Riocan REIT Reports Strong Q4 2025 Results: Key Takeaways and Future Outlook

Riocan REIT, a leading Canadian real estate investment trust, recently announced its fourth quarter and full-year results for 2025, showcasing robust financial performance and strategic initiatives that position the company favorably for continued growth. With 4.5% same property NOI growth and a reduction in net debt to EBITDA to 8.6 times, the company demonstrated strong operational momentum. This article analyzes the key financial metrics, strategic initiatives, and future outlook presented during the earnings call.

Financial Performance

In its recent earnings call, Riocan REIT reported a Core FFO of $1.55 per unit, aligning with the company's projections made at the Investor Day. The following key metrics highlight the company's strong performance:

• Same Property NOI Growth: Achieved 3.6% growth for the full year and 4.5% in Q4, showcasing the resilience of its cash flows.
• Blended Leasing Spreads: A record-setting 21.1% for the full year, indicating strong demand for retail space.
• Occupancy Rate: Retail committed occupancy stood at an impressive 98.5%, underscoring the attractiveness of Riocan's portfolio.
• Capital Repatriation: The company successfully repatriated $742 million of capital, bolstering its balance sheet and supporting unit repurchase activities.

These results reflect the effectiveness of Riocan's retail-focused strategy and its strong operational execution despite broader market challenges.

Strategic Initiatives

Riocan REIT's management highlighted several strategic initiatives aimed at driving growth and enhancing shareholder value:

• Portfolio Enhancement: The company continues to focus on necessity-based retailers, with 86% of its sites now including a grocery component. This strategy aims to anchor daily traffic and ensure consistent performance across its locations.
• Leasing Strategy: Riocan is in the midst of a leasing super cycle, with 10.1 million square feet of leases maturing over the next few years. This presents an opportunity to reset rents and enhance income quality by selectively retaining high-quality tenants.
• Capital Recycling: The company successfully sold $406.6 million of assets and is on track to meet its goal of $1.3 to $1.4 billion through its Riocan Living Disposition program, further strengthening its balance sheet.
• Technological Investments: Continued enhancements in operational and technological capabilities were emphasized, contributing to improved employee engagement and efficiency.

These initiatives demonstrate Riocan's commitment to a disciplined capital allocation strategy while maintaining a focus on its core retail strengths.

Future Outlook

Looking ahead, Riocan REIT's management provided guidance that reflects confidence in the company's ability to sustain growth and enhance shareholder value:

• 2026 Guidance: The company expects Core FFO per unit in the range of $1.60 to $1.62, with same property NOI growth projected at 3.5% to 4%. Management believes that approximately 75% of this growth is contractually secured through rent steps and previously signed leases.
• Investment Plans: Riocan is planning to invest $95 to $150 million into retail-focused projects in 2026, including significant improvements at key properties such as the Young Eglinton Center and the addition of grocery components at Georgian Mall and Oakville Place.
• Debt Management: The company aims to maintain a net debt to EBITDA ratio of 8 to 9 times, allowing for flexibility in capital allocation while managing financial risk effectively.

Management expressed optimism about the future, believing that the current unit price does not fully reflect the intrinsic value and earnings potential of the company's business model.

Conclusion

In summary, Riocan REIT's fourth quarter and full-year results for 2025 showcase a strong financial performance characterized by impressive same property NOI growth and record leasing spreads. The company's strategic initiatives, including a focus on necessity-based retail, disciplined capital recycling, and technological enhancements, position it well for future growth. With a robust outlook for 2026, management’s guidance reflects confidence in the company's ability to deliver consistent, durable cash flows and long-term value creation for its unitholders. As Riocan REIT continues to navigate the evolving retail landscape, its strategic focus and operational excellence will be key drivers of success in the years to come.