TRANSFORMING... SECOND QUARTER 2013 SUPPLEMENTAL INFORMATION PACKAGE Q_02 REAL ESTATE INVESTMENT TRUST 2_2

Transcription

1 SECOND QUARTER 2013 SUPPLEMENTAL INFORMATION PACKAGE Q_02 TRANSFORMING... REAL ESTATE INVESTMENT TRUST RIOCAN REAL ESTATE INVESTMENT TRUST ANNUAL REPORT _2

2 Table of Contents Second Quarter 2013 Supplemental Information Package Real Estate Portfolio Fact Sheet... 1 FINANCIAL INFORMATION Operational and Financial Highlights... 2 Interim Consolidated Financial Statements Consolidated Balance Sheets... 5 Consolidated Statements of Earnings... 6 Consolidated Statements of Comprehensive Income... 7 Consolidated Statements of Cash Flows Change in Accounting Policy... 9 Results of Operations Net Operating Income FFOandAFFO International Financial Reporting Standards ( IFRS ) Summary of Consolidated Debt Debt and Leverage Metrics INVESTMENT ACTIVITY Acquisitions Dispositions Development Projects Greenfield Development Urban Intensification Expansion and Redevelopment Projects REAL ESTATE INFORMATION Occupancy Economic versus Committed Occupancy Leasing Activity Renewal Activity Contractual Rent Steps Top 50 Tenants Top Ten Tenants Canada Top Ten Tenants US Property Ownership by Geographic Area Portfolio Geographic Diversification Lease Expiries by Geographic Area JOINT VENTURE INFORMATION GENERAL General Information Senior Management and Unitholder Information... 59

3 REAL ESTATE PORTFOLIO FACT SHEET As at June 30, 2013 Canadian Properties American Properties Grand Total Net Leasable Area ( NLA ) (sq.ft.): Retail Office Total Retail Office Total Total Income Producing Properties 38,374,949 1,825,364 40,200,313 8,904,742 8,904,742 49,105,055 Properties Under Development 4,272,330 4,272,330 4,272,330 Total 42,647,279 1,825,364 44,472,643 8,904,742 8,904,742 53,377,385 Number of Tenancies 7,900 Portfolio Occupancy Canadian Properties American Properties Total Retail 96.5% 97.3% 96.6% Office 97.8% 97.8% Total 96.6% 97.3% 96.7% Geographic Diversification Number of properties Percentage of annualized rental revenue Income producing properties* Properties under development* Total Ontario 56.7% Quebec 11.4% Alberta 9.9% British Columbia 5.4% Other Canada 2.5% Northeastern United States 6.4% Texas 7.7% % * Certain assets have been reclassified for consistency. Anchor and National Tenants (including US) Percentage of annualized rental revenue Percentage of total NLA 85.9% 85.8% Top Ten Sources of Revenue by Tenant (including US) Rank Tenant Percentage of annualized rental revenue Weighted average remaining lease term (yrs) 1 Walmart 3.7% Canadian Tire Corporation (i) 3.5% Cineplex/Galaxy Cinemas (ii) 3.2% Metro/Super C/Loeb/Food Basics 3.2% Winners/HomeSense/ Marshalls 2.6% Loblaws/No Frills/Fortinos/Zehrs/Maxi (iii) 2.5% Target Corporation 1.8% Staples/Business Depot 1.7% Shoppers Drug Mart (iii) 1.6% Future Shop/Best Buy 1.5% 6.1 Total 25.3% 8.7 (i) Canadian Tire Corporation includes Canadian Tire/PartSource/Mark s Work Wearhouse/Sport Mart/Sport Chek/Sports Experts/National Sports/ Atmosphere. The following pro forma rankings assume the successful closing of all the deals mentioned below: (ii) Cineplex has entered into an agreement to purchase certain theatre locations from Empire Co., including two locations within the RioCan portfolio. This transaction is anticipated to close during the third quarter of (iii) Loblaws has entered into an agreement to purchase Shoppers Drug Mart which is scheduled to close in the fourth quarter of Upon closing of this transaction, Loblaws would be RioCan s largest tenant as measured by gross revenue. Lease Expiries - Canada Lease expiries (NLA) Retail Class Total NLA 2013 (i) New Format Retail 18,832, ,706 1,392,613 1,877,831 1,951,671 1,589, % 7.4% 10.0% 10.4% 8.4% Grocery Anchored Centre 8,386, ,213 1,141, ,224 1,232,560 1,379, % 13.6% 11.8% 14.7% 16.5% Enclosed Shopping Centre 7,361, , , ,295 1,199, , % 11.8% 10.9% 16.3% 7.4% Non-Grocery Anchored Centre 2,201, , , , ,938 92, % 5.8% 14.0% 8.6% 4.2% Urban Retail 1,593, , ,947 93,597 95, , % 23.0% 5.9% 6.0% 8.4% Office 1,825,364 87, ,781 83, , , % 7.9% 4.6% 11.0% 7.4% Total 40,200,314 1,785,915 4,040,363 4,155,587 4,869,425 3,878, % 10.1% 10.3% 12.1% 9.6% Average net rent per square foot $ $ $ $ $ $ Lease Expiries - US Lease expiries (NLA) Retail Class Total NLA 2013 (i) New Format Retail 6,272, , , , , , % 6.9% 6.3% 3.1% 6.9% Grocery Anchored Centre 2,472,921 44, ,405 66, , , % 8.1% 2.7% 10.3% 6.5% Non-Grocery Anchored Centre 159,416 10,847 40,975 15,403 3,208 14, % 25.7% 9.7% 2.0% 9.1% Total 8,904, , , , , , % 7.6% 5.4% 5.1% 6.8% Average net rent per square foot $ $ $ $ $ $ (i) Tenant lease expiries for the remaining six months of Second Quarter 2013 Supplemental Information Package

4 OPERATIONAL AND FINANCIAL HIGHLIGHTS Operational Information (thousands of square feet, except other data) As at and for the three months ended June 30, 2013 December 31, 2012 June 30, 2012 US Canada Total US Canada Total US Canada Total Number of properties: Income properties Under development (iii) Portfolio occupancy 97.3% 96.6% 96.7% 98.1% 97.2% 97.4% 97.8% 97.3% 97.4% Net leasable area ( NLA ) at 100% * 13,678 59,803 73,481 13,579 60,962 74,541 12,330 59,762 72,092 NLA at RioCan s interest: Total portfolio 8,905 40,200 49,105 8,816 40,674 49,490 7,232 39,690 46,922 Average in place rent $ $ $ $ $ $ $ $ $ Completed greenfield development and land use intensification activities during the period ended Acquired during the period ended 4 1,138 1,142 1, , Dispositions during the period ended (1,588) (1,588) (76) (76) Development pipeline upon completion: Total project NLA (iv) 11,290 11,290 9,948 9,948 8,884 8,884 RioCan s interest of project NLA (iv) 5,359 5,359 4,910 4,910 4,616 4,616 Percentage of portfolio rental revenue derived from: Six Canadian high growth markets (annualized) (i) N/A 72.1% 72.1% N/A 67.5% 67.5% N/A 66.7% 66.7% US market (annualized) 14.1% N/A 14.1% 13.6% N/A 13.6% 12.5% N/A 12.5% National and anchor tenants (annualized) 85.7% 86.0% 85.9% 86.3% 86.1% 86.1% 85.6% 85.9% 85.8% Largest tenant (annualized) 9.8% 4.2% 3.7% 9.2% 4.9% 4.3% 12.9% 5.0% 4.5% Percentage of portfolio NLA anchored or shadow anchored by grocery stores 60.6% 73.3% 71.5% 58.0% 70.5% 68.8% 58.1% 73.5% 71.1% Number of employees (excluding seasonal) (ii) * Includes retail owned anchors. (i) The six Canadian high growth markets are: Calgary, AB; Edmonton, AB; Montreal, QC; Ottawa, ON (includes Gatineau region); Toronto, ON; and Vancouver, BC. (ii) Number of employees at June 30, 2013 includes 13 US based employees for the start-up of RioCan s US management platform. (iii) Includes active development projects. (iv) Includes active and non-active projects. 2 Second Quarter 2013 Supplemental Information Package

5 Financial Information (i) (millions of dollars, except where otherwise noted) For the three months ended June 30, For the six months ended June 30, Total revenue Consolidated (xix) $ 278 $ 256 $ 571 $ 517 Total revenue RioCan s interest (ii) 292 $ 266 $ 598 $ 534 Change in fair value of investment properties Consolidated $ 43 $ 306 $ 80 $ 538 Change in fair value of investment properties RioCan s interest (iii) 48 $ 313 $ 86 $ 552 Net earnings before taxes and fair value adjustment $ 112 $ 106 $ 238 $ 223 Net earnings attributable to unitholders $ 153 $ 409 $ 316 $ 751 Net earnings per Unit attributable to common Unitholders basic $ 0.50 $ 1.41 $ 1.03 $ 2.62 Net earnings per Unit attributable to common Unitholders diluted $ 0.49 $ 1.40 $ 1.02 $ 2.61 Adjusted EBITDA (iv) $ 183 $ 172 $ 373 $ 340 FFO (v) $ 106 $ 227 $ 275 $ 92 FFO per Unit $ 0.35 $ 0.32 $ 0.75 $ 0.68 Operating FFO (v) $ 121 $ 106 $ 245 $ 209 Operating FFO per Unit (v) $ 0.40 $ 0.37 $ 0.81 $ 0.74 Weighted average common Units outstanding basic (in thousands) 301, , , ,096 Distributions to common Unitholders $ 106 $ 100 $ 213 $ 197 Distributions to common Unitholders per Unit $ $ $ $ Distributions per common Unit (annualized) (vi) $ 1.41 $ 1.38 $ 1.41 $ 1.38 Distributions to common Unitholders net of distribution reinvestment plan $ 79 $ 73 $ 158 $ 147 Distributions to common Unitholders net of distribution reinvestment plan per Unit (last twelve months) $ 1.01 $ 1.05 $ 1.01 $ 1.05 Common Unit issue proceeds under distribution reinvestment plan $ 27 $ 27 $ 55 $ 50 Distribution reinvestment plan ( DRIP ) participation rate 25.2% 27.1% 25.8% 25.4% (millions of dollars, except where otherwise noted) As at June 30, 2013 December 31, 2012 June 30, 2012 Total enterprise value (vii) $ 13,774 $ 14,274 $ 13,559 Total assets Consolidated $ 12,931 $ 12,619 $ 11,546 Total assets RioCan s interest (viii) $ 13,195 $ 12,888 $ 11,698 Debt (mortgages and debentures payable) Consolidated $ 5,579 $ 5,451 $ 4,933 Debt (mortgages and debentures payable) RioCan s interest (ix) $ 5,851 $ 5,717 $ 5,155 Debt to total assets Consolidated (x) 43.0% 42.4% 42.0% Debt to total assets RioCan s interest (x) 44.2% 43.6% 43.3% Debt to total capitalization Consolidated (xi) 40.5% 38.2% 38.3% Debt to total capitalization RioCan s interest (xi) 42.5% 40.1% 38.0% Debt service coverage ratio RioCan s interest (xiii) * Interest coverage ratio RioCan s interest (xii) * Fixed charge coverage ratio RioCan s interest (xiv) * Net consolidated debt to Adjusted EBITDA (xv) * Operating debt to adjusted operating EBITDA RioCan s interest (xvi) * Total unitholders equity $ 7,048 $ 6,847 $ 6,231 Common Units outstanding (in thousands) 302, , ,659 Closing market price per common Unit $ $ $ Common Units market capitalization (xvii) $ 7,646 $ 8,271 $ 8,051 Series A preferred units outstanding (in thousands) 5,000 5,000 5,000 Closing market price per Series A preferred unit $ $ $ Series C preferred units outstanding (in thousands) 5,980 5,980 5,980 Closing market price per Series C preferred unit $ $ $ Preferred units market capitalization (xviii) $ 277 $ 286 $ 279 Please note: RioCan s method of calculating non-gaap measures may differ from other issuers methods and accordingly may not be comparable to such amounts reported by other issuers. (i) During the first quarter of 2013, RioCan changed its accounting policy for certain joint arrangements as required by the new standard IFRS 11 Joint Arrangements. As a result, the Trust no longer proportionately consolidates certain joint arrangements and now accounts for these investments using the equity method of accounting. Where applicable, prior period financial information has been restated to reflect this change in accounting policy. An analysis of RioCan s consolidated financial position and results of operations plus its interests in the equity accounted for investments financial position and results of operations may be found under 2013 Change in Accounting Policy. (ii) A non-gaap measurement. Calculated as the sum of rental revenue, fees and other income and interest income, all at RioCan s interest. 3 Second Quarter 2013 Supplemental Information Package

6 (iii) A non-gaap measurement. Calculated as consolidated change in fair value of investment properties plus RioCan s share of change in fair value of investment properties for its equity accounted for joint arrangements less non-controlling interests share of change in fair value of investment properties. (iv) A non-gaap measurement. Adjusted EBITDA is defined as net earnings at RioCan s interest before changes in fair value of income properties, net interest expense and income taxes as well as other one-time adjustments. A reconciliation of Adjusted EBITDA to net earnings can be found under Capital Strategy and Resources. (v) A non-gaap measurement. A reconciliation to net earnings can be found under Results of Operations. (vi) Annualized amount is based on the latest quarter s distribution. (vii) A non-gaap measurement. Calculated by the Trust as debt at RioCan s interest plus common Unit market capitalization plus preferred unit market capitalization. (viii) A non-gaap measurement. Calculated as consolidated assets of the Trust and adding back RioCan s share of liabilities for its equity accounted for joint arrangements and less non-controlling interests share of assets. (ix) A non-gaap measurement. Calculated as consolidated mortgages and debentures payable of the Trust plus RioCan s share of mortgages and debentures payable for its equity accounted for joint ventures less non-controlling interests share of mortgages and debentures payable. (x) A non-gaap measurement. Calculated as debt net of cash divided by total assets net of cash. (xi) A non-gaap measurement. Calculated by the Trust as debt divided by total enterprise value. (xii) 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), prepared at RioCan s interest. (xiii) 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. (xiv) 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, prepared at RioCan s interest. (xv) A non-gaap measurement. Net consolidated debt to Adjusted EBITDA is defined as: the average consolidated debt (net of cash) for the period divided by Adjusted EBITDA. (xvi) A non-gaap measurement. Net operating debt to Operating EBITDA is defined as the average debt outstanding (net of cash) for the period less debt related to property under development (both at RioCan s interest) divided by Operating EBITDA (as found under Capital Strategy and Resources ). (xvii) A non-gaap measurement. Calculated by the Trust as closing market price of the common Units trading on the Toronto Stock Exchange on the respective period end dates, multiplied by the number of common Units outstanding at such date. (xviii) A non-gaap measurement. Calculated by the Trust as the aggregate of the closing market price of each series of preferred units trading on the Toronto Stock Exchange on the respective period end dates, multiplied by the number of preferred units of such series outstanding at such date. (xix) Calculated as the sum of rental revenue, fees and other income and interest income (consolidated). n/a - not applicable * - As reported as at June 30, The change in methodology for RioCan s calculation based upon proportionate consolidation for equity accounted joint ventures has not been applied to June 30, 2012 numbers. 4 Second Quarter 2013 Supplemental Information Package

7 INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited Canadian dollars, in millions) As at June 30, 2013 As at December 31, 2012 (restated) ASSETS Investment property $ 12,180 $ 11,765 Investments in equity accounted joint ventures (includes held for sale assets) Mortgages and loans receivable Deferred tax assets 8 9 Investment 50 Receivables and other assets Cash and equivalents Total assets $ 12,931 $ 12,619 LIABILITIES Mortgages payable and lines of credit $ 4,134 $ 4,159 Debentures payable 1,445 1,292 Accounts payable and other liabilities Total liabilities $ 5,847 $ 5,739 EQUITY Preferred unitholders equity $ 265 $ 265 Common unitholders equity 6,783 6,582 Total unitholders equity 7,048 6,847 Non-controlling interests Total equity 7,084 6,880 Total liabilities and equity $ 12,931 $ 12,619 5 Second Quarter 2013 Supplemental Information Package

8 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited Canadian dollars, in millions, except per unit amounts) For the three months ended June 30, For the six months ended June 30, (restated) (restated) Rental revenue $ 272 $ 248 $ 553 $ 503 Property operating costs Recoverable under tenant leases Non-recoverable from tenants Operating income Other income Fees and other Interest Share of net earnings in equity accounted joint ventures Fair value gains on investment property, net Other expenses Interest General and administrative Transaction and other costs Impairment of investment Expense for early redemption of debentures Earnings before income taxes Deferred income tax expense 1 Net earnings $ 154 $ 412 $ 318 $ 761 Net earnings attributable to: Common and preferred unitholders $ 153 $ 409 $ 316 $ 751 Non-controlling interests $ 154 $ 412 $ 318 $ 761 Net earnings per unit attributable to common unitholders basic $ 0.50 $ 1.41 $ 1.03 $ 2.62 Net earnings per unit attributable to common unitholders diluted $ 0.49 $ 1.40 $ 1.02 $ 2.61 Weighted average number of common units outstanding basic (in thousands) 301, , , ,096 Weighted average number of common units outstanding diluted (in thousands) 303, , , ,416 6 Second Quarter 2013 Supplemental Information Package

9 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited Canadian dollars, in millions) For the three months ended June 30, For the six months ended June 30, Net earnings $ 154 $ 412 $ 318 $ 761 Other comprehensive income: Items that may be reclassified subsequently to net earnings: Unrealized gain (loss) on interest rate swap agreements 9 (3) 9 (2) Unrealized gains on translation of foreign operations Unrealized gain (loss) on available-for-sale investment 15 (2) 24 Other comprehensive income, net of tax Comprehensive income 179 $ 441 $ 358 $ 790 Comprehensive income attributable to Common and preferred unitholders $ 177 $ 435 $ 355 $ 779 Non-controlling interest $ 2 $ 6 $ 3 $ 11 7 Second Quarter 2013 Supplemental Information Package

10 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited Canadian dollars, in millions) For the three months ended June 30, For the six months ended June 30, (restated) (restated) CASH FLOWS PROVIDED BY (USED IN): Operating activities Net earnings $ 154 $ 412 $ 318 $ 761 Items not affecting cash Amortization Impairment of investment Recognition of rents on a straight-line basis (2) (1) (4) (3) Unit-based compensation expense Fair value gains on investment property, net (43) (306) (80) (538) Share of net earnings in equity accounted joint ventures (12) (15) (21) (31) Properties held for resale (1) (1) (1) Net change in non-cash operating items (49) 21 Cash flows provided by operating activities Investing activities Acquisition of investment properties (288) (94) (334) (151) Expenditures on properties under development (37) (43) (75) (65) Maintenance capital expenditures recoverable from tenants (6) (2) (6) (2) Maintenance capital expenditures not recoverable from tenants (3) (2) (3) (3) Tenant installation costs (6) (8) (15) (16) Proceeds on disposition of investment properties Mortgages and loans receivable Advances (14) (16) (18) (39) Repayments Sale of investment in available-for-sale securities 49 Cash flows used in investing activities (70) (160) (101) (266) Financing activities Mortgages payable Borrowings Repayments (205) (161) (330) (238) Advances of lines of credit Repayment of lines of credit (25) (72) (105) Issue of debentures payable, net Repayment of debentures payable (150) (100) (300) (100) Distributions paid to common unitholders (107) (99) (212) (196) Distributions paid to preferred unitholders (3) (3) (6) (6) Distributions paid to non-controlling interests (1) (2) (1) (4) Units issued under distribution reinvestment plan Issue of common units, net Cash flows provided by (used in) financing activities (139) 169 (215) 162 Net increase (decrease) in cash and equivalents during the period (97) 127 (149) 120 Cash and equivalents, beginning of period Cash and equivalents, end of period $ 26 $ 151 $ 26 $ Second Quarter 2013 Supplemental Information Package

11 2013 CHANGE IN ACCOUNTING POLICY During the first quarter of 2013, RioCan changed its accounting policy for certain joint arrangements as required by the new standard IFRS 11 Joint Arrangements. As a result, the Trust no longer proportionately consolidates certain joint arrangements and now accounts for these investments using the equity method of accounting in its interim and annual consolidated financial statements. The equity method of accounting results in a new line item on the consolidated balance sheet entitled Investment in equity accounted joint ventures representing RioCan s share of the assets less liabilities of the equity accounted joint ventures. As well, the Statement of Earnings presents a new line item entitled Share of net earnings in equity accounted joint ventures representing RioCan s share of the net earnings of the equity accounted joint ventures. Where applicable, prior period financial information has been restated for comparative reporting purposes to reflect this change in accounting policy. During the second quarter of 2013, the following joint ventures which were previously accounted for using the proportionate consolidation method are accounted for using the equity method of accounting, effective January 1, 2013: Partnership Properties RioCan s Interest RPAI (Texas) (iii) 1890 Ranch 80% Alamo Ranch 80% Bear Creek 80% Bird Creek Crossing 80% Coppel Town Center 80% Cypress Mill Plaza 80% Great Southwest Crossing 80% New Forest Crossing 80% Riverpark Shopping Center I, II 80% Sawyer Heights 80% Southlake Corners 80% Southpark Meadows (Phase I, II) 80% Sun Tree Square 80% RioKim (i)/dunhill (Texas) Las Palmas Marketplace 32% RioKim (Texas) Montgomery Plaza 80% Dawson Yonge LP (ii) (Canada) RioCan Centre Newmarket 40% During the second quarter of 2013, the following joint ventures were consolidated in RioCan s consolidated financial statements: Partnership Properties RioCan s Interest Dunhill (Texas) (iv) Arbor Park 85% Las Colinas Village 85% Lincoln Square 82% Louetta Central 85% Timber Creek 80% Sterling (Texas) Cinco Ranch 80% Ingram Hills Shopping Center 90% White Shield (Canada) White Shield Plaza 60% (i) RioKim is 50/50 Joint Venture between RioCan and Kimco. (ii) Dawson Yonge LP is a partnership between RioCan (40%), Marketvest Corporation (40%) and Dale-Vest Corporation (20%). (iii) Refer to note 17 in RioCan s unaudited condensed consolidated financial statements for details on the Trust s RPAI held for sale investment. (iv) Refer to note 32 in RioCan s unaudited condensed consolidated financial statements for a description of the transaction to effectively dissolve the Trust s joint venture arrangement with Dunhill. 9 Second Quarter 2013 Supplemental Information Package

12 The following tables provide a reconciliation from RioCan s IFRS accounting to RioCan s proportionate interest in all of its portfolio investments: Reconciliation of Consolidated Balance Sheet to Balance sheet at RioCan s interest (i) Adjustments (millions of dollars) As at June 30, 2013 Consolidated (ii) Non-controlling interests (iii) RioCan s share of Equity Accounted For Joint Ventures (iv) RioCan s interest (i) ASSETS Investment property $ 12,180 $ (64) $ 685 $ 12,801 Investment in equity accounted joint ventures 376 (376) Mortgages and loans receivable Deferred tax assets 8 8 Receivables and other assets 129 (1) Cash and equivalents Total assets $ 12,931 $ (65) $ 329 $ 13,195 LIABILITIES Mortgages payable and lines of credit $ 4,134 $ (28) $ 300 $ 4,406 Debentures payable 1,445 1,445 Accounts payable and other liabilities 268 (1) Total liabilities 5,847 (29) 329 6,147 EQUITY Preferred unitholders equity Common unitholder equity 6,783 6,783 Total unitholders equity 7,048 7,048 Non-controlling interests 36 (36) Total equity 7,084 (36) 7,048 Total liabilities and equity $ 12,931 $ (65) $ 329 $ 13,195 (i) (ii) (iii) (iv) Represents RioCan s proportionate ownership interest in assets and liabilities of all of its portfolio investments. Effectively, this utilizes the accounting joint venture methodology (proportionate consolidation) in place prior to the implementation of IFRS 11 which requires equity accounting for certain joint ventures. Represents RioCan s consolidated balance sheet prepared in accordance with IFRS. Represents the non-controlling interests proportionate share of the assets and liabilities for those joint ventures that have been consolidated. Represents RioCan s proportionate share of the assets and liabilities of its joint ventures that are accounted for on the equity basis of accounting. 10 Second Quarter 2013 Supplemental Information Package

13 Reconciliation of Consolidated Balance Sheet to Balance sheet at RioCan s Interest (i) Adjustments (millions of dollars) As at December 31, 2012 Consolidated (ii) Non-controlling interests (iii) RioCan s Share of Equity Accounted For Joint Ventures (iv) RioCan s interest (i) ASSETS Investment property $ 11,765 $ (60) $ 639 $ 12,344 Investment in equity accounted joint ventures 333 (333) Mortgages and loans receivable Deferred tax assets 9 9 Investment Receivables and other assets 87 (2) Cash and equivalents Total assets $ 12,619 $ (62) $ 331 $ 12,888 LIABILITIES Mortgages payable and lines of credit $ 4,159 $ (28) $ 294 $ 4,425 Debentures payable 1,292 1,292 Accounts payable and other liabilities 288 (1) Total liabilities 5,739 (29) 331 6,041 EQUITY Preferred unitholders equity Common unitholder equity 6,582 6,582 Total unitholders equity 6,847 6,847 Non-controlling interests 33 (33) Total equity 6,880 (33) 6,847 Total liabilities and equity $ 12,619 $ (62) $ 331 $ 12,888 (i) (ii) (iii) (iv) Represents RioCan s proportionate ownership interest in assets and liabilities of all of its portfolio investments. Effectively, this utilizes the accounting joint venture methodology (proportionate consolidation) in place prior to the implementation of IFRS 11 which requires equity accounting for certain joint ventures. Represents RioCan s consolidated balance sheet prepared in accordance with IFRS. Represents the non-controlling interests proportionate share of the assets and liabilities for those joint ventures that have been consolidated. Represents RioCan s proportionate share of the assets and liabilities of its joint ventures that are accounted for on the equity basis of accounting. 11 Second Quarter 2013 Supplemental Information Package

14 Reconciliation of Consolidated Balance Sheet to Balance sheet at RioCan s Interest (i) Adjustments (millions of dollars) As at June 30, 2012 Consolidated (ii) Non-controlling interests (iii) RioCan s Share of Equity Accounted For Joint Ventures (iv) RioCan s interest (i) ASSETS Investment property $ 10,667 $ (182) $ 628 $ 11,113 Investment in equity accounted joint ventures 309 (309) Mortgages and loans receivable Deferred tax assets 8 8 Investment Receivables and other assets 183 (2) Cash and equivalents 151 (2) Total assets $ 11,546 $ (186) $ 338 $ 11,698 LIABILITIES Mortgages payable and lines of credit $ 3,912 $ (82) $ 304 $ 4,134 Debentures payable 1,021 1,021 Accounts payable and other liabilities 282 (3) Total liabilities 5,215 (85) 338 5,468 EQUITY Preferred unitholders equity Common unitholder equity 5,965 5,965 Total unitholders equity 6,230 6,230 Non-controlling interests 101 (101) Total equity 6,331 (101) 6,230 Total liabilities and equity $ 11,546 $ (186) $ 338 $ 11,698 (i) (ii) (iii) (iv) Represents RioCan s proportionate ownership interest in assets and liabilities of all of its portfolio investments. Effectively, this utilizes the accounting joint venture methodology (proportionate consolidation) in place prior to the implementation of IFRS 11 which requires equity accounting for certain joint ventures. Represents RioCan s consolidated balance sheet prepared in accordance with IFRS. Represents the non-controlling interests proportionate share of the assets and liabilities for those joint ventures that have been consolidated. Represents RioCan s proportionate share of the assets and liabilities of its joint ventures that are accounted for on the equity basis of accounting. 12 Second Quarter 2013 Supplemental Information Package

15 Reconciliation of Consolidated Statement of Earnings to Earnings at RioCan s Interest (i) Adjustments (thousands of dollars) Three months ended June 30, 2013 Consolidated (ii) Non-Controlling Interests (iii) RioCan s Interest in Equity Accounted For Joint Ventures (iv) RioCan s Interest (i) REVENUE: Base rent $ 181,832 $ (1,035) $ 11,397 $ 192,194 Percentage rent 1,144 (24) 2 1,122 Rent subject to tenants sales thresholds 1,174 1,174 Property taxes and operating cost recoveries 88,072 (352) 3,769 91, ,222 (1,411) 15, ,979 Lease cancellation fees Rental revenue 272,431 (1,411) 15, ,202 PROPERTY OPERATING COSTS: Recoverable under tenant leases 91,350 (431) 4,680 95,599 Non-recoverable from tenants 3,548 (24) 139 3,663 Property operating costs 94,898 (455) 4,819 99,262 OPERATING INCOME 177,533 (956) 10, ,940 Other income Share of net earnings in equity accounted joint ventures 12,329 (12,329) Fees and other 2,898 2,898 Interest 3,376 2 (10) 3, ,136 (954) (1,976) 193,206 Other expenses Interest 57,305 (311) 3,274 60,268 Expense for early retirement of debentures 12,094 12,094 General and administrative 10,091 (22) ,245 Foreign exchange loss Demolition costs 1,056 1,056 Aborted deal costs Acquisition/disposition transaction costs 3,149 3,149 Earnings before fair value gains on investment property, net 111,996 (621) (5,426) 105,949 and income taxes Fair value gains on investment property, net 43,035 (694) 5,426 47,767 Deferred income tax expense Net earnings 154,231 $ (1,315) $ $ 152,916 Net earnings attributable to: Common and preferred unitholders $ 152,916 $ $ $ 152,916 Non-controlling interests 1,315 (1,315) $ 154,231 $ (1,315) $ $ 152,916 Net earnings per unit attributable to common unitholders basic $ 0.50 Net earnings per unit attributable to common unitholders diluted $ 0.49 Weighted average number of common units outstanding basic (in thousands) 301,983 Weighted average number of common units outstanding diluted (in thousands) 303,165 (i) (ii) (iii) (iv) Represents RioCan s proportionate share of the revenues and expenses of all of its portfolio investments. Effectively, this utilizes the accounting joint venture methodology (proportionate consolidation) in place prior to the implementation of IFRS 11 which requires equity accounting for certain joint ventures. Represents RioCan s consolidated statement of earnings prepared in accordance with IFRS. Represents the non-controlling interests proportionate share of the revenues and expenses for those joint ventures that have been consolidated. Represents RioCan s proportionate share of the revenues and expenses of its joint ventures that are accounted for on the equity basis of accounting. 13 Second Quarter 2013 Supplemental Information Package

16 Reconciliation of Consolidated Statement of Earnings to Earnings at RioCan s Interest (i) (thousands of dollars) Six months ended June 30, 2013 Consolidated (ii) Non-Controlling Interests (iii) Adjustments RioCan s Interest in Equity Accounted For Joint Ventures (iv) RioCan s Interest (i) REVENUE: Base rent $ 361,484 $ (2,068) $ 22,310 $ 381,726 Percentage rent 2,284 (51) 2 2,235 Rent subject to tenants sales thresholds 2,348 2,348 Property taxes and operating cost recoveries 183,036 (704) 7, , ,152 (2,823) 29, ,180 Lease cancellation fees 4, ,279 Rental revenue 553,365 (2,823) 29, ,459 PROPERTY OPERATING COSTS: Recoverable under tenant leases 190,118 (862) 9, ,483 Non-recoverable from tenants 8,585 (46) 273 8,812 Property operating costs 198,703 (908) 9, ,295 OPERATING INCOME 354,662 (1,915) 20, ,164 Other income Share of net earnings in equity accounted joint ventures 20,832 (20,832) Fees and other 11, ,271 Interest 6,734 4 (11) 6, ,486 (1,911) (413) 391,162 Other expenses Interest 117,097 (613) 6, ,939 Expense for early retirement of debentures 12,094 12,094 General and administrative 19,624 (38) ,868 Foreign exchange loss Demolition costs 1,933 1,933 Aborted deal costs Acquisition/disposition transaction costs 4,003 4,003 Earnings before fair value gains on investment property, net and income taxes 238,161 (1,260) (7,150) 229,751 Fair value gains on investment property, net 80,157 (908) 7,150 86,399 Current income tax expense (recovery) (270) (270) Deferred income tax expense Net earnings $ 318,238 $ (2,168) $ $ 316,070 Net earnings attributable to: Common and preferred unitholders $ 316,070 $ $ $ 316,070 Non-controlling interests 2,168 (2,168) Net earnings per unit attributable to common unitholders basic $ 1.03 Net earnings per unit attributable to common unitholders diluted $ 1.02 Weighted average number of common units outstanding basic (in thousands) 301,362 Weighted average number of common units outstanding diluted (in thousands) 302,565 $ 318,238 $ (2,168) $ $ 316,070 (i) (ii) (iii) (iv) Represents RioCan s proportionate share of the revenues and expenses of all of its portfolio investments. Effectively, this utilizes the accounting joint venture methodology (proportionate consolidation) in place prior to the implementation of IFRS 11 which requires equity accounting for certain joint ventures. Represents RioCan s consolidated statement of earnings prepared in accordance with IFRS. Represents the non-controlling interests proportionate share of the revenues and expenses for those joint ventures that have been consolidated. Represents RioCan s proportionate share of the revenues and expenses of its joint ventures that are accounted for on the equity basis of accounting. 14 Second Quarter 2013 Supplemental Information Package

17 Reconciliation of Consolidated Statement of Earnings to Earnings at RioCan s Interest (i) Adjustments (thousands of dollars) Three months ended June 30, 2012 Consolidated (ii) Non-Controlling Interests (iii) RioCan s Interest in Equity Accounted For Joint Ventures (iv) RioCan s Interest (i) REVENUE: Base rent $ 165,483 $ (2,629) $ 10,168 $ 173,022 Percentage rent 1, ,394 Rent subject to tenants sales thresholds 1,200 1,200 Property taxes and operating cost recoveries 79,611 (467) 3,097 82, ,673 (3,082) 13, ,857 Lease cancellation fees Rental revenue 248,382 (3,082) 13, ,566 PROPERTY OPERATING COSTS: Recoverable under tenant leases 82,526 (591) 3,863 85,798 Non-recoverable from tenants 2,609 (53) 117 2,673 Property operating costs 85,135 (644) 3,980 88,471 OPERATING INCOME 163,247 (2,438) 9, ,095 Other income Share of net earnings in equity accounted joint ventures 15,181 (15,181) Fees and other 4,752 (1) 4,751 Interest 2, , ,003 (2,434) (5,879) 177,690 Other expenses Interest 59,153 (797) 3,209 61,565 General and administrative 7,608 (33) 157 7,732 Impairment of investment 11,999 11,999 Foreign exchange (gain)loss (17) (17) Demolition costs Aborted deal costs Acquisition transaction costs 1 1 Earnings before fair value gains on investment property, net 106,123 (1,604) (9,246) 95,273 and income taxes Fair value gains on investment property, net 306,023 (1,845) 9, ,424 Net earnings $ 412,146 $ (3,449) $ $ 408,697 Net earnings attributable to: Common and preferred unitholders $ 408,697 $ $ $ 408,697 Non-controlling interests 3,449 (3,449) Net earnings per unit attributable to common unitholders basic $ 1.41 Net earnings per unit attributable to common unitholders diluted $ 1.40 Weighted average number of common units outstanding basic (in thousands) 288,211 Weighted average number of common units outstanding diluted (in thousands) 289,479 $ 412,146 $ (3,449) $ $ 408,697 (i) (ii) (iii) (iv) Represents RioCan s proportionate share of the revenues and expenses of all of its portfolio investments. Effectively, this utilizes the accounting joint venture methodology (proportionate consolidation) in place prior to the implementation of IFRS 11 which requires equity accounting for certain joint ventures. Represents RioCan s consolidated statement of earnings prepared in accordance with IFRS. Represents the non-controlling interests proportionate share of the revenues and expenses for those joint ventures that have been consolidated. Represents RioCan s proportionate share of the revenues and expenses of its joint ventures that are accounted for on the equity basis of accounting. 15 Second Quarter 2013 Supplemental Information Package

18 Reconciliation of Consolidated Statement of Earnings to Earnings at RioCan s Interest (i) Adjustments (thousands of dollars) Six months ended June 30, 2012 Consolidated (ii) Non-Controlling Interests (iii) RioCan s Interest in Equity Accounted For Joint Ventures (iv) RioCan s Interest (i) REVENUE: Base rent $ 330,626 $ (6,478) $ 19,804 $ 343,952 Percentage rent 2,820 (78) (1) 2,741 Rent subject to tenants sales thresholds 2,379 2,379 Property taxes and operating cost recoveries 165,494 (1,605) 6, , ,319 (8,161) 25, ,999 Lease cancellation fees 1,492 1,492 Rental revenue 502,811 (8,161) 25, ,491 PROPERTY OPERATING COSTS: Recoverable under tenant leases 171,022 (1,995) 7, ,493 Non-recoverable from tenants 6,122 (107) 148 6,163 Property operating costs 177,144 (2,102) 7, ,656 OPERATING INCOME 325,667 (6,059) 18, ,835 Other income Share of net earnings in equity accounted joint ventures 31,329 (31,329) Fees and other 8,438 (36) 8,402 Interest 5, , ,948 (6,048) (13,094) 351,806 Other expenses Interest 117,678 (2,145) 6, ,680 General and administrative 16,106 (65) ,315 Impairment of investment 11,999 11,999 Foreign exchange (gain)loss (46) (46) Demolition costs 1,132 1,132 Aborted deal costs 1,074 1,074 Acquisition transaction costs Earnings before fair value gains on investment property, net 222,994 (3,838) (20,209) 198,947 and income taxes Fair value gains on investment property, net 537,619 (6,105) 20, ,723 Net earnings $ 760,613 $ (9,943) $ $ 750,670 Net earnings attributable to: Common and preferred unitholders $ 750,670 $ $ $ 750,670 Non-controlling interests 9,943 (9,943) Net earnings per unit attributable to common unitholders basic $ 2.62 Net earnings per unit attributable to common unitholders diluted $ 2.61 Weighted average number of common units outstanding basic (in thousands) 284,096 Weighted average number of common units outstanding diluted (in thousands) 285,416 $ 760,613 $ (9,943) $ $ 750,670 (i) (ii) (iii) (iv) Represents RioCan s proportionate share of the revenues and expenses of all of its portfolio investments. Effectively, this utilizes the accounting joint venture methodology (proportionate consolidation) in place prior to the implementation of IFRS 11 which requires equity accounting for certain joint ventures. Represents RioCan s consolidated statement of earnings prepared in accordance with IFRS. Represents the non-controlling interests proportionate share of the revenues and expenses for those joint ventures that have been consolidated. Represents RioCan s proportionate share of the revenues and expenses of its joint ventures that are accounted for on the equity basis of accounting. 16 Second Quarter 2013 Supplemental Information Package

19 RESULTS OF OPERATIONS RioCan s interest (i) The components of RioCan s interest in the consolidated net earnings attributable to Unitholders for each respective period are as follows: (thousands of dollars) Three months ended Six months ended June 30, June 30, Increase (decrease) Increase (decrease) Rental revenue $ 286,202 $ 258,566 $ 580,459 $ 520,491 Property operating costs 99,262 88, , ,656 Net operating income 186, ,095 10% 373, ,835 10% Fees and other income 2,898 4,751 11,271 8,402 Interest income 3,368 2,844 6,727 5, , ,690 9% 391, ,806 11% Interest expense 60,268 61, , ,680 Expense for early retirement of debentures 12,094 12,094 General and administrative expense 10,245 7,732 19,868 16,315 Impairment of investment 11,999 11,999 Foreign exchange (gain) loss 93 (17) 105 (46) Demolition costs 1, ,933 1,132 Aborted deal costs ,074 Acquisition transaction costs 3, , Earnings before fair value gains on investment property, net and income taxes 105,949 95,273 11% 229, ,947 15% Fair value gains on investment property, net 47, ,424 86, ,723 Current income tax expense (recovery) (270) Deferred income tax expense Net earnings - RioCan s interest (i) $ 152,916 $ 408,697 (63%) $ 316,070 $ 750,670 (58%) (i) See 2013 Changes in Accounting Policy for a reconciliation to RioCan s consolidated earnings. 17 Second Quarter 2013 Supplemental Information Package

20 NET OPERATING INCOME NOI at RioCan s interest for the three and six months ended June 30, 2013 and 2012 is as follows: (thousands of dollars) Three months ended Six months ended June 30, June 30, Increase (decrease) Increase (decrease) Base rent $ 192,194 $ 173,022 11% $ 381,726 $ 343,952 11% Percentage rent 1,122 1,394 (20%) 2,235 2,741 (18%) Rents subject to tenants sales thresholds 1,174 1,200 (2%) 2,348 2,379 (1%) Property taxes and operating cost recoveries 91,489 82,241 11% 189, ,927 12% 285, ,857 11% 576, ,999 11% Lease cancellation fees (69%) 4,279 1, % Rental revenue 286, ,566 11% 580, ,491 12% Recoverable under tenant leases 95,599 85,798 11% 198, ,493 12% Non-recoverable from tenant 3,663 2,673 37% 8,812 6,163 43% Property operating costs 99,262 88,471 12% 207, ,656 13% NOI - RioCan s interest (i) $ 186,940 $ 170,095 10% $ 373,164 $ 337,835 10% NOI as a percentage of rental revenue (excluding the impact of lease cancellation fees) 65% 66% (1%) 65% 65% 0% (i) See 2013 Change in Accounting Policy for a reconciliation to RioCan s consolidated earnings. 18 Second Quarter 2013 Supplemental Information Package

21 The following tables provide the analysis of RioCan s operating FFO and AFFO for the three and six months ended June 30, 2013 and (thousands of dollars, except per Unit amounts and other data) Three months ended June 30, RioCan s interest in operating FFO Transaction gain (loss)* Development/ redevelopment activities (ii) RioCan s interest in FFO RioCan s interest in operating FFO Transaction gain (loss)* Development/ redevelopment activities and other RioCan s Operating interest in FFO FFO Increase Net operating income $ 187,181 $ $ (241) $ 186,940 $ 170,273 $ $ (178) $ 170,095 10% Other revenue 6,266 6,266 7,595 7, ,447 (241) 193, ,868 (178) 177,690 9% Interest expense 58,711 1,557 60,268 59,990 1,575 61,565-2% General and administrative 10,245 10,245 7,732 7,732 33% Demolition costs 1,056 1, Preferred unit distributions 3,398 3,398 3,398 3,398 0% Aborted deal costs % Impairment charge Cedar shares 11,999 11,999 Expense for early retirement of debentures 12,094 12,094 72,706 12,094 2,613 87,413 71,597 11,999 2,235 85,831 2% Operating FFO $ 120,741 $ 106,271 14% Other activities $ (12,094) $ (2,854) $ (11,999) $ (2,413) FFO (i) $ 105,793 $ 91,859 Operating FFO per Unit $ 0.40 $ % FFO per Unit $ 0.35 $ 0.32 FFO, excluding expenses for early retirement of debentures $ 117,887 $ 91,859 FFO per Unit, excluding expenses for early retirement of debentures $ 0.39 $ 0.32 Adjustments to bring Operating FFO to AFFO (iii): Add back/(deduct): Deduction of rents recorded on a straightline basis (2,017) (1,739) Non-cash unit based compensation expense 1,300 1,203 Normalized productive capacity maintenance cash expenditures capitalized: Leasing commissions and tenant improvements (6,250) (4,750) Maintenance capital expenditures recoverable from tenants (2,750) (2,750) Maintenance capital expenditures not recoverable from tenants (2,250) (1,500) AFFO $ 108,774 $ 96,735 12% AFFO per Unit $ 0.36 $ % Weighted average number of common Units outstanding (in thousands) 301, ,211 Distribution Coverage Ratios: Cash distributions per Unit $ $ Distributions paid as a percentage of Operating FFO 88.3% 93.2% Distributions as a percentage of AFFO 98.1% 101.5% Distributions paid net of DRIP, per Unit $ 0.26 $ 0.25 Distributions net of DRIP as a percentage of AFFO 72.2% 73.5% * - Transaction gains (losses) are presented net of tax, where applicable. (i) FFO is generally the same as IFRS net earnings other than excluding changes in the fair values of investment properties, deferred income taxes, acquisition transaction costs and deducting preferred unit distributions. (ii) The Trust has added back certain costs not capitalized during the development period for accounting purposes that, in management s view, forms part of the cost of its development projects. (iii) AFFO is calculated by adjusting Operating FFO for straight-line rent adjustments, non-cash compensation expenses, costs for capital expenditures and leasing costs for maintaining shopping centre infrastructure and current lease revenues ( productive capacity maintenance ). In addition, nonrecurring costs that impact operating cash flow may be adjusted. FFO amounts related to transactions gains and losses and development/ redevelopment are also excluded from AFFO. 19 Second Quarter 2013 Supplemental Information Package

22 (thousands of dollars, except per Unit amounts and other data) Six months ended June 30, Operating FFO Transaction gain (loss)* Development/ redevelopment activities (ii) FFO Operating FFO Transaction gain (loss)* Development/ redevelopment activities and other FFO Operating FFO Increase Net operating income $ 373,607 $ $ (443) $ 373,164 $ 338,182 $ $ (347) $ 337,835 Other revenue 17, ,268 13,971 13, , (443) 391, ,153 (347) 351,806 Interest expense 119,836 3, , ,619 3, ,680 General and administrative 19,868 19,868 16,315 16,315 Demolition costs 1,933 1,933 1,132 1,132 Preferred unit distributions 6,795 6,795 6,795 6,795 Aborted deal costs ,074 1,074 Impairment charge Cedar shares 11,999 11,999 Expense for early retirement of debentures 12,094 12, ,968 12,094 5, , ,803 11,999 4, ,995 Operating FFO $ 244,637 $ 209,350 17% Other activities $ (11,824) $ (5,479) $ (11,999) (4,540) FFO (i) $ 227,334 $ 192,811 Operating FFO per Unit $ 0.81 $ % FFO per Unit $ 0.75 $ 0.68 FFO, excluding expenses for early retirement of debentures $ 239,428 $ 192,811 FFO per Unit, excluding expenses for early retirement of debentures $ 0.79 $ 0.68 Adjustments to bring Operating FFO to AFFO (iii): Add back/(deduct): Deduction of rents recorded on a straight-line basis (4,240) (3,117) Non-cash unit based compensation expense 2,768 2,312 Normalized productive capacity maintenance cash expenditures capitalized: Leasing commissions and tenant improvements (12,500) (9,500) Maintenance capital expenditures recoverable from tenants (5,500) (5,500) Maintenance capital expenditures not recoverable from tenants (4,500) (3,000) AFFO $ 220,665 $ 190,545 16% AFFO per Unit $ 0.73 $ % Weighted average number of common Units outstanding (in thousands) 301, ,096 Distribution Coverage Ratios: Cash distributions per Unit $ 0.71 $ 0.69 Distributions paid as a percentage of Operating FFO 87.7% 93.2% Distributions as a percentage of AFFO 97.3% 103.0% Distributions paid net of DRIP, per Unit $ 0.52 $ 0.52 Distributions net of DRIP as a percentage of AFFO 71.2% 77.6% * - Transaction gains (losses) are presented net of tax, where applicable. (i) FFO is generally the same as IFRS net earnings other than changes in the fair values of investment properties, deferred income taxes, acquisition transaction costs and deducting preferred unit distributions. (ii) The Trust has added back certain costs not capitalized during the development period for accounting purposes that, in management s view, forms part of the cost of its development projects. (iii) AFFO is calculated by adjusting Operating FFO for straight-line rent adjustments, non-cash compensation expenses, costs for capital expenditures and leasing costs for maintaining shopping centre infrastructure and current lease revenues ( productive capacity maintenance ). In addition, nonrecurring costs that impact operating cash flow may be adjusted. FFO amounts related to transactions gains and losses and development/ redevelopment are also excluded from AFFO. 20 Second Quarter 2013 Supplemental Information Package