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RioCan Real Estate Investment Trust Announces 17% Growth in Operating Funds From Operations in First Half of 2013

Wednesday, July 31, 2013

RioCan Real Estate Investment Trust Announces 17% Growth in Operating Funds From Operations in First Half of 2013

07:08 EDT Wednesday, July 31, 2013

TORONTO, ONTARIO--(Marketwired - July 31, 2013) - RioCan Real Estate Investment Trust (TSX:REI.UN) -

HIGHLIGHTS for the three and six months ended June 30, 2013:

All figures in Canadian dollars unless otherwise noted. RioCan's results are prepared in accordance with International Financial Reporting Standards ("IFRS").

  • RioCan's Operating FFO increased by 14% to $121 million for the three months ending June 30, 2013 ("Second Quarter") compared to $106 million in the second quarter of 2012. On a per unit basis, Operating FFO increased 8% to $0.40 per unit from $0.37 per unit in the same period of 2012;
  • RioCan's Operating FFO increased by 17% to $245 million for the six months ended June 30, 2013 compared to $209 million for the same period in 2012. On a per unit basis, Operating FFO increased 9% to $0.81 per unit from $0.74 per unit for the same period in 2012;
  • RioCan's concentration in Canada's six major markets has increased to 72.1% from 67.5% at December 31, 2012;
  • Overall occupancy was 96.7% at June 30, 2013, compared to 97.4% at June 30, 2012. The decline in occupancy was largely due to five Zellers stores totalling 466,000 square feet that were returned to RioCan on April 1, 2013;
  • RioCan renewed 956,000 square feet in the Canadian portfolio during the Second Quarter at an average rent increase of $2.14 per square foot, representing an increase of 12.0%, compared to 13.4% for the same period in 2012;
  • RioCan renewed 1.8 million square feet in the Canadian portfolio during the six months ended June 30, 2013 at an average rent increase of $2.04 per square foot, representing an increase of 12.5%, compared to 11.6% for the same period in 2012;
  • During the Second Quarter, RioCan acquired interests in seven income properties in Canada and the US aggregating 1.1 million square feet at an aggregate purchase price of approximately $460 million at RioCan's interest at a weighted average capitalization rate of 5.2%;
  • During the quarter RioCan sold four properties located in secondary markets aggregating 1.6 million square feet at a total sale price of $364 million;
  • During the quarter, RioCan redeemed its $150 million Series M debentures that carried an interest rate of 5.65% and issued $200 million Series T ten year senior unsecured debentures at an interest rate of 3.725%;
  • During the quarter, RioCan entered into an agreement to effectively dissolve its joint venture arrangement with Retail Properties of America, Inc. ("RPAI"). Under the terms of the dissolution, RPAI will convey its 20% managing interest in eight properties to RioCan. RioCan will, in turn, convey its 80% interest in the remaining five properties to RPAI. The transaction is expected to close on October 1, 2013;
  • RioCan entered into agreements to effectively dissolve its joint venture agreements with Dunhill Partners,Inc. ("Dunhill") after the quarter end. Under the terms of the dissolution, RioCan will acquire Dunhill's interests in six properties at a total purchase price of $83.5 million, which equates to a capitalization rate of 6.4%. The transaction is expected to close in phases during the third and fourth quarters of 2013; In addition to its office in the northeastern US, RioCan is in the process of establishing a second US office to be located in Dallas, Texas, and intends to assume the management duties for its Texas Portfolio; and
  • On July 25, 2013, RioCan announced the TSX approval of its notice of intention to make a normal course issuer bid ("NCIB") for a portion of its Units as appropriate opportunities arise from time to time.

RioCan Real Estate Investment Trust ("RioCan") today announced its financial results for the three and six months ended June 30, 2013.

"I am very pleased with the strength of our results this past quarter. We have been able to generate significant growth in our funds from operations despite the drag on the portfolio from nine vacated Zellers locations, which became vacant over the first half of the year. This space is already 62% leased with 102% of the former rental income in place to come back on stream over the next year. We expect to see continued improvement in RioCan's cash flow into 2014 from our multiple growth drivers that include growth from development completions, organic growth from within the portfolio and intensification of our existing properties," said Edward Sonshine, Chief Executive Officer of RioCan. "With a series of purchases in the Toronto area, and sales in secondary markets such as Thunder Bay and Moncton, we increased the percentage of RioCan's Canadian assets situated in the six major markets of this country to over 72%. With virtually all of our development projects being in Toronto and Calgary, this percentage will continue to increase."

Financial Highlights

In millions except percentages and per unit values

Three months ended
June 30,
Six months ended
June 30,
2013 2012 %
change
2013 2012 %
change
Operating FFO $121 $106 14% $245 $209 17%
Operating FFO per Unit $0.40 $0.37 8% $0.81 $0.74 9%
In $millions Three months ended June 30, Six months ended June 30,
2013 2012 2013 2012
Net earnings attributable to common and preferred unit holders $153 $409 $316 $751
Net earnings before taxes and fair value adjustment 112 106 238 223
In $millions. As at June 30,
2013
June 30,
2012
Total enterprise value (1) 13,774 13,559
Total assets - at RioCan's interest(1) 13,195 11,698
Debt(1) (mortgages and debentures payable - at RioCan's interest) 5,851 5,155
  1. Based on RioCan's proportionate share including joint ventures accounted for under the equity method of accounting

Operating FFO for the Second Quarter was $121 million ($0.40 per unit) compared to $106 million ($0.37 per unit) in the Second Quarter of 2012. The primary reasons for this increase were: a $17 million increase in net operating income ("NOI"), which was due to acquisitions, same property growth of 0.4% in Canada and 1.4% in the US, and the completion of greenfield developments. Operating FFO also benefited from lower interest expense of $1 million in the Second Quarter. These increases to Operating FFO were partially offset by increased higher general and administrative expenses of $3 million and lower fees and other income of $1 million during the Second Quarter.

Operating FFO for the six months ended June 30, 2013 was $245 million ($0.81 per unit) compared to $209 million ($0.74 per unit) in 2012. The primary reasons for this increase were: a $35 million increase in net operating income ("NOI"), as a result of acquisitions, higher lease cancelation fees, same property growth of 0.3% in Canada and the completion of greenfield developments, net of dispositions. Operating FFO was also positively impacted by higher fees and other income of $4 million. These increases to Operating FFO were partially offset by increased general and administrative expenses of $4 million.

Same Store and Same Property NOI

Canada Three months
ended
June 30, 2013
year over year
Six months
ended
June 30, 2013
year over year
Sequential
quarter
over quarter
Same Store Growth 0.6% 0.3% 1.3%
Same Property Growth 0.4% 0.3% 1.1%
United States
Same Store & Property Growth 1.4% 0.9% 1.0%

Leasing and Operational Highlights:

2013 2012 2011
(thousands of square feet, millions of dollars) Second
quarter
First
quarter
Fourth
quarter
Third
quarter
Second
quarter
First
quarter
Fourth
quarter
Third
quarter
Committed occupancy 96.7% 97.0% 97.4% 97.3% 97.4% 96.9% 97.6% 97.5%
Economic occupancy 95.4% 95.8% 95.9% 95.5% 95.5% 95.7% 96.6% 96.3%
NLA leased but not paying rent 640 615 711 855 871 542 466 541
Annualized rental impact $15.00 $15.00 $15.00 $18.00 $18.00 $12.00 $11.00 $12.00
Retention rate - Canada 95.9% 68.3% 94.3% 84.8% 89.9% 91.2% 90.5% 88.9%
% increase in average net rent per sq ft - Canada 12.0% 13.4% 18.4% 12.9% 13.4% 10.0% 14.5% 7.2%
Retention rate - US 92.0% 98.8% 87.6% 96.3% 84.2% 83.1% 95.7% 89.9%
% increase in average net rent per sq ft - US 4.3% 2.3% 5.1% 6.0% 7.3% 7.2% 8.9% 6.4%
Average in place rent $15.77 $15.77 $15.70 $15.85 15.33 $15.37 $15.14 $15.09
Same store growth - Canada 0.6% 0.1% 0.2% 0.0% 1.5% 1.5% 1.9% 1.3%
Same store growth - US 1.4% 1.4% 1.9% (0.3%) 1.3% (0.6%) 1.3% 1.0%

Highlights:

  • RioCan's Canadian portfolio is concentrated in Canada's six high growth markets (consisting of Calgary, Edmonton, Montreal, Ottawa, Toronto and Vancouver). Assets in these markets contribute about 72.1% of RioCan's Canadian annualized rental revenue (67.5% at December 31, 2012). The increase in the past quarter was accomplished through a combination of the sale of certain assets in secondary markets and the acquisition of two large enclosed shopping centres in the Greater Toronto Area;
  • National and anchor tenants represented about 85.9% of RioCan's total annualized rental revenue at June 30, 2013, a slight increase compared to 85.8% at June 30, 2012; and
  • No individual tenant comprised more than 3.7% of annualized rental revenue. At June 30, 2013, Walmart was RioCan's largest revenue source.

Portfolio Activity and Acquisition Pipeline

During the Second Quarter, RioCan completed seven acquisitions of interests in income producing properties in Canada with a weighted average capitalization rate of 5.2%.

In addition to the interests in fourteen properties to be acquired in the US as part of the effective dissolution of the joint venture arrangements with RPAI and Dunhill, RioCan has one income property under firm contract that, if completed, will represent an acquisition of $58 million at RioCan's interest. Conditions have been waived and it is expected that this transaction will close during the third quarter of 2013. Additionally, RioCan has five income property acquisitions in Canada and the Unites States under conditional contract for a purchase price of $108 million (at RioCan's interest) where conditions have not yet been waived.

Acquisitions Completed in the Second Quarter

Canada

  • Oakville Place is located directly off of Queen Elizabeth Way ("QEW"), the major highway running through Ontario's "Golden Horseshoe", in Oakville, Ontario. Oakville is a fast growing community with a strong, diversified economic base, and possesses one of Canada's highest income demographics with an average household income statistic that is well above the national average. Oakville Place is a fashion focused, two level regional mall containing approximately 458,000 square feet of gross leasable area. The property was built in 1981 and has undergone significant renovations in 2004 and 2008. Oakville Place is 100% occupied and is anchored by The Bay and Sears. Other major retail tenants at Oakville Place include American Eagle, H&M, Jacob, Birks, Roots, Laura, Mexx and Shoppers Drug Mart. At September 30, 2012, the property's Commercial Retail Units ("CRU") generated average sales of approximately $493 per square foot. Approximately 94% of the gross rent is generated by national and regional tenants. RioCan purchased a 100% interest in the property at a purchase price of $259 million. In connection with the purchase, RioCan assumed the in place mortgage financing of $112 million which carries an interest rate of 4.7%, maturing in 2021.
  • Burlington Mall, located near the QEW at Guelph Line and Fairview Street, is a 782,000 square foot enclosed mall. The property is owned on a 50/50 joint venture basis with the KingSett Canadian Real Estate Investment Fund. Burlington Mall was constructed in 1968 and has undergone significant renovations in 2001, 2004 and 2006. The property is 99% occupied and is anchored by Target, Canadian Tire and Winners/HomeSense, and is shadow anchored by The Bay. Other major tenants include Dollarama, Old Navy, Shoppers Drug Mart and SportChek. At September 30, 2012, the property's CRU generated average sales of approximately $386 per square foot. Approximately 87% of the gross rent is generated by national and regional tenants. RioCan will provide asset and property management functions for the property. The purchase price for the property was $206 million at 100% ($103 million at RioCan's interest). In connection with the purchase, the parties assumed the in place mortgage financing of $105 million ($52.5 million at RioCan's interest) which carries an interest rate of 3.8%, maturing in 2016.
  • South Cambridge Centre is a 190,000 square foot grocery anchored shopping centre. The property is 100% occupied and is anchored by a Zehrs grocery store (Loblaws). Other major tenants at the property include the Liquor Control Board of Ontario, The Beer Store and Home Hardware. RioCan purchased a 100% interest in the property at a purchase price of $35 million. In connection with the purchase, RioCan assumed the in place mortgage financing of $19.5 million which carries an interest rate of 5.5% maturing in June 2016.

The acquisition of Oakville Place, Burlington Mall and South Cambridge Centre were part of the successful completion of the amended arrangement between H&R REIT and Primaris.

  • On May 1, 2013, RioCan acquired an additional 50% interest in March Road Shopping Centre in Ottawa, Ontario at a purchase price of $21 million, which equates to a capitalization rate of 5.3%. RioCan now holds a 100% interest in the property. March Road is a 109,000 square foot grocery anchored retail shopping centre anchored by Sobeys. In connection with the purchase, RioCan assumed the other 50% of the in place first mortgage financing of $11 million, which carries an interest rate of 4.0%, maturing in September 2021.
  • On May 3, 2013, RioCan acquired an additional 35.2% interest in Shoppers City East Shopping Centre in Ottawa, Ontario at purchase price of $10 million, which equates to a capitalization rate of 5.6% and was acquired free and clear of financing. Combined with RioCan's initial acquisition of a 27.6% interest in the property in the fourth quarter of 2012, RioCan now holds a 62.8% interest in the property. Shoppers City East is a 148,000 square foot non grocery anchored retail shopping centre anchored by Giant Tiger. Other notable tenants include Staples and Shoppers Drug Mart. The site area is 19.4 acres and RioCan is considering redevelopment of the site.
  • On June 6, 2013, RioCan acquired a 100% interest in Dufferin Plaza in Toronto, Ontario at a purchase price of $27 million, which equates to a capitalization rate of 5.4%. Dufferin Plaza is a 65,000 square foot unenclosed shopping centre on 3.8 acres located on Dufferin Street just north of Lawrence Avenue in Toronto. The shopping centre is tenanted by Staples, TD Bank and Swiss Chalet, among others. In connection with the purchase, RioCan assumed mortgage financing of $11 million, which carries an interest rate of 5.5%, maturing in June 2017.

United States

  • On June 3, 2013, RioCan acquired a 100% interest in two pads totaling 4,000 square feet at Timber Creek Crossing in Dallas, Texas. The aggregate purchase price for the pads was US$5 million, which equates to a capitalization rate of 5.6%. In 2011, RioCan acquired an 80% interest in Timber Creek Crossing, a 470,354 square foot power centre anchored by Walmart, Sam's Club and JC Penny. The pads were acquired free and clear of financing and are triple net ground leases.

Acquisitions Completed subsequent to the Second Quarter

Subsequent to the quarter end RioCan completed the acquisition of one property in the US.

  • First Colony Shopping Center located in California, Maryland is a 98,186 square foot grocery anchored shopping centre. It is anchored by a Giant Supermarket and also includes tenants such as Michael's and Pier One and is shadow anchored by Target and Lowe's. The property was acquired at a purchase price of US$20 million which equates to a capitalization rate of 6.3%. The property was acquired free and clear of financing. The acquisition is the subject of a reverse 1031 transaction such that it will be held by an intermediary until such time as RioCan completes the disposition of assets to Retail Properties of America.

Acquisitions Under Contract (Firm)

In addition to RioCan's agreements with RPAI and Dunhill, RioCan currently has one income property in Canada where conditions have been waived as follows:

  • 1860 Bayview Avenue is a development site located at the northwest corner of Bayview Avenue and Broadway Avenue in the Leaside area of Toronto. Kingsett and Trinity Development Group are currently developing a grocery-anchored centre on the site, and RioCan will acquire the site on a forward purchase basis in phases at an approximate purchase price of $58 million, at a capitalization rate of 5.4%. Once completed, the centre will consist of approximately 74,220 square feet of retail space and will be anchored by a 50,200 square foot Whole Foods. The initial acquisition is expected to close during the third quarter of 2013, with the remaining portions to be paid on an earn-out basis upon completion of the project.

Joint Venture Activities

Retail Properties of America, Inc. (RPAI)

During the quarter announced that it has entered into an agreement to effectively dissolve its joint venture arrangement with RPAI. Since 2010, RioCan and RPAI have amassed a high quality portfolio of 13 properties in Dallas, Houston, Austin, San Antonio and Temple, Texas that are owned on an 80/20 basis (80% owned by RioCan and 20% owned by RPAI). Under the terms of the dissolution, RPAI will convey its 20% managing interest in eight properties to RioCan. RioCan will, in turn, convey its 80% interest in the remaining five properties to RPAI. The transaction is expected to close on October 1 2013.

The gross purchase price for the 20% interest in the eight properties to be acquired by RioCan is $96.6 million, representing a capitalization rate of 6.9%. Under the terms of the transaction, RioCan will assume RPAI's share of the existing in place mortgage financing on five of the properties aggregating $41.8 million, which carries an average interest rate of 3.7% and has an average term to maturity of 2.9 years. Three of the properties will be acquired free and clear of financing. The properties to be acquired have an average occupancy of 94.4%.

The gross sale price for the 80% interest in the five properties owned by RioCan is $102.8 million, representing a capitalization rate of 6.8% and represents a total of approximately 600,000 square feet (at a 100% interest). RPAI will assume RioCan's portion of the in place mortgage financing of $54.3 million that carries a weighted average interest rate of 4.8%.

Dunhill Partners Inc. (Dunhill)

RioCan has entered into an agreement to effectively dissolve its joint venture agreement with Dunhill. Under the terms of the dissolution, RioCan will acquire its partner's interests in six properties for a total purchase price of US$83.5 million, which equates to a capitalization rate of 6.4%. The six properties are; Arbor Park, Las Colinas Village, Las Palmas Marketplace, Lincoln Square, Louetta Central and Timber Creek Crossing.

Under the terms of the transaction, RioCan will assume Dunhill's share of the existing in place mortgage financing on the six properties aggregating to approximately US$42 million, which carries an average interest rate of 4.97% and has an average term to maturity of 8.2 years. The properties to be acquired have an average occupancy of 97.1%. The transaction is expected to close on a property by property basis over the third and fourth quarters of 2013.

Acquisitions Under Contract (Conditional)

RioCan has $108 million of income property acquisitions (at RioCan's interest) under contract where conditions have not yet been waived. These transactions are in various stages of due diligence and while efforts will be made to complete these transactions, no assurance can be given.

Acquisition Pipeline

RioCan is currently in negotiations regarding property acquisitions in Canada and the US that, if completed, represent approximately $145 million of additional acquisitions at RioCan's interest (calculated taking into account the US dollar transactions at an exchange rate of par). These transactions are in various stages of negotiations and while efforts will be made to complete these negotiations, no assurance can be given.

Disposition Pipeline

As a further means of raising and re-cycling capital, the Trust intends to selectively sell assets as part of a process of actively managing the portfolio and a means of increasing the portfolio weighting to the urban markets in Canada. RioCan had dispositions of $364 million during the quarter and dispositions of $374 million during the six months ended June 30, 2013. Subsequent to the quarter end, RioCan sold one property in Canada at a sale price of $4 million. RioCan has two property dispositions in Canada under firm contract where conditions have been waived pursuant to a purchase and sale agreement at a sale price of $13 million. Additionally, RioCan has two property dispositions under conditional contract where conditions have not yet been waived pursuant to purchase and sale agreements at an aggregate sale price of $9 million. RioCan is also in the process of marketing for sale two other properties in Canada.

Development Portfolio

As at June 30, 2013, RioCan had ownership interests in 15 greenfield development projects that will, upon completion, comprise about 11 million square feet (5.0 million square feet at RioCan's interest). In addition to its development projects, RioCan continues its urban intensification activities, primarily in the Toronto, Ontario market.

Development acquisitions completed during the Second Quarter

During the three months ended June 30, 2013, RioCan acquired interests in three development properties at an aggregate purchase price of $40 million, at RioCan's interest.

Details of the current quarter development site acquisitions are as follows.

  • The April 8, 2013 acquisition of Calgary East Village, a 2.8 acre site located in the East Village area of downtown Calgary, Alberta. The site is one of downtown Calgary's few remaining privately owned full city blocks. The site was acquired on a 50/50 joint venture basis between RioCan and KingSett at a purchase price of $20 million ($10 million at RioCan's interest). The site was acquired free and clear of financing and RioCan will develop, lease and manage the property on behalf of the joint venture. The joint venture is contemplating the development of 560,000 square feet of mixed use retail and office space, with development anticipated to commence in the spring of 2014. An executed Letter of Intent with Loblaws is in place to lease 100,000 square feet of space on the second floor of the development and expressions of interest have been received from several other potential tenants.
  • The April 23, 2013 acquisition of West Kanata Lands, a 52.5 acre parcel of land located in Kanata, Ontario, approximately 20 kilometers west of Ottawa, Ontario. The site was acquired on a 50/50 joint venture basis between RioCan and Tanger at a purchase price of $29.4 million ($14.7 million at RioCan's interest). The site was acquired free and clear of financing and RioCan acquired a managing interest in the development property. It is anticipated that the site will be developed into an estimated 347,000 square foot outlet centre, with development having commenced in the second quarter of 2013.
  • The April 30, 2013 acquisition of phase II of the Downtown West (Globe & Mail lands) development site, a 1.2 acre piece of land adjacent to the 6.47 acres acquired in Q4 2012, located west of Spadina Avenue, between Front Street West and Wellington Street West, in Toronto, Ontario. Consistent with the acquisition of phase I, phase II was acquired on a 40/40/20 joint venture basis among RioCan, Allied and Diamond Corp. The purchase price was $37 million ($15 million at RioCan's interest). In connection with the purchase, the parties assumed vendor take-back mortgage financing of approximately $22 million ($9 million at RioCan's interest) at an interest rate of 2.0% (interest only) for a five year term. It is expected that the total site will be redeveloped into a mixed use retail, office and residential space.

Development Property Acquisitions under Contract

RioCan currently has one development site in Canada under firm contract where conditions have been waived that, if completed, represents an acquisition of $14 million at RioCan's interest.

  • The acquisition of lands adjacent to Calaway Park, a 35 acre parcel of land located approximately 25 kilometers west of Calgary, Alberta. The site is to be acquired on a 50/50 joint venture basis between RioCan and Tanger at a purchase price of $28 million ($14 million at RioCan's interest). The site would be acquired free and clear of financing and RioCan would acquire a managing interest in the development property. The site represents an opportunity for the RioCan/Tanger joint venture to enter the Calgary market with the intention to develop the land into an outlet centre of approximately 350,000 square feet. The acquisition is expected to close in the third quarter of 2013.

Additionally, RioCan has $6 million of development sites in Canada (at RioCan's interest) under contract where conditions have not yet been waived. These transactions are in various stages of due diligence and while efforts will be made to complete these transactions, no assurance can be given.

Liquidity and Capital

Rolling 12 months ended June 30, 2013 In millions except percentages and coverage metrics
June 30,
2013
December 31,
2012
Interest Coverage - RioCan's interest 2.81x 2.69x
Debt Service Coverage - RioCan's interest 2.08x 1.98x
Fixed Charge Coverage - RioCan's interest 1.06x 1.04x
Net debt to adjusted EBITDA - RioCan's interest 7.41x 7.29x
Net operating debt to adjusted operating EBITDA - RioCan's interest 7.18x 7.09x
Unencumbered assets $1,863 $1,353
Unencumbered assets to unsecured debt 128% 104%

Financing Highlights for the Second Quarter

Canada

  • RioCan obtained approximately $78 million of fixed-rate mortgage financing at a weighted average interest rate of 2.98% with a weighted average term to maturity of 4.8 years.
  • During the Second Quarter RioCan redeemed the $150 million Series M debentures and issued $200 million Series T ten year senior unsecured debentures at an interest rate of 3.725%.
  • RioCan has four revolving lines of credit in place with three Canadian chartered banks, having an aggregate capacity of $428 million. At June 30, 2013, $14 million has been drawn against these facilities and $23 million has been drawn as letters of credit, leaving $391 million available for cash draws under the lines of credit.
  • As at June 30, 2013, RioCan's unencumbered asset pool was comprised of 96 assets with an aggregate fair value of $1.9 billion.

US

  • RioCan did not obtain any US mortgage financing during the Second Quarter.

Trust Units

On July 25, 2013, RioCan announced the TSX approval of its notice of intention to make a normal course issuer bid ("NCIB") for a portion of its Units as appropriate opportunities arise from time to time. RioCan's NCIB will be made in accordance with the requirements of the TSX. Under the NCIB, RioCan may acquire up to a maximum of 15,039,156 of its Units, or approximately 5% of its issued and outstanding Units as of July 9, 2013, for cancellation over the next 12 months commencing on or about August 3, 2013 until August 4, 2014 (as such other time as RioCan completes its purchases or provides notice of termination of such bid). The number of Units that can be purchased pursuant to the bid is subject to a current daily maximum of 149,016 Units (equal to 25% of the average daily trading volume from January 1, 2013 through to June 30, 2013), subject to RioCan's ability to make one block purchase of Units per calendar week in excess of such limits. RioCan intends to fund the purchases out of its available cash and undrawn credit facilities.

RioCan's Consolidated Financial Statements, Management's Discussion and Analysis and a Supplemental Information Package for the three months ended June 30, 2013 are available on RioCan's website at www.riocan.com.

Conference Call and Webcast

Interested parties are invited to participate in a conference call with management on Wednesday July 31, 2013 at 9:00 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 416-340-2218 or 1-866-226-1793. If you cannot participate in the live mode, a replay will be available until August 28, 2013. To access the replay, please dial 905-694-9451 or 1-800-408-3053 and enter passcode 8849707#.

Scheduled speakers include Edward Sonshine, O.Ont. Q.C., Chief Executive Officer, Fred Waks, President and Chief Operating Officer and Rags Davloor, Executive Vice President and Chief Financial Officer. Management's presentation will be followed by a question and answer period. To ask a question, press "star 1" on a touch-tone phone. The conference call operator will be notified of all requests in the order in which they are made, and will introduce each questioner.

Alternatively, to access the simultaneous webcast, go to the following link on RioCan's website http://investor.riocan.com/Investor-Relations/Events-Webcasts/default.aspx 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 capitalization of approximately $13.7 billion as at June 30, 2013. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 348 retail properties containing more than 83 million square feet, including 50 grocery anchored and new format retail centres containing 13.7 million square feet in the United States through various joint venture arrangements as at June 30, 2013. RioCan's portfolio also includes 15 properties under development in Canada. For further information, please refer to RioCan's website at 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, Funds From Operations ("FFO"), Operating Funds From Operations ("Operating FFO"), and Adjusted Earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") 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 uses these measures to better assess the Trust's underlying performance and provides 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 "Use of Non-GAAP Measures" in RioCan's second quarter 2013 Management Discussion and Analysis.

Forward-Looking Information

This news release contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements made in this News Release (including the sections entitled "Highlights for the three and six months ended June 30, 2013", "Financial Highlights", "Leasing and Operational Highlights", "Portfolio Activity and Acquisition Pipeline", "Liquidity and Capital", and "Development Portfolio"), 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 statements 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 statements reflect management's current beliefs and are based on information currently available to management. All forward-looking statements in this News Release are qualified by these cautionary statements.

These forward-looking statements are not guarantees of future events or performance and, by their nature, are based on RioCan's current estimates and assumptions, which are subject to risks and uncertainties, including those described under "Risks and Uncertainties" in RioCan's Management's Discussion and Analysis for the period ended June 30, 2013, which could cause actual events or results to differ materially from the forward-looking statements contained in this News Release. Those risks and uncertainties include, but are not limited to, those related to: liquidity in the global marketplace associated with economic conditions, tenant concentrations, occupancy levels, access to debt and equity capital, interest rates, joint ventures/partnerships, the relative illiquidity of real property, unexpected costs or liabilities related to acquisitions, construction, environmental matters, legal matters, reliance on key personnel, unitholder liability, income taxes, the investment in the United States of America ("US"), fluctuations in the currency exchange rate between the Canadian and US dollar and RioCan's qualification as a real estate investment trust for tax purposes. 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 in high growth markets; access to equity and debt capital markets to fund, at acceptable costs, the future growth program to enable the Trust to refinance debts as they mature; and the availability of purchase opportunities for growth in Canada and the US. 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 these forward-looking statements. Certain statements included in this News Release may be considered "financial outlook" for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this News Release.

The Income Tax Act (Canada) contains provisions which potentially impose tax on publicly traded trusts (the "SIFT Provisions"). However, the SIFT Provisions do not impose tax on a publicly traded trust which qualifies as a real estate investment trust ("REIT"). RioCan currently qualifies as a REIT and intends to continue to qualify for future years. Should this not occur, certain statements contained in this News Release may need to be modified.

Except as required by applicable law, RioCan under takes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

FOR FURTHER INFORMATION PLEASE CONTACT:

Contact Information:
RioCan Real Estate Investment Trust
Rags Davloor
Executive Vice President & CFO
(416) 642-3554
www.riocan.com

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