BUILDING ON EXPERIENCE, SHAPING THE FUTURE RioCan Investor Presentation – Third Quarter 2019 November 2019
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”), Net Operating Income (“NOI”), Adjusted Earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), Debt to Adjusted EBITDA, Same Property NOI, Interest Coverage, Debt Service Coverage, Fixed Charge Coverage, and Total Enterprise Value as well as other measures discussed in this presentation, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. 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 “Non -GAAP Measures” in RioCan’s Management’s Discussion and Analysis for the quarter ended September 30, 2019. RioCan uses these measures to better assess the Trust’s underlying performance and provides these additional measures so that investors may do the same. PEER DATA PRESENTATION RioCan data and statistics are based on the quarter ended September 30, 2019 information. Certain slides contain a peer comparison that is based on the respective issuer’s reported information as at September 30, 2019. Peer group includes: First Capital Realty Corp. (FCR), SmartCentres REIT (SRU), Choice Properties REIT (CHP), CT REIT (CRT), and Crombie REIT (CRR). All information presented is at RioCan’s interest unless otherwise noted. CAGR refers to compound annual growth rate of a specific metric over a period of time. FORWARD LOOKING INFORMATION Certain information included in this presentation contains forward-looking statements within the meaning of applicable securities laws including, among others, statements concerning our objectives, our 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. Certain material factors, estimates or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in these statements and actual results could differ materially from such conclusions, forecasts or projections. The forward looking information contained in this presentation is made as of the date hereof. Additional information on the material risks that could cause our actual results to differ materially from the conclusions, forecast or projections in these statements and the material factors, estimates or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information can be found in our most recent annual information form and annual report that are available on our website and at www.sedar.com. Except as required by applicable law, RioCan undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
ANNUALIZED REVENUE FROM SIX MAJOR MARKETS: 88.7% AT A GLANCE 6.4% Edmonton Growth driven by strategic insight BC Calgary 5.1% Montreal 10.3% Vancouver Ottawa 5.0% • One of Canada’s first and largest REITs, 12.4% 12 4% 49 49.5% 5% Toronto focused on the ownership, management and development of high-quality, mixed-use properties with strategic positioning in Canada’s six major markets QUICK FACTS – Q3 2019 • 25-year proven track record of driving success and Enterprise Value $14.9 B adding value with a highly experienced and deep Number of Properties 225 management team Net Leasable Area (NLA) (M sf) 39.3 • Diversified and predominantly necessity-based, Major Market Same Property NOI (SPNOI) 2.3% 2 service-focused tenant mix 2.1% 2 Total Portfolio SPNOI • Robust 27.4M sf development pipeline, Major Market Committed Occupancy - Commercial 97.7% 13.3M sf or 48.7% already with zoning approvals. Committed Occupancy - Commercial 97.2% 2,700 residential rental units recently completed or Blended New and Renewal Leasing Spread 6.3% under construction with additional 2,100 units Renewal Retention Rate 86.5% underway by 2021 1 Greater Toronto Area (GTA) Focus • Rated BBB with stable outlook by S&P % of Annualized Revenue 49.5% - Peer Average 3 and BBB (high) with stable trend by DBRS 24.9% 1. At 100% of project 2. If completed properties under development are included and the disclaimed Bombay/Bowring and Payless Shoes leases are excluded, SPNOI increased by 4.9% and 4.4% for its major market portfolio and total portfolio, respectively, when compared to the same period in 2018 Investor Presentation | RioCan | 03 3. Peer group includes: FCR, CHP, and CRT (CRR and SRU do not disclose this information)
RIOCAN’S STRATEGIC PRIORITIES Sustaining success and long term value Key Differentiators 25 years of Leading major Robust Strong REIT leadership market portfolio development pipeline balance sheet Concentrate Drive organic Unlock Mitigate risk within major growth intrinsic value effectively markets Provide unitholders with a reliable and growing cash flow while building and creating value Investor Presentation | RioCan | 04
DEEP EXECUTIVE BENCH Extensive industry knowledge and unparalleled experience Andrew Duncan John Ballantyne Oliver Harrison Jonathan Gitlin Senior Vice President, Senior Vice President, Senior Vice President, President & Development Asset Management Operations Chief Operating Officer Jeff Ross Qi Tang Jennifer Suess Edward Sonshine O.Ont, Q.C Senior Vice President Senior Vice President, Chief Executive Officer Senior Vice President, & Chief Financial Officer General Counsel & Leasing & Tenant Coordination Corporate Secretary Investor Presentation | RioCan | 05
OUR QUALITY OF INCOME HAS NEVER BEEN STRONGER Operating metrics are producing high quality income and are supported by an improved balance sheet Total Metric 2013 Q3 2019 Improvement +17.0% Major Market Presence (% of Revenue) 71.7% 88.7% +7.9% GTA Presence (% of Revenue) 41.6% 49.5% +0.8% Same Property NOI growth 1 1.3% 2.1% 3 +17.2% Average Net Rent PSF 1 $16.63 $19.49 +0.3% Occupancy 1,2 96.9% 97.2% $1,328M 4 +$745M Development Costs on the Balance Sheet $583M +0.51x Debt to Adjusted EBITDA 7.56x 8.07x +$6,814M Unencumbered Assets $2,068M $8,882M 43.6% 5 -0.4% Leverage 44.0% -13.0% FFO Payout Ratio 90.4% 77.4% $23.01 +13.0% Net Book Value Per Unit $26.01 Debt Service Coverage 2.10x 2.95x +0.85x +36.6% Unsecured Debt as % of Total Debt 24.3% 60.9% 1. Includes only Canadian operations 2. Committed occupancy 3. If completed properties under development are included and the disclaimed Bombay/Bowring and Payless Shoes leases are excluded, SPNOI increased by 4.4% when compared to the same period in 2018 4. Includes $99M of Residential Inventory 5. Primarily due to the timing of strategic acquisitions in Q3 2019 totaling approximately $500 million. Applying the $220.4 million net proceeds from the Investor Presentation | RioCan | 06 recent equity offering to pay down debt , the Trust’s debt to total assets would be in the mid -42% range, while holding everything else constant as of September 30, 2019
HIGH-PERFORMANCE GROWTH ORIENTED PORTFOLIO Consistently delivering high-quality, growing income Drive Organic Growth High occupancy and strong net rent growth (Canadian commercial only) Net rent CAGR since 2015 ─ 3.5% $19.49 100.0% $20.00 $19.07 $17.59 $17.75 $17.11 $18.00 95.0% 97.1% 97.2% $16.00 96.6% 95.6% 94.0% 90.0% $14.00 2015 2016 2017 2018 Q3 2019 Total Portfolio Strong same property NOI growth in the major market portfolio Same Property NOI Guidance for 2020 Investor Presentation | RioCan | 07
STAYING AHEAD OF CHANGING CONSUMER TRENDS Strategic insights drive long-term growth and high-quality returns RENT BREAKDOWN Q3 2019 74.1% OF RENT FROM NECESSITY-BASED AND SERVICE-ORIENTED TENANTS The increasing strength and quality Entertainment & Hobby 3.1% of our income is a Movie Theatres 4% result of growth in 4.5% since 2007 Department necessity-based and Stores & Apparel service-oriented 8.4% tenants within our 8% Grocery / portfolio since 2007 Pharmacy / Liquor / Restaurants 28.0% Furniture & Home 9.9% No single tenant represents >5% of Specialty annualized rental Retailers Personal Services revenue 10.7% 21.8% Value Retailers 13.6% 6% since 2007 Investor Presentation | RioCan | 08
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