RioCan REIT just announced its fourth-quarter and full-year 2025 results on February 17, 2026, and its operating performance, occupancy and income growth tell a story of a company that’s on the right track despite the broader economic noise.
Retail real estate is flourishing: RioCan REIT distributes monthly income
Need-based retail centers continue to thrive in Canada. RioCan REIT’s predominantly retail portfolio, which includes 168 wholly owned properties with a gross leasable area of 31.4 million square meters (GLA), is a good example of this. The REIT entered 2026 with a strong occupancy rate of 97.8%, with its retail-specific assets showing a higher occupancy rate of 98.5%. Retail space comprises 85.6% of RioCan REIT’s annual rent, with a small (11.4%) office exposure and growing mixed-use and residential space.
Why is the retail industry doing well? There continues to be a shortage of well-located retail space in Canada’s major markets. Because RioCan owns some of the best corners in high-density areas, the trust not only fills vacancies but also increases rent.
In 2025, RioCan achieved double-digit rental spreads, including a staggering 37.3% spread on new leases. When a tenant leaves, the new one pays significantly more. This pricing power drove full-year Commercial Same Property Net Operating Income (SPNOI) growth of 3.6%, a crucial metric for long-term investors, demonstrating the organic growth potential of the existing portfolio.
Approximately 8.9% of RioCan’s net leasable area is due for re-rental in 2026, followed by 12.7% in 2027. Higher contractual rents could increase revenue, operating income and distributable cash flow to improve the security of monthly distribution.
RioCan’s distribution safety
The main question from passive income seekers is: How safe is the monthly dividend? RioCan REIT’s monthly income distribution of $0.0965 per unit currently offers an annualized yield of approximately 5.9%.
Distribution looks healthy and sustainable with an adjusted payout ratio (AFFO) of 71.9% for 2025. AFFO measures a REIT’s most distributable rental cash flow, after taking into account recurring maintenance costs and straight-line rents. In the REIT world, AFFO payout ratios under 100% are sustainable, and payout ratios under 80% are among the most conservative, highly sought-after passive income streams. The current low AFFO payout ratio provides a huge cash flow buffer that allows the trust to maintain distributions even if the economy temporarily experiences difficulties.
Moreover, RioCan REIT is growing its cash flow. Over the past three years, the trust has seen consistent growth in diluted FFO per unit, which increased to $1.87 for the full year 2025 (up from $1.78 in 2024 and $1.77 in 2023). This growth is fueled by a mix of rent increases, new developments coming online and an aggressive unit buyback program that increases intrinsic value for remaining equity holders.
The case of passive income and long-term growth
RioCan REIT’s distribution stability is further anchored by a long average lease term of 7.8 years. This means that the majority of rental income has been tied up with high-quality, need-based tenants (such as supermarkets and pharmacies) for almost a decade.
From a valuation perspective, RioCan shares remain attractively priced. Trading at a price-to-FFO (P/FFO) At approximately 10.6x, the units are well below historical valuation averages and trade at a 19% discount to their most recent net book value of $24.37 per unit.
The takeaway from a passive income investor
RioCan REIT offers an attractive investment proposition for passive income: high portfolio occupancy rates, a strong organic rental growth profile and a well-covered monthly distribution, supported by increasing cash flows. If you are looking for a reliable monthly income share that you can buy in 2026, RioCan REIT is an excellent choice that can help you pay regular monthly bills in retirement.
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