RioCan Real Estate Investment Trust, the country's largest REIT, appears to be hitting a strategic turning point.
Analysts will be keeping an eye on the shopping centre owner's year-end financial results when they are released Thursday for hints of what's to come.
The company has been on a property buying spree for the last three years, spending as much as $1-billion annually on acquisitions, but some observers expect those purchases to wane now that property values have risen.
Indeed, the company appears to be shifting into a new phase. It has put six malls, estimated to be worth $500-million, up for sale in places like Quebec City and Moncton, New Brunswick, as it sharpens its concentration on Canada's largest cities, especially the Greater Toronto Area, where its shopping spree has recently continued.
The deals of late suggest the company is restricting itself to higher-end opportunities. Last week it said it will be picking up a 50-per-cent-stake in Burlington Mall and full ownership of Oakville Place, both near Toronto, for about $362-million as part of the multi-firm takeover of Primaris Retail REIT's portfolio.
"The REIT continues to target increasing its investments in Canada's largest and most attractive retail property markets, [but is] broadening its property type focus to include enclosed malls and mixed-use properties, adapting to market realities," said Canadian Imperial Bank of Commerce analyst Alex Avery.
"Enclosed malls is really a new area of growth for them," added Macquarie Securities analyst Michael Smith.
Analysts tuning in for the company's conference call Thursday will also be hungry for details on Target Corp.'s imminent arrival and its implications, with more than 20 Target stores set to open in RioCan centres.
At the same time, the REIT's new strategy for U.S. expansion will also be high on the agenda, and the market will be seeking details on how its plans are unfolding. The company announced in September that it would be dissolving its partnership with Cedar Realty Trust, Inc., which it had teamed up with about three years ago when it first decided to push south of the border. The two firms built up a portfolio of properties in the U.S. northeast, and RioCan CEO Ed Sonshine has decided the company is now at the point where it can own and manage a portfolio of American properties by itself. RioCan completed the sale of all of its shares of Cedar Realty Trust Inc. last week.
RioCan's distributions are likely to come up as well, with the company announcing late in the quarter that it would be raising its distribution for the first time since 2008.