RioCan represents one of Canada’s most compelling long-term REIT opportunities as it evolves beyond traditional retail into a diversified, mixed-use platform anchored by necessity-based tenants that are virtually immune to e-commerce disruption. With the majority of its rental income derived from grocery stores, pharmacies, and essential services, this REIT is well positioned for the future.
Meanwhile, the trust’s strategic focus on Canada’s six major metropolitan markets—where 90% of income is generated—captures the nation’s population and economic growth.
And at just 9.9x forward forecast cash flow with exceptional 98.0% occupancy rates, we think the market has undervalued this transformation story.
RIOCAN REAL ESTATE INVESTMENT TRUST (Toronto symbol REI.UN; www.riocan.com) owns all or part of 177 shopping centres and other properties across Canada, including eight under development. Its occupancy rate is a high 98.0%.
Retail properties provide 85% of RioCan’s rental revenue, followed by office (11%) and residential (4%).
Its biggest tenants (as of March 31, 2025) were TJX Companies (4.4% of annualized rental revenue), which operates the Winners and Marshalls chains; Canadian Tire (4.3%); Loblaw/Shoppers Drug Mart (4.2%); Metro/Jean Coutu (2.6%); and Cineplex (2.5%).
Despite the COVID-19 lockdowns, RioCan’s revenue rose 6.1%, from $1.14 billion in 2020 to $1.21 billion in 2022. Revenues then declined by 7.4% in 2023 to $1.12 billion due to lower sales of residential units. However, revenue rebounded by 10.3% in 2024 to $1.24 billion on improved residential sales and occupancy rates.
Its cash flow increased 7.3% from $507.4 million in 2020 to $544.3 million in 2024. On a per-unit basis, its cash flow rose 11.3%, from $1.60 in 2020 to $1.78 in 2024, due to fewer units outstanding.
With department store operator Hudson’s Bay Company now bankrupt, the liquidation of all its stores impacts RioCan. The REIT, through a joint venture, owns 22% of 10 of Hudson’s Bay’s 96 stores. It also has a direct 50% stake in three more stores (HBC owns the other 50% in two of
those stores).
The store closures have forced RioCan to write down the value of the joint venture by $208.8 million. The REIT is nonetheless confident it can find new tenants for the HBC stores (typically at higher rents) or re-develop them.
RioCan is now selling its 50% stake in four properties held by its RioCan Living business, which owns 13 residential rental buildings and two projects under development. The REIT will receive $197.3 million when it completes the transaction in the third quarter of 2025.
The trust will apply the proceeds to its total debt of $7.75 billion (as of March 31, 2025). That’s equal to 1.4 times its $5.4 billion market cap. The trust also aims to sell its remaining residential properties over the next two years.
High yield and a low P/E multiple makes for an attractive investment
Meantime, in the three months ended March 31, 2025, overall revenue rose 17.3%, to $355.8 million from $303.4 million a year earlier. RioCan sold residential condominiums for $54.9 million in the quarter, up from $10.5 million in a year earlier. In addition, its residential and retail occupancy rates were higher in quarter. Cash flow also gained 8.9%, to $0.49 a share (or a total of $145.8 million) from $0.45 a share (or $136.6 million).
RioCan cut its monthly distribution by 33.3% to $0.96 a unit (on an annual basis) in February 2021 as retailers shut down due to the COVID-19 pandemic. As the restrictions eased, the trust resumed annual distribution increases.
Under that policy, RioCan increased your monthly distribution by 4.3% with the March 2025 payment. Investors now receive $0.0965 a unit, up from $0.0925. The new annual rate of $1.158 yields a solid 6.8%.
Based on that new rate, the trust expects distributions will account for roughly 62% of its 2025 cash flow. That’s within its 55% to 65% payout range
The trust now expects its cash flow per unit will range from $1.85 to $1.88 a unit in 2025. The units trade at a moderate 9.9 times the midpoint of that range. That’s an attractive multiple in light of the REIT’s high-quality properties and re-development opportunities.
Recommendation in The Successful Investor: RioCan REIT is a buy.
