RioCan REIT and CT REIT released their Q1 2025 financial and operational results on May 5, and while RioCan had to absorb a $209-million hit thanks to its involvement with Hudson's Bay Company, CT REIT had no such blips on its radar. 

CT REIT has approved a 2.5 per cent distribution increase to unitholders after another strong quarter, while RioCan president and CEO Jonathan Gitlin described his company’s first three months of 2025 as “paradoxical” during a May 6 conference call with analysts.

“It's been a tough quarter, though you wouldn't know it based on results,” Gitlin explained. “RioCan continues to produce operational results demonstrating considerable strength and maintaining historic highs. 

“However, the backdrop has been a bit turbulent. The macro environment is rife with uncertainty, including trade conflicts, economic instability, dampened market and consumer sentiment and a general risk-off approach to trading. In addition, Canada's longest-standing retailer, Hudson's Bay Company (HBC), commenced insolvency proceedings under CCAA.

"It's a rocky road but, as always, RioCan is well-positioned to navigate it.”

Toronto-based RioCan’s portfolio is comprised of 177 properties. There’s approximately 32 million square feet of leasable area in its commercial portfolio, not including income-producing properties that are owned through joint ventures. 

The REIT also has approximately 21 million square feet of space zoned for development.

RioCan’s operational and financial results

RioCan’s core retail portfolio achieved record-breaking operational results, according to Gitlin. These included: 

• a committed retail occupancy rate of 98.7 per cent;
• respective blended and new leasing spreads of 17.5 and 18.3 per cent;
• and commercial same property net operating income (NOI) growth of 3.6 per cent due to contractual rent steps, an increase in in-place occupancy and positive leasing spreads.

One million square feet of retail space was leased during the first quarter, including 200,000 square feet of new leases with necessity-based tenants.

A 28-cent net loss per unit was 71 cents lower than in the same period last year. 

RioCan has approximately $1.43 billion of liquidity and $8.46 billion in unencumbered assets, which the REIT said will enable it to successfully navigate economic volatility and optimize capital allocation. 

RioCan and Hudson’s Bay Company

RioCan and HBC established a joint venture in 2015. The REIT indirectly holds a 22 per cent interest in 10 locations where HBC is the sole tenant and an 11 per cent interest in two multi-tenanted locations. The joint venture represented 4.4 per cent of the trust’s funds from operations and 3.3 per cent of its equity as of the end of 2024. 

“We've written down our investments by $209 million this quarter, which represents the vast majority of the NAV related to the joint venture,” Gitlin explained, noting RioCan had done previous contingency planning to prepare for a situation like this. It's now taking steps to preserve value, protect the REIT’s rights and advance its strategic interests. 

“We feel confident in our ability to recover some of the value over time,” Gitlin said. “We believe the market is pricing a downside risk that is more substantial than the probable outcome.”

RioCan Living

Gitlin also updated efforts to divest buildings in RioCan Living’s existing residential rental portfolio. RioCan Living's operations generated $7.5 million of NOI in Q1, an increase of $1.1 million over the same period last year. There are 13 buildings in operation with a fair value of approximately $900 million. 

In addition to the sale of Strada in Toronto, which closed in 2024, RioCan has a firm deal to sell its 50-per-cent share of Brio in Calgary, plus conditional sales for its 50-per-cent stakes in three additional assets. The REIT is also in advanced discussions on other properties within the RioCan Living portfolio.

“RioCan Living assets are unique,” Gitlin said. “They're new and therefore have low cap-ex requirements. They're not subject to rent control and therefore have strong growth profiles. They're in major markets and have transit at their doorstep. 

“These characteristics are generating interest from buyers and will continue to do so in the future.”

While RioCan is selling its existing residential rental portfolio to reduce debt and purchase units under its normal course issuer bid program, Gitlin emphasized RioCan Living will continue to be a part of the trust’s business.

“RioCan will remain focused on maximizing value from our extensive mixed-use density pipeline,” Gitlin said. “When the time is appropriate, we will either build additional mixed-use properties or sell the densities. 

“If we choose to build, we'll pursue this through a structure that minimizes the impact on RioCan’s balance sheet. This involves seeking outside investors to provide the majority of required capital, while RioCan will contribute its plan and its expertise.” 

On a proportionate share basis, approximately $66.1 million of condominium sales revenue and $22.2 million of residential inventory gains were recognized in Q1. Ninety-six per cent of the 324 expected Q1 condo interim occupancies at 11YV and U.C. Tower 2 were completed as of May 5. 

Approximately $468 million of sales revenue is expected from the remaining units in RioCan Living’s five active condo construction projects.

CT REIT

CT REIT’s portfolio is comprised of more than 375 properties totalling more than 31 million square feet of gross leasable area, consisting primarily of net lease single-tenant retail properties across Canada. Canadian Tire Corporation, Limited is the most significant tenant.

The REIT saw property revenue rise by 4.3 per cent to $150.4 million and NOI increase by 4.6 per cent to $118.7 million compared to the same period a year earlier. This was primarily due to the acquisition, intensification and development of income-producing properties completed in 2024.

CT REIT’s indebtedness ratio dropped by 70 basis points to 40.3 per cent while its occupancy rate held steady, sliding by 10 basis points to 99.4 per cent.