Financial Highlights Q3 2011 Highlights • RioCan’s Operating FFO (“Funds From Operations”) increased by 14% for the quarter ended September 30, 2011 to $97 million compared to $85 million for the same period in 2010. On a per unit basis, Operating FFO increased 6% to $0.37 per unit from $0.35 per unit for the same period in 2010; • RioCan’s Operating FFO increased by 14% for the first nine months ended September 30, 2011 to $280 million compared to $246 million for the same period in 2010. On a per unit basis, Operating FFO increased 6% to $1.07 per unit from $1.01 per unit for the same period in 2010; • Portfolio occupancy increased 40bps at September 30, 2011 to 97.5%, compared to 97.1% at September 30, 2010; • RioCan has acquired interests in 7 income properties (3 in Canada and 4 in the United States (“US”)) at an aggregate purchase price of approximately $240 million at RioCan’s interest with a weighted average cap rate of 6.5% during the quarter. RioCan has also added to its development portfolio through the acquisition of interests in several development sites at an aggregate purchase price of $56 million; • Subsequent to the quarter end, RioCan has completed the purchase of four properties (two in Canada and two in the US) at an aggregate purchase price of $157 million at RioCan’s interest with a weighted average cap rate of 6.8%. RioCan has also added to its development portfolio through the acquisition of an interest in two development properties at an aggregate purchase price of $8 million; • Year to date RioCan has acquired interests in 25 properties (16 in Canada and nine in the US) at an aggregate purchase price of approximately $620 million at RioCan’s interest with a weighted average cap rate of 6.7%; • RioCan has $257 million (at RioCan’s interest) of assets under firm contract, with a weighted average cap rate of 6.7% and $97 million (at RioCan’s interest) of additional acquisitions under contract, but subject to certain conditions not yet waived; and • RioCan issued 5.1 million units during the quarter, which generated $125 million of gross proceeds. Subsequent to the quarter end, RioCan issued an additional 5.1 million units, which generated an additional $126.5 million of gross proceeds. 15
Financial Highlights IFRS Valuation of Properties • RioCan uses the “fair value” model for the valuation of its income properties and properties under development (collectively, “Investment Property”) as provided under International Financial Reporting Standards (“IFRS”) ; • The Trust determined the fair value of each income property based upon the direct capitalization income approach method of valuation. The fair value was determined by applying a capitalization rate to stabilized NOI, which incorporates allowances for vacancy, management fees and structural reserves for capital expenditures for the property. The resulting capitalized value was further adjusted, where appropriate, for extraordinary costs to stabilize the income and non recoverable capital expenditures. • Individual properties were valued using capitalization rates in the range of 5.5% to 9.3% applied to stabilized net operating income (“NOI”), resulting in an overall weighted average capitalization rate for the portfolio of approximately 6.6%. Overall Portfolio Septem ber 3 0 , 2 0 1 1 Decem ber 3 1 , 2 0 1 0 W eighted Average Cap . Range W eighted Average Cap. Range Rate* Rate* Enclosed Shopping Centre 7.4% 6.2% - 9.3% 7.5% 6.50% - 9.00% Grocery Anchored Shopping Centre 6.7% 5.8% - 8.8% 7.0% 6.00% - 9.26% Mixed Use 6.7% 5.8% - 8.7% 7.0% 6.00% - 8.75% New Format Retail 6.4% 5.7% - 8.3% 6.7% 6.00% - 8.25% Non-Grocery Anchored Centre 6.8% 5.8% - 8.5% 7.1% 6.00% - 8.75% Urban Retail 6.1% 5.5% - 7.0% 6.3% 5.75% - 7.70% Total Weighted Average 6 .6 % 5 .5 % - 9 .3 % 6 .9 % 5 .7 5 % - 9 .2 6 % Fair Value of Investment Properties $ 9 ,5 7 2 $ 8 ,4 6 6 (in millions) First nine m onths 2 0 1 1 2 0 1 0 Jan 1 . 2 0 1 0 I FRS Bum p Fair Value Gain ($ millions) $ 3 8 7 $ 4 5 7 $ 1 ,6 2 4 * at RioCan’s Interest 16
Financial Highlights Three months Nine months ended September 30, Ended September 30, (in millions of $ except per unit amounts) 2011 2010 2011 2010 $246 $215 $721 $649 Total Revenues $97 $85 $280 $246 Operating FFO $0.37 $0.35 $1.07 $1.01 Operating FFO per Unit $91 $85 $272 $253 Distributions to unitholders $0.345 $0.345 $1.035 $1.035 Distributions to unitholders per Unit $70 $71 $211 $212 Distributions to unitholders net of distribution reinvestment plan $0.26 $0.29 $0.80 $0.87 Distributions to unitholders net of distribution reinvestment plan per Unit $21 $14 $61 $41 Unit issue proceeds under distribution reinvestment plan 22.9% 16.0% 22.5% 16.2% Distribution reinvestment plan participation rate Sept. 30, 2011 Dec. 31, 2010 Sept. 30, 2010 $9,906 $8,886 $8,312 Total assets 4,749 4,410 4,189 Debt (mortgages and debentures payable) 47.8% 49.1% 50.2% Debt to Total Assets 40.4% 43.6% 42.0% Debt to total capitalization 2.4x 2.5x n/c Interest coverage ratio 1.9x 1.9x n/c Debt service coverage ratio 1.0x 1.0x n/c Fixed charge coverage ratio 7.2x 6.8x n/c Net debt to Adjusted EBITDA 7,010 5,716 5,782 Market capitalization 11,887 10,126 9,971 Total capitalization (incl. Preferred Units) 17
Financial Highlights Net Operating Income – Year over Year (Canada) “nm” – not meaningful. (i) Same store refers to those income properties that were owned by RioCan and had consistent leasable area in both periods. (ii) Same properties refer to those income properties that were owned by RioCan throughout both periods. 18
Financial Highlights Net Operating Income – Sequential Quarter over Quarter (Canada) “nm” – not meaningful. (i) Same store refers to those income properties that were owned by RioCan and had consistent leasable area in both periods. (ii) Same properties refer to those income properties that were owned by RioCan throughout both periods. 19
Financial Highlights 2011 & 2012 Outlook • Robust acquisition activity the past two years will have an impact in 2011 and 2012. • Year to date RioCan completed total acquisitions of $620 million at an average cap rate of 6.7% – RioCan has also acquired an interest in several development properties with a total purchase price of $64 million – RioCan has $257 million (at RioCan’s interest) of assets under firm contract, with a weighted average cap rate of 6.7% – $97 million (at RioCan’s interest) of additional acquisitions under contract, but subject to certain conditions not yet waived – RioCan will exceed its budgeted $600 million of acquisitions in Canada and the US for 2011 • In 2010, RioCan completed total acquisitions of $986 million at an average cap rate of 7.6 % • Contractual Rent Steps of $1 million expected in remainder of 2011 and $4 million in 2012 • Increased development activity is expected in 2011 and 2012 • US tenant expansion into Canada – A number of US tenants have announced their entry into Canada • Target, Marshall’s, J. Crew, Kohl’s, Bed Bath & Beyond, Dick’s Sporting Goods • Interest savings on maturing debt are expected to continue in 2012 • Mortgage debt maturing in 2012 currently carries an average interest rate of 5.8% providing an opportunity for RioCan to reduce interest expense at current interest rates – During Q1 2011, RioCan redeemed the $180 million Series L unsecured debentures due April 2014, which carried a coupon of 8.33% and issued $225 million series O unsecured debentures with a five year term and a coupon of 4.499% resulting in annual interest savings of $6.9 million per annum 20
Acquisition Activity
Acquisition Activity 2011 Acquisitions Acquisitions During 2011 RioCan's NLA (in sqft) purchase price at RioCan's Location Cap rate (i) (millions) interest CANADA 6.3% $63 220,831 UNITED STATES 7.3% 94 467,726 Fourth Quarter to date 2011 Acquisitions 6.8% $ 157 688,557 CANADA 6.4% $74 298,208 UNITED STATES 6.5% 166 786,170 Third Quarter 2011 Acquisitions 6.5% $ 240 1,084,378 CANADA 6.7% $46 226,729 UNITED STATES 7.3% 90 587,416 Second Quarter 2011 Acquisitions 7.1% $ 136 814,145 CANADA 6.6% $87 391,920 UNITED STATES ‐‐ ‐ ‐ First Quarter 2011 Acquisitions 6.6% $ 87 391,920 2011 Acquisitions: Canada 7.3% $270 1,137,688 US 6.9% 350 1,841,312 2011 To Date Acquisitions 6.7% $ 620 2,979,000 (i) Excludes closing costs and other acquisition related costs. 22
Acquisition Activity 2011 Acquisitions 23
Acquisition Activity 2011 Acquisitions 24
Acquisition Activity 2011 Acquisitions 25
Acquisition Activity 2011 Acquisitions 26
Acquisition Activity 2010 Acquisitions 27
Capital Structure
Conservative Debt Profile • Debt ‐ to ‐ Total Assets of 47.8% at September 30, 2011; • Total operating lines ‐ $422 million with approximately $332 million available • 54 properties unencumbered by debt with a fair value of nearly $450 million as at September 30, 2011 • Floating rate debt ‐ 3.2% of total debt • Strong coverage ratios 29
Leverage and Coverage Ratios & Targets (i) Interest coverage defined as: Adjusted EBITDA for the period, divided by total interest expense (including interest that has been capitalized). (ii) Debt service coverage defined as: Adjusted EBITDA for the period, divided by total interest expense and scheduled mortgage principal amortization (including interest that has been capitalized). (iii) Fixed charge coverage is defined as: Adjusted EBITDA for the period, divided by total interest expense (including interest that has been capitalized) and distributions to common and preferred unitholders. (iv) Net debt to Adjusted EBITDA is defined as: the average debt outstanding (net of cash) for the period divided by Adjusted EBITDA * adjusted to exclude interest capitalized. 30
Modest Leverage, Strong Interest Coverage • RioCan has consistently adhered to a conservative debt policy even through periods of considerable growth – Leverage of 47.8% at historical book cost at September 30, 2011; – 60% max permitted under covenant – Interest coverage well in excess of the 1.65x maintenance covenant 2.7x 2.8x 2.7x 2.6x 2.6x 2.5x 2.9x 2.9x 2.9x 2.6x 2.2x 2.4x Leverage Interest Coverage 56.6% 56.3% 55.6% 54.9% 53.8% 53.9% 53.1% 51.9% 49.1% 48.2% 47.8% 47.3% IFRS 31
Debt Maturity Schedule • Long ‐ term, staggered debt maturity profile • 5.3% Overall WAIR • 4.7 Year weighted avg. term to maturity • Minimal floating rate debt exposure (3.2% of total debt) • Financing mortgages today at around 3.5% to 4.5% (dependent on term) 32
Leverage at Fair Value & Stock Market Value • As at September 30, 2011 47.8% 40.4% Debt to Total Assets Debt to Total Capitalization Net of cash 33
Capital Structure – September 30, 2011 Enterprise Value = $11.9 billion Total Assets = $9.9 billion 32.2% 38.3% 8.2% 9.5% 59.6% 52.2% Mortgages= $3.8 Debentures = $0.9 Equity = 270 million billion billion units outstanding 34
Borrowings in 2011 Quarter ended Nine Months ended Mortgages Payable September 30, 2011 September 30, 2011 (millions of dollars, except % data) Weighted Weighted Average Average Average term Contractua l Contractual Contractua l Contractua l to maturity in Debt Interest Rate Debt Interest Rate years New borrowings: Fixed rate term mortgages – Canada $63 4.06% $309 4.98%* 7.5 Fixed rate term mortgages – US 61 4.34% 135 4.75% 6.5 Floating rate term mortgages 2 3.05% 3 3.27% 2.4 Construction 6 3.88% 43 3.45% 0.6 Operating Lines of Credit 51 3.36% 51 3.36% 1.8 Total $183 3.94% $541 4.63% 6.2 * includes $140 million of CMBS mortgage debt with a rate of 5.48% 35
Assets Available to Finance PRINCIPAL BALANCE OF DEBT MATURING Fair Value of IPP (in millions except # NUMBER OF At September 30, 2011 2012 properties) PROPERTIES 2011 Collateral – Income Properties Encumbered Assets with Debt 1 99 15 ‐ Maturing in 2011 Encumbered Assets with Debt 23 536 ‐ 253 Maturing in 2012 Unencumbered Assets at 54 449 ‐ ‐ September 30, 2011 Construction Financing on 3 62 23 34 Properties Under Development (1) Unsecured Debt Maturity ‐ ‐ ‐ 220 TOTAL 81 $ 1,146 $38 $507 (1) Projects include components that are income producing at September 30, 2011. FV shown represents amounts in IPP only 36
Looking Ahead
Future Growth Drivers • Organic Growth – Contractual Rent Steps – contractual rent steps should generate $1 million in the remaining quarter of 2011 and $4 million in 2012 – Positive leasing spreads on maturing leases should provide positive same property NOI growth – US tenant demand providing additional rent growth and conversion of Zellers to Target will increase demand at those centres – Closing the gap – economic occupancy versus committed occupancy provides an annual NOI impact of approximately $12 million • Acquisition Activity – $986 million completed in 2010 – In the first ten months of 2011, RioCan has acquired interests in 25 properties (16 in Canada and 9 in the US) at an aggregate purchase price of approximately $620 million with a weighted average cap rate of 6.7%. RioCan has also acquired an interest in several development properties with a total purchase price of $64 million; – RioCan has $257 million (at RioCan’s interest) of assets under firm contract, with a weighted average cap rate of 6.7%, and $97 million (at RioCan’s interest) of additional acquisitions under contract, but subject to certain conditions not yet waived; 38
Future Growth Drivers • Greenfield Development – Completions in 2011 will begin to provide additional income – New projects such as St. Clair & Weston have commenced with additional projects such as YEC expected to begin in 2012 – As at September 30, 2011, development projects comprise approximately 8.9 million square feet, of which RioCan’s ownership interest is approximately 7.4 million square feet. Once complete, these developments should generate strong returns and improve the overall quality of the portfolio. – Estimated project cost for these sites is $1.8 billion with $659 million having been incurred to date ($427 million at RioCan’s interest) – Completion of these sites is expected during 2012 ‐ 2014, with the majority expected to be completed during 2013 • Intensification of Existing Sites & Urban Development – RioCan's intensification projects at Avenue Road and Queen and Portland are complete and have come on line – YEC intensification expected to begin in 2012 – Recent Urban Development acquisitions include: • Yonge & Eglinton Northeast corner – RioCan with its partners has begun to assemble parcels for future development • Bathurst & College – Potential 140 ‐ 150k square feet of urban retail space • 740 Dupont in the GTA ‐ Potential 184k square feet of urban retail space 39 • Herongate Mall in Ottawa, ON ‐ 16 acre site, redevelopment project
Future Growth Drivers Development Land Use Institutional Organic Growth Acquisitions Pipeline Intensification Relationships
New Entrants to Canadian Market Target Corporation • On January 13, 2011 Target announced that it had agreed to acquire up to 220 Zellers leasehold interests from Zellers Inc. and the Hudson Bay Company • Included in the 24 locations are 3 additional stores in RioCan’s portfolio as recently announced by Target. One of the latest 3 store openings is the result of Target’s acquisition of the Wal ‐ Mart lease at RioCan Niagara Falls. In addition, Target announced that the Zellers leases at 404 Town Centre and Parkland Mall were assumed by Wal ‐ Mart and Canadian Tire respectively. • Currently in discussions to expand several of the planned locations • RioCan is contemplating an extensive capital improvement program for those locations where it feels cash flow can eventually be increased as a result • Current Target stores selected represent 2 million square feet (at 100%) • Letter of intent to be the anchor tenant at RioCan’s St. Clair & Weston Road development site 41
Portfolio Leasing Activity • In Q3 2011, in Canada RioCan has renewed 838,000 square feet at and average rent increase of $1.01 per square foot or 7.2% • In first nine months of 2011, in Canada RioCan has renewed 3.1 million square feet at and average rent increase of $1.40 per square foot or 10.1% • In Q3 2011, excluding fixed rent renewals, RioCan renewed 0.4 million square feet at an average rent increase of $1.76 per square foot, or 9.0% • In first nine months of 2011, excluding fixed rent renewals, RioCan renewed 1.5 million square feet at an average rent increase of $2.02 per square foot, or 11.7% • Retained 88.9% of expiring leases in Q3 2011, 89.2% for the first nine months • New vacancies during Q3 2011 were 186,000 square feet at RioCan’s interest compared to 126,000 square feet in the same period of 2010 • In first nine months of 2011, vacancies during were 613,000 square feet at RioCan’s interest compared to 620,000 square feet in the same period of 2010 42
Occupancy Analysis As at September 30, 2011 • RioCan’s committed occupancy rate is 97.5%. Included in this rate is 549,000 square feet of leased but not yet open space, resulting in an economic occupancy rate of 96.3% • The gap of leased but not yet paying rent represents an additional $12 million of annualized rental revenue 43
Portfolio Leasing Activity Canadian portfolio – Renewal Leasing 44
Portfolio Leasing Activity Total Portfolio – Lease Expiries for 2011 45
Organic Growth – Lease Expires Canadian Portfolio US Portfolio 46
Interest Savings • RioCan’s debt ladder staggers maturities such that there are no single years with a large exposure to maturing debt. • This enables RioCan to take advantage of low interest rate environments and insulates the impact of higher interest rate environments. • In 2010, by refinancing maturing debt with an interest rate in excess of 7% into debt with an average interest rate of 4.8% RioCan has generated annual interest savings in excess of $6 million on refinanced mortgage debt. • In Q1 2011, RioCan redeemed the $180 million Series L debentures which carried a coupon of 8.33% and issued $225 million series O debentures with a coupon of 4.499% resulting in annual interest savings of $6.9 million and extended the term. • Additional savings are anticipated again in 2012 as maturing mortgages carry an average interest rate of 5.8% with current financings being completed at approximately 4% or a potential interest savings of 180 bps on $366 million. 47
Debt Maturity Schedule • Long ‐ term, staggered debt maturity profile • 5.3% Overall WAIR • 4.7 Year weighted avg. term to maturity • Minimal floating rate debt exposure (3.2% of total debt) • Financing mortgages today at around 3.5% ‐ 4.5% (dependent on term) 48 As at September 30, 2011
Future Growth Drivers Development Land Use Institutional Organic Growth Acquisitions Pipeline Intensification Relationships
Future Growth Drivers Acquisitions – Income Properties • In first ten months of 2011, RioCan acquired interests in 25 properties (16 in Canada and 9 in the US) at an aggregate purchase price of approximately $620 million with a weighted average cap rate of 6.7%; • RioCan has $257 million (at RioCan’s interest) of assets under firm contract, with a weighted average cap rate of 6.7% and $97 million (at RioCan’s interest) of additional acquisitions under contract, but subject to certain conditions not yet waived; • RioCan completed almost $1 billion of acquisitions in 2010 at a weighted average cap rate of 7.6% and is on pace to complete nearly $1 billion of acquisitions again in 2011 at a cap rate of approximately 6.7%; • Financing used to complete these acquisitions has been completed at interest rates below 5% 2011 Capitalization Rate Purchase Price NLA ($ millions) YTD Canada 6.5% 270 1,137,688 US 6.9% 350 1,841,312 Total 2011 6.7% 620 2,979,000 50
Acquisition Activity Recent Acquisitions – Sheppard Centre • Entered into firm contract to acquire at a purchase price of $218 million (6.11% cap rate) • Mixed use property (Retail, Office, and Residential) • 672,854 sf space • 257,039 sf of retail space • Winners, Shoppers Drug Mart, BMO, CIBC • 5.3 year avg lease term • 96% leased • 415,815 sf of office space • BMO, Aon Hewitt • 6.8 avg lease term • 100% leased • To be acquired on a 50/50 basis with KingSett Capital • RioCan will manage the property, act as leasing manager for the property and Future growth potential will be the development manager in connection with any redevelopment of the property. • Potential for • Strong demographics both retail and • Direct access to two subway lines • Opportunities for near term residential revenue improvements expansion • Fast growing area the North 51 Toronto Examples of nearby residential developments
Acquisition Activity Recent Acquisitions United States – Selected Photos Alamo Ranch, San Antonio, TX (Under firm contract) Southpark Meadows, Austin, TX Huntington Square, Huntington (Long Island), NY 1890 Ranch, Austin, TX 52
Acquisition Activity Recent Acquisitions Edmonton West Retail Centre, Edmonton, AB RioCan LaGappe, Gatineau, QC 53 RioCan Stoney Creek, Stoney Creek, ON
Future Growth Drivers Development Land Use Institutional Organic Growth Acquisitions Pipeline Intensification Relationships
Potential Development Activity • A number of US retailers have recently announced that they will be opening stores in Canada over the next five years • RioCan is in a prime position to assist these tenants with their growth needs to develop new space in Canada 55
Strong Development Pipeline Greenfield developments through in ‐ house capabilities and with partners, such as Trinity and Canada Pension Plan Investment Board (CPPIB) At September 30, 2011 • Total developments comprise 8.9 million square feet, including shadow anchors • RioCan and partners’ owned interest consists of 7.4 million square feet • Total estimated project cost is $1.8 billion, with RioCan’s interest being approx. $1.4 billion • Invested $427 million in these projects • RioCan’s funding obligations, before construction financing is $614 million ($37 million is for current development and $577 million is for potential future development) – In addition, RioCan will fund approx. $176 million under mezzanine lending program to certain partners, primarily Trinity Developments ($12 million is for current development and $164 million is for potential future development) • Generate unlevered yield between 7% to 11%, at a weighted average of 8.5% to 9.5% • Recent Urban Development acquisitions include Yonge & Eglinton Northeast corner, Bathurst & College, and 740 Dupont in the GTA and Herongate Mall in Ottawa, ON Projects Coming on Stream in 2011 • RioCan’s Urban intensification projects at 1717 Avenue Road and Queen & Portland have been completed. • Grant Crossing, Okotoks and Lowe’s Centre Orleans have also begun to contribute to RioCan’s results. 56
Strong Development Pipeline St. Clair & Weston • RioCan has completed the rezoning for its St. Clair and Weston Road development with Trinity and Canada Pension Plan Investment Board (“CPPIB”) in Toronto. • Construction commenced in late 2011. • The 20 acre site is ultimately expected to feature a 563,000 square foot property situated within a unique two storey retail. format • Target has signed letter of intent be the anchor tenant at the site 57
Strong Development Pipeline RioCan Centre Belcourt RioCan is nearing completion of its 39 acre site at Lowe’s Centre Orleans at Innes Road and Belcourt Boulevard in Ottawa, Ontario into a 398,000 square foot new format retail centre. This joint venture development with our partner, Trinity, is anchored by Lowe’s Home Improvement Warehouse which owns its own location and has commenced operations. Other major tenants at the property include Allstate Insurance, CIBC, and Empire Theatres, which have all commenced operations. Construction is expected to commence in 2011 on an additional phase, which will feature a national supermarket tenant of approximately 35,000 square feet. Grant Crossing Construction is nearing completion at RioCan’s joint venture development on Hazeldean Road, in Ottawa. This 33 acre site is currently being developed into a 403,000 square foot new format retail centre. The site is anchored by a 128,000 square foot Lowe’s that commenced operations in the first quarter of 2011. Lowe’s owns its own store which operates as part of the overall site. A 31,000 square foot Winners, a 26,000 square foot Homesense and a 22,000 square foot Michael’s commenced operations in the fourth quarter of 2010. 58
Strong Development Pipeline Cimarron Shopping Centre RioCan has commenced construction at its Okotoks site in Okotoks, Alberta, located approximately 40 kilometres south of Calgary. This 31 acre property is a joint venture development with Trinity and is currently being developed into a 434,000 square foot new format retail centre. The site is anchored by a 93,000 square foot Home Depot, which owns its own store. Costco, which will also own its own location and opened in the third quarter of 2010. A 25,000 square foot Winners commenced operations in the first quarter of 2011. 59
Strong Development Pipeline East Hills • This 148 acre site located in Calgary, Alberta is currently being developed into a 1.6 million square foot regional new format retail centre. • The East Hills development is planned in three phases. Phases I and III comprise approximately 111 acres. • Phase I of the property will be co ‐ owned with CPP 37.5%, Trinity, and Lansdowne 12.5%. • Phase II, comprises approximately 37 acres, and will be co ‐ owned with CPP, Tristar, Trinity and Lansdowne. Jacksonport • Jacksonport, located at 36th Street NE and Country Hills Boulevard NE in Calgary, is a 105 acre development site. • Will be developed into a new format retail centre with CPPIB and Trinity • Upon completion, the development is expected to feature approximately 1.1 million square feet of retail space. 60
Strong Development Pipeline Windfield Farms • This 160 acre site located in Oshawa, Ontario is currently being developed into a 1.2 million square foot regional new format retail centre. • RioCan acquired its partners’ interests in July 2011. RioCan now owns 100% of this development site Sage Hill Subsequent to September 30, 2011. RioCan has waived conditions for the acquisition of Sage Hill Crossing, a 32 acre greenfield development site in Northwest Calgary. The purchase price for the lands, which will be serviced and zoned at the time of closing, will be $31.6 million. Once completed, the anticipated gross leasable area is 347,000 square feet of retail use. The anticipated closing date is September, 2012. Development is expected to commence in 2013. 61
Canadian Outlet Centre Development • On January 24, 2011 RioCan Announced that it had entered into a letter of intent to form an exclusive joint venture for the acquisition, development and leasing of sites across Canada that are suitable for development or redevelopment as outlet shopping centres similar in concept and design to those within the existing Tanger U.S. portfolio. • On March 14, 2011 RioCan announced that through the joint venture it has entered into a purchase and sale agreement for a 35 acre parcel located in the GTA market of Halton Hills. 62
Tanger Portfolio Examples 63
Tanger Joint Venture Development Site Halton Hills Site • 35 – acre site zoned for retail • Located at 401 and James Snow Parkway • Excellent access to Brampton, Mississauga and Metro Toronto • Development expected to begin in 2011 with completion targeted for 2013 64
Future Growth Drivers Development Land Use Institutional Organic Growth Acquisitions Pipeline Intensification Relationships
Land Use Intensification • Capitalize on trend in Canada’s six high growth markets towards “densifying” existing urban locations, driven by: – Prohibitive costs of expanding infrastructure beyond urban boundaries – Environmental concerns – Maximizing use of mass transit – Generate high yields as land is already owned 66
Land Use Intensification – Eglinton Subway Extension • Proposed subway extension along Eglinton Avenue through mid ‐ town Toronto will provide multiple intensification opportunities for RioCan at its properties along Eglinton. • City of Toronto has said that they will rezone areas surrounding new subway stops to permit higher density developments. 67
Yonge Eglinton Centre Toronto, Ontario • One of RioCan’s largest acquisitions at $223 million (acquired in January 2007) – 750,126 sq. ft. of office area and 264,391 sq. ft. of retail area • RioCan has launched a thorough revitalization and expansion plan that will capitalize on the area’s residential intensification – Improvements to parking increased revenues by $500,000 – 46,000 sq. ft. of new retail, and a connection to the office towers and ingress/egress to the food court and subway – A combined 12 ‐ storey, 210,000 sq. ft. expansion of the office towers – received Toronto City Council approval for its development plans and is currently submitting plans for site plan approval, and subject to receipt of all approvals, it is expected that construction can begin in 2012 • RioCan’s leasing and capital improvement efforts have resulted in significant increases in NOI and occupancy • NOI at acquisition was $13.3 million and is budgeted to be in excess of $22 million for 2012 • Occupancy has increased from 88% at acquisition to 100% 68
Creating New Cash Flow Sources RioCan Yonge Eglinton Centre 69
Creating New Cash Flow Sources RioCan Yonge Eglinton Centre – Proposed Retail Addition 70
Creating New Cash Flow Sources RioCan Yonge Eglinton Centre – Proposed Vertical Addition � Potential to add 210,000 square feet of office space 71
Urban Intensification 1717 Avenue Road, Toronto, ON • Rezoning urban properties to accommodate mixed use projects became RioCan REIT’s focus in the last several years • 1717 Avenue Road, Toronto � Assembled a city block over four year period located in one of the busiest nodes in Toronto on Avenue Road, between Fairlawn Avenue and St. Germain Avenue � The block was made up of four, one storey, properties, the largest being 21,000 sq. ft. strip centre anchored by an LCBO and Blockbuster � Ideal property for redevelopment into a mixed ‐ use facility, in keeping with the trend of urban intensification � Residential air rights sold to Tribute Communities, who developed this mixed ‐ use property � RioCan REIT retained ownership of the retail portion and shares in a portion of the profits created on the sale of the condominiums � Bank of Montreal and Pharma Plus commenced operations in March 2011 � The retail component was completed, is 93% leased, and began producing rental revenue in Q1 2011 72
Urban Intensification Queen & Portland, Toronto, ON • One acre parking lot acquired in January 2006 • Southwest corner of Queen and Portland Streets, occupying the entire length of the block • Ideal property for redevelopment into a mixed ‐ use facility, in keeping with the trend of urban intensification • Development includes retail footprint ‐ Loblaws occupying the bulk of the ground floor and all of the second floor, with a flagship Joe Fresh store and a Loblaws supermarket, while Winners occupies the third floor • Winners and Joe Fresh commenced operations early in the fourth quarter of 2011. Loblaws will also open during the fourth quarter of 2011 • Total retail space is 91,000 sq ft over three levels ‐ 100% leased • Residential air rights sold to Tribute Communities, who developed this mixed ‐ use property • RioCan REIT retained ownership of the retail portion and shares in a portion of the profits created on the sale of the condominiums 73
Urban Intensification • RioCan has a number of Urban Intensification opportunities in the GTA market • Sunnybrook Plaza, Toronto, ON � Located at the busy intersection of Bayview Avenue and Eglinton Avenue in midtown Toronto � The site benefits from excellent demographics and is a probable location for a stop along the proposed Eglinton subway line � The property is an excellent location for a redevelopment project similar to what has been accomplished at 1717 Avenue Road. • Queensway Cineplex, Toronto, ON � Located in Western Toronto at the corner of The Queensway and Islington Avenue with access to the Queen Elizabeth Way (QEW) � Currently anchored by Cineplex this centre is an ideal property for additional density and potential redevelopment into a mixed ‐ use facility, in keeping with the trend of urban intensification 74
Tillicum Centre Victoria, BC • Acquired in July 2002, expansion initiated in 2004 • 62,000 sq. ft. addition anchored by introduction of two marquee tenants • Fabricland relocated to a larger store and TD Bank also took occupancy during phase 2 • Mixed ‐ use expansion of will feature 294,000 sq. ft. of residential uses • In addition to improving tenant quality and aesthetics, the return on investment (“ROI”) since acquisition has increased by more than 100 bps 75
Future Growth Drivers Development Land Use Institutional Organic Growth Acquisitions Pipeline Intensification Relationships
Institutional Relationships • Through the years RioCan has developed strong institutional relationships • Leverage RioCan’s capital to enhance returns and increase scale of investments • Generate additional revenue streams – Property and asset management fees • RioCan recently entered into a Joint Venture arrangement with KingSett Capital to acquire the Sheppard Centre – RioCan will manage the property, act as leasing manager for the property and will be the development manager in connection with any redevelopment of the property. 77
Institutional Relationships Strong Partnerships 78
Institutional Relationships RioKim Joint Venture Brentwood Village • RioCan REIT and Kimco Realty Corporation, a U.S. REIT listed on the NYSE which also focuses on the ownership of shopping centres, each have a 50% interest in RioKim joint venture • Invested over $1.2 billion in 45 properties since 2001 comprising over 9.3 million sq. ft. of GLA • In September 2008, created a second joint Tillicum Centre venture partnership with Kimco (RioKim II) with the acquisition of a 10 properties portfolio in central and eastern Canada • RioCan provides asset and property management, development and leasing services to RioKim 79
Institutional Relationships CPPIB Joint Venture RioCan Centre Burloak ‐ Before • In October 2004, RioCan REIT and CPPIB announced an agreement to acquire premier regional power centres in Canada on a 50/50 basis as a core, long ‐ term holding strategy • Today, RioCan and CPPIB are partners in over 1.3 million sq. ft. of completed regional power centres and approximately 3.0 million sq. ft. of planned development projects RioCan Centre Burloak ‐ After • RioCan provides property and asset management, leasing, development and construction management services for the co ‐ ownership 80
Institutional Relationships CPPIB Strategic Alliance Grandview Corners • Acquired in December 2009 on a 50 ‐ 50 basis • Unique asset located in the Greater Vancouver Area market of Surrey • Diverse and strong tenant mix • 42 acre site • 529,827 sq. ft. anchored by a 217,278 sq. ft. Walmart • Other major tenants include The Brick, Future Shop, Indigo 81
Institutional Relationships CPPIB Strategic Alliance ‐ St. Clair & Weston • RioCan has completed the rezoning for its St. Clair and Weston Road development with Trinity and Canada Pension Plan Investment Board (“CPPIB”) in Toronto. • Construction commenced in the fourth quarter of 2011. • The 20 acre site is ultimately expected to feature a 484,000 square foot property situated within a unique two storey retail. format • Target has signed letter of intent be the anchor tenant at the site 82
Institutional Relationships CPPIB Strategic Alliance In September 2008 the Trust and Trinity sold a 50% non ‐ managing interest in two developments to CPP Investment Board. The two developments are Jacksonport located in Calgary, Alberta and St. Clair Avenue and Weston Road located in Toronto, Ontario. Additionally, in October 2008 RioCan and Trinity sold a 37.5% non ‐ managing ownership interest in East Hills, phases I and III, a development featuring approximately 115 acres in Calgary, Alberta, to CPP Investment Board. East Hills • RioCan has successfully completed the rezoning requirements for its East Hills development with Trinity, CPPIB and the original vendor in Calgary, Alberta. • The East Hills development consists of three phases. Phase I and III comprise approximately 111 acres and Phase II comprises approximately 37 acres. Jacksonport • Jacksonport, located at 36th Street NE and Country Hills Boulevard NE in Calgary, is a 105 acre development site. • Will be developed into a new format retail centre • Upon completion, the development is expected to feature approximately 1.1 million square feet of retail space. 83
Summary • Canada’s largest REIT • Seasoned management team • Excellent portfolio, solid tenants and diversified • Focus on urban markets • 86% of annualized rental revenue from national and anchor tenants • Conservative debt profile and access to capital • Strong institutional relationships • Solid development pipeline 84
Appendix A Senior Management
Experienced Management Team • Extensive experience in Canadian real estate market – Multi ‐ disciplinary team with experience across a wide spectrum of real estate classes EDWARD SONSHINE, O.Ont., Q.C . – President & Chief Executive Officer, RioCan REIT • CEO of RioCan REIT since late 1993 and has overseen its growth from an asset base of under $100 million to its current enterprise value which is in excess of $11 billion • Previously practiced law for 15 years, during which he was awarded his Queen’s Counsel in 1983 • Member of the board of directors of Royal Bank of Canada, Chair of Chesswood Income Fund, Cineplex Inc. and Chair of Mount Sinai Hospital Foundation FREDERIC WAKS – Executive Vice President & Chief Operating Officer, RioCan REIT • COO of RioCan REIT since 1995 • Began real estate career in 1981 with Royal LePage, where he earned the honourable designation of Rookie of the Year in the Commercial Division and President’s Round Table • In 1984, he joined First Plazas as Vice President of Leasing/Marketing. Moved to Dominion Trust in 1988, where he took on the position of Senior Vice President. From 1993 to 1995, acted as Vice ‐ President, Retail Leasing for Confederation Life. RAGS DAVLOOR, CA – Senior Vice President & Chief Financial Officer, RioCan REIT • CFO of RioCan REIT since 2008 • Over 25 years of real estate, management, finance, accounting and tax experience • Began his career with Arthur Anderson & Co where he spent 8 years in audit, tax and advisory roles, followed by over 10 years at O&Y Properties and O&Y REIT ultimately becoming CFO, and prior to coming to RioCan at TD Securities as a Vice President and Director in corporate finance for two years, where he was focused on real estate industry coverage. • Member of the board of directors of Cedar Shopping Centers, Inc. 86
Appendix B Supplemental Information Package
THIRD QUARTER 2011 SUPPLEMENTAL INFORMATION PACKAGE Q_ DISCIPLINED MEASURED 03 TRUST INVESTMENT ESTATE REAL
Third Quarter 2011 Table of Contents Supplemental Information Package Real Estate Portfolio Fact Sheet . . . . . . . . . . . . . . . . . . . . 1 FINANCIAL INFORMATION Operational and Financial Highlights . . . . . . . . . . . . . . . . 2 Unaudited Interim Consolidated Financial Statements Balance Sheets Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . 4 Equity Reconciliation – January 1, 2010 . . . . . . . . . . . 5 Equity Reconciliation – December 31, 2010 . . . . . . . . 6 Consolidated Statements of Earnings . . . . . . . . . . . . . . 7 Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Net Earnings and Comprehensive Income Reconciliations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Consolidated Statements of Cash Flows . . . . . . . . . . . . 9 Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Net Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Quarterly Reconciliation of Previous Canadian GAAP to IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 International Financial Reporting Standards (“IFRS”) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Summary of Consolidated Debt . . . . . . . . . . . . . . . . . . . . .15 Interest Coverage, Debt Service Coverage, Fixed Charge Coverage and Net Debt to EBITDA Ratios . . . . . . . . . . .16 INVESTMENT ACTIVITY Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Greenfield Development Projects . . . . . . . . . . . . . . . . . . .21 Expansion and Redevelopment Activities . . . . . . . . . . . . .26 REAL ESTATE INFORMATION Leasing Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Renewal Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 Contractual Rent Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 Economic versus Committed Occupancy . . . . . . . . . . . . .34 Top 50 Tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 Top Ten Tenants – Canada . . . . . . . . . . . . . . . . . . . . . . . . .37 Top Ten Tenants – US . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Property Ownership by Geographic Area . . . . . . . . . . . . .38 Portfolio Geographic Diversification . . . . . . . . . . . . . . . . .39 Lease Expires by Geographic Area . . . . . . . . . . . . . . . . . .40 GENERAL General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Senior Management and Unitholder Information . . . . . . .43
REAL ESTATE PORTFOLIO FACT SHEET Fact Sheet as at September 30, 2011 Canadian Properties US Properties Grand Total Net Leasable Area (“NLA”) (sq.ft.): Retail Office Total Retail Office Total Total Income Producing Properties 36,443,171 1,588,499 38,031,670 5,319,621 51,758 5,371,379 43,403,049 Properties Under Development 3,498,500 – 3,498,500 – – – 3,498,500 Total 39,941,671 1,588,499 41,530,170 5,319,621 51,758 5,371,379 46,901,549 Number of Tenancies 7,000 Portfolio Occupancy Canadian Properties US Properties Total Retail 97.5% 98.0% 97.5% Office 97.2% 84.1% 96.8% Total 97.5% 97.8% 97.5% Geographic Diversification Number of properties Percentage Income Properties of annualized producing under rental revenue properties development Total Ontario 54.0% 166 7 173 Quebec 14.9% 44 – 44 Alberta 11.3% 28 2 30 British Columbia 5.6% 15 – 15 New Brunswick 1.7% 6 1 7 Manitoba 0.6% 2 – 2 Saskatchewan 0.5% 1 – 1 Prince Edward Island 0.3% 1 – 1 Newfoundland 0.3% 2 – 2 Nova Scotia 0.1% 1 – 1 USA 10.7% 38 – 38 100.0% 304 10 314 Anchor and National Tenants (including US) Percentage of annualized rental revenue Percentage of total NLA Anchor and National Tenants 86.0% 84.0% Top Ten Sources of Revenue by Tenant (including US) Percentage of Weighted average remaining Ranking Tenant annualized rental revenue lease term (yrs) Canadian Tire/PartSource/Mark’s Work Wearhouse/Sport Mart/ Sport Chek/ 1. Sports Experts/National Sports/Atmosphere 4.8% 10.1 Walmart 2. 4.4% 13.2 3. Famous Players/Cineplex/Galaxy Cinemas 4.3% 11.7 Metro/Super C/Loeb/Food Basics 4. 4.3% 7.8 5. Winners/HomeSense/ Marshalls 3.0% 6.8 Loblaws/No Frills/Fortinos/Zehrs/Maxi 6. 2.5% 5.1 7. Target Corporation 2.1% 8.7 Staples/Business Depot 8. 2.1% 7.2 9. Future Shop/Best Buy 1.9% 7.5 Giant Food Stores/ Stop & Shop (Royal Ahold) 10. 1.9% 14.3 Total 31.3% Lease Expiries – Canada Lease expiries (NLA) Retail Class Total NLA 2011 2012 2013 2014 2015 New Format Retail 19,029,948 287,279 955,635 1,414,113 1,589,696 2,097,974 1.5% 5.0% 7.4% 8.4% 11.0% Grocery Anchored Centre 7,663,700 205,942 738,536 643,807 1,243,326 1,004,582 2.7% 9.6% 8.4% 16.2% 13.1% Enclosed Shopping Centre 6,311,736 254,776 740,687 622,196 740,906 855,653 4.0% 11.7% 9.9% 11.7% 13.6% Non-Grocery Anchored Centre 2,090,738 28,366 115,755 209,634 166,570 318,713 1.4% 5.5% 10.0% 8.0% 15.2% Urban Retail 1,347,049 1,928 110,584 155,309 311,785 19,124 0.1% 8.2% 11.5% 23.1% 1.4% Office 1,588,499 85,556 150,972 171,038 170,696 98,679 5.4% 9.5% 10.8% 10.7% 6.2% Total 38,031,670 863,847 2,812,169 3,216,097 4,222,979 4,394,725 2.3% 7.4% 8.5% 11.1% 11.6% Average net rent per square foot $ 15.13 $ 16.81 $ 15.87 $ 16.30 $ 15.52 $ 14.41 Lease Expiries – US Lease expiries (NLA) Retail Class Total NLA 2011 2012 2013 2014 2015 New Format Retail 3,552,908 46,047 139,033 212,152 303,141 201,763 1.3% 3.9% 6.0% 8.5% 5.7% Grocery Anchored Centre 1,583,688 56,291 86,944 51,790 184,377 25,450 3.6% 5.5% 3.3% 11.6% 1.6% Non-Grocery Anchored Centre 183,025 9,061 7,774 19,120 32,000 10,243 5.0% 4.2% 10.4% 17.5% 5.6% Office 51,758 12,406 4,329 12,276 3,654 – 24.0% 8.4% 23.7% 7.1% 0.0% Total 5,371,379 123,805 238,080 295,338 523,172 237,456 2.3% 4.4% 5.5% 9.7% 4.4% Average net rent per square foot $ 14.82 $ 21.08 $ 18.40 $ 16.70 $ 13.47 $ 12.15 Third Quarter 2011 Supplemental Information Package 1
II. OPERATIONAL AND FINANCIAL HIGHLIGHTS Operational Information (thousands of square feet, except other data) As at and for the three months ended September 30, 2011 December 31, 2010 September 30, 2010 US Canada Total US Canada Total US Canada Total Number of properties: Income properties 38 266 304 31 256 287 18 250 268 Under development (i) – 10 10 – 10 10 – 11 11 Portfolio occupancy 97.8% 97.5% 97.5% 98.2% 97.3% 97.4% 98.1% 97.0% 97.1% Net leasable area (“NLA”) at 100% * 9,692 58,132 67,824 7,468 56,251 63,719 4,002 55,183 59,185 Net leasable area (“NLA”) at RioCan’s interest: Total portfolio 5,371 38,032 43,403 3,998 36,849 40,847 2,455 36,255 38,710 Average in place rent $ 14.82 $ 15.13 $ 15.09 $ 14.69 $ 14.82 $ 14.75 $ 17.10 $ 14.86 $ 14.99 Completed development and land use intensification activities during the period ended – 78 78 – 237 237 – 9 9 Acquired during the period ended 786 298 1,084 1,542 441 1,983 1,417 838 2,255 Development pipeline upon completion: Total project NLA – 8,991 8,991 – 8,090 8,090 – 8,446 8,446 RioCan’s interest of project NLA – 4,715 4,715 – 3,046 3,046 – 3,397 3,397 Percentage of portfolio rental revenue derived from: Six Canadian high growth markets (annualized) (ii) n/a 65.4% 65.4% n/a 65.2% 65.2% n/a 61.7% 61.7% US market (annualized) 10.7% n/a 10.7% 8.2% n/a 8.2% 5.6% n/a 5.6% National and anchor tenants (annualized) 87.5% 85.9% 86.0% 90.2% 85.5% 85.9% 93.8% 85.6% 86.0% Largest tenant (annualized) 18.3% 5.4% 4.8% 21.3% 4.9% 4.6% 18.3% 4.9% 4.7% Percentage of portfolio NLA anchored or shadow anchored by grocery stores: 72.4% 74.4% 75.2% 71.0% 75.2% 74.8% 76.2% 75.1% 75.2% Number of employees (excluding seasonal) 615 598 585 (i) The number of properties under development excludes those properties with phased development where tenancies have already commenced operations. These properties are included in the number of income properties. (ii) See discussion in “About RioCan”. * Includes retailer owned anchors Third Quarter 2011 Supplemental Information Package 2
Financial Information – IFRS For the three months For the nine months (millions of dollars, except per Unit amounts) ended September 30, ended September 30, 2011 2010 2011 2010 Total revenue $ 246 $ 215 $ 721 $ 649 Net earnings attributable to unitholders $ 168 $ 56 $ 632 $ 243 Net earnings per Unit attributable to common Unitholders - basic $ 0.63 $ 0.23 $ 2.39 $ 1.00 Net earnings per Unit attributable to common Unitholders - diluted $ 0.63 $ 0.23 $ 2.38 $ 0.99 Adjusted EBITDA (i) $ 159 $ 136 $ 463 $ 429 Operating FFO (ii) $ 97 $ 85 $ 280 $ 246 Operating FFO per Unit (ii) $ 0.37 $ 0.35 $ 1.07 $ 1.01 Weighted average common Units outstanding (in thousands) 265,515 246,314 262,743 244,284 Distributions to common Unitholders $ 91 $ 85 $ 272 $ 253 Distributions to common Unitholders per Unit $ 0.345 $ 0.345 $ 1.035 $ 1.035 Distributions per common Unit (annualized) $ 1.38 $ 1.38 $ 1.38 $ 1.38 Distributions to common Unitholders net of distribution reinvestment plan $ 70 $ 71 $ 211 $ 212 Distributions to common Unitholders net of distribution reinvestment plan per Unit $ 0.26 $ 0.29 $ 0.80 $ 0.87 Common Unit issue proceeds under distribution reinvestment plan $ 21 $ 14 $ 61 $ 41 Distribution reinvestment plan (“DRIP”) participation rate 22.9% 16.0% 22.5% 16.2% (millions of dollars, except other data) September 30, December 31, September 30, As at 2011 2010 2010 Total assets $ 9,906 $ 8,886 $ 8,312 Debt (mortgages and debentures payable) $ 4,749 $ 4,410 $ 4,189 Debt to total assets (iii) 47.8% 49.1% 50.2% Debt to total capitalization (iv) 40.4% 43.6% 42.0% Interest coverage ratio (v) 2.4 2.5 n/c Debt service coverage ratio (vi) 1.9 1.9 n/c Fixed charge coverage ratio (vii) 1.0 1.0 n/c Net debt to adjusted EBITDA (viii) 7.2 6.8 n/c Total unitholders’ equity $ 4,841 $ 4,165 $ 2,857 Common Units outstanding (in thousands) 269,630 259,818 252,255 Closing market price per common Unit $ 26.00 $ 22.00 $ 22.92 Common Units – market capitalization (ix) $ 7,010 $ 5,716 $ 5,782 Preferred units outstanding (in thousands) 5,000 n/a n/a Closing market price per preferred unit $ 25.55 n/a n/a Preferred units – market capitalization (x) $ 128 n/a n/a Total enterprise value (xi) $ 11,887 $ 10,126 $ 9,971 (i) A non-GAAP measurement. Adjusted EBITDA is defined as net earnings before changes in fair value of income properties, net interest expense and income taxes as well as other one-time adjustments such as expense for early redemption of debentures. A reconciliation of Adjusted EBITDA can be found in RioCan’s discussion under “Capital Strategy”. (ii) A non-GAAP measurement for which a reconciliation to net earnings can be found in RioCan’s discussion under “OFFO”. (iii) A non-GAAP measurement. Calculated as debt net of cash divided by total assets net of cash. (iv) A non-GAAP measurement. Calculated by the Trust as debt divided by total capitalization. RioCan’s method of calculating debt to total capitalization may differ from other issuers’ methods and accordingly may not be comparable to such amounts reported by other issuers. (v) A non-GAAP measurement. Interest coverage is calculated on a rolling twelve month basis and is defined as Adjusted EBITDA divided by total interest expense (including interest that has been capitalized). (vi) A non-GAAP measurement. Debt service coverage is calculated on a rolling twelve month basis and is defined as Adjusted EBITDA divided by total interest expense (including interest that has been capitalized) and scheduled mortgage principal amortization. (vii) A non-GAAP measurement. Fixed charge coverage ratio is calculated on a rolling twelve month basis and is defined as Adjusted EBITDA divided by total interest expense (including interest that has been capitalized) and distributions to common and preferred unitholders. (viii) A non-GAAP measurement. Net debt to Adjusted EBITDA is calculated on a rolling twelve month basis and is defined as the average debt outstanding (net of cash) for the period divided by Adjusted EBITDA. (ix) A non-GAAP measurement. Calculated by the Trust as closing market price of the common Units trading on the TSX on December 31, 2010, September 30, 2010 and September 30, 2011 multiplied by the number of common Units outstanding at such date. RioCan’s method of calculating market capitalization may differ from other issuers’ methods and accordingly may not be comparable to such amounts reported by other issuers. (x) A non-GAAP measurement. Calculated by the Trust as closing market price of the preferred units trading on the TSX on September 30, 2011 multiplied by the number of preferred units outstanding at such date. RioCan’s method of calculating market capitalization may differ from other issuers’ methods and accordingly may not be comparable to such amounts reported by other issuers. (xi) A non-GAAP measurement. Calculated by the Trust as debt plus common Unit market capitalization plus preferred unit market capitalization. RioCan’s method of calculating total enterprise value may differ from other issuers’ methods and accordingly may not be comparable to such amounts reported by other issuers. n/c – not calculated Third Quarter 2011 Supplemental Information Package 3
CONSOLIDATED BALANCE SHEETS (unaudited – Canadian dollars, in millions) IFRS Previous Canadian GAAP September 30, December 31, September 30, January 1, December 31, December 31, As at, 2011 2010 2010 2010 2010 2009 ASSETS Investment property $ 9,572 $ 8,466 $ 7,916 $ 6,938 $ 6,385 $ 5,314 Mortgages and loans receivable 154 188 208 236 188 236 Investments 30 59 59 50 59 50 Deferred tax asset 8 8 – – Receivables and other assets 115 73 97 66 135 115 Cash and equivalents 27 92 32 147 92 147 Total assets $ 9,906 $ 8,886 $ 8,312 $ 7,437 $ 6,859 $ 5,862 LIABILITIES Mortgages payable and lines of credit $ 3,806 $ 3,316 $ 3,091 $ 2,669 $ 3,316 $ 2,669 Debentures payable 943 1,094 1,098 994 1,094 994 Deferred tax liability – – 994 890 – 140 Accounts payable and other liabilities 239 252 231 196 252 193 Total liabilities 4,988 4,662 5,414 4,749 4,662 3,996 NON-CONTROLLING INTEREST – – – – 46 9 EQUITY Preferred unitholders’ equity 121 – – – – – Common unitholders’ equity 4,720 4,165 2,857 2,680 2,151 1,857 Total unitholders’ equity 4,841 4,165 2,857 2,680 2,151 1,857 Non-controlling interest 77 59 41 8 – – Total equity 4,918 4,224 2,898 2,688 2,151 1,857 Total liabilities, non-controlling interest and equity $ 9,906 $ 8,886 $ 8,312 $ 7,437 $ 6,859 $ 5,862 Third Quarter 2011 Supplemental Information Package 4
EQUITY RECONCILIATION – JANUARY 1, 2010 (unaudited – Canadian dollars, in millions) The following is a reconciliation of the Trust’s equity reported in accordance with previous Canadian GAAP to IFRS at January 1, 2010 (date of transition to IFRS). January 1, 2010 Previous Effect of Canadian transition GAAP to IFRS IFRS ASSETS Investment property $ 5,314 $ 1,624 $6,938 Mortgages and loans receivable 236 – 236 Investments 50 – 50 Receivables and other assets 115 (49) 66 Cash and equivalents 147 – 147 Total assets $ 5,862 $ 1,575 $7,437 LIABILITIES Mortgages payable and lines of credit $ 2,669 $ – $2,669 Debentures payable 994 – 994 Deferred tax liability 140 750 890 Accounts payable and other liabilities 193 3 196 Total liabilities 3,996 753 4,749 NON-CONTROLLING INTEREST 9 (9) – EQUITY Common unitholders’ equity 1,857 823 2,680 Non-controlling interest – 8 8 Total equity 1,857 831 2,688 Total liabilities, non-controlling interest and equity $ 5,862 $ 1,575 $7,437 Third Quarter 2011 Supplemental Information Package 5
EQUITY RECONCILIATION – DECEMBER 31, 2010 (unaudited – Canadian dollars, in millions) The following is a reconciliation of the Trust’s equity reported in accordance with previous Canadian GAAP to IFRS at December 31, 2010. December 31, 2010 Previous Effect of Canadian transition 2010 GAAP to IFRS IFRS impact IFRS ASSETS Investment property $ 6,385 $ 1,624 $ 457 $8,466 Mortgages and loans receivable 188 – – 188 Investments 59 – – 59 Deferred tax asset – – 8 8 Receivables and other assets 135 (49) (13) 73 Cash and equivalents 92 – – 92 Total assets $ 6,859 $ 1,575 $ 452 $8,886 LIABILITIES Mortgages payable and lines of credit $ 3,316 $ – $ – $3,316 Debentures payable 1,094 – – 1,094 Deferred tax liability – 750 (750) – Accounts payable and other liabilities 252 3 (3) 252 Total liabilities 4,662 753 (753) 4,662 NON-CONTROLLING INTEREST 46 (9) (37) – EQUITY Common unitholders’ equity 2,151 823 1,191 4,165 Non-controlling interest – 8 51 59 Total equity 2,151 831 1,242 4,224 Total liabilities, non-controlling interest and equity $ 6,859 $ 1,575 $ 452 $8,886 Third Quarter 2011 Supplemental Information Package 6
CONSOLIDATED STATEMENTS OF EARNINGS (unaudited – Canadian dollars, in millions, except per share amounts) For the three months For the nine months ended September 30, ended September 30, Previous Previous Canadian GAAP Canadian GAAP 2011 2010 2010 2011 2010 2010 Rental revenue $ 236 $ 205 $ 206 $ 694 $ 608 $ 611 Property operating costs Recoverable under tenant leases 78 65 64 232 199 197 Non-recoverable from tenants 2 2 2 7 5 5 80 67 66 239 204 202 Net operating income 156 138 140 455 404 409 Fees and other income 8 4 4 17 13 13 Interest 2 3 3 10 11 11 Gains on properties held for resale – 3 3 – 17 17 Fair value gains on investment property 73 1 – 387 104 – 239 149 150 869 549 450 Expenses Interest and other 60 55 53 178 163 158 General and administrative 9 10 6 23 24 19 Business acquisition transaction costs – – – – 3 – Transition costs – – 1 – – 2 Expense for early redemption of debentures – – – 27 – – Amortization – – 46 – – 136 69 65 106 228 190 315 Earnings before income taxes 170 84 44 641 359 135 Income tax expense – 26 5 1 112 10 Net earnings $ 170 $ 58 $ 39 640 247 $ 125 Net earnings attributable to: Common and preferred unitholders $ 168 $ 56 $ 39 $ 632 $ 243 $ 124 Non-controlling interests 2 2 – 8 4 1 $ 170 $ 58 $ 39 $ 640 $ 247 $ 125 Net earnings per unit attributable to common unitholders – basic $ 0.63 $ 0.23 $ 0.16 $ 2.39 $ 1.00 $ 0.51 Net earnings per unit attributable to common unitholders – diluted $ 0.63 $ 0.23 $ 0.16 $ 2.38 $ 0.99 $ 0.50 Weighted average number of common units outstanding – basic (in thousands) 265,515 246,314 246,314 262,743 244,284 244,284 Weighted average number of common units outstanding – diluted (in thousands) 266,952 247,073 247,073 264,228 244,916 244,916 Third Quarter 2011 Supplemental Information Package 7
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited – Canadian dollars, in millions) For the three months For the nine months ended September 30, ended September 30, Previous Previous Canadian GAAP Canadian GAAP 2011 2010 2010 2011 2010 2010 Net earnings $ 170 $ 58 $ 39 $ 640 $ 247 $ 125 Other comprehensive income (loss), net of tax Unrealized gain on interest rate swap agreements (5) (4) (4) (7) (3) (3) Unrealized loss on translation of foreign operations 21 (1) (5) 12 – (2) Unrealized (loss) gain on available-for-sale securities (19) – - (29) (6) (7) Actuarial gains (losses) on pension plan – – – (1) Other comprehensive (loss) income (3) (5) (9) (24) (10) (12) Comprehensive income $ 167 $ 53 $ 30 $ 616 $ 237 $ 113 Comprehensive income attributable to Unitholders $ 161 $ 51 $ 30 $ 606 $ 233 $ 112 Non-controlling interest 6 2 – 10 4 1 $ 167 $ 53 $ 30 $ 616 $ 237 $ 113 NET EARNINGS AND COMPREHENSIVE INCOME RECONCILIATIONS (unaudited – Canadian dollars, in millions) Reconciliation of Net Earnings and Comprehensive Income as Reported Under Previous Canadian GAAP to IFRS The following is a reconciliation of the Trust’s net earnings and comprehensive income reported in accordance with previous Canadian GAAP to IFRS for the three and nine months ended September 30, 2010. Three months Nine months ended September 30, ended September 30, 2010 2010 Net earnings as reported under previous Canadian GAAP $ 39 $ 125 Fair value gains recorded under IFRS 1 104 Depreciation and amortization recorded under previous Canadian GAAP 46 136 Capitalized costs (3) (7) Lease accounting (1) (3) Business acquisition transaction costs – (3) Income tax expense and other (24) (105) Net earnings as reported under IFRS $ 58 $ 247 Other comprehensive loss as reported under previous Canadian GAAP $ (8) $ (12) Decrease in unrealized loss on translation of foreign operations 3 1 Decrease in unrealized loss on available-for-sale securities – 1 Other comprehensive loss as reported under IFRS $ (5) $ (10) Comprehensive income as reported under IFRS $ 53 $ 237 Third Quarter 2011 Supplemental Information Package 8
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited – Canadian dollars, in millions) For the three months For the nine months ended September 30, ended September 30, Previous Previous Canadian Canadian GAAP GAAP 2011 2010 2010 2011 2010 2010 CASH FLOWS PROVIDED BY (USED IN): Operating activities Net earnings $170 $ 58 $ 39 $640 $247 $ 125 Amortization – – 46 1 1 136 Recognition of rents on a straight-line basis (2) (2) (2) (7) (5) (6) Unit-based compensation expense 1 1 1 3 2 2 Amortization of differential between contractual and market rents on in-place leases – – (1) – – (3) Deferred tax expense – 26 5 1 112 10 Fair value gains on investment properties (68) – - (363) (104) - Fair value gains (losses) on properties under development (5) – - (24) – - Properties held for resale – 3 3 – (1) (1) Acquisition and development of properties held for resale (1) (2) (1) (2) (3) (3) Changes in non-cash operating items and other (18) 13 11 (39) (13) (8) Cash flows provided by operating activities 77 97 101 210 236 252 Investing activities Acquisition of income properties and properties under development (240) (344) (345) (418) (516) (561) Acquisition of income properties by business combination – – - – (46) - Capital expenditures on income properties – – - – (2) (2) Capital expenditures on properties under development (20) (26) (32) (85) (44) (60) Maintenance capital expenditures recoverable from tenants (2) (3) (2) (10) (6) (6) Maintenance capital expenditures not recoverable from tenants (2) (1) (2) (4) (2) (3) Tenant installation costs (10) (12) (12) (29) (25) (26) Mortgages and loans receivable Advances (13) (14) (13) (19) (41) (41) Repayments 3 4 4 54 55 55 Investment in available-for-sale securities – – - – (19) (20) Cash flows used in investing activities (284) (396) (402) (511) (646) (664) Financing activities Mortgages payable Borrowings (net of NCI) 131 239 246 480 601 608 Repayments (103) (144) (144) (190) (339) (339) Issue of debentures payable, net – 102 99 223 102 99 Repayment of debentures payable 51 (3) - 51 (3) - Distributions paid to common unitholders (91) (85) (91) (272) (253) (259) Distributions paid to preferred unitholders (2) – - (4) – - Units issued under distribution reinvestment plan 21 14 14 61 41 42 Issue of preferred units – – - 121 – - Issue of common units 126 143 144 146 146 146 Cash flows provided by financing activities 133 266 268 236 295 297 Decrease in cash and equivalents during the period (74) (33) (33) (65) (115) (115) Cash and equivalents, beginning of period 101 65 65 92 147 147 Cash and equivalents, end of period $27 $ 32 $ 32 $27 $ 32 $ 32 Third Quarter 2011 Supplemental Information Package 9
RESULTS OF OPERATIONS The components of RioCan’s net earnings attributable to unitholders for each respective period are as follows: Three months ended Nine months ended (thousands of dollars, except per Unit amounts) September 30, September 30, Increase Increase 2011 2010 2011 2010 (decrease) (decrease) Rental revenue $ 235,981 $ 204,811 $ 693,777 $ 608,182 Property operating costs 79,900 66,861 238,796 204,112 Net operating income 156,081 137,950 454,981 404,070 Fees and other income 8,273 4,421 16,828 12,658 Interest income 2,267 3,573 10,168 11,603 Fair value gains 73,230 674 387,382 104,308 Gains on properties held for resale - 2,859 - 17,064 239,851 149,477 869,359 549,703 Interest expense 60,487 54,892 177,959 163,426 Expense for early retirement of debentures - - 27,217 - General and administrative expense 7,841 6,023 21,314 19,266 Foreign exchange loss 130 2,736 94 1,297 Demolition costs 940 447 1,338 1,311 IFRS and SIFT implementation costs - 1,144 - 2,217 Acquisition transaction costs 86 - 247 3,255 Deferred income tax expense - 26,143 700 112,279 Net earnings $ 170,367 $ 58,092 193% $ 640,490 $ 246,652 160% Net earnings attributable to Unitholders $ 168,676 $ 56,298 200% $ 632,337 $ 243,092 160% Net earnings attributable to non-controlling interest $ 1,691 $ 1,794 (6%) $ 8,153 $ 3,560 129% Net earnings per Unit attributable to common Unitholders - basic $ 0.63 $ 0.23 175% $ 2.39 $ 1.00 140% Net earnings per Unit attributable to common Unitholders - diluted $ 0.63 $ 0.23 174% $ 2.38 $ 0.99 139% Weighted average number of common Units outstanding - basic (in thousands) 265,515 246,314 8% 262,743 244,284 8% Weighted average number of common Units outstanding - diluted (in thousands) 266,952 247,073 8% 264,228 244,916 7% Third Quarter 2011 Supplemental Information Package 10
NET OPERATING INCOME Consolidated NOI for the three and nine months ended September 30, 2011 and 2010 is as follows: Three months ended Nine months ended (thousands of dollars) September 30, September 30, Increase Increase 2011 2010 2011 2010 (decrease) (decrease) Base rent $157,917 $134,460 17% $459,514 $394,673 16% Percentage rent 920 894 3% 2,437 2,576 (5%) Rents subject to tenants’ sales thresholds 1,325 1,315 1% 3,960 4,066 (3%) Property taxes and operating cost recoveries 75,807 63,439 19% 227,111 194,489 17% 235,969 200,108 18% 693,022 595,804 16% Lease cancellation fees 12 4,704 nm 755 12,378 nm Rental revenue 235,981 204,812 15% 693,777 608,182 14% Recoverable property taxes and operating costs 77,582 64,936 19% 232,199 199,219 17% Non-recoverable property operating and site administration costs 2,318 1,926 20% 6,597 4,893 35% Property operating costs 79,900 66,862 19% 238,796 204,112 17% NOI $156,081 $137,950 13% 454,981 404,070 13% NOI as a percentage of rental revenue (excluding the impact of lease cancellation fees) 66% 67% (1%) 66% 66% 0% “nm”—not meaningful. QUARTERLY RECONCILIATIONS OF PREVIOUS CANADIAN GAAP TO IFRS For the three months ended (thousands, except per unit YTD amounts) Q1 2011* Q2 2011 Q3 2011 2011 Q1 2010 Q2 2010 Q3 2010 Q4 2010 YTD 2010 FFO as calculated under previous Canadian GAAP $ 91,133 $ 94,259 $ 98,166 $283,558 $ 86,291 $ 92,750 $ 89,331 $ 88,404 $356,776 FFO per weighted average common unit outstanding $ 0.35 $ 0.36 $ 0.37 $ 1.08 $ 0.36 $ 0.38 $ 0.36 $ 0.35 $ 1.45 Reconciling items: Straight line rents (438) (292) (103) (833) (385) (438) (239) 204 (858) Deferred market rents (735) (785) (816) (2,336) (577) (614) (711) (1,009) (2,911) Pension plan adjustment – – – – – – – (2,033) (2,033) Capitalized interest and other adjustments affecting interest expense (1,511) (1,863) (1,683) (5,057) (1,727) (1,640) (1,690) (1,615) (6,672) Capitalized CAM and tax (348) (365) (251) (964) (485) (432) (489) (824) (2,230) Demolition costs (307) (90) (941) (1,338) (284) (576) (447) (1,054) (2,361) Total of reconciling items (3,339) (3,395) (3,794) (10,528) (3,458) (3,700) (3,576) (6,331) (17,065) FFO as calculated under IFRS $ 87,794 $ 90,864 $ 94,372 $273,030 $ 82,833 $ 89,050 $ 85,755 $ 82,073 $339,711 FFO per weighted average common unit outstanding $ 0.34 $ 0.35 $ 0.36 $ 1.05 $ 0.34 $ 0.37 $ 0.35 $ 0.32 $ 1.38 Weighted average common units outstanding 260,355 262,302 265,515 261,334 242,826 243,674 246,314 253,610 246,608 * FFO for Q1 2011 excludes one-time expense for early redemption of debentures Third Quarter 2011 Supplemental Information Package 11
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