalized to
RioCan's equity-accounted investment in WhiteCastle New Urban Fund
2, LP, WhiteCastle New Urban Fund 3, LP, WhiteCastle New Urban Fund
4, LP, WhiteCastle New Urban Fund 5, LP, RioCan-Fieldgate JV, RC
(Queensway) LP, RC (Leaside) LP- Class B and PR Bloor Street LP.
This amount is not capitalized to properties under development
under IFRS, but is allowed as an adjustment under REALPAC’s
definition of FFO.
Development SpendingTotal Development Spending
for the three months ended March 31, 2023 and 2022 is as
follows:
(thousands of dollars) |
|
|
Three months ended March 31 |
|
2023 |
|
2022 |
Development expenditures on balance sheet: |
|
|
Properties under development |
$ |
66,911 |
$ |
61,165 |
Residential inventory |
|
17,551 |
|
28,345 |
RioCan's share of Development Spending from equity-accounted joint
ventures |
|
3,885 |
|
2,374 |
Total Development Spending |
$ |
88,347 |
$ |
91,884 |
Total Acquisitions
Total Acquisitions for the three months ended
March 31, 2023 and 2022 are as follows:
(thousands of dollars) |
|
|
Three months ended March 31 |
|
2023 |
|
2022 |
|
|
|
Income producing
properties |
$ |
— |
$ |
89,948 |
Properties under
development |
|
28,847 |
|
11,946 |
Residential inventory |
|
— |
|
19,440 |
RioCan's share of acquisitions from equity-accounted joint
ventures |
|
— |
|
66,497 |
Total Acquisitions |
$ |
28,847 |
$ |
187,831 |
Total Adjusted Debt and Total Contractual
Debt
The following tables reconcile total debt to
Total Adjusted Debt, total assets to Total Adjusted Assets, and
total debt to Total Contractual Debt as at March 31, 2023 and
December 31, 2022:
As at |
March 31, 2023 |
December 31, 2022 |
(thousands of dollars, except where otherwise noted) |
IFRS basis |
|
Equity-accountedinvestments |
RioCan'sproportionateshare |
|
IFRS basis |
|
Equity-accountedinvestments |
RioCan'sproportionateshare |
|
Debentures payable |
$ |
3,141,869 |
|
$ |
— |
$ |
3,141,869 |
|
$ |
2,942,051 |
|
$ |
— |
$ |
2,942,051 |
|
Mortgages payable |
|
2,721,509 |
|
|
173,758 |
|
2,895,267 |
|
|
2,659,180 |
|
|
172,100 |
|
2,831,280 |
|
Lines of credit and other bank loans |
|
952,425 |
|
|
96,331 |
|
1,048,756 |
|
|
1,141,112 |
|
|
89,187 |
|
1,230,299 |
|
Total debt |
$ |
6,815,803 |
|
$ |
270,089 |
$ |
7,085,892 |
|
$ |
6,742,343 |
|
$ |
261,287 |
$ |
7,003,630 |
|
Cash and cash equivalents |
|
97,133 |
|
|
11,852 |
|
108,985 |
|
|
86,229 |
|
|
8,001 |
|
94,230 |
|
Total Adjusted Debt |
$ |
6,718,670 |
|
$ |
258,237 |
$ |
6,976,907 |
|
$ |
6,656,114 |
|
$ |
253,286 |
$ |
6,909,400 |
|
|
|
|
|
|
|
|
Total
assets |
$ |
15,179,113 |
|
$ |
305,491 |
$ |
15,484,604 |
|
$ |
15,101,859 |
|
$ |
294,125 |
$ |
15,395,984 |
|
Cash and cash equivalents |
|
97,133 |
|
|
11,852 |
|
108,985 |
|
|
86,229 |
|
|
8,001 |
|
94,230 |
|
Total Adjusted Assets |
$ |
15,081,980 |
|
$ |
293,639 |
$ |
15,375,619 |
|
$ |
15,015,630 |
|
$ |
286,124 |
$ |
15,301,754 |
|
|
|
|
|
|
|
|
Total Adjusted Debt to Total Adjusted Assets |
|
44.5 |
% |
|
|
45.4 |
% |
|
44.3 |
% |
|
|
45.2 |
% |
As at |
March 31, 2023 |
December 31, 2022 |
(thousands of dollars) |
IFRS basis |
|
Equity-accountedinvestments |
|
RioCan'sproportionateshare |
|
IFRS basis |
|
Equity-accountedinvestments |
|
RioCan'sproportionateshare |
|
Total debt |
$ |
6,815,803 |
|
$ |
270,089 |
|
$ |
7,085,892 |
|
$ |
6,742,343 |
|
$ |
261,287 |
|
$ |
7,003,630 |
|
Less: |
|
|
|
|
|
|
Unamortized debt financing costs, premiums and discounts on
origination and debt assumed, and modifications |
|
(18,327 |
) |
|
(631 |
) |
|
(18,958 |
) |
|
(15,634 |
) |
|
(690 |
) |
|
(16,324 |
) |
Total Contractual Debt |
|
6,834,130 |
|
|
270,720 |
|
|
7,104,850 |
|
|
6,757,977 |
|
|
261,977 |
|
|
7,019,954 |
|
Liquidity
As at March 31, 2023, RioCan had
approximately $1.7 billion of liquidity as summarized in the
following table:
As at |
March 31, 2023 |
December 31, 2022 |
(thousands of dollars) |
IFRS basis |
|
Equity-accountedinvestments |
RioCan'sproportionateshare |
|
IFRS basis |
Equity-accountedinvestments |
RioCan'sproportionateshare |
Undrawn revolving unsecured operating line of credit |
$ |
1,250,000 |
|
$ |
— |
$ |
1,250,000 |
|
$ |
1,116,351 |
$ |
— |
$ |
1,116,351 |
Undrawn construction lines and
other bank loans |
|
306,641 |
|
|
61,892 |
|
368,533 |
|
|
267,562 |
|
70,094 |
|
337,656 |
Cash and cash equivalents |
|
97,133 |
|
|
11,852 |
|
108,985 |
|
|
86,229 |
|
8,001 |
|
94,230 |
Liquidity |
$ |
1,653,774 |
|
$ |
73,744 |
$ |
1,727,518 |
|
$ |
1,470,142 |
$ |
78,095 |
$ |
1,548,237 |
Increase (Decrease) subsequent to quarter end from: |
|
|
|
|
|
|
Debenture redemption |
|
(200,000 |
) |
|
— |
|
(200,000 |
) |
|
|
|
Cash
from funds held in trust for a loan receivable repayment |
|
62,155 |
|
|
— |
|
62,155 |
|
|
|
|
Proforma Liquidity |
$ |
1,515,929 |
|
$ |
73,744 |
$ |
1,589,673 |
|
|
|
|
Adjusted EBITDA
The following table reconciles consolidated net
income attributable to Unitholders to Adjusted EBITDA:
|
|
Twelve months ended |
March 31, 2023 |
December 31, 2022 |
(thousands of dollars) |
IFRS basis |
|
Equity-accountedinvestments |
|
RioCan'sproportionateshare |
|
IFRS basis |
Equity-accountedinvestments |
|
RioCan'sproportionateshare |
Net income attributable to Unitholders |
$ |
194,718 |
|
$ |
— |
|
$ |
194,718 |
|
$ |
236,772 |
$ |
— |
|
$ |
236,772 |
Add
(deduct) the following items: |
|
|
|
|
|
|
Income
tax expense (recovery): |
|
|
|
|
|
|
Current |
|
(12,296 |
) |
|
— |
|
|
(12,296 |
) |
|
921 |
|
— |
|
|
921 |
Fair
value losses on investment properties, net |
|
293,925 |
|
|
14,797 |
|
|
308,722 |
|
|
241,128 |
|
16,208 |
|
|
257,336 |
Change
in unrealized fair value on marketable securities (i) |
|
4,769 |
|
|
— |
|
|
4,769 |
|
|
3,783 |
|
— |
|
|
3,783 |
Internal
leasing costs |
|
11,944 |
|
|
— |
|
|
11,944 |
|
|
12,204 |
|
— |
|
|
12,204 |
Non-cash
unit-based compensation expense |
|
9,269 |
|
|
— |
|
|
9,269 |
|
|
9,056 |
|
— |
|
|
9,056 |
Interest
costs, net |
|
186,582 |
|
|
8,895 |
|
|
195,477 |
|
|
180,365 |
|
8,242 |
|
|
188,607 |
Restructuring costs |
|
4,293 |
|
|
— |
|
|
4,293 |
|
|
4,289 |
|
— |
|
|
4,289 |
ERP
implementation costs |
|
3,954 |
|
|
— |
|
|
3,954 |
|
|
— |
|
— |
|
|
— |
Depreciation and amortization |
|
4,461 |
|
|
— |
|
|
4,461 |
|
|
4,774 |
|
— |
|
|
4,774 |
Transaction losses on the sale of investment properties, net
(ii) |
|
576 |
|
|
— |
|
|
576 |
|
|
1,024 |
|
— |
|
|
1,024 |
Transaction costs on investment properties |
|
5,305 |
|
|
— |
|
|
5,305 |
|
|
5,734 |
|
3 |
|
|
5,737 |
Operational lease revenue (expenses) from ROU assets |
|
4,494 |
|
|
(47 |
) |
|
4,447 |
|
|
4,086 |
|
(46 |
) |
|
4,040 |
Adjusted EBITDA |
$ |
711,994 |
|
$ |
23,645 |
|
$ |
735,639 |
|
$ |
704,136 |
$ |
24,407 |
|
$ |
728,543 |
(i) The fair value gains and losses on
marketable securities may include both the change in unrealized
fair value and realized gains and losses on the sale of marketable
securities. By adding back the change in unrealized fair value on
marketable securities, RioCan effectively continues to include
realized gains and losses on the sale of marketable securities in
Adjusted EBITDA and excludes unrealized fair value gains and losses
on marketable securities in Adjusted EBITDA.(ii) Includes
transaction gains and losses realized on the disposition of
investment properties.
Adjusted Debt to Adjusted
EBITDA RatioAdjusted Debt to Adjusted
EBITDA is calculated as follows:
|
|
Twelve months ended |
March 31, 2023 |
December 31, 2022 |
(thousands of dollars, except where otherwise noted) |
IFRS basis |
|
Equity-accountedinvestments |
|
RioCan'sproportionateshare |
|
IFRS basis |
|
Equity-accountedinvestments |
|
RioCan'sproportionateshare |
|
|
|
|
|
|
|
|
Adjusted Debt to Adjusted EBITDA |
|
|
|
|
|
|
Average total debt outstanding |
$ |
6,797,665 |
|
$ |
263,022 |
|
$ |
7,060,687 |
|
$ |
6,756,628 |
|
$ |
251,888 |
|
$ |
7,008,516 |
|
Less: average cash and cash equivalents |
|
(78,746 |
) |
|
(9,339 |
) |
|
(88,085 |
) |
|
(74,871 |
) |
|
(8,791 |
) |
|
(83,662 |
) |
Average Total Adjusted Debt |
$ |
6,718,919 |
|
$ |
253,683 |
|
$ |
6,972,602 |
|
$ |
6,681,757 |
|
$ |
243,097 |
|
$ |
6,924,854 |
|
Adjusted EBITDA (i) |
$ |
711,994 |
|
$ |
23,645 |
|
$ |
735,639 |
|
$ |
704,136 |
|
$ |
24,407 |
|
$ |
728,543 |
|
Adjusted Debt to Adjusted EBITDA |
|
9.44 |
|
|
|
9.48 |
|
|
9.49 |
|
|
|
9.51 |
|
(i) Adjusted EBITDA is reconciled in the immediately preceding
table above.
Unencumbered Assets
The tables below summarize RioCan's Unencumbered Assets to
Unsecured Debt and Percentage of Normalized NOI Generated from
Unencumbered Assets as at March 31, 2023 and December 31,
2022:
As
at |
|
March 31, 2023 |
December 31, 2022 |
(thousands of dollars, except where otherwise noted) |
TargetedRatios |
IFRSbasis |
|
Equity-accountedinvestments |
RioCan'sproportionateshare |
|
IFRSbasis |
|
Equity-accountedinvestments |
RioCan'sproportionateshare |
|
Unencumbered Assets |
|
$ |
8,218,961 |
|
$ |
56,132 |
$ |
8,275,093 |
|
$ |
8,200,280 |
|
$ |
56,228 |
$ |
8,256,508 |
|
Total
Unsecured Debt |
|
$ |
3,850,000 |
|
$ |
— |
$ |
3,850,000 |
|
$ |
3,783,649 |
|
$ |
— |
$ |
3,783,649 |
|
Unencumbered Assets to Unsecured Debt |
> 200% |
|
213 |
% |
|
|
215 |
% |
|
217 |
% |
|
|
218 |
% |
|
|
|
|
|
|
|
|
Annual Normalized NOI - total
portfolio (i) |
|
$ |
652,844 |
|
$ |
22,700 |
$ |
675,544 |
|
$ |
646,540 |
|
$ |
23,488 |
$ |
670,028 |
|
Annual
Normalized NOI - Unencumbered Assets (i) |
|
$ |
385,088 |
|
$ |
3,444 |
$ |
388,532 |
|
$ |
370,804 |
|
$ |
3,440 |
$ |
374,244 |
|
Percentage of Normalized NOI Generated from Unencumbered
Assets |
> 50.0% |
|
59.0 |
% |
|
|
57.5 |
% |
|
57.4 |
% |
|
|
55.9 |
% |
(i) Annual Normalized NOI are reconciled in
the table below.
|
Three months ended March 31,
2023 |
Three months ended December 31, 2022 |
(thousands of dollars) |
IFRS basis |
|
Equity-accountedinvestments |
RioCan'sproportionateshare |
|
IFRS basis |
|
Equity-accountedinvestments |
RioCan'sproportionateshare |
|
NOI (i) |
$ |
170,282 |
|
$ |
5,675 |
$ |
175,957 |
|
$ |
166,062 |
|
$ |
5,872 |
$ |
171,934 |
|
Adjust the following: |
|
|
|
|
|
|
Miscellaneous revenue |
|
(1,035 |
) |
|
— |
|
(1,035 |
) |
|
(802 |
) |
|
— |
|
(802 |
) |
Percentage rent |
|
(1,474 |
) |
|
— |
|
(1,474 |
) |
|
(3,234 |
) |
|
— |
|
(3,234 |
) |
Lease
cancellation fees |
|
(4,562 |
) |
|
— |
|
(4,562 |
) |
|
(391 |
) |
|
— |
|
(391 |
) |
Normalized NOI - total
portfolio |
$ |
163,211 |
|
$ |
5,675 |
$ |
168,886 |
|
$ |
161,635 |
|
$ |
5,872 |
$ |
167,507 |
|
Annual Normalized NOI - total
portfolio(ii) |
$ |
652,844 |
|
$ |
22,700 |
$ |
675,544 |
|
$ |
646,540 |
|
$ |
23,488 |
$ |
670,028 |
|
|
|
|
|
|
|
|
NOI from unencumbered assets |
$ |
98,065 |
|
$ |
861 |
$ |
98,926 |
|
$ |
94,957 |
|
$ |
860 |
$ |
95,817 |
|
Adjust the following for
Unencumbered Assets: |
|
|
|
|
|
|
Miscellaneous revenue |
|
(519 |
) |
|
— |
|
(519 |
) |
|
(518 |
) |
|
— |
|
(518 |
) |
Percentage rent |
|
(1,244 |
) |
|
— |
|
(1,244 |
) |
|
(1,430 |
) |
|
— |
|
(1,430 |
) |
Lease
cancellation fees |
|
(30 |
) |
|
— |
|
(30 |
) |
|
(308 |
) |
|
— |
|
(308 |
) |
Normalized NOI -
Unencumbered Assets |
$ |
96,272 |
|
$ |
861 |
$ |
97,133 |
|
$ |
92,701 |
|
$ |
860 |
$ |
93,561 |
|
Annual Normalized NOI -
Unencumbered Assets (ii) |
$ |
385,088 |
|
$ |
3,444 |
$ |
388,532 |
|
$ |
370,804 |
|
$ |
3,440 |
$ |
374,244 |
|
(i) Refer to the NOI and Same Property NOI
table of this section for reconciliation from NOI to operating
income.(ii) Calculated by multiplying Normalized NOI by a
factor of 4.
Forward-Looking Information
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, 2023 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. 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.
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.
Contact InformationRioCan Real
Estate Investment Trust Dennis Blasutti
Chief Financial Officer416-866-3033 |
www.riocan.com
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