RioCan Real Estate Investment Trust
TSX : REI.UN

RioCan Real Estate Investment Trust

November 05, 2014 07:00 ET

RioCan Real Estate Investment Trust Funds From Operations Grows by 8% in Third Quarter of 2014 on Double Digit Rental Renewal Increases

TORONTO, ONTARIO--(Marketwired - Nov. 5, 2014) - RioCan Real Estate Investment Trust ("RioCan") (TSX:REI.UN) -

RioCan's HIGHLIGHTS for the three and nine months ended September 30, 2014 were:

  • RioCan's Operating FFO increased by 8% to $134 million for the three months ending September 30, 2014 ("third quarter") compared to $124 million in the third quarter of 2013. On a per unit basis, Operating FFO increased 5% to $0.43 from $0.41 in the same period of 2013;
  • RioCan's Operating FFO increased 5% to $388 million for the first nine months of 2014 compared to $368 million for the same period in 2013. On a per unit basis, Operating FFO increased by $0.05 or 4% to $1.27 compared to $1.22 during the same period of 2013;
  • Subsequent to the Quarter End, RioCan and Tanger celebrated the successful Grand Opening of the Tanger Factory Outlets Centre in Kanata, Ontario, which is the first newly constructed outlet centre by RioCan and Tanger;
  • During the third quarter, RioCan transferred 520,000 square feet of development space at RioCan's interest to the income producing portfolio. For the first nine months RioCan transferred approximately one million square feet of development space at RioCan's interest to the income producing portfolio;
  • RioCan's concentration of rental revenue in Canada's six major markets increased to 73.3% from 71.7% at December 31, 2013;
  • Overall occupancy improved to 97.0% as of September 30, 2014, compared to 96.9% at December 31, 2013;
  • RioCan renewed 1.1 million square feet in the Canadian portfolio during the third quarter at an average rent increase of $2.01 per square foot, representing an increase of 12.9%;
  • During the third quarter, RioCan's same store growth was 1.9% in Canada and 3.7% in the US;
  • As at September 30, 2014, RioCan had ownership interests in 15 properties under development that will, upon completion, comprise approximately 8.8 million square feet (4.5 million at RioCan's interest), all located in major markets in Canada;
  • During the third quarter, RioCan acquired interests in three income properties in Canada at an aggregate purchase price of approximately $84 million at RioCan's interest at a weighted average capitalization rate of 5.6%; and
  • During the quarter, RioCan completed the offering of an additional $100 million Series V debentures, which carry a coupon of 3.746% and maturity date of May 30, 2022. The debentures were issued at a premium and carried an effective rate of 3.587%, making the effective rate on the full $250 million of Series V debentures 3.682%.

RioCan Real Estate Investment Trust ("RioCan") today announced its financial results for the three and nine months ended September 30, 2014.

"I am pleased with our financial results again this quarter as operationally, the portfolio is performing well and occupancy ticked up slightly. Our rental renewals are strong, and we are seeing good same store growth out of our portfolio in Canada and the US. Interest rates remain very attractive, and during the quarter, with favourable terms on the Trust's fixed rate mortgage borrowings. RioCan also issued an additional $100 million out of its Series V debenture at an effective rate of 3.6% with an eight year term to maturity." said Edward Sonshine, Chief Executive Officer of RioCan. "The development pipeline is producing good results this year, our Tanger Outlets Kanata opened after the quarter end and our expansion at Cookstown will be opening later this week. Over the last twelve months ending September 30, 2014, RioCan has been able to transfer 1.2 million square feet of completed projects at RioCan's interest to our investment property portfolio."

Financial Highlights

All figures in Canadian dollars unless otherwise noted. RioCan's results 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 a full definition of these measures, please refer to the "Use of Non-GAAP Measures" in RioCan's third quarter 2014 Management Discussion and Analysis.

In millions except percentages and per unit values Three months ended
September 30,
Nine months ended
September 30,
2014 2013 % change 2014 2013 % change
Operating FFO $ 134 $ 124 8 % $ 388 $ 368 5 %
Operating FFO per Unit $ 0.43 $ 0.41 5 % $ 1.27 $ 1.22 4 %
In millions except percentages and per unit values Three months ended
September 30,
Nine months ended
September 30,
2014 2013 % change 2014 2013 % change
Net earnings attributable to common and preferred unitholders $ 162 $ 129 26 % $ 491 $ 445 10 %
Net earnings per Unit attributable to common Unitholders - basic $ 0.51 $ 0.41 24 % $ 1.57 $ 1.44 9 %
In $millions. As at September 30, 2014 September 30, 2013
Total enterprise value (1) 14,674 13,624
Total assets - at RioCan's interest(1) 14,423 13,359
Debt - at RioCan's interest(1) 6,467 5,991
(1) Includes mortgages, operating lines, and debentures payable based on RioCan's proportionate share including joint ventures accounted for under the equity method of accounting

Operating FFO at RioCan's interest for the third quarter of 2014 was $134 million or $0.43 per Unit compared to $124 million or $0.41 per Unit for the third quarter in 2013, representing an increase of $10 million or 7.8%. On a per Unit basis, Operating FFO increased by $0.02 per Unit or 4.9%.

The $10 million increase in Operating FFO at RioCan's interest for the third quarter of 2014 compared to the same period in 2013 is primarily due to the following:

  • an increase in NOI from rental properties of $8.4 million, which includes the impact of the following items: acquisitions, net of dispositions (completed over the last 12 months); additional income property NLA resulting from completion of development projects (including the Tanger Cookstown expansion and the grand opening of Tanger Ottawa); Canadian and US same property NOI growth; and a $3.0 million favourable foreign currency gain from US operations;
  • higher fees and other income of $4.5 million due to increased financing service fees from partners and investment income; partly offset by
  • lower interest income of $2.1 million due primarily to the settlement of certain mezzanine loans during the first quarter of 2014 in connection with the acquisition of interests in three development projects; and
  • an increase in general and administrative costs of $1.7 million primarily due to increased information technology costs associated with the Trust's expanded ERP platform as well as higher salaries and benefits costs due to an increase in employee headcount commensurate with the Trust's growth in portfolio (including the completion of the internalization of the US operations in Texas), increased complexity of operations and the timing of expenses.

Operating FFO at RioCan's interest for the first nine months of 2014 was $388 million or $1.27 per Unit, compared to $368 million or $1.22 per Unit for the same period in 2013, representing an increase of $20 million or 5.3%. On a per Unit basis, Operating FFO increased by $0.05 per Unit or 4.1%.

The $20 million increase in Operating FFO at RioCan's interest for the first nine months of 2014 as compared to the same period in 2013 is primarily due to the following:

  • an increase in NOI from rental properties of $20 million, which includes the impact of the following items: acquisitions, net of dispositions (completed over the last 12 months); additional income property NLA resulting from completion of development projects (including the Tanger Cookstown expansion, Tanger Ottawa and The Stockyards openings); Canadian and US same property NOI growth; and a $9 million favourable foreign currency gain from US operations; and
  • an increase in fees and other income of $1.3 million due to an increase in financing service fees and investment income earned during 2014, partially offset by lower development fees generated on joint venture projects;
  • a decrease in interest expense of $6.8 million, net of $1.4 million unfavourable impact of foreign exchange; partly offset by
  • lower interest income of $3.5 million due primarily to the settlement of certain mezzanine loans during the first quarter of 2014 in connection with the acquisition of interests in three development projects; and
  • an increase in general and administrative costs of $5.4 million due primarily to increased ongoing and one-time information technology costs of $0.8 million associated with the launch of a new ERP platform in 2014; professional fees of $0.7 million related to the introduction of new long-term incentive compensation plans for senior executive and non-employee Trustees; and higher salaries and benefits costs due to an increase in employee headcount commensurate with the Trust's growth in portfolio (including the completion of the internalization of the US operations in the Northeast and Texas), increased complexity of operations and the timing of expenses.

Same Store and Same Property NOI

Canada Three months ended
September 30, 2014
year over year
Same Store Growth 1.9%
Same Property Growth 1.5%
United States
Same Store & Property Growth 3.7%

Leasing and Operational Highlights:

2014 2013 2012
(thousands of square feet, millions of dollars, except where otherwise noted) Third
quarter
Second
quarter
First
quarter
Fourth
quarter
Third
quarter
Second
quarter
First
quarter
Fourth
quarter
Committed occupancy 97.0 % 96.9 % 96.8 % 96.9 % 97.0 % 96.7 % 97.0 % 97.4 %
Economic occupancy 96.0 % 95.9 % 95.7 % 95.8 % 95.5 % 95.4 % 95.8 % 95.9 %
NLA leased but not paying rent 488 520 519 542 716 642 615 711
Annualized rental impact $ 15.5 $ 15.3 $ 13.0 $ 14.0 $ 17.0 $ 15.0 $ 15.0 $ 15.0
Retention rate - Canada 91.7 % 88.8 % 91.2 % 97.0 % 91.1 % 95.9 % 68.3 % 94.3 %
% increase in average net rent per sq ft -Canada 12.9 % 13.9 % 7.0 % 8.8 % 11.2 % 12.0 % 13.4 % 18.4 %
Retention rate - US 92.2 % 97.3 % 86.4 % 98.2 % 98.4 % 92.0 % 98.8 % 87.6 %
% increase in average net rent per sq ft - US 9.3 % 7.0 % 8.3 % 4.8 % 3.8 % 4.3 % 2.3 % 5.1 %
Average in place rent $ 16.01 $ 16.00 $ 16.01 $ 16.08 $ 16.07 $ 15.77 $ 15.77 $ 15.70
Same store growth (i) - Canada 1.9 % 2.0 % 3.1 % 2.7 % 2.2 % 0.6 % 0.1 % 0.2 %
Same store growth (i) - US 3.7 % 1.4 % 3.0 % 1.7 % 0.9 % 1.4 % 1.4 % 1.9 %
(i) Refers to same store NOI growth on a year over year basis.

Highlights:

  • During the third quarter, RioCan renewed 1.1 million square feet (2013 - 708,000 square feet) in the Canadian portfolio at an average rent increase of $2.01 per square foot (2013 - $2.08 per square foot), representing an increase of 12.9% and a renewal retention rate of 91.7%;
  • 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 73.3% of RioCan's Canadian annualized rental revenue (71.7% at December 31, 2013). The increase was accomplished through developments and the sale of certain assets in secondary markets;
  • National and anchor tenants represented about 86.5% of RioCan's total annualized rental revenue at September 30, 2014, a slight increase compared to 86.2% at December 31, 2013; and
  • No individual tenant comprised more than 4.2% of annualized rental revenue. At September 30, 2014, Loblaws (which includes Shoppers Drug Mart) was RioCan's largest revenue source.

Portfolio Activity and Acquisition Pipeline

During the third quarter, RioCan completed two acquisitions of interests in income producing properties for a total purchase price of $52 million in Canada with a weighted average capitalization rate of 5.3%. RioCan completed the purchase of one income property in the US during the third quarter at a purchase price of US$29 million with a capitalization rate of 6.1%.

Acquisitions Completed in the Third Quarter

Canada

  • On August 5, 2014, RioCan completed the acquisition of the remaining 20% interest in Trinity Common Brampton in Brampton, Ontario, at a purchase price of approximately $43 million, representing a capitalization rate of 5.4%. Trinity Common Brampton is a 75-acre site that has been developed into an 877,000 square foot new format retail shopping centre located at the intersection of Highway 410 and Bovaird Drive in Brampton, Ontario, with 215,000 square feet of shadow anchor space owned by Canadian Tire and Home Depot. Other anchor tenants are Famous Players (Cineplex) Theatre, Target and Metro. In connection with the acquisition, RioCan assumed $15 million in mortgage financing across three loans carrying interest rates between 5.705% and 7.82%, maturing in May 2020. A mark-to-market adjustment of $1.8 million was made to the purchase price in consideration of the debt's above-market interest rate.
  • On September 16, 2014, RioCan completed the acquisition of a 75% interest in four pads at Chapman Mills Marketplace in Ottawa, Ontario, at a purchase price of approximately $9 million, representing a capitalization rate of 5.3%. The retail pads, which are tenanted by Wendy's, Tim Horton's, TD Bank and Scotiabank, were acquired free and clear of financing. Chapman Mills Marketplace is a 547,000 square foot new format centre that was completed in 2006. RioCan owns a 75% interest in the existing site and acquired a 25% interest in the additional pads. The site is anchored by a Walmart and a Loblaws, which own their premises but operates as part of the shopping centre.

US

  • On August 11, 2014, RioCan completed the acquisition of a 100% interest in Riverwalk Market in Flower Mound, Texas at a purchase price of approximately US$29 million, representing a capitalization rate of 6.1%. Riverwalk Market is an 82,000 square foot grocery anchored shopping centre anchored by Market Street grocery (owned by Albertsons) located in Flower Mound (a suburb of Dallas Fort-Worth), Texas. The property was acquired free and clear of financing.

Acquisitions Completed Subsequent to the Quarter End

On October 24, 2014, RioCan completed the acquisition of a 40.34% interest in the 47,000 square foot medical office building at Mill Woods Town Centre at a purchase price of approximately $5 million, representing a capitalization rate of 6.1%. In connection with the acquisition, RioCan assumed approximately $2 million in mortgage financing carrying interest at 4.40%, maturing in December 2015. RioCan owns a 40.34% interest in Mill Woods Town Centre, which is a 538,000 square foot single-level enclosed shopping centre located in Edmonton, Alberta, anchored by Target, Canadian Tire and Safeway. Partner Bayfield Realty Advisors holds the remaining interests in both the shopping centre and medical office building, and was the vendor of the 40.34% interest that RioCan acquired in the medical office building.

Acquisitions Under Contract (Firm)

RioCan has one income property acquisition under firm contract in Canada that would represent an acquisition of $32 million, at a capitalization rate of 5.5%.

Canada

  • RioCan has the acquisition of the remaining 50% interest in 845 Eglinton Avenue East under firm contract at a purchase price of approximately $32 million, representing a capitalization rate of 5.5%. 845 Eglinton Avenue East is a 133,000 square foot non-grocery anchored shopping centre located in Toronto, Ontario. In connection with the acquisition, RioCan would assume $16 million in mortgage financing carrying interest at approximately 3.34%, maturing in March 2017. As part of the transaction, the vendor is entitled to additional consideration of up to approximately $6 million if RioCan is successful in its efforts to rezone the property to permit a mixed use project. The acquisition is expected to close in the first quarter of 2015.

Conditional Acquisitions

RioCan has income property acquisitions under contract in Canada where conditions have not yet been waived that, if completed, would represent acquisitions of $49 million, at RioCan's interest. These transactions are undergoing due diligence procedures and while efforts will be made to complete the transactions, no assurance can be given.

Pipeline Acquisitions

RioCan is currently in negotiations regarding income property acquisitions in Canada and the US that, if completed, would represent approximately $58 million of additional acquisitions at RioCan's interest. These transactions are in various stages of negotiations and while efforts will be made to complete these negotiations, no assurance can be given.

Property Dispositions Under Contract

Income property dispositions

RioCan has dispositions of income properties under conditional contracts where conditions have not yet been waived for approximately $186 million, at RioCan's interest. The Trust's mortgage obligation related to these properties is approximately $50 million. Prior to the disposition date, RioCan will repay the mortgage associated with one of the properties of approximately $8 million, at RioCan's interest.

Land dispositions

RioCan has dispositions of land parcels under conditional contracts where conditions have not yet been waived for approximately $14 million. These land parcels are free and clear of financing.

RioCan is also in the process of marketing for sale land parcels with an aggregate fair value as at September 30, 2014 calculated in accordance with IFRS of approximately $25 million. These land parcels are free and clear of financing. RioCan is under no obligation to proceed with the proposed dispositions which, if completed, will be done to facilitate its objective of paring its portfolio and focusing on major markets.

Other dispositions

RioCan and its partner, KingSett, have entered into an agreement with the developer, Embassy BOSA Inc., to sell up to $30 million in air rights (representing 600,000 square feet) above the CPA development site, along with approximately $40 million in cost reimbursement for infrastructure works. Embassy BOSA Inc. has waived its due diligence conditions. The transaction remains subject to a number of both mutual and unilateral normal course development conditions. The intention is for two residential towers to be erected upon the planned retail podium. The transaction contemplates that Embassy BOSA Inc. be responsible, on a cost to complete basis, for all incremental costs associated with the residential component of the overall project.

Development Portfolio

As at September 30, 2014, RioCan had ownership interests in 15 development projects that will, upon completion, comprise about nine million square feet (five million square feet at RioCan's interest). In addition to its development projects, RioCan continued its urban intensification activities, primarily in the Toronto, Ontario and Calgary, Alberta markets.

During the third quarter, RioCan transferred from properties under development to income producing properties $188 million in costs pertaining to 520,000 square feet of completed greenfield development or expansion and redevelopment projects. For the nine months ended September 30, 2014, RioCan transferred $330 million in costs pertaining to 997,000 square feet.

Development Project Updates - recent events

Demolition around the existing Toronto-Dominion Bank ("TD Bank") branch at RioCan's Northeast Corner, Yonge and Eglinton site in Toronto, Ontario is largely complete and construction has begun at the site. The land assembly was acquired in 2011 with Metropia and Bazis for the purpose of redeveloping it into a mixed-use retail and residential property. It is anticipated that the project will contain two residential towers totalling 62 and 36 floors, an office component, as well as a 57,000 square foot retail component upon completion. The property will feature a flagship TD Bank branch at the corner of Yonge and Eglinton. RioCan's ownership interest in the property is 50%. The Condominium portion of the property will contain 622 units of which 602 units have been sold.

During the quarter, RioCan completed the redevelopment at Collingwood Centre, where the former Zellers store was returned to RioCan and the space was then re-demised and expanded to include new tenants such as, Winners, Bed Bath & Beyond, Sport Chek and Carters in addition to an expansion of the FreshCo grocery store.

During the quarter, RioCan completed the Tanger Outlets Kanata development, and on October 17, 2014, celebrated the grand opening of this newly completed outlet shopping centre. The initial response has been very positive and has surpassed expectations. The nearly 300,000 square foot Outlet Shopping centre that contains more than 75 designer stores such as; Coach, Nike Factory Outlet, Polo Ralph Lauren, J. Crew Outlets and Brooks Brothers Factory Store.

RioCan also completed the expansion work during the third quarter at the Tanger Outlets Cookstown, Ontario location and will celebrate the grand opening on November 7, 2014. This expanded and remodelled site includes 80 designer outlet stores, doubling the size of the former centre. New stores include Banana Republic Factory Store, Nike Factory Store, Under Armour and Carter's/Oshkosh.

These outlet centres, together with our properties in Bromont and St. Sauveur near Montreal, Quebec, which are operated and managed by RioCan, comprise a portfolio of four outlet shopping centres aggregating nearly 900,000 square feet of retail space servicing three of Canada's six largest markets.

Development Acquisitions Completed During the Third Quarter

During the Third Quarter, RioCan did not acquire any interests in development properties.

Development Acquisitions Completed Subsequent to the Third Quarter

On November 3, 2014, RioCan completed the acquisition of a 50% interest in the site where TD Bank is currently located at the northeast corner of Yonge Street and Eglinton Avenue in Toronto, Ontario, at a purchase price of $12 million ($6 million at RioCan's interest). The property was acquired free and clear of financing, and forms part of the existing Northeast Yonge Eglinton land assembly, acquired in 2011 with Metropia and Bazis for the purpose of redeveloping into a mixed-use retail and residential property. RioCan and its partners obtained zoning approval and the redevelopment commenced in April 2014.

Development Property Acquisitions Under Contract

RioCan currently has two development sites in Canada under firm contract where conditions have been waived that, if completed, represent acquisitions of $5 million at RioCan's interest.

  • The acquisition of an 81.25% interest in a 5.8 acre land parcel at RioCan Centre Vaughan, located in Vaughan, Ontario, at a purchase price of $4 million ($3 million at RioCan's interest). Trinity would acquire the remaining 18.75% interest in the property and the property would be acquired free and clear of financing. The acquisition is expected to close in the fourth quarter of 2014. The land parcel to be acquired is adjacent to phase II of RioCan's existing shopping centre at RioCan Centre Vaughan.
  • The acquisition of a 50% interest in a 4 acre parcel of land adjacent to RioCan Centre Burloak located in Oakville, Ontario, at a purchase price of approximately $4 million ($2 million at RioCan's interest). The property would be acquired free and clear of financing and the acquisition is expected to be completed in the fourth quarter of 2014. Together with a contiguous residual 8.5 acre land parcel, the combined 12.5 acre land parcel will be redesignated and re-zoned in the second quarter of 2015 and an additional 141,000 square feet of retail space will be available for development on the site. RioCan Centre Burloak is a 553,000 new format retail centre situated on an 89 acre parcel of land anchored by Cineplex Theatre, Longo's Supermarket and a retailer-owned Home Depot. The entire site is owned on a 50%/50% joint venture basis with partner CPPIB; the additional 4 acres will be acquired on the same joint venture basis.

As a result of the seller being unable to satisfy certain conditions, RioCan and its partner, Tanger, will no longer be proceeding with the acquisition of the lands adjacent to Calloway Park near Calgary, AB as disclosed last quarter.

Liquidity and Capital

Quarter
Ended (i)
Rolling 12
months ended (ii)
September 30,
2014
September 30,
2014
December 31,
2013
Interest coverage ratio - RioCan's interest 3.30x 2.89x 2.83x
Debt service coverage ratio - RioCan's interest 2.47x 2.18x 2.10x
Fixed charge coverage ratio - RioCan's interest 1.15x 1.08x 1.06x
Net debt to Adjusted EBITDA ratio - RioCan's interest 7.97x 8.01x 7.56x
Net Operating debt to Operating EBITDA - RioCan's interest 7.56x 7.61x 7.24x
Unencumbered assets (millions) $ 2,684 $ 2,068
Unencumbered assets to unsecured debt 144 % 142 %
(i) Excludes capitalized interest to properties under development
(ii) Includes capitalized interest to properties under development

Financing Highlights for the Third Quarter

Unencumbered Assets

As at September 30, 2014, RioCan's unencumbered asset pool was comprised of 100 assets with an aggregate fair value of $2.7 billion.

Credit Facilities

At September 30, 2014, RioCan has five revolving lines of credit in place having an aggregate capacity of $715 million with $514 million available to be drawn.

Term Financing

Canada

  • RioCan obtained approximately $53 million fixed-rate mortgage financing during the quarter at an average interest rate of 1.75% and a average term to maturity of 3.82 years.
  • On August 6, 2014, RioCan completed the offering of an additional $100 million Series V debentures, which carry a coupon of 3.746% and maturity date of May 30, 2022. The debentures were issued at a premium to par value for gross proceeds of $101.07 million resulting in an effective rate of 3.587%, making the effective rate on the full $250 million of Series V debentures 3.682%.

US

  • RioCan obtained approximately $67 million of fixed-rate mortgage financing at a weighted average interest rate of 3.45% with a weighted average term to maturity of 5.0 years.

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. During the third quarter RioCan did not make any purchases of Trust Units.

RioCan's Consolidated Financial Statements, Management's Discussion and Analysis for the three months ended September 30, 2014 is 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, November 5, 2014 at 9:30 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 416-340-2218 or 1-866-225-0198. If you cannot participate in the live mode, a replay will be available until December 3, 2014. To access the replay, please dial 905-694-9451 or 1-800-408-3053 and enter passcode 3105116#.

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-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 capitalization of approximately $14.7 billion as at September 30, 2014. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 340 retail properties containing more than 80 million square feet, including 48 grocery anchored and new format retail centres containing 13 million square feet in the United States as at September 30, 2014. 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, RioCan's Interest, Funds From Operations ("FFO"), Operating Funds From Operations ("Operating FFO"), Adjusted Net Operating Income, 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 third quarter 2014 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 nine months ended September 30, 2014", "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 September 30, 2014, 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, development projects, 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.

Contact Information

  • RioCan Real Estate Investment Trust
    Rags Davloor
    President, COO & interim CFO
    (416) 642-3554