Focused
on
Canada’s
Urban
Markets

The
Canadian
Urban
Markets

RioCan is Canada’s largest real estate investment trust with a total enterprise value of approximately $14.6 billion. RioCan owns and manages Canada’s largest portfolio of shopping centres, including ownership interests in 300 retail and mixed-use properties, with 15 properties under active development. RioCan has an aggregate net leasable area (NLA) of more than 46 million square feet. Concentrated in Canada’s six major markets of Toronto, Ottawa, Calgary, Edmonton, Montreal, and Vancouver, RioCan is Canada’s pre-eminent real estate investment trust.

Edward Sonshine,
O.Ont., Q.C. Chief Executive Officer

RioCan — We Are Where You Want To Be

RioCan now, once again, has a dedicated focus on Canada, where we began building the nation’s largest retail REIT nearly twenty-five years ago. With a total enterprise value of almost $15 billion, RioCan owns and manages Canada’s foremost portfolio of shopping centres, and some of the premier mixed-use locations in the country, such as RioCan Yonge Eglinton Centre and the Yonge Sheppard Centre. RioCan controls an aggregate net leasable area of more than 46 million square feet focused in Canada’s six major markets: Toronto, Ottawa, Calgary, Edmonton, Montreal, and Vancouver. With annual rental revenue in excess of $1.1 billion, RioCan is Canada’s pre-eminent real estate investment trust.

Our “focused on Canada” strategy is derived from our storied past. In the early 1990s, I envisioned the potential of a Canadian REIT: a security that trades on a major exchange and that invests in real estate directly, generating special tax considerations for investors, coupled with growing distributions over time. A REIT provides Unitholders a method of investing in real estate while obtaining the benefits of professional management, diversification of properties and most importantly liquidity. Unitholders and the investment community were enthusiastic about the benefits of a REIT, and RioCan was listed on the Toronto Stock Exchange in 1994.

Growth Through Insight

With an initial portfolio of less than one million square feet, RioCan’s portfolio varied in property type and location. Instead of a focus on Canada’s six major markets, the early portfolio had an array of properties in primary, secondary and tertiary markets.

Over a decade ago, we forecast significant population growth in Canada’s six major markets, so we targeted our portfolio accordingly by disposing of assets in secondary and tertiary markets while acquiring properties in the primary markets. The powerful growth of annual rental revenue generated in these six markets validates our strategy. In 2004, these markets generated less than 60% of RioCan’s annual rental revenue. Today, this number has increased to more than 75% of our annual rental revenue, and we anticipate achieving our 80% target within the next few years as projects within our present urban development portfolio are completed.

RioCan’s success is aligned with that of our tenants, so management continuously assesses retail and demographic trends to ensure that our properties are innovative and leading-edge. That’s why RioCan properties are at the forefront of how people want to shop, live and work in the 21^st century. Indeed, RioCan provides solutions that both address leading trends but also help define the communities of which we are a part.

RioCan’s Urban Intensification – Creating Spaces Where We Can All Prosper

Urban transformation involves much more than bricks and mortar. Building better futures means seeing communities for what they are, imagining what they can be, and implementing a plan, sometimes with selected partners, to get them there. This is how RioCan delivers for our tenants, customers and unitholders alike.

Today, we are witnessing the continuing demographic shift that RioCan anticipated—and planned for. Canada’s major markets are in the midst of major transformation in terms of population growth and density, as well as investment in transit infrastructure. Accordingly, RioCan will add substantial value by intensifying our properties in selected locations that were acquired or developed years ago.

To facilitate a large influx of people living, shopping, and working in densely populated areas, cities are upgrading their transit infrastructure. Land intensification is being mandated in the suburbs, especially in conjunction with major transit infrastructure expansion. This shift towards land use intensification is central to our expansion and redevelopment strategies of creating mixed-use communities, near public transit in areas with compelling demographic trends.

RioCan’s development initiatives are central to our short-term and long-term planning. All our decisions on property acquisitions, development and management are based on RioCan’s core competency: real estate. Our ability to scout prize properties, from the standpoints of location, demographic trends and income levels, allow us to strategically acquire, operate, and develop jewels that will shine brightly for tenants, residents, consumers and the surrounding communities.

As a major owner of limited and costly land in highly desirable urban cores and suburban transit ways, RioCan intends to develop spaces that provide an optimal shopping mix, often combining convenient and attractive living and, on occasion, working opportunities.

RioCan has a long-term goal to develop more than 10,000 rental residential units in these high-demand markets through its residential development initiative and already has several buildings under construction with the first occupancies expected towards the end of 2018. By forging alliances and partnerships on larger projects such as The Well featured in this report, RioCan mitigates some of the risk in these capital-intensive developments.

RioCan has a proud history delivering rewarding opportunities for our tenants and unitholders. Using our combined decades of experience, RioCan delivers prosperity for our stakeholders by making strategic decisions with integrity. At RioCan, we help shape the future, but as community stewards we have a responsibility to do it right, to wisely cultivate growth, and in so doing, take our stakeholders wherever they need to go.

2016: A Transformational Year

In 2009, RioCan capitalized on a historic opportunity and expanded the portfolio into the United States, primarily in densely populated centres in the north east, as well as in major cities in Texas. Acting in a responsible and fiscally disciplined manner, RioCan partnered with established parties on these early acquisitions, as a means of widening our scope of projects and mitigating risk. Once established, we created our own operating platform in the United States. We added value to the portfolio by increasing occupancy and cash flow. Then, in 2016, RioCan capitalized on another historically favourable opportunity: with property valuations exceeding those in Canada and the significant rise in the American dollar, RioCan sold its American stake for US $1.9 billion, realizing net proceeds of approximately $1.2 billion Canadian.

Our decision to divest in the United States this year was both measured and prudent. In assessing whether to proceed further in the United States, RioCan concluded that the best opportunities for long-term growth were based in Canada. Moreover, with improved valuations in the U.S. markets, and a significant spread between the U.S. and Canadian currencies, the timing was opportune to divest. As a result, RioCan repatriated a significant amount of capital, which enabled your REIT to reduce its leverage to a historic low. Our decisions have proven sound: at the end of 2016 RioCan has the best balance sheet in our history. Our leverage ratio was 39.7% as at December 31, 2016, which provides the balance sheet strength and ample resources necessary to execute RioCan’s urban development initiatives.

Real Vision – Solid Ground

Since the inception of the Trust, RioCan has delivered on its strategy to grow its portfolio across Canada. Today, our approach is showcased with distinctive branding and signage in bustling communities and a portfolio that is strategically focused in Canada’s six major markets. To assure success for our tenants, our centres must successfully compete with ecommerce. Indeed, RioCan centres offer consumers compelling experiences, including leading movies and entertainment, a range of dining options, dynamic social experiences, fitness and other services. Additionally, consumers rely on RioCan properties to provide a full array of leading retailers—and brands.

With a deep and experienced management team, an entrepreneurial spirit, strong financial resources, and the discipline to implement our vision, RioCan delivers on the same key principle that has defined our REIT since inception: maintaining or increasing our distributions to Unitholders. Today, RioCan’s current financial strength makes our distribution as secure and reliable as it has ever been. Moreover, as our development projects move to completion and generate revenue, and organic growth in our portfolio is realized, it is our intention to resume regular growth in our distributions.

I thank you—our Unitholders—for your ongoing support, and I appreciate your continuing confidence in RioCan.

Ed Sonshine O.Ont., Q.C.
Chief Executive Officer
RioCan Real Estate Investment Trust

Focused
on
toronto,
A canadian
urban
market

The Well Toronto, Ontario

Stretching down the western side of Spadina Avenue from Wellington to Front, The Well is located within comfortable walking distance to the entertainment district, financial district and waterfront, making it a central hub in one of Toronto’s most vibrant areas.

At The Well, RioCan and its partners are bringing homes, flexible office space and retail shops together to create a new and entirely unique community in the heart of the city. With three million square feet of mixed-use space, The Well will be a singular destination for working, living, shopping, dining and entertainment. International brands, authentic cuisine and entrepreneurial minds will unite in one integrated, intimate place, making it easy to live, work and play in harmony.

Focused
on
toronto,
A canadian
urban
market

ePlace Toronto, Ontario

RioCan’s ePlace at the northeast corner of Yonge and Eglinton will be a signature destination in the thriving commercial and residential community of Midtown Toronto. It is surrounded by endless shopping, dining and entertainment choices. ePlace includes two residential towers, including what will be RioCan’s first completed rental residential tower.

Intersecting Yonge and Eglinton, two of Toronto’s busiest streets, this mixed-use residential and retail property that is expected to be completed in 2018 and 2019 will elevate the status of Midtown, while connecting it with the city through unparalleled underground access to the Yonge subway and the future Crosstown Eglinton LRT. ePlace also enjoys direct access to RioCan’s recently renovated Yonge Eglinton Centre. The two centres combined offer more than 70 retailers including; Metro, Indigo, Winners, LCBO and the largest Sephora in North America and a VIP Cineplex.

5th & 3rd East Village Calgary, Alberta

Located on 2.8 acres in Calgary's East Village, the project features 180,000 square feet of retail space at the base of a 600,000 square feet residential tower.

Focused
on
Calgary,
A canadian
urban
market

Highlights include an 82,000 square foot Loblaws City Market and Shoppers Drug Mart, and an additional 70,000 square feet of retail space at grade, with convenient access to 300 dedicated parking spots.

Located in the East Village area of downtown Calgary, the site features direct access to the LRT. Construction at the site is expected to be completed in 2020. Of note, the project is on one of downtown Calgary's few full city blocks that is privately owned. The site is being developed as a mixed-use project that will include approximately 188,000 square feet of retail space to be anchored by an 82,000 square foot Loblaws City Market and Shoppers Drug Mart. Other retailers include a liquor store and financial
service providers.

Focused
on
ottawa,
A canadian
urban
market

Gloucester Ottawa, Ontario

Ottawa is growing, and RioCan is in the heart of the action, building a striking 23 storey tower featuring approximately 220 residential units.

This phase 1 project, on a 7-acre site, provides convenient housing in Ottawa. The tower features environmentally friendly geothermal heating and cooling, and the potential to expand to 3
additional towers.

Plans and approvals have been received for phase 1 of the Gloucester City Centre. Demolition is underway, and construction is soon to commence. RioCan’s innovative development features a 215,000 square foot, 23 storey rental residential tower comprising approximately 220 units. Current plans include a geothermal energy system for heating and cooling. Completion of the first phase is scheduled for 2019. The site, near a light rapid transit line, offers easy access to transit. There is room to grow, with the potential for the development of three additional residential towers, offering up to 840 residential units in all four towers.

CORPORATE INFORMATION

SENIOR MANAGEMENT

Edward Sonshine, O.Ont., Q.C.
Chief Executive Officer

Raghunath Davloor
President, Chief Operating Officer & Corporate Secretary

Qi Tang
Senior Vice President, Finance & Acting Chief Financial Officer

John Ballantyne
Senior Vice President, Asset Management

Andrew Duncan
Senior Vice President, Developments

Jonathan Gitlin
Senior Vice President, Investments & Residential

Danny Kissoon
Senior Vice President, Operations

Jeff Ross
Senior Vice President, Leasing & Tenant Coordination

Terri Andrianopoulos
Vice President, Corporate Marketing

Moshe Batalion
Vice President, Leasing – Ontario

Stuart Baum
Vice President, Human Resources

Nigel Bunbury
Vice President, Financial Reporting & Controls

Stuart Craig
Vice President, Planning & Development

Roberto DeBarros
Vice President, Construction

Oliver Harrison
Vice President, Asset Management

Oliver Hobday
Vice President, Legal

Kevin Miller
Regional Vice President,
Operations – Central Ontario

Pradeepa Nadarajah
Vice President, Property Accounting

Paran Namasivayam
Vice President, Recovery Accounting

Stephen Roberts
Vice President, Analytics

Tim Roos
Vice President, Operations

Jonathan Sonshine
Vice President, Asset Management

Jeffrey Stephenson
Vice President, Leasing

Naftali Sturm
Vice President, Real Estate Finance

Renato Vanin
Vice President, Information Technology