RioCan Reports Fourth Quarter and Year End 2023 Results - FFO per Unit Growth Enables Annualized Distributions Increase of 2.8% to $1.11 Per Unit

• Superior operational performance included retail committed occupancy increasing 50 bps to a record 98.4%, higher blended leasing spreads of 10.7% and greater Same Property NOI growth year-over-year

• Delivered ~ 600,000 square feet of top quality development assets, including The Well^TM and a growing residential portfolio, that has continued to add a steady stream of new NOI

TORONTO, February 14, 2024--(BUSINESS WIRE)--RioCan Real Estate Investment Trust ("RioCan" or the "Trust") (TSX: REI.UN) announced today its financial results for the three months and year ended December 31, 2023.

"RioCan continued to capitalize on Canada's short supply of quality space and robust retailer demand, generating some of the best operational results we have ever seen, and achieved our financial objectives for 2023," said Jonathan Gitlin, President and CEO of RioCan. "Our performance speaks to the reliability and quality of our open air retail, prime locations, and foundation of necessity-based retailers. As we celebrate our 30th anniversary, we cement our position as a valuable long-term investment and Canada's premier REIT. RioCan's third consecutive annual distribution increase to Unitholders reflects our confidence in delivering continued operational excellence and meaningful value creation."

Financial Highlights
	Three months ended December 31									Years ended December 31
(in millions, except where otherwise noted, and per unit values)			2023				2022				2023				2022
FFO 1		$	132.9			$	127.6			$	531.3			$	524.7
FFO per unit - diluted 1		$	0.44			$	0.42			$	1.77			$	1.71
Net income (loss)		$	(117.7)			$	(5.0)			$	38.8			$	236.8
Weighted average Units outstanding - diluted (in thousands)			300,417				302,423				300,479				306,247
As at										December 31, 2023				December 31, 2022
Net book value per unit										$	24.76			$	25.73

• Full year FFO per unit was $1.77, an increase of $0.06 per unit or 3.5% over the prior year.

  • Commercial Same Property NOI¹ grew by 4.8%, contributing a $0.09 increase in FFO per unit.

  • NOI from completed commercial developments drove FFO per unit higher by $0.05.

  • Residential NOI¹ accounted for $0.03 per unit of the FFO per unit increase.

  • Reduced NOI from the sale of commercial properties resulted in a $0.10 reduction in FFO per unit.

  • Higher interest expense, which was partially insulated by hedges, debt reduction impact of property sales proceeds, and higher investment and interest income, resulted in a net $0.05 decrease in FFO per unit.

  • Accretion from Normal Course Issuer Bid activity resulted in an increase of $0.03 FFO per unit while all other combined variances accounted for the remaining $0.01 increase in FFO per unit.

• Net income for the year of $38.8 million was $198.0 million lower than the prior year due to a fair value loss on investment properties of $450.4 million compared to a $241.1 million fair value loss in 2022. The fair value loss in 2023 was driven by increased capitalization rate assumptions, partially offset by higher stabilized NOI.

• Our FFO Payout Ratio¹ of 60.5%, Liquidity¹ of $2.0 billion, Unencumbered Assets¹ of $8.1 billion, floating rate debt at 6.8%¹ of total debt and staggered debt maturities, all contribute to our financial flexibility and balance sheet strength.

1. A non-GAAP measurement. For definitions, reconciliations and the basis of presentation of RioCan's non-GAAP measures, refer to the Basis of Presentation and Non-GAAP Measures section in this News Release.

Distribution Increase and Outlook

• RioCan's Board of Trustees approved a 2.8% increase to the monthly distribution to Unitholders from $0.09 to $0.0925 per unit commencing with the February 2024 distribution, payable on March 7, 2024 to Unitholders of record as at February 29, 2024. This brings RioCan's annualized distribution to $1.11 per unit and is the third consecutive annual distribution increase as we provide sustainable distribution growth to Unitholders while maintaining our payout ratio targets.

• For 2024, we anticipate FFO per unit to be within the range of $1.79 to $1.82, Commercial SPNOI growth of ~ 3%, and an FFO Payout Ratio of between 55% to 65%. Development Spending¹ on mixed-use projects is expected to be between $250 million to $300 million and spending for the construction of retail projects of $50 million to $60 million.

• The Trust continuously reviews its longer-term targets in the context of ever-evolving macroeconomic and business environments. Refer to the Outlook section of the MD&A for more information.

1. A non-GAAP measurement. For definitions, reconciliations and the basis of presentation of RioCan's non-GAAP measures, refer to the Basis of Presentation and Non-GAAP Measures section in this News Release.

Operation Highlights (i)

	Three months ended December 31							Years ended December 31
		2023			2022			2023			2022
Occupancy - committed (ii)		97.4 %			97.4 %			97.4 %			97.4 %
Retail occupancy - committed (ii)		98.4 %			97.9 %			98.4 %			97.9 %
Blended leasing spread		9.0 %			8.8 %			10.7 %			9.0 %
New leasing spread		13.2 %			11.8 %			14.7 %			12.3 %
Renewal leasing spread		8.7 %			8.3 %			9.8 %			8.2 %
(i) Includes commercial portfolio only.
(ii) Information presented as at respective periods then ended.

• Commercial Same Property NOI grew by 4.8%, driven by contractual rent steps, strong leasing and recovery of provisions for credit losses. The impact of net provision reversals during 2023 contributed 1.2% to this SPNOI growth.

• A record high 98.4% retail committed occupancy increased by 50 basis points over last year, underscoring the demand for well-located retail space. When compared to Q3 2023, retail in-place occupancy increased by 40 basis points to 98.0%.

• The blended leasing spread of 10.7% in 2023 was comprised of new and renewal leasing spreads of 14.7% and 9.8%, respectively. Excluding fixed-rate renewals, the renewal leasing spread would be 11.4% for the year, reflective of the strong leasing environment. New leasing in 2023 generated average net rent per square foot of $27.75, well above the average net rent per occupied square foot of $21.51.

• Our strong demographic profile with a population and household income of 260,000 and $140,000, respectively, within a five kilometre radius of the Trust's properties, continues to attract strong and stable tenants which comprise 87.5% of annualized net rent and strengthen the quality of the tenant mix.

RioCan Living Update ¹

• Continued strong performance and leasing environment for our stabilized properties drove Residential Same Property NOI² growth of 13.8% in 2023.

• Total NOI generated from our residential rental operations for 2023 was $21.5 million, an increase of $7.9 million or 57.7% over the prior year.

• RioCan Living^TM has 13 buildings in operation, representing 2,738 residential units. 11 of these buildings are stabilized and 96.5% leased as at February 13, 2024.

• Occupancy commenced at FourFifty The Well^TM on August 1, 2023. As at February 13, 2024, 45.8% of the units are leased at rents above expectations.

• The 2,573 condominium and townhouse units that are under construction are expected to generate combined sales revenue of over $780.0 million between 2024 and 2026. Of RioCan’s six active condominium construction projects, 86% of the total units have been pre-sold, representing 95% of pro-forma total revenues.

1. Units at 100% ownership interest.

2. A non-GAAP measurement. For definitions, reconciliations and the basis of presentation of RioCan's non-GAAP measures, refer to the Basis of Presentation and Non-GAAP Measures section in this News Release.

Development Highlights

	Three months ended December 31									Years ended December 31
(in millions except square feet)			2023				2022				2023				2022
Development Completions - sq. ft. in thousands (i)			272.0				258.0				599.0				651.0
Development Spending		$	94.4			$	114.6			$	399.9			$	427.1
Development Projects Under Construction - sq. ft. in thousands (ii)			1,235.0				1,945.0				1,235.0				1,945.0
(i) At RioCan's ownership. Represents net leasable area (NLA) of property under development completions. Excludes NLA of residential inventory completions.
(ii) Information presented as at the respective periods then ended, includes properties under development and residential inventory, equity-accounted joint ventures and represents gross floor area of the respective projects.

• For the full year, 599,000 square feet of property under development were completed which are expected to contribute $27.2 million of stabilized cash NOI. Rental income has commenced in 2023 and is expected to ramp up over the course of 2024. Completions include 460,000 square feet related to The Well, comprised of 123,000 square feet of purpose-built rental residential and 337,000 square feet of commercial space. In addition, 32 U.C. Towns 2 townhouse units were completed and sold in the quarter, generating a $4.8 million inventory gain.

• As at February 13, 2024, approximately 96% of the total commercial space at The Well is leased with approximately 91% or 1,352,000 square feet (at 100% ownership interest) in tenant possession. The retail component is 93% leased, with more than half of the space open and operating. The remaining retail tenants will open steadily over the first half of 2024.

• Zoning approvals for 4.0 million square feet of residential inventory were obtained in 2023 including for RioCan Scarborough Centre (Golden Mile Phase One & Two) in Toronto, RioCan Hall in the entertainment district in downtown Toronto, 83 Bloor Street West located in the prestigious downtown Toronto neighbourhood of Yorkville and East Hills South Block in Calgary. As cost of financing conditions persist, RioCan does not intend to commence new physical construction of mixed-use properties in 2024.

• Total zoned square footage of 17.4 million at Q4 2023 compares to 15.0 million at Q4 2022, an increase of 2.4 million as newly zoned projects were partially offset by development deliveries. Zoned square footage includes 1.2 million square feet of projects under construction and 1.7 million square feet of shovel ready projects. Value recognized in the Trust's properties under development balance for zoned projects, excluding those under construction, is $31.04 per square foot.

Investing and Capital Recycling

• During 2023, and including the subsequent event period, RioCan executed on capital recycling activities that improved portfolio quality and the balance sheet, summarized as follows:

  • Dispositions: Closed $295.4 million of investment property dispositions, all of which were unencumbered assets, and provided $6.0 million vendor take-back financing.

  • Acquisitions: Closed $263.1 million of Total Acquisitions to February 13, 2024¹, which included both debt assumed of $119.6 million, at an average contractual interest rate of 2.68% and a weighted average term of 5.3 years, and a $40.9 million deferred payment.

  • Lending Program: Issued $84.1 million of new loans receivable offset by $74.6 million of loans repaid. With the weighted average interest rate on new loans at 11.1% we expect our lending program to be accretive to FFO, and help partially offset the impact of higher interest rates.

  • Net cash raised from the above capital recycling activities was $177.3 million.

• Dispositions improved our portfolio quality through reducing exposure to secondary markets, enclosed malls and certain tenant categories, including:

  • An enclosed mall in Winnipeg, Manitoba;

  • Three cinema-anchored centres in Surrey, British Columbia; Gatineau, Quebec and Orillia, Ontario; and

  • A non-grocery-anchored centre in Calgary, Alberta.

• In addition, the Trust sold a 12.5% interest in the 11YV project, thereby reducing its interest in the project to 37.5%. The resulting gain of $12.1 million was mainly attributable to the value of the underlying residential inventory. Subsequent to year end, RioCan further reduced its interest in the project to 25.0% by selling an additional 12.5% interest.

• Subsequent to year end, the Trust also entered into firm deals to dispose full or partial interests in a number of properties totalling $31.1 million including two secondary market assets, one of which is cinema-anchored, and a piece of non-core development land.

• Strategic acquisitions added to our major market portfolio including new stock residential assets and an urban, grocery-anchored retail asset with development upside. Strategic acquisitions included the following previously announced transactions:

  • A multi-phase residential rental asset in Quebec, which included in-place Canada Mortgage and Housing Corporation (CMHC) debt;

  • Land assemblies for development; and

  • Purchase of a parking lot lease at a Focus Five² project to remove a significant encumbrance to development.

  • Two acquisitions closed subsequent to year end:

    • 50.0% ownership in an operating and stabilized rental residential property in Calgary, Alberta for $52.9 million, which included $32.7 million of in-place debt at a weighted average contractual interest rate of 1.97%; and

    • A 50.0% managing interest in an urban grocery-anchored centre in Toronto, Ontario which is currently undergoing re-zoning to create additional density. The Trust will manage the property and the development process, earning fees for these activities. The purchase was settled with $13.2 million cash, the assumption of $46.1 million of in-place debt at a weighted average contractual interest rate of 3.20%, and agreed upon future consideration for density, estimated to be $40.9 million, to be paid as various development milestones are met.

• The above capital recycling activities are representative of our on-going strategy to rotate capital away from lower quality, higher risk assets to premium quality retail and residential assets in the best markets in Canada. This process, which began a number of years ago, has positioned our portfolio to perform well in any economic environment.

1. A non-GAAP measurement. For definitions, reconciliations and the basis of presentation of RioCan's non-GAAP measures, refer to the Basis of Presentation and Non-GAAP Measures section in this News Release.

2. Focus Five projects are large scale, transit-oriented, mixed-use developments in the Greater Toronto Area that the Trust is currently advancing through zoning and the site plan approval process.

Capital Management Update

• During 2023, the Trust issued $800.0 million of senior unsecured debentures, including $300.0 million of Series AI debentures at a coupon rate of 6.488%, which can be repaid at par on or after September 29, 2024. This feature allows the Trust to refinance these debentures in the near-term with longer-term debt at lower interest rates and provides the Trust with additional flexibility in the current volatile interest rate environment.

• The Trust settled a total of $500.0 million of bond forward contracts during 2023 in conjunction with the issuance of $200.0 million Series AG and $300.0 million Series AH senior unsecured debentures on March 6, 2023 and June 26, 2023, respectively. Inclusive of $16.8 million of realized gains from these contracts, the combined weighted average hedged interest rate for these debentures is 5.244% with a combined weighted average term of 5.6 years.

• Since Q3 reporting on November 2, 2023 to February 13, 2024, the Trust arranged $608.0 million in permanent financing at a weighted average interest rate of 5.4%, across various financing types including debentures, commercial mortgages and CMHC mortgages.

• Included in that permanent financing were $300.0 million Series AJ senior unsecured debentures issued on February 12, 2024. These debentures were issued at a coupon rate of 5.470% per annum and will mature on March 1, 2030. The proceeds were used to repay, in full, the $300.0 million, 3.29% Series W unsecured debentures upon maturity on February 12, 2024.

Balance Sheet Strength

(in millions except percentages) As at						December 31, 2023				December 31, 2022
Liquidity (i) 1							$	1,964			$	1,548
Adjusted Debt to Adjusted EBITDA (i) 1							9.28x				9.51x
Unencumbered Assets (i) 1							$	8,090			$	8,257
(i) At RioCan's proportionate share.

• As at December 31, 2023, the Trust had $2.0 billion of Liquidity. The Trust has full availability of its $1.3 billion revolving line of credit in addition to $0.6 billion in undrawn construction lines and other bank loans and $0.1 billion cash and cash equivalents. Liquidity increased by $415.8 million when compared to the prior year, providing greater flexibility in debt refinancing strategies.

• Pursuant to the terms of its credit agreement, the Trust has an option to increase the commitment under its revolving line of credit by $250.0 million.

• RioCan’s Unencumbered Assets of $8.1 billion, which can be used to obtain secured financing to provide additional liquidity at lower interest rates than unsecured debt, generated 55.8% of Annual Normalized NOI¹.

• Adjusted Debt to Adjusted EBITDA improved to 9.28x on a proportionate share basis as at December 31, 2023, compared to 9.51x as at the end of 2022. The decrease was primarily due to higher Adjusted EBITDA, partially offset by higher Average Total Adjusted Debt balances.

• As at December 31, 2023, the Trust's weighted average term to maturity on a proportionate share basis was 2.97 years. However, inclusive of financing activities completed in early 2024, the weighted average term to maturity as at February 13, 2024 was extended to approximately 3.5 years.

• The Trust’s exposure to floating rate debt was 6.8% of total debt as at December 31, 2023. Excluding construction loans, floating rate exposure was 3.5%.

1. A non-GAAP measurement. For definitions, reconciliations and the basis of presentation of RioCan's non-GAAP measures, refer to the Basis of Presentation and Non-GAAP Measures section in this News Release.

Conference Call and Webcast

Interested parties are invited to participate in a conference call with management on Wednesday, February 14, 2024 at 10:00 a.m. (ET). Participants will be required to identify themselves and the organization on whose behalf they are participating.

To access the conference call, click on the following link to register at least 10 minutes prior to the scheduled start of the call: Pre-registration link. Participants who pre-register at any time prior to the call will receive an email with dial-in credentials including a login passcode and PIN to gain immediate access to the live call. Those that are unable to pre-register may dial-in for operator assistance by calling 1-833-950-0062 and entering the access code: 218112.

For those unable to participate in the live mode, a replay will be available at 1-866-813-9403 with access code: 539726.

To access the simultaneous webcast, visit RioCan’s website at Events and Presentations and click on the link for the webcast.

About RioCan

RioCan is one of Canada’s largest real estate investment trusts. RioCan owns, manages and develops retail-focused, increasingly mixed-use properties located in prime, high-density transit-oriented areas where Canadians want to shop, live and work. As at December 31, 2023, our portfolio is comprised of 188 properties with an aggregate net leasable area of approximately 32.6 million square feet (at RioCan's interest) including office, residential rental and 9 development properties. To learn more about us, please visit www.riocan.com.

Basis of Presentation and Non-GAAP Measures

All figures included in this News Release are expressed in Canadian dollars unless otherwise noted. RioCan’s annual audited consolidated financial statements ("2023 Annual Consolidated Financial Statements") are prepared in accordance with International Financial Reporting Standards (IFRS). Financial information included within this News Release does not contain all disclosures required by IFRS, and accordingly should be read in conjunction with the Trust's 2023 Annual Consolidated Financial Statements and MD&A for the three months and year ended December 31, 2023, which are available on RioCan's website at www.riocan.com and on SEDAR+ at www.sedarplus.com.

Consistent with RioCan’s management framework, management uses certain financial measures to assess RioCan’s financial performance, which are not in accordance with generally accepted accounting principles (GAAP) under IFRS. Funds From Operations ("FFO"), FFO per unit, Net Operating Income ("NOI"), Same Property NOI, Commercial Same Property NOI, Residential Same Property NOI, Development Spending, Total Acquisitions to February 13, 2024, Ratio of floating rate debt to total debt, Liquidity, Adjusted Debt to Adjusted EBITDA, RioCan's Proportionate Share, Unencumbered Assets and Percentage of Normalized NOI Generated from Unencumbered Assets, as well as other measures that may be discussed elsewhere in this News 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 supplements its IFRS measures with these Non-GAAP measures to aid in assessing the Trust’s underlying performance and reports these additional measures so that investors may do the same. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of RioCan’s performance, liquidity, cash flow, and profitability. For full definitions of these measures, please refer to the "Non-GAAP Measures" section in RioCan’s MD&A for the three months and year ended December 31, 2023.

The reconciliations for non-GAAP measures included in this News Release are outlined as follows:

RioCan's Proportionate Share

The following table reconciles the consolidated balance sheets from IFRS to RioCan's proportionate share basis as at December 31, 2023 and December 31, 2022:

As at	December 31, 2023						December 31, 2022
(in thousands of dollars)	IFRS basis		Equity-accounted investments		RioCan's proportionate share		IFRS basis		Equity-accounted investments		RioCan's proportionate share
Assets
Investment properties	$	13,561,718	$	411,811	$	13,973,529	$	13,807,740	$	398,701	$	14,206,441
Equity-accounted investments		383,883		(383,883)		—		364,892		(364,892)		—
Mortgages and loans receivable		289,533		(6,707)		282,826		269,339		—		269,339
Residential inventory		217,186		407,946		625,132		272,005		214,536		486,541
Assets held for sale		19,075		—		19,075		42,140		—		42,140
Receivables and other assets		246,652		50,681		297,333		259,514		37,779		297,293
Cash and cash equivalents		124,234		14,506		138,740		86,229		8,001		94,230
Total assets	$	14,842,281	$	494,354	$	15,336,635	$	15,101,859	$	294,125	$	15,395,984
Liabilities
Debentures payable	$	3,240,943	$	—	$	3,240,943	$	2,942,051	$	—	$	2,942,051
Mortgages payable		2,740,924		158,292		2,899,216		2,659,180		172,100		2,831,280
Lines of credit and other bank loans		879,246		231,963		1,111,209		1,141,112		89,187		1,230,299
Accounts payable and other liabilities		543,398		104,099		647,497		630,624		32,838		663,462
Total liabilities	$	7,404,511	$	494,354	$	7,898,865	$	7,372,967	$	294,125	$	7,667,092
Equity
Unitholders’ equity		7,437,770		—		7,437,770		7,728,892		—		7,728,892
Total liabilities and equity	$	14,842,281	$	494,354	$	15,336,635	$	15,101,859	$	294,125	$	15,395,984

The following tables reconcile the consolidated statements of income (loss) from IFRS to RioCan's proportionate share basis for the three months and years ended December 31, 2023 and 2022:

	Three months ended December 31, 2023						Three months ended December 31, 2022
(in thousands of dollars)	IFRS basis		Equity-accounted investments		RioCan's proportionate share		IFRS basis		Equity-accounted investments		RioCan's proportionate share
Revenue
Rental revenue	$	276,510	$	8,124	$	284,634	$	268,864	$	7,516	$	276,380
Residential inventory sales		13,789		11,365		25,154		33,873		—		33,873
Property management and other service fees		6,611		—		6,611		3,450		—		3,450
		296,910		19,489		316,399		306,187		7,516		313,703
Operating costs
Rental operating costs
Recoverable under tenant leases		94,445		881		95,326		95,258		836		96,094
Non-recoverable costs		7,397		605		8,002		9,060		606		9,666
Residential inventory cost of sales		8,994		9,117		18,111		26,448		—		26,448
		110,836		10,603		121,439		130,766		1,442		132,208
Operating income		186,074		8,886		194,960		175,421		6,074		181,495
Other income (loss)
Interest income		6,401		618		7,019		6,272		599		6,871
Income (loss) from equity-accounted investments		(7,190)		7,190		—		(3,864)		3,864		—
Fair value loss on investment properties, net		(222,921)		(13,506)		(236,427)		(115,507)		(8,404)		(123,911)
Investment and other income (loss)		4,459		(25)		4,434		240		324		564
		(219,251)		(5,723)		(224,974)		(112,859)		(3,617)		(116,476)
Other expenses
Interest costs, net		58,940		3,108		62,048		48,320		2,394		50,714
General and administrative		15,459		23		15,482		12,845		23		12,868
Internal leasing costs		3,156		—		3,156		3,306		—		3,306
Transaction and other costs		6,945		32		6,977		3,236		40		3,276
		84,500		3,163		87,663		67,707		2,457		70,164
Loss before income taxes	$	(117,677)	$	—	$	(117,677)	$	(5,145)	$	—	$	(5,145)
Current income tax recovery		(18)		—		(18)		(184)		—		(184)
Net loss	$	(117,659)	$	—	$	(117,659)	$	(4,961)	$	—	$	(4,961)

	Year ended December 31, 2023						Year ended December 31, 2022
(in thousands)	IFRS basis		Equity-accounted investments		RioCan's proportionate share		IFRS basis		Equity-accounted investments		RioCan's proportionate share
Revenue
Rental revenue	$	1,091,105	$	33,609	$	1,124,714	$	1,074,192	$	29,221	$	1,103,413
Residential inventory sales		13,789		63,222		77,011		118,659		936		119,595
Property management and other service fees		18,977		—		18,977		20,996		—		20,996
		1,123,871		96,831		1,220,702		1,213,847		30,157		1,244,004
Operating costs
Rental operating costs
Recoverable under tenant leases		374,149		3,549		377,698		376,914		2,889		379,803
Non-recoverable costs		26,320		2,338		28,658		27,955		2,394		30,349
Residential inventory cost of sales		8,994		49,476		58,470		96,286		422		96,708
		409,463		55,363		464,826		501,155		5,705		506,860
Operating income		714,408		41,468		755,876		712,692		24,452		737,144
Other income (loss)
Interest income		25,131		2,559		27,690		20,902		2,326		23,228
Income from equity-accounted investments		18,383		(18,383)		—		2,349		(2,349)		—
Fair value loss on investment properties, net		(450,408)		(14,123)		(464,531)		(241,128)		(16,208)		(257,336)
Investment and other income (loss)		8,501		(339)		8,162		(1,842)		277		(1,565)
		(398,393)		(30,286)		(428,679)		(219,719)		(15,954)		(235,673)
Other expenses
Interest costs, net		208,948		11,339		220,287		180,365		8,242		188,607
General and administrative		60,367		56		60,423		54,437		74		54,511
Internal leasing costs		11,919		—		11,919		12,204		—		12,204
Transaction and other costs		9,344		(213)		9,131		8,274		182		8,456
		290,578		11,182		301,760		255,280		8,498		263,778
Income before income taxes	$	25,437	$	—	$	25,437	$	237,693	$	—	$	237,693
Current income tax (recovery) expense		(13,365)		—		(13,365)		921		—		921
Net income	$	38,802	$	—	$	38,802	$	236,772	$	—	$	236,772

NOI and Same Property NOI

The following table reconciles operating income to NOI and Same Property NOI to NOI for the three months and years ended December 31, 2023 and 2022:

	Three months ended December 31				Years ended December 31
(thousands of dollars)		2023		2022		2023		2022
Operating Income	$	186,074	$	175,421	$	714,408	$	712,692
Adjusted for the following:
Property management and other service fees		(6,611)		(3,450)		(18,977)		(20,996)
Residential inventory gains		(4,795)		(7,425)		(4,795)		(22,373)
Operational lease revenue from ROU assets		1,638		1,516		6,717		5,666
NOI	$	176,306	$	166,062	$	697,353	$	674,989
	Three months ended December 31				Years ended December 31
(thousands of dollars)		2023		2022		2023		2022
Commercial:
Commercial Same Property NOI	$	150,698	$	142,019	$	596,558	$	569,416
NOI from income producing properties:
Acquired (i)		566		8		2,010		462
Disposed (i)		2,494		8,830		15,351		46,709
		3,060		8,838		17,361		47,171
NOI from completed commercial developments		9,181		4,878		31,964		16,948
NOI from properties under de-leasing (ii)		4,213		5,111		18,842		20,829
Lease cancellation fees		70		391		5,253		5,119
Straight-line rent adjustment		2,638		806		5,898		1,884
NOI from commercial properties		169,860		162,043		675,876		661,367
Residential:
Residential Same Property NOI		4,088		3,507		7,123		6,260
NOI from income producing properties:
Acquired (i)		401		—		2,975		1,667
Disposed (i)		—		—		48		(7)
		401		—		3,023		1,660
NOI from completed residential developments		1,957		512		11,331		5,702
NOI from residential rental		6,446		4,019		21,477		13,622
NOI	$	176,306	$	166,062	$	697,353	$	674,989
(i) Includes properties acquired or disposed of during the periods being compared. (ii) NOI from limited number of properties undergoing significant de-leasing in preparation for redevelopment or intensification
	Three months ended December 31				Years ended December 31
(thousands of dollars)		2023		2022		2023		2022
Commercial Same Property NOI	$	150,698	$	142,019	$	596,558	$	569,416
Residential Same Property NOI		4,088		3,507		7,123		6,260
Same Property NOI	$	154,786	$	145,526	$	603,681	$	575,676

FFO

The following table reconciles net income (loss) attributable to Unitholders to FFO for the three months and years ended December 31, 2023 and 2022:

	Three months ended December 31				Years ended December 31
(thousands of dollars, except where otherwise noted)		2023		2022		2023		2022
Net income (loss) attributable to Unitholders	$	(117,659)	$	(4,961)	$	38,802	$	236,772
Add back/(Deduct):
Fair value losses, net		222,921		115,507		450,408		241,128
Fair value losses included in equity-accounted investments		13,506		8,404		14,124		16,207
Internal leasing costs		3,156		3,306		11,919		12,204
Transaction losses on investment properties, net (i)		1,147		560		1,182		1,027
Transaction gains on equity-accounted investments		(14)		—		(83)		—
Transaction costs on sale of investment properties		5,094		2,652		5,601		5,734
ERP implementation costs		3,503		—		12,032		—
Change in unrealized fair value on marketable securities		(1,846)		382		865		3,782
Current income tax (recovery) expense		(18)		(184)		(13,365)		921
Operational lease revenue from ROU assets		1,283		1,120		5,116		4,086
Operational lease expenses from ROU assets in equity-accounted investments		(16)		(12)		(55)		(46)
Capitalized interest on equity-accounted investments (ii)		1,833		869		4,735		2,863
FFO	$	132,890	$	127,643	$	531,281	$	524,678
Add back:
Restructuring costs		24		510		1,368		4,289
FFO Adjusted	$	132,914	$	128,153	$	532,649	$	528,967
FFO per unit - basic	$	0.44	$	0.42	$	1.77	$	1.71
FFO per unit - diluted	$	0.44	$	0.42	$	1.77	$	1.71
FFO Adjusted per unit - diluted	$	0.44	$	0.42	$	1.77	$	1.73
Weighted average number of Units - basic (in thousands)		300,417		302,321		300,392		306,069
Weighted average number of Units - diluted (in thousands)		300,417		302,423		300,479		306,247
FFO for last 4 quarters					$	531,281	$	524,678
Distributions paid for last 4 quarters					$	321,414	$	309,416
FFO Payout Ratio						60.5%		59.0%
(i) Represents net transaction gains or losses connected to certain investment properties during the period.
(ii) This amount represents the interest capitalized to RioCan's equity-accounted investment in WhiteCastle New Urban Fund 2, LP, WhiteCastle New Urban Fund 3, LP, WhiteCastle New Urban Fund 4, LP, WhiteCastle New Urban Fund 5, LP, RioCan-Fieldgate JV, RC (Queensway) LP, RC (Leaside) LP - Class B, PR Bloor Street LP and RC Yorkville LP. This amount is not capitalized to properties under development under IFRS but is allowed as an adjustment under REALPAC’s definition of FFO.

Development Spending

Total Development Spending for the three months and years ended December 31, 2023 and 2022 is as follows:

	Three months ended December 31				Years ended December 31
(thousands of dollars)		2023		2022		2023		2022
Development expenditures on balance sheet:
Properties under development	$	52,267	$	78,282	$	244,260	$	298,409
Residential inventory		26,875		33,631		127,118		112,597
RioCan's share of Development Spending from equity-accounted joint ventures		15,223		2,639		28,568		16,062
Total Development Spending	$	94,365	$	114,552	$	399,946	$	427,068

	Three months ended December 31				Years ended December 31
(thousands of dollars)		2023		2022		2023		2022
Mixed-use projects	$	83,271	$	88,642	$	346,956	$	394,926
Retail projects		11,094		25,910		52,990		32,142
Total Development Spending	$	94,365	$	114,552	$	399,946	$	427,068

Total Acquisitions

Total Acquisitions for the three months and years ended December 31, 2023 and 2022 are as follows:

	Three months ended December 31				Years ended December 31
(thousands of dollars)		2023		2022		2023		2022
Income producing properties	$	—	$	5,011	$	75,473	$	96,031
Properties under development		—		—		34,583		11,946
Residential inventory		—		—		—		19,440
RioCan's share of acquisitions from equity-accounted joint ventures		—		—		—		66,497
Total Acquisitions	$	—	$	5,011	$	110,056	$	193,914
Subsequent event acquisitions to February 13, 2024		153,089		n.a		153,089		n.a
Total Acquisitions to February 13, 2024	$	153,089		n.a	$	263,145		n.a

Total Contractual Debt

The following table reconciles total debt to Total Contractual Debt as at December 31, 2023 and December 31, 2022:

As at	December 31, 2023						December 31, 2022
(thousands of dollars, except where otherwise noted)	IFRS basis		Equity- accounted investments		RioCan's proportionate share		IFRS basis		Equity- accounted investments		RioCan's proportionate share
Debentures payable	$	3,240,943	$	—	$	3,240,943	$	2,942,051	$	—	$	2,942,051
Mortgages payable		2,740,924		158,292		2,899,216		2,659,180		172,100		2,831,280
Lines of credit and other bank loans		879,246		231,963		1,111,209		1,141,112		89,187		1,230,299
Total debt	$	6,861,113	$	390,255	$	7,251,368	$	6,742,343	$	261,287	$	7,003,630
Less:
Unamortized debt financing costs, premiums and discounts on origination and debt assumed, and modifications		(24,019)		(484)		(24,503)		(15,634)		(690)		(16,324)
Total Contractual Debt	$	6,885,132	$	390,739	$	7,275,871	$	6,757,977	$	261,977	$	7,019,954

Floating Rate Debt and Fixed Rate Debt

The following table summarizes RioCan's Ratio of floating rate debt to total debt as at December 31, 2023 and December 31, 2022:

As at	December 31, 2023						December 31, 2022
(thousands of dollars, except where otherwise noted)	IFRS basis		Equity- accounted investments		RioCan's proportionate share		IFRS basis		Equity- accounted investments		RioCan's proportionate share
Total fixed rate debt	$	6,543,106	$	212,554	$	6,755,660	$	6,301,054	$	141,720	$	6,442,774
Total floating rate debt		318,007		177,701		495,708		441,289		119,567		560,856
Total debt	$	6,861,113	$	390,255	$	7,251,368	$	6,742,343	$	261,287	$	7,003,630
Ratio of floating rate debt to total debt		4.6%				6.8%		6.5%				8.0%

Liquidity

As at December 31, 2023, RioCan had approximately $2.0 billion of Liquidity as summarized in the following table:

As at	December 31, 2023						December 31, 2022
(thousands of dollars)	IFRS basis		Equity- accounted investments		RioCan's proportionate share		IFRS basis		Equity- accounted investments		RioCan's proportionate share
Undrawn revolving unsecured operating line of credit	$	1,250,000	$	—	$	1,250,000	$	1,116,351	$	—	$	1,116,351
Undrawn construction lines and other bank loans		385,715		189,563		575,278		267,562		70,094		337,656
Cash and cash equivalents		124,234		14,506		138,740		86,229		8,001		94,230
Liquidity	$	1,759,949	$	204,069	$	1,964,018	$	1,470,142	$	78,095	$	1,548,237

Adjusted EBITDA

The following table reconciles consolidated net income attributable to Unitholders to Adjusted EBITDA:

Year ended	December 31, 2023						December 31, 2022
(thousands of dollars)	IFRS basis		Equity-accounted investments		RioCan's proportionate share		IFRS basis		Equity-accounted investments		RioCan's proportionate share
Net income attributable to Unitholders	$	38,802	$	—	$	38,802	$	236,772	$	—	$	236,772
Add (deduct) the following items:
Income tax (recovery) expense:
Current		(13,365)		—		(13,365)		921		—		921
Fair value losses on investment properties, net		450,408		14,123		464,531		241,128		16,208		257,336
Change in unrealized fair value on marketable securities (i)		865		—		865		3,783		—		3,783
Internal leasing costs		11,919		—		11,919		12,204		—		12,204
Non-cash unit-based compensation expense		10,154		—		10,154		9,056		—		9,056
Interest costs, net		208,948		11,339		220,287		180,365		8,242		188,607
Restructuring costs		1,368		—		1,368		4,289		—		4,289
ERP implementation costs		12,032		—		12,032		—		—		—
Depreciation and amortization		2,632		—		2,632		4,774		—		4,774
Transaction losses (gains) on the sale of investment properties, net (ii)		1,180		(83)		1,097		1,024		—		1,024
Transaction costs on investment properties		5,606		1		5,607		5,734		3		5,737
Operational lease revenue (expenses) from ROU assets		5,116		(55)		5,061		4,086		(46)		4,040
Adjusted EBITDA	$	735,665	$	25,325	$	760,990	$	704,136	$	24,407	$	728,543
(i) The fair value gains and losses on marketable securities may include both the change in unrealized fair value and realized gains and losses on the sale of marketable securities. By adding back the change in unrealized fair value on marketable securities, RioCan effectively continues to include realized gains and losses on the sale of marketable securities in Adjusted EBITDA and excludes unrealized fair value gains and losses on marketable securities in Adjusted EBITDA.
(ii) Includes transaction gains and losses realized on the disposition of investment properties.

Adjusted Debt to Adjusted EBITDA Ratio

Adjusted Debt to Adjusted EBITDA is calculated as follows:

Year ended	December 31, 2023						December 31, 2022
(thousands of dollars, except where otherwise noted)	IFRS basis		Equity- accounted investments		RioCan's proportionate share		IFRS basis		Equity- accounted investments		RioCan's proportionate share
Adjusted Debt to Adjusted EBITDA
Average total debt outstanding	$	6,879,087	$	317,231	$	7,196,318	$	6,756,628	$	251,888	$	7,008,516
Less: average cash and cash equivalents		(120,952)		(11,408)		(132,360)		(74,871)		(8,791)		(83,662)
Average Total Adjusted Debt	$	6,758,135	$	305,823	$	7,063,958	$	6,681,757	$	243,097	$	6,924,854
Adjusted EBITDA (i)	$	735,665	$	25,325	$	760,990	$	704,136	$	24,407	$	728,543
Adjusted Debt to Adjusted EBITDA		9.19				9.28		9.49				9.51
(i) Adjusted EBITDA is reconciled in the immediately preceding table above.

Unencumbered Assets

The tables below summarize RioCan's Unencumbered Assets and Percentage of Normalized NOI Generated from Unencumbered Assets as at December 31, 2023 and December 31, 2022:

As at		December 31, 2023						December 31, 2022
(thousands of dollars, except where otherwise noted)	Targeted Ratios	IFRS basis		Equity-accounted investments		RioCan's proportionate share		IFRS basis		Equity-accounted investments		RioCan's proportionate share
Investment Properties		$	13,561,718	$	411,811	$	13,973,529	$	13,807,740	$	398,701	$	14,206,441
Less: Encumbered Investment Properties			5,531,177		352,425		5,883,602		5,607,460		342,473		5,949,933
Unencumbered Assets		$	8,030,541	$	59,386	$	8,089,927	$	8,200,280	$	56,228	$	8,256,508
Annual Normalized NOI - total portfolio (i)		$	692,092	$	25,664	$	717,756	$	646,540	$	23,488	$	670,028
Annual Normalized NOI - Unencumbered Assets (i)		$	396,888	$	3,736	$	400,624	$	370,804	$	3,440	$	374,244
Percentage of Normalized NOI Generated from Unencumbered Assets	> 50.0%		57.3 %				55.8 %		57.4 %				55.9 %

(i) Annual Normalized NOI is reconciled in the table below.

	Three months ended December 31, 2023						Three months ended December 31, 2022
(thousands of dollars)	IFRS basis		Equity- accounted investments		RioCan's proportionate share		IFRS basis		Equity- accounted investments		RioCan's proportionate share
NOI (i)	$	176,306	$	6,416	$	182,722	$	166,062	$	5,872	$	171,934
Adjust the following:
Miscellaneous revenue		(874)		—		(874)		(802)		—		(802)
Percentage rent		(2,339)		—		(2,339)		(3,234)		—		(3,234)
Lease cancellation fees		(70)		—		(70)		(391)		—		(391)
Normalized NOI - total portfolio	$	173,023	$	6,416	$	179,439	$	161,635	$	5,872	$	167,507
Annual Normalized NOI - total portfolio(ii)	$	692,092	$	25,664	$	717,756	$	646,540	$	23,488	$	670,028
NOI from Unencumbered Assets	$	101,349	$	934	$	102,283	$	94,957	$	860	$	95,817
Adjust the following for Unencumbered Assets:
Miscellaneous revenue		(796)		—		(796)		(518)		—		(518)
Percentage rent		(1,331)		—		(1,331)		(1,430)		—		(1,430)
Lease cancellation fees		—		—		—		(308)		—		(308)
Normalized NOI - Unencumbered Assets	$	99,222	$	934	$	100,156	$	92,701	$	860	$	93,561
Annual Normalized NOI - Unencumbered Assets (ii)	$	396,888	$	3,736	$	400,624	$	370,804	$	3,440	$	374,244
(i) Refer to the NOI and Same Property NOI table of this section for reconciliation from NOI to operating income.
(ii) Calculated by multiplying Normalized NOI by a factor of 4.

Forward-Looking Information

This News Release contains forward-looking information within the meaning of applicable Canadian securities laws. This information reflects RioCan’s objectives, our strategies to achieve those objectives, as well as statements with respect to management’s beliefs, estimates and intentions concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information can generally 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 information reflects management’s current beliefs and is based on information currently available to management. All forward-looking information in this News Release is qualified by these cautionary statements. Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan’s current estimates and assumptions, which are subject to numerous risks and uncertainties, including those described in the "Risks and Uncertainties" section in RioCan's MD&A for the three months and year ended December 31, 2023 and in our most recent Annual Information Form, which could cause actual events or results to differ materially from the forward-looking information contained in this News Release. 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 this forward-looking information.

The forward-looking statements contained in this News Release are made as of the date hereof, and should not be relied upon as representing RioCan’s views as of any date subsequent to the date of this News Release. Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240213409741/en/

Contacts

RioCan Real Estate Investment Trust
Dennis Blasutti
Chief Financial Officer
416-866-3033 | www.riocan.com