The market plunge in the wake of the COVID-19 crisis lowered prices for most REITs as the pandemic forced many businesses to temporarily close. That hurt rent collection and cut cash available for distributions.
However, this REIT’s distribution payments look secure thanks to high-quality properties and tenants.
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RIOCAN REAL ESTATE INVESTMENT TRUST (Toronto symbol REI.UN; www.riocan.com) offers you a stake in 221 shopping centres and other properties across Canada. They include 15 projects under development. In all, RioCan controls 38.6 million square feet of rentable space. Its overall occupancy rate is a high 96.4%.
COVID-19 forced many of RioCan’s tenants, mainly apparel retailers, to temporarily shut down their stores. As a result, it collected just 73.3% of its rental payments in the quarter ended June 30, 2020. Government support programs and deferrals covered another 13.5%. However, the REIT was unable to collect 6.4% of its outstanding rents.
As a result of the lower rent collections—along with fewer sales of condominium units and lower property management fees—the trust’s overall revenue fell 17.6% in the quarter to $269.89 million. That’s down from $327.57 million a year earlier. Cash flow per unit dropped 27.1%, to $0.35 from $0.48.
Dividend Stocks: Most rent comes from essential business operations
However, RioCan now gets 75% of its rental revenue from grocery stores, drug stores, banks and other retailers that continue to operate during the pandemic. The trust is also diversifying with new residential developments.
RioCan recently sold 50% of two mixed-use residential projects in Toronto and Ottawa in separate transactions. In all, it will get $32.6 million.
Taking on partners—a prudent move in these uncertain times—will help RioCan offset the construction costs for these new developments. The cash will also help it keep paying distributions to investors. The units yield a very high 9.9%.
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T.REI.UN, T.HR.UN technicals were same buy weeks ago September 2020 we were in weeks ago.T.CMMC copper +$3.125, NOV 2 ,2020 earnings reporting
Thanks for your opinion on the two REITs. Both are recommendations of our Canadian Wealth Advisor newsletter. Thanks also for your view on Copper Mountain Mining Corp.
T.CMMC block buying