RioCan Real Estate Investment Trust, one of the founding and largest REITs in Canada, will mark 30 years as a public company on Friday with a bell ringing ceremony to open the TSX (Toronto Stock Exchange).
For the past three decades, RioCan has been a fixture in commercial real estate, managing vibrant shopping centres, residences, and mixed-use properties that cater to consumer needs. Today, its portfolio consists of about 200 retail-focused, increasingly mixed-use properties in Canada’s largest cities.
Oliver Harrison, RioCan’s Senior Vice President, Leasing and Tenant Experience, said over the past three decades RioCan has grown and then it shrunk and diversified its portfolio.
“I’ve been with RioCan in May it will be 25 years. When I started we were in the process of sort of finalizing our first large scale acquisition . . . I think at the time we had 20 properties, we grew very quickly from that point. Probably until 2016 we peaked north of 200 properties, closer to 250 properties across North America. We had a large Canadian portfolio but we also had 40 properties and 10 million square feet in the United States,” said Harrison.
“No residential. That’s definitely something that’s changed and I would say we’re a little bit less particular about what we were focused on owning and operating than we are now. Right now we are heavily focused on owning and operating in the six major markets in Canada, predominantly transit-oriented properties, in some cases with a mixed-use component, primarily that mixed-use being residential. That historically was not the case. We were primarily buying power centres as we used to call them and building them, grocery anchored strip centres and enclosed centres. We still have a bunch of new format retail as we call it and grocery anchored strips but I think we’re down to maybe eight enclosed centres, maybe even less at this point in time.”
As at September 30, 2023, the RioCan portfolio was comprised of 192 properties with an aggregate net leasable area of approximately 33.6 million square feet (at RioCan’s interest) including office, residential rental and 10 development properties.
“There is definitely opportunity for growth through both development and acquisitions. We still have a very healthy pipeline of sites that are either in the process for various city approvals to proceed with development and/or already approved and ready to proceed,” said Harrison.
“So I think development is certainly a big component of how we plan on growing in the future. Acquisitions to a lesser degree probably. But growth primarily through development in major markets and transit-oriented and in the form of mixed-use development.
“I don’t see us building any grocery-anchored strip centres or new format shopping centres. We just delivered Windfield Farms which is out in north Oshawa a year ago. But that’s probably the last one we’ll do for quite some time.”
The jewel in the RioCan portfolio is the massive joint venture development The Well, in the heart of downtown Toronto.
The Well is a joint venture between RioCan REIT and Allied Properties REIT, bordering Front, Spadina and Wellington. It is a mixture of retail, commercial and residential space in downtown Toronto that will draw approximately 22,000 daily visitors, including the approximately 11,000 residents and employees that will live and work at The Well.
Harrison said the demand for retail space remains really strong.
“In the urban markets, following population growth, retailers are looking to expand their network. Our pipeline is still very strong. Our occupancy remains at record highs in our retail portfolio and our retention ratio as well is on a historic basis still trending very positively,” he said.
“So the retail story is still great at the moment. Doesn’t mean there’s not going to be some bumps on the road because there always is but we’re very pleased with the growth that we’re seeing from our retail portfolio.”
Of the 13 RioCan Living™ buildings in operation 11 were stabilized and 97.5 per cent leased as at November 2, 2023. Total NOI (net operating income) generated from its residential rental operations for the Third Quarter was $5.6 million, an increase of $1.8 million or 46.3 per cent over the same period last year. An increase of approximately eight per cent in average monthly rent per occupied square foot on a same property basis contributed to the year-over-year improvement.
Occupancy commenced at FourFifty The Well™ on August 1, 2023. Construction of 236 units was completed in the quarter. The remaining 356 units were completed in phases through Q4 2023 and early 2024. Pre-leasing commenced in March 2023 and units are leasing at a healthy velocity and at rates in-line or above expectations.
The 2,605 condominium and townhouse units that are under construction as of September 30, 2023, are expected to generate combined sales revenue of over $800.0 million between 2023 and 2026 that can be redeployed to productive uses such as paying down debt or development. Of RioCan’s six active condominium construction projects, 86 per cent of the total units have been pre-sold, representing 95 per cent of pro-forma total revenues.
