Takeaways From Management Meetings: Guidance Increasingly Looking Conservative

Research evidence excerpt

Takeaways From Management Meetings: Guidance Increasingly Looking Conservative

TD Cowen RioCan REIT

Global Research June 23, 2026

VALUATION METHODOLOGY AND RISKS

Valuation Methodology

Real Estate/REITS:

Our REIT valuations generally use two approaches. Most of our target prices are based on a

P/AFFO multiple, with our AFFO forecasts representing estimated recurring free cash flows

after capital expenditures and leasing costs. We incorporate historical and current valuation

multiples of both the company and its peers, as well as our analysis on future growth rate

expectations, company-specific risks, and other inputs from our research when devising the

multiples used to generate our target prices. We also use Net Asset Value (NAV) as a secondary

check, and in some cases as the primary valuation method. Our NAV estimates most often

consist of an applied capitalization rate to estimated forward one year NOI (net operating

income), less debt, but in some cases represent a SOTP valuation.

Investment Risks

Risks to the REIT sector may include: slowing rent growth; higher vacancies; adverse

government legislation; new supply coming on to the market; fluctuations in interest

rates; operating cost pressures; tenant credit risk; local real-estate markets and general

macroeconomic challenges. For companies in our coverage with development projects,

additional risks include: construction delays; cost overruns; and failure to achieve targeted

financial projections.

Risks To The Price Target

Key risks to our target price include local real estate markets; excessive competitive supply;

general economic conditions and demand for space; fluctuations in interest rates; cost

pressure; tenant credit risk; and potential for developments not to reach budgeted stabilized

NOI.