UPDATE 1-RioCan FFO rises 7 percent in third quarter

* FFO rises to C$0.37/unit

* Portfolio occupancy at 97 percent

* Says diversified portfolio will help weather turmoil

TORONTO, Nov 4 (Reuters) - RioCan Real Estate Investment Trust (REI_u.TO) said third-quarter funds from operations rose 7 percent, partly because of increases in property rents.

Funds from operations, a key measure used by real estate companies, were C$81.3 million ($70.7 million), or 37 Canadian cents a unit, in the quarter, up from C$76 million, or 36 Canadian cents a unit, a year earlier.

Analysts had expected FFO of 37 Canadian cents a unit, according to Reuters Estimates.

RioCan said it would be able to weather the turmoil in financial and real estate markets because it holds a diversified portfolio with solid national and anchor tenants.

The trust said it earned C$41.6 million, or 19 Canadian cents a unit, in the three months ended Sept. 30, up 16 percent from C$35.9 million, or 17 Canadian cents a unit.

Rental revenue rose to C$173.1 million from C$160.6 million.

RioCan said its portfolio occupancy at the end the quarter was 97 percent.

RioCan reported results after market close. Its units finished up 2.6 percent at C$17.50 on the Toronto Stock Exchange.

($1=$1.15 Canadian) (Reporting by Ka Yan Ng; editing by Rob Wilson)