Over the past six months, there has been a significant increase in my investment in Real Estate Investment Trusts (REITs) in my portfolio, with a focus on European, Canadian, and American real estate companies. One particular REIT that caught my attention was RioCan Real Estate Investment Trust (OTCPK:RIOCF) (TSX:REI.UN:CA), which unfortunately saw a 25% decrease in share price since my last article in December 2021.
Despite the decrease in share price, I am considering adding to my position in RioCan after reviewing its Q1 results. One key aspect I look at when evaluating a REIT is its Adjusted Funds From Operations (AFFO) performance. RioCan, being a commercial REIT with a significant portion of its assets in ‘grocery anchored centers’, has shown a stable AFFO performance.
In terms of debt management, RioCan has a staggered maturity of its debt pile, which will help mitigate the impact of increasing interest rates over the next few years. Additionally, the REIT has a strong balance sheet with a manageable debt to total assets ratio.
Looking ahead, I anticipate RioCan’s financial performance to improve, with potential increases in rental revenue and Net Operating Income (NOI) driven by strong leasing spreads. The REIT currently offers a monthly distribution with an attractive yield of approximately 6.3%.
In conclusion, I am inclined to increase my position in RioCan REIT due to its stable financial performance and potential for growth in the coming years. It is important to note that investing in securities like RioCan comes with inherent risks, and investors should be aware of these risks before making any investment decisions.