ANNUAL REPORT 2018 BUILDING ON EXPERIENCE, SHAPING THE FUTURE CORPORATE PROFILE RioCan is one of Canada’s largest real estate investment trusts with a total enterprise value of approximately $13.2 billion as at December 31, 2018. 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. Our portfolio is comprised of 233 properties, including 16 development properties, with an aggregate net leasable area of approximately 38.7 million square feet. To learn more about how we deliver real vision on solid ground, visit www.riocan.com. TABLE OF CONTENTS IFC Contents & Profile 1 Strategic Canadian Major Market Positioning 2 CEO’s Letter to Unitholders 6 Yonge Eglinton Centre 7 eCentral 8 Frontier 9 Silver City Gloucester 10 Bathurst College Centre 12 RioCan Colossus Centre 13 Property Portfolio 22 Management’s Discussion and Analysis 98 Audited Annual Consolidated Financial Statements IBC Corporate Information Strategic Canadian Major Market Positioning MONTREAL VANCOUVER EDMONTON 20 ASSETS 7 ASSETS 12 ASSETS 3.0M SF 1.8M SF 1.7M SF OTTAWA CALGARY 35 ASSETS 14 ASSETS TORONTO 2 4.8M SF 3.2M SF 83 ASSETS 15.3M SF Key Metrics in Canada’s Six Major Markets3 85.4% OF 11M+ SF 97.7% 171 ASSETS 1 2.6% SPNOI ANNUALIZED ZONED FOR COMMITTED 29.8M SF GROWTH REVENUE DEVELOPMENT OCCUPANCY 1. Excludes 16 active properties under development with 2.2M sf at RioCan’s interest 2. Excludes 12 active properties under development with 1.7M sf at RioCan’s interest 3. As of December 31, 2018 RIOCAN REAL ESTATE 1 INVESTMENT TRUST ANNUAL REPORT 2018 EDWARD SONSHINE, O.ONT., Q.C. CHIEF EXECUTIVE OFFICER Dear Unitholders, 2018 was an extraordinary year for RioCan as we celebrated our 25th Anniversary and continued to execute on our strategic transformation. The quality of our portfolio and income has never been stronger than it is now. We expect that prior to the end of 2019 we will reach two of our key strategic targets: specifically, deriving 90% of our revenue from Canada’s six major markets (Toronto, Ottawa, Montreal, Vancouver, Edmonton, and Calgary), and 50% of our total revenue from the Greater Toronto Area (GTA), the largest, most prosperous and fastest growing area in this country. To continue delivering long-term unitholder value, we remain focused on implementing a strategy underpinned by four critical pillars: • Strengthening our leading major market portfolio by concentrating on properties within fast-growing, highly populated and high-income areas; • Driving organic growth by evolving our tenant mix to stay ahead of changing consumer trends and delivering operating efficiencies and ancillary revenue; • Unlocking intrinsic value by bringing our major market assets to their highest and best use by intensifying transit-oriented properties with mixed-use residential developments, generating new sources of cash-flow and Net Asset Value (NAV) growth; and • Managing risks effectively through diversification, an experienced leadership team, and the strongest balance sheet in our sector. As we celebrate our 25th Anniversary, we can look back on a successful and dynamic history, which has driven RioCan to adapt and thrive in an ever-evolving environment by building upon our competitive advantages of leadership team experience, leading major market portfolio, robust development pipeline and a strong balance sheet. I would like to take you briefly through this journey to illustrate how RioCan’s past is shaping our future. 2 RIOCAN REAL ESTATE INVESTMENT TRUST ANNUAL REPORT 2018 RioCan’s History 1993-1999 – Growth through Acquisition, Scale and Flexibility We founded RioCan Real Estate Investment Trust (REIT) in 1993 in the wake of one of the worst real estate recessions of our time. Our intent was to create and build a REIT that would stand the test of time through fluctuating economic cycles and evolving market landscapes. From the outset, we built a leadership team with strong skill sets in investments, leasing, and asset management with the aim of delivering long-term tenant satisfaction and unitholder value. In 1994, RioCan listed on the Toronto Stock Exchange and raised crucial capital to fuel a strategic combination of growth from acquisitions, operational scale and financial flexibility, enabling us to focus exclusively on the retail sector. From 1997, we identified and capitalized on the inherent value in retail “Power Centres”. We strategically acquired signature properties such as Gloucester Silver City in Ottawa, Ontario (which later became the site of one of our first residential rental developments) and Colossus Centre in Vaughan, Ontario (a 60 acre site, rich in intensification opportunities due to its proximity to the recently opened Vaughan Metropolitan Subway Station). By the end of 1999, we had acquired RealFund, another of the first three Canadian REITs, which added 5 million square feet of space, nearly doubling our total portfolio size. This decision enabled us to establish RioCan as Canada’s largest REIT and Power Centre owner with a distinctive foothold in major markets, ultimately positioning the Trust for the future and creating a baseline for what eventually became a robust development pipeline. 2000-2004 – Expanding and Adding Value As we moved into the new millennium, we undertook our first exclusive partnership with Kimco Realty, and expedited our growth through the joint acquisition of a portfolio with a fair value of approximately $2 billion that would strengthen our balance sheet and simultaneously mitigate risk. The Canadian suburbs expanded and RioCan shifted gears, strategically adapting to the evolving population demographics and retail trends. We diversified our portfolio with developments that enabled us to build assets from the ground up, which offered retailers greater customization and drove overall cost efficiencies. To execute this strategy, we continued to acquire in partnership with Kimco, focusing on purchasing sought- after land where retailers wanted to be, and then building developments to specification. In some cases, we opportunistically bought troubled assets, turned them around and sold them at a substantial profit. In parallel, the leadership team developed additional institutional partnerships to mitigate risk and grow. By 2004, our leadership team had expanded to include in-house development and project management capabilities. 2005-2017 – Strengthening our Major Market Rent Breakdown 2018 Focus, Tenant Mix and Balance Sheet Entertainmentnment & Hobby A foundation of disciplined capital allocation 3% MMovie Theatres and astute strategic execution fortified RioCan Department 5% Stores & Apparparel 3% to weather the upcoming global financial crisis 9% since 2007 and thrive on the valuable opportunities it 8% would unearth. since 2007 Grocery 27% From 2005, having long-benefitted from its robust and sustainable characteristics, RioCan Furniture & Home applied an even greater focus to Canada’s major 10% markets by strategically pruning our portfolio and decreasing our exposure in secondary markets. Specialty Retailers 11% We also invested in mixed-use, transit-oriented Personal properties such as the iconic Yonge Eglinton Services Value 21% Centre and Yonge Sheppard Centre in Toronto. Retailers 14% 5% In addition, we began to aggressively pursue since 2007 mixed-use zoning for our existing portfolio in order to unlock its intrinsic value, giving us a ten- year head start over our peers and translating to a 73% OF RENT FROM NECESSITY-BASED significant present day competitive advantage. AND SERVICE ORIENTED TENANTS RIOCAN REAL ESTATE 3 INVESTMENT TRUST ANNUAL REPORT 2018 Our Andrew Duncan John Ballantyne Oliver Harrison Jonathan Gitlin Management Senior Vice President, Senior Vice President, Vice President, President & Team Developments Asset Management National Operations Chief Operating Officer Qi Tang Jennifer Suess Jeff Ross Senior Vice President & Senior Vice President, Senior Vice President, Chief Financial Officer General Counsel & Edward Sonshine, O. Ont, Q.C. Leasing & Tenant Corporate Secretary Chief Executive Officer Coordination Total Return to Unitholders Assuming Distributions are Re-Invested FFO per Unit $1,000 $1,043 $2.50 $635 $359 rate: 3.6% $800 $331 $2.00 $172 $825 $168 $440 Compound annual growth $269 $295 $600 $166 $1.50 $137 $400 $1.00 $100 $100 $200 $100 $0.50 $1.56 $1.85 $1.32 $0.91 $1.48 $0 $0.00 1998 2003 2008 2013 2018 1998 2003 2008 2013 2018 RioCan S&P/TSX Capped REIT Index S&P/TSX Composite Index 4 RIOCAN REAL ESTATE INVESTMENT TRUST ANNUAL REPORT 2018 South of the border, by 2009, the 2007-2008 financial crisis had driven the U.S. into a recession resulting in a wealth of available, undervalued assets. The Leadership Team made the strategic decision to enter the U.S., eventually purchasing 49 retail properties across the Northeastern States and Texas, prior to divesting all the U.S. assets DEVELOPMENT for $2 billion at a high point in the market in May 2016 and realizing a PIPELINE substantial gain on the original investment. This strategic divestment enabled RioCan to further strengthen our balance sheet and at the same time focus exclusively on our Canadian assets and development 26.2M SF pipeline, which included buying out Kimco’s interest in our Canadian development pipeline major market assets by the end of 2016. 2018 and beyond – Building on our Strength and Vision to 11.2M SF Position RioCan to Thrive with zoning approved RioCan is stronger than it has ever been, having developed and built our competitive strengths through 25 years of combined leadership 100% experience, vision and discipline. A best-in-class balance sheet located in Canada’s six major enables RioCan to access a lower cost of debt compared to peers. markets Strong operation, divestiture and development execution has enabled us to accelerate our Canadian major market strategy with 2,100 the aim of reaching the target of 90% of our rental revenue from residential units under the six major markets by the end of 2019.