Lower Interest Rates a Plus for RioCan

Article Excerpt

RIOCAN REAL ESTATE INVESTMENT TRUST $22 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 209.5 million; Market cap: $4.6 billion; SI Rating: Average) moved down in January on investor concerns that problems in credit markets would hinder its expansion, and that a slower economy might hurt its cash flows. However, interest rates have dropped, and occupancy and leasing rates remain high at REITs in Canada. RioCan’s total occupancy is 97.6%, and anchor tenants account for 82.6% of its rental revenue. RioCan is also designing mixed-used properties that combine retail stores with residential units. New developments like this help it expand in built-up areas, and diversify its revenue streams. That should help it maintain monthly distributions of $0.1125 a unit (for a yield of 6.1%). RioCan is a buy. buy…