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. TABLE OF CONTENTS IFC CORPORATE PROFILE 1 THE MAJOR MARKETS 2 CEO’S LETTER TO UNITHOLDERS 6 GLOUCESTER 8 EPLACE 10 KING PORTLAND CENTRE 12 YONGE SHEPPARD CENTRE 14 BRENTWOOD VILLAGE 16 MANAGEMENT TEAM 17 PROPERTY PORTFOLIO 27 MANAGEMENT’S DISCUSSION AND ANALYSIS 101 FINANCIALS 147 CORPORATE INFORMATION RIOCAN REAL ESTATE INVESTMENT TRUST IFC_1 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% VANCOUVER % of Income Producing NLA: 7.7% Metropolitan area: 2,571,262 % of annualized rental revenue: 5.6% 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. RIOCAN REAL ESTATE INVESTMENT TRUST 2_3 ANNUAL REPORT 2017 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, Canada’s six largest markets. Of note, we approximately 6% increase in renewal rent. expect that more than 50% of our These accomplishments translated into a revenue will be generated from Canada’s 6.3% increase in FFO per unit in 2017 as largest market: the Greater Toronto Area compared to 2016. (“GTA”). The anticipated outcome will be a resilient portfolio that generates stronger CEO’S LETTER Based on the growth over this past year, same property NOI growth per year and TO UNITHOLDERS and the Trust’s confidence in our ability to every property in that portfolio will maintain our growth profile, the Board of eventually be an opportunity to surface Trustees approved a three cent or 2.1% increased value. Dear Unitholders, increase to RioCan’s 2018 distribution to an annualized distribution of $1.44 per In addition to evolving the geographic mix RioCan – We Are Where You Want To Be of our portfolio, we are also evolving our unit per year. 2017 was a year of much change and saw a tenant mix. RioCan recognizes that our strong progression of RioCan’s strategic Canada’s Six Major Markets: success is deeply intertwined with the vision. While the Trust made significant A Foundation For The Present – And success of our tenants. By anticipating, progress on its development program and The Future planning for the future and continuously accelerating its major market strategy, it evolving, RioCan attracts tenants best RioCan has the entrepreneurial vision to suited for future success. Over the past delivered at the same time the highest identify opportunities and the resources to same property net operating income decade, RioCan has increased our tenant realize them. At the onset of our REIT, our concentration into the strongest retail (“NOI”) growth since 2010 and 6.3% business primarily consisted of acquiring year‑over‑year funds from operations sectors, such as grocery, pharmacy, and managing shopping centres. More restaurants, personal services, (“FFO”) growth. than a decade ago, RioCan anticipated a and value retailers. With a total enterprise value of $13.9 demographic shift away from Canada’s billion, RioCan’s portfolio of retail and secondary markets to Canada’s six major Maximizing Value By Disposing Of increasingly mixed-use properties is markets with compelling demographics Secondary Market Assets and rapid population growth: Toronto, powerfully rooted in Canada’s six major To accelerate the progress of our major markets. Twenty five years of experience, Ottawa, Calgary, Edmonton, Vancouver and Montréal. This population growth has market initiatives, we have embarked on acumen and insight have resulted in an the sale of approximately 100 properties incomparable major-market portfolio, with driven investment in new infrastructure, specifically significant investment in transit largely in Canada’s secondary markets a diversified, strong national tenant base, with a value surpassing $2.0 billion. These significant upside on rent growth and expansion. Population density and accessibility make these markets properties generate stable income; tremendous intrinsic value that will drive however, their growth profile lags that of Net Asset Value (“NAV”) and FFO growth in compelling for tenants, resulting in a resilient portfolio with stable tenancies and RioCan’s major market portfolio. Over the the near and long term. This portfolio is next two to three years, we anticipate managed and optimized by the strong strong income growth. We planned for this seismic demographic shift into the nation’s realizing approximately $1.5 billion of net executive bench who use their collective proceeds from these sales. These funds wealth of experience and expertise to drive six major markets, and for more than a decade RioCan has focused its growth in will be allocated to maintaining our organic growth, strategically surface the current leverage and capital structure, the these markets. intrinsic value within the portfolio; development program, and the maintain a strong balance sheet and At its core, RioCan represents a portfolio of repurchase of units through our normal make selective acquisitions. retail-focused, increasingly mixed-use course issuer bid. Canadian consumers’ shopping habits are properties situated in high-density, transit- oriented locations. Due to its intrinsic We have made significant progress on the changing, as are Canada’s major markets, disposition of these properties. As of value, RioCan’s major market portfolio is which are becoming more populous and February 13, 2018 there is a total of central to its ongoing success. Currently, urbanized. Increasingly there is a need for approximately $512 million in either approximately 76% of our revenue is mixed-use communities in Canada’s major closed, firm or conditional transactions, generated from these markets. Upon the markets as more Canadians shop, live and representing approximately 25% of the completion of our announced secondary work in urban settings. RioCan’s portfolio of $2.0 billion disposition target at sale prices market property dispositions over the next major market assets is perfectly positioned in-line with IFRS values. to capitalize on these trends and drive value two to three years, more than 90% of our growth for our unitholders. rental revenue will be produced in Exciting New Community, 15 Minutes From Downtown Ottawa Phase I, 23 Storey, Approval For A 222 Residential Total Of 4 Towers Units And Up To 820 Units 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. RIOCAN REAL ESTATE INVESTMENT TRUST 4_5 ANNUAL REPORT 2017 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 Although RioCan will always feature a RioCan employs a principle we call significant retail component, retail has “laddering” in our development program, changed in terms of client mix and goods similar to our approach with staggering our and services offered. To maintain our debt maturities. The “debt ladder” is an leadership in the marketplace, our effective tool in both a declining interest development strategy reflects a popular rate environment as well as in a slowly saying: “People shop where they live, and, rising interest rate economy, as is the case increasingly live where they shop.” presently. In a similar manner, RioCan Consumers will easily find, enjoy and shop Surfacing Value Through Intensification “staggers” the development of our in RioCan’s properties in high‑density, And Redevelopment properties so as to spread out risk, transit oriented locations in Canada’s RioCan’s major market portfolio today allowing us to best allocate our financial, major markets.