RioCan Real Estate Investment Trust T.REI.UN

REIT Accounting: REI vs FCR

[RetailRube]

I am considering buying into REI and/or FCR.  So far I own zero shares.  I was hoping 1Q financials would flush out the risk from the price so I won't need to average-down in future.  I spent today reading the financial statements and key parts of the MD&As.  I now have a headache.

It sounded to me like the two companies experienced similar collection problems on April 1 when rent was due, based on their respective April news releases.  But their revaluations of investment assets looks quite different.  Does anyone know why?  My best guess is RioCan assumed they can collect most of the non-payment through normal processes like court proceedings, and we will be back to normal by the end of May.  First Capital on the otherhand seems to have used much more pessimistic assumptions.  Here is the data:

                                     REI                        FCR
Cap Rate                     5.28%                     5.0%
Income Properties      $13.1B                    $9.67B  [opening balance for Q1]
Decrease recorded      $32M                     $117M
% write-off                    0.24%                    1.21%

I exclude land and developments in process.

This analysis is very top-level, but I thought it would be more similar.  As an investor, I have decided to stay on the sidelines until they announce what they intend to do with distributions.  Hopefully that will be announced around May 15th.

I am posting this on both Bullboards because the FCR board is not as lively as REI.  Hoping to get some ideas.