ANNUAL
REPORT
2017

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FRANÇAIS PRINT PAGE CUSTOMIZED REPORT DOWNLOAD FULL REPORT
THE MAJOR MARKETS
CANADIAN POPULATION: 36,708,083
POPULATION GROWTH SINCE 2006: 8.1%
POPULATION FOR THE 6 MAJOR MARKETS: 17,790,810
POPULATION GROWTH FOR THE
6 MAJOR MARKETS SINCE 2006: 26.1%
CORPORATE PROFILE
RioCan is Canada's largest real estate investment trust with a total enterprise value of approximately $13.9 billion as at December 31, 2017. RioCan is a fully integrated REIT that owns, manages and develops high quality retail-focused, increasingly mixed-use properties in Canada with ownership interests in a portfolio of 289 retail and mixed-use properties, including 17 properties under development, containing an aggregate net leasable area of 44 million square feet. 76.1% of RioCan's annual rental revenue is comprised from a portfolio that is powerfully rooted in Canada's six largest markets.
IFC_1
RIOCAN REAL ESTATE
INVESTMENT TRUST
ANNUAL REPORT 2017

TORONTO

Metropolitan area: 6,654,682
Population growth since 2006: 30.2%
% of Income Producing NLA: 34.9%
% of annualized rental revenue: 40.9%

MONTREAL

Metropolitan area: 4,138,300
Population growth since 2006: 13.8%
% of Income Producing NLA: 7.7%
% of annualized rental revenue: 5.6%

VANCOUVER

Metropolitan area: 2,571,262
Population growth since 2006: 21.5%
% of Income Producing NLA: 4.3%
% of annualized rental revenue: 4.7%

OTTAWA

Metropolitan area: 1,377,016
Population growth since 2006: 21.8%
% of Income Producing NLA: 11.7%
% of annualized rental revenue: 11.8%

EDMONTON

Metropolitan area: 1,451,849
Population growth since 2006: 40.3%
% of Income Producing NLA: 4.1%
% of annualized rental revenue: 4.9%

CALGARY

Metropolitan area: 1,597,701
Population growth since 2006: 48.0%
% of Income Producing NLA: 7.6%
% of annualized rental revenue: 8.2%
*Source: Statistics Canada
SURFACING
VALUE
IN CANADA’S
MAJOR
MARKETS
EDWARD SONSHINE, O.ONT., Q.C.
CHIEF EXECUTIVE OFFICER
To ensure its premiere position in the Canadian marketplace, RioCan is transforming properties in high-density, transit-orientated locations. RioCan’s growth flourishes in Canada’s six major markets: Toronto, Ottawa, Calgary, Edmonton, Vancouver and Montréal, cities with compelling demographics and strong population growth. RioCan properties greatly appeal to tenants, resulting in stable tenancies and strong income growth.
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RIOCAN REAL ESTATE
INVESTMENT TRUST
ANNUAL REPORT 2017

CEO’S LETTER
TO UNITHOLDERS

Dear Unitholders,

RioCan – We Are Where You Want To Be

2017 was a year of much change and saw a strong progression of RioCan’s strategic vision. While the Trust made significant progress on its development program and accelerating its major market strategy, it delivered at the same time the highest same property net operating income (“NOI”) growth since 2010 and 6.3% year‑over‑year funds from operations (“FFO”) growth.

With a total enterprise value of $13.9 billion, RioCan’s portfolio of retail and increasingly mixed-use properties is powerfully rooted in Canada’s six major markets. Twenty five years of experience, acumen and insight have resulted in an incomparable major-market portfolio, with a diversified, strong national tenant base, significant upside on rent growth and tremendous intrinsic value that will drive Net Asset Value (“NAV”) and FFO growth in the near and long term. This portfolio is managed and optimized by the strong executive bench who use their collective wealth of experience and expertise to drive organic growth, strategically surface the intrinsic value within the portfolio; maintain a strong balance sheet and make selective acquisitions.

Canadian consumers’ shopping habits are changing, as are Canada’s major markets, which are becoming more populous and urbanized. Increasingly there is a need for mixed-use communities in Canada’s major markets as more Canadians shop, live and work in urban settings. RioCan’s portfolio of major market assets is perfectly positioned to capitalize on these trends and drive value growth for our unitholders.

Growth Driven By Insight

As evidenced by a number of key indicators, 2017 was a strong year for the Trust. These results were bolstered by strong organic growth and committed occupancy that is returning to a level consistent with our historical average at 96.6% as at December 31, 2017. During 2017, we retained over 90% of our expiring leases and attained, on average, approximately 6% increase in renewal rent. These accomplishments translated into a 6.3% increase in FFO per unit in 2017 as compared to 2016.

Based on the growth over this past year, and the Trust’s confidence in our ability to maintain our growth profile, the Board of Trustees approved a three cent or 2.1% increase to RioCan’s 2018 distribution to an annualized distribution of $1.44 per unit per year.

Canada’s Six Major Markets: A Foundation For The Present – And The Future

RioCan has the entrepreneurial vision to identify opportunities and the resources to realize them. At the onset of our REIT, our business primarily consisted of acquiring and managing shopping centres. More than a decade ago, RioCan anticipated a demographic shift away from Canada’s secondary markets to Canada’s six major markets with compelling demographics and rapid population growth: Toronto, Ottawa, Calgary, Edmonton, Vancouver and Montréal. This population growth has driven investment in new infrastructure, specifically significant investment in transit expansion. Population density and accessibility make these markets compelling for tenants, resulting in a resilient portfolio with stable tenancies and strong income growth. We planned for this seismic demographic shift into the nation’s six major markets, and for more than a decade RioCan has focused its growth in these markets.

At its core, RioCan represents a portfolio of retail-focused, increasingly mixed-use properties situated in high-density, transit-oriented locations. Due to its intrinsic value, RioCan’s major market portfolio is central to its ongoing success. Currently, approximately 76% of our revenue is generated from these markets. Upon the completion of our announced secondary market property dispositions over the next two to three years, more than 90% of our rental revenue will be produced in

Canada’s six largest markets. Of note, we expect that more than 50% of our revenue will be generated from Canada’s largest market: the Greater Toronto Area (“GTA”). The anticipated outcome will be a resilient portfolio that generates stronger same property NOI growth per year and every property in that portfolio will eventually be an opportunity to surface increased value.

In addition to evolving the geographic mix of our portfolio, we are also evolving our tenant mix. RioCan recognizes that our success is deeply intertwined with the success of our tenants. By anticipating, planning for the future and continuously evolving, RioCan attracts tenants best suited for future success. Over the past decade, RioCan has increased our tenant concentration into the strongest retail sectors, such as grocery, pharmacy, restaurants, personal services, and value retailers.

Maximizing Value By Disposing Of Secondary Market Assets

To accelerate the progress of our major market initiatives, we have embarked on the sale of approximately 100 properties largely in Canada’s secondary markets with a value surpassing $2.0 billion. These properties generate stable income; however, their growth profile lags that of RioCan’s major market portfolio. Over the next two to three years, we anticipate realizing approximately $1.5 billion of net proceeds from these sales. These funds will be allocated to maintaining our current leverage and capital structure, the development program, and the repurchase of units through our normal course issuer bid.

We have made significant progress on the disposition of these properties. As of February 13, 2018 there is a total of approximately $512 million in either closed, firm or conditional transactions, representing approximately 25% of the $2.0 billion disposition target at sale prices in-line with IFRS values.

RioCan crafts a site-specific approach for every project, based on demographics, retail trends, the competitive environment, and current and future transit infrastructure. RioCan’s mixed-use projects feature leading retailers, a rental residential and/or a condominium component and in some cases an office component. Canadians living in the six major markets enjoy the convenience of shopping, living, and working in RioCan’s signature properties.
Phase I, 23 Storey, 222 Residential Units
Exciting New Community, 15 Minutes From Downtown Ottawa
Approval For A Total Of 4 Towers And Up To 820 Units
Phase I, 23 Storey, 222 Residential Units
Exciting New Community, 15 Minutes From Downtown Ottawa
Approval For A Total Of 4 Towers And Up To 820 Units
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RIOCAN REAL ESTATE
INVESTMENT TRUST
ANNUAL REPORT 2017

Surfacing Value Through Intensification And Redevelopment

RioCan’s major market portfolio today presents significant redevelopment opportunities to unlock the intrinsic value of our assets, or “surface value” that is inherent in our property portfolio. Unlocking this value will generate tangible benefits to Unitholders: stronger FFO and cash flow growth and increased net asset value.

How Will RioCan Surface Value?

As a mini case study, consider a shopping centre that was built in Toronto decades ago. Over time, the surrounding neighbourhood has grown in density and major new transit infrastructure is being added to the community. Accordingly, the value of our land, of which more than half is a parking lot, has increased by a multiple of its original value. To unlock its full value, RioCan will “intensify” this property with a retail component, and the addition of residential uses, often vertically.

Currently, RioCan has identified 74 projects in our portfolio for potential intensification and redevelopment, some of which we will develop with strategic partners. In the initial planning stages, additional value for these properties is surfaced by obtaining the necessary zoning approvals to proceed with future development and RioCan has already obtained such approvals for 52 of these projects in our six major markets. Transformative and much talked-about development completions coming in future months include Yonge Eglinton Northeast Corner (ePlace), King Portland Centre, in Toronto and the first phase at our Gloucester rental residential development in Ottawa, to name but a few.

Surfacing Value With An Exceptional Balance Sheet

RioCan’s financial strength is derived from a conservative balance sheet, and sound fiscal discipline, which provides the flexibility to carry out its large-scale, capital-intensive projects. To mitigate risk RioCan employs a principle we call “laddering” in our development program, similar to our approach with staggering our debt maturities. The “debt ladder” is an effective tool in both a declining interest rate environment as well as in a slowly rising interest rate economy, as is the case presently. In a similar manner, RioCan “staggers” the development of our properties so as to spread out risk, allowing us to best allocate our financial, and human capital resources to achieve our strategic goals.

Our ability to find strategic acquisitions and develop key strategic relationships is another of RioCan’s competitive advantages that is based on a 25 year proven track record and deep respect within the industry. In certain instances, RioCan forms strategic partnerships for large-scale projects, allowing us to disperse our financial risk, crystalize value of zoned density, leverage our partners’ local expertise, and at the same time drive revenue through property and development management fees.

RioCan’s development program will continue to expand as we identify and realize new intensification opportunities within our portfolio in Canada’s growing six major markets.

Building Success In The 21st Century

What will RioCan look like moving forward? Upon completion of the disposition of our secondary market assets, RioCan expects that more than 90% of its rental revenue will be generated from Canada’s six major markets, with more than 50% of these revenues derived from the Greater Toronto Area’s thriving marketplace.

Although RioCan will always feature a significant retail component, retail has changed in terms of client mix and goods and services offered. To maintain our leadership in the marketplace, our development strategy reflects a popular saying: “People shop where they live, and, increasingly live where they shop.” Consumers will easily find, enjoy and shop in RioCan’s properties in high‑density, transit oriented locations in Canada’s major markets.

RioCan is a dynamic entity whose growth is driven by insight. We constantly evaluate our portfolio of properties for opportunities to surface value and increase FFO, cash flow, and NAV growth. We see our communities in which we operate for what they are, what they could be, and what they need to get there. Our seasoned management team has the entrepreneurial spirit to imagine – and seize opportunities. RioCan capitalizes on its resources, financial strength, and discipline to form long-lasting strategic relationships with tenants and joint venture partners to ensure every RioCan property is optimized to deliver its highest and best use.

The execution of our strategy is designed to ensure success today, and to secure RioCan’s growth and market leadership tomorrow. We are proud of our results to date and eagerly anticipate and plan for further success.

Thank you for your continued support and confidence in RioCan.

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

OTTAWA_

   MAJOR MARKET
RioCan leads the way in innovative mixed-use properties that include leading retailers and smart residential living, located in close proximity to existing or proposed transit infrastructure.

Gloucester (Frontier)

Frontier, in Gloucester is a striking, modern 23 storey tower featuring 222 residential units. Frontier offers a contemporary lifestyle adjacent to RioCan's Silver City Gloucester, a 150,600 square foot retail centre with a GoodLife gym, a Cineplex theatre, Indigo, and a variety of exciting new restaurants and amenities. The site, located right on the LRT line, is complemented with top retailers and other conveniences right at the doorstep.
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RIOCAN REAL ESTATE
INVESTMENT TRUST
ANNUAL REPORT 2017

Gloucester

Just 15 minutes east of downtown Ottawa, buzz is building for Frontier, coming on board in 2019. With approval for three additional residential towers in this new conception of Gloucester.
GLOUCESTER

TORONTO_

   MAJOR MARKET
Located among many transit options including subway and a new light rapid transit line in Toronto’s midtown “downtown” with almost 500,000 people in a 5 km radius, the area boasts an average household income of more than $156,000.

Yonge Eglinton Northeast Corner (ePLACE)

The first residential rental property to be completed in the RioCan Living portfolio, the 466 unit eCentral at ePlace is beside three storeys of retail in ePLACE, and is across the street from RioCan's newly renovated Yonge Eglinton Centre, one of Toronto’s most popular midtown shopping destinations.
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RIOCAN REAL ESTATE
INVESTMENT TRUST
ANNUAL REPORT 2017

ePLACE

Situated at Yonge and Eglinton, the intersections of two of Toronto’s busiest streets, RioCan’s dynamic new mixed-use project will satisfy many shopping and living needs.
ePLACE

TORONTO_

   MAJOR MARKET
Nearing completion, the dynamic King Portland Centre is a complete success: all of the 134 condominium units are sold. As well, the new office space is fully leased to Indigo and to Shopify. Finally, the property includes exciting boutique retail space fronting King Street West.

King Portland Centre (Kingly)

The King Portland location has it all: leading retailers, modern living and working, with convenient transit access, in a prime location in Toronto’s vibrant “downtown west.”
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RIOCAN REAL ESTATE
INVESTMENT TRUST
ANNUAL REPORT 2017

King Portland Centre

King Portland showcases RioCan in action in Toronto’s trendy King West: complete with condominium units, office working spaces, and RioCan’s signature retail component.
KING PORTLAND CENTRE

TORONTO_

   MAJOR MARKET
Yonge Sheppard Centre is the "go-to" destination for the 340,000 people living within 5 kms of the site.

Yonge Sheppard Centre (Pivot)

A reimagined retail presence that features leading retailers such as Longo's, Winners, Shoppers Drug Mart, and three major banks. Yonge Sheppard Centre, at the intersection of two of Canada's busiest streets, and two major subway lines, with retail, two office towers and Pivot, a 36 storey, 361 unit rental residential tower is the perfect lifestyle destination rich in shopping and dining experiences.
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RIOCAN REAL ESTATE
INVESTMENT TRUST
ANNUAL REPORT 2017

Yonge Sheppard Centre

With an array of retailers, services, fitness and restaurants, Yonge Sheppard Centre is the first choice for thousands of people who shop at and frequent this site each day.
YONGE SHEPPARD CENTRE

CALGARY_

   MAJOR MARKET
The demographics in a 5 km radius say it all for Brentwood Village: average household income is in excess of $140,000. The 163 unit Brio is perfectly situated in northwestern Calgary near the Crowchild Parkway, and with easy access to McMahon Stadium, the Foothills Hospital, and the University of Calgary.

Brentwood Village (Brio)

This exciting mixed-use project features Brio, with approximately 10,000 sq. feet of retail and 163 rental units in a 12 storey building. The site is adjacent to RioCan's Brentwood Village, a 286,000 square foot shopping centre anchored by Safeway, located near the University of Calgary on the Northwest LRT line. The anticipated completion date is 2020.
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RIOCAN REAL ESTATE
INVESTMENT TRUST
ANNUAL REPORT 2017

Brentwood Village

Brio – RioCan’s leading retail and this state-of-the-art rental residential complex, will draw people to shop and live in this fast-growing area of Calgary.
BRENTWOOD VILLAGE

Management Team

A seasoned management team is growing RioCan based on decades of combined experience and insight. By design, RioCan is transforming Canada’s retail, living and office landscapes.
1 Edward Sonshine, O.Ont., Q.C. Chief Executive Officer
2 Raghunath Davloor President and Chief Operating Officer
3 Qi Tang Senior Vice President and CFO
4 Jeff Ross Senior Vice President, Leasing & Tenant Coordination 7 John Ballantyne Senior Vice President, Asset Management
5 Danny Kissoon Senior Vice President, Operations 8 Jennifer Suess Senior Vice President, General Counsel and Corporate Secretary
6 Andrew Duncan Senior Vice President, Developments 9 Jonathan Gitlin Senior Vice President, Investments & Residential
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RIOCAN REAL ESTATE
INVESTMENT TRUST
ANNUAL REPORT 2017
CORPORATE INFORMATION

SENIOR MANAGEMENT

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

Raghunath Davloor
President and Chief Operating Officer

Qi Tang
Senior Vice President and CFO

Jeff Ross
Senior Vice President, Leasing & Tenant Coordination

Danny Kissoon
Senior Vice President, Operations

Andrew Duncan
Senior Vice President, Developments

John Ballantyne
Senior Vice President, Asset Management

Jennifer Suess
Senior Vice President, General Counsel and
Corporate Secretary

Jonathan Gitlin
Senior Vice President, Investments & Residential

Terri Andrianopoulos
Vice President, Marketing & Communications

Moshe Batalion
Vice President, Leasing – Ontario

Stuart Baum
Vice President, Human Resources

Stuart Craig
Vice President, Planning & Development

Roberto DeBarros
Vice President, Construction

Anuska Grant
Vice President, Sustainability & Asset Efficiency

Oliver Harrison
Vice President, Asset Management

Frank Keller
Vice President, Leasing

Kevin Miller
Regional Vice President,
Operations – Western Canada

Pradeepa Nadarajah
Vice President, Property Accounting

Paran Namasivayam
Vice President, Recovery Accounting

Stephen Roberts
Vice President, Analytics

Tim Roos
Vice President, Operations

Franca Smith
Vice President, Finance

Jonathan Sonshine
Vice President, Asset Management

Jeffrey Stephenson
Vice President, Operations

Naftali Sturm
Vice President, Real Estate Finance

Kimberly Valliere
Vice President, Development Construction

Renato Vanin
Vice President, Information Technology

Jason Wong
Vice President, Corporate Tax

BOARD OF TRUSTEES

Paul Godfrey, C.M., O.Ont. 1,2,3,4
(Chairman of Board of Trustees)
President and Chief Executive Officer
Postmedia Network Canada Corp.

Bonnie R. Brooks, C.M. 3,4
Chair, Liquor Control Board of Ontario

Clare R. Copeland 1,2
Vice-Chair, Falls Management Company

Dale H. Lastman
Chair and Partner, Goodmans LLP

Jane Marshall 2,3,4
Former Chief Operating Officer of
Choice Properties REIT

Sharon Sallows 1,2,4
Trustee, Chartwell Retirement Residences REIT

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

Charles M. Winograd 3,4
President, Winograd Capital Inc.

Siim Vaneselja 1
Chair of the Audit Committee,
RioCan Real Estate Investment Trust

1 member of the Audit Committee
2 member of the Human Resources & Compensation Committee
3 member of the Nominating & Governance Committee
4 member of the Investment Committee


UNITHOLDER INFORMATION

Head Office
RioCan Real Estate Investment Trust
RioCan Yonge Eglinton Centre,
2300 Yonge Street, Suite 500
P.O. Box 2386, Toronto, Ontario M4P 1E4
Tel: (416) 866-3033 or 1 (800) 465-2733
Fax: (416) 866-3020
Website: www.riocan.com
Email: inquiries@riocan.com


UNITHOLDER AND INVESTOR CONTACT

Christian Green
Assistant Vice President, Investor Relations & Compliance
Tel: (416) 864-6483
Email: cgreen@riocan.com

AUDITORS

Ernst & Young LLP


TRANSFER AGENT AND REGISTRAR

AST Trust Company (Canada)
P.O. Box Station B,
Montreal, Quebec H3B 3K3
Answerline: 1 (800) 387-0825 or
(416) 643-5500
Fax: 1 (800) 249-6189 or (514) 985-8843
Website: www.canstockta.com
Email: inquiries@canstockta.com


STOCK EXCHANGE LISTING

The Toronto Stock Exchange
Trading Symbols:
Common Units – REI.UN


ANNUAL MEETING

The 2018 Annual Meeting of RioCan REIT will be held on May 29, 2018 at 10:00 a.m. at SilverCity Theatres located at RioCan Yonge Eglinton Centre, 2300 Yonge Street, Toronto, Ontario. All unitholders are invited and encouraged to attend in person or via webcast at www.riocan.com.

On peut obtenir une version française du présent rapport annuel sur le site web de RioCan :
www.riocan.com.

A French language version of this annual report is available on RioCan’s website:
www.riocan.com

RIOCAN YONGE EGLINTON CENTRE
2300 Yonge Street
Suite 500
P.O. Box 2386
Toronto, Ontario
M4P IE4
Tél.
Sans Frais
Télés.
Site Web
416 866 3033
1 800 465 2733
416 866 3020
www.riocan.com