REI.UN RioCan Real Estate Investment Trust

RioCan's HIGHLIGHTS for the three and six months ended June 30, 2017:

RioCan Real Estate Investment Trust (“RioCan”) (TSX:REI.UN) today announced its financial results for the three and six months ended June 30, 2017.

"I am very pleased with what we have been able to accomplish in the first half of 2017. Our Canadian operations have generated very strong growth in Funds From Operations and our portfolio is performing well with occupancy levels returning to near our best of around 97%," said Edward Sonshine Chief Executive Officer of RioCan. "We are creating substantial value in our development program, as evidenced by the quality of partners that we have been able to attract to projects such as Gloucester City Centre and Sunnybrook Plaza. Our development with Allied Properties at King and Portland is progressing very well and the office component is 93% pre-leased. These and other projects currently well underway will be solid contributors to the continued growth in Funds From Operations for RioCan."

Financial Highlights

All figures are expressed in Canadian dollars unless otherwise noted. For further information about RioCan's results for the three and six months ended June 30, 2017, this earnings release should be read in conjunction with our unaudited interim consolidated financial statements ("Consolidated Financial Statements"), as well as Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2017.

RioCan’s Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (“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. For full definitions of these measures, please refer to “Non-GAAP Measures” in RioCan’s June 30, 2017 Management's Discussion and Analysis. As a result of the sale of the U.S. operations, we have reported our former U.S. geographic segment performance as "discontinued operations" with comparative income statement amounts adjusted to reflect this change, unless otherwise noted.

Net income from continuing operations attributable to unitholders

	Three months ended June 30,							Six months ended June 30,
(in millions except percentages and per unit values)		2017		2016	% Change				2017		2016	% Change
Net income from continuing operations	$	155.1	$	142.7	8.6	%		$	318.2	$	251	26.8	%
Net income per unit from continuing operations attributable to unitholders – diluted	$	0.47	$	0.43	9.3	%		$	0.96	$	0.74	29.7	%

Continuing Operations 

Net income from continuing operations attributable to unitholders for the second quarter of 2017 is $155.1 million compared to $142.7 million during the same period in 2016, representing a increase of $12.4 million. Excluding $16.5 million lower fair value gains versus the comparable period, net income from continuing operations attributable to unitholders for the second quarter of 2017 is $142.2 million compared to $113.4 million in 2016, representing an increase of $28.8 million or 25.4%.

The increase of $28.8 million is largely the net effect of the following:

• $13.8 million of income primarily due to property acquisitions (net of dispositions), increased same property performance, and higher straight line rent revenue;
• $10.3 million in gains related to the sale of available-for-sale marketable securities;
• $3.5 million in lower interest expense primarily due to interest savings on the refinancing of aggregate debt at lower effective rates;
• $2.6 million in lower general and administrative expenses primarily due to mark to market adjustments associated with certain cash-settled unit-based compensation costs; and
• $2.3 million in higher property management and asset management fee income and other income, due mainly to a development fee on a co-ownership development; partly offset by
• $1.8 million in higher transaction and other costs;
• $1.2 million lower inventory income and deferred tax recoveries; and
• $1.1 million in lower dividend income from available-for-sale marketable securities.

Net income from continuing operations attributable to unitholders for the first half of 2017 is $318.2 million compared to $250.9 million during the same period in 2016, representing an increase of $67.3 million. Excluding $4.6 million higher fair value gains versus the comparable period, net income from continuing operations attributable to unitholders for the six months ended June 30, 2017 is $287.3 million compared to $224.6 million in 2016, representing an increase of $62.7 million or 27.9%.

The increase of $62.7 million is largely the net effect of the following:

• $23.1 million of income primarily due to property acquisitions (net of dispositions), higher same property performance and increased straight line rent revenue;
• $21.8 million in gains related to available-for-sale marketable securities;
• $7.1 million in interest savings due mainly to lower average debt balances outstanding as a result of debt repayments using proceeds from the sale of the U.S. portfolio in 2016, and the refinancing of debt at lower interest rates;
• $5.3 million in higher earnings from our equity accounted investments, primarily as a result of fair value gains in our RioCan-HBC joint venture; and
• $5.3 million in lower internal leasing costs and general and administrative expenses primarily due to mark to market adjustments of certain cash-settled unit-based compensation costs.

Funds From Operations ("FFO")	Three months ended June 30,						Six months ended June 30,
(in millions except percentages and per unit values)	2017		2016		% Change		2017		2016		% Change
FFO from continuing operatiions	$	145.7	$	116.1	25.5	%	$	288.7	$	224.8	28.4	%
FFO from discontinued operations	$	0.9	$	17.0	(94.8	%)	$	0.7	$	50.9	(98.6	%)
FFO (i)	$	146.6	$	133.1	10.1	%	$	289.4	$	275.8	4.9	%
FFO per Unit - diluted	$	0.45	$	0.41	9.7	%	$	0.88	$	0.85	4.2	%
(i)   A non-GAAP measurement. A reconciliation to net income can be found under “Results of Operations” in RioCan's Management's Discussion andAnalysis for the period ending June 30, 2017.

Q2 2017

FFO for the second quarter of 2017 is $146.6 million compared to $133.1 million representing an increase of approximately $13.5 million or 10.1%. On a basic per unit basis, FFO is $0.45 compared to $0.41, representing an increase of 9.6%.

Continuing Operations

FFO from continuing operations increased from $116.1 million in the second quarter of 2016 to $145.7 million in the second quarter of 2017, an increase of $29.6 million or 25.5%. The $29.6 million increase in FFO from continuing operations for the quarter was primarily due to higher NOI of $13.7 million (at RioCan’s proportionate share) mainly as a result of acquisitions net of dispositions and growth in same property NOI, $10.3 million gains related to the sale of available-for-sale marketable securities, $3.5 million lower interest costs (at RioCan's proportionate share), $2.6 million lower general and administrative expenses mainly resulting from mark to market adjustments for certain cash-settled unit-based compensation, and $1.7 million higher fee income and other income, partially offset by $1.1 million in lower dividend income on available-for-sale marketable securities $1.2 million in other costs associated with transactions that the Trust decided not to pursue further, and $0.6 million lower inventory sales net of costs.

FFO for the first half of 2017 is $289.4 million compared to $275.8 million representing an increase of approximately $13.6 million or 4.9%. On a basic per unit basis, FFO is $0.89 compared to $0.85, representing an increase of 4.2%, despite the sale of the U.S. portfolio in May 2016.

Continuing Operations

FFO from continuing operations increased from $224.8 million in the first half of 2016 to $288.7 million in the comparable period in 2017, an increase of $63.8 million or 28.4%. The $63.8 million increase in FFO from continuing operations for the period was primarily due to higher NOI of $23.1 million (at RioCan’s proportionate share) mainly as a result of acquisitions net of dispositions and growth in same property NOI, $21.8 million gains related to the sale of available-for-sale marketable securities, $7.0 million lower interest costs (at RioCan's proportionate share), $4.8 million lower general and administrative expenses, $4.3 million Series A preferred unit redemption costs in Q1 2016, $1.6 million less Series A preferred unit distributions, $1.3 million higher interest income and $1.0 million higher property management and asset management fee income, partially offset by $1.8 million lower dividend income from the sale of available-for-sale marketable securities and $1.2 million in other costs associated withtransactions that the Trust decided not to pursue further.

Operational Performance

Same Property NOI Growth

	Three months ended June 30, 0217	Six months ended June 30, 2017
Same Property Growth	1.9%	1.7%
Refers to same property NOI growth on a year over year basis.

Same property NOI increased 1.9% or $3.0 million in the Second Quarter compared to the same period in 2016. Approximately $1.6 million of the increase is related to higher occupancy, renewal rate growth and contractual rent increases and $1.4 million is due to an increase in NOI from Target backfills and other expansion and re-development projects completed.

The key performance indicators related to operating and leasing for the Canadian portfolio over the last eight quarters are as follows:

	2017				2016								2015
	Q2*		Q1		Q4		Q3		Q2		Q1		Q4		Q3
Committed occupancy	96.7	%	96.2	%	95.6	%	95.3	%	95.1	%	94.8	%	94.0	%	93.2	%
In-place occupancy	95.2	%	94.4	%	93.6	%	93.6	%	92.9	%	92.8	%	93.3	%	92.4	%
Retention rate	93.9	%	88.6	%	84.0	%	83.1	%	91.6	%	84.4	%	81.4	%	89.8	%
% increase in average net rent per sq ft	4.7	%	8.2	%	8.1	%	6.6	%	3.3	%	6.2	%	4.0	%	8.6	%
* The percentage increase in average net rent per square foot declined in Q2 versus Q1 2017 as a result of a higher volume of renewals at fixed rental rates, many of which were completed with anchor tenants in secondary markets, compared to renewals at market rental rates.

Other Operating Statistics

• Renewal rents increased on average 4.7% and RioCan's retention rate increased from 91.6% in Q2 2016 to 93.9% this quarter. The lower renewal average net rent increase in Q2 2017 in comparison to Q1 2017 is primarily due to a higher proportion of renewals with fixed rates many of which were completed with anchor tenants in secondary markets compared to renewals at market rental rates.
• We expect to generate  $13.0 million of annualized net incremental IFRS rent once all tenants that have signed leases as of June 30, 2017 take possession of their space. Approximately 40.3% of the incremental IFRS rent relates to the leasing of former Target space and leasing of other tenant space in development projects expected to be completed in the second half of 2017; and
• Consistent with RioCan’s stated strategy, its portfolio is concentrated in Canada’s six major markets (consisting of Toronto, Ottawa, Calgary, Edmonton, Montreal and Vancouver). Assets in these markets contribute approximately 75.2% of RioCan’s annualized rental revenue as at June 30, 2017 (75.5% at December 31, 2016).

Acquisitions and Dispositions

Income Producing Property Acquisitions and Dispositions

During the quarter, we completed the acquisition of one income property for $16.5 million.  During the quarter, we disposed of one income property (Cambie Street property in Vancouver, British Columbia) for sale proceeds of $94.2 million at a capitalization rate of 3.29%.

As at August 3, 2017, RioCan expects to complete the sale of a portfolio of six chartered bank branches located in British Columbia at a sale price of $30.3 million, at a capitalization rate of 3.72%, subject to customary closing conditions. There is no debt associated with these properties.

Development Property Acquisitions and Dispositions

We did not acquire any development properties during the second quarter of 2017. During the quarter, we disposed of 50% interests in the following two development properties for gross sale proceeds of $35.2 million.

• Gloucester Residential - On April 21, 2017, RioCan and Killam Apartment REIT announced the creation of a 50/50 Joint Venture to develop a residential community at Gloucester City Centre in Ottawa, Ontario. The site has zoning approval for a total of four residential towers containing up to an aggregate of 840 units. The first phase of the development will be a 23-storey tower containing approximately 222 units. This leading edge development will maximize efficiency with the incorporation of a geothermal energy system for the building’s heating and cooling. Construction has commenced and occupancy is anticipated in mid-2019.
• Sunnybrook Plaza - On June 14, 2017, RioCan completed the sale of a 50% interest in Sunnybrook Plaza to Concert Properties ("Concert"). RioCan and Concert plan to construct a 16-storey and 11-storey mixed use residential project. Currently, RioCan and Concert are contemplating that the residential component will be developed as rental suites.

Development Pipeline

RioCan’s development program is an important component of its long-term growth strategy and is focused on well- located urban and suburban properties in the six major markets in Canada. Often, these are properties that RioCan already owns and are located directly on, or in proximity, to major transit lines. RioCan's development program continues to be a significant value creation driver and will secure diversification and growth for our future cash flows.

Pipeline Summary

RioCan's overall estimated development pipeline as at June 30, 2017, represents approximately 24.1 million square feet of density (at RioCan’s interest). These projects include commercial space (office and retail), residential rental held for long-term rental income, condominiums and townhouses for sale, and density associated with air rights sales. Approximately 3.5 million square feet of net leaseable area ("NLA") in the estimated development pipeline is existing NLA which is currently income producing, therefore the net incremental density included in the total development pipeline is estimated at 20.6 million square feet (at RioCan's interest) as of June 30, 2017. Approximately 94.1% or 22.7 million square feet of our overall estimated development pipeline is residential or mixed-use projects.

A key milestone of the development process and in creating value for the Trust is the the zoning approval process. Of the Trust's estimated 24.1 million square feet of development pipeline (at RioCan's interest) 10.7 million square feet have zoning approvals, representing approximately 44.6% of total estimated NLA in the Trust's current estimated development pipeline. In addition, the Trust has 7.1 million square feet with zoning applications submitted, representing an additional 29.4% of the Trust's current development pipeline as of June 30, 2017.

RioCan has categorized its development pipeline into three primary components: active projects with detailed cost estimates, active projects with cost estimates in progress, and future estimated density. As of June 30, 2017, RioCan has active projects with detailed cost estimates that when complete over the next six years represent 4.4 million square feet (4.6 million square feet including Residential Inventory) with total estimated project costs of $2.2 billion, after projected proceeds from land and air rights dispositions, of which $1.1 billion of costs have been incurred to date.

The Trust will continue to fund its development pipeline through its capital recycling program and strategic development partnerships.

Completed Developments in 2017

During the Second Quarter, RioCan transferred $41.8 million in costs to income producing properties pertaining to232,000  square feet of completed greenfield development and expansion and redevelopment projects.

Liquidity and Capital

RioCan’s debt and leverage metrics are disclosed below to help facilitate an understanding of RioCan’s leverage and its ability to service such leverage. The definitions that management uses, as well as the calculation methodology for the ratios included in the table below are described in RioCan's Management’s Discussion and Analysis for the six months ended June 30, 2017.

	Rolling 12 months ended
	June 30, 2017				December 31, 2016
Interest coverage – RioCan’s proportionate share (i)	3.74		x		3.36		x
Debt service coverage – RioCan’s proportionate share (i)	2.92		x		2.61		x
Fixed charge coverage – RioCan’s proportionate share (i)	1.12		x		1.10		x
Debt to Adjusted EBITDA – RioCan’s proportionate share (i)	7.51		x		8.10		x
Ratio of total debt to total assets  (RioCan's proportionate share, net of cash and cash equivalents)		41.5	%			40.0	%
Unencumbered assets (millions)	$7,128				$6,625
% of NOI generated from unencumbered assets (ii)		52.6	%			49.5	%
Unencumbered assets to unsecured debt		231	%			240	%
(i)  Refer to section Non-GAAP Measures in RioCan's MD&A for further details and the calculation of adjusted EBITDA for the respective periods.
(ii)   Ratio is calculated on a continuing operations basis.

The interest and debt service coverage ratios calculated at RioCan's proportionate share for the twelve months ended June 30, 2017 improved compared to December 31, 2016 mainly due to lower interest and debt service costs as a result of the repayment of debt using the net proceeds from the U.S. sale and interest savings from mortgage refinancing, partially offset by a decrease in adjusted EBITDA mainly in connection with our U.S. property portfolio disposition.

The fixed charge coverage ratio calculated at RioCan's proportionate share for the twelve months ended June 30, 2017 improved compared to December 31, 2016 mainly due to lower total fixed charges (interest cost plus unitholder distributions) partially offset by the same changes in adjusted EBITDA as described above.

Debt to adjusted EBITDA at RioCan's proportionate share has decreased to 7.51x for the twelve months ended June 30, 2017 mainly as a result of lower average debt balances outstanding, partially offset by a decrease in adjusted EBITDA mainly in connection with our U.S. property portfolio disposition in the second quarter of 2016.

Our leverage ratio at RioCan's proportionate share increased from 40.0% at December 31, 2016 to 41.5% at June 30, 2017 primarily due to the payment of U.S. taxes that have been accrued in 2016, relating to the sale of our U.S. portfolio in 2016, as well as redemption of the Trust's Series C preferred trust units on June 30, 2017. We expect our total debt to total asset ratio to fluctuate between 38% to approximately 42%. Over the next 12 to 18 months, we expect this ratio to rise toward the higher end of this range.

The percentage NOI generated from unencumbered assets has improved from 49.5% to 52.6% as we continued to unencumber assets during the first half of 2017. The unencumbered assets to unsecured debt ratio, however, decreased from 240% to 231% this period as the increase in our unsecured debt of $333 million, partially driven by tax payments relating to the U.S. portfolio sale and redemption of the Trust's Series C preferred units, outpaced the $503 million increase in unencumbered assets on a relative basis.  Overall, we are still well over our 200% target.

Selected Financial Information

The following includes financial information prepared by management in accordance with IFRS and based on the Trust's Consolidated Financial Statements for the period ended June 30, 2017. This financial information does not contain all disclosures required by IFRS, and accordingly should be read in conjunction with the Trust's Consolidated Financial Statements and MD&A for the period ended June 30, 2017, which is available on RioCan's website and on SEDAR.

CONSOLIDATED BALANCE SHEETS
(In thousands of Canadian dollars, except per unit amounts)
(unaudited)
As at	June 30, 2017		December 31, 2016
Assets
Investment properties	$	13,362,936	$	13,287,038
Deferred tax assets		10,609		11,609
Equity accounted investments		201,084		185,278
Mortgages and loans receivable		126,334		118,017
Residential inventory		57,878		48,414
Assets held for sale		91,780		60,530
Receivables and other assets		382,421		408,508
Cash and cash equivalents		41,642		54,366
Total assets	$	14,274,684	$	14,173,760
Liabilities
Debentures payable	$	2,694,789	$	2,248,024
Mortgages payable		2,611,029		2,699,935
Lines of credit and other bank loans		597,738		705,633
Accounts payable and other liabilities		405,973		510,280
Total liabilities	$	6,309,529	$	6,163,872
Equity
Unitholders' equity:
Preferred	$	—	$	144,755
Common		7,965,155		7,865,133
Total equity		7,965,155		8,009,888
Total liabilities and equity	$	14,274,684	$	14,173,760

CONSOLIDATED STATEMENTS OF INCOME
(In thousands of Canadian dollars, except per unit amounts)
(unaudited)
	Three months ended June 30,					Six months ended June 30,
		2017		2016			2017		2016
Revenue
Rental revenue	$	280,862	$	268,282		$	567,549	$	543,817
Property and asset management fees		4,770		3,538			7,753		6,748
Residential inventory sales		—		3,926			—		9,012
		285,632		275,746			575,302		559,577
Operating costs
Rental operating costs
Recoverable under tenant leases		96,248		96,796			202,708		200,941
Non-recoverable costs		4,340		4,999			8,637		9,757
Residential inventory cost of sales		—		3,328			—		8,290
		100,588		105,123			211,345		218,988
Operating income		185,044		170,623			363,957		340,589
Other income
Interest income		1,716		1,337			4,004		2,668
Income from equity accounted investments		2,389		2,555			8,609		3,310
Fair value gains on investment properties, net		12,831		29,286			30,938		26,343
Investment and other income		13,707		3,443			29,084		6,858
		30,643		36,621			72,635		39,179
Other expenses
Interest costs		42,580		46,076			85,585		92,703
General and administrative		11,294		13,941			22,225		27,074
Internal leasing costs		2,318		2,407			4,811		5,230
Transaction and other costs		4,428		2,678			4,780		4,597
		60,620		65,102			117,401		129,604
Income before income taxes		155,067		142,142			319,191		250,164
Deferred income tax expense (recovery)		—		(600	)		1,000		(850	)
Net income from continuing operations	$	155,067	$	142,742		$	318,191	$	251,014
Net income from discontinued operations		1,405		128,414			2,852		167,145
Net income	$	156,472	$	271,156		$	321,043	$	418,159
Net income attributable to
Unitholders	$	156,472	$	271,116		$	321,043	$	418,068
Non-controlling interests		—		40			—		91
	$	156,472	$	271,156		$	321,043	$	418,159
Net income per unit - basic:
From continuing operations	$	0.47	$	0.43		$	0.96	$	0.74
From discontinued operations		—		0.39			0.01		0.52
Net income per unit - basic	$	0.47	$	0.83		$	0.97	$	1.26
Net income per unit - diluted:
From continuing operations	$	0.47	$	0.43		$	0.96	$	0.74
From discontinued operations		—		0.39			0.01		0.51
Net income per unit - diluted	$	0.47	$	0.83		$	0.97	$	1.26
Weighted average number of units (in thousands):
Basic		327,063		325,364			326,921		324,459
Diluted		327,201		325,811			327,073		324,733

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)
(unaudited)
	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Operating activities
Net income from:
Continuing operations	$	155,067		$	142,742		$	318,191		$	251,014
Discontinued operations		1,405			128,414			2,852			167,145
Net income		156,472			271,156			321,043			418,159
Items not affecting cash:
Depreciation and amortization		1,250			1,119			2,845			2,224
Amortization of straight-line rent		(1,999	)		(652	)		(4,362	)		(2,718	)
Unit-based compensation expense		1,600			495			2,079			648
Income from equity accounted investments		(2,389	)		(2,555	)		(8,609	)		(3,310	)
Fair value gains on investment properties, net		(12,831	)		(24,985	)		(30,938	)		(43,242	)
Deferred income taxes (recovery)		—			(214,414)			1,000			(231,525	)
Transaction gains (net) on disposition of:
Available-for-sale securities		(10,280	)		—			(21,822	)		—
Canadian investment properties		(629	)		—			(971	)		—
U.S. investment properties		—			(65,116	)		—			(65,116	)
Adjustments for other changes in working capital items		(26,362	)		78,992			(176,177	)		83,731
Cash provided by operating activities		104,832			44,040			84,088			158,851
Investing activities
Acquisitions of investment property, net of assumed debt		(7,544	)		(77,967	)		(12,928	)		(123,218	)
Construction expenditures on properties under development		(79,949	)		(58,908	)		(155,672	)		(105,691	)
Capital expenditures on income properties:
Recoverable and non-recoverable costs		(7,727	)		(16,078	)		(12,327	)		(20,881	)
Tenant improvements and external leasing commissions		(11,932	)		(15,174	)		(20,865	)		(23,042	)
Proceeds from sale of investment properties		128,218			1,991,612			159,630			2,036,805
Earn-outs on investment properties		—			—			(1,309	)		—
Contributions to equity accounted investments		(620	)		(24,147	)		(13,801	)		(24,147	)
Distributions received from equity accounted investments		4,823			2,406			7,225			6,500
Advances of mortgages and loans receivable		(2,312	)		(425	)		(4,562	)		(980	)
Repayments of mortgages and loans receivable		—			13,155			5,129			20,972
Proceeds from sale of available-for-sale securities, net of selling costs		33,190			—			75,968			—
Cash provided by investing activities		56,147			1,814,474			26,488			1,766,318
Financing activities
Proceeds from mortgage financing, net of issue costs		85,409			58,373			182,529			109,914
Repayments of mortgage principal		(63,817	)		(1,086,774	)		(253,215	)		(1,233,817	)
Advances from bank credit lines, net of issue costs		3,940			100,380			99,471			507,970
Repayment of bank credit lines		(225,028	)		(691,079	)		(230,028	)		(1,050,297	)
Proceeds from issuance of debentures, net of issue costs		298,565			—			596,948			—
Repayment of unsecured debentures		—			—			(150,000	)		—
Distributions to common trust unitholders, net of distributions reinvested		(108,779	)		(103,895	)		(216,711	)		(182,322	)
Distributions to preferred trust unitholders		(1,757	)		(1,757	)		(3,514	)		(5,154	)
Distributions paid to non-controlling interests		—			(91	)		—			(91	)
Return of capital to non-controlling interests		—			(782	)		—			(782	)
Proceeds received from issuance of common units, net		215			13,582			720			33,418
Redemption of preferred units		(149,500	)		(125,000	)		(149,500	)		(125,000	)
Cash used in financing activities		(160,752	)		(1,837,043	)		(123,300	)		(1,946,161	)
Net change in cash and cash equivalents		227			21,471			(12,724	)		(20,992	)
Cash and cash equivalents, beginning of period		41,415			40,855			54,366			83,318
Cash and cash equivalents, end of period	$	41,642		$	62,326		$	41,642		$	62,326

Conference Call and Webcast

Interested parties are invited to participate in a conference call with management on Friday, August 4, 2017 at 8:30 a.m. Eastern time. You will be required to identify yourself and the organization on whose behalf you are participating.

In order to participate, please dial 647-427-3230 or 1-877-486-4304. If you cannot participate in the live mode, a replay will be available. To access the replay, please dial 1-855-859-2056 and enter passcode 47045117#.

Alternatively, to access the simultaneous webcast, go to the following link on RioCan’s website http://investor.riocan.com/investor-relations/events-and-presentations/events/ and click on the link for the webcast. The webcast will be archived 24 hours after the end of the conference call and can be accessed for 120 days.

About RioCan

RioCan is Canada's largest real estate investment trust with a total enterprise value of approximately $13.9 billion as at June 30, 2017. RioCan owns and manages Canada’s largest retail focused portfolio with ownership interests in 299 retail and mixed-use properties, including 15 properties under development, containing an aggregate net leasable area of 45 million square feet. For the past 25 years, we have shaped the future, sensibly cultivated growth, and taken our stakeholders and partners wherever they needed to go. Currently, we have more than 6,350 retail tenants and approximately 660 employees with a presence from coast to coast. We know that there is a home for every retailer. Whether we find it today or build it for tomorrow, we deliver real vision, solid ground. For more information, visit www.riocan.com.

Non-GAAP Measures

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 Interest, RioCan's Proportionate Share, Funds From Operations (“FFO”), Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), Interest Coverage Ratio, Debt Service Coverage Ratio, Debt to Adjusted EBITDA, Net Operating Income ("NOI"), Same Property NOI, Fixed Charge Coverage, Percentage of NOI Generated from Unencumbered Assets, Unencumbered Assets to Unsecured Debt, and Total Enterprise Value, as well as other measures discussed elsewhere in this release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. RioCan supplements its IFRS measures with these non-GAAP measures to aid in assessing the Trust’s underlying performance and reports these additional measures so that investors may do the same. 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 Discussion and Analysis for the period ending June 30, 2017.

Forward-Looking Information

This news release contains forward-looking information within the meaning of applicable Canadian securities laws. This information includes, but is not limited to, statements made in “Financial Highlights”, “Operational Performance", “Acquisitions and Dispositions”, "Development Pipeline Summary", Liquidity and Capital" and other statements concerning RioCan’s objectives, its 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. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcomes or events. Such forward-looking information reflects management’s current beliefs and is based on information currently available to management. All forward-looking information in this News Release is qualified by these cautionary statements.

Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan’s current estimates and assumptions, which are subject to numerous risks and uncertainties, including those described under “Risks and Uncertainties” in RioCan's Management's Discussion and Analysis for the period ended June 30, 2017 ("MD&A"), which could cause actual events or results to differ materially from the forward-looking information contained in this News Release. Those risks and uncertainties include, but are not limited to, those related to: liquidity and general market conditions; tenant concentrations and related risk of bankruptcy or restructuring (and the terms of any bankruptcy or restructuring proceeding), occupancy levels and defaults, including the failure to fulfill contractual obligations by the tenant or a related party thereof; lease renewals and rental increases; the ability to re-lease and find new tenants for vacant space; retailer competition; changes in Ontario's rent control legislation; access to debt and equity capital; interest rate and financing risk; joint ventures and partnerships; the relative illiquidity of real property; unexpected costs or liabilities related to acquisitions and dispositions; development risk associated with construction commitments, project costs and related approvals; environmental matters; litigation; reliance on key personnel; unitholder liability; income, sales and land transfer taxes; and credit ratings.

RioCan currently qualifies as a real estate investment trust for Canadian tax purposes and intends to qualify for future years. The Income Tax Act (Canada) contains provisions which potentially impose tax on publicly traded trusts that qualify as specified investment flow-through entities (the SIFT Provisions). However, the SIFT Provisions do not impose tax on a publicly traded trust which qualifies as a REIT. Should RioCan no longer qualify as a Canadian REIT under the SIFT Provisions, certain statements contained in this News Release may need to be modified. RioCan is still subject to Canadian tax in its incorporated Canadian subsidiaries.

Our U.S. subsidiary qualified as a REIT for U.S. income tax purposes up to May 25, 2016, subsequent to the closing date of the sale of our U.S. property portfolio. For U.S. income tax purposes, the subsidiary distributed all of its U.S. taxable income and is entitled to deduct such distributions against its taxable income. The subsidiary’s qualification as a REIT depends on the REIT’s satisfaction of certain asset, income, organizational, distribution, unitholder ownership and other requirements up until May 25, 2016. Our U.S. subsidiary was subject to a 30% or 35% withholding tax on distributions of its U.S. taxable income to Canada. We do not intend to distribute any withholding taxes paid or payable to our unitholders related to the disposition. Should RioCan’s U.S. subsidiary no longer qualify as a U.S. REIT for U.S. tax purposes prior to May 25th, 2016, certain statements contained in this MD&A may need to be modified.

Other factors, such as general economic conditions, including interest rate fluctuations, may also have an effect on RioCan’s results of operations. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a stable retail environment; relatively low and stable interest costs; a continuing trend toward land use intensification, including residential development in urban markets; access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable our refinancing of debts as they mature; and the availability of investment opportunities for growth in Canada. For a description of additional risks that could cause actual results to materially differ from management’s current expectations, see “Risks and Uncertainties” in RioCan's MD&A for the period ended June 30,2017, and in “Risks and Uncertainties” in RioCan’s most recent Annual Information Form. Although the forward- looking information contained in this News Release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information. Certain statements included in this News Release may be considered “financial outlook” for purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this News Release. The forward-looking information contained in this News Release is made as of the date of this News Release , and should not be relied upon as representing RioCan’s views as of any date subsequent to the date of this News Release.

Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward- looking information, whether as a result of new information, future events or otherwise.

Contact Information:

RioCan Real Estate Investment Trust
Qi Tang
Senior Vice President and Chief Financial Officer
416-866-3033