RioCan Q3 takes hit from smaller gain in property value, but operations advance

TORONTO – RioCan Real Estate Investment Trust’s bottom line took a hit from “fair value” accounting requirements in the third quarter but the shopping mall operator says its operational results were an improvement over the same time last year.

Riocan’s revenue in the quarter was $283 million, up from $246 million a year earlier, and distributions to common unitholders increased to $101 million from $91 million a year earlier.

On a per-unit level, distributions were constant both years at $1.38 but there were about 27 million more units outstanding in the quarter ended Sept. 30.

The Toronto-based trust (TSX:REI.UN) had $125 million in net income in the third quarter, a $43-million decline from last year that the shopping mall developer attributes to a smaller increase in the fair value of its investment properties.

In the three months ended Sept. 30, the increase in fair value was $7 million, comparedwith a $73-million in the third quarter of 2011.

Adjusting to exclude the fair-value gains in both years, RioCan had $120 million of net income — up from $97 million a year earlier.

RioCan says its operating FFO — which excludes gains from the sale of real-estate and certain costs of property development — was $115 million or 40 cents per unit, compared with $97 million or 37 cents per unit a year earlier.