Thursday, July 29, 2010

Riocan Announces Results.

Riocan RealEstate continues to impress investors with solid returns and operational results.

Though I have held it for a number of years, Riocan will remain one of my core holdings for a number of key reasons:

When analysing a real estate investment trust, FFO, or FFO per unit is a key measure of how cash-flow rich the business really is. Remember, real estate operations have significant amounts of depreciation etc. from their buildings, so "income" is not always the best indicator of financial health.

-- Funds from operations ("FFO") increased by 37% to $92.8 million in the second quarter of 2010 compared to $67.9 million in the second quarter of 2009. On a per unit basis FFO increased 26% to $0.38 per unit from $0.30 per unit in the same period of 2009.

Net operating income increased as well, by a healthy margin.

-- Second quarter net operating income ("NOI") increased 17% or $20.4 million versus the second quarter of 2009 and increased 17% or $39.4 million for the first six months of 2010 versus the same period in 2009.

And last but not least, the company continues to maintain a strong occupancy rate both in Canada and the United States, with no tenant contributing more than 5 percent to revenue!

-- Maintained strong occupancy rate of 97.0%; and had cash on hand of $65.3 million at quarter end.

It is clear that RioCan remains strong and healthy, and with a distribution of 12 cents per month for each unit, this business actually pays you to invest, unlike many other businesses these days.

Matthew Clarke.

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