RioCan Real Estate Investment Trust (TSE:REI.UN) used its fourth-quarter 2025 earnings call to highlight accelerating retail-led operating momentum, meaningful capital recycling progress, and a shift toward what management described as more predictable earnings reporting through a new “Core FFO” measure.
Operating performance led by retail strength
CEO Jonathan Gitlin said the trust delivered 4.5% Same Property NOI growth in the fourth quarter, driven by outperformance in its core retail assets. For the full year, management reported commercial Same Property NOI growth of 3.6%.
Key retail operating metrics cited on the call included:
- Retail committed occupancy of 98.5% at year-end
- Record full-year blended leasing spreads of 21.1%
- Retention ratio of 93.1% in 2025
Gitlin said RioCan’s tenant mix remains heavily oriented toward daily needs, noting that 86% of sites include a grocery component. He cited retailers such as Loblaws, Metro, Sobeys, Shoppers Drug Mart, and Dollarama as examples of necessity-based anchors and traffic drivers.
Leasing spreads and embedded mark-to-market opportunity
Management emphasized the mark-to-market opportunity within the portfolio. Gitlin said RioCan completed 5 million square feet of leasing in 2025, with the average net rent for new leases at about C$29.65 per square foot, which he said was approximately 28% higher than the trust’s overall average rent. He added that rents on new leases since 2022 have averaged about 27% above existing lease rents.
Looking ahead, Gitlin said management expects the trend to continue “for at least the next three years,” noting that 10.1 million square feet of leases are maturing over that period. In the Q&A, he said the strength in leasing spreads is supported by broader retail fundamentals but could be “more acute with RioCan” due to the visible mark-to-market gap and portfolio improvements in recent years.
Capital recycling, balance sheet metrics, and unit repurchases
Gitlin said RioCan repatriated C$742 million of capital to strengthen the balance sheet and support unit repurchases, while CFO Dennis Blasutti provided additional detail on 2025 dispositions.
Blasutti said the trust sold C$406.6 million of RioCan Living assets and closed C$221.7 million of condo sales, totaling C$628.3 million. After year-end, RioCan went firm on the disposition of the Underwood residential building in Calgary for C$46.5 million. He said the trust is “halfway” toward its C$1.3 billion to C$1.4 billion RioCan Living disposition target, with additional assets in negotiation, while stressing execution and timing are market-dependent.
On the commercial side, Blasutti said RioCan sold C$113.4 million of non-core and lower-growth commercial assets, bringing total capital repatriation cited on the call to C$788.2 million.
Management said the proceeds were largely directed to debt reduction and unit repurchases. Net debt to EBITDA ended 2025 at 8.6x, improving from 9.1x at the prior year-end and remaining within management’s stated 8x to 9x target range. Blasutti said RioCan ended the year with C$1.5 billion of liquidity, and reported that the ratio of unsecured debt to total debt rose to 63% from 56%, increasing the unencumbered asset pool by C$1 billion to C$9.2 billion.
Unit repurchases were a central theme. Gitlin said the trust repurchased C$179 million of units through 2025 and year-to-date 2026, and argued the current unit price does not reflect RioCan’s value and earnings power. Blasutti said that at current prices the units imply a forward multiple of approximately 12x using 2026 Core FFO, which he compared with a long-term historical average of 15x. He also said RioCan has repurchased 19 million units, or 6% of the company, since 2022.
2025 results and a new “Core FFO” focus
Blasutti reported FFO of C$1.87 per unit in 2025, near the high end of guidance, and Core FFO of C$1.55 per unit, which he said was in line with Investor Day projections. Both executives positioned Core FFO as a measure designed to reflect recurring earnings power driven by occupied space, contractual rent steps, and capital allocation to higher-return opportunities, while excluding items not representative of underlying operating strength.
In response to an analyst question about the company’s narrow Core FFO guidance range, management said Core FFO is “quite predictable” and largely rooted in “very predictable operational outcomes,” leading them to provide tighter guidance.
2026 outlook: NOI growth, Core FFO guidance, and lower development spending
For 2026, management guided to Same Property NOI growth of 3.5% to 4% and Core FFO of C$1.60 to C$1.62 per unit. Blasutti said the company has “strong visibility” into the target, with approximately 75% contractually secured through rent steps and the ramp-up of previously signed leases.
RioCan also outlined a shifting capital profile. Blasutti said the trust has reached the “natural conclusion” of its development cycle, with development intensity moderating. Total development spend was C$254 million in 2025, and management expects a significant decline in 2026. For the year ahead, RioCan expects:
- C$95 million to C$150 million of investment into retail-focused projects (including Yonge Eglinton Centre Improvement Plan, the new Costco at Burloak, Georgian Mall and Oakville Place backfills with grocery additions, Westgate Shopping Centre de-malling and grocery addition, and infill pad density at Windfields Farm)
- C$45 million to C$55 million of mixed-use development expenditures, described as largely cost-to-complete and pipeline advancement costs
- Maintenance CapEx returning to normalized levels of approximately C$55 million
On retail reinvestment returns, Blasutti said RioCan applies a 9% unlevered IRR hurdle rate, and expects projects in its 2026 plan to outperform, with a going-in yield averaging 8% to 9% plus future growth averaging about 3%.
During the Q&A, management also discussed The Well, stating that early tenant volatility was expected for a new project and that increased foot traffic is supporting improvements in tenant mix and rent structure over time. Executives said they also saw growth in activations, digital signage, and parking revenues as traffic increases.
About RioCan Real Estate Investment Trust (TSE:REI.UN)
Riocan Real Estate Investment Trust is a Canadian real estate investment trust which owns, develops, and operates Canada’s portfolio of retail-focused, increasingly mixed-use properties. The REIT’s property portfolio includes shopping centers and mixed-use developments, with most of its properties located in Ontario, Canada. Riocan’s tenants consist of grocery stores, supermarkets, restaurants, cinemas, pharmacies, and corporates. By geography, the company operates in Canada, which generates the majority of total revenue, and in the United States.
