The retail REIT just raised its own outlook and the numbers behind it matter for lending
RioCan Real Estate Investment Trust posted its highest retail occupancy reading on record in the second quarter of 2026.
Committed occupancy reached 98.8% across its 164-property portfolio, a milestone that points to deepening supply constraints in Canada's necessity-based retail market and carries direct implications for commercial mortgage lending.
The Toronto-based real estate investment trust (REIT) reported net income of $151.2 million for the three months ended June 30, up from $145.6 million in the same period of 2025.
Diluted net income per unit rose to $0.52 from $0.49 year-over-year. Core funds from operations (FFO) per unit — diluted reached $0.40, a 5.3% increase, driven primarily by commercial same property net operating income (NOI) growth of 4.3% and unit repurchases.
On the strength of those results, the trust raised its 2026 commercial same property NOI growth guidance to 4.0%–4.5%, up from an original estimate of 3.5%–4.0%.
Leasing spreads signal NOI growth for commercial brokers
RioCan's blended leasing spread for Q2 2026 reached 23.1%, supported by a new leasing spread of 40.8% and a renewal spread of 20.7%.
Average net rent for new leases came in at $37.73 per square foot. That's 60% above the portfolio's average in-place net rent of $23.58.
The trust completed 1.0 million square feet of leasing in the quarter with a retention ratio of 92.5%, and a further 1.0 million square feet of lease maturities remain in 2026.
As tenancies renew at materially higher rates, NOI projections strengthen, improving refinancing cases and acquisition underwriting on retail-anchored properties.
Lenders are demonstrating strong appetite for assets with durable income streams, with private and institutional capital re-engaging in urban and necessity-based retail.
Residential exit nears completion
RioCan also reported cumulative proceeds of $1.26 billion from its RioCan Living divestiture programme, representing 96% of its $1.3 billion target for 2025–2026.
First-half dispositions, including The Underwood Apartments, FourFifty The Well, and Bellevue Phase One and Two, generated gross proceeds of $280.5 million.
Two conditional sale agreements announced after quarter end are expected to contribute approximately $205.7 million in estimated gross proceeds.
The strategic exit from residential rental properties narrows RioCan's focus to pure-play retail collateral. That shift arrives alongside the $9.4 billion acquisition of First Capital REIT by KingSett Capital and Choice Properties that signals deepening conviction in grocery-anchored assets as preferred collateral.
"Our second-quarter results reinforce that RioCan's strategy is working," said Jonathan Gitlin, President and Chief Executive Officer of RioCan.
"The strength of our fundamentals, the quality of our necessity-based retail portfolio and our full operating independence provides RioCan the flexibility to make decisions based on what's best for each asset, supporting strong performance and durable growth."
Unitholders' equity rose $68.4 million during Q2 2026 to $7.18 billion, driven by investment property fair value gains.
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