Short term I expect the company will continue to struggle due to COVID-19. As we've witnessed in the Q2 report, a net loss of $247.9 million is substantially lower than net income of $447.5 million in 2019 through the first 6 months. More amplified is the fact that the company had a net loss of $350.8 million in this quarter alone. However, this was to be expected. Funds from operations are down 25% as well.
Long term however, 85% of rent has been paid in July, and with more businesses opening back up we can probably assume this will continue to improve.
The main thing we like about RioCan is it is probably the most diverse REIT in the country. No client makes up over 5% of the portfolio. And to add to this, it's based in the Toronto market, and we know how fast that's growing and will probably continue to grow.
Of note, Shopify was due to lease a ton of square footage (over 433k) from the joint project in Toronto Allied Properties and RioCan called The Well Tower. Not too long ago, the Shopify CEO stated they have full intentions of making Shopify an exclusively "work from home" company, stating that “As of today, Shopify is a digital by default company”.
This is the only potential long term issue I see with RioCan. If Shopify does it and does it successfully, how many more companies will follow suit? Only time will tell.
And, we have the potential of a second wave shutting businesses down again. But, this is a concern for most all stocks, not just REITs.
If you're a buyer now, just expect some volatility and be willing to be very patient. In the mean time, you can collect a pretty handsome dividend, one that management said will not be cut. However, it's important we take that with a grain of salt too. They can say one thing and do another.