RioCan sales will fund new projects

Article Excerpt

RIOCAN REAL ESTATE INVESTMENT TRUST $23 is a buy. The REIT (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 317.8 million; Market cap: $7.3 billion; Price-to-sales ratio: 6.3; Distribution yield: 4.2%; TSINetwork Rating: Average; www.riocan.com) owns all or part of 214 shopping centres and other properties across Canada. The REIT expects to spend about $500 million on new projects in 2021. To help offset those costs, it continues to sell non-core properties—a process called “capital recycling.” So far in 2021, it has sold (or agreed to sell) several properties for a total of $880.5 million. RioCan’s units are still below their pre-pandemic high of $28 in December 2019 but should continue to move up as malls re-open and it builds new residential properties. The units now trade at an attractive 13.7 times the REIT’s projected 2021 cash flow of $1.67 a unit. The $0.96 distribution yields a high 4.2%. RioCan is a buy. buy…