RioCan sees opportunity in U.S. real estate

* To consider deals in wider North American pool

* Aims to focus on joint ventures

* Sees funds from operation exceeding C$1.38 in 2010

TORONTO, Oct 27 (Reuters) - RioCan (REI_u.TO), Canada's largest shopping mall operator, will seek more deals in the United States in the next three to five years after unveiling its first investment south of the border earlier this week.

The REIT on Monday said it forged a $181 million alliance with Cedar Shopping Centers (CDR.N), taking a minority stake in the U.S. company and forming a joint venture on 124 shopping centers in the northeastern and mid-Atlantic states. [ID:nWNAB4410]

"We intend over the next year or so to take advantage of what we believe is a once-in-a-decade opportunity to buy quality properties on an accretive basis, to be able to do this in a North American field, rather than Canada alone," said Edward Sonshine, chief executive of RioCan Real Estate Investment Trust, said in a conference call with analysts.

"It enables us to pick the absolute best opportunities from a much larger pool," he said a day after the company posted a 66 percent decline in funds from operations.

RioCan, which owns more than 200 properties in Canada, has largely stayed away from acquisitions for nearly four years, but now expects to lay the foundation for a major expansion. In the short term, any deals are likely to take the form of joint ventures rather than outright acquisitions, Sonshine said.

Sonshine said he would not expect the REIT's assets to be more than 20 to 25 percent outside of Canada. The Cedar deal represents about 2 or 2 1/2 percent, he said.

Sonshine said the trust likes to deal with public companies because it is more comfortable with their transparency but it might also consider deals with closely held companies.

The REIT usually does not give financial guidance on its results as a matter of governance, but Sonshine said he expected solid funds from operation, a key measure of operating performance for real estate companies.

With the incoming acquisitions and the REIT's modest assumptions for more deals in 2010, he said he sees baseline FFO "well in excess" of C$1.38 per unit in 2010. For the nine-months ended Sept 30, 2009, FFO stood at 92 Canadian cents. For 2008, it posted FFO of C$1.48.

After market close on Monday, RioCan said its FFO fell 66 percent in the third quarter to C$71.6 million, or 30 Canadian cents a unit, due to higher interest expenses.

Analysts had expected FFO of 31 Canadian cents a unit, according to Thomson Reuters I/B/E/S. [ID:nN26211093]

($1=$1.07 Canadian)

(Reporting by Ka Yan Ng; Editing by Frank McGurty)