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The trust also trimmed four cents from its expected funds from operations for the year to between $1.85 and $1.88 per unit as the hit from Hudson’s Bay offsets benefits of higher residential inventory gains.

RioCan indirectly holds a 22 per cent interest in 10 properties where HBC is the only tenant, and has seen its rent payments reduced and the future of the properties put in limbo because of the retailer’s troubles. RioCan’s writedown slashed about 83 per cent of its perceived value in the partnership to leave it at $41.4 million.

Chief executive Jonathan Gitlin said that the revaluation is reflective of the information it has, while on the separate loans RioCan has extended to Hudson’s Bay he believes the company is well-placed to see payback on the securities backing the loans.

“We’ve got secured interests which rank ahead of virtually everyone else in the capital stack. That gives us a pretty clear path to realizing on that security, so we feel very comfortable,” he said in an interview.

The monitor overseeing bids on the joint-venture leases, which were due April 30, has not told RioCan the results, said Gitlin. There’s much still unknown about what’s ahead for Hudson’s Bay but RioCan is prepared for any outcome, he said.

“What has been priced into our units is far more dramatic than we think what the actual outcome will be.”

The millions of square feet of retail space hitting the market because of HBC could put some pressure on retail lease pricing, but RioCan’s portfolio won’t see much direct impact, he said.

The same is true, he said, of the wider recession fears and economic uncertainty, because of the company’s focus on necessity-based tenants like grocers, but that some smaller tenants could feel the pressure.

“There are going to be some independent businesses that will suffer in this kind of environment,” said Gitlin. 

“If there is some fallout, there is a significant demand in behind that space that will allow us to backfill it quite quickly and with quality tenants.”

Gitlin referred to the quarter as “paradoxical” on an earnings call, given the strong operational results against a backdrop of turbulence and uncertainty. 

The trust’s results in the quarter show this split, where the writedown led to a loss, even as it reported a 17.5 per cent increase in rates when renewals and new leases were combined and a 98.7 per cent retail occupancy.

There is however enough economic uncertainty that RioCan has decided to postpone its investor day indefinitely.

In the meantime, the trust is working to do what it can to navigate the fallout of HBC, Gitlin told the trust’s earnings call.

“Your management team is actively navigating through the process. While the path may not be linear, clarity will emerge in waves, and we look forward to sharing our progress with you.” 

This report by The Canadian Press was first published May 6, 2025.

Companies in this story: (TSX:REI.UN)