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Bullboard - Stock Discussion Forum RioCan Real Estate Investment Trust T.REI.UN

Alternate Symbol(s):  RIOCF

RioCan Real Estate Investment Trust is a Canada-based real estate investment trust. The Company owns, manages, and develops retail-focused mixed-use properties. Its portfolio includes leasing, development, and residential. The Company’s properties are held by various tenants, such as grocery, pharmacy, liquor, personal services, and specialty and value retailers. The Company’s portfolio is... see more

TSX:REI.UN - Post Discussion

RioCan Real Estate Investment Trust > The problem with the distribution cut was the timing
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Post by SirCharlesV on Dec 06, 2020 10:26am

The problem with the distribution cut was the timing

If REI cut the distribution between March-May like everyone else there wouldn't be so much uproar from shareholders. For those asking if SRU or other REITs will follow REI and cut their distribution? The answer is no. The time for cutting the distribution has long past. I don't believe any REITs have cut since May, but REI does it 7 months later, after all the vaccines have been announced. Does that make any sense? We're on the way to recovery, and the government is paying rent for all affected business' anyways. 

I know it's tough to ask yourself the tough questions as shareholders of a company you love and are heavily invested in, but it's in your interest to do so. 

As I mentioned earlier, pay close to executive compensation for REI in 2021. If they're using any part of that $150 million to give themselves a pay raise when they're already making millions a year would be wrong and unacceptable. Especially when they're giving shareholders a 33% pay cut. If they do give themselves a raise I would hope the shareholders let REI know how they feel about that. 

As for when shareholders will exit after the cut, there are 3 options:

1) Exit the morning after the announcement i.e. last Friday, which wasn't a very good move since everyone was rushing for the exits at the same time. 

2) Exit in early January after the last full distribution is paid. We should see another fairly large shareholder exit around then.

3) Exit when the unit price hits around NAV, or around $24. I'm sure many more will exit at that point when the upside potential is limited and the distribution yield remains below average. At this point there's very little reason to hold.

Comment by gashole on Dec 06, 2020 10:53am
#3 when it hits nav I think they would have already started increasing the dividend again, I dont see $24 until late 2021. Rents will be back to normal before this in my opinion, likely summer 2021. When Sonshine is gone and dividend is increasing I think Nav starts going up also, I dont see a lot of sellers in that environment, perhaps after the last ex dividend date for the 12 cents though ...more  
Comment by SirCharlesV on Dec 06, 2020 11:07am
I personally don't believe they will raise the dividends anytime soon. Sonshine's word is clearly not reliable and he's not exactly a bastion of integrity. There was no reason to cut the distribution at this point, they could've continued paying it especially since the government is paying their tenants' rent until summer, and at that point the lockdowns will be over and a ...more  
Comment by CANCDN on Dec 06, 2020 1:54pm
Sonshine is a liar.. but this was the right choice after reflecting. In fact, until the 50 million pipeline is fully built out, they should never pay more tha  60% of FFO ever again. The NAV is going to dramatically increase over the next 5-10 years and you bring on high NOI properties, pay down debt monthly and then average annual property value increase. your comments of BPY show you are ...more  
Comment by SirCharlesV on Dec 06, 2020 2:08pm
That's a very ignorant comment. Trying to get rich quick from BPY? Their share price has appreciated dramatically in the past 2 months. Investing in BPY is more about dividend safety than share price appreciation. I disagree that their dividend will be cut, they're backed by BAM, and if they didn't cut it the past 9 months, they're not going to cut now when you can see the light at ...more  
Comment by CANCDN on Dec 06, 2020 2:34pm
Can you show me the financials that show the excellent management of BPY? It's being propped up by BAM. Do you think they are just going to payout 100%+ forever?  Their rent collection for malls is worse by SPG and MAC...  SPG is the top dawg in retail reits and they cut...  
Comment by CANCDN on Dec 06, 2020 2:36pm
PS, Thier share price did not increase based on merit, it increases on BAM buying more shares before they take it in house.
Comment by SirCharlesV on Dec 06, 2020 2:46pm
I'm just using BPY as an example, I haven't bought any shares yet. I'll decide in early January what to do with my REI shares. I'm not selling until next year because I already have significant capital gains this year from other holdings that I've sold. I may dump it if there are better opportunities in early January, or hold until it hits $24, which is a price I will ...more  
Comment by ntcse123 on Dec 06, 2020 4:48pm
I've looked at TNT - solid REIT, I especially like how they provide comparison to other REITs in their presentations.  They are more of a distribution play, with limited growth but top notch safety in their tenants - AFFO payout has been slightly over 100 percent although I don't expect them to cut due to the stabiity of their business (as we've seen you never know though).  ...more  
Comment by SirCharlesV on Dec 06, 2020 5:09pm
That's a very accurate assessment of TNT. Safe, high yielding distribution with stable quality tenants and limited upside potential on the unit price. I don't currently own it, but may buy it next year.  
Comment by gashole on Dec 07, 2020 8:12am
I dont know anything about TNT to be honest, but I would rather buy something trading well below NAV that can appreciate 30 or 40% with a lower payout than something that isnt going to move but pays out a higher divi.... I want my investment to gain a couple hundred k in value rather than just sit.... HR will eventually put their dividend back over $1.30 again... in time and that together with a ...more  
Comment by SeekAlpha81 on Dec 07, 2020 8:56am
I went to take a look at TNT quickly and it seems they're paying out over 100pct of AFFO. Collections are indeed great but you need to dig a bit deeper than yield. H&R has a small yield for example but half the cash is hitting their books and FFO will increase in a big way by next summer/fall... the same for Riocan. I agree with Gas, the dividend will get reinstated when things normalize ...more  
Comment by liljohnnyjoke on Dec 07, 2020 10:49am
Some of the other REITs that announced divy cuts at the beginning of the pandemic will likely be announcing divi increases around Xmas for the start of 2021, just when these guys are cutting. With the money they saved over the last 9 months, rent paid until summer by Trudeau, and vaccine on the way they will be able. 
Comment by thenewsnake on Dec 07, 2020 10:51am
I don't expect a div increases, the horizon is still merky with lockdowns and vaccine results in the real world unknown.  Reality is some places are throwing in the towel and not reopening
Comment by Shirtlessnomore on Dec 06, 2020 2:17pm
Agree, many people rely on this income, if it's not completely necessary leave it alone. Jmo.
Comment by CANCDN on Dec 06, 2020 2:39pm
Gitlin is new head honcho, this whole VECTOM intensification focus was all his doing as per Sonshine.. as such, I think it's clear RioCan went from retirement units to growth.   
Comment by Sapho on Dec 06, 2020 3:11pm
Comment by CANCDN on Dec 06, 2020 2:01pm
I believe Gitlin has changed the focus from a retirement homding to a growth REIT. The payout won't change based on share price. It's going to be 60% of FFO period regardless of price. Now generally as FFO increases so should the unit price and corresponding payout, but the % will remain the same. IMHO
Comment by thenewsnake on Dec 06, 2020 10:54am
The problem was Toronto (50% revenue) went into a full lockdown, which was unexpected, and with no expiration date.  Winners, Toys R US, Walking on a Cloud, Ardene, everything is shut.  This was the death nail to some of those smaller places, because XMas made up a huge part of yearly revenue.  I'm telling you, don't blame Riocan, blame the politicians. They killed ...more  
Comment by CANCDN on Dec 06, 2020 1:57pm
unless Winners, Toys R US, Walking on a Cloud, Ardene declare bankruptcy (which they won't, they are paying rent. If not the store will be foreclosed on, property sold and parent company sued. a company has two choices, pay rent or declare bakrupcy... in the case of Cineplex, Sonshine made a deal for rent abatement in exchange for redevelopment rights which appears to be a good move ...more  
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