TSX:REI.UN - Post by User
Post by
incomedreamer11on Feb 10, 2022 8:46am
222 Views
Post# 34415807
TD comments on results
TD comments on resultsRioCan REIT (REI.UN-T) C$22.66 Q4/21 Results Ahead; Cash Distributions Raised +6.25% Sam Damiani, CFA Jaz Cumberbatch, CFA (Associate)
Impact: POSITIVE
Our Take: RioCan delivered a solid beat on both FFO and AFFO, with significant NCIB activity and a distribution increase both demonstrating management's confidence in the outlook.
Results vs. Forecast (Exhibit): Q4/21 FFO/unit of $0.46 was ahead of our $0.37 estimate and consensus of $0.40 largely due to ~$26mm of residential inventory gains ($24mm above our forecast) related to the sale of a 75% interest in the condo development component of Leaside Centre in Toronto ($54.5mm or $145/sf buildable). On our calculation of AFFO/unit, RioCan's $0.347 beat our $0.33 estimate by 5%. Committed occupancy increased for the fourth consecutive quarter, rising +40bps q/q to 96.8% (Q4/19: 97.2%). In-place occupancy was +50bps q/q at 96.1% (Q4/19: 96.3%), and the highest since Q2/20. SPNOI growth (including BDE) was +4.9% Y/Y, and excluding BDE was +0.1% - the first positive quarter since Q3/20.
New 2022 Guidance: Management expects FFO/unit growth of 5%-7%, implying $1.70/unit or ~3% ahead of our estimate and consensus. The Well – Retail: Firm leases now represent 50% of total retail space (up from 33% a year ago), and those in advanced discussions would increase it to 62%. With the spring 2023 grand opening approaching, we expect lease-up to accelerate.
Balance Sheet/Capital Allocation: Distribution Increase: RioCan announced a +6.5% distribution increase to $0.085 per unit ($1.02 annualized versus $0.96 currently) commencing with the February distribution. Management targets recurring distribution increases over the long term based on a FFO payout ratio of 55%-65%
NCIB Activity of $178mm in Q4/21: RioCan repurchased 8mm units at $22.32/ unit (equating to the maximum daily permitted between mid-November and December 31).
First Apartment Acquisition: RioCan acquired a 90% interest in the 139- unit first phase of the "Market" apartment complex in Laval for $46.8mm or $375,000/suite and based on a 4.06% cap rate (believed to be this project: https:// condosmarket.ca/en/plans-rental).
2022 Development Completions to Exceed Spending: RioCan targets ~ $500mm of investment and ~$700mm of completions, which should, in our view, reduce the PUD/GBV ratio (now 11.0%).