If anyone needed further evidence showing how uncorrelated a company’s share price (or a REIT’s unit price) can be from its underlying value, RioCan (REI.UN) provided a good example yesterday.
In the morning, RioCan announced First Quarter Results for 2022. Their operations resulted in:
- Net income of $160.1 million, exceeding the comparable period last year by $53.3 million
- FFO (Funds from Operations) of $0.42 /unit, up 27% year of year (YoY)
- A 4.1% increase in SPNOI – Same Property Net Operating Income
- 1.1 million sq. ft. of new and renewed leases
- Occupancy was 97% – up to pre-pandemic levels
- 42.6 million ft2 in the “development pipeline”
- 16.8 million ft2 of zoning approved
- 2.2 million ft2 under construction
- 2.5 million ft2 “shovel ready”
- 3.2 million ft2 actively being “redeveloped”
- 1.7 million ft2 expected to be delivered in the next 24 months
- 27.4 million of new funds expected in 2022
- Weighted interest costs are at 2.98%
- Book Value /unit $25.96 as of March 31, 2022.
Most landlords would be satisfied with those quarterly results. So, how did the market respond to their business operations? The unit price dropped $1.15 or 5% to $20.65 from $21.80 and then closed at $20.99. It was one of the most traded issues on the Toronto Stock Exchange.
RioCan owns and operates 204 premier retail properties in Canada. They lease over 36 million square feet of space and their enterprise value is roughly $15 billion.
At $21 /unit, an investor can purchase a pro-rata interest at a discount of 19%.
Further Reading, See:
RioCan’s First Quarter 2022 Delivers Growth Across Key Metrics Driven by its Quality Portfolio
RioCan REIT Posts Strong Q1 Earnings: Is the Stock Now Worth a Buy?
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