AHEAD OF THE CURVE ANNUAL REPORT 2014 EDWARD SONSHINE, O.ONT.,Q.C. | Chief Executive Officer AHEAD OF THE CURVE With a market capitalization of more than $9 billion, RioCan is the largest real estate investment trust in Canada. RioCan has ownership interests in 340 retail properties in some of North America’s most desired markets. Your REIT has 15 major properties under development, coming on stream over the next several years. RioCan’s strength is assured with a seasoned management team, disciplined fnancial focus, and a quality balance sheet. CEO’S LETTER TO UNITHOLDERS RioCan is a pre-eminent North American REIT with a retail focus. Your REIT comprises a dominant Canadian retail platform, and a leading retail portfolio in select markets in the United States. To assure future growth, RioCan is redeveloping existing core assets of key retail sites in major Canadian cities. Tis report showcases select properties that will transform the lives of customers and communities alike. RIOCAN REAL ESTATE INVESTMENT TRUST ANNUAL REPORT 2014 REAL ESTATE RIOCAN 2_3 Ahead of the Curve... | characterizes We believe that the addition of a residential component to certain properties will enhance the value of the underlying RioCan’s strategic thinking and operational practices. real estate. Tese developments will feature a modern design, As an example, a decade ago, RioCan identified, and then ideal for customers to visit, shop in, eat at, and in some acquired, a portfolio of properties in Canada’s six major instances live in. RioCan’s residential platform will ofer professional property management, security of tenure, and markets. This strategy was prescient: today, almost 75% a host of amenities. A fexible and creative approach to site of annual revenue in Canada is derived from these six development for shopping, and living, ensures that RioCan major markets. To further enhance these sites, RioCan stays ahead of the curve. has commenced intensifying them. Te residential sector provides a steady and continuous income stream with a growth profle that will serve as a hedge against infation. Te residential component will also provide additional With RioCan’s tenant profle of national and anchor retailers, diversifcation to RioCan’s retail portfolio. In total, RioCan’s risk is balanced – and diversifed. Of note, 86.5% of our objective is to develop as many as 19,000 units over the next annualized Canadian revenue as at December, 31 2014 is ten years. We have identifed an initial eight projects that will generated by these high-profle tenants. Stable cash fows from provide about 3,369 units where zoning applications have been these brand-name tenants result in successful, and enduring fled or will be in the next several months, the details of which tenancies. Accordingly, RioCan’s occupancy rate was 97.0% can be found further on in this report. at December 31, 2014. Such success is based on mutually Given the extent of this initiative, RioCan will possess a proftable partnerships between RioCan and its leading tenants. scale that will result in numerous efciencies going forward. RioCan is thinking ahead of the curve in densely populated RioCan owns the underlying land, ofen at irreplaceable urban areas that ofen lack high-quality shopping centres. locations, thus giving it the unique opportunity to create a Brand-name national retailers are also typically under- tremendous amount of value. RioCan has established a team represented in these markets. to carry forward the residential rental initiative, drawing from its existing areas of expertise. Te team is comprised of Because of the popularity of individuals working, living and AHEAD OF THE CURVE existing RioCan executives as well as third-party consultants. enjoying recreational activities in the core of the city, RioCan’s As this initiative matures, additional resources will be added mixed-use properties hold widespread appeal. Instead of a to the platform to facilitate such growth. “one-size” fts all template, your REIT develops site-specifc solutions, according to neighbourhood, need, desired retail In the United States, RioCan operates in the highly populated, mix, and zoning. RioCan confgures innovative spaces that northeast, and in four robust markets in Texas: Dallas-Fort invite the perfect blend of tenants and customers alike. Worth, Houston, Austin and San Antonio. RioCan’s development platform now encompasses a portfolio RioCan’s business and prospects are strong. Your REIT’s of properties that will include a residential component. In some operating FFO increased 5.1% to $517 million for the year cases, RioCan’s residential spaces include condominium units. ended December 31, 2014 compared to $492 million for In others, RioCan will provide rental residential apartments. 2013. In Canada, RioCan’s leasing team renewed 4.2 million square feet and averaged an 11.4% rental rate increase, RioCan has identifed ffy of its properties that hold the amounting to $1.84/sq. foot in 2014. Our management potential for additional intensifcation opportunities. Tese team and the strength of your Trust’s portfolio are designed properties are located in our six core Canadian markets to address challenges as they arise. primarily in the Greater Toronto Area, and are typically located in the vicinity of substantive transit infrastructure. Tis As always, I thank you for your continued trust and intensifcation and residential development represents the next confidence in RioCan. stage of growth for your Trust. Edward Sonshine, O.Ont., Q.C. Chief Executive Ofcer, RioCan Real Estate Investment Trust AHEAD OF THE CURVE URBAN MARKETS RIOCAN REAL ESTATE INVESTMENT TRUST ANNUAL REPORT 2014 REAL ESTATE RIOCAN 4_5 Ahead of the Curve AHEAD OF THE CURVE Urban Markets | In urban markets, RioCan’s properties are popular attractions designed for convenient shopping, working, eating, and other recreational activities. RioCan’s high-profile sites are often situated at bustling, transit-accessible intersections. RioCan Yonge Eglinton Centre, Toronto, Ontario | Extensive renovations have been completed at the Yonge Eglinton Centre. A 45,000 sq. foot addition is underway and is expected to be completed mid 2015. New retailers will include Cineplex VIP Teatres and Winners. RioCan Yonge Eglinton Centre, Toronto, Ontario | Tis popular, midtown Toronto mixed-use complex includes leading retailers such as Indigo Books, Metro Grocery, Pickle Barrel and Urban Outftters. College and Bathurst, Toronto, Ontario | Tis conveniently located 1.3 acre site will be developed into a 145,000 sq. foot three storey urban mixed-use building. It includes 300 underground parking spots. Northeast Yonge and Eglinton, Toronto, Ontario | Sage Hill, Calgary, Alberta | Tis large-scale 34-acre site in Tis striking development incorporates a 58 foor condominium tower, northwest Calgary is expected to be completed in 2016. Currently, the a 36 foor residential rental tower, and 54,000 sq. feet of retail and site is 72% pre-leased. Anchor tenants are Walmart and Loblaws. commercial space, including a fagship Toronto Dominion Bank branch. AHEAD OF THE CURVE MIXED USE DEVELOPMENT RIOCAN REAL ESTATE INVESTMENT TRUST ANNUAL REPORT 2014 REAL ESTATE RIOCAN 6_7 Ahead of the Curve AHEAD OF THE CURVE Mixed Use Development | Accommodating space constraints in densely populated urban centres, RioCan designs its mixed-use properties to fulfill an array of shopping needs, and diverse eating and recreational activities. Designated sites combine office and living spaces too. Queen & Portland, Toronto, Ontario | Tree storeys of this development are devoted to retail while the other four storeys are residential. Major tenants include Loblaws, Winners and Joe Fresh. Yonge & Sheppard, Toronto, Ontario | Positioned at the bustling intersections of Sheppard Avenue and Yonge Street, major retailers include Longos and LA Fitness. Te Sheppard Centre includes two ofce properties, with three adjacent RioCan retail properties. King & Portland, Toronto, Ontario | Tis 400,000 sq. foot mixed-use complex features 20,000 sq. feet of retail, a 200,000 sq. foot East Village, Calgary, Alberta | Tis 2.75 acre ofce space, and 170,000 sq. feet of residential space. site in downtown Calgary features almost 270,000 sq. feet of retail including a key anchor: a 100,000 sq. foot Loblaws. Tis site features easy LRT and Skyway access, and 300 dedicated parking spots. Ahead of the Curve Mixed Use Development | With disciplined financial management and decades of experience in large-scale real estate, RioCan is perfectly positioned to co-manage large-scale projects like The Well, from conception through to completed project. The Well, Toronto, Ontario | Toronto is abuzz with Te Well, a transformative new development situated on 7.7 acres of prime real estate in downtown Toronto. Tis is the epitome of a mixed-use project, as it combines world-class shopping, living, working and recreation. The Well, Toronto, Ontario | Te Well features 1.6 million sq. feet of retail and ofce space, 940,000 sq. feet of residential rental units, and 466,000 sq. feet of condominium space. RioCan has partnered with Allied Properties REIT and Diamond Corporation. RIOCAN REAL ESTATE INVESTMENT TRUST ANNUAL REPORT 2014 REAL ESTATE RIOCAN 8_9 AHEAD OF THE CURVE OUTLET CENTRES Ahead of the Curve Outlet Centres | RioCan’s Outlet Centres are popular destinations, providing easy access and ample parking for diverse retail including high fashion at discount prices, food, sporting goods, health and beauty, and home furnishings. RioCan’s