RioCan Real Estate Investment Trust
TSX : REI.UN

RioCan Real Estate Investment Trust

August 02, 2006 14:36 ET

RioCan Real Estate Investment Trust Announces Second Quarter 2006 Results

TORONTO, ONTARIO--(CCNMatthews - Aug. 2, 2006) - RioCan Real Estate Investment Trust (TSX:REI.UN) -



HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2006:

- Portfolio occupancy hits an all-time high of 97.3%
- Annualized gross rental revenue from national and anchor tenants
achieves new record of 83%
- Annualized rental revenue derived from properties located in
Canada's six urban markets (Calgary, Edmonton, Montreal, Ottawa,
Toronto and Vancouver) was 62.8%


RioCan Real Estate Investment Trust ("RioCan") today announced its financial results for the three and six months ended June 30, 2006.

Financial Highlights

RioCan today reported funds from operations ("FFO") for the six months ended June 30, 2006, increased to $136,907,000 ($0.70 per unit) from $121,929,000 ($0.63 per unit) for the comparable period in 2005. For the quarter ended June 30, 2006, FFO was $68,227,000 ($0.35 per unit) as compared to $72,458,000 ($0.38 per unit) for the three months ended June 30, 2005.

For the six months ended June 30, 2006, RioCan reported net earnings of $78,614,000 ($0.40 per unit basic and diluted) as compared to $55,124,000 ($0.28 per unit basic and diluted) for the comparable period in 2005. Net earnings for the quarter ended June 30, 2006, increased to $39,639,000 ($0.20 per unit basic and diluted) from $33,537,000 ($0.17 per unit basic and diluted) for the three months ended June 30, 2005.

Recurring distributable income ("RDI") for the six months ended June 30, 2006, was $136,563,000 ($0.692 per unit) as compared to $140,314,000 ($0.727 per unit) for the comparable period in 2005. For the quarter ended June 30, 2006, RDI was $68,315,000 ($0.346 per unit) versus $71,405,000 ($0.369 per unit) for the three months ended June 30, 2005.

Total rental revenue for the six months ended June 30, 2006, was $283,952,000 versus $290,593,000 for the comparable period in 2005. For the quarter ended June 30, 2006, total rental revenue was $141,606,000 as compared to $142,554,000 for the three months ended June 30, 2005.

RioCan's Consolidated Financial Statements, Management's Discussion and Analysis and Supplemental Information Package for the three and six months ended June 30, 2006, are available on RioCan's website at www.riocan.com.

Both RDI and FFO are widely accepted supplemental measures of a Canadian real estate investment trust's performance. The Canadian generally accepted accounting principles ("GAAP") measurement most directly comparable to RDI and FFO is net earnings. RDI and FFO should not be construed as an alternative to net earnings or cash flow from operating activities determined in accordance with GAAP. RioCan's method of calculating RDI and FFO may differ from certain other issuers' methods and accordingly may not be comparable to measures reported by other issuers.

Portfolio Stability



At June 30, 2006:

- Portfolio occupancy was 97.3%;
- 83% of annualized gross rental revenue was derived from national
and anchor tenants;
- No individual tenant comprised more than 6% of annualized gross
rental revenue; and
- Over 62.8% of RioCan's annualized rental revenue was derived from
properties located in Canada's six urban markets (Calgary, Edmonton,
Montreal, Ottawa, Toronto and Vancouver).


Leasing Activities

RioCan remains the dominant retail landlord in Canada with more than 4,800 tenancies from coast-to-coast. Its leasing department continues to strengthen relationships with current and potential tenants, as well as lease space to national, regional and local retailers. The total number of new lease deals completed in the six months ended June 30, 2006, was 235 (936,000 square feet) as compared to 266 (895,000 square feet) for the comparable period in 2005. Total annualized net operating income of the new deals completed in the six months ended June 30, 2006, increased by 18.9% to $15,614,000 from $13,132,000 for the comparable period in 2005.

The total number of leasing deals to national and anchor tenants ("nationals") completed in the six months ended June 30, 2006, was 123 (705,000 square feet) as compared to 121 (594,000 square feet) for the comparable period in 2005. Total annualized net operating income of the leasing deals to nationals completed in the six months ended June 30, 2006, increased by 29.2% to $11,591,000 from $8,973,000 for the comparable period in 2005. For the six months ended June 30, 2006, the total number of leasing deals to nationals represented 74.2% of the total annualized net operating income of all new deals, as compared to 68.3% for the comparable period in 2005.

Land Use Intensification Program

RioCan continues to enhance returns from its existing properties through a land use intensification program. The goal of the program is to add an additional 250,000 square feet of new retail space annually to a number of its new format and neighbourhood shopping centres. Highlights of some of RioCan's current land use intensification projects include:

Ajax, Ontario - Over 94,000 square feet of new space are under construction, or completed, at RioCan Durham Centre. At the rear of the centre, RioCan has completed a 55,000 square foot addition that is anchored by Value Village (23,000 square feet) and Imperial Buffet (12,500 square feet), both of which are now open for business. Other national and regional retailers, totalling 19,500 square feet, are also open or will commence opening within the next few months. At the front of the centre, a 33,000 square foot addition is underway and will be tenanted by The Keg, Bank of Montreal, Nike Outlet, 2001 Audio Video and Ardene. Site servicing work commenced in late July 2006 and construction of the buildings will begin in September 2006.

Victoria, British Columbia - RioCan is once again expanding Tillicum Centre by adding an additional 17,000 square feet. The addition includes a 5,000 square foot TD Canada Trust pad and 12,000 square foot Fabricland. Both tenants are expected to open in the spring of 2007. This is the second expansion of this centre since RioCan acquired it in 2002.

Ottawa, Ontario - RioCan has undertaken two initiatives in Ottawa including the construction of a 8,300 square foot three-unit retail building at Fairlawn Plaza and the construction of an additional 14,000 square feet at RioCan Merivale Place. Sleep Country, Cash Money and a dentist will tenant the building at Fairlawn Plaza. At RioCan Merivale Place, Dollarama recently opened its 10,000 square foot store for business in one of the two new units. Negotiations with a number of national retailers to occupy the remaining unit are well advanced.

Development Program

With over a billion dollars at cost of on-going developments, project activities remained strong throughout the second quarter as RioCan continues to focus on its development program. Approximately 6.6 million square feet of retail space, of which RioCan's interest is approximately 3.3 million square feet, is scheduled to be completed over the next eighteen months. In addition to the 6.6 million square feet of current developments, an additional 1.6 million square feet is in the development pipeline.

Development work at a number of RioCan's new format retail centres has been progressing well including: RioCan Beacon Hill located in Calgary, Alberta; RioCan Centre Burloak located in Oakville, Ontario; and RioCan Centre Kingston, located in Kingston, Ontario. In addition to these developments, RioCan continued to work on the following projects in the second quarter:

Edmonton, Alberta - Construction has commenced at RioCan Meadows, a 504,000 square foot new format retail centre at the corner of 17th Street and Whitemud Drive. The centre will be anchored by Real Canadian Superstore (retailer owned) and Home Depot, and will be tenanted by, amongst others, Staples/Business Depot, Mark's Work Wearhouse, TD Canada Trust, Royal Bank of Canada and Alberta Treasury Branch. Home Depot is planning to open in the fall of this year, and Staples/Business Depot and Mark's Work Wearhouse are expected to open in December 2006.

London, Ontario - Site work has commenced at Summerside Shopping Centre, located at the intersection of Commissioners Road and Highbury Avenue. Major retailers anchoring this 180,000 square foot centre include Loblaws (retailer owned) and Rona. Expansion of Commissioners Road from a two to four lane road by the city is nearing completion and servicing work for the site has commenced.

Milton, Ontario - Construction is well underway at RioCan Centre Milton, a 293,000 square foot new format retail centre. Anchors Home Depot (retailer owned) and Galaxy Cinemas are now open for business. The centre will be tenanted by a strong mix of national and regional tenants including Premier Fitness, Sleep Country, The Beer Store, Boston Pizza, Casey's, Super Cuts, CIBC and Bank of Montreal. Store openings will be phased-in over the remainder of the year.

Conference Call and Webcast

Analysts and investors are invited to participate in a conference call with management on Thursday, August 3, 2006 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 in the conference call, please dial 416-695-6622 or outside of Toronto dial 1-888-789-0150. If you cannot participate in the live mode, a replay will be available until August 17, 2006. For the replay, please dial 416-695-5275 or 1-888-509-0081 and enter passcode 626277.

Scheduled speakers are Edward Sonshine, Q.C., President and Chief Executive Officer, Fred Waks, Senior Vice President and Chief Operating Officer, and Robert Wolf, 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 is immediately 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://www.riocan.com/_bin/presentations/webcast.cfm 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's purpose is to deliver to its unitholders stable and reliable cash distributions, which continuously increase over time. RioCan is Canada's largest real estate investment trust with a total market capitalization of approximately $7 billion. It has ownership interests in a portfolio of 199 retail properties, including 8 under development, across Canada containing an aggregate of over 50.5 million square feet, including partners' and shadow anchors' interests.

Contact Information