The second quarter results are less than stellar. How much longer can this keep up before Mr. Sonshine has to go back on his promise not to cut?
The net earnings of 12 cents in the quarter made me sit up and take notice. The 97% occupancy rate is very good, however.
http://finance.yahoo.com/news/RioCan-Re ... l?x=0&.v=1
This is my knee jerk 15 minute analysis oO
* March 31 post way above was "run for cover and hide under a rock".
* It doesn't look like they can sustain current distributions long term (unless the economy turns around dramatically and quickly) because the distribution takes up all the profit as well as the amortization, so they would have to use up cash or borrow to pay for any capital expenditures.
* YOY it looks like their income went down while their expenses went up. That doesn't sound like a winning combination, particularly if occupancy levels hasn't changed.
* 97% is indeed very good. Sounds like they have no free space to rent and that they cannot therefore increase their revenues, unless rental rates rise. Which seems unlikely in the midst of a global economic crisis and soaring vacant office and commercial real estate space.
* I'd ask myself what happens if the occupancy drops from 97%... It can't go up much, but it can go down...
* What happens if interest rates rise sometime down the road. I think many of their leases are matched to their mortgage rates (or mortgage durations) or something like that, but it is interesting that their YOY interest expense went up while their revenue went down...
* What happens if we enter a period of hyper inflation (10% + inflation) and interest rates go through the roof; will their tenants (the ones that don't close or go bankrupt or leave) pay increased rental rates at a speed of increase equal to the increasing interest rates...
That being said, if the economy "recovers", which seems probable for Canada, they might be ok, and the 9% dividend might be safe.
Too many bombs for me, and based off a 15 minute check of the wires leading into those bombs, it doesn't look like any of them will go off, but I don't think I'll stick around to find out. I'll stay somewhere safer for my part.
If things go boom I might come out from under the rock, sift through the rubble and do some REIT bargain hunting.
P.S.; I don't know much about REITs. Arby seems to follow them closely.
Research until your head hurts then scream Banzai!!! and charge fearlessly to victory or death!