By Priya Raman

RioCan Real Estate Investment Trust expects 2026 Core FFO (recurring earnings per unit) to land at the high end of C$1.60 to C$1.62 after third-quarter Core FFO rose 5.1% year over year to C$0.41, management said.

Third-quarter commercial same-property net operating income (NOI), a rental-income measure for comparable properties, grew 4.2%, while year-to-date Core FFO reached C$1.19, up 2.6%. RioCan reaffirmed its 2026 Core FFO guidance of C$1.60 to C$1.62 per unit and its outlook for 4% to 4.5% same-property NOI growth, and now expects the FFO result at the high end.

President and CEO Jonathan Gitlin said the quarter showed progress against RioCan's 2025 investor-day strategy: concentrate on high-quality retail properties in major Canadian markets, simplify the business through residential asset sales, and maintain balance-sheet discipline.

What does record occupancy mean for growth?

RioCan's leasing engine supplied the operating evidence for that strategy: record occupancy, nearly 90% retention and double-digit renewal spreads.

• Committed retail occupancy reached a record 98.9%, while the retention rate stood at nearly 90%.
• The trust completed about 1.1 million square feet of leasing activity, including roughly 900,000 square feet of renewals.
• The blended leasing spread, measuring the rent change across leases, was 17% in the quarter and 22.7% over the preceding 12 months.

Average rent on new leases reached C$31.45 per square foot, 32% above the average rent on occupied portfolio space at quarter-end. About 15% of leases roll each year, creating continuing scope to close the gap between in-place and market rents as leases mature. “Today’s leasing spreads are tomorrow’s same property NOI growth,” Gitlin said.

Grocery activity supplied another source of leasing growth. RioCan completed two transactions with national grocery retailers covering about 63,000 square feet, including one 35,000-square-foot deal at a 64% rent increase. Over the previous 12 months, 11 grocery renewals covered more than 400,000 square feet at an average blended leasing spread of about 35%.

How close is the residential monetization target?

RioCan has effectively completed its C$1.3 billion RioCan Living capital-repatriation target after closing the sale of the Pivot apartment building in Toronto during the quarter. Completed residential dispositions have generated about C$1.2 billion.

A further C$110 million conditional sale brings the company’s effective total to the C$1.3 billion target. CFO Dennis Blasutti said three RioCan Living assets remain to be sold after 2026, with ultimate proceeds expected to exceed the target.

RioCan has also moved C$235 million of residential inventory density into investment properties and properties under development for retail use. Blasutti expects those assets to produce more durable, recurring cash flow over time. Gitlin said the proceeds and growing free cash flow will give RioCan more capacity to invest in retail, reduce debt or pursue other capital-allocation opportunities.

What does the East Hills deal change?

RioCan agreed during the quarter to buy its partner’s 37.5% interest in the Costco-anchored East Hills shopping centre in Calgary for about C$55 million. When the transaction closes, RioCan’s ownership will rise to 77.5%.

Blasutti said the purchase should exceed RioCan’s 9% unlevered internal rate of return, the annualized return before financing costs. It will initially lift debt-to-EBITDA (debt relative to earnings before interest, taxes, depreciation and amortization) modestly, but RioCan expects that effect to become neutral after a full year of EBITDA contribution.

Gitlin said acquisition decisions remain disciplined. RioCan compares purchases with retail pad development, or new retail sites beside existing centres, investment in existing properties, debt repayment and, potentially, repurchases of trust units. Management remains comfortable operating with net debt at eight to nine times EBITDA.

The trust invested C$77.5 million in retail infill, meaning additional space within existing centres, and asset-enhancement projects during the first nine months of 2026. It remains on track for roughly C$100 million of investment for the full year. Projects include work at Yonge Eglinton Centre, added retail gross leasable area, or rentable floor space, at nine existing sites and a new Costco at RioCan Burloak.

How is RioCan managing financing costs?

RioCan continues to face higher financing costs as interest rates remain elevated. During the quarter, it took a new C$400 million, 7.3-year term loan and used the net proceeds to reduce its line of credit. Since the second quarter, it has also extended C$400 million of term loans from 2030 to 2032.

At quarter-end, RioCan had met its target of keeping 70% of total debt unsecured. Its unencumbered asset pool, comprising assets not pledged as collateral, reached C$9.7 billion, and available liquidity exceeded C$1.1 billion.

Blasutti said the cost of unsecured debentures, or bonds, had risen by roughly 40 to 50 basis points at the long end of the curve compared with assumptions made at the investor day. Stronger same-property NOI growth has helped absorb that increase, and management does not expect near-term refinancing conditions to disrupt its plans.

Gitlin said remaining residential-sale proceeds and available liquidity give RioCan enough flexibility to meet obligations due next March without raising capital immediately.

What are retailers signalling?

Retailers continue to pursue expansion, particularly discount-oriented banners and established Canadian and global chains. Management said its tenant watch list remains minimal and sees no material change in tenant behaviour heading into 2027.

As of June 30, 2026, RioCan’s portfolio comprised 164 properties with about 31 million square feet of aggregate net leasable area, based on RioCan’s ownership interest. The trust owns, manages and develops necessity-based retail properties serving everyday needs in densely populated Canadian communities.