RioCan Real Estate Investment Trust announced Tuesday its financial results for the three months ended March 31, 2025 and provided an update on its relationship with Hudson’s Bay Company.
“Hudson’s Bay Company ULC (HBC), the primary tenant of the RC-HBC JV, filed for creditor protection on March 7, 2025 under the Companies’ Creditors Arrangement Act (CCAA). Through its investment in the RC-HBC JV, RioCan indirectly holds a 22% interest in ten locations where HBC is the sole tenant, and an 11% interest in two multi-tenanted locations (the RC-HBC JV owns 50% of these two multi-tenanted locations and RioCan owns 50% directly). Please refer to RioCan’s Press Release dated March 18, 2025,RioCan Real Estate Investment Trust Provides Update on Hudson’s Bay Company’s CCAA Filing, which provides details of RioCan’s balance sheet and FFO exposure.
“A court order dated March 21, 2025 requires HBC to pay $7.0 million of the approximate $10.0 million (at 100%) of monthly occupancy rent due to the RC-HBC JV. This payment provides sufficient cash flow to cover expenses, debt service obligations and fees, including fees and debt service that is payable to RioCan. The remaining amount will be accrued with a charge against the HBC estate, ranking ahead of the pre-filing creditors. RioCan has recorded a provision of approximately $1.0 million (at RioCan’s share) for the uncollected portion.
“RioCan also evaluated the carrying value of its net investment in the RC-HBC JV and recognized $208.8 million of Total RC-HBC JV Valuation Losses for the three months ended March 31, 2025. These valuation losses were based on management’s best estimate using the information available to the Trust and include the assumption of re-leasing the investment properties to new tenants at market rents below existing rents at sole tenant locations.”
RioCan is one of Canada’s largest real estate investment trusts. It owns, manages and develops retail-focused, mixed-use properties located in prime, high-density transit-oriented areas where Canadians want to shop, live and work. As at March 31, 2025, its portfolio is comprised of 177 properties with an aggregate net leasable area of approximately 32 million square feet (at RioCan’s interest).
As for its Q1 financial results, RioCan noted these highlights:
- Strong leasing demand generated new leasing spreads of 18.3%; blended leasing spreads of 17.5%
- Commercial Same Property NOI increased to 3.6%
- 96% completion of expected First Quarter condominium interim closings to date; cumulative 97% success rate since Q4 2024
- RioCan Living asset monetization strategy proceeding with deals for the sale of four additional assets
“RioCan’s major-market, necessity-based portfolio delivered strong operational and financial results in the first quarter of 2025, despite significant global economic volatility and short-term challenges presented by HBC’s CCAA filing. We continue to successfully deliver on our strategy to monetize our RioCan Living portfolio and met our interim condominium closing targets for Q1”, said Jonathan Gitlin, President and CEO of RioCan.
“We remain focused on executing our strategy to drive growth and responsibly managing capital to maximize long-term value for our Unitholders. With a proven track record and experienced team, we are well positioned to successfully navigate any economic environment. With respect to HBC, we will be disciplined in our approach, and we are committed to protecting the interests of our Unitholders.”
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