RioCan Real Estate Investment Trust (TSE:REI.UN) reported second-quarter results marked by record retail occupancy, continued leasing-spread strength and progress toward monetizing its RioCan Living portfolio, while raising its 2026 commercial same-property net operating income outlook.
President and CEO Jonathan Gitlin said the quarter reflected progress across operations, leasing, capital recycling and balance-sheet management. He said RioCan’s retail portfolio continues to benefit from constrained supply and retailer demand in the Canadian markets where it operates.
Retail occupancy and leasing spreads
The trust reported a blended leasing spread of 23.1%, including new-lease spreads of 40.8% and renewal spreads of 20.7%. Average net rent on new leases was C$37.73 per square foot, which Gitlin said was 60% above the average net rent per occupied square foot.
RioCan has about 1 million square feet of lease maturities remaining in 2026 and roughly 3.7 million square feet maturing in each of 2027 and 2028. Approximately 30% of the portfolio’s leases roll through 2028, providing additional opportunities to capture differences between in-place and market rents, management said.
Gitlin cited a Greater Toronto Area grocery-store renewal in which rent was doubled. Oliver Harrison, RioCan’s senior vice president of leasing and tenant experience, said the lease had last been negotiated at market about 30 years earlier and had been relatively flat under its prior fixed-option structure.
Harrison said blended leasing spreads have been in the mid-20% range over the last three quarters. He said management expects that range to persist in the near term if occupancy remains at current levels.
Guidance raised for same-property NOI
Based on results through the first half of the year, RioCan raised its 2026 commercial same-property NOI growth guidance to 4% to 4.5%, from its previous range of 3.5% to 4%.
The trust maintained its 2026 core funds from operations guidance of C$1.60 to C$1.62 per unit. Gitlin said same-property NOI is only one factor affecting core FFO, alongside the timing of capital recycling, interest expense and other items below NOI.
During the quarter, core FFO was C$0.40 per unit, up 5.3% from a year earlier. Franca Smith, senior vice president of finance, said commercial same-property NOI growth contributed C$0.02 per unit, while unit repurchases under the normal course issuer bid added about C$0.01 per unit. Higher net interest expense and lower interest income together reduced results by about C$0.01 per unit.
RioCan’s trailing 12-month core FFO payout ratio was 73.8%, down about 100 basis points from the prior quarter and moving toward its long-term 70% target. Adjusted general and administrative expense was 4.1% of rental revenue in the quarter and 3.7% year to date. The trust expects full-year adjusted G&A expense to remain below 4% of rental revenue.
RioCan Living monetization nears completion
RioCan continued to sell assets from its RioCan Living portfolio. Including transactions completed over the past 18 months and assets under contract, the trust said it has sold C$1.26 billion of RioCan Living assets, effectively reaching its C$1.3 billion capital-repatriation target.
In the second quarter, RioCan completed the sales of FourFifty The Well and Bellevue Phase One and Two for aggregate gross proceeds of C$234 million. Those transactions brought year-to-date RioCan Living disposition proceeds to about C$280 million. After the quarter ended, the trust entered two conditional agreements to sell interests in two additional RioCan Living properties for total gross proceeds of C$206 million.
Smith said RioCan repatriated C$143 million from residential inventory year to date, primarily through the collection of accounts receivable related to prior-year sales. Since the start of 2025, it has repatriated C$365 million, largely in line with its C$370 million target.
The value of unsold units was reduced to C$86 million, or about 1% of net asset value. Gitlin said the trust is considering alternatives for the remaining condo inventory, including sales to bulk buyers and individual unit sales, but described the residual balance as not material to RioCan’s future performance.
Capital deployment and balance sheet
RioCan invested C$44 million in retail infill and asset-enhancement projects during the first half and remains on track to invest about C$100 million in 2026. Roughly half is being directed to asset enhancements, including a Metro expansion and LCBO relocation at Yonge Eglinton Centre. The remaining capital is allocated to retail infill projects, including a new Costco at RioCan Burloak and additional retail space at East Hills, Windfields Farm and South Edmonton Common.
The trust’s net asset value increased C$0.23 per unit, or C$68 million, from the prior quarter. Smith said the increase was largely driven by C$52 million of net fair-value gains on investment properties, supported by higher stabilized NOI, rent steps, lease renewals and new leasing activity.
During the quarter, RioCan repaid C$500 million of Series AD unsecured debentures, C$91 million of maturing mortgages and about C$114 million of condo-project construction loans on a proportionate-share basis. Following those repayments, only C$30 million of debt maturities remained for the balance of 2026.
Unsecured debt represented about 70% of total debt, while RioCan’s unencumbered asset pool rose to approximately C$9.7 billion on a proportionate-share basis. The trust reported about C$700 million of available liquidity and said it is positioned to manage 2027 debt maturities.
Management said acquisitions could become a more prominent capital-allocation option as RioCan’s cost of capital declines and potential retail assets become available. However, Gitlin said the trust will continue to weigh acquisitions against alternatives including debt repayment, unit repurchases and internal retail intensification projects.
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.
