February 28, 2011 / 5:20 PM / 7 years ago

UPDATE 1-RioCan posts 35 pct FFO jump, units at 3.5 yr high

* RioCan FFO rises to C$0.35/unit from C$0.28, as expected

* Units jump to highest level on TSX since October 2007

* Comfortable with C$600 mln target for acquisitions (Adds details)

TORONTO, Feb 28 (Reuters) - Units of RioCan Real Estate Investment Trust (REI_u.TO) rose to their highest level in 3-1/2 years on Monday after Canada’s largest landlord of retail space reported a 35 percent rise in quarterly funds from operations (FFO) after a big year of acquisitions.

FFO, a key measure of profitability for real estate companies, rose to C$89 million ($91.8 million), or 35 Canadian cents a share, in the fourth quarter, up from C$66 million, or 28 Canadian cents a share, in the year-earlier quarter, RioCan said.

The results met the average estimate of analysts surveyed by Thomson Reuters I/B/E/S.

Units of RioCan rose 2.2 percent to C$24.30, their highest point since October 2007, on the Toronto Stock Exchange. The units have risen about 10 percent since the start of the year.

During the quarter, RioCan completed the acquisition of 19 properties. For the year, it added more than 5.7 million square feet to its portfolio, spanning 48 properties in Canada and the United States for an aggregate purchase price of C$986 million.

In a conference call with analysts, Chief Executive Ed Sonshine said he was comfortable with the REIT’s target of making another C$600 million of acquisitions in Canada and the United States this year. He said the REIT was also looking at expanding its U.S. footprint beyond the Northeast and Texas, but did not say where.

Sonshine also said he expects rents will rise as the next wave of U.S. retailers entering the Canadian market starts to hit. Last month’s announcement that U.S. discount retailer Target Corp will make its long-anticipated advance into Canada intensified sentiment that demand will be hot for retail property this year. [ID:nN13263162] [ID:nN18236768]

“There is no question that we expect increases in rents to accelerate,” Sonshine said. He cautioned, however, that they may not rise as dramatically as many expect.

The REIT said its occupancy improved at yearend, rising to 97.4 percent in the fourth quarter from 97.1 percent in the third.

$1=$0.97 Canadian Reporting by Ka Yan Ng; editing by Peter Galloway

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