MANAGEMENT INVESTOR PRESENTATION Year end … · PEER DATA PRESENTATION or otherwise. Calgary ......

MANAGEMENT INVESTOR PRESENTATIONYear end 2017

Updated: February 27, 2018

2

RioCan’s consolidated financial statements are prepared in

accordance with IFRS. Consistent with RioCan’s management

framework, management uses certain financial measures to assess

RioCan’s financial performance, which are not generally accepted

accounting principles (GAAP) under IFRS.

The following measures, RioCan’s Proportionate Share (or

Interest), Funds From Operations (“FFO”), Net Operating

Income (“NOI”), Adjusted Earnings before interest, taxes,

depreciation and amortization (“Adjusted EBITDA”), Debt to

Adjusted EBITDA, Same Property NOI, Interest Coverage, Debt

Service Coverage, Fixed Charge Coverage, and Total

Enterprise Value as well as other measures discussed in this

presentation, do not have a standardized definition prescribed by

IFRS and are, therefore, unlikely to be comparable to similar

measures presented by other reporting issuers.

Non-GAAP measures should not be considered as alternatives to

net earnings or comparable metrics determined in accordance with

IFRS as indicators of RioCan’s performance, liquidity, cash flow,

and profitability. For a full definition of these measures, please refer

to the “Non-GAAP Measures” in RioCan’s Management’s

Discussion and Analysis for the period ended December 31, 2017.

RioCan uses these measures to better assess the Trust’s

underlying performance and provides these additional measures so

that investors may do the same.

2

NON-GAAP MEASURES FORWARD LOOKING INFORMATION

RioCan data and statistics are based on December 31, 2017

information. Peer group included published results where provided

from First Capital Realty Corp. (FCR), SmartCentres REIT

(SRU.UN), Choice Properties REIT (CHP.UN), CT REIT (CRT.UN),

and Crombie REIT (CRR.UN). Certain slides contain a peer

comparison that was based on the respective issuer’s reported

information as at December 31, 2017.

Certain information included in this presentation contains

forward-looking statements within the meaning of applicable

securities laws including, among others, statements concerning

our objectives, our strategies to achieve those objectives, as well

as statements with respect to management's beliefs, plans,

estimates, and intentions, and similar statements concerning

anticipated future events, results, circumstances, performance or

expectations that are not historical facts. Certain material

factors, estimates or assumptions were applied in drawing a

conclusion or making a forecast or projection as reflected in

these statements and actual results could differ materially from

such conclusions, forecasts or projections.

Additional information on the material risks that could cause our

actual results to differ materially from the conclusions, forecast

or projections in these statements and the material factors,

estimates or assumptions that were applied in drawing a

conclusion or making a forecast or projection as reflected in the

forward-looking information can be found in our most recent

annual information form and annual report that are available on

our website and at www.sedar.com.

Except as required by applicable law, RioCan undertakes no

obligation to publicly update or revise any forward-looking

statement, whether as a result of new information, future events

or otherwise.PEER DATA PRESENTATION

http://www.sedar.com/

Calgary

Edmonton

Vancouver

Toronto

MontrealOttawa

BC

ON

11.6%

8.6%

4.7%

4.8%

5.4%

ABOUT RIOCAN

40.9%

• Canada’s largest REIT, focused on the ownership,

management and development of high quality, necessity

based retail, increasingly mixed-use properties in Canada’s

six major markets

• Founded in 1993 – 25 year track record

• Robust 26.31 M sf development pipeline, 12.3 M sf or 47%

already approved for zoning – mostly mixed-use

• Diversified and evolving tenant mix

• Rated BBB with stable outlook by S&P and BBB (high) by

DBRS

Annualized Revenue from Six Major Market: 76.1%

Quick Facts

Enterprise Value $13.9 B

Number of Properties 289

Net Leasable Area (NLA) 44M sf

Same Property NOI 2.1%

Committed Occupancy 96.6%

GTA Focus - % of Annualized Rental Revenue

Peer Average1

41%

23%

Revenue from National Tenants 84.8%

Average Net Rent $17.75

Renewal Spread full year 2017 5.8%

GROWTH DRIVEN BY INSIGHT

0

10

20

30

40

50

60

70

RioCan NLA RioCan NLA includingIncremental NLA from

Development*

Robust Development ProgramTremendous source of future NAV growth

22.2M

incremental

NLA or 53% of

existing NLA2

41.8M

existing

IPP NLA

2. Includes incremental NLA of 22.2M sf plus 4.1M sf that is currently income producing.

Assumes all development projects per the MD&A for the period ended December 31, 2017 are

completed and assumes no additional development, acquisitions, or dispositions

1. Source: company reports; Peers: FCR, CHP, CRT; no data on CRR and SRU

4

CANADA’S MAJOR MARKET PORTFOLIO• High quality, necessity based retail, and increasingly mixed-use major markets portfolio

• Diversified, strong national tenant base

• Significant upside on rent growth

• Base for significant NAV growth – tremendous intrinsic value to be unlocked

• Strong executive bench with wealth of experience and proven track record

• Focusing on transit-

oriented urban

intensification in major

markets

• Mostly mixed-use with

residential rental

and/or condo

development

• Strategic alliances to

mitigate risk and

create steady fee

stream

• Robust and growing

pipeline of well located

sites with substantial

zoning approved

UNLOCKINGINTRINSIC VALUE

STRATEGIC ACQUISITIONS

• Acquire only the best

locations in the six

major markets

• Opportunities to

acquire partners’

interests in today’s

tight market

• Highly selective

acquisitions of

development sites,

leveraging existing

properties

DRIVING ORGANIC GROWTH

• Evolving tenant mix

and revenue growth

• Improving operating

efficiency and cost

structure

• Redeveloping prime

assets

• Optimize pads by

adding additional

GLA

• Drive ancillary

revenues

• Continuous portfolio

pruning

• Low leverage

• Low cost of debt

• Laddered debt

maturity and mostly

fixed rate

• Access to multiple

sources of capital

• Large

unencumbered

assets pool

generating 56.7% of

annualized NOI

STRONG BALANCE SHEET

VALUE PROPOSITION AND FOUR STRATEGIC PILLARSREAL VISION, SOLID GROUND

5

CANADA’S MAJOR MARKET PORTFOLIO


• High quality, necessity based retail, and increasingly mixed-use major markets portfolio

• Diversified, strong national tenant base

• Significant upside on rent growth

• Base for significant NAV growth – tremendous intrinsic value to be unlocked

• Strong executive bench with wealth of experience and proven track record

CANADA’S MAJOR MARKET PORTFOLIOWHERE CANADIANS SHOP, LIVE AND WORK

CANADA’S SIX MAJOR MARKETSWHERE THE POPULATION GROWTH IS

• By 2036, more than half of Canadians will live in Canada’s six major markets

2006, 2017 Data: Statistics Canada2036 Data: Statistics Canada, Provincial and Municipal population forecasts

6

8.7%

26.2%

64.6%

3.7%8.1%

17.8%

2006 2011 2017 2036 Forecast

Cumulative Population Growth2006 as Base Year

Six Major Markets Secondary markets

Cumulative population growth between 2006 and: 2017 2036 Forecast

Six major markets 26.2% 64.6%

Secondary markets 8.1% 17.8%


76.1%

>90%

2017 Vision

Major Market Revenue

40.9%

>50%

2017 Vision

GTA Revenue Focus

~2.1%

>3%

2017 Vision

SP NOI Growth

24

19

2017 Vision

Avg. Age Portfolio (yrs.)

WHERE CANADIANS SHOP, LIVE AND WORK

• Improved portfolio quality and resilience to the changing retail environment

• Enhanced growth profile

• Improved operating efficiencies, newer assets, and less capex

• Improved cost structure

7

CANADA’S MAJOR MARKET PORTFOLIOWHERE CANADIANS SHOP, LIVE AND WORK

Disposition Progress as of Feb 13, 2018

Transaction type Value (M) Weighted

average cap

rate

Closed and Firm $511.9 6.1%

Conditional $58.0 6.7%

Total to Date $569.9 6.1%

• Sales prices to-date is in line with

IFRS value

• $569.9M progress to-date in four

months since the October 2017

announcement representing

approximately 28% of the $2.0B

disposition target

• Disposition progress Feb. 13, 2017

are located in:

o Fredericton in New Brunswick

o Hamilton, Orillia, Sudbury, Collingwood and

St. Catharines in Ontario

o Duncan, Kelowna, Oliver, Vernon, British

Columbia and

o Yorkton in Saskatchewan

8

9

CONSISTENT GROWTH IN FUNDS FROM OPERATIONS

$1.34$1.62 $1.53

$1.78

$1.65

$1.94

$1.68$1.79

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

2014 2015 2016 2017

Continuing Operations FFO/Unit Discontinued Operations FFO/Unit (US)

Includes

$88.3M (or

$0.28/unit)

Target

Settlement

FROM CONTINUING OPERATIONS

3-Year CAGR for Continuing Operations FFO/Unit*: 9.9%

* Continuing and discontinued operations FFO per unit is calculated based on disclosed total continuing and discontinued operations FFO, respectively, divided by the weighted average number of units (diluted) for the respective years.

Well-timed

exit from U.S.

retail market

10

STAGGERED LEASE MATURITY WITH RENT GROWTH OPPORTUNITYLEASE MATURITY AND EXPIRING RENT

• Favorable expiry profile that balances stability with opportunity for growth on renewal

• Average lease term for Top 30 tenants – 7.0 years

8.2%

12.7%11.8% 11.8%

9.7%

$19.23 $18.44

$17.51 $18.48

$20.23

$-

$5.00

$10.00

$15.00

$20.00

$25.00

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

2018 2019 2020 2021 2022

Lease maturity Expiring Rent

11

DRIVING GROWTH IN SAME PROPERTY NOI (SPNOI)

Target

Departure

SAME PROPERTY NOI

Highest

since 2010

>3%

2.1%

0.5%

(1.8)%

1.6%1.3%

1.0%1.1%

3.1%

(3.0)

(2.0)

(1.0)

0.0

1.0

2.0

3.0

4.0

Vision20172016201520142013201220112010

Target

Departure

Highest

since 2010

• 2017 SPNOI growth for:

o RioCan’s major market properties: 2.2%

o RioCan’s secondary market properties: 1.7%

• 2018 annual SPNOI guidance: 2.0% to 3.0%

12

GREATER TORONTO AREA (GTA) FOCUS

CONSISTENTLY ABOVE 95%

• Strong, consistent, industry leading presence in the Greater Toronto Area, which has one

of the highest population and economic growth profiles in the country

PERCENTAGE OF RENT FROM THE GTA EXCEEDS OUR PEERS

Source: company reports; Peers: FCR, CHP, CRT; no data on CRR and SRU

34.6%

36.8%

41.9%42.8%

41.7% 41.7% 40.9%

24.0%

32.0%

25.2% 25.6% 22.0%23.1%

23.3%

2011 2012 2013 2014 2015 2016 2017

REI Peer Average

13

GREATER TORONTO AREA (GTA) FOCUSINDUSTRY LEADING PRESENCE IN THE TORONTO CORE AND…

RioCan First Capital Realty SmartCentres REIT

14

GREATER TORONTO AREA (GTA) FOCUSACROSS THE GTA

RioCan First Capital Realty SmartCentres REIT

15

EVOLVING & RESILIENT TENANT MIX

Retailer

Category

% of

Rent

2017

Change

since

2007

Key Brands

Grocery/

Pharmacy

Liquor/

Restaurant

27.8% 3.3%

Personal Services 20.3% 4.2%

Value Retailers 15.2% 2.6%

Specialty

Retailers10.2% 0.1%

Department

Stores/ Apparel8.9% (7.4%)

Furniture and

Home9.9% 1.5%

Entertainment and

Hobby3.1% (2.6%)

Movie Theatres 4.6% (1.7%)

ADAPTING TO THE EVER CHANGING RETAIL ENVIRONMENT

16

CONSISTENTLY HIGH OCCUPANCY


COUPLED WITH STRONG RENT GROWTH

97.4% 97.6% 97.4% 96.9% 97.0%94.0%

95.6% 96.6%

$14.82

$15.21

$15.70

$16.08

$16.69

$17.11

$17.59 $17.75

$13.00

$13.50

$14.00

$14.50

$15.00

$15.50

$16.00

$16.50

$17.00

$17.50

$18.00

2010 2011 2012 2013 2014 2015 2016 2017

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Committed occupancy Average rentAverage net rent

Target

Departure

• Average net rent growth also reflects the improvements in the overall quality of the portfolio as RioCan increased its major market focus over time

17

STRONG RETENTION RATIO


• RioCan has maintained a consistent strong retention rate and continues to broaden the

gap with our peers

• Strong track record of tenant retention averaging 89.2% since 2009 relative to 82.9% for

the peer average

OUTPERFORMING AND WIDENING THE GAP RELATIVE TO PEERS

Source: company reports; Peers: CHP and SRU (no data for FCR, CRR, CRT)

Peer average calculation is weighted by square feet renewed

88.1% 89.7%

85.7%85.8%

91.1%

86.2%84.8%

75.9%

78.5%

72.5%

2013 2014 2015 2016 2017

REI Peers - Weighted Average

11.4% 11.4%

8.1%

6.0%5.8%

7.2%

8.7% 8.4%

6.1%

5.4%

2013 2014 2015 2016 2017

REI Peers - Weighted Average

18

LEASE RENEWAL SPREAD

CONSISTENTLY ABOVE 95%Target

Departure

Source: company reports; Peers: FCR, CHP, CRR and SRU (no data for CRT)

Peer average calculation is weighted by square feet renewed

• RioCan consistently outperformed peers prior to Target departure in 2015 and returned

to outperformance as new tenants are opening in the redeveloped space

OUTPERFORMING PEERS IN 2017

19

OPTIMIZING PORTFOLIO FOR CURRENT MARKET ENVIRONMENT

GROWING

Home Furnishings, Food, Fitness, Beauty and Value Retailers continue to be

bright spots in the retail landscape, with numerous brands adding additional

physical locations

• Small format service-oriented retail performing well, numerous tenants expanding

• Continued urban centre growth from national gym operators and expansion of

smaller, boutique-type operators. Quick Service Restaurants aggressively growing

• Value retailers such as Winners, Marshalls, Dollarama, etc. are rapidly expanding

• New specialty grocers are appearing and others, such as Nations and Farm Boy are

expanding

EVOLVING

Shifting demand for large formats • Some pressure from the larger format tenants upon renewal as they have options to

relocate and right-size their existing boxes

• Relocations open up opportunities for large format, value retailers who are

aggressively growing (e.g. TJX and Lowe’s)

DECLINING

Full price fashion continues to struggle• Department stores reporting soft fashion sales

• Bankruptcies continue both north and south of the border

• Small format fashion retailers not opening new locations

20

WELL DIVERSIFIED NATIONAL TENANT BASENO SINGLE TENANT OVER-EXPOSURE

Top 10 Tenant NameAnnualized Rental

Revenue

Number Of

Locations

NLA (Sq. Ft. in

'000s)

Weighted Avg

Remaining Lease

Term (Yrs)

1 4.8 % 80 2,067 7.5

2 4.3 % 82 2,050 4.8

3 4.2 % 29 3,607 9.3

4 3.9 % 27 1,443 7.4

5 3.9 % 72 1,942 6.8

6 3.4 % 49 1,999 6.7

7 1.8 % 104 504 7.0

8 1.8 % 13 1,517 10.4

9 1.6 % 83 760 6.3

10 1.6 % 25 898 8.4

TOTAL 31.3% 564 16,789 7.3

Peer Average (iii) 67.7% -- -- --

(i) Loblaws includes Shoppers Drug Mart, No Frills, Fortinos, Zehrs and Maxi. (ii) Canadian Tire Corporation includes Canadian Tire/PartSource/Mark’s/Sport Mart/ Sport Chek/Sports Experts/National Sports/Atmosphere.(iii) Source: company reports; Peers: FCR, CHP, CRT, CRR and SRU

21

LEADERSHIP TEAM

Ed Sonshine

O.Ont., Q.C.

Founder and CEO

John Ballantyne,

SVP Asset

Management

24 years in Real Estate

Jeff Ross,

SVP Leasing & Tenant

Coordination


Andrew Duncan

SVP Developments

18 years in

Development, 12 years

in Real Estate

Rags Davloor,

President and COO

25 years in Real Estate,

Operations & Finance

Qi Tang,

SVP and CFO

20 years in Finance

& Real Estate

Jonathan Gitlin,

SVP Investments &

Residential


Danny Kissoon

SVP Operations

32 years in Real

Estate

Jennifer Suess

SVP General Counsel

& Corporate Secretary

16 years in Law with a

focus on Real Estate

• Strong executive bench

with a wealth of

experience and proven

track record

• Fully integrated REIT

with all disciplines in-

house including:• Investments

• Leasing

• Asset Management

• Development &

Construction

• Property Management

• Finance, Legal and

Human Resources

• Trusted and respected,

with deep industry

knowledge and

relationships

EXPERIENCE, INTEGRITY AND FORESIGHT

22


STRATEGIC PILLAR ONE: DRIVING ORGANIC GROWTHOPTIMIZING AND FUTURE PROOFING OUR PORTFOLIO

DRIVING ORGANIC GROWTH

• Evolving tenant mix and revenue growth

• Improving operating efficiency and cost

structure

• Redeveloping prime assets

• Optimize pads and add additional GLA

• Drive ancillary revenues

• Continuous portfolio pruning

23

DRIVING ORGANIC GROWTHENHANCING PRIME ASSETS

Burlington Mall, Burlington Ontario – 2018

• $65M redevelopment and renovation of this iconic centre in Canada’s

Best Mid-Sized City (voted five years in a row)

• Rebranded to Burlington Centre

• Renovated food court

• Strategically remerchandised (former Target location):

• Confirmed new tenancies include Indigo, Denninger’s Foods

of the World, Sportchek and Winners

24

COMPLETED DEVELOPMENTSGREENFIELD DEVELOPMENT

• Demographics in 5km radius:

• Population: 95k

• Average household income: $145k

Location – Located in a growing residential suburbs in Northwestern Calgary

Ownership Structure – 50% (JV with KingSett)

Property Type – New format retail

• Substantially completed in Q4 2017

• 380,000 sf Walmart and Loblaws anchored centre

• The first Loblaws City Market banner in Calgary

• Excellent mix of strong national tenants: London Drugs, Dollarama, Scotiabank, McDonalds, Royal Bank of Canada

SAGE HILL CROSSING, CALGARY AB

DRIVING ORGANIC GROWTHSTRATEGIC REDEVELOPMENT

RIOCAN YONGE EGLINTON CENTRE, TORONTO

25

Intersection: Yonge St. and Eglinton Avenue East

Ownership: 100%

Total GLA: 1,056,285 sf

Property Concept: Mixed-use

Project Completion: 2016

Surfacing Value:• Purchase Price (2007): $223 million

• Current Value: $574 million

• NOI at acquisition: $13 million

• Value Stabilized NOI: $26 million

257% increase in value since acquisition

• Strategically evolved tenant mix to meet consumer

needs

• Incremental revenue through leasing of the digital

screens on the building interior and exterior

26

CAPITALIZING ON RE-LEASING OPPORTUNITIESTARGET RE-LEASING & SEARS UPDATE

Target Re-leasing

• Re-leasing of former Target space 1.7 M sf

• Substantially completed Q4 2017

• Annual net rent revenue from releasing tenants: $14.0 M

• Annual rent revenue paid by Target of $10.6 million

• Annual net rent increase over Target rent: $3.4 million or 32.1%

• Significant capital recovered by way of settlement with Target of

$88.3M (at RioCan’s interest)

• Greater customer appeal and traffic

• Stronger, more diversified tenants

Sears Update

• Sears departure left 381,000 sf of space to re-lease at RioCan’s interest (vs. Target 1.7M sf)

• Completed leases, conditional leases or leases in advanced negotiations to replace 133% of the net

revenue and while only representing 84% of the former Sears GLA

• Leasing is much less complex than leasing former Target spaces

• Replacement tenants will be stronger and more diversified

• Properties will have broader customer appeal and replacement tenants will drive incremental traffic

27


STRATEGIC PILLAR TWO: UNLOCKING INTRINSIC VALUEREALIZING THE POTENTIAL OF OUR CORE ASSETS

• Focusing on transit-oriented urban

intensification in major markets

• Mostly mixed-use with residential rental

and/or condo development

• Strategic alliances to mitigate risks and

create steady fee stream

• Robust and growing pipeline of well

located sites with substantial zoning

approved

UNLOCKING INTRINSIC VALUE

28

UNMATCHED PORTFOLIO OF URBAN MIXED-USE DEVELOPMENT PROPERTIES

Yonge Eglinton Northeast Corner King & Portland

Yonge Sheppard Centre Gloucester Residential Phase I

Sunnybrook Plaza

29

SOURCES OF TREMENDOUS NAV GROWTH

• Strong, major market, urban focused development pipeline with high quality projects in prime

locations, predominantly transit oriented

• Risk mitigation via staggered development starts and the use of strategic alliances

• Maintain a disciplined approach to capital allocation and maintain leverage in the 38%-42% debt to

asset range

ROBUST DEVELOPMENT PIPELINE

0

10

20

30

40

50

60

70

RioCan NLA RioCan NLA including Incremental NLA fromDevelopment*

1. Total development pipeline of 26.3M sf includes incremental NLA of 22.2M sf plus 4.1M sf that is currently income producing

2. Assumes all development projects per the MD&A for the period ended December 31, 2017 are completed and assumes no

additional development, acquisitions, or dispositions

22.2M incremental

NLA1 or 53% of

existing NLA2

Millions sf.

41.8M existing

IPP NLA

30

TREMENDOUS SOURCES OF CASH FLOW & NAV GROWTH

Zoned, 12.3m sf, 46.7%

Application submitted, 5.3m sf, 20.1%

Future est. density, 8.7m sf, 33.2%

Total Pipeline by Zoning Status(26.3M* sf)

Commercial1.1m sf,

4.4%

Residential & Air Rights17.2m sf,65.3%

Commercial, 7.0m sf, 27.8%

Residential Inventory1.0m sf, 3.9%

Mixed-Use Residential25.1m sf,

95.6%

Total Pipeline by Project Type

* Includes 22.2M sf of incremental NLA and 4.1M sf of NLA which is currently income producing. All data at RioCan’s interest.

• Nearly 50% or 12.3M sf with zoning approved and 100% is located in the six major markets

• Particularly valuable in today’s more challenging regulatory environment• Uncertainty in Ontario regarding transition to the newly implemented Local Planning

Appeal Tribunals given that its mandate is unclear

PIPELINE IS EXPECTED TO CONTINUE TO GROW

31

TREMENDOUS SOURCES OF CASH FLOW & NAV GROWTH

SELECTED DEVELOPMENT COMPLETIONS OVER THE NEXT THREE YEARS

At RioCan’s Interest 2018 2019 2020

Annual Completed NLA 693,000 813,000 1,302,000

Cumulative NLA 693,000 1,506,000 2,808,000

% of NLA* 1.7% 3.6% 6.7%

* Income producing NLA of 41,807k sf as at December 31, 2017

Brentwood Village

King Portland Centre

Bathurst College Centre

Yonge & Eglinton

Northeast Corner

Gloucester Phase I

740 Dupont

The Well – Phased

completion 2020-2023

• Development completions of 2.8M sf through 2020 are expected to generate approximately $54M of annualized NOI at RioCan’s interest

32

UNLOCKING THE VALUE OF TRANSIT-ORIENTED ASSETSURBAN TORONTO HIGHLIGHTS: SELECTED HIGH DENSITY, LOCATIONS

Legend

Under Development

TTC – Existing

Future Development Potential

TTC – Under Development

Selected Urban Toronto

RioCan Developments'000s sf

(100%)

Yonge-Sheppard Centre 412

555 College 113

King Portland Centre 425

Yonge & Eglinton 707

The Well & Building 6 2,938

740 Dupont 181

Sunnybrook Plaza 316

Queensway 614

Dufferin Plaza 582

RioCan Leaside Centre 1,307

Lawrence Square 94

RioCan Hall 736

491 College 24

Bathurst College Centre 139

SELECTED URBAN

TORONTO8,588

TTC – Station

1

2

3

4

5

6

8

9

10

11

12

13

14

Demographics, 5km radiusDense population*:

• 481,000 people

Desirable demographic*:

• HH Income: $130,000+

• Post-secondary education: 65%+

Planned Rapid Transit Line

*Average demographics within a 5km radius of RioCan Urban Toronto development sites

7

7

UNLOCKING THE VALUE OF TRANSIT-ORIENTED ASSETSBRAMPTON/MISSISSUAGA HIGHLIGHTS: SELECTED HIGH DENSITY LOCATIONS

Selected Brampton/Mississauga RioCan

Future Development Potential '000s sf (100%)

Shoppers World Brampton 4,200

RioCan Sandalwood Square (Ph. I) 180

RioCan Grand Park 330

Selected Brampton/Mississauga

TOTAL4,710

1

12

3

3

2

With three shopping centres and approximately 82 acres

of land on this LRT line, RioCan is uniquely positioned to

take advantage of future intensification opportunities


• 270,000 people+


• HH Income: $100,000+

• Post-secondary education: 50%+

*Average demographics within a 5km radius of selected RioCan Brampton/Mississauga development sites

33

UNLOCKING THE VALUE OF TRANSIT-ORIENTED ASSETSCALGARY HIGHLIGHTS: SELECTED HIGH DENSITY LOCATIONS

1

2

3

*Average demographics within a 5km radius of selected RioCan Calgary development sites


• 170,000 people+


• HH Income: $137,000+

• Post-secondary education: ~60%

Selected Calgary RioCan Future

Development Potential'000s sf

(100%)

Brentwood Village 145

5th & Third East Village 755

Southland Crossing 972

Selected Calgary TOTAL 1,872

3

2

1

1

2

3

34

35

UNLOCKING THE VALUE OF TRANSIT-ORIENTED ASSETSOTTAWA HIGHLIGHTS: SELECTED HIGH DENSITY LOCATIONS

Selected Ottawa RioCan

Development Potential'000s sf

(100%)

Gloucester/Frontier 667

Lincoln Fields 1,000

SELECTED OTTAWA POTENTIAL

TOTAL 1,667

2

Legend

Under Development

Future Development Potential

1

2

1


• 150,000 people+


• HH Income: ~ $100,000

• Post-secondary education: ~60%

*Average demographics within a 5km radius of selected RioCan Ottawa

development sites 35

UNLOCKING INTRINSIC VALUERESIDENTIAL INTENSIFICATION

GLOUCESTER RESIDENTIAL PHASE I, OTTAWA

Location: Located on a 7.1 acre portion of

RioCan's Gloucester Silver City Shopping Centre along

new Confederation LRT line at the Blair Station in

Ottawa

Ownership: 50% (JV with Killam Apartment REIT)

Property Type: Rental Residential, Phase I contains a

23 storey tower with 222 units (at 100%)

Zoning status: Zoned

Project Completion: 2019

Surfacing Value:• Zoning approved for three additional residential

towers containing the potential for up to 840 units

• Transitioned use from 77,000 sf of struggling

fashion retail to a 23 story desirable rental

residential building.

• Retail mix at our adjacent shopping centre was

evolved and now includes a strong, diverse mix of

tenants including Cineplex theatre, Indigo,

Goodlife and numerous restaurants

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Proposed

• Demographics in a 5km radius:

• Population: 450k

• Daytime population: 457k

• Average household income: $164k+

• Adjacent to CSIS headquarters: 2,000+ employees

• Leading edge development that will maximize efficiency

via a geothermal energy system for heating and cooling

UNLOCKING INTRINSIC VALUERESIDENTIAL INTENSIFICATION, GLOUCESTER OTTAWA (Including future phases)

Zoning approved for four residential towers containing the potential for up to 840 units on a 7.1

acre portion of RioCan's Gloucester Silver City Shopping Centre

37

Proposed


• Population: ~700k

• Average household income: ~ $120k

38


740 DUPONT AVE.,TORONTO, ON

Location – Toronto, Ontario

Property Type – Mixed-use retail and residential. 9-storey

project with 210 rental units and 31,000 square feet of retail

GLA. Firm lease with Farm Boy (23,000sf) to anchor the retail

portion of the site.

Ownership - 50% (JV with Woodbourne)

Project Start / Anticipated Completion 2017 / 2021


Surfacing Value

• Site was acquired in 2010, formerly occupied by Grand

Touring automobile until November 2017

• Well located along a busy thoroughfare in a densely

populated area of Toronto. A short walk to the Bloor-

Danforth subway line

Proposed


• Population: ~160k


• Well located with easy access to downtown Calgary,

the University of Calgary, McMahon Stadium and

Foothills Hospital

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BRENTWOOD VILLAGE, CALGARY, AB

Location – Located along the Northwest LRT line and

adjacent to the Crowchild Parkway in Northwestern Calgary in

close proximity to the University of Calgary

Property Type – Mixed-use retail residential, 12-storey, 165

rental units with approximately 10,000sf of retail GLA

Ownership - 50% (JV with Boardwalk REIT)


Project Start / Anticipated Completion 2018 / 2020

Surfacing Value

• Extracting additional value through the redevelopment of an

underutilized retail portion of the site to include additional

residential uses

• RioCan will retain a 100% interest in the remainder of the

shopping centre

Proposed

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YONGE & EGLINTON NORTHEAST CORNER, TORONTO, ON

Location: At the heart of one of Toronto’s busiest and most

popular intersections. Unparalled access to the Yonge subway

and new Eglington Crosstown LRT

Property Type: Mixed-use with retail, residential tower with

466 units and condominium tower with 623 units

Ownership: 50% (JV with Metropia and Bazis)

Leasing/Sales: All 623 condominium units have been pre-

sold. Retail is 82% leased (anchored by TD Bank)

Proposed Rental Residential Units: ~460 Units

Zoning Status: Zoned

Anticipated Completion: 2018 & 2019

Surfacing Value

• Agreement in place to acquire the partners’ 50% interest

in the 466 unit rental residential tower at cost plus $10M

• Agreement in place to acquire partner’s 50% interest in

the retail NLA at a 7% capitalization rate upon completion

of the project





• Condo portion of the project is 100% pre-sold

Proposed


Location: Prime location in trendy Toronto’s

downtown west with direct access to transit

Property Type: Mixed-use with office, retail and

condominiums

Leasing/Sales: 134 condominium units fully

sold out ahead of price expectations. New office

256,000 sf (at 100%) 100% leased to Shopify

and Indigo: retail all but 7,000 sf leased.

Existing 55,000 sf of office space adjacent to

the building is 100% leased with substantial rent

upside upon project completion

Ownership: 50% (JV with Allied Properties

REIT)

Incremental Commercial NLA: 166,000 sf at

RioCan’s Interest


Project Start / Anticipated Completion: 2016/

Late 2018

KING PORTLAND CENTRE,

TORONTO, ON

41

Proposed




• Office tower is targeted LEED platinum

RESIDENTIAL INTENSIFICATION

SUNNYBROOK PLAZA,TORONTO, ON

42

Location: Located on new Eglinton LRT in an affluent

neighbourhood in midtown Toronto

Ownership: 50% (JV with Concert Properties)

Property Type: Mixed-use with one 16 storey and one 11

storey rental residential towers (approx. 427 units)

Commercial NLA: 22,000 sf at RioCan’s Interest

Project Start / Anticipated Completion: 2020/2023

Surfacing Value:

• Concert paid RioCan $26.3 million in June 2017 for a

50% interest in the development.

• RioCan acquired the centre in 2007 for $22.8 million

(100%)

• More than doubled the value in ten years, before

significant value creation upon this project’s

completion.

Proposed





UNLOCKING INTRINSIC VALUE


YONGE SHEPPARD CENTRE,

TORONTO, ON

Location: Located at the thriving intersection Yonge &

Sheppard, with access to 2 subway lines and highway 401

Property Type: Mixed-use with incremental 156k sf retail,

as well as 258k sf of rental residential

Ownership: 50% (JV with KingSett Capital)


Phased Completion: Retail – 2019

Residential - 2020

Surfacing Value

• Renovation and expansion of retail space

• Intensification through the addition of a new 39

storey residential tower containing 258,000

square feet of residential rental space

• Retail anchored by Longo’s, LA Fitness,

Shoppers Drug Mart, Winners, and three

major banks

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Proposed• Demographics in 5km radius:




• 49,000 people pass through the site as part of their

daily commute

• $250M (at RioCan’s interest) renovation underway

Proposed

44



• Low leverage

• Low cost of debt

• Laddered debt maturity and mostly fixed rate

• Access to multiple sources of capital

• Large unencumbered assets pool generating

56.7% of annualized NOI


Strong Growth

Multiple Capital

Sources

Low Leverage

THE FINANCIAL RESOURCES TO FUEL GROWTH AND WEATHER MARKET TURMOIL

45


Capital Structure Metrics

Target 2017

Leverage38% - 42% 41.4%

Debt/EBITDA<8.0x 7.57x

Interest Coverage>3.0x 3.84x

Debt Service Coverage>2.25x 3.06x

Fixed Coverage>1.10x 1.17x

Unencumbered AssetsN/A $7.7B

Unencumbered Assets to

Unencumbered Debt >2.0x 2.26x

NOI % from Unencumbered Assets>50% 56.7%

FFO Payout Ratio<80% 78.8%

Recent News & Future Plans

• January 31, 2018 – issued $300 million

5.7-year senior unsecured debentures

at 3.209%, maturing September 2023

• Repurchased and cancelled 3.9M units

at a weighted average price of $25.30

per unit under NCIB

• Self funding (as opposed to equity

issuance) developments through:

o Sales proceeds from

condominium/townhouse developments

or air rights sales

o Strategic alliances to reduce capital

requirements and mitigate risks

o Disposition net proceeds

o Excess operating cash flows

o Sale of marketable securities

o Debt, subject to leverage targets and

credit metrics

• Optimize secured versus unsecured

debt and floating versus fixed rate debt

STRATEGIC PILLAR THREE: STRONG BALANCE SHEETPRUDENT CAPITAL MANAGEMENT & FLEXIBLE CAPITAL STRUCTURE

41.4%46.0%

3.1x

2.6x

7.6x8.3x

Debt Service Coverage

Leverage

46

INDUSTRY LEADING FINANCIAL PROFILE

Source: company reports; Peers: FCR, SRU, CHP, CRR, CRT

3.9x

3.1x

Interest Coverage

Debt to EBITDA

47

STAGGERED DEBT MATURITY AND LOW COST OF DEBTW

eig

hte

dA

vg. Interest R

ate on

Matu

ring D

ebt

3.37% 3.52% 3.65%

4.40%

2.69%

3.36%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

0

400

800

1,200

1,600

2,000

2,400

2018 2019 2020 2021 2022 Thereafter

$ ‘000s

Scheduled principal amortization Mortgages payable

Floating Rate Mortgages and Lines of Credit Debentures payable

Weighted average interest rate

1,004 963 896 922 1,0801,201

LESS IMPACTED BY RISING INTEREST RATES

48

STRATEGIC PILLAR FOUR: STRATEGIC ACQUISITIONS


• Acquire only the best locations in the six

major markets

• Opportunities to acquire partners’ interests

in today’s tight market

• Highly selective acquisitions of

development sites, leveraging existing

properties


SELECTIVELY SEIZING OPPORTUNITIES

STRATEGIC ACQUISITIONSACQUISITIONS OF PARTNERS’ INTERESTS HAVE BEEN A KEY SOURCE OF GROWTH POST SALE OF US PORTFOLIO

49

Proposed

Acquired more than $1.5 Billion of assets predominantly in major markets that would

otherwise not be available in the market at a weighted average capitalization rate of 5.8%

• Acquisition from Kimco involved the purchase of a non-managing interest from a motivated seller seeking

to re-focus their portfolio in the United States.

Acquisitions from Kimco of $0.9B

Acquisitions from CPPIB of $0.3B

Acquisitions from other partners,

$0.2B

Over $1.5 Billion of Acquisitions from Partners Since 2015

MIXED-USE DEVELOPMENT

50

Proposed

THE WELL TORONTO, ON



51

Proposed

• Demographics 5KM radius:



• Innovative, amenity rich design including a European inspired

food hall

• Office is targeted LEED platinum

• Teaming with Enwave for the first low-carbon resilient cooling

and heating option for the property and surrounding community

THE WELL,

TORONTO, ON

Location: 7.7 acre site situated at the gateway to

downtown Toronto, at Front and Spadina. Transit

oriented adjacent to the site of a proposed intercity

GO Train stop.

Ownership Structure:

Commercial: 50% (J.V. with Allied Properties REIT

Residential: 40% (J.V. Allied Properties REIT and

WNUF2*)

Residential Building 6: 50% (J.V. with Woodbourne )

Property Type: Mixed-use with 500,000 sf retail, 1.1

M sf office and ~1,800 residential units (condo and

rental) at 100%


Estimated project completion:

Commercial - 2021, Residential Building 6 - 2023

*WNUF2 holds a 20% interest in the residential portion until the sale of air rights to Tridel and Woodbourne upon completion of the underground and podium structures .



52

Proposed

THE WELL,

TORONTO ON

Surfacing Value

• RioCan and its partners acquired the

former Globe and Mail head office and

surrounding land for $170 million in 2012

and 2013

• Agreement in place to sell 1.1M sf of air

rights to Residential partners Tridel and

Woodbourne for approximately $180 million

upon completion of the underground and

podium structures

• Upon completion, an estimated 10,000

people will live and work at the property

• A comprehensive signage master plan

agreement has been approved by the city.

Interior and exterior digital signage will

generate significant ancillary revenue

Proposed



YORKVILLE, TORONTO, ON

Location: Transit oriented and in the heart of prestigious

Yorkville, one of Toronto’s most high-end shopping and

residential areas.

Property Type: Mixed-use with potential for 0.5M sf of luxury

condominium and retail uses and up to up to 82 rental units

Ownership: 50/25/25 joint venture among RioCan, Metropia

and Capital Developments

Zoning Status: Preparing application for ZBA Zoning Bylaw

Amendment

Project Start/Anticipated Completion: TBD

Surfacing Value:

• As of February 2018 the partners have completed

acquisitions of adjacent properties substantially required

for the intensification project

• RioCan has agreed to purchase the partners’ interest in

the retail portion upon completion at a 6% cap rate and

has the right of first opportunity to acquire the residential

rental units

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• Demographics in 5 km radius:






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Proposed

BATHURST COLLEGE

CENTRE, TORONTO

Location: Situated in the western

downtown corridor in Toronto, at Bathurst

Street and College Avenue. Directly across

street from Toronto General Hospital

Ownership Structure: 100%

Property Type: 139,000 sf mixed-use

office and retail

Leasing status: 79% pre-leased


Estimated project completion: 2019

Proposed


55

Proposed

5th & THIRD,

CALGARY, AB

Location: Well located in the East

Village area of downtown Calgary with

direct access to the LRT

Ownership Structure: 100% retail,

Residential air rights sold to Embassy

BOSA

Property Type: Mixed-use with

158,000 sf of retail and 597,000 sf

residential sold as air rights

Leasing status: 70% pre-leased


Estimated project completion: 2021

Lead Tenants : Loblaw’s City Market,

Shoppers Drug Mart

Proposed



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Proposed

• Well defined sustainability policy;

• Established sustainability governance structure;

• In 2017, RioCan participated in the Global Real Estate Sustainability Benchmark ("GRESB") Survey for the first time;

• Inclusion of a new performance indicator for management;

• Completed an employee engagement survey to collect feedback on sustainability drivers;

• Establishment of a baseline for sustainability: energy, water and Greenhouse Gas ("GHG") emissions;

• Establishment of sustainability standards for our income producing properties and our development projects;

• Pursuing Toronto Green Standard (TGS) Tier II for The Well and Sunnybrook Plaza projects, and pursuing LEED Gold & TGS Tier II for its Yonge Sheppard Centre project

• Extension of Enwave’s existing Deep Lake Water Cooling network via a new 12 million-litre energy storage facility at The Well(see image) to provide a low-carbon, resilient cooling and heating option for the property and the surrounding communities

• Geothermal energy system for heating and cooling to be incorporated at RioCan’s Gloucester project in Ottawa

Proposed

ENVIRONMENTAL SOCIAL AND GOVERNANCE AT RIOCAN

Embedding Sustainability

CONTACT INFORMATION

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Proposed

Proposed

Edward Sonshine, O.Ont., Q.C.

Chief Executive Officer

Rags Davloor

President & Chief Operating Officer

Qi Tang

Senior Vice President & Chief Financial Officer

Contact Information RioCan Yonge Eglinton Centre 2300 Yonge Street P.O. Box 2386 Toronto, ON M4P 1E4

Email: [email protected](T) 1-800-465-2733 or (416) 866-3033

MANAGEMENT INVESTOR PRESENTATION Year end … · PEER DATA PRESENTATION or otherwise. Calgary ......

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