B Disposition Program Jonathan Gitlin€¦ · • Redeveloping prime assets • Optimize pads by adding additional GLA • Drive ancillary revenues • Continuous portfolio pruning

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

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.

http://www.sedar.com/

TODAY’S AGENDA

3

A Opening Remarks Ed Sonshine

B Disposition Program Jonathan Gitlin

C

The Current Operating Environment

• RioCan’s Strategic & Operational Advantages

• Operations – Driving Organic Growth

• Leasing Market & Supporting RioCan’s Strategic Growth Platform

Rags Davloor, John

Ballantyne, & Jeff Ross

D

Development Program Overview & RioCan Living

• Development Expertise & Approach

• Residential Growth Strategy

Andrew Duncan &

Jonathan Gitlin

E Capital Structure and Financing Strategy Qi Tang

F Closing Remarks Ed Sonshine

G Q&A

4

OPENING REMARKS

Ed Sonshine

Founder and CEO

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

UNLOCKING INTRINSIC 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

RIOCAN’S VALUE PROPOSITION AND FOUR STRATEGIC PILLARSREAL VISION, SOLID GROUND

5

UNMATCHED PORTFOLIO OF URBAN MIXED-USE DEVELOPMENT PROPERTIES

eCentral at ePlace King Portland Centre (Kingly)

Yonge Sheppard Centre (Pivot) Gloucester Residential Phase I

(Frontier)

Sunnybrook Plaza

6

LEADERSHIP TEAM

• Strong executive bench with a

wealth of experience and

proven track record

• Trusted and respected, with

deep industry knowledge and

relationships

EXPERIENCE, INTEGRITY AND FORESIGHT

Andrew Duncan

SVP Developments

18 years in

Development,

12 years in Real

Estate

Danny Kissoon

SVP Operations

32 years in Real

Estate

Ed Sonshine O.Ont.,

Q.C. Founder and

CEO

Jeff Ross,

SVP Leasing &

Tenant Construction

30 years in Real

Estate

Jennifer Suess

SVP General Counsel

& Corporate

Secretary

16 years in Law with a

focus on Real Estate

John Ballantyne,

SVP Asset

Management

24 years in Real

Estate

Jonathan Gitlin,

SVP Investments

& Residential

18 years in

Real Estate

Qi Tang,

SVP and CFO

20 years in Finance

& Real Estate

Rags Davloor

President and COO

25 years in Real

Estate, Operations

& Finance

7

8

DISPOSITION PROGRAM UPDATE

Jonathan Gitlin

Senior Vice President, Investments

and Residential

PROGRESS TO DATE

9

• Sale prices to-date and cap rates achieved have been in line with IFRS value

• $612M progress to-date in six months since the October 2017 announcement representing

approximately 31% of the $2.0B disposition target

Disposition Progress as of March 29, 2018

Transaction type Value ($m)

Closed and Firm $537.3

Conditional $74.7

Total to Date $612.0

Weighted Average Cap Rate 6.22%

DISPOSITION UPDATE

10

MAP OF FIRM OR CLOSED DISPOSITIONS TO DATE

The properties disposed to date span a broad

geographical range of secondary markets

DISPOSITION UPDATE

11

REITs

• Strategic buyers, such as CT REIT, who are looking to acquire assets where

their retail banner is already a tenant. They know these assets well and

recognize the advantage of controlling properties in which their associate

retail banners operate.

• Geographically focused REITs looking to expand footprint in a particular

region.

• Small cap REITs looking for growth and accretive acquisitions, which would

otherwise be unavailable in major markets.

BUYER PROFILE

DISPOSITION UPDATE

12

Private Individual Buyers

• Objectives include capital preservation and stable, risk-adjusted returns.

• These buyers have local expertise or presence in particular secondary

markets, and therefore covet these assets.

Private Equity and Investment Managers

• Objectives include deploying a robust supply of capital in a low-interest rate

environment.

• Increasingly looking at secondary markets in the core to value-add risk range

due to limited supply of product in primary markets.

BUYER PROFILE

13

THE CURRENT OPERATING ENVIRONMENT

CONSISTENTLY ABOVE 95%

Rags Davloor

President & COO

RIOCAN’S STRATEGIC & OPERATIONAL ADVANTAGES

Rags Davloor

Asset Management

Asset Management Operations Marketing Sustainability

Leasing

Leasing Tenant Construction

Development

Planning/Zoning Permitting/ Permissions

Design and Development

Construction

DRIVEN BY INSIGHTEXPERIENCE, INTEGRITY AND FORESIGHT

• Best in class management team

• Widely integrated cross functional management approach

14

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

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

15


76.1%

>90%

2017 Vision

Major Market Revenue

40.9%

>50%

2017 Vision

GTA Revenue Focus

WHERE CANADIANS SHOP, LIVE AND WORK

24

19

2017 Vision

Avg. Age Portfolio (yrs.)

16

GREATER TORONTO AREA (GTA) FOCUS

17

INDUSTRY LEADING PRESENCE IN THE TORONTO CORE AND…

RioCan

First Capital

SmartCentre REIT

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

~157k

~205k~212k

2017 - All Markets 2017 - MajorMarkets

2020

Avg. Population(5km radius)

~$102k~$111k

~$120k

2017 - All Markets 2017 - MajorMarkets

2020

Avg. Income (5km radius)

• Improved operating efficiencies, newer assets, and less capex

• Improved portfolio demographics – higher population growth, more disposable income

Source: Based on Environics data 18

SOURCES OF TREMENDOUS NAV GROWTH

• Strong, major market, urban focused development pipeline

• High quality projects in prime locations, predominantly transit oriented

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

19

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

• Uncertainty in Ontario regarding transition to the newly implemented Local Planning Appeal

Tribunals given that its mandate is unclear, which makes zoned density more valuable

PIPELINE IS EXPECTED TO CONTINUE TO GROW

20

TREMENDOUS SOURCES OF CASH FLOW & NAV GROWTHSELECTED 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%

Number of Rental Units 0 688 799

NOI (millions) $23.9 $16.8 $13.6

Completions of 2.8M sf through 2020 are expected to generate approx. $54M of annualized NOI at RioCan’s interest

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

INTENSIFICATION STRATEGYDEVELOPMENT PROCESS FOR EXISTING INCOME PRODUCING PROPERTY

Project Evaluation and Market Research

Leasing Strategy

Development Planning Zoning, Design, Planning

Development & Construction

Income Producing Asset Until Development Commences

Year 1 Year 2 - 3 Year 4-5 Year 6-7

22

ORGANIC GROWTH


John Ballantyne

Senior Vice President, Asset Management

OPERATIONS AND ASSET MANAGEMENT OVERVIEW

23

Strategically manage and position each

asset for its highest and best use

• Experienced Asset Management

team with diversified strength in

retail, development and residential

• Best in class Operations team that

provides local management for 280+

properties

FOCUSSED ON DRIVING SAME PROPERTY NOI (SPNOI) & FFOLEVERAGING SCALE, EXPERIENCE AND OUR MAJOR MARKET PORTFOLIO

1

2

3

Operational

efficiencies

Capital planning

Strategic asset

repositioning &

redevelopment

24

DRIVING SPNOI, FFO & NAV

Drive SPNOI and FFO and leverage

scale through:

• Occupancy and rent growth

• Operational efficiency:o Concentrate maintenance contracts

with national major market vendors

o Sustainable business practices

• Ancillary revenueo Digital signage

o Pop up stores and activations

o Sponsorships

o Cell tower income

• Fee generation

25

PORTFOLIO CAPITAL PLANNING & OPTIMIZATIONVALUE ADDED CAPEX

Leverage capital to strategically redevelop and

reposition assets to tap into their highest and best

use

• Rebrand and redevelop assets to differentiate and

resonate with the communities they serve

o Expanded food courts

o Improved common areas and amenities

• Drive experience, engagement and reasons

to visit

o Experiential offerings

o Technology (wifi, charging stations)

• Maximize FFO pre-development

26

27

DRIVING ORGANIC GROWTHCASE STUDY – BURLINGTON MALL

BURLINGTON MALL, BURLINGTON, ON

Location: On of the busiest intersections in Burlington

(Canada’s best mid-sized city 5 years in a row). Three GO

train stations within a 10 KM radius and easily accessible

from the QEW

Acquisition: 2013

Ownership: 50%

Total GLA: 738,000 sf

Property Concept: Enclosed Shopping Centre

Project Completion: 2018

Demographics (5km radius):

Population 138KAvg. Household Income $116K

Redevelopment and rebranding to “Burlington

Centre”


• Strategic repositioning as the

destination for locals to find

everything the want, need and love

in Burlington

• Remerchandised with a compelling

tenant mix with strong convenience

offering

• Expanded food court with stronger

food offering

• Upgraded washrooms

28


29


Metric

At

Acquisition

(2013)

Capital

Invested

Anticipated

Stabilized

Value $206.5M $55M $287.5 M

NOI $9.9M - $14.1M

NOI will increase by 42%

30

DRIVING ORGANIC GROWTHCASE STUDY – YONGE EGLINTON CENTRE

31

YONGE EGLINTON CENTRE,

TORONTO

Intersection: Yonge St. and Eglinton Avenue East

Acquisition: 2007

Ownership: 100%

Total GLA: 1,056,285 sf

Property Concept: Mixed-use

Project Completion: 2016

Demographics (5km radius):

Population 138KAvg. Household Income $116K+

Strategically transitioned the property into a destination centre that

better aligns to the community needs


32

DRIVING ENGAGEMENTANCILLARY REVENUE AND EXPERIENTIAL MARKETING

33


34

Metric

At

Acquisition

(2007)

Capital

Invested

Stabilized

(2017)

Value $223M $110M $574M

NOI $13M - $26M

Avg. net

rent PSF$12.73 - $17.76

73% increase in value over total costs

35

ORGANIC GROWTH & STRATEGIC DEVELOPMENT


Jeff Ross

Senior Vice President, Leasing

and Tenant Construction

LEASING MARKET & SUPPORTING RIOCAN’S STRATEGIC GROWTH PLATFORM

LEASING PLATFORM & TEAM

36

Leasing Team

• Dedicated team with specialized sub leasing groups with expertise in their

segment

• Supporting organic growth and finding new sources of cash flow through smaller

intensification opportunities

Unenclosed

RetailFood &

Beverage

Lifestyle &

FitnessEnclosed Mall Intensification

$19.22 $19.61

2016 2017

New Leasing

Completed 2.0 million square feet of new leasing in

2017 at $19.61 per square foot

DRIVING ORGANIC GROWTH2017 LEASING RESULTS

37

Renewal Leasing

Renewed 4.5 million square feet in 2017 at $18.99

per square foot, an increase of 5.8% compared to

2016

85.8%91.1%

2016 2017

38

RETAILERS ADAPTING TO CURRENT MARKET ENVIRONMENT

• Retailers are still adapting to

find right mix of e-commerce

and bricks & mortar strategy

• Consumers have more

access to information than

ever before

• The successful retailers will

be the ones that merge the

Physical World with the

Digital World

EVOLVING & RESILIENT TENANT MIX

Retailer Category% of Rent

2017

Change

since

2007

Key Brands

Grocery/ Pharmacy

Liquor/

Restaurant27.8% 3.3%

Personal Services 20.3% 4.2%

Value Retailers 15.2% 2.6%

Specialty Retailers 10.2% 0.1%

Furniture and Home 9.9% 1.5%

Department Stores/

Apparel8.9% (7.4%)

Entertainment and Hobby 3.1% (2.6%)

Movie Theatres 4.6% (1.7%)

ADAPTING TO THE EVER CHANGING RETAIL ENVIRONMENT

39

40

LANDLORDS MUST ADAPTING ALSO THE RIGHT SETTING – EXPERIENCE, ENGAGEMENT & CONVENIENCE

• Providing tenants with space where they can

provide experiential environments

• Restaurant growth is strong

• Shopping centres will become more of a social

gathering place than ever before

THE “NEW” RETAIL ENVIRONMENT

41

Provide flexible space as retailers find

the right tenant mix for our properties

- Lifestyle/Restaurants/Leisure

- Pop-up retail

- Omni channel

Case Study: Lululemon Pop-Up to

long term lease at Georgian Mall

• Provided a short term storefront

as a test location

• The successful launch translated

into a long term lease

42

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

(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.

Top Ten Tenants are all

sound operators and

leaders in their segments

Majority are growing –

especially value focused

tenants

Largely resilient to e-

commerce disruption

LEVERAGING CURRENT RELATIONSHIPS AND FORGING NEW ONESWITH CANADA’S MAJOR MARKET PORTFOLIO WE CAN DELIVER

43

• Major Market focus and presence to offer an avenue to introduce new concepts across a variety of

retail formats

• Able to support the full range of tenant opportunities

Toronto, ON Ottawa, ON Montreal, QC

44

Vancouver, ON Calgary, AB Edmonton, AB

LEVERAGING CURRENT RELATIONSHIPS AND FORGING NEW ONESWITH CANADA’S MAJOR MARKET PORTFOLIO WE CAN DELIVER

• Major Market focus and presence to offer an avenue to introduce new concepts across a variety of

retail formats

• Able to support the full range of tenant opportunities

45

DEVELOPMENT AND RESIDENTIAL INITIATIVE

Andrew Duncan

Senior Vice President, Developments

UNLOCKING THE INTRINSIC VALUE


UNLOCKING INTRINSIC VALUEREALIZING THE FULL POTENTIAL OF OUR CORE ASSETS

• Focusing on transit-oriented urban intensification

in major markets

• Mostly mixed-use with residential rental and/or

condo development

• Strong residential team with a wealth of experience

capable of managing complex development projects

from design to completion

• 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

46

DEVELOPMENT TEAM

47

• Balanced, experienced talented team

• Established strong industry relations

• Identify opportunities in robust pipeline of urban, transit-oriented sites

• 33 team members – Planners, Engineers, Construction Managers, Analysts

• Three office locations – Toronto, Calgary, Montreal

Planning Design Analytics Residential Construction

DEVELOPMENT HAS BEEN INSTRUMENTAL TO LONG TERM GROWTH

• Development has been an internalized

function for RioCan since 2003

• Increased RioCan’s presence in

Canada’s six major markets

• Grown in expertise to handle mixed-

use retail and residential development

• Added strength to handle complex

development in urban locations

48

UNMATCHED EXPERTISE AND DEPTH

49

• Mixed-use projects include:

o Strada (College & Manning, Toronto)

o Litho. (740 Dupont, Toronto)

o Frontier (Gloucester, Ottawa)

o Brio (Brentwood Village, Calgary)

o The Well (Front & Spadina, Toronto)

• Forged strong strategic relationships

with leading industry participants –

Allied, Boardwalk, Killam, Concert,

and others

HEALTHY PIPELINE

50

• Constantly analyze portfolio

for sites near transit

infrastructure

• Pursuing site plan approvals

or development permits in

GTA, Ottawa and Calgary

• Perfectly positioned to

execute on RioCan’s

long-term growth strategy

OTTAWA CALGARY

GTA

INNOVATION AT THE WELL

51

• RioCan continues to

pursue innovative design

elements in its projects

• The Well will utilize deep

water lake cooling that

harnesses Lake Ontario’s

capacity for its heating

and cooling system

INNOVATION AT GLOUCESTER (FRONTIER)

52

• Frontier will employ a geothermal system

for its heating and cooling system that

capitalizes on its location above a

geothermal source which reduces

operating costs

RESIDENTIAL PROJECTS

53

Litho. – 740 Dupont

• Interior design and amenities pay homage to a

neighbourhood steeped in craftsmanship, history

and creativity

• Clean design, natural materials such as concrete,

infused with bold pop of colour throughout

common spaces

• Retail Design:

o Structural design suitable for retail use,

with a grocery tenant focus

o Loading efficiencies captured for grocery

logistics

o Integration with below-grade parking

and retail circulation

UNLOCKING INTRINSIC VALUERESIDENTIAL INTENSIFICATION – YONGE SHEPPARD CENTRE

54

YONGE SHEPPARD CENTRE, TORONTO, ON

Location: Located at the thriving intersectionYonge & 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)

Zoning Status: Zoned

Phased Completion: Retail – 2019

Residential - 2020

UNLOCKING INTRINSIC VALUERESIDENTIAL INTENSIFICATION

55

Proposed

Pivot – Yonge Sheppard CentrePIVOT (YONGE SHEPPARD CENTRE),

TORONTO, ON

• Renovation and expansion of retail

space

• Intensification through the addition of

a new 36 storey residential tower

containing 361 residential rental units

• Adding 100,000 square feet of

additional retail space

• Adding new retail uses in Longo’s

and LA Fitness

• Required considerable effort and

expertise to achieve project’s

success

56

DEVELOPMENT AND RESIDENTIAL INITIATIVEUNLOCKING THE INTRINSIC VALUE

Jonathan Gitlin

Senior Vice President, Investments

and Residential

Building Property/City/Province Rental Units Condo Units

Yonge & Eglinton, Toronto, Ontario 466 623

King & Portland, Toronto, Ontario - 134

Gloucester, Ottawa 222 -

Brentwood Village, Calgary 163 -

Yonge Sheppard Centre, Toronto, Ontario 361 -

740 Dupont, Toronto, Ontario 210 -

College & Manning, Toronto, Ontario 65 -

The Well, Toronto, Ontario 584 -

Total 2,071 757

TOTAL ALL 2,828

57

DEVELOPMENT AND RESIDENTIAL INITIATIVECURRENT ACTIVE RESIDENTIAL PROJECTS

58

URBAN TORONTO HIGHLIGHTS: SELECTED HIGH DENSITY, LOCATIONS

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

UNPARALLELED MAJOR MARKET PIPELINE

Demographics, 5km radiusDense population*:

• 481,000 people

Desirable demographic*:

• HH Income: $130,000+

• Post-secondary education: 65%+

1

2

3

4

5

6

7

13 14

8

10

11

12

9

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

59

URBAN HIGHLIGHTS: SELECTED HIGH DENSITY, LOCATIONS

UNPARALLELED MAJOR MARKET PIPELINE

RIOCAN LIVING

60

Each RioCan Living project is supported by:

• Impeccable management backed by the

proven track record of RioCan.

• Easy access to major commuter routes.

• Best in class architecture in iconic locations.

• Animated, community-focused event

programming.

• Best in class communal amenities that cater

to you.

• Retail experiences curated by the retail

experts.

61

RIOCAN MIXED-USE DEVELOPMENT TEAMCROSS-FUNCTIONAL COORDINATION ACROSS VARIOUS DISCIPLINES

RioCan Mixed-Use

Development Team

Investments & Residential

Leasing

Asset Management /

Operations

Developments

3rd Party Property

Management, at

the current state

• Product Development

• Acquisitions/Dispositions/Joint

Ventures

• Branding

• Marketing

• De-leasing initiatives

• Tenant relations

• Prospective tenant

engagement

• Commercial reporting, if Partner

involved

• Day-to-day management of

commercial component

• Liasing with Partner

• Initial planning and

concept

• Preliminary pro-forma

development

• Land entitlement

BRENTWOOD SHOPPING CENTRE

62

SITE CONTEXT

• 2008: Air right sale to residential

condominium developer (533,000

sq. ft.) for University City project

(727 residential units)

• 2016: RioCan achieved zoning

approval for an additional 1.1M

sq. ft. of density (655,000 sq. ft.

of residential, 445,000 sq. ft. of

commercial)

• 2017: Development permits issued

for BRIO (phase 1 of Brentwood

development) - 145,000 sq. ft. of

mixed-use density (135,000 sq. ft.

of residential, 10,000 sq. ft. of

commercial)

• RioCan planning future phase

adjacent to BRIO

University City

Brentwood

C Train -

Calgary LRT

University of

Calgary

SA Institute of

Technology

Foothills

Hospital

Property Boundary

BRIO

Brentwood Village

BRIO

63

PROJECT RENDERS

• BRIO is a joint-venture project

between Boardwalk REIT and

RioCan

• 12 storey, 163 unit residential

rental building with retail at

grade

• Construction underway,

expected completion in 2020

• Contemporary design,

premium living, and condo-

style amenities

• Redefining Brentwood Village

into a vibrant mixed-use

community complementing

neighbouring institutional uses

CURATED COMMUNITIES

64

RioCan enhances the living experience of its residents through:

• Impeccable management

backed by the proven track

record of RioCan.

• Easy access to major

commuter routes.

• Best in class architecture in

iconic locations.

• Animated, community-

focused event programming.

• Best in class communal

amenities that cater to

our tenants.

• Retail experiences curated by

the retail experts.

PARTNERSHIPS TO LEVERAGE EXPERTISE AND MITIGATE RISKS

65

Carefully selected partners in specific regions

BEST IN CLASS PARTNERS AND IMPECCABLE MANAGEMENT

Frontier - Gloucester Brio – Brentwood Village Litho. – 740 Dupont

EXAMPLE OF CURATED COMMUNITIES: STRADA

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Strada – College & Manning• Classic red-brick façade at street level and interior design details

and amenities that fit into the Italian heritage of Toronto’s Little Italy

• Exposed brick details, smoked mirror and antique architectural

details found throughout common spaces

• Classic Italian suite finishes:

o Open-kitchen designs with butcher-block details

o Marble tiles laid in timeless herringbone patterns

o Stainless steel chimney hood fans

• Technology Forward

o Connectivity and Security

o CRM software & solutions

• Amenities curated to appeal to a target who is known to enjoy

spending discretionary income upholding their lifestyle and social

life:

o Speakeasy

o Party Room and rooftop lounge

o Fitness room

RESIDENTIAL PROJECTS

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Litho. – 740 Dupont• Interior design and amenities pay homage to a neighbourhood

steeped in craftsmanship, history and creativity

• Clean design, natural materials such as concrete, infused with

bold pop of colour throughout common spaces

• Modern suite design with industrial touches:

o Black hardware and sliding doors

o Exposed metal-leg island detail

o Stainless steel appliances

• Ensure selected features and finishes are durable

• Amenities curated to appeal to the young, urban, creative class:

o Community Room

o Creative Studio

o Fitness Centre

o Private Dining/Boardroom

STRATEGIC ACQUISITIONS AND PARTNERSHIPS


• With the best locations in the six major markets

• Creates opportunities for partners to contribute to the project

o Expertise – development and managing partners on the residential side

proved the opportunity for RioCan to learn best practise and acquire

management expertise in a new asset class

o Capital/Risk Management – through the sale of interests in projects

RioCan is able to develop more projects than it could on its own and

spreads risk across projects and multiple partners

SELECTIVE ACQUISITIONS WITH PARTNERS

SEIZING OPPORTUNITIES AND MANAGING RISK

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STRATEGIC ACQUISITIONS AND PARTNERSHIPS

Sunnybrook

Participant(s)

JV Timing Post-Zoning, Pre-Construction

Crystalizing Value of Zoned Density and

Premier Purpose-Built Rental Developer

Gloucester City Centre

Participant(s)

JV Timing Post-Zoning, Under

Construction

One of the Largest Residential Landlords

and Local Expertise

The Well

Participant(s)

JV Timing Initial Acquisition

Risk Mitigation and Partner Expertise

Through strategic acquisitions and partnerships, RioCan owns the best locations in the six major

markets, and utilizes best-in-class partner expertise to maximize value for Unitholders

COMBINING THE BEST IN RETAIL WITH BEST IN CLASS PARTNERS TO CREATE LANDMARK COMMUNITIES

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STRATEGIC ACQUISITIONSYORKVILLE

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 up to

0.5M sf of luxury condominium and retail uses and

up to 82 rental units

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

Metropia and Capital Developments

Zoning Status: Zoning Bylaw Amendment (ZBA)

submitted April 2018

Surfacing Value:

• 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

18 Cumberland

17 Yorkville

11 Yorkville

19 Yorkville

16 Cumberland21 Yorkville

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CAPITAL STRUCTURE AND FINANCING STRATEGY

Qi Tang

Senior Vice President and CFO

Max.

Permitted

As at

Dec. 31, 2017Target

Properties Under Development (“PUD”) & Inventory - $1.2 B $1B +/- $200M

PUD and Inventory as % of Gross Assets – per Line of Credit Covenant 15% 8.5% ~ 10%

Investment in Greenfield Development and Inventory as % of Unitholder Equity

- per Declaration of Trust15% 3.3% N/A

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MEASURED APPROACH TO DEVELOPMENT

$1.2 Billion

$300M - $400M$300M - $600M

$1.0 Billion

+/-$200M

Current PUD &

Inventory Balance

Annual Development

Spending

Annual Development

Completions

Annual PUD

Balance

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SELF FUNDING DEVELOPMENTNOT DEPENDENT ON EQUITY OFFERINGS OR INCREASING LEVERAGE

Sources of Funding for Development:

• Disposition net proceeds

• Sales proceeds from condominium/townhouse developments or air rights sales

• Strategic alliances to reduce capital requirements and mitigate risks

• Excess operating cash flows

• Sale of marketable securities

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PRUDENT MANAGEMENT OF DEVELOPMENT RISKS

• Laddered development

• Pre-leasing requirement for commercial development and sound market studies for residential

development

• Well-established internal control process for development approvals and construction management

• Strategic alliances to reduce capital requirements and mitigate risks

• Dedicated and experienced development team but not over-staffed

o No overhead pressure to take on projects

o Residential property management currently outsourced until we reach scale

• Already own the assets, which are income producing

o We can better control development starts especially in today’s environment of rising construction costs

• Limited condominium development

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Capital Structure Metrics

Target 2017

Leverage 38% - 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 Assets N/A $7.7B

Unencumbered Assets to Unencumbered Debt >2.0x 2.26x

NOI % from Unencumbered Assets >50% 56.7%

Unsecured vs. Secured Debt 60%/40% 57%/43%

FFO Payout Ratio <80% 78.8%

STRONG BALANCE SHEETCONTINUE TO MAINTAIN PRUDENT CAPITAL MANAGEMENT & FLEXIBLE CAPITAL STRUCTURE

41.4%46.0%

3.1x

2.6x

7.6x8.3x

Debt Service Coverage

Leverage

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INDUSTRY LEADING FINANCIAL PROFILERIOCAN VS. PEERS

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

3.9x

3.1x

Interest Coverage

Debt to EBITDA

INDUSTRY LEADING FINANCIAL PROFILECAPITAL STRUCTURE PROFILE: CANADA VS. U.S.

Historical Background and Stronger Demand for Yield:

o Canadian REITs have a shorter history and higher demand for yield

o US Retail REITs have much higher institutional ownership (~86%*)

Less Risky Retail Operating Environment

o Less retail space per capita in Canada

o Stricter development regulations and municipal bylaws in Canada

o Retail in Canada has less competition, more financially stable anchor tenants

More Conservative Lending Practices

o Canada: recourse borrowing and higher proportion of secured financing

o U.S.: Non-recourse borrowing and more reliance on unsecured financing

o Canadian financial institutions have more conservative, on-balance sheet lending practices

*Source: RBC Capital Markets

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CAPITAL MANAGEMENT STRATEGY

• Maintain strong balance sheet with leverage in the 38% - 42% range

• Maximize unit repurchases under NCIB subject to our leverage target

• Self-fund development

• Balance unsecured and secured debt ratio in the 60/40 split range

• Maintain financial flexibility by managing revolving line of credit utilization

and balance between debenture issuance and line of credit utilization

• Balance debt maturities and limit variable rate debt to manage interest rate risk

• Maintain and develop lender relationships and continue to utilize diversified funding sources

• Utilize CMHC funding for mixed-use residential properties



• 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

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CLOSING REMARKS

Ed Sonshine

Founder and CEO

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Q&A

Documents

B Disposition Program Jonathan Gitlin€¦ · • Redeveloping prime assets • Optimize pads by adding additional GLA • Drive ancillary revenues • Continuous portfolio pruning