RioCan Announces Strong First Quarter Results - Solid Leasing Spreads and Same Property NOI Growth Achieved

RioCan Real Estate Investment Trust (“RioCan" or the "Trust”) (TSX: REI.UN) announced today its financial results for the three months ended March 31, 2025.

• Strong leasing demand generated new leasing spreads of 18.3%; blended leasing spreads of 17.5%
• Commercial Same Property NOI increased to 3.6%
• 96% completion of expected First Quarter condominium interim closings to date; cumulative 97% success rate since Q4 2024
• RioCan Living asset monetization strategy proceeding with deals for the sale of four additional assets

“RioCan’s major-market, necessity-based portfolio delivered strong operational and financial results in the first quarter of 2025, despite significant global economic volatility and short-term challenges presented by HBC’s CCAA filing. We continue to successfully deliver on our strategy to monetize our RioCan Living portfolio and met our interim condominium closing targets for Q1”, said Jonathan Gitlin, President and CEO of RioCan. “We remain focused on executing our strategy to drive growth and responsibly managing capital to maximize long-term value for our Unitholders. With a proven track record and experienced team, we are well positioned to successfully navigate any economic environment. With respect to HBC, we will be disciplined in our approach, and we are committed to protecting the interests of our Unitholders.”

• FFO per unit was $0.49, an increase of $0.04 per unit or 8.9% compared to the same period last year. This growth resulted from strong operating performance and higher residential inventory gains partially offset by higher interest expenses, net of interest income.
• Net loss per unit of $0.28 was $0.71 per unit lower than the same period last year. In addition to the FFO items described above, net loss included Total RC-HBC JV Valuation Losses¹ of $208.8 million or $0.70 per unit pertaining to the Trust's investment in the RioCan-HBC Joint Venture (RC-HBC JV). The net investment in the RC-HBC JV decreased to $41 million in the First Quarter from $249 million at the end of 2024 reflecting lower estimated underlying asset values. Refer to the RC-HBC JV section in this News Release for further details.
• Adjusted Debt to Adjusted EBITDA¹ improved to 8.96x and the FFO Payout Ratio¹ was 61.2%. RioCan's strong balance sheet, reinforced by $1.4 billion of Liquidity¹ and $8.5 billion in Unencumbered Assets¹, enables RioCan to successfully navigate economic volatility and optimize capital allocation. 

Outlook

• FFO per unit guidance for 2025 has been revised to $1.85 to $1.88 from the previously disclosed range of $1.89 to $1.92 resulting from expected lost FFO from the RC-HBC JV operations, net of the benefit of higher residential inventory gains from development costs savings.
• Based on our revised FFO guidance for 2025, we expect to maintain a payout ratio within our long-term target range of 55%-65%:

• Leasing Spreads: In the First Quarter, RioCan achieved a blended leasing spread of 17.5% with a new leasing spread of 18.3% and a renewal leasing spread of 17.3%. Strong leasing demand fueled double-digit leasing spreads for the fifth consecutive quarter.
• Occupancy: Steady demand for space in RioCan's premium portfolio sustained committed occupancy and retail committed occupancy at record high levels of 98.0% and 98.7%.
• Leasing Progress: 1.0 million square feet were leased in the First Quarter, including 0.2 million square feet of new leases. These new leases with creditworthy tenants span various necessity-based uses, further enhancing the quality of RioCan's income and productivity of our shopping centres.
• Same Property NOI: Commercial Same Property NOI¹ improved in the First Quarter to 3.6% bolstered, in part, by the benefits of 2024 leasing activity, which included necessity-based retail tenant backfills at higher rents.
• RioCan Living - Residential Rental: Residential rental operations generated $7.5 million of NOI, an increase of $1.1 million or 17.7% over the same period last year. As of March 31, 2025, there are 13 buildings in operation with a total fair value of $0.9 billion. RioCan continues to execute on its strategy of unlocking the value in its residential portfolio. In addition to the sale of Strada in Toronto, Ontario, which closed in 2024, to date RioCan has a firm deal to sell its share of Brio in Calgary as well as conditional sales for three additional assets, all in line with IFRS values. Refer to the Capital Recycling section in this News Release for further details.
• RioCan Living - Residential Inventory Gains and Condominium Closings: On a proportionate share basis, approximately $66.1 million of sales revenue and $22.2 million of residential inventory gains were recognized in the First Quarter. As a condition of interim occupancy, purchasers must show proof of sufficient funds to close the transaction once the buildings are registered. As of May 5, 2025, 96% of the 324 expected First Quarter condominium interim occupancies at 11YV and U.C. Tower 2 were completed. Since Q4 2024, approximately 97% of the 694 expected interim closings at these two projects have been completed. The condominiums at 11YV and U.C. Tower 2 were officially registered in April 2025. Final closings are expected to start in Q2 2025. A $2.9 million provision for the accounts receivable due on condominium final closing was recorded in the First Quarter given the softening in the general condominium market. The provision for accounts receivable is over and above the 7% default assumption embedded in our outlook.
• Approximately $468 million of sales revenue is expected from the remaining units in the five active condominium construction projects. Approximately $362 million of this expected revenue comes from pre-sold units. Buyers are motivated to complete their purchases as these sales are under legally binding contracts, with an average deposit of 20%.
• Of the initial $800 million of expected sales revenue from the active condominium and townhouse construction projects at the beginning of 2024, $332 million has been recognized, including $152 million from units occupied during 2024 and 2025 and $180 million of accelerated sales revenue from the 2024 sale of partial interests in the 11YV project.
• Capital Recycling: As of May 5, 2025, closed, firm and conditional dispositions totalled $240.6 million, and are in line or above IFRS values. In Q1 2025, RioCan completed $16.7 million of dispositions including the sale of a Cineplex-anchored property. Subsequent to quarter end, the Trust also sold part of an open-air retail site in Quebec to an industrial developer. Firm deals include an agreement to sell its 50% interest in Brio in Calgary, Alberta which is expected to close in the coming months upon the assignment of the CMHC mortgage. RioCan also entered into a conditional agreement to sell its 50% interest in three additional RioCan Living properties.
• Normal Course Issuer Bid (NCIB): The Trust believes that the market price of its units does not fully reflect the underlying value and future prospects of its business, making purchasing its own units an attractive investment opportunity. During the First Quarter, the Trust acquired and cancelled 3.2 million Units at a weighted average price of $18.51 per unit for a cost of $60.0 million. Purchases were funded through the sale of two low-growth assets: RioCan Centre Vaughan, which closed in Q4 2024, and the aforementioned North Edmonton Cineplex Centre, which closed in Q1 2025. These purchases were made pursuant to the automatic securities purchase plan adopted in connection with the Trust's 2024/2025 NCIB.
• Investing: RioCan issued $19.9 million of new loans under its real estate lending program during the First Quarter, earning an average interest rate of 12.7%. Additionally, $67.0 million of existing loans were repaid. RioCan completed a $53.9 million previously announced acquisition of a mixed-use residential rental property located in Calgary and, in a non-cash deal, acquired its partner's 75% interest in the condominium density at RioCan Leaside Centre in Toronto. Construction of the mixed-use residential rental asset is expected to be completed by June 2025 and pre-leasing commenced in April 2025. On April 1, 2025, RioCan acquired, upon stabilization, a 90% interest in Phase Two/Three of Market in Montreal, Quebec for the purchase price of $125.4 million. This acquisition was pursuant to a forward purchase agreement previously announced during the purchase of Phase One of the project in 2022.
• Balance Sheet and Liquidity: As of March 31, 2025, the Trust's Adjusted Debt to Adjusted EBITDA ratio improved to 8.96x from 8.98x at the end of 2024, in line with its target range of 8.0x - 9.0x. The Trust has $1.4 billion of Liquidity to meet its financial obligations, including $1.1 billion revolving operating line of credit.
• Financing: As of March 31, 2025, the weighted average term to maturity of its debt portfolio was extended to 3.88 years from 3.72 years, and the Ratio of Unsecured Debt to Total Contractual Debt¹ increased to 57.3% from 55.7%, both compared to the end of 2024 and on a proportionate share basis.
• During the First Quarter, RioCan proactively accessed the debt capital markets before the recent volatility, securing favourable rates and addressing a significant number of its 2025 maturities. The Trust issued $550.0 million of senior unsecured debentures in two series: $250.0 million floating rate Series AN senior unsecured debentures which were swapped to fixed rates, and $300.0 million fixed rate Series AO senior unsecured debentures. The all-in weighted average interest rate for the $550.0 million of debentures was 4.05% per annum inclusive of the interest rate swap, with a weighted average term to maturity of 4.8 years. The net proceeds were used to redeem the $500.0 million Series AB senior unsecured debentures upon maturity. The Trust repaid $133.6 million of maturing mortgages during the quarter and additionally, repaid $167.4 million of maturing mortgages subsequent to quarter end. The repayment of mortgages subsequent to quarter end further improved the Ratio of Unsecured Debt to Total Contractual Debt to 58.6% and increased the Unencumbered Assets pool by $344.9 million.

RC-HBC JV

• Hudson's Bay Company ULC (HBC), the primary tenant of the RC-HBC JV, filed for creditor protection on March 7, 2025 under the Companies' Creditors Arrangement Act (CCAA). Through its investment in the RC-HBC JV, RioCan indirectly holds a 22% interest in ten locations where HBC is the sole tenant, and an 11% interest in two multi-tenanted locations (the RC-HBC JV owns 50% of these two multi-tenanted locations and RioCan owns 50% directly). Please refer to RioCan's Press Release dated March 18, 2025, RioCan Real Estate Investment Trust Provides Update on Hudson’s Bay Company’s CCAA Filing, which provides details of RioCan's balance sheet and FFO exposure.
• A court order dated March 21, 2025 requires HBC to pay $7.0 million of the approximate $10.0 million (at 100%) of monthly occupancy rent due to the RC-HBC JV. This payment provides sufficient cash flow to cover expenses, debt service obligations and fees, including fees and debt service that is payable to RioCan. The remaining amount will be accrued with a charge against the HBC estate, ranking ahead of the pre-filing creditors. RioCan has recorded a provision of approximately $1.0 million (at RioCan's share) for the uncollected portion.
• RioCan also evaluated the carrying value of its net investment in the RC-HBC JV and recognized $208.8 million of Total RC-HBC JV Valuation Losses for the three months ended March 31, 2025. These valuation losses were based on management's best estimate using the information available to the Trust and include the assumption of re-leasing the investment properties to new tenants at market rents below existing rents at sole tenant locations.
• RioCan’s net investment in the RC-HBC JV is summarized in the chart below.

• RioCan has assessed that the guarantees and mezzanine loans associated with the RC-HBC JV are recoverable based on the estimated values of the assets that are pledged as security against each obligation. Additionally, RioCan obtained termination rights for the HBC leases at three properties that are currently at below market rent.
• While the RC-HBC JV is not an applicant to the CCAA proceedings, the CCAA court-ordered stay has been extended to benefit the RC-HBC JV, including any events of default associated with the debt. The RC-HBC JV debt is non-recourse to the Trust except where RioCan has provided guarantees.
• The Trust continues to pursue all available business and legal avenues and will leverage its extensive leasing and development capabilities to achieve the best possible outcome for each of the properties within the RC-HBC JV.
• Refer to the Joint Arrangements and Non-GAAP Measures sections of the Management Discussion and Analysis and the Condensed Consolidated Financial Statements for the three months ended March 31, 2025 for further details. 

Conference Call and Webcast

Interested parties are invited to participate in a conference call with management on Tuesday, May 6, 2025 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: 479261.

For those unable to participate in the live mode, a replay will be available at 1-866-813-9403 with access code: 981805.

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, mixed-use properties located in prime, high-density transit-oriented areas where Canadians want to shop, live and work. As at March 31, 2025, our portfolio is comprised of 177 properties with an aggregate net leasable area of approximately 32 million square feet (at RioCan's interest). 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 unaudited interim condensed consolidated financial statements ("Condensed 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 Condensed Consolidated Financial Statements and MD&A for the three months ended March 31, 2025, 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 ("Commercial SPNOI"), FFO Payout Ratio, Total RC-HBC JV Valuation Losses, Ratio of Unsecured Debt to Total Contractual Debt, Liquidity, Adjusted Debt to Adjusted EBITDA, RioCan's Proportionate Share, 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 ended March 31, 2025.

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 March 31, 2025 and December 31, 2024:

The following tables reconcile the consolidated statements of income (loss) from IFRS to RioCan's proportionate share basis for the three months ended March 31, 2025 and 2024:

NOI and Same Property NOI

The following table reconciles operating income to NOI and Same Property NOI to NOI for the three months ended March 31, 2025 and 2024:

FFO

The following table reconciles net income (loss) attributable to Unitholders to FFO for the three months ended March 31, 2025 and 2024:

Total RC-HBC JV Valuation Losses

The following table reconciles Total RC-HBC JV Valuation Losses and Other RC-HBC JV Valuation Losses during the three months ended March 31, 2025 and 2024:

Total RC-HBC JV Valuation Losses comprise of the following during the three months ended March 31, 2025 and 2024:

Total Contractual Debt

The following table reconciles total debt to Total Contractual Debt as at March 31, 2025 and December 31, 2024:

Unsecured and Secured Debt

The following table reconciles Total Unsecured and Secured Debt to Total Contractual Debt as at March 31, 2025 and December 31, 2024:

Liquidity

As at March 31, 2025, RioCan had approximately $1.4 billion of Liquidity as summarized in the following table:

Adjusted EBITDA

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

Adjusted Debt to Adjusted EBITDA Ratio

Adjusted Debt to Adjusted EBITDA is calculated as follows:

Unencumbered Assets

The tables below summarize RioCan's Unencumbered Assets as at March 31, 2025 and December 31, 2024:

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 ended March 31, 2025 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.

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