Opinions Benj Gallander
RioCan Real Estate InvestmentREI.UN.TOCOMMENTAug 04, 2015
Benj GallanderStock price when the opinion was issued
As of Jun 10, 2026. Market Open.
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She doesn't own REITs. Valuations were too high, and there was better growth elsewhere, like pipelines. REITs do pay dividends and REI is not bad. It's flat over 5 years, but high occupancy rates, a 5% dividend and 60% payout ratio, and a high renewal rates by tenants. Will do more research first, though. REITs are a rare place to pay 5% dividends with little risk.
Open air, grocery-centred. Very good centres and management. Some investments outside that core business in multi-family (where rental rates are contracting) and enclosed malls (HBC investment is an overhang). Still, distribution quite safe. Growth picture is quite bright, as they have levers to pull.
Cash flow per unit of 49c beat estimates of 45c; leasing spreads improved and same property net operating income rose. But it did take a $209M writedown on Hudson Bay and trimmed its guidance because of it (by 4c per unit). This hit offset benefits from its residential sector. The stock is down less than 1% which we would not consider abnormal.
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We think REI will be able to manage HBC's exit. The valuation is quite low at 9X cash flow, and, all things considered, the units have held up relatively well, down 6% YTD and up 2% in 52 weeks. The distribution was raised in February and payout is a decent 60%. We would not expect much from the sector, considering economic conditions, and minimal growth is expected (consensus). Still, this seems reflected in the valuation, and any good news would likely be quite positive to the stock. We would consider it 'OK', for income, overall. We are just not so sure this is a 'good' time to buy. 'Accumulate' slowly might be a better strategy.
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Still a REIT giant. Leads in the retail-focused, mixed-property use. Definitely impacted by The Bay situation. Retail weakness over next 6-12 months could be an issue.
Saw 96% retail occupancy in Q4, and 1.5% rental growth. Pressure from e-commerce. Issued debt in January to bolster balance sheet, debt is still manageable. Rate cuts could continue to spark leasing demand. Yield is 6%, cash machine for income lovers. Still reliable.
Value pick given current share price. Company beginning to find its way again. Returning back to core strengths of the business. Focus on urban centers very good idea. Management team is performing well.
Derek WarrenAttractive level, high double-digit discount to NAV. Great portfolio. Multi-family residential portfolio is growing, may start selling it off and reallocating capital to retail or to share buybacks. Overhang: $600M worth of condos closing in next 3 years. Risk/reward is in your favour to buy here.
Short term, he's constructive, likely more upside, a yield beneficiary. Medium term, might be one of the largest REITs in Canada, but one one of the smaller investors compared to pension plans, for example. Buying and developing assets is complex, expensive, and fraught with uncertainty. Fragile profile, despite good yield and recent rally.
Blue chip in shopping centre space. Growing footprint in residential. Will benefit from capital coming in to pay down debt. Internal growth is 3-4%. Good one to own going forward. Nice yield of 6%.
Andrew MoffsDistribution very safe due to proactive cutting during pandemic. Achievable net operating growth of 3%, last quarter was 3.7%. Despite rising rates, with population growth, limited new supply, and limited retail bankruptcies, setup generally good for shopping centres in Canada. In a good spot.
The operator Ed Sonshine is just brilliant, and right now is talking about selling their US operations. They bought the US operations on the cheap during and after the recession, and now is talking about selling it. Also, had the US$ appreciation at the same time. This is a company that he likes, but this sector is dangerous to some degree, because a lot of retailers are having problems. More and more people are buying on the Internet, and that will continue to a certain degree. To him it is too expensive, but for other people he could see why they might choose this.