East Hills
Calgary, AB
STRENGTH
IN RETAIL
ANNUAL
REPORT
2024
TABLE OF CONTENTS
2
ABOUT RIOCAN
3
RIOCAN AT A GLANCE
4
LETTER FROM THE PRESIDENT & CEO
13
DEDICATED ESG PROGRAM
15
FINANCIAL REVIEW
17
KEY PERFORMANCE INDICATORS
20
MANAGEMENT DISCUSSION AND ANALYSIS
108
AUDITED ANNUAL CONSOLIDATED
FINANCIAL STATEMENTS
1860 Bayview
Toronto, ON
1
RIOCAN ANNUAL REPORT 2024
RioCan owns, manages and develops retail-focused, mixed-use
properties concentrated in prime, high-density, transit-oriented
areas where Canadians want to shop, live and work.
As at December 31, 2024, our portfolio is comprised
of 178 properties with an aggregate net leasable area
of approximately 32 million square feet, consisting
primarily of retail, residential, and mixed-use properties.
ABOUT RIOCAN
1
Income producing properties at RioCan’s interest
2
Percentage of total fair value of income producing properties at RioCan's interest
3
Within 5km radius. Data is updated annually in the second quarter, with the disclosure reflecting new statistics that become available each spring. Source: 2024 - Trends, 2024 Environics Analytics
4
The baseline year for comparison is 2017 as it is the year prior to the commencement of RioCan's purposeful secondary market and non-core disposition program.
VANCOUVER
4 assets
1.1M SF 1
4.6% 2
EDMONTON
9 assets
1.7M SF 1
5.0% 2
MONTREAL
18 assets
1.9M SF 1
3.5% 2
GREATER TORONTO AREA
80 assets
16.5M SF 1
57.1% 2
CALGARY
16 assets
3.6M SF 1
12.1% 2
OTTAWA
33 assets
4.7M SF 1
13.0% 2
MAJOR MARKET ADVANTAGE
STRONG DEMOGRAPHIC PROFILE
% OF GROSS RENT FROM
CANADA’S SIX MAJOR MARKETS
~74%
~94%
~273,000
Average
Population 3
since 2017 4
~$148,000
Average
Household Income 3
since 2017 4
2024
2017
+20%
+77%
+45%
2
(~3.5% 2025 Outlook)
RIOCAN AT A GLANCE
FINANCIALS
98.0%
Committed
Occupancy
88.0%
Strong and Stable
Tenants
32.2 million
NLA (sq. ft.)
$22.39
Average Net Rent Per
Occupied Square Foot
85.1%
Annualized Contractual
Gross Rent From Retail
Portfolio
36.7%
New
Leasing Spread
61.9%
FFO Payout Ratio 3
$8.2B
Unencumbered Assets 3,4
8.98x
Adjusted Debt/Adjusted EBITDA 3,4
$1.7B
Available Liquidity 3,4
$740.9M
Operating Income
$1.81
FFO Adjusted/Unit 2,3
1 The 2.2% represents Commercial SPNOI growth excluding provision for the year ended December 31, 2024.
2 FFO: Funds from Operations
3 This is a Non-GAAP measurement. For more information, refer to the Non-GAAP Measures section in the MD&A for the three months and year ended December 31, 2024.
4 RioCan's proportionate share.
98.7%
Retail Committed
Occupancy
18.7%
Blended
Leasing Spread
Record-High
2.2%
1,3
Commercial
SPNOI Growth
3
RIOCAN ANNUAL REPORT 2024
Dear Fellow Unitholders,
In 2024, RioCan once again demonstrated an
exceptional year of strong operational performance
and financial results. We delivered on our commitments
to improve our cash flow, de-risk our portfolio, and
strengthen our balance sheet. Our success was driven
by our dedicated, experienced team and our high-
quality, major market portfolio.
With high-quality real estate in short supply, there
continues to be robust demand for our well-located,
open-air shopping centres that attract necessity-based
tenants and high foot traffic. These premium centres
are the foundation of our portfolio. We consistently
benefit from favorable retail fundamentals that
enhance the resiliency of our business while fueling our
future growth. While the macro-economic environment
continues to be volatile, heightened by the recent threat
of import tariffs between Canada and the U.S., our
necessity-based portfolio is well positioned to perform
in any market conditions.
We delivered on our commitments to
improve our cash flow, de-risk our portfolio,
and strengthen our balance sheet.
RioCan’s distribution increase to $1.16 per unit
annualized, effective with the February 2025
distribution, reflects our confidence in our skilled
team and ongoing operational excellence.
In addition to our solid performance, we remain
committed to responsible growth, sustainability,
and ethical governance. Among our numerous
accomplishments in 2024, we achieved Regional
Sector Leader status in the Americas under the Retail
sector in the GRESB 2024 Real Estate Assessment,
attained an ESG rating upgrade to AA from MSCI,
and recorded top-decile performance for employee
engagement among our industry peers for a third
consecutive year.
With our solid foundation and growth prospects,
we expect to continue growing cash flows for
our Unitholders and to deliver on our strengths
in 2025 and beyond.
LETTER FROM THE
PRESIDENT
& CEO
4
VIBRANT COMMUNITIES IN CANADA’S MAJOR MARKETS
RioCan’s properties are concentrated in prime, high-density,
and transit-oriented areas where people want to shop, live,
and work. The vast majority of our revenue comes from
properties in Canada’s six major urban centres – markets with
attractive demographics and growing populations that present
meaningful demand drivers for our space.
Our acute focus on demographics has shown positive results.
Within a 5-kilometer radius of RioCan’s centres, the average
population is 273,000 people, an increase of 77% since 2017,
and the average household income is $148,000, up from
$102,000 in 2017.
Wellington Market
Toronto, ON
5
RIOCAN ANNUAL REPORT 2024
CAPITALIZING ON ACCELERATED DEMAND FOR HIGH-QUALITY RETAIL SPACES
High-quality retail real estate, particularly assets of RioCan’s
caliber, remains in limited supply, which drives increasing
demand for our locations. We believe this scarcity will persist
due to stringent zoning laws and high construction costs for
new properties in the markets we serve, creating an insulated
marketplace that favors established owners and operators
such as RioCan.
Our retail assets have consistently been and will remain the
cornerstone of our business. The committed occupancy of
our retail portfolio is a record-breaking 98.7% and our long-
term, forward-looking leasing strategy ensures steady growth.
Our retail assets have been and will continue
to be the cornerstone of our business.
In 2024, our best-in-class leasing team completed nearly
4.8 million square feet of new leases and renewals. The average
net rent per square foot of these new and renewal leases was
$26.17 and $25.23, which is $3.78 and $2.84 per square foot
above our portfolio average net rent per occupied square
foot. Our blended leasing spread for the year was 18.7%,
with renewals at 13.1% and new leases at 36.7%. We are
confident that strong market dynamics will sustain this
upward trend in 2025 and beyond.
Our leasing activity and rising rental rates were driven by
demand from major, necessity-based tenants. Our strong
and stable tenant roster has improved by 50 basis points from
2023 to 88.0%. These tenants attract steady traffic, enhance
cross-shopping convenience, provide stable and growing
income, and increase asset value in any economic environment.
Sage Hill Crossing
Calgary, AB
6
In 2024, we added seven new grocery
stores, such as No Frills and Longo's,
which transformed sites into highly
valued, grocery-anchored centres. The
new grocery store square footage total
approximately 130,000 square feet. In
addition to our new leases this year, we
entered into a land lease to replace less-
resilient fashion-focused tenants with a
new 158,000-square-foot Costco store
at RioCan Centre Burloak in Oakville,
Ontario, which will increase traffic to the
site and enhance the property’s long-
term value.
We also continue to proactively increase
our asset value and tenant quality.
Our occupancy is at an all time high.
When vacancies arise, they offer
opportunity to improve our tenant
mix. We fill vacancies with relevant and
resilient retailers at high rents consistent
with today’s strong market. This past
year, we secured improved lease terms
on all 10 of the vacant units that resulted
from two tenant failures discussed in
Q1 2024 that feature 23.9% higher base
rents. In addition, we entered into leases
with contractual rent steps with tenants
such as HomeSense, Canadian Tire,
Winners, Rexall and Dollarama.
We continue to convert lower
growth, lower-quality leases
to the high-quality tenancies
typically associated with
a RioCan shopping centre.
Success begets success. Our new leases
set precedents for future negotiations
in all market environments. We continue
to convert lower-growth, lower-quality
leases to the high-quality tenancies
typically associated with a RioCan
shopping centre. This strategic focus
drives sustainable growth in Funds
From Operation and net asset value.
Elgin Mills Crossing
Richmond Hill, ON
7
RIOCAN ANNUAL REPORT 2024
PROPERTY MIX*
TENANT COMPOSITION
By Annualized Net Rent
Grocery Anchored Centre
58.5%
Mixed-Use / Urban
31.4%
Open Air Centre and Other
10.1%
*Percentage of total fair value
TRAFFIC-DRAWING TENANT MIX 1
By Annualized Net Rent
Note: Percentage represents annualized net rental revenue as at December 31, 2024.
1 Selected retailers are presented for example purposes.
88.0%
Strong and
Stable
9.9%
Compelling
Traffic Drivers
2.1%
Transitional
10+2+88+M
19.8%
Grocery, Pharmacy, Liquor
Loblaws, Sobeys, Metro, Walmart, Costco, Shoppers Drug Mart,
Rexall Pharma Plus, LCBO, Jean Coutu, SAQ
23.9%
Essential Goods and Services
Canadian Tire, PetSmart, Bell, Rogers, Bank of Montreal,
CIBC, Royal Bank of Canada, TD Bank, Scotiabank, Medical,
Dental, Optical
12.8%
Value Retailers
Dollarama, Winners, HomeSense, Value Village
10.2%
Experiential and Dine-in Restaurants
Cineplex, The Keg, Activate
7.7%
Specialty Retailers
Sephora, Sport Chek, Indigo
7.7%
Quick Service Restaurants
Chipotle, Tim Hortons, McDonald's
7.1%
Fitness and Personal Services
GoodLife Fitness, LA Fitness, Healthy Planet
5.1%
Furniture and Home
The Brick, Sleep Country, Structube
5.7%
Other Tenants
Apparel and Other Retailers
8
CAPITALIZING ON RIOCAN LIVING, OUR
BEST-IN-CLASS RESIDENTIAL PORTFOLIO
While our retail assets comprise our foundation, our
mixed-use properties add strategic value. The RioCan Living™
portfolio is concentrated in Canada’s major markets, with over
50% in the Greater Toronto Area. We complement residential
spaces with high-quality retail tenants, creating vibrant,
mixed-use communities that meet the growing demand
for urban living and offer residents unmatched convenience
and accessibility. Together, the amenities, community focus
and access to necessity-based retailers drive new demand
for RioCan Living properties.
We’ve now reached the scale that allows
optionality for maximizing our portfolio’s
value going forward.
From the outset, our RioCan Living strategy sought to scale
the portfolio for flexibility. Over the past six years, we’ve
developed exceptional mixed-use residential rental buildings,
and we’ve now reached the scale that allows optionality for
maximizing our portfolio’s value going forward. Our residential
rental portfolio consists of 13 buildings with a fair value of
$0.9 billion as at December 31, 2024.
In late 2024, we sold Strada, a premium mixed-use residential
rental building in downtown Toronto, at a 6% premium over IFRS
value, further reinforcing the value of our sought-after portfolio.
Pivot
Toronto, ON
9
RIOCAN ANNUAL REPORT 2024
Yonge Sheppard Centre
Toronto, ON
10
EXECUTING WITH
A SOLID BALANCE SHEET
We are actively managing our portfolio to enhance
income quality and asset value while improving
our balance sheet. In 2024, we reduced our leverage
within our target range of 8.0x – 9.0x Adjusted
Debt to Adjusted EBITDA. Our increased EBITDA
figures were supported by a steady stream of
Net Operating Income from strong operations and
development deliveries in properties like The Well™.
Our deleveraging strategy also includes reducing
construction spend and repatriating proceeds from
residential inventory sales. Since 2019, RioCan has
generated $479.2 million in revenue on a proportionate
share basis from the sale of condominium and
townhouse units. This has contributed $92.5 million
to FFO. During the fourth quarter alone, we successfully
completed approximately $73.3 million of sales on a
proportionate share basis and, as at February 18, 2025,
98% of the 372 expected fourth quarter 2024 interim
closings were completed.
Our strategy of allocating capital for residential
rental and condo development has been a profitable
endeavour and unlocked the intrinsic value of our
assets. The sales proceeds from these assets enhance
RioCan’s financial flexibility and capacity to deliver
positive returns to our Unitholders.
Adapting to the current environment, we made
a strategic decision to pause new construction
starts in 2024 and in 2025. We continue to explore
opportunities to maximize value from our development
pipeline by advancing zoning approvals and ensuring
our future development strategy focuses on a balance
sheet-light approach.
$1.16
Annualized
distributions / unit 1
~60%
FFO Payout
Ratio, Target
6.2%
Distribution Yield 1,2
71.9%
FFO Payout Ratio,
Peer Average 3
SUSTAINABLE GROWTH IN DISTRIBUTION
ADJUSTED DEBT TO ADJUSTED EBITDA 1
8.0x-9.0x
Debt to EBITDA Target
9.59x
2021
9.51x
2022
9.28x
2023
8.98x
2024
Lawrence Allen Centre
Toronto, ON
1 Represents Non-GAAP measure and RioCan's Proportionate share
1 Represents annualized totals based on monthly distributions of $0.0965
2 Distribution yield is calculated using annualized distribution, including RioCan's recent
4.3% increase, and closing unit price as of February 14, 2025.
3 Peer group includes Choice Properties REIT, Crombie REIT, CT REIT, First Capital REIT and
SmartCentres REIT. Peer average based on Q4-2024 except for Crombie REIT, which is
based on Q3-2024.
11
RIOCAN ANNUAL REPORT 2024
DELIVERING FOR OUR UNITHOLDERS IN 2025 AND BEYOND
As we head into 2025, RioCan maintains a strong operating
position. Our curated portfolio is designed to thrive in any
economic condition. Current retail real estate market dynamics
create long-term demand for high quality assets, and we are
uniquely positioned to capitalize on this demand.
In repositioning our portfolio, tenants and platform,
we have enhanced our efficiency, effectiveness and resilience.
Our portfolio is more defensive and well positioned than ever,
and our business is poised to improve further over the next year
through significant catalysts including additional de-leveraging,
continued condominium closings, and increased optionality
with RioCan Living. We will continue to use every opportunity
to strengthen our portfolio and foster strategic growth
to deliver superior total Unitholder returns.
With a solid foundation, multiple levers to drive growth,
prudent financial management, and a commitment to
responsible capital allocation, RioCan is well-positioned
to continue delivering value to its Unitholders.
Thank you to our RioCan team, tenants and Unitholders
for your continued confidence and support.
Jonathan Gitlin
President and Chief Executive Officer
ePlace
Toronto, ON
Yonge Eglinton Centre
Toronto, ON
12
DEDICATED ESG PROGRAM
RESILIENT BUSINESS
Future-proofing RioCan through
best-in-class governance and
climate-resilient assets
PURPOSEFUL IMPACT
Pursuing sustainable economic growth by
purposefully creating value and impact for
our environment, people and communities
STRATEGIC PARTNERSHIPS
Collaborating with RioCan’s partners
to address the pertinent challenges
facing our society
Climate: ensure our operations,
portfolio and developments are
resilient to the effects of climate
change and contribute to the transition
to a low-carbon economy
Governance: operate with leading
ESG governance and risk management
practices and continuously provide
high-quality and transparent reporting
Finance: use sustainable strategies
to generate long-term value for our
investors and gain access to new
sources of capital
Environment: design and operate
high-quality assets that minimize
our environmental footprint, support
and enhance the natural environment,
and contribute to the circular economy
People: attract, retain and develop a diverse
and talented workforce and create a
workplace where all employees are valued,
included and empowered to do their best work
Community: enhance the communities
in which we operate through purposeful
design and economic and social
growth initiatives
Tenants: continuously enhance
tenant experience, well-being and
safety, and identify opportunities to
engage them to identify and achieve
mutual ESG objectives
Suppliers: apply procurement and
partner selection criteria that support
positive environmental and social
change and supply chain resilience
Industry: collaborate with industry
initiatives and groups to collectively
address material ESG challenges
facing our industry
KEY ACHIEVEMENTS
1
GRESB SECTOR
LEADER
Awarded Regional Sector
Leader status in the
Americas under the Retail
sector in the GRESB 2024
Real Estate Assessment -
Standing Investments
Benchmark, and received
the top score under Retail:
Centres sector in
North America
2
AA ESG RATED
BY MSCI
Achieved ESG rating
upgrade from A to AA
by Morgan Stanley Capital
International (MSCI)
3
GREEN LEASE
LEADER
PLATINUM LEVEL
Earned the 2024 Green
Lease Leader (Platinum
Level) recognition
by the Institute for Market
Transformation (IMT)
and the U.S. Department
of Energy's Better
Building Alliance
4
LEED
CERTIFIED
Awarded LEED Platinum
Certification at The Well
for the retail and office
components and for
RioCan's head office at
Yonge Eglinton Centre -
the highest level of
LEED achievement
13
RIOCAN ANNUAL REPORT 2024
14
Hunt Club Centre
Ottawa, ON
RioCan Windfields
Oshawa, ON
FINANCIAL REVIEW
15
RIOCAN ANNUAL REPORT 2024
TABLE OF CONTENTS
Key Performance Indicators
17
Development Activities
49
Management's Discussion and Analysis
20
Development Pipeline
49
Introduction
20
Completed Developments
50
About this Management's Discussion and Analysis
20
2022-2026 Development Deliveries
51
Forward-Looking Information
20
Development Projects Under Construction
52
Our Business and Our Business Environment
21
Development Projects in Planning
53
Business Overview
21
2025 Development Spending
53
Strategy
21
Capital Resources and Liquidity
54
Operating Environment
22
Capital Management Framework
54
Outlook
24
Debt Metrics
55
Environmental, Social and Governance (ESG)
Initiatives
25
Credit Ratings
55
Property Portfolio Overview
26
Total Debt Profile
56
Property Operations - Total Portfolio
26
Liquidity
60
Property Operations - Commercial
28
Off-Balance Sheet Arrangements
61
Property Operations - Residential Rental
32
Hedging Activities
62
Results of Operations
33
Trust Units
63
Summary of Selected Financial Information
33
Distributions to Unitholders
64
Revenue
34
Other Disclosures
65
Operating Income and Net Operating Income (NOI)
35
Related Party Transactions
65
Other Income (Loss)
36
Selected Quarterly Results and Trend Analysis
66
Other Expenses
37
Fourth Quarter Unaudited Consolidated Statements of
Income (Loss)
67
Net Income (Loss) Attributable to Unitholders
39
Accounting Policies and Estimates
68
Funds From Operations (FFO)
39
Adoption of New Accounting Standards
68
Adjusted Funds From Operations (AFFO)
40
Critical Accounting Judgements and Estimates
68
Asset Profile
42
Future Changes in Accounting Policies
70
Property Valuations
42
Controls and Procedures
70
Acquisitions and Dispositions
43
Climate-Related Financial Disclosures
71
Mortgages and Loans Receivable
45
Non-GAAP Measures
74
Joint Arrangements
45
Risks and Uncertainties
102
Capital Expenditures on Income Producing Properties
48
RioCan Annual Report 2024 16
FINANCIAL
Rental Revenue
Q4 2024
Year 2024
Rental revenue increased for the year and quarter
primarily from higher base rent, recoveries and straight-
line rent. Base rent increases from rental growth,
development completions and asset acquisitions were
partially offset by the impact of asset dispositions.
$293,327
$1,137,127
Q4 2023
$276,510
+6.1%
Year 2023 $1,091,105 +4.2%
Commercial Same Property NOI (i)
Q4 2024
Year 2024
Commercial SPNOI growth on an annual and quarterly
basis was impacted by pandemic related provision
reversals in the prior year. Excluding the impact of prior
year provision reversals, Commercial SPNOI growth for
the year and quarter was 2.2% and 3.5%, respectively.
$150,744
$588,278
Q4 2023
$147,307
+2.3%
Year 2023 $581,360
+1.2%
Operating Income
Q4 2024
Year 2024
The increases in operating income for the year and
quarter were mainly driven by higher Net Operating
Income(i) from strong underlying property fundamentals
and higher inventory gains from the effect of the timing
of condominium/townhouses sales, partially offset by
lower property management and other service fees.
Operating income for the year also benefited from the
disposition
of
non-core
residential
inventory
development land in Calgary, Alberta.
$195,973
$740,948
Q4 2023
$186,074
+5.3%
Year 2023 $714,408
+3.7%
FFO Per Unit - Diluted (i)
Q4 2024
Year 2024
FFO Adjusted per unit, which excludes restructuring and
debt prepayment costs, increased by $0.04 to $1.81 for
the year and by $0.03 to $0.47 for the quarter compared
to the same periods last year. For the year, strong
operating performance and completed developments
increased NOI. This growth was partially offset by
disposed NOI relating to the sale of lower growth
commercial properties. Higher residential inventory
gains, higher FFO from equity-accounted investments,
mainly driven by the underlying gains on the residential
inventory, and increases in interest income were offset
by higher interest expense. The increase in FFO
Adjusted for the quarter was largely driven by the same
factors except FFO from equity-accounted investments,
which was lower.
$0.47
FFO Adjusted per Unit $1.81
FFO Adjusted per Unit
$0.45
FFO per Unit
$1.78
FFO per Unit
Q4 2023
$0.44
+6.8%(vii)
Year 2023 $1.77
+2.3%(vii)
FFO Payout Ratio (i) (vi)
AFFO Payout Ratio (i) (vi)
Q4 2024
Q4 2024
The FFO Payout Ratio is within the Trust's long-term
target range of 55% to 65%. FFO and AFFO Payout
Ratios increased when compared to the same period
last year mainly due to a $0.06 and $0.03 per unit per
annum increase in distributions effective February 2023
and 2024, respectively.
61.9%
72.8%
Q4 2023
60.5%
+1.4%
Q4 2023
70.0%
+2.8%
Net Income (Loss)
Q4 2024
Year 2024
The increase in net income for the year and quarter was
mainly due to a favourable change in fair value on
investment properties and an increase in operating
income,
higher
income
from
equity-accounted
investments and increased interest income, partially
offset by higher interest expense.
$125,648
$473,465
Q4 2023
$(117,659) nm
Year 2023 $38,802
+1120.2%
KEY PERFORMANCE INDICATORS
(In thousands of dollars, except percentages, square feet and per unit values)
17 RioCan Annual Report 2024
LEASING - COMMERCIAL
Committed Occupancy(iii)
(vi)
In-Place Occupancy (iii)
(vi)
Q4 2024
Q4 2024
Committed and retail committed occupancy reached all-
time highs of 98.0% and 98.7%, respectively, reflecting
unprecedented demand for RioCan's premium retail
portfolio. At these occupancy levels, the portfolio is
effectively full, providing flexibility for tenant turnover
and minor vacancies.
98.0%
97.4%
Q4 2023
97.4%
+0.6%
Q4 2023
97.1%
+0.3%
New Leasing Spread (iv) (vi) (vi)
Q4 2024
Year 2024
New leasing spreads for the year and quarter were
strong at 36.7% and 52.5%, respectively, due to high-
quality tenants backfilling space, demonstrating the
portfolio's quality and resiliency. This marks RioCan's
tenth sequential quarter of double-digit new leasing
spreads.
52.5%
36.7%
Q4 2023
13.2%
+39.3%
Year 2023 14.7%
+22.0%
Renewal Leasing Spread (iv) (vi)
Q4 2024
Year 2024
Approximately 2,305,000 and 629,000 square feet of
renewals were executed at market rental rates,
representing 71% and 91% of total renewals for the year
end and quarter, respectively. The average net rent per
square for renewals is significantly higher than in-place
rent, reflecting the strong demand for the Trust's quality
assets.
17.6%
13.1%
Q4 2023
8.7%
+8.9%
Year 2023 9.8%
+3.3%
Blended Leasing Spread (iv) (vi)
Q4 2024
Year 2024
Strong new leasing spreads drove blended leasing
spread to notably high levels. The portfolio's prime
locations, well curated tenant mix and the supply
constraint of high-quality retail space created sustained
leasing momentum.
25.5%
18.7%
Q4 2023
9.0%
+16.5%
Year 2023 10.7%
+8.0%
DEVELOPMENT
Development Spending (i) (ii)
Q4 2024
Year 2024
Full year Development Spending amounted to $349.4
million with $309.4 million allocated to mixed-use
projects to complete projects initiated prior to 2024 and
$39.9 million to retail in-fill projects. These expenditures
were largely in line with the anticipated 2024 ranges of
$250 million to $300 million and $30 million to $40
million, respectively.
We remain disciplined in our approach to construction
with no new mixed-use starts planned in the foreseeable
future. Refer to the Outlook section of this MD&A for
further details.
$85,081
$349,384
Q4 2023
$94,365
-9.8%
Year 2023 $399,946
-12.6%
Development NLA Completions (sq. ft.) (v)
Q4 2024
Year 2024
The 180,000 square feet of property under development
completions for the year included the completion of
52,000 square feet of commercial space at The WellTM.
Total combined year-to-date transfers related to The
Well, including purpose-built rental at FourFifty The
WellTM, was 125,000 square feet. In addition, on a year-
to-date basis, 387 units were completed at U.C. Towns
2, U.C.Tower 2 and 11 YV for a $16.1 million residential
inventory gain on a proportionate share basis.
43,000
180,000
Q4 2023
272,000
-84.2%
Year 2023 599,000
-69.9%
KEY PERFORMANCE INDICATORS
(In thousands of dollars, except percentages, square feet and per unit values)
RioCan Annual Report 2024 18
BALANCE SHEET
Liquidity (i)(ii)(iii)
Unencumbered Assets (i)(ii)(iii)
Q4 2024
Q4 2024
The Trust has $1.7 billion of Liquidity to meet its
financial obligations, including a fully undrawn $1.25
billion revolving operating line of credit. The decrease in
Liquidity from Q4 2023 was due to timing of capital
recycling, investment and financing activities.
Unencumbered Assets increased from Q4 2023 as the
Trust
repaid
certain
mortgages
upon
maturity,
enhancing
financial
flexibility.
The
ratio
of
Unencumbered
Property
Assets
to
Unsecured
Indebtedness is 1.8x.
$1,694,049
$8,201,345
Q4 2023
$1,964,018 -13.7%
Q4 2023
$8,089,927 +1.4%
Adjusted Debt to Adjusted
EBITDA (i)(ii)
Total Debt (i)(ii)
Q4 2024
Q4 2024
Adjusted Debt to Adjusted EBITDA improved to 8.98x
from 9.28x at the end of 2023, in line with the target
range of 8.0x - 9.0x.The decrease in Adjusted Debt to
Adjusted EBITDA was driven by higher Adjusted
EBITDA partially offset by higher Average Total Adjusted
Debt. Adjusted EBITDA increased for the rolling twelve
months ended Q4 2024 when compared to Q4 2023
due to higher NOI from rent growth and completed
developments, higher residential inventory gains and
higher interest income, partially offset by lower NOI from
asset dispositions, net of acquisitions.
Total Debt increased from Q4 2023 mainly due to
development and incremental investment activities
partially funded with debt.
8.98x
$7,683,297
Q4 2023
9.28x
-0.30x
Q4 2023
$7,251,368 +6.0%
(i)
This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section in this MD&A for more information on each non-GAAP financial
measure.
(ii) At RioCan's proportionate share.
(iii) Information presented as at the respective period end.
(iv) Based on annualized contractual base rent.
(v) NLA for development completions includes properties under development (PUD) only and excludes residential inventory.
(vi) The quarter over quarter and year over year changes are based on absolute changes.
(vii) Both FFO per unit and FFO - Adjusted per unit for Q4 2023 and Year 2023 were $0.44 and $1.77, respectively. Percentage change is calculated
using FFO Adjusted per Unit.
KEY PERFORMANCE INDICATORS
(In thousands of dollars, except percentages, square feet and per unit values)
19 RioCan Annual Report 2024
INTRODUCTION
About this Management's Discussion and Analysis
This Management’s Discussion and Analysis (MD&A) for the three months and year ended December 31, 2024 (Q4 2024 and
YTD 2024, respectively) is dated February 18, 2025 and should be read in conjunction with the annual audited consolidated
financial statements and related notes for the year ended December 31, 2024 (2024 Annual Consolidated Financial Statements).
Unless the context indicates otherwise, references to "RioCan", "the Trust", "we", "us" and "our" in this MD&A refer to RioCan
Real Estate Investment Trust and its consolidated operations. Unless otherwise specified, all amounts are based on financial
statements prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). These documents, as well as additional information relating to RioCan, including our most
recently filed Annual Information Form (AIF), have been filed electronically with Canadian securities regulators through the
System for Electronic Document Analysis and Retrieval (SEDAR+) and may be accessed through the SEDAR+ website at
www.sedarplus.com or RioCan's website at www.riocan.com.
In addition to using performance measures determined in accordance with IFRS, RioCan also measures performance using
certain additional non-IFRS performance measures and provides these measures in this MD&A so that investors may do the
same. Such measures do not have any standardized definitions prescribed under IFRS generally accepted accounting principles
(GAAP) and, therefore, may not be comparable to similar measures presented by other real estate investment trusts or
enterprises. Refer to the Non-GAAP Measures section of this MD&A for a list of defined Non-GAAP financial measures and
reconciliations.
Unless otherwise specified, amounts are in thousands of Canadian dollars, and percentage changes are calculated using whole
numbers.
Forward-Looking Information
Certain information included in this MD&A contains forward-looking information within the meaning of applicable Canadian securities laws. 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. This
information includes, but is not limited to, statements made in the Key Performance Indicators, Our Business and Our Business Environment,
Property Portfolio Overview, Asset Profile, Development Activities and Capital Resources and Liquidity sections in this MD&A. This MD&A includes,
but is not limited to, forward-looking statements regarding increases to RioCan’s SPNOI; occupancy levels, expected annual Development Spending
and capital expenditures during 2025; completion of construction and estimated revenues and project costs in connection with residential inventory
and Properties Under Development (“PUD”); estimated FFO per unit and FFO per unit growth and the FFO Payout Ratio; continued demand for
space in our target markets; RioCan’s internal forecast; the creation of future value; NOI and growth from PUD; RioCan’s property and tenant mix;
return on investments; market trends and anticipated demand for retail and residential properties; our expectations regarding development of
potential incremental density; anticipated net leasing activity and rental rates; management’s expectations regarding future distributions; completion
of future financings, cost and availability of capital, and debt levels; RioCan's greenhouse gas emissions targets; and other statements concerning
RioCan’s objectives, its strategies to achieve those objectives, as well as statements with respect to management’s beliefs, plans, estimates, and
intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical
facts. Such forward-looking information reflects management’s current beliefs and is based on information currently available to management. All
forward-looking information in this MD&A is qualified by the following 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 about future events and financial trends, which RioCan believes may affect its financial condition, business and operations, and
financial results, including, but not limited to: growth of the retail environment; a changing interest rate environment; land use intensification at
reasonable costs and development yields, including residential development in urban markets; the Trust’s ability to redevelop, sell or enter into
partnerships with respect to the future incremental density it has identified in its portfolio; continued access to equity and debt capital markets to
meet the Trust’s current and future financing needs; and the availability of investment opportunities for growth in Canada. Risks and uncertainties
which could cause actual events or results to differ materially from the forward-looking information contained in this MD&A include those described
under the Risks and Uncertainties section in this MD&A and the Trust's AIF, as well as those related to: interest rate and financing risk; trade tariffs;
operations and the financial condition of RioCan and its tenants, as well as on consumer behaviours and the economy in general; financial and
liquidity risks; tenant concentrations and related risk of bankruptcy or restructuring (and the terms of any bankruptcy or restructuring proceeding);
occupancy levels and defaults, including the failure to fulfill contractual obligations by the tenant or a related party thereof; lease renewals and rental
increases; the ability to re-lease and find new tenants for vacant space; retailer competition; the relative illiquidity of real property; the timing and
ability of RioCan to sell certain properties; the valuations to be realized on property sales relative to current IFRS values; regulatory risk including
changes to rent control legislation; development risk associated with construction commitments, project costs and timing, related zoning and other
permit approvals and pace of lease-up or pre-sale; risks related to the residential rental business; credit risk related to our mortgages and loans
receivable, access to debt and equity capital; credit ratings; joint ventures and partnerships; the Trust's ability to utilize the capital gain refund
mechanism; changes in income tax legislation; unexpected costs or liabilities related to acquisitions and dispositions; environmental matters; climate
change; litigation; uninsured losses; reliance on key personnel; Unitholder liability; income, sales and land transfer taxes; and cyber security.
Although the forward-looking information contained in this MD&A 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. Certain statements included in this MD&A may be
considered “financial outlook” for the purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for
purposes other than this MD&A. The forward-looking information contained in this MD&A is made as of the date of this MD&A, and should not be
relied upon as representing RioCan’s views as of any date subsequent to the date of this MD&A. 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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 20
OUR BUSINESS AND OUR BUSINESS ENVIRONMENT
Business Overview
RioCan is an unincorporated “closed-end” trust governed by the laws of the Province of Ontario constituted pursuant to the
amended and restated declaration of Trust dated June 2, 2020 (the "Declaration of Trust"). RioCan's trust units (Units) are listed
on the Toronto Stock Exchange (TSX) under the symbol REI.UN. RioCan is one of Canada’s largest real estate investment trusts.
RioCan owns, manages and develops retail-focused, mixed-use properties in prime, high-density transit-oriented areas where
Canadians want to shop, live and work.
RioCan's property portfolio includes Mixed-Use / Urban, Grocery Anchored centres and Open Air centres and Other which are
defined in the Property Portfolio Overview section of this MD&A.
As at December 31, 2024, the portfolio was comprised of 100% owned and co-owned properties as follows:
(thousands of sq. ft., except where otherwise noted)
NLA at RioCan's Interest
Property Count
100% owned properties
27,153
135
Co-owned properties
5,026
43
Total
32,179
178
In addition, the Trust owns partial interests in 17 properties through eight joint ventures, representing 1.7 million square feet, that
are accounted for as equity-accounted investments. RioCan enters into co-ownership arrangements and joint ventures to
leverage its robust pipeline of prime locations to efficiently raise capital, mitigate development and concentration risk and earn
management fees for its expertise in managing income producing properties (IPP) and development projects. As at December 31,
2024, our retail portfolio accounts for 85.1% of the Trust's annualized contractual gross rent, followed by office at 10.6% and
residential at 4.3%.
Strategy
RioCan’s strategy builds on its differentiated advantages that offer an exceptional balance of quality and growth. The Trust’s high-
quality portfolio consists of well-positioned assets located in Canada’s six largest, most densely populated markets which are
predominantly transit-oriented. The average population within five kilometres is 273,000(i), with an average household income of
$148,000(i) , both of which have increased by more than 5% from prior year statistics of 260,000 and $140,000, respectively. This
growth reflects the attractiveness of RioCan's locations, the rapid pace of growth within those markets and the impact of new,
mixed-use developments. The portfolio generates resilient and growing income from a strong and stable tenant base, anchored
by necessity uses such as grocery stores, pharmacies and value retailers. These necessity-based tenants are crucial in an
economy that may face headwinds as a result of trade tariffs or other significant disruptions. Grocery anchored centres and
mixed-use urban sites represent 89.9% of RioCan’s income producing properties' fair value, respectively. Strong and stable
tenants who can reliably pay rent through challenging economic cycles generate 88.0% of RioCan's annualized net rent.
In addition to attracting consumer traffic and best-in-class tenants, RioCan’s desirable locations offer consistent organic growth
through robust leasing spreads. The reinvestment of the retained earnings has also resulted in an industry leading low FFO
payout ratio. The utilization of its development pipeline has delivered new and growing NOI and an improved portfolio. Since
2021, RioCan has delivered approximately 1.7 million square feet of newly developed mixed-use and retail assets. Given current
market conditions, RioCan intends to focus on harvesting future density and to forego new construction starts.
RioCan's strategy is anchored in four pillars:
•
Resilient Retail - A strong, stable retail core that delivers reliable income and steady growth through a relentless commitment
to customer centrism and operational excellence;
•
Disciplined Capital Management - A prudent approach to capital allocation that drives growth without compromising balance
sheet strength;
•
Intelligent Diversification - Responsibly diversified asset base, income streams and overall tenant mix; and
•
Responsible Growth - Industry leadership in ESG and corporate culture.
Guided by its strategic pillars, RioCan focuses on enhancing its retail core, delivering reliable income and steady growth and
further enhancing its tenant mix. It aims to maximize leasing and opportunistically divest slower-growth assets, focusing on
quality, high growth retail and residential assets in the best markets in Canada.
RioCan's portfolio is dominated by resilient assets with a diversified tenant base that aligns with consumer purchasing patterns.
We continuously build on our core of necessity-based tenants, including grocery, pharmacy, and value retailers, which drive
steady and high volumes of traffic to our properties. We build deep tenant relationships and offer superior amenities and services
to meet their current and future needs..
RioCan maintains ample liquidity and prudently manages its balance sheet and capital structure. The Trust aims to maintain
leverage within target ranges and optimize the mix of unsecured and secured debt to provide financial flexibility and liquidity.
(i) Data is updated annually in the second quarter, with the disclosure reflecting new statistics that become available each spring.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
21 RioCan Annual Report 2024
RioCan aims to maintain a well distributed debt maturity profile and limit its exposure to floating rate debt to reduce its refinancing
and interest rate risks. The Trust relies on its established lender relationships and seeks to utilize multiple sources of capital to
maintain the financial flexibility and capacity needed for growth in the evolving marketplace.
To enhance the quality, stability and growth of its income, RioCan diversifies its asset base, tenants and income sources through
initiatives such as optimizing its tenant mix, generating ancillary revenue and maximizing alternative income streams. Capital
recycling is an avenue through which the Trust improves asset quality, diversifies its income streams and strengthens its balance
sheet. The Trust expects to continue establishing long-term relationships to recycle capital through sales of density and form
capital partnerships with recognized investors. This strategy provides benefits to RioCan, including diversified risk, efficient use of
capital and value realization of its zoned excess density.
RioCan's mezzanine and co-owner financing is another means to diversify income while earning interest at attractive rates higher
than the cost of capital. The loans are typically full recourse to the borrowers and are secured by real property assets, thereby
mitigating counterparty risk. These assets align with the desired location, asset mix and overall strategy of the Trust. In certain
instances, the Trust will negotiate an option and/or other rights to acquire an interest in the real property assets.
Committed to responsible growth, RioCan fosters a culture of excellence that drives results and retains, develops and attracts top
talent. The Trust is executing its culture roadmap through continuous improvement of processes, policies and initiatives to create
a more productive, diverse and united workforce. RioCan is also a leader within the Canadian real estate industry in ESG best
practices. It is taking action to continuously improve and monitor its progress and embed ESG into all facets of its business to
enhance the organization and assets and to deliver long-term Unitholder value.
Operating Environment
Canadian Retail Environment
Strong, well-positioned retail assets, such as those owned by RioCan, continue to demonstrate resilience. Located in growing
major markets, RioCan's properties are mainly comprised of national, necessity-based retailers with strong covenants.
Approximately 88% of the Trust’s tenants are considered to be strong and stable. These well-established tenants adapt effectively
to various economic cycles.
Consumers continue to prioritize necessities, value and convenience while retailers enhance the omni-channel experience and
use brick and mortar store networks for efficient distribution. Retailers, especially those providing everyday conveniences and
essential goods and services, continue to expand their physical footprint. However, prolonged trade tariffs could create economic
instability, negatively affecting certain tenant categories, potentially leading to downward pressure on occupancy and leasing
spreads.
As a responsible and forward-thinking commercial landlord, RioCan supports retailers in adapting their stores to provide their
customers with flexibility. This ongoing effort ensures that RioCan provides relevant and resilient shopping environments.
The demand for high-quality retail remains strong as tenants aim to serve an expanded customer base. Recently, the Canadian
federal government announced a plan to temporarily slow population growth by reducing the number of new permanent and
temporary residents. This plan is expected to result in marginal population declines in 2025 and 2026 before growth resumes in
2027. Since 2020, Canada has added nearly 2 million people, mainly in the major markets, particularly in the Greater Toronto
Area (GTA). However, there has not been sufficient new retail and residential development to accommodate this growth. This
shortage keeps demand robust even during this pause, while the country catches up on infrastructure to support the population.
Additionally, Canada boasts a favourable retail operating landscape. Compared to other countries, Canada has low retail space
per capita and a limited number of retailers within each retail category, creating a more stable retail ecosystem. In the past year
alone, retail square foot per capita has fallen by 4%, tightening the market further.
The lack of supply from limited investment in recent years due to strict building zoning controls and high construction costs will
persist as replacement costs exceed market values. This supply/demand imbalance creates positive tension during lease
negotiations, benefiting RioCan through higher rental rates and more favourable lease terms. Retailers are reluctant to relocate
since customers value the convenience and familiarity of incumbent locations. This often results in higher retention ratios,
reducing the need for costly refitting of space.
These factors ensure that RioCan enjoys resilient and sustainable growth from quality retail centres. RioCan's portfolio attributes,
such as proximity to transit, an exceptional demographic profile and high visibility at key intersections and major thoroughfares,
remain appealing and difficult to replicate.
Development Environment
The Trust closely monitors market trends and adjusts its development program accordingly. With limited land available for
development, residential development has faced challenges in meeting demand, contributing to the housing shortage. Recently,
skilled labour shortages, higher interest costs and increasing fees, taxes and charges by municipalities have presented
challenges for new construction. Higher demand for purpose-built residential rental, and therefore higher rents, have provided a
partial offset to cost inflation and higher interest rates. Various levels of government have also introduced several initiatives to
encourage increased supply of housing. However, these offsets have not been sufficient to fully prevent deferred and canceled
projects.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 22
RioCan did not start new physical construction of mixed-use properties in 2024 and does not intend to do so in 2025 as it focuses
on other capital allocation priorities.RioCan has the flexibility to choose when or if to begin construction as the underlying lands
are typically productive retail properties with a low invested land cost. RioCan continues, to pursue value creation by advancing
projects through the entitlement and re-zoning process to optimize density and use. Such activities are significantly less capital
intensive than physical construction.
For condominium/townhouse projects currently under construction, approximately 85% are pre-sold, with significant deposits
providing security against homebuyer default.
Refer to the Development Activities section of this MD&A for further details regarding the development pipeline.
Residential Rental Environment
The residential rental market in Canada is characterized by strong demand for rental housing and changing market dynamics.
The Canada Mortgage and Housing Corporation (CMHC) estimates that an additional 3.5 million housing units are needed by
2030 to restore affordability levels, highlighting the significant housing supply deficit in the country. The completion of new
condominiums has helped ease housing supply pressures, particularly in the GTA. While the influx of new units has put pressure
on short-term rental growth as these new units are delivered and rented, it has not fully resolved the issue of housing supply
deficit .
With the ongoing limited supply of housing in major markets, RioCan LivingTM properties are in high demand. RioCan's residential
portfolio consists of 13 new buildings which are overseen by a dedicated residential team. RioCan Living's portfolio offers
significant advantages that appeal to tenants. These properties are inviting places to live, with excellent amenities that foster a
sense of community. Their prime locations provide easy access to public transit and enhance their desirability in competitive
markets. Recent economic volatility and higher interest rates have made homeownership less attainable for many, further driving
the demand for rental housing. Notably, approximately 98% of the Trust's residential rental portfolio is exempt from rent controls
and prescribed rents, allowing flexible pricing to align with market trends, thereby enhancing the overall financial performance of
the portfolio.
RioCan is confident that its high-quality residential offering will be in high demand given its age, design, amenities, community
focus, professional management and access to strong retail offerings.
Economic Environment
At its latest meeting, the Bank of Canada (BOC) cut the overnight interest rate to 3.00%, the sixth consecutive reduction since
June 2024. This decision was influenced by several factors including slack in the economy, an elevated unemployment rate and
ongoing uncertainty surrounding U.S. tariffs. Inflation has shown signs of easing but core inflation measures such as energy
prices continue to exert price pressure. The BOC continues to closely monitor inflation and economic growth data and will
evaluate the need for further rate cuts one decision at a time.
Amid ongoing market volatility, since the start of 2024, longer-term Government of Canada bond yields have generally declined
and corporate spreads in the Canadian REIT sector have compressed, leading to lower all-in interest rates. Ample credit remains
available in the Canadian financial markets, but lenders are selective between asset classes, locations and borrowers. However,
Riocan, with its strong operating fundamentals and robust balance sheet, remains attractive to lenders.
RioCan's portfolio and balance sheet provide the Trust with the flexibility needed to navigate volatile economic conditions. With
well-located real estate that is part of the fabric of vibrant communities, RioCan is positioned to attract top-tier tenants. Our strong
and stable tenants are less susceptible to economic uncertainty, and necessity-based goods and services tenants remain resilient
even amidst shifts in discretionary spending.
Higher interest rates have increased the cost of capital resulting in a slowdown in the transaction market. Robust NOI growth from
solid operating fundamentals and a limited supply of high-quality assets serve as an offset to these fluctuations in interest rate
pressures. We have been adjusting our IFRS investment property values with changing economic conditions and recorded $29.4
million in cumulative fair value net losses in 2024. RioCan expects to see a tightening of capitalization rates for high-quality retail
and residential assets in 2025 as operating fundamentals continue to strengthen.
If imposed, US tariffs will cause economic volatility in Canada, which may elicit a reaction from the BOC, potentially resulting in
lower interest rates. While lower interest rates can reduce borrowing costs, they also introduce interest rate risk. To manage this
volatility, we maintain a balanced fixed/floating ratio, use derivatives to lock in long-term fixed rates, and ensure a well-distributed
debt ladder. Ample Liquidity of $1.7 billion and Unencumbered Assets of $8.2 billion provide additional financial flexibility to the
Trust in the current economic environment.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
23 RioCan Annual Report 2024
Outlook
RioCan manages its portfolio and capital structure to focus on long-term growth and deliver on its commitment to optimize Total
Unitholder Return. By focusing on the quality of our portfolio and the advancement of our development completions, we will
continue to generate resilient income and grow FFO to support sustainable and growing distributions and increase net asset
value (NAV).
Subsequent to year end, RioCan's Board of Trustees approved a 4.3% increase to the monthly distribution to Unitholders from
$0.0925 to $0.0965 per unit commencing with the February 2025 distribution, payable on March 7, 2025 to Unitholders of record
as at February 28, 2025. This brings RioCan's annualized distribution to $1.16 per unit and is the fourth consecutive annual
distribution increase.
Based on our FFO guidance for 2025, we expect to maintain a payout ratio within our long-term target range of 55%-65%:
Outlook 2025 (i)
FFO per unit (ii)
$1.89 to $1.92
FFO Payout Ratio
~ 60%
Commercial Same Property NOI growth (iii)
~3.5%
(i)
The Trust continuously reviews its longer-term targets in the context of ever-evolving macroeconomic and business environments. This Outlook
assumes normalized economic conditions and does not reflect any potential negative impact of tariffs, which could significantly alter economic
conditions and market dynamics.
(ii) Assumes weighted average interest rate of approximately 5% for 2025 financing activities compared to ~3% for maturing debt.
(iii) Commercial SPNOI growth is expected to be generated by contractual rent increases, the full year impact of leases signed in 2024, and by 2025
leasing activities assuming low to mid-teen blended leasing spreads and committed occupancy of ~ 98%.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 24
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) INITIATIVES
RioCan embeds ESG into every aspect of its business, including developments, operations, investment activities and corporate
functions. Embedding ESG is important for RioCan to:
•
promote resource efficiency, cost savings and minimizing environmental degradation;
•
increase property values, contributing to stakeholder satisfaction, and driving long-term net asset value growth;
•
drive the appeal of our assets, helping to attract and retain tenants;
•
build collaborative relationships with our tenants and employees, which accelerates the pace of positive change;
•
manage risks and comply with evolving regulations, enhancing operations management and governance practices; and
•
provide employees with sustainability impact opportunities, leading to increased employee job satisfaction and retention.
To meet its ESG objectives, RioCan is executing a multi-year plan that includes commitments and targets as well as actions and
initiatives to improve its ESG performance year-over-year. For performance tracking and reporting, the GRESB Real Estate
Assessment provides the Trust with a framework to benchmark organization-wide performance and ensure transparency and
continuous improvement. The Trust published its sixth annual ESG report in 2024, which includes indicators from the
Sustainability Accounting Standards Board (SASB) Real Estate sub-sector and recommended disclosure from the Financial
Stability Board (FSB) and the Task Force on Climate-related Financial Disclosures (TCFD).
RioCan's ESG Council is comprised of cross-functional executive and leadership team members that oversee the Trust's ESG
strategy implementation and drive performance improvements. Council members sponsor and provide guidance on ESG
initiatives within the organization and enable performance measurement. In addition, RioCan has a dedicated ESG team, led by
the SVP, General Counsel, ESG & Corporate Secretary, responsible for reporting ESG goals, plans and performance to the ESG
Council and Board of Trustees and ensuring ESG initiatives are resourced and elevated across the Trust. For RioCan's ESG
policy and additional information about its strategy and plan, visit RioCan's website.
Key accomplishments in 2024 include the following:
Environmental
•
Achieved top rank amongst North American retail peers in the 2024 GRESB Real Estate Assessment;
•
Achieved Regional Sector Leader status in the Americas under the Retail sector in the GRESB 2024 Real Estate
Assessment - Standing Investments Benchmark;
•
First rank amongst its Canadian peers in the GRESB Public Disclosure Assessment with an A rating for the sixth consecutive
year;
•
Won BOMA Toronto's race2reduce Commercial Real Estate Trailblazers (CREST) Award for emission reduction at two
properties, for the Mixed-Use: over 500,000 square feet and Open Air Retail categories;
•
RioCan Mayfield was honoured with BOMA Edmonton’s prestigious 2024 'The Outstanding Building of the Year' (TOBY®)
Award, recognizing commercial real estate industry excellence in the Edmonton Metropolitan Region, Central and Northern
Alberta, Northwest Territories and Yukon; and
•
Achieved LEED Platinum Certification at The Well for the retail and office components. The Platinum certification represents
the highest level of LEED achievement, awarded to projects that earn more than 80% of the available points.
Social
•
Achieved a top-decile ranking on our Employee Engagement survey for the third consecutive year, relative to a benchmark of
similar-sized Canadian companies;
•
Awarded "Canada's Most Admired Corporate Culture" by Waterstone Human Capital;
•
Established a landmark partnership with SickKids to increase access to essential pediatric health services. This endeavour is
the first of its kind in Canada;
•
Recognized as one of Greater Toronto’s Top 100 Employers by Mediacorp Canada Inc.;
•
In recognition of National Truth and Reconciliation Day 2024, select RioCan properties featured artist markets to celebrate
Indigenous creativity, launched community lending libraries, and provided complimentary books to enhance education and
awareness;
•
RioCan collaborated with industry peers to host a 2024 Pride-themed event, promoting engagement during Pride season and
promoting industry allyship; and
•
Achieved Fitwel Commercial Interior Space Certification of RioCan’s head offices at the Yonge Eglinton Centre. Fitwel is the
world's leading certification system committed to building health for all. Fitwel is implementing a vision for a healthier future
where all buildings and communities are enhanced to strengthen health and well-being.
Governance
•
Jennifer Suess, SVP, General Counsel, ESG & Corporate Secretary has been appointed to the 2024 Order of Ontario, the
highest honour granted to civilians by the Province. The Minister of Citizenship and Multiculturalism commends the
Appointees for their achievements, dedication and exemplifying the spirit that makes Ontario a great place to live;
•
Achieved an ESG rating upgrade of 'AA' from 'A' by Morgan Stanley Capital International (MSCI);
•
Maintained “Prime” status by Institutional Shareholder Services (ISS);
•
RioCan developed an expansive Supplier Code of Conduct (the "Supplier Code") which was approved in 2024. The Supplier
Code was introduced to set out the principles, standards and behaviours for our suppliers to follow in conducting their
business and to highlight the importance of RioCan’s commitment to avoid any form of modern slavery within its operations
or its supply chains; and
•
Earned the 2024 Green Lease Leader (Platinum Level) recognition presented by the Institute for Market Transformation
(IMT) and the U.S. Department of Energy’s Better Building Alliance. The Green Lease Leaders designation is applied to
organizations that exhibit a strong commitment to high performance and sustainability in buildings and best practice leasing.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
25 RioCan Annual Report 2024
PROPERTY PORTFOLIO OVERVIEW
Property Operations - Total Portfolio
Net Leasable Area (NLA) and Property Count
RioCan's portfolio of net leasable area and properties consisted of the following as at December 31, 2024:
NLA at RioCan's Interest
Total Portfolio
(thousands of sq. ft., except where otherwise noted)
Retail
Office
Total
Commercial
Residential
Rental (iii)
NLA
Property
Count
Total NLA (i) (ii)
28,144
2,636
30,780
1,399
32,179
178
(i)
Includes NLA that was occupied or available for occupancy on or before December 31, 2024. Excludes 12 income producing properties that are
owned through joint ventures and reported under equity-accounted investments and included 74 thousand square feet of legacy residential rental
NLA that are excluded from the metrics disclosed in the Property Operations - Residential Rental section of this MD&A.
(ii)
Includes 0.8 million NLA of Development Projects Under Construction, except for five development properties that are owned through joint
ventures and reported under equity-accounted investments and condominium and townhouse units. Includes completed properties under
development NLA and have a rent commencement date after December 31, 2024.
(iii) See the Property Portfolio Overview - Property Operations - Residential Rental section of this MD&A for further details.
Total Portfolio
At RioCan’s Interest
% of NLA
% of total fair value of income
producing properties
As at December 31
2024
2023
2024
2023
Greater Toronto Area (i)
51.9 %
51.4 %
57.1 %
57.2 %
Ottawa (ii)
14.9 %
14.9 %
13.0 %
12.9 %
Calgary
11.3 %
10.9 %
12.1 %
11.9 %
Montreal
6.0 %
6.0 %
3.5 %
3.3 %
Edmonton
5.4 %
5.5 %
5.0 %
5.0 %
Vancouver (iii)
3.5 %
3.4 %
4.6 %
4.7 %
Other
7.0 %
7.9 %
4.7 %
5.0 %
Total Portfolio
100.0 %
100.0 %
100.0 %
100.0 %
(i)
Area extends north to Newmarket, Ontario; west to Hamilton, Ontario; and east to Oshawa, Ontario.
(ii)
Area extends from Nepean and Vanier to Gatineau, Quebec.
(iii) Area extends east to Abbotsford, British Columbia.
Property Mix
The Trust operates a variety of income producing property formats or classes to best serve the communities in which it operates.
The Trust has identified the following three major categories of property classes:
Category
Description
Grocery Anchored Centre
Assets with a grocery anchor tenant or shadow grocery anchor(i). Properties anchored or shadow-
anchored by Walmart or Costco are included in this category. Examples of these properties include:
Clarkson Crossing and RioCan Durham Centre.
Mixed-Use/Urban
Assets with more than one type of use (retail, office, residential mixed-use assets) located in major
markets and non mixed-use assets located in high-density urban areas. Examples of these properties
include: The Well and Yonge Eglinton Centre.
Open Air Centre and
Other
Community shopping centres with little or no enclosed component. They often include high-quality
anchor tenants such as pharmacy, liquor, home improvement and/or a bank branch. Examples of these
properties include: RioCan Warden and RioCan Thickson Ridge.
(i)
A shadow anchor is a retail store that is adjacent or in close proximity to an owned property that generates a great deal of traffic and attracts
business to a property of the Trust, but the underlying property/land for this retail store is not owned by the Trust.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 26
As at December 31, 2024, RioCan's portfolio of income producing properties consisted of the following:
NLA by Property Mix
66.9%
21.1%
12.0%
Fair Value by Property Mix
58.5%
31.4%
10.1%
Grocery Anchored Centre
Mixed-Use / Urban (i)
Open Air Centre and Other
(i)
Mixed-Use/Urban includes approximately 1.3 million square feet of residential rental NLA and the corresponding fair value.
The majority of the Trust's portfolio is comprised of formats that are attractive to tenants and are resilient in the face of economic
fluctuations and evolving retail trends. Strategic leasing continued to improve the tenant mix, adding grocers during the year to
three assets: Grant Crossing, RioCan Hall and RioCan Langley, transforming each asset into a grocery-anchored centre.
Tenant Composition
The Trust strategically manages its tenant mix by segmenting its tenants into the following three categories: strong and stable,
compelling traffic drivers and transitional tenants. Defining tenant mix using these three categories helps to guide decision-
making with respect to tenancies.
Based on annualized net rent as at December 31, 2024, 88.0% of the Trust's tenants are classified as "strong and stable", an
improvement of 50 basis points year-over-year.
% of Annualized Net Rent by Tenant Composition
88.0%
9.9%
2.1%
Strong and Stable (i)
Compelling Traffic Drivers (ii)
Transitional (iii)
(i)
Strong and Stable is represented by tenants with stable rent-paying ability, strong covenants, and reliable foot traffic. This category is largely
comprised of national, necessity-based retail tenants.
(ii)
Compelling Traffic Drivers is represented by tenants that drive meaningful traffic and/or incremental visits to our properties, such as services,
experiential tenants, and independent food service providers which have covenants of lesser quality than Strong and Stable tenants.
(iii) Transitional are tenants that are currently fulfilling their rent obligation but can be transitioned out for a strong covenant tenant that drives
meaningful traffic.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
27 RioCan Annual Report 2024
Property Operations - Commercial
Top 30 Commercial Tenants
RioCan reduces its exposure to rental revenue risk through major market geographical diversification, staggered lease maturities,
diversifying revenue sources, avoiding dependence on any single tenant by ensuring no individual tenant contributes a significant
percentage of our gross revenue and ensuring a considerable portion of rental revenue is earned from national and anchor
tenants. As at December 31, 2024, RioCan’s 30 largest commercial tenants measured by annualized contractual gross rent are
as follows:
Rank Tenant name
Percentage of total
annualized
contractual gross rent
Number
of
locations
NLA
(thousands
of sq. ft.)
Percentage
of total
IPP NLA
Weighted average
remaining lease
term (years) (i)
1
Canadian Tire Corporation (ii)
4.3 %
55
1,603
5.2 %
5.9
2
The TJX Companies, Inc. (iii)
4.2 %
61
1,743
5.7 %
4.8
3
Loblaws/Shoppers Drug Mart (iv)
4.1 %
53
1,349
4.4 %
8.6
4
Cineplex (v)
2.7 %
16
947
3.1 %
5.0
5
Metro/Jean Coutu (vi)
2.6 %
33
1,283
4.2 %
7.4
6
Walmart
2.0 %
11
1,399
4.6 %
5.6
7
Sobeys/Safeway (vii)
1.9 %
23
797
2.6 %
10.5
8
Dollarama
1.8 %
66
641
2.1 %
6.8
9
Shopify
1.5 %
2
263
0.9 %
11.2
10
GoodLife Fitness
1.4 %
23
516
1.7 %
9.0
11
Michaels
1.4 %
22
481
1.6 %
4.8
12
TD Bank
1.2 %
44
225
0.7 %
5.4
13
Recipe Unlimited (viii)
1.2 %
59
278
0.9 %
5.1
14
Staples/Business Depot
1.2 %
23
470
1.5 %
6.4
15
PetSmart
1.0 %
22
333
1.1 %
5.2
16
Chapters/Indigo
1.0 %
13
280
0.9 %
6.8
17
Rona Inc.
1.0 %
6
780
2.6 %
5.4
18
Value Village
1.0 %
15
379
1.2 %
8.2
19
Liquor Control Board of Ontario (LCBO)
0.8 %
22
179
0.6 %
7.5
20
DSW/The Shoe Company
0.7 %
27
214
0.7 %
4.4
21
Bank Of Montreal
0.7 %
27
138
0.5 %
4.6
22
Restaurant Brands International (ix)
0.7 %
60
139
0.5 %
6.1
23
Best Buy
0.7 %
11
218
0.7 %
5.1
24
Leon's/The Brick
0.6 %
8
226
0.7 %
4.6
25
The Bank Of Nova Scotia
0.6 %
23
114
0.4 %
4.2
26
LA Fitness
0.6 %
6
265
0.9 %
11.8
27
Gap Inc. (x)
0.6 %
20
188
0.6 %
3.9
28
Canadian Imperial Bank of Commerce
0.5 %
18
101
0.3 %
4.1
29
Royal Bank of Canada
0.5 %
16
91
0.3 %
4.2
30
Rexall Pharma Plus
0.5 %
9
98
0.3 %
5.5
Top 30 Commercial Tenants
43.0 %
794
15,738
51.5 %
6.5
Total commercial portfolio
7.9
(i)
Weighted average remaining lease term based on annualized contractual gross rent.
(ii)
Canadian Tire Corporation includes Canadian Tire, PartSource, Mark’s, Sport Chek, Sports Experts, National Sports, Atmosphere and Party City.
(iii) The TJX Companies, Inc. includes Winners, HomeSense and Marshalls.
(iv) Loblaws/Shoppers Drug Mart includes No Frills, Fortinos, Zehrs Markets, Joe Fresh, Maxi and T&T Supermarket, among others.
(v)
Cineplex includes Galaxy Cinemas.
(vi) Metro/Jean Coutu includes Super C, Loeb, Food Basics and Adonis.
(vii) Sobeys/Safeway includes Farm Boy, Longo's and FreshCo.
(viii) Recipe Unlimited includes Montana's, Harvey's, Swiss Chalet, Kelseys, The Keg and East Side Mario's, among others.
(ix) Restaurant Brands International includes Tim Hortons, Burger King, Popeyes and Firehouse Subs.
(x)
Gap Inc. includes The Gap, Old Navy and Banana Republic banners.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 28
Occupancy by Markets and Usages
The committed (tenants that have signed leases) and in-place (tenants that are in possession of their space) occupancy rates for
our commercial property portfolio at RioCan's interest are as follows:
At RioCan’s Interest
Committed Occupancy
In-Place Occupancy
As at December 31
2024
2023
2024
2023
Greater Toronto Area (i)
97.5 %
97.2 %
96.9 %
96.9 %
Ottawa (ii)
99.2 %
99.4 %
99.2 %
99.2 %
Calgary
98.4 %
98.4 %
97.2 %
98.0 %
Montreal
95.7 %
94.6 %
95.1 %
94.6 %
Edmonton
98.5 %
95.6 %
98.0 %
94.7 %
Vancouver (iii)
99.1 %
100.0 %
97.5 %
99.0 %
Other
99.2 %
96.1 %
99.2 %
95.6 %
Total Commercial Occupancy
98.0 %
97.4 %
97.4 %
97.1 %
(i)
Area extends north to Newmarket, Ontario; west to Hamilton, Ontario; and east to Oshawa, Ontario.
(ii)
Area extends from Nepean and Vanier to Gatineau, Quebec.
(iii) Area extends east to Abbotsford, British Columbia.
The following table summarizes the Trust's committed and in-place occupancy rates by retail and office as at December 31, 2024
and December 31, 2023.
As at
December 31, 2024
December 31, 2023
Retail
Office
Total
Commercial
Retail
Office
Total
Commercial
Total
Commercial
Portfolio
Committed Occupancy
98.7 %
90.1 %
98.0 %
98.4 %
87.5 %
97.4 %
In-Place Occupancy
98.2 %
89.6 %
97.4 %
98.0 %
87.4 %
97.1 %
Committed occupancy increased 60 basis points and in-place occupancy increased 30 basis points, when compared to the same
period last year. When compared to Q3 2024, committed occupancy and in-place occupancy increased by 20 and 40 basis
points, respectively.
Retail committed and in-place occupancy improved by 30 and 20 basis points, respectively, when compared to the same period
last year and by 10 and 20 basis points, respectively, when compared to Q3 2024.
As at December 31, 2024, all 10 of the initial vacant units that resulted from the two tenant failures discussed in Q1 2024, Bad
Boy and Rooms+Spaces, have been re-leased to improved tenancies, including grocers. As of February 18, 2025, tenants at four
of those locations are paying cash rent. Cash rents from the remaining six locations will commence at varying points over the next
seven months. These units were backfilled by relevant and resilient retailers at improved lease terms featuring 23.9% higher base
rents on a weighted average basis, further improving the portfolio's overall quality and cash flow growth. This delay in rent
commencement had a negative impact on Commercial SPNOI in 2024, but the tenancies will contribute to future Commercial
SPNOI, AFFO and NAV growth.
Compared to the same period last year, office committed occupancy increased by 260 basis points and in-place occupancy
increased by 220 basis points. When compared to Q3 2024, office committed occupancy increased by 120 basis points and in-
place occupancy increased by 240 basis points. The disposition of a non-core office building with high vacancy located in a
secondary market during the quarter positively impacted the quarterly and annual increase.
The spread between committed and in-place occupancy of 60 basis points reflects the impact of executed deals where tenants
have not yet taken possession, including the leasing of several of the retail units noted above. We anticipate this gap will narrow
as the tenancies are completed. The increase in in-place occupancy during the quarter and for the year was due to tenants taking
possession.
Future Lease Commencements
On a prospective basis, we expect to generate approximately $8.4 million of annualized gross incremental rent, on an IFRS basis,
from tenants that have signed leases but have not taken possession of the space as at December 31, 2024. This includes base
rent, operating cost recoveries and straight-line rent, but excludes operating costs capitalized while a property is under
redevelopment.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
29 RioCan Annual Report 2024
Average Net Rent
The portfolio weighted average net rent per occupied square foot for our income producing properties is as follows:
As at December 31
2024
2023
Average net rent per occupied square foot (i)
$
22.39 $
21.51
Retail
$
22.05 $
21.22
Office
$
26.54 $
24.97
(i)
Net rent is primarily contractual base rent pursuant to tenant leases.
Average net rent per occupied square foot increased when compared to the prior year mainly due to contractual rent steps, rent
increases upon renewals, higher-than-average net rent per occupied square foot on new deals, vacancies and properties sold
during the intervening period that had a lower average net rent per square foot. Our leasing strategy includes a focus on
embedding contractual rent steps into every lease.
New Leasing Activity
Three months ended December 31
Years ended December 31
(in thousands, except per sqft amounts)
2024
2023
2024
2023
New Leasing NLA at 100% - IPP & PUD
294
122
1,517
1,029
Average net rent per square foot - IPP & PUD (i)
$
31.79 $
30.53 $
26.17 $
27.75
IPP
$
32.47 $
29.54 $
25.36 $
25.61
PUD
$
28.16 $
34.06 $
34.85 $
42.93
(i)
Net rent is primarily contractual base rent pursuant to tenant leases. Includes new square footage that has not previously been tenanted and
existing square footage leased to a new tenant.
New leasing activity for the three months and year ended December 31, 2024 totalled 294,000 and 1,517,000 square feet at an
average rate of $31.79 and $26.17 per square foot, respectively. In addition to the 1,517,000 square feet of new leasing, RioCan
also finalized a land lease for a 158,000 square foot Costco at RioCan Centre Burloak during the year. As part of our ongoing
initiatives to continuously improve tenant quality and the quality of our shopping centres, we strategically replaced fashion-
focused tenants with a strong, service-based anchor. This is expected to attract significant traffic, draw other tenants and
enhance the overall property appeal, generating incremental net asset value. Higher new lease volumes for the year are mainly
due to new high-quality tenants including a number of new grocery stores backfilling space, demonstrating the resiliency and the
high quality of the portfolio.
Average net rent per square foot for new leasing for the quarter is $9.40 per square foot above our portfolio average net rent per
occupied square foot.
Renewal Leasing Activity
Three months ended December 31
Years ended December 31
(in thousands, except percentage and per sqft amounts)
2024
2023
2024
2023
Square feet renewed at market rental rates (at 100%)
629
552
2,305
2,395
Square feet renewed at fixed rental rates (at 100%)
62
510
947
1,349
Total square feet renewed (at 100%)
691
1,062
3,252
3,744
Average net rent per square foot (i)
$
28.34 $
23.60 $
25.23 $
23.36
Renewal leasing spread in average net rent (ii)
$
4.25 $
1.89 $
2.92 $
2.08
Retention ratio
78.8%
93.4%
88.6%
87.7%
(i)
Net rent is primarily contractual base rent pursuant to tenant leases.
(ii)
Represents increase in average net rent per square foot for renewal leasing.
A high proportion of leases expiring in Q4 2024 and full year were renewed at market rates, which contributed to the strong
renewal leasing spread. The retention ratios were impacted by one large vacancy upon expiry at a property in the GTA. The Trust
took advantage of this turnover and quickly re-leased the space at higher base rent.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 30
Leasing Spreads
Three months ended December 31
Years ended December 31
2024
2023
2024
2023
New leasing spread (i)
52.5%
13.2%
36.7%
14.7%
Renewal leasing spread
17.6%
8.7%
13.1%
9.8%
Blended leasing spread (ii)
25.5%
9.0%
18.7%
10.7%
(i)
The new leasing spread excludes any units that have not previously been tenanted (such as a newly completed development) or that have been
vacant for longer than two years. The quarterly new leasing spread is calculated for properties owned by the Trust as of each quarter end date.
The year-to-date leasing spread is the weighted average net rent of the quarterly new leasing spread as reported over the respective period. For
further clarity, net rent on new leases signed on new square footage from new development projects is included in the average net rent per square
foot for new leases but is excluded in calculating the new leasing spread given that there is no base to compare to for such new developments.
(ii)
The blended leasing spread is the weighted average net rent leasing spread for both renewal leasing and new leasing for each period indicated.
A favourable retail environment, high demand for desirable locations and limited space continued into Q4 2024, the benefits of
which were reflected in the leasing spreads for the quarter and year end.
Lease Expiries
Lease expiries for the next five years are as follows:
At RioCan's interest
Total
Commercial
IPP NLA
2025
2026
2027
2028
2029
Square feet
30,560
2,971
4,031
3,815
3,714
4,792
Square feet expiring/Portfolio NLA
9.7 %
13.2 %
12.5 %
12.2 %
15.7 %
Average net rent per occupied square foot
$
22.16
$
20.96
$
22.84
$
24.32
$
24.00
(in thousands, except per sqft and percentage amounts)
For the years ending
Contractual Rent Increases
Certain of our leases provide periodic increases in rates during the lease terms which contribute to growth in Commercial Same
Property NOI. Contractual rent increases in each year for the next five years for our properties are as follows:
(thousands of dollars)
For the years ending
At RioCan's interest
2025
2026
2027
2028
2029
Contractual rent increases
$
9,999
$
7,633 $
6,750 $
5,043 $
3,653
The contractual rent increases noted above are based on existing leases as at December 31, 2024 and are on a year-over-year
incremental increase basis. The contractual rent increases in 2025 reflect more market rent changes as a result of new leasing
and renewals completed in 2024 than in the outer years. The above schedule is on a cash rent basis and accounts for the timing
of contractual rent increases year-over-year (in other words, not on an annualized basis but based on a year-over-year cash rent
change basis).
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
31 RioCan Annual Report 2024
Property Operations - Residential Rental
RioCan's residential brand, RioCan Living, includes purpose-built residential rental buildings developed or acquired by RioCan
and condominium and townhouse developments, as further discussed in the Development Activities and Asset Profile - Joint
Arrangements sections of this MD&A.
Strong demand for well-located, professionally-managed, amenity-rich rental accommodations with easy access to transit
continued in the quarter.
RioCan Living's residential rental portfolio consists of 13 buildings, with a fair value of $0.9 billion, comprised of 3,099 residential
rental units in operation, including 225 income producing property residential rental units acquired by RioCan on February 2, 2024
through its purchase of a 50% interest in The Underwood Apartments located in Calgary, Alberta. On November 29, 2024, the
Trust sold its 50% interest in 61 units at Strada for gross sale proceeds of $23.9 million. Upon stabilization, RioCan will acquire a
90% interest in 297 units at Phase Two/Three of Market. RioCan has also agreed to purchase a 100% interest in an additional 60
units at Bellevue Phase Three subject to certain conditions. Both transactions are expected to close in the first half of 2025.
At FourFifty The Well, construction of all 592 units was completed in the first half of 2024.
Approximately 98% of the residential rental portfolio is exempt from rent controls and prescribed rents.
Occupancy and Leasing
Occupancy as at
December 31, 2024
Leasing as of
February 18, 2025
Residential Rental Buildings in Operation
Number of total units (i)
% of occupied units
% of leased units
Stabilized (12 properties)
2,507
94.6 %
95.0 %
In lease-up
FourFifty The Well (Toronto) (ii)
592
87.3 %
92.4 %
(i)
Number of units are at 100% ownership interest and all buildings are 50% owned except for Market which is 90% owned and Bellevue which is
100% owned.
(ii)
Phased occupancy commenced on August 1, 2023.
Residential properties in lease-up initially generate negative FFO, as property operating costs and interest expense exceed rent
revenue due to unoccupied units during this phase. Capitalization of interest expense and other carrying costs ceases when units
are completed and transferred to income producing properties. While FourFifty The Well generated positive NOI in Q4 2024, it
was not sufficient to cover the associated interest expense causing this property in lease-up to generate negative FFO of $0.1
million and $2.1 million for the three months and year ended December 31, 2024, respectively. As this property reaches
stabilization, the Trust expects this property positively contribute to FFO.
Average Market Rent
As at December 31,
2024
2023
Market units average monthly rent per occupied square foot (i) (ii)
$
3.37 $
3.23
(i)
Market units average monthly rent per occupied square foot is calculated as monthly gross rents as at December 31, 2024 (excluding utilities
which are paid by tenants) from leased residential units divided by the total number of net leasable square feet for these leased residential units. It
does not include revenue from parking or other sources.
(ii)
Market units average monthly rent per occupied square foot includes only properties that are owned and stabilized as at the end of each of the
reporting dates presented. A property is considered to have reached stabilization upon the earlier of (i) achieving 95% occupancy or (ii) 24 months
after first occupancy as of the quarter end reporting date. Properties disposed during the year are excluded from the comparative calculation. As at
December 31, 2024 and 2023, 10 properties (eCentralTM, PivotTM, and Litho.TM located in Toronto, Ontario, FrontierTM, LatitudeTM and LumaTM
located in Ottawa, Ontario, BrioTM located in Calgary, Alberta and Market, Bellevue Phase One and Two located in Montreal, Quebec) are included.
For the properties listed in footnote (ii) above, the market units average monthly rent per occupied square foot increased by 4.3%
when compared to December 31, 2023 due to new leasing and renewals at higher rents. The increase in market units average
monthly rent per unit that were turned over or renewed was 4.0% for the year ended December 31, 2024.
In the GTA, on a total stabilized portfolio basis, market units average monthly rent per occupied square foot was $4.19 as at
December 31, 2024, an increase of 2.2% compared to December 31, 2023.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 32
RESULTS OF OPERATIONS
Summary of Selected Financial Information
The following table summarizes key selected financial information that is based on or derived from, and should be read in
conjunction with, the Consolidated Financial Statements of the Trust for the respective years indicated in the table.
Revenue
$
1,239,526 $
1,123,871 $
1,213,847
Net income
473,465
38,802
236,772
Operating income
740,948
714,408
712,692
Net Operating Income (NOI) (i)
712,156
697,353
674,989
Net Operating Income NOI (RioCan's Proportionate Share) (i)
737,764
724,217
698,118
FFO (i)
535,971
531,281
524,678
FFO Adjusted (i)
544,278
532,649
528,967
Weighted average Units outstanding (in thousands)
Basic
300,464
300,392
306,069
Diluted
300,473
300,479
306,247
Per unit basis
Net income - basic
$
1.58 $
0.13 $
0.77
Net income - diluted
$
1.58 $
0.13 $
0.77
FFO - diluted (i)
$
1.78 $
1.77 $
1.71
FFO Adjusted - diluted (i)
$
1.81 $
1.77 $
1.73
Unitholder distributions (iii)
$
1.1075 $
1.0750 $
1.0200
FFO Payout Ratio (i) (ii)
61.9 %
60.5 %
59.0 %
FFO Payout Ratio Adjusted (i) (ii)
61.0 %
60.3 %
58.5 %
AFFO Payout Ratio (i) (ii)
72.8 %
70.0 %
67.1 %
AFFO Payout Ratio Adjusted (i) (ii)
71.5 %
69.7 %
66.4 %
Investment properties
$
13,839,154 $
13,561,718 $
13,807,740
Total assets
15,472,044
14,842,281
15,101,859
Total debt
7,323,914
6,861,113
6,742,343
Total equity
7,558,338
7,437,770
7,728,892
Adjusted Debt to Adjusted EBITDA (RioCan's Proportionate Share) (i) (ii)
8.98
9.28
9.51
Weighted average contractual interest rate (iv)
3.89%
3.78%
3.41 %
Weighted average effective interest rate (iv) (v)
3.90%
3.74%
3.40 %
Net book value per unit
$
25.16 $
24.76 $
25.73
(thousands of dollars, except where otherwise noted)
As at or for the years ended December 31
2024
2023
2022
(i)
This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section in this MD&A for more information on each non-GAAP financial
measure.
(ii)
Calculated on a trailing twelve-months basis. For further discussion of the Trust's FFO and AFFO Payout Ratios and Adjusted Debt to Adjusted
EBITDA (RioCan's Proportionate Share) refer to the Non-GAAP Measures section in this MD&A.
(iii) Effective February 2024, the distribution was increased to $1.11 from $1.08 on an annualized basis.
(iv) For hedged floating rate debt, the interest rate reflects the fixed rate in the interest swap.
(v)
Inclusive of bond forward hedges.
The Trust's year-over-year changes in revenues, FFO, operating income and net income, as well as other key financial metrics
were primarily impacted by strong operating fundamentals, the magnitude and pace of development expenditures and project
completions, the timing and magnitude of its various residential condominium and townhouse projects closings and property
dispositions. Net income, investment properties, total assets and total equity were further impacted by the year-over-year
changes in the fair values of investment properties. Unitholder distributions were within the targeted FFO Payout ratio of 55% to
65% and increased accordingly year-over-year. NCIB purchases completed in 2022 reduced the number of Units outstanding and
had an accretive impact on FFO per Unit. Refer to the various sections of this MD&A for more detail on the Trust's key financial
and operational information.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
33 RioCan Annual Report 2024
The Q4 2024 and YTD 2024 variances discussed in the following sections compare the respective 2024 results to the same
comparable periods in 2023, unless otherwise noted.
Revenue
The revenue for the three months and years ended December 31, 2024 and 2023 is as follows:
Three months ended December 31
Years ended December 31
(thousands of dollars)
2024
2023
Change
2024
2023
Change
Rental revenue
$
293,327 $
276,510 $
16,817 $ 1,137,127 $ 1,091,105 $
46,022
Residential inventory sales
59,670
13,789
45,881
84,483
13,789
70,694
Property management and other service fees
4,606
6,611
(2,005)
17,916
18,977
(1,061)
Revenue
$
357,603 $
296,910 $
60,693 $ 1,239,526 $ 1,123,871 $
115,655
The rental revenue for the three months and years ended December 31, 2024 and 2023 is as follows:
Three months ended December 31
Years ended December 31
(thousands of dollars)
2024
2023
Change
2024
2023
Change
Base rent
$
182,709 $
174,393 $
8,316 $
710,525 $
689,609 $
20,916
Realty tax and insurance recoveries
54,272
49,538
4,734
213,555
200,858
12,697
Common area maintenance recoveries
47,673
46,253
1,420
183,501
176,080
7,421
Percentage rent
2,616
2,339
277
8,184
8,424
(240)
Straight-line rent
3,101
2,638
463
11,234
5,898
5,336
Lease cancellation fees
1,591
70
1,521
4,817
5,253
(436)
Parking revenue
1,365
1,279
86
5,311
4,983
328
Rental revenue
$
293,327 $
276,510 $
16,817 $ 1,137,127 $ 1,091,105 $
46,022
YTD 2024
The increase in revenue was mainly due to higher residential inventory sales, higher rental revenue partially offset by lower
property management and other service fees.
The increase in residential inventory sales was primarily due to the disposition of non-core residential inventory development land
located in Calgary, Alberta and timing of condominium and townhouse sales.
The increase in rental revenue was mainly due to higher base rent, higher recoveries and higher straight-line rent. Base rent
increases from rental growth, development completions and asset acquisitions were partially offset by the impact of asset
dispositions.
The decrease in property management and other service fees was primarily due to lower construction and development fees and
lower other fees, partially offset by higher financing and higher property management fees.
Q4 2024
The increase in revenue was mainly due to the same reasons described above in YTD 2024.
Residential inventory sales increased primarily due to the timing of condominium and townhouse sales.
The increase in rental revenue was mainly due to the same reasons described above in YTD 2024.
Property management and other service fees decreased primarily due to lower construction and development fees and lower
other fees partially offset by higher financing fees.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 34
Operating Income and Net Operating Income (NOI)
The operating income and NOI for the three months and years ended December 31, 2024 and 2023 is as follows:
(thousands of dollars)
2024
2023
Change
2024
2023
Change
Operating income
$
195,973 $
186,074 $
9,899 $
740,948 $
714,408 $
26,540
NOI (i)
$
184,230 $
176,306 $
7,924 $
712,156 $
697,353 $
14,803
NOI (RioCan's proportionate share) (i)
$
190,623 $
182,722 $
7,901 $
737,764 $
724,217 $
13,547
NOI
Commercial
$
176,521 $
169,860 $
6,661 $
682,932 $
675,876 $
7,056
Residential (ii)
7,709
6,446
1,263
29,224
21,477
7,747
Total NOI
$
184,230 $
176,306 $
7,924 $
712,156 $
697,353 $
14,803
Three months ended December 31
Years ended December 31
(i) This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section in this MD&A for more information on each non-GAAP financial
measure.
(ii)
Includes $0.2 million and $0.2 million of non-recoverable operating costs from residential operations for the three months and year ended
December 31, 2024 (three months and year ended December 31, 2023 - $0.0 million and $0.1 million).
YTD 2024
The increase in operating income was largely the combined effect of $14.8 million higher NOI, $15.3 million higher inventory
gains primarily due to disposition of non-core residential inventory development land located in Calgary, Alberta and timing of
condominium and townhouse sales, partially offset by $1.1 million in lower property management and other service fee revenue.
The increase in commercial NOI was largely due to $11.4 million higher NOI from completed developments, $7.5 million higher
straight-line rent and Commercial Same Property NOI growth of 1.2% or $6.9 million. Excluding the impact of prior year provision
reversals, Commercial SPNOI growth for year-to-date was 2.2%. These increases were partially offset by $15.6 million lower NOI
due to asset dispositions net of the impact of acquisitions, $2.7 million lower NOI from properties under de-leasing and $0.4
million lower lease cancellation fees.
Residential NOI increased primarily due to completed developments, acquisitions and strong leasing progress in the residential
rental portfolio.
Q4 2024
The increase in operating income was largely due to $7.9 million higher NOI, $6.2 million in higher residential inventory gains due
to the timing of condominium and townhouse sales, partially offset by $2.0 million lower property management and other service
fee revenue.
The increase in commercial NOI was largely due to Commercial Same Property NOI growth of 2.3% or $3.4 million, $2.6 million
higher straight-line rent, $1.9 million in higher NOI from completed developments, $1.5 million higher lease cancellation fees, and
$0.2 million higher NOI from properties under de-leasing. Excluding the impact of prior year provision reversals, Commercial
SPNOI growth for the quarter was 3.5%. These increases were partially offset by $2.9 million lower NOI due to asset dispositions
net of the impact of acquisitions.
Residential NOI increased primarily due to completed developments, acquisitions and strong leasing progress in the residential
rental portfolio, partially offset by the impact of the provision for credit losses and property tax settlements in the same quarter last
year.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
35 RioCan Annual Report 2024
Same Property NOI
Same Property NOI for commercial and residential portfolio for the three months and years ended December 31, 2024 and 2023
is as follows:
Commercial Same Property NOI (i)
$
150,744 $
147,307
2.3 % $
588,278 $
581,360
1.2 %
Residential Same Property NOI (i)
$
5,362 $
5,426
(1.2) % $
18,008 $
17,139
5.1 %
Same Property NOI (i)
$
156,106 $
152,733
2.2 % $
606,286 $
598,499
1.3 %
Commercial Same Property NOI excluding
provision (i)
$
151,628 $
146,470
3.5 % $
588,425 $
576,016
2.2 %
Adjusted Commercial Same Property NOI (i)
$
149,870 $
145,329
3.1 % $
581,362 $
570,360
1.9 %
Adjusted Residential Same Property NOI (i)
$
5,467 $
5,260
3.9 % $
17,842 $
17,024
4.8 %
Three months ended December 31
Years ended December 31
(thousands of dollars, except where otherwise
noted)
2024
2023
% change
2024
2023
% change
(i)
This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section in this MD&A for more information on each non-GAAP financial
measure.
YTD 2024
Commercial Same Property NOI increased by 1.2% due to organic growth that was tempered by a higher provision reversal in the
prior year and the short-term impact of tenant turnovers which occurred in Q1 2024. Tenant turnovers included 10 retail locations
that were vacated due to two tenant failures. As at December 31, 2024, all 10 locations have been re-leased to improved
tenancies, including grocers. Refer to the analysis of the change in occupancy included in the Property Portfolio Overview -
Property Operations - Commercial section of this MD&A for further details.
Commercial Same Property NOI excluding provision increased by 2.2%. Adjusted Commercial Same Property NOI,which adjusts
for the impact of the provision for credit losses and legal and CAM/property tax settlements, increased by 1.9%.
Residential Same Property NOI increased by 5.1%. Adjusted Residential Same Property NOI, which adjusts for the impact of the
provision for credit losses and property tax settlements, increased by 4.8%.
Q4 2024
Commercial Same Property NOI increased by 2.3% due to the same reasons described above in YTD 2024.
Commercial Same Property NOI excluding provision increased by 3.5%. Adjusted Commercial Same Property NOI increased by
3.1%.
Residential Same Property NOI decreased by 1.2%. Adjusted Residential Same Property NOI increased by 3.9%.
Other Income (Loss)
Three months ended December 31
Years ended December 31
(thousands of dollars)
2024
2023
Change
2024
2023
Change
Interest income
$
12,301 $
6,401 $
5,900 $
42,469 $
25,131 $
17,338
Income from equity-accounted investments
3,977
(7,190)
11,167
38,507
18,383
20,124
Fair value gain (loss) on investment properties, net
2,004
(222,921)
224,925
(29,353)
(450,408)
421,055
Investment and other income, net
3,782
4,459
(677)
17,531
8,501
9,030
Other income (loss)
$
22,064 $ (219,251) $
241,315 $
69,154 $ (398,393) $
467,547
YTD 2024
Interest income increased mainly due to higher average mortgages and loans receivable outstanding and higher effective interest
rates, and higher other interest from cash on deposit and funds held in trust.
RioCan's share of FFO from equity-accounted investments was $47.7 million, $10.6 million higher than the comparative period in
2023, primarily due to $11.2 million higher gains from two dispositions of a combined 25.0% interest in the 11YV project during
the year, as compared to a 12.5% interest sold in the comparable period last year, $3.1 million higher residential inventory gains
from the sale of condominium units within the equity-accounted investments and $1.0 million higher capitalized interest from
additional equity-accounted investments in 2024. These increases were partially offset by $3.5 million lower FFO from the
RioCan-HBC joint venture. The gains from the dispositions of the interests in the 11YV project were generated predominantly
from the underlying gains on the residential inventory component. For further details on the results of operations of the RioCan-
HBC joint venture and the gains from the dispositions of our interests in the 11YV project, refer to the Joint Arrangements section
of this MD&A.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 36
The Trust recognized net fair value losses of $29.4 million on investment properties including assets held for sale compared to
net fair value losses of $450.4 million in the same period last year. Refer to the Property Valuations section of this MD&A for
further details.
Investment and other income increased due to a $5.5 million increase in the change in unrealized fair value on marketable
securities (which does not impact FFO), $1.9 million in higher realized gain on sale of marketable securities, $1.9 million higher
transaction gains and other income, partially offset by lower income from marketable securities.
Q4 2024
Interest income was higher primarily due to higher average mortgages and loans receivable outstanding and higher effective
interest rates.
RioCan's share of FFO from equity-accounted investments was $7.3 million, $0.8 million lower than the comparative period,
primarily due to a $2.0 million gain from the disposition of a 2.1% interest in the 11YV project during the comparative period, $0.3
million lower capitalized interest from equity-accounted investments and $0.2 million lower FFO from the RioCan-HBC joint
venture. These decreases were partially offset by $1.8 million higher residential inventory gains from the sale of condominium
units within the equity-accounted investments.
The Trust recognized net fair value gains of $2.0 million on investment properties including assets held for sale, compared to net
fair value losses of $222.9 million in the same period last year. Refer to the Property Valuations section of this MD&A for further
details.
Investment and other income decreased due to a $1.8 million decrease in the change in unrealized fair value on marketable
securities (which does not impact FFO), $0.1 million decrease in realized gain on sale of marketable securities, lower income
from marketable securities, partially offset by $1.6 million higher transaction gains and other income.
Other Expenses
Three months ended December 31
Years ended December 31
(thousands of dollars)
2024
2023
Change
2024
2023
Change
Interest costs, net
$
66,040 $
58,940 $
7,100 $
257,544 $
208,948 $
48,596
General and administrative
19,070
15,459
3,611
59,847
60,367
(520)
Internal leasing costs
3,262
3,156
106
13,293
11,919
1,374
Transaction and other costs
4,017
6,945
(2,928)
6,747
9,344
(2,597)
Other expenses
$
92,389 $
84,500 $
7,889 $
337,431 $
290,578 $
46,853
Interest Costs
Interest costs capitalized (i)
(7,527)
(7,739)
212
(31,707)
(41,589)
9,882
Interest costs, net
$
66,040 $
58,940 $
7,100 $
257,544 $
208,948 $
48,596
Capitalized interest as percentage of total interest
10.2%
11.6%
(1.4)%
11.0%
16.6%
(5.6)%
(thousands of dollars, except where otherwise
noted)
Three months ended December 31
Years ended December 31
2024
2023
Change
2024
2023
Change
Total interest
$
73,567 $
66,679 $
6,888 $
289,251 $
250,537 $
38,714
(i) Includes amounts capitalized to properties under development and residential inventory.
YTD 2024
Total interest costs increased mainly due to higher average debt balances and higher average cost of debt. As at December 31,
2024, the weighted average effective interest rate of our total debt is 3.90% (December 31, 2023 – 3.74%).
Interest was capitalized to properties under development and residential inventory at a weighted average effective interest rate of
4.27% for the year ended December 31, 2024 (year ended December 31, 2023 – 3.88%).
Q4 2024
Total interest costs increased mainly due to higher average debt balances and higher average cost of debt.
Interest was capitalized to properties under development and residential inventory at a weighted average effective interest rate of
4.32% for the three months ended December 31, 2024 (three months ended December 31, 2023 – 3.90%).
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
37 RioCan Annual Report 2024
General and Administrative (G&A)
Non-recoverable salaries and benefits, net
$
12,674 $
5,305 $
7,369 $
30,293 $
22,438 $
7,855
Unit-based compensation expense
2,188
1,882
306
7,795
7,807
(12)
Depreciation and amortization
359
646
(287)
1,450
2,632
(1,182)
Other G&A expense (i)
3,849
4,123
(274)
14,941
15,458
(517)
G&A expense before Enterprise Resource
Planning (ERP) implementation costs
19,070
11,956
7,114
54,479
48,335
6,144
ERP implementation costs (ii)
—
3,503
(3,503)
5,368
12,032
(6,664)
Total G&A expense (iii)
$
19,070 $
15,459 $
3,611 $
59,847 $
60,367 $
(520)
Adjusted G&A Expense as a percentage of rental
revenue (iv)
4.1%
4.2%
(0.1)%
4.1%
4.2%
(0.1)%
(thousands of dollars, except where otherwise
noted)
Three months ended December 31
Years ended December 31
2024
2023
Change
2024
2023
Change
(i)
Primarily includes information technology costs, public company costs, travel, marketing, legal and professional fees, as well as trustee costs.
(ii)
ERP implementation costs include salaries and benefits, and consultant and licensing costs.
(iii) G&A expenses are presented net of recoverable expenses and expenses capitalized to development and residential inventory.
(iv) Adjusted G&A Expense is a non-GAAP financial measure. Refer to the Non-GAAP Measures section in this MD&A for more information on each
non-GAAP financial measure.
YTD 2024
G&A expenses decreased primarily due to a $6.7 million decrease in ERP implementation costs, $1.2 million decrease in
depreciation and amortization expense, $0.5 million decrease in other G&A expenses, partially offset by a $7.8 million increase in
compensation costs, mainly from a $7.9 million restructuring charge.
During Q2 2024, the Trust successfully deployed its new ERP system. Our new ERP system supports efficiencies in our financial
processes and data management, leading to better overall business operations.
During 2024, RioCan restructured its organization, reducing its workforce by approximately 9.5%. The corporate restructuring is
part of RioCan’s ongoing cost management efforts, which include cutting back on construction spending, using our national
procurement program, and implementing advanced technology capabilities including an upgraded ERP solution.
Going forward, annualized cash savings of approximately $8 million are anticipated as a result of the restructuring, with an
estimated net G&A impact of approximately $4 million. RioCan's restructuring aligns with responsible cost management,
enhances workflow efficiency, and optimizes resource allocation to better align with business needs.
Adjusted G&A Expense as a percentage of rental revenue decreased from the prior year due to higher rental revenue and a
decrease in discretionary expenses.
Q4 2024
G&A expenses increased primarily due to a $7.7 million increase in compensation costs mainly from a $7.2 million restructuring
charge recognized in the quarter, partially offset by $3.5 million decrease in ERP implementation costs, $0.3 million decrease in
other G&A expenses and $0.3 million decrease in depreciation and amortization expense.
Adjusted G&A Expense as a percentage of rental revenue decreased from the prior year for the same reasons described above.
Internal Leasing Costs and Transaction Costs
(thousands of dollars)
Three months ended December 31
Years ended December 31
2024
2023
Change
2024
2023
Change
Internal leasing costs (i)
$
3,262 $
3,156 $
106 $
13,293 $
11,919 $
1,374
Transaction and other costs (ii)
$
4,017 $
6,945 $
(2,928) $
6,747 $
9,344 $
(2,597)
(i) Comprised of the payroll costs of our internal leasing department and related administration costs.
(ii) Includes marketing costs related to condominium and townhouse projects which are expensed as incurred before condominium sales revenue are
recognized into income. For the three months and year ended December 31, 2024, transaction and other costs includes a net debt prepayment
loss of $0.9 million and $0.5 million (three months and year ended December 31, 2023 - nil).
YTD 2024
Transaction and other costs decreased mainly due to lower disposition costs, lower marketing costs, partially offset by a net debt
prepayment loss. The Trust incurred $1.9 million in marketing costs for the year ended December 31, 2024 (year ended
December 31, 2023 - $2.9 million).
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 38
Q4 2024
Transaction and other costs decreased mainly due to the same reasons noted above. The Trust incurred $0.5 million in marketing
costs for the three months ended December 31, 2024 (three months ended December 31, 2023 - $1.7 million).
Net Income (Loss) Attributable to Unitholders
Net income (loss) attributable to Unitholders
$
125,648 $ (117,659) $
243,307 $
473,465 $
38,802 $
434,663
Net income (loss) attributable to Unitholders
(basic)
$
0.42 $
(0.39) $
0.81 $
1.58 $
0.13 $
1.45
Net income (loss) attributable to Unitholders
(diluted)
$
0.42 $
(0.39) $
0.81 $
1.58 $
0.13 $
1.45
(thousands of dollars, except per unit amounts)
Three months ended December 31
Years ended December 31
2024
2023
Change
2024
2023
Change
YTD 2024
Net income attributable to Unitholders increased largely as a result of a $26.5 million increase in operating income and $467.5
million higher other income inclusive of a $421.1 million favourable change in fair value on investment properties, a $20.1 million
increase in income from equity-accounted investments, a $17.3 million increase in interest income, and a $9.0 million increase in
investment and other income. These were partially offset by $46.9 million higher other expenses, predominantly net interest
costs, and $12.6 million lower current income tax recovery. Refer to the Results of Operations - Operating Income and Net
Operating Income (NOI), Results of Operations - Other Income (Loss) and Results of Operations - Other Expenses sections of
this MD&A for further details.
Q4 2024
Net income (loss) attributable to Unitholders increased largely as a result of a $9.9 million increase in operating income and
$241.3 million higher other income, inclusive of a $224.9 million favourable change in fair value on investment properties, a $11.2
million increase in income from equity-accounted investments, and a $5.9 million increase in interest income. These were partially
offset by a $7.9 million increase in other expenses, predominantly net interest costs. Refer to the Results of Operations -
Operating Income and Net Operating Income (NOI), Results of Operations - Other Income (Loss) and Results of Operations -
Other Expenses sections of this MD&A for further details.
Funds From Operations (FFO)
RioCan’s method of calculating FFO is in compliance with the REALPAC definition issued in January 2022, except that RioCan
excludes unrealized fair value gains or losses on marketable securities and ERP implementation costs (net of amortization) in its
calculation of FFO and, for clarity, continues to include realized gains or losses on marketable securities in FFO. Refer to the
Non-GAAP Measures section of this MD&A for more information.
2024
2023
Change
2024
2023
Change
FFO
$
134,379 $
132,890 $
1,489 $
535,971 $
531,281 $
4,690
FFO Adjusted
$
142,493 $
132,914 $
9,579 $
544,278 $
532,649 $
11,629
FFO per unit - basic
$
0.45 $
0.44 $
0.01 $
1.78 $
1.77 $
0.01
FFO per unit - diluted
$
0.45 $
0.44 $
0.01 $
1.78 $
1.77 $
0.01
FFO Adjusted per unit - diluted
$
0.47 $
0.44 $
0.03 $
1.81 $
1.77 $
0.04
Weighted average number of Units - basic
(in thousands)
300,469
300,417
52
300,464
300,392
72
Weighted average number of Units - diluted
(in thousands)
300,524
300,417
107
300,473
300,479
(6)
FFO Payout Ratio (i)
61.9%
60.5%
1.4%
FFO Payout Ratio Adjusted (i)
61.0%
60.3%
0.7%
(thousands of dollars, except where otherwise
noted)
Three months ended December 31
Years ended December 31
(i)
Calculated on a twelve-months trailing basis. For a definition of the Trust's Unitholder distributions as a percentage of FFO and FFO Adjusted,
refer to the Non-GAAP Measures section of this MD&A.
YTD 2024
FFO increased by $4.7 million and FFO Adjusted increased by $11.6 million when compared to last year. On a diluted per unit
basis, FFO increased by $0.01 or 0.6% and FFO Adjusted increased by $0.04 or 2.3%.
The $11.6 million increase in FFO Adjusted resulted mainly from a $26.5 million increase in operating income, $17.3 million
increase in interest income, $10.6 million higher FFO from equity-accounted investments, $2.9 million in higher investment and
other income, and $1.1 million lower transaction and other costs, partially offset by higher net interest costs of $48.6 million. The
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
39 RioCan Annual Report 2024
increase in FFO from equity-accounted investments is mainly due to the gains from two dispositions of a combined 25.0% interest
in the 11YV project during the year, as compared to a 12.5% interest sold in the comparable period last year, and $3.1 million
higher residential inventory gain within the equity-accounted investments, partially offset by $3.5 million lower FFO from the
RioCan-HBC joint venture. The gains from the disposition of the interest in the 11YV project were generated predominantly from
the underlying gains on the residential inventory component. The increase in operating income was primarily due to $14.8 million
higher NOI, $15.3 million higher inventory gains primarily due to disposition of non-core residential inventory development land
located in Calgary, Alberta and timing of condominium and townhouse sales, partially offset by $1.1 million in lower property
management and other service fee revenue. The improvement in NOI was driven by a $7.7 million increase in residential NOI due
to continued strong performance and leasing environment for our residential properties and $7.1 million higher commercial NOI.
The increase in commercial NOI was largely due to $11.4 million higher NOI from completed developments, $7.5 million higher
straight-line rent and Commercial Same Property NOI growth of 1.2% or $6.9 million. Excluding the impact of prior year provision
reversals, Commercial SPNOI growth for year-to-date was 2.2%. These increases were partially offset by $15.6 million lower NOI
due to asset dispositions net of the impact of acquisitions, $2.7 million lower NOI from properties under de-leasing and $0.4
million lower lease cancellation fees.
Residential NOI increased primarily due to completed developments, acquisitions and strong leasing progress in the residential
rental portfolio.
Q4 2024
FFO increased by $1.5 million and FFO Adjusted increased by $9.6 million when compared to the same respective period last
year. On a diluted per unit basis, FFO increased by $0.01 or 2.3% and FFO Adjusted increased by $0.03 or 6.8%.
The $9.6 million increase in FFO Adjusted resulted mainly from a $9.9 million increase in operating income, a $5.9 million
increase in interest income, $1.2 million in lower transaction and other costs, partially offset by $7.1 million higher net interest
costs, $1.3 million in lower investment and other income, and $0.8 million lower FFO from equity-accounted investments. The
increase in operating income was primarily from $7.9 million higher NOI, and $6.2 million in higher residential inventory gains due
to timing of condominium and townhouse sales, partially offset by $2.0 million lower property management and other service fee
revenue. The higher NOI pertaining to our commercial properties was mainly driven by Commercial Same Property NOI growth of
2.3% or $3.4 million, $2.6 million higher straight-line rent, $1.9 million in higher NOI from completed developments, $1.5 million
higher lease cancellation fees, and $0.2 million higher NOI from properties under de-leasing. Excluding the impact of prior year
provision reversals, Commercial SPNOI growth for the quarter was 3.5%. These increases were partially offset by $2.9 million
lower NOI due to asset dispositions net of the impact of acquisitions. Continued strong performance and leasing environment for
our residential properties and operating residential properties acquired increased residential NOI by $1.3 million.
FFO Payout Ratio
The FFO Payout Ratio was 61.9% for the twelve-month period ended December 31, 2024 compared to 60.5% in 2023. The
increase in the FFO Payout Ratio relative to last year is due to a $0.06 and $0.03 per unit per annum increase in distributions
effective February 2023 and February 2024, respectively.
Adjusted Funds From Operations (AFFO)
AFFO is a non-GAAP financial measure. Refer to the Non-GAAP Measures section of this MD&A for more information. RioCan’s
method of calculating AFFO is in compliance with the REALPAC definition issued in January 2022, except that RioCan excludes
unrealized fair value gains or losses on marketable securities and ERP implementation costs (net of amortization) and continues
to include realized gains or losses on marketable securities in its calculation of FFO and by extension AFFO.
(thousands of dollars, except where otherwise
noted)
Three months ended December 31
Years ended December 31
2024
2023
Change
2024
2023
Change
AFFO
$
112,604 $
113,670 $
(1,066)
$
455,995 $
459,483 $
(3,488)
AFFO Adjusted
$
120,718 $
113,694 $
7,024
$
464,302 $
460,851 $
3,451
AFFO per unit - basic
$
0.37 $
0.38 $
(0.01)
$
1.52 $
1.53 $
(0.01)
AFFO per unit - diluted
$
0.37 $
0.38 $
(0.01)
$
1.52 $
1.53 $
(0.01)
AFFO Adjusted per unit - diluted
$
0.40 $
0.38 $
0.02
$
1.55 $
1.53 $
0.02
Weighted average number of Units - basic
(in thousands)
300,469
300,417
52
300,464
300,392
72
Weighted average number of Units - diluted
(in thousands)
300,524
300,417
107
300,473
300,479
(6)
AFFO Payout Ratio (i)
72.8%
70.0%
2.8%
AFFO Payout Ratio Adjusted (i)
71.5%
69.7%
1.8%
(i)
Calculated on a twelve-months trailing basis. For a definition of the Trust's Unitholder distributions as a percentage of AFFO and AFFO Adjusted,
refer to the Non-GAAP Measures section of this MD&A.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 40
YTD 2024
AFFO decreased by $3.5 million and AFFO Adjusted increased by $3.5 million over the comparable period. On a diluted per unit
basis, AFFO decreased by $0.01 or 0.7% and AFFO Adjusted increased by $0.02 or 1.3%.
The $3.5 million increase in AFFO Adjusted was primarily due to higher FFO Adjusted, excluding the benefit of higher straight-line
rent and including higher internal leasing costs. Refer to the Results of Operations - Funds From Operations (FFO) section of this
MD&A for further details.
Q4 2024
AFFO decreased by $1.1 million and AFFO Adjusted increased by $7.0 million over the comparable period. On a diluted per unit
basis, AFFO decreased by $0.01 or 2.6% and AFFO Adjusted increased by $0.02 or 5.3%.
The $7.0 million increase in AFFO Adjusted was primarily due to the same reasons as described above for FFO Adjusted,
excluding the benefit of higher straight-line rent. Refer to the Results of Operations - Funds From Operations (FFO) section of this
MD&A for further details.
AFFO Payout Ratio
The AFFO Payout Ratio was 72.8% for the twelve-month period ended December 31, 2024 compared to 70.0% in 2023. The
increase compared to last year was primarily due to a $0.06 and $0.03 per unit per annum increase in distributions effective
February 2023 and February 2024, respectively.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
41 RioCan Annual Report 2024
ASSET PROFILE
Property Valuations
Refer to Note 3 of the 2024 Annual Consolidated Financial Statements for a continuity schedule for the change in consolidated
IFRS carrying values of our investment properties.
Investment Property Valuation
The Trust recorded net fair value gains of $2.0 million and net fair value losses of $29.4 million, including assets held for sale, for
the three months and year ended December 31, 2024, respectively. The fair value gains in the current quarter were primarily due
to higher stabilized NOI partially offset by changes in capitalization rates and the impact of cost-to-complete adjustments on
properties under development. The fair value losses on year-to-date basis were primarily due to changes in capitalization rates
including those for certain office properties and the impact of costs-to-complete adjustments on properties under development,
partially offset by the impact of higher stabilized NOI.
Capitalization Rates
The weighted average capitalization rate is based on the location and quality of the properties and takes into account market data
at the valuation date. The table below provides details of the change in the weighted average capitalization rate (weighted by
Stabilized NOI):
Three months ended December 31
Years ended December 31
Weighted Average Capitalization Rate
2024
2023
2024
2023
Beginning of period
5.41 %
5.40 %
5.41 %
5.33 %
Impact of dispositions
— %
(0.05) %
(0.01) %
(0.05) %
Impact of acquisitions
— %
— %
(0.01) %
(0.01) %
Development yield
(0.01) %
— %
(0.01) %
— %
Other adjustments
0.01 %
0.06 %
0.03 %
0.14 %
End of period
5.41 %
5.41 %
5.41 %
5.41 %
At December 31, 2024, the weighted average capitalization rate of the Trust's investment portfolio remained unchanged when
compared to September 30, 2024 and December 31, 2023. The carrying value of investment properties reflects the Trust's best
estimate for the highest and best-use as at December 31, 2024.
The valuation of investment properties is subject to a number of factors underlying the estimated cash flows and capitalization
rates used in the valuation process. These factors include but are not limited to geographic location, property type, strength of
underlying tenant covenants, future intensification opportunities, estimated vacancy allowances and the resulting re-tenanting
costs. Property values can also be impacted by changes in interest rates as they tend to exert pressure on capitalization rates.
Additionally, macroeconomic volatility resulting from trade tariffs can impact interest rates, further influencing property values.
Interest rates, however, are only one of the many factors that impact property values. Favourable supply/demand dynamics,
strong property fundamentals, the delivery of highly valued mixed-use residential developments and rising replacement costs,
which further restrict the supply of quality open-air retail centres, can all provide support for fair values. Notwithstanding low
visibility in a distorted market that is short of transactions, our valuations have been validated by third-party appraisals and
substantiated with available market data points including recent transactions in which we have participated. Refer to Note 3 of the
2024 Annual Consolidated Financial Statements for a sensitivity analysis of investment property valuations to changes in the
three key inputs to the property valuation - Stabilized NOI, capitalization rates and costs-to-complete.
Given the volatility in the current macroeconomic environment, the impact on the Trust's investment property valuation remains
difficult to assess and predict. Refer to the Risks and Uncertainties - Interest Rate and Financing Risk and Trade Tariffs sections
of this MD&A for discussions on these risks and uncertainties.
Valuation Processes
Internal Valuations
RioCan measures the vast majority of its investment properties, including co-owned properties, using valuations prepared by its
internal valuation team which utilizes appraisal methodologies largely consistent with the practices employed by third-party
appraisers. This team of individuals has specialized industry experience in real estate valuations and report directly to a senior
member of the Trust's management. The internal valuation team's processes and results are reviewed and approved by the
Valuations Committee on a quarterly basis.
The Trust's Valuations Committee is responsible for approving any fair value changes to the investment properties and consists of
senior management of the Trust including the Chief Financial Officer, Chief Operating Officer, Chief Investment Officer and other
executive members.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 42
External Valuations
Depending on the property asset type and location, management may opt to obtain independent third-party valuations from
accredited valuation professionals for purposes of adopting such appraised values in the case of land parcels or assessing the
reasonableness of its internal investment property valuations.
During the year ended December 31, 2024, the Trust obtained a total of 21 external property appraisals which supported an IFRS
fair value of approximately $1.8 billion or 13.3% of the Trust's investment property portfolio as at December 31, 2024. Our
mandate is to conduct an average of five external appraisals on investment properties on a quarterly basis or 20 investment
properties a year, plus a selection of external land valuations, which are done every fourth quarter on our excess land and
greenfield sites.
Acquisitions and Dispositions
Acquisitions
Acquisitions for the year ended December 31, 2024 are as follows:
(in thousands of dollars or sq. ft., except where otherwise noted)
Purchase price (i)
(At RioCan's interest)
Property name and location
Date
acquired
Interest
acquired
IPP
PUD
Residential
Inventory
Total
Acquisitions
(ii)
Vendor
take-back
mortgage,
purchase
price
payable
and/or
debt
assumed
NLA
acquired
(thousands
of sq. ft.)
Q4 2024 - No acquisitions
Q3 2024 - No acquisitions
Q2 2024
Property adjacent to Mega Centre Notre
Dame, Laval, QC
May 22
50.0 % $
3,631 $
— $
— $
3,631 $
—
3
$
3,631 $
— $
— $
3,631 $
—
3
Q1 2024
Land at Georgian Mall, Barrie, ON (iii)
March 25
50.0 % $
5,133 $
— $
— $
5,133 $
—
—
The Underwood Apartments, Calgary, AB (iv)
February 2
50.0 %
48,654
—
—
48,654
28,280
79
Lawrence Plaza, Toronto, ON (v)
January 11
50.0 %
60,774
42,539
—
103,313
44,866
132
$ 114,561 $ 42,539 $
— $
157,100 $ 73,146
211
Total 2024 acquisitions
$ 118,192 $ 42,539 $
— $
160,731 $ 73,146
214
(i)
Purchase price includes transaction costs of $4.8 million in aggregate.
(ii)
This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section in this MD&A for more information on this non-GAAP financial
measure.
(iii) RioCan exercised the purchase option in a land lease to acquire a parcel of land at the property.
(iv) Gross purchase price before transaction costs of $0.2 million was $52.9 million, of which $48.5 million was allocated to investment properties and
$4.4 million was allocated to mortgages payable. The mortgages payable assumed on closing had an aggregate contractual balance of $32.7
million, weighted average contractual interest rate of 1.97% and weighted average maturity term of 6.73 years.
(v)
Gross purchase price before transaction costs of $4.3 million was $100.2 million, of which $99.0 million was allocated to investment properties and
$1.2 million was allocated to mortgages payable. The transaction includes density contingent consideration valued at $40.9 million. The debt
assumed on closing had an aggregate contractual balance of $46.1 million, with a weighted average contractual interest rate of 3.20% and
weighted average term to maturity of 1.58 years.
Total Acquisitions included a 50.0% ownership interest in an operating and stabilized residential rental property in Calgary, Alberta
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.
Subsequent to year end, the Trust acquired a 50% interest in a residential rental development property located in the beltline
neighbourhood of Calgary Alberta, for the purchase price of $51.2 million including transaction costs. The acquisition included the
assumption of $34.6 million of debt at a floating interest rate of CORRA plus 2.55%. RioCan also assumed its share of the
remaining cost-to-complete estimated to be $11.4 million. A mezzanine loan receivable due to RioCan from the vendor of $15.7
million was settled upon closing.
The Trust also acquired its partner's 75% interest in the condominium lands at RioCan Leaside Centre in Toronto, Ontario for the
purchase price of $59.3 million. A mezzanine loan receivable due to RioCan from the vendor of $59.1 million was settled upon
closing.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
43 RioCan Annual Report 2024
Dispositions
Dispositions for the year ended December 31, 2024 are as follows:
(in thousands of dollars or sq. ft., except where otherwise noted)
Gross sales proceeds
(at RioCan's interest) (i)
Property name and location
Date
disposed
Ownership
interest
disposed
IPP
PUD
Residential
Inventory
Total
Debt
associated
with
property
(v)
NLA
disposed
at
RioCan's
Interest
Q4 2024
RioCan Centre Vaughan, Vaughan, ON
December 30
100.0 % $ 45,400 $
— $
— $ 45,400 $
—
262
2335 Boulevard Lapiniere, Brossard, QC
December 12
100.0 %
1,600
—
—
1,600
—
2
541 Boulevard Saint-Joseph, Gatineau, QC
December 3
100.0 %
1,315
—
—
1,315
—
3
Strada - 555-563 College Street, Toronto, ON
November 29
50.0 % 23,896
—
—
23,896
14,850
27
1556 Bank Street, Ottawa, ON
November 28
100.0 %
4,000
—
—
4,000
—
5
145 Woodbridge Avenue, Woodbridge, ON
November 21
100.0 %
2,740
—
—
2,740
—
5
Timberlea Landing - office building, Fort
McMurray, AB
October 18
100.0 %
7,570
—
—
7,570
—
41
2422 Fairview Street, Burlington, ON (ii)
October 1
100.0 %
4,200
—
—
4,200
—
6
$ 90,721 $
— $
— $ 90,721 $
14,850
351
Q3 2024
Timmins Square, Timmins, ON
August 21
30.0 % $ 8,850 $
— $
— $
8,850 $
—
84
$ 8,850 $
— $
— $
8,850 $
—
84
Q2 2024
519 Brant Street, Burlington, ON (iii)
June 20
100.0 % $ 2,076 $
— $
— $
2,076 $
—
5
East Hills South Block, Calgary, AB (iv)
April 15
40.0 %
—
—
12,000
12,000
—
—
$ 2,076 $
— $
12,000 $ 14,076 $
—
5
Q1 2024
Belleville Centre, Belleville, ON
March 28
100.0 % $ 5,200 $
— $
— $
5,200 $
—
89
Galaxy Centre, Owen Sound, ON
February 20
100.0 % 13,610
290
—
13,900
—
92
$ 18,810 $
290 $
— $ 19,100 $
—
181
Total 2024 dispositions
$ 120,457 $
290 $
12,000 $ 132,747 $
14,850
621
(i)
Residential Inventory proceeds represent dispositions of ownership interest in projects and do not include sale of inventory units to purchasers.
(ii)
RioCan provided a vendor take-back mortgage of $2.0 million.
(iii) RioCan provided a vendor take-back mortgage of $1.0 million.
(iv) Non-core residential inventory development land was sold in Q2 2024 resulting in inventory gain of $5.0 million.
(v)
Excludes debt associated with property paid prior to or on closing.
In 2024, the Trust completed $132.7 million of dispositions at a weighted average capitalization rate of 5.60%, which include
$120.5 million of income producing assets at a weighted average capitalization rate of 5.61% and $12.3 million of development
property and non-core residential inventory development land with no in-place income.
As of February 18, 2025, the Trust has firm and conditional deals to sell full or partial interest in a number of properties totaling
$56.6 million. These transactions include a cinema-anchored property in Alberta and the sale of a portion of an open-air retail site
in Quebec to an industrial developer.
RioCan's disposition program is an effective means to raise capital that can be put to beneficial use to strengthen its balance
sheet. In some cases, dispositions offer the additional benefits of removing lower-growth or vulnerable assets from the Trust's
portfolio.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 44
Mortgages and Loans Receivable
Contractual mortgages and loans receivable as at December 31, 2024 and December 31, 2023 are comprised of the following:
(thousands of dollars, except where
otherwise noted)
As at
Contractual
interest rate
(i)
Effective
interest rate
(i)
Terms to
maturity
(in years) (i)
December 31, 2024 December 31, 2023
Mezzanine financing and other
9.86 %
9.86 %
1.5 $
367,731 $
207,814
Vendor take-back
5.07 %
6.51 %
1.8
102,998
81,719
Total
$
470,729 $
289,533
Floating rate loans (ii)
10.21 %
10.21 %
1.4 $
256,600 $
142,009
Fixed rate loans (iii) (iv)
7.13 %
7.83 %
1.8
214,129
147,524
Total
$
470,729 $
289,533
Weighted average contractual interest rate
8.81 %
8.57 %
Weighted average effective interest rate
9.13 %
9.06 %
Weighted average terms to maturity (years)
1.5
2.9
Weighted average
(i)
Information presented as at December 31, 2024.
(ii)
As at December 31, 2023, contractual interest rates and effective interest rates were 11.33% and 11.33%, respectively.
(iii) As at December 31, 2024, $12.1 million included in fixed rate loans was variable to the prime rate, with a prime rate floor of 3.95% and prime rate
cap of 4.95% (December 31, 2023 - $11.1 million).
(iv) As at December 31, 2023, weighted average contractual interest rates and effective interest rates were 5.91% and 6.87%, respectively.
All of the $470.7 million of mortgages and loans receivable as at December 31, 2024 are carried at amortized cost. Mortgages
and loans receivable are either directly or indirectly secured by real property, and as at December 31, 2024, $141.3 million are full
recourse to or guaranteed by the project/property sponsors.
RioCan's Declaration of Trust and certain credit agreements contain provisions that have the effect of limiting the investment in
mortgages receivable under specific circumstances. Refer to Note 26 of the 2024 Annual Consolidated Financial Statements for
further details.
Joint Arrangements
Joint arrangement activities represent real estate investments in which RioCan has joint control and either owns an undivided
interest in the assets and liabilities with its co-owners (co-ownership or joint operations) or ownership rights to the residual equity
of a separate entity holding the property interests (joint ventures) that are accounted for as equity-accounted investments (EAI
JV). RioCan has 43 properties in joint operations and 17 properties in 8 joint ventures. RioCan’s primary co-ownership
arrangements are with Allied Properties REIT (Allied); Boardwalk REIT (Boardwalk); Broccolini Real Estate Group (Broccolini);
Canada Pension Plan Investment Board (CPPIB); Killam Apartment REIT (Killam); KingSett Capital (KingSett); Tanger Factory
Outlet Centres, Inc. (Tanger); Woodbourne Capital Management (Woodbourne); and Sun Life Financial. The Trust also has partial
interests in 17 properties held through joint ventures with Hudson's Bay Company (HBC), Marketvest Corporation, Fieldgate
Urban (Fieldgate), Parallax Properties Inc. (Parallax), Metropia, Lee Chow Group, and with a number of investors in RC
(Queensway) LP, which are included in our equity-accounted investments in the 2024 Annual Consolidated Financial Statements.
The Trust’s co-ownership arrangements are governed by co-ownership agreements with its various co-owners. The Trust's joint
venture arrangements are typically governed by limited partnership agreements and/or shareholders' agreements. RioCan’s
standard joint arrangements provide exit and transfer provisions, including, but not limited to, buy/sell and/or right-of-first offers or
refusals that allow for the unwinding of these joint arrangements should the circumstances necessitate.
Generally, the Trust is only liable for its proportionate share of the obligations of the joint arrangements in which it participates,
except in limited circumstances. Credit risk may arise in the event that co-owners default on the payment of their proportionate
share of such obligations. The joint arrangement agreements will typically provide RioCan with an option to remedy any non-
performance by a defaulting co-owner/partner. These credit risks are mitigated as the Trust has recourse against the assets
under its joint arrangement agreements in the event of default by its co-owners/partners, in which case the Trust’s claim would be
against both the underlying real estate investments and the co-owners/partners that are in default. In addition, RioCan has
provided guarantees on debt totalling $600.7 million as at December 31, 2024 on behalf of co-owners/partners (December 31,
2023 - $341.2 million). These guarantees are expected to decrease as certain development projects are completed. Refer to the
Off-Balance Sheet Arrangements - Guarantees section of this MD&A for further details.
In addition to the 8 joint ventures, the Trust has significant influence over 4 limited partnerships, and, as a result, these are also
equity-accounted investments. The total aggregate carrying-value of equity-accounted investments was $408.6 million as at
December 31, 2024 (December 31, 2023 – $383.9 million), of which the most significant equity-accounted investments were
RioCan-HBC JV $249.0 million, PR Bloor Street LP $52.6 million and the combined WhiteCastle New Urban Fund LPs $50.7
million (December 31, 2023 - $248.6 million, $48.9 million and $44.6 million, respectively). In addition to its net equity in equity-
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
45 RioCan Annual Report 2024
accounted investments, RioCan has guaranteed its share of debt within equity-accounted investments to third-party lenders in the
aggregate amount of $160.1 million (December 31, 2023 - $190.8 million). For clarity, the $160.1 million of debt is included in the
calculation of Total Debt (RioCan's Proportionate Share).
Selected Financial Information of Joint Ventures and Other Equity-Accounted Investments
Total Assets
(thousands of dollars)
Income
producing
properties
PUD
Residential
inventory
Other (i)
Total
assets
Total assets as
at December 31,
2023
As at December 31, 2024
Joint operations:
Total assets of proportionately consolidated
joint operations
$ 2,649,324 $ 260,308 $
244,896 $ 119,779 $ 3,274,307 $
2,985,221
Equity-accounted joint ventures:
RioCan-HBC JV
$ 383,362 $
— $
— $ 33,444 $ 416,806 $
414,979
Dawson-Yonge LP
9,807
—
—
243
10,050
9,663
RioCan-Fieldgate LP
—
2,223
17,062
143
19,428
18,683
RC (Queensway) LP
—
4,571
47,882
2,315
54,768
32,316
RC (Leaside) LP - Class B
—
—
10,367
74
10,441
10,373
PR Bloor Street LP
—
2,399
99,929
876
103,204
97,063
RC Yorkville LP
—
5,448
48,069
16,743
70,260
166,401
RCLC King and Sherbourne LP
17,848
32
—
5,959
23,839
—
Total assets of equity-accounted joint ventures (ii)
$ 411,017 $ 14,673 $
223,309 $ 59,797 $ 708,796 $
749,478
Other equity-accounted investments (ii)
—
—
114,611
22,345
136,956
128,761
Total assets of equity-accounted investments (ii)
$ 411,017 $ 14,673 $
337,920 $ 82,142 $ 845,752 $
878,239
Total joint operations and equity-accounted
investments (ii)
$ 3,060,341 $ 274,981 $
582,816 $ 201,921 $ 4,120,059 $
3,863,460
(i)
Primarily includes finance lease receivable, cash and cash equivalents, rents receivable and other operating expenditures recoverable from
tenants.
(ii) This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section in this MD&A for more information on each non-GAAP financial
measure.
Total NOI
NOI of proportionately consolidated joint operations and NOI of joint operations and equity-accounted investments are non-GAAP
financial measures. Refer to the Non-GAAP Measures section of this MD&A for more information.
Three months ended
December 31
Years ended
December 31
(thousands of dollars)
2024
2023
2024
2023
Joint Operations:
Total NOI from proportionately consolidated joint operations
$
31,792 $
28,737 $
124,274 $
102,117
Equity-accounted investments:
Joint ventures:
RioCan-HBC JV
$
5,933 $
6,012 $
23,676 $
25,181
Dawson-Yonge LP
128
130
517
509
RioCan-Fieldgate LP
—
—
5
24
RC (Queensway) LP
(10)
—
—
(19)
PR Bloor Street LP
292
245
1,116
1,016
RCLC King and Sherbourne LP
65
—
65
—
Total NOI of equity-accounted joint ventures
$
6,408 $
6,387 $
25,379 $
26,711
Other equity-accounted investments
(15)
29
229
153
Total NOI of equity-accounted investments (i)
$
6,393 $
6,416 $
25,608 $
26,864
Total NOI of joint operations and equity-accounted
investments
$
38,185 $
35,153 $
149,882 $
128,981
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 46
(i)
Total FFO from equity-accounted investments was $7.3 million and $47.7 million for the three months and year ended December 31, 2024
(December 31, 2023 - $8.1 million and $37.1 million). Included in FFO was nil and $23.3 million related to the gain on disposition of 25.0% in the
underlying 11YV project for the three months and year ended December 31, 2024, respectively. Also included in FFO was $2.1 million and $5.2
million related to the gain on sale of condominium units for the three months and year ended December 31, 2024, respectively. The remaining FFO
from equity-accounted investments is predominantly from the RioCan-HBC JV, which contributed $3.5 million and $13.6 million of FFO for the
three months and year ended December 31, 2024 (December 31, 2023 - $3.7 million and $17.1 million, respectively).
RC Yorkville LP
On January 1, 2024, RioCan sold a 25.0% interest in the units of RC Yorkville LP for proceeds of $15.0 million, recognizing a
$12.2 million gain on sale and reducing its interest to 50.0% or 25.0% in the underlying 11YV project. RioCan provided a loan of
$9.8 million to the purchaser to finance the acquisition of units from RC Yorkville LP.
On September 20, 2024, RioCan sold an additional 25.0% interest in the units of RC Yorkville LP for proceeds of $14.6 million,
recognizing a $11.6 million gain on sale and further reducing its interest to 25.0% or 12.5% in the underlying 11YV project.
RioCan provided a loan of $10.6 million to the purchaser to finance the acquisition of units from RC Yorkville LP.
RioCan-HBC JV
On February 12, 2024, RioCan advanced a mezzanine loan of $19.5 million to the RioCan-HBC JV with a CORRA + 7.75% with
CORRA floor of 5.0% maturing on February 12, 2029 to partially repay a maturing mortgage, and on March 22, 2024, an
additional $4.8 million to finance the exercise of a purchase option for land. On October 3, 2024, RioCan advanced a mezzanine
loan of $14.2 million to the RioCan-HBC JV with a CORRA + 7.75% with CORRA floor of 4.25% maturing on October 3, 2029 to
partially repay a maturing mortgage. Both loans are secured by a second mortgage on the related income producing property.
On November 30, 2023, RioCan advanced a $30.0 million bridge financing loan to the RioCan-HBC JV. This bridge financing loan
was subsequently repaid on January 26, 2024, upon the re-financing of a property in the RioCan-HBC JV for $75.0 million, for
which RioCan has provided a guarantee to the third-party lender. This guarantee is inclusive of RioCan's 22.0% interest. In
exchange for this guarantee, RioCan has received security interests in other assets of the RioCan-HBC JV. Refer to the Off-
Balance Sheet Arrangements- Guarantees section of this MD&A for further details.
For the year ended December 31, 2024, RioCan earned $6.6 million in fees in respect of certain financing services provided to
the RioCan-HBC JV.
RCLC King and Sherbourne LP
On October 1, 2024, RioCan and its partner restructured their co-ownership arrangement into a joint venture arrangement,
forming RCLC King and Sherbourne LP, for the development of King and Sherbourne properties into residential mixed-use
development. RioCan retained a 50% interest in the limited partnership. As a result of the re-organization, RioCan transferred net
assets of $9.3 million, including investment property of $11.9 million and mortgage liabilities of $2.7 million, into the limited
partnership.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
47 RioCan Annual Report 2024
Capital Expenditures on Income Producing Properties
Maintenance Capital Expenditures
Maintenance capital expenditures consist primarily of tenant improvements, third-party leasing commissions and certain
recoverable and non-recoverable capital expenditures. Maintenance capital expenditures maintain the earnings capacity of our
property portfolio and are dependent upon numerous factors. These include, but are not limited to, lease expiry profile, tenant
vacancies, the age and location of the income producing properties and general economic and market conditions, which impact
the level of tenant bankruptcies.
Actual maintenance capital expenditures can vary widely from period to period depending on a number of factors as noted above,
as well as the level of acquisition and disposition activity. As a result, management believes that for the purpose of determining
AFFO, as discussed in the Non-GAAP Measures section of this MD&A, using Normalized Capital Expenditures as an input in
assessing a REIT's recurring economic earnings is more relevant than using actual capital expenditures. Refer to the Non-GAAP
Measures section of this MD&A for details on how management estimates its Normalized Capital Expenditures used in the
determination of AFFO.
Tenant improvements and external leasing commissions
The Trust's portfolio requires ongoing investments of capital for costs related to tenant improvements, broker commissions on
new and renewal tenant leases and other third-party leasing costs. The amount and timing of capital outlays to fund tenant
improvements on the Trust's income producing property portfolio depend on several factors, which may include the lease maturity
profile, unforeseen tenant bankruptcies and the location of the income producing property.
Recoverable and non-recoverable capital expenditures
The Trust invests capital on a regular basis to physically maintain its income producing properties. Typical costs incurred are for
expenditures such as roof replacement programs and resurfacing parking lots. Tenant leases generally provide for the ability to
recover a significant portion of such costs from tenants over time as property operating costs. The Trust expenses or capitalizes
these amounts to income producing properties, as appropriate. The majority of such activities occur when weather conditions are
favourable. As a result, these expenditures are generally not consistent throughout the year.
Revenue Enhancing Capital Expenditures
Capital spending for new or existing income producing properties that is expected to create, improve and/or add to the overall
earnings capacity of the property portfolio is considered revenue enhancing. RioCan considers such amounts to be investing
activities. As a result, it does not expect such expenditures to be funded from cash flows from operating activities and does not
consider such amounts as a key determinant in setting the amount that is distributed to our Unitholders. Revenue enhancing
capital expenditures are not included in the determination of AFFO.
Summary of Capital Expenditures
Expenditures for third-party leasing commissions and tenant improvements, recoverable and non-recoverable, and revenue
enhancing capital expenditures pertaining to our income producing properties are as follows:
Tenant improvements and external
leasing commissions
$
15,233 $
9,590 $
5,643 $
42,407 $
29,512 $
12,895 $ 26,000 $ 32,000
Recoverable from tenants
7,890
7,505
385
21,453
28,545
(7,092) 27,000 18,000
Non-recoverable
1,389
1,549
(160)
5,255
6,447
(1,192)
2,000
5,000
$
24,512 $
18,644 $
5,868 $
69,115 $
64,504 $
4,611 $ 55,000 $ 55,000
Revenue enhancing capital
expenditures
4,050
24,319
(20,269)
35,724
61,350
(25,626)
$
28,562 $
42,963 $ (14,401) $ 104,839 $ 125,854 $ (21,015)
Three months ended December 31
Years ended December 31
Normalized Capital
Expenditures (i)
(thousands of dollars)
2024
2023
Change
2024
2023
Change
2024
2025
Maintenance capital expenditures:
(i)
This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section in this MD&A for details on how management estimates its
Normalized Capital Expenditures.
RioCan's total maintenance capital expenditures for the year ended December 31, 2024 were $69.1 million, $14.1 million higher
than the Normalized Capital Expenditures estimate of $55.0 million, primarily due to higher tenant improvements and external
leasing commissions and non-recoverable capital expenditures, partially offset by lower recoverable expenditures from tenants.
For 2025, normalized maintenance capital expenditure guidance is set at $55.0 million, allocated evenly to each quarter, although
quarterly fluctuations between the estimated normalized maintenance capital expenditures and actual expenditures are expected.
The Trust will reassess the estimated normalized maintenance capital expenditures as necessary on a going forward basis.
Revenue enhancing capital expenditures for 2024 were within the expected range of $30.0 million to $40.0 million. Revenue
enhancing capital expenditures for 2025 are expected to be between $10.0 million to $20.0 million.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 48
DEVELOPMENT ACTIVITIES
Development Opportunities
RioCan's sizable portfolio provides embedded long-term value-enhancement opportunities. The Trust's well-located retail centres
are generally built with lot coverages of approximately 25% of the underlying lands which provide excess density for potential
intensification. All development sites are well-located, transit-oriented locations in Canada's six largest metropolitan markets with
79.5% of projects located in the GTA.
Established Development Expertise
RioCan operates an in-house development team with extensive experience to execute every stage of the development lifecycle
from site identification, development planning, zoning, design, construction management oversight, product delivery, and
operations. The Trust has a track record of successfully executing development projects and over 30 years of experience in the
Canadian commercial real estate landscape.
Strategic Financial & Risk Management
RioCan's management team actively manages development capital requirements and adapts to changing market conditions.
RioCan continues to advance properties to shovel ready status. RioCan did not start new physical construction of mixed-use
properties in 2024 and does not intend to do so in 2025 as we focus on other capital allocation priorities. Given that RioCan's
development pipeline is primarily comprised of excess density embedded within existing income producing assets, the Trust is
able to manage the timing of development starts. If required, these assets can continue to generate income until the appropriate
time to commence physical construction is reached in order to generate strong incremental returns and increase the Trust's net
asset value. Refer to the Our Business and Our Business Environment and Risks and Uncertainties sections of this MD&A for
discussions about the development environment as well as associated development risk.
The Trust categorizes the projects within its development pipeline as follows:
Category
Description
Projects under construction
Development projects under active construction or anticipated to commence active construction
in the next three months.
Shovel ready development sites
Zoning by-law approval, legal obligations achieved, as well as environmental and tenant
encumbrances resolved. Upon financial commitment and site plan approval, project will
commence construction.
Zoning approved
Achieved full zoning by-law amendment approval.
Zoning application submitted
Trust has submitted re-zoning application to change municipality zoning designation and/or
increase density.
Future developments
Sites identified in key urban markets with potential for mixed-use and residential development.
The Trust is actively reviewing redevelopment strategy on these sites including re-zoning and
entitlement process to seek incremental density.
Development Pipeline
RioCan's development pipeline on a proportionate share basis in equity-accounted joint ventures as at December 31, 2024 is
summarized below:
Estimated GFA (i)
Investment
(in thousands of dollars or sq. ft. and
at RioCan's interest unless otherwise
noted)
Commercial
Residential (ii)
Total (iii)
Residential
units at 100%
ownership
(i)(ii)
Residential
inventory
cost to
date(iv)(v)
PUD cost
to date (iv)
Estimated
cost to
complete
Estimated
total
Projects under construction (vi)
213
672
885
2,512 $
296,441 $ 228,407 $ 190,536 $
715,384
Shovel ready development sites
838
801
1,639
1,389
6,280
177,366
—
183,646
Zoning approved (vii)
1,734
16,045 17,779
20,259
161,456
209,552
—
371,008
Zoning application submitted
38
2,975
3,013
5,661
49,949
75,990
—
125,939
Future developments
1,787
18,251 20,038
15,453
4,284
80,244
—
84,528
Development lands & others
—
—
—
—
—
86,884
—
86,884
Total Development at Cost
4,610
38,744 43,354
45,274 $
518,410 $ 858,443 $ 190,536 $ 1,567,389
Total properties under development at fair value
$ 859,589
(i) Estimated GFA and the number of residential units are based on current development plans; final square footage and units may differ.
(ii)
Includes residential condominiums, townhouses, and residential rental development.
(iii) Estimated total square footage includes 4.7 million square feet of NLA currently income producing.
(iv) Non-GAAP financial measures are presented at RioCan's Proportionate Share in Equity-Accounted Investments Joint Ventures. Refer to the Non-
GAAP Measures section in this MD&A for more information.
(v)
Residential inventory cost to date includes commissions.
(vi) Estimated NLA on projects under construction approximates 0.8 million square feet by applying a 90% GFA conversion factor.
(vii) During Q4 2024, the Trust achieved zoning approval for 2.7 million square feet of mixed-use development at Lincoln Fields, Ottawa.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
49 RioCan Annual Report 2024
Completed Developments
For the year ended December 31, 2024, RioCan transferred a total of 180,000 square feet of new development NLA, including
42,000 square feet of commercial space completed in Q4 2024.
The following table details RioCan's development completion in the year ended December 31, 2024:
(in thousands and at RioCan's interest unless
otherwise noted)
NLA (in '000 sq. ft.)
Project / Location
%
Ownership
Residential
units at
100%
ownership
Q1
Q2
Q3
Q4
Total
Notable Tenants
Mixed-use
The Well, Toronto, ON
50 %
n/a
17
15
19
1
52
Wellington Market merchants,
Lululemon, HealthOne, La Plume,
Gotstyle, Frank And Oak, Bone &
Biscuit, Fix Coffee + Bikes, Sephora,
National
FourFifty The Well, Toronto,
ON
50 %
197
36
37
—
—
73
Residential rental units
Luma, Ottawa, ON
50 %
n/a
—
—
2
—
2
Pür & Simple
Subtotal mixed-use
197
53
52
21
1
127
Retail
RioCan Windfields Phase Two,
Oshawa, ON
100 %
n/a
1
1
—
—
2
Rehab Clinic, Barbershop
Heart Lake Town Centre,
Brampton, ON
100 %
n/a
—
—
6
—
6
Wendy's, Edo Japan, Mucho Burrito,
Lazeez Shawarma
Tanger Outlets, Ottawa, ON
50 %
n/a
—
—
3
—
3
Chick-fil-A
Yonge Eglinton Centre,
Toronto, ON
100 %
n/a
—
—
—
25
25
Winners
South Edmonton Common,
Edmonton AB
100 %
n/a
—
—
—
5
5
Chick-fil- A
RioCan Windfields Phase
Three, Oshawa ON
100 %
n/a
—
—
—
12
12
McDonald's, Mary Brown's, Dr. Siciliano,
CIBC
Subtotal retail
—
1
1
9
42
53
Total completed developments
197
54
53
30
43
180
For the year ended December 31, 2024, RioCan completed a total of 387 condominium / townhouse units, recognizing a total
inventory gain of $16.1 million on a total cost of $70.1 million including commissions.
The following table details RioCan’s condominium and townhouse completions in the year ended December 31, 2024:
(in thousands of dollars and at RioCan's interest unless otherwise noted)
Project / Location
%
Ownership
Units at
100%
ownership
Revenue
Cost
Commissions
Inventory gain
Townhouses/ Condominium
U.C. Towns 2, Oshawa, ON (i)
50.0 %
33 $
13,524 $
8,873 $
394 $
4,257
U.C. Tower 2, Oshawa, ON (ii) (iii)
50.0 %
234
58,959
45,635
2,448
10,876
11 YV, Toronto, ON (ii) (iii)
12.5 %
120
13,669
12,136
591
942
Total townhouse & condominium development
387 $
86,152 $
66,644 $
3,433 $
16,075
(i)
Total development is comprised of 65 townhouse units. As of December 31, 2024, all units have been closed which includes 2 units in Q4 2024.
(ii)
U.C. Tower 2 and 11YV developments are comprised of 606 and 617 condominium units, respectively. As of December 31, 2024, interim
occupancy has occurred on 234 and 120 units respectively. The remaining units are expected to commence interim occupancy in 2025.
(iii) Q4 2024 completions.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 50
2022-2026 Development Deliveries
RioCan's development pipeline is expected to deliver 3.0 million square feet of GFA. The following table details the Trust's
development deliveries:
(in thousands of
dollars and RioCan's
interest unless
otherwise noted)
Development Completion (i)
Residential Inventory Completion (i)(ii)
Completion year
GFA
(in sq. ft.)
Residential
units at 100%
ownership
IFRS cost
transfer from
PUD to IPP
Net cost
transfer from
PUD to
IPP(iii) (iv)
Stabilized
cash NOI(v)
GFA
(in sq. ft.)
Residential
units at
100%
ownership
Total residential
inventory sales
revenue
2022
721,800
650 $
565,520 $
504,967 $
24,132
254,110
608 $
118,659
2023
653,900
395
530,600
466,800
27,200
25,000
32
13,789
2024 (vi)
210,700
197
291,500
244,600
9,000
120,100
387
86,152
2025
245,000
151
238,000
205,200
9,200
374,400
1,526
340,000 - 350,000
2026 & Thereafter
247,300
175
142,700
68,200
4,300
184,700
660
180,000 - 190,000
Total (vii)
2,078,700
1,568 $
1,768,320 $
1,489,767 $
73,832
958,310
3,213
$739,000 - $759,000
(i)
2022 to 2024 represents actual completions. Figures for 2025-2026 & Thereafter are estimates and represent forward-looking information.
(ii)
Residential inventory includes condominium and townhouse units. All condominium pre-sold units are expected to close by Q4 2026. The closing
of unsold units will occur in due course and are dependent on market conditions.
(iii) Net cost transfer is expressed on a cash basis. It excludes vacant land costs and invested costs on retail redevelopment at date of transfer. It is
also net of proceeds from land sales, applicable interim income or fee income earned, capitalized interest on invested equity, and fair value on
initial amounts transferred into properties under development.
(iv) Refer to the Non-GAAP Measures section of this MD&A for further information on net cost transfers from PUD to IPP during 2024 and 2023.
(v)
Forward-looking non-GAAP financial measure calculated based on proforma annualized Stabilized NOI. Refer to the Non-GAAP Measures section
of this MD&A for further information on NOI.
(vi) The Trust completed 180,000 square feet of NLA (210,700 square feet of GFA) year-to-date. Residential inventory sales revenue includes $86.2
million from U.C. Towns 2, U.C. Tower 2 and 11YV for the year ended December 31, 2024.
(vii) Includes only the remaining 12.5% ownership interest in 11YV.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
51 RioCan Annual Report 2024
Development Projects Under Construction
RioCan currently has eight mixed-use developments and six retail developments under active construction. Upon completion of
these projects, the Trust is expected to deliver approximately 213,000 square feet of commercial space and 2,512 residential
units, including 2,186 condominium units.
The following table details RioCan's development projects under construction on a proportionate share basis including equity-
accounted joint ventures as at December 31, 2024:
(in thousands of dollars and at RioCan's
interest unless otherwise noted)
Estimated GFA
('000 sq. ft.) (i)
Investment
%
Ownership
Estimated
Residential
units at
100%
ownership
(i)
Residential Commercial
Total cost to
date (ii) (iii)
Estimated
cost to
complete
Estimated
total (iii)
Estimated
residential
inventory
sales
revenue
(vii)
Residential
inventory
pre-sold %
Estimated
completion period
(iv)
Mixed-use
11YV, Toronto, ON
(Condominium) (v)(ix)
12.5 %
497
48
— $
49,217 $
8,798 $ 58,015
$70,000 -
$72,000
100 % 2025 Q1 - 2025 Q3
U.C. Tower 2, Oshawa, ON
(Condominium) (ix)
50.0 %
372
144
—
48,692
29,752
78,444
$97,000 -
$99,000
94 % 2025 Q1 - 2025 Q2
Queen & Ashbridge, Toronto, ON
(Condominium)
50.0 %
399
144
—
103,626
28,954 132,580
$153,000 -
$155,000
96 % 2025 Q2 - 2026 Q1
U.C. Tower 3, Oshawa, ON
(Condominium)
50.0 %
386
138
—
45,315
40,060
85,375
$126,000 -
$128,000
40 % 2025 Q2 - 2026 Q4
Verge, Toronto, ON
(Condominium) (v)
20.0 %
532
85
—
49,591
18,193
67,784
$78,000 -
$80,000
90 % 2025 Q3 - 2026 Q1
Subtotal - residential inventory
2,186
559
— $
296,441 $ 125,757 $ 422,198
$524,000 -
$534,000
The Well, Toronto, ON
50.0 %
—
—
74 $
112,655 $
2,690 $ 115,345
n/a
n/a 2025 Q1 - 2025 Q2
11YV, Toronto, ON (Rental) (v)
(viii)
12.5 %
81
7
3
10,281
2,545
12,826
n/a
n/a 2025 Q1 - 2025 Q2
Queen & Ashbridge, Toronto, ON
(Rental)
50.0 %
233
104
10
60,037
18,310
78,347
n/a
n/a 2025 Q1 - 2026 Q3
Verge, Toronto, ON (Rental) (v)
20.0 %
12
2
6
3,518
2,180
5,698
n/a
n/a 2025 Q3 - 2026 Q1
Others
Various
—
—
14
10,273
3,261
13,534
n/a
n/a 2025 Q1 - 2025 Q4
Subtotal - commercial and
residential rental
326
113
107 $
196,764 $ 28,986 $ 225,750
n/a
Subtotal mixed-use
2,512
672
107 $
493,205 $ 154,743 $ 647,948
$524,000 -
$534,000
Retail
RioCan Signal Hill Centre,
Calgary, AB (vi)
100.0 %
n/a
—
9 $
3,552 $
1,098 $
4,650
n/a
n/a
2025 Q1
East Hills Shopping Centre,
Calgary, AB
40.0 %
n/a
—
3
416
359
775
n/a
n/a
2025 Q1
Mega Centre Notre-Dame, Laval,
QC
50.0 %
n/a
—
20
1,734
11,409
13,143
n/a
n/a 2025 Q1 - 2025 Q4
Clarkson Crossing, Mississauga,
ON (vi)
100.0 %
n/a
—
25
10,126
1,787
11,913
n/a
n/a
2025 Q2
RioCan Windfields Phase Two,
Oshawa, ON
100.0 %
n/a
—
11
3,940
4,380
8,320
n/a
n/a
2025 Q3
South Edmonton Common,
Edmonton, AB (vi)
100.0 %
n/a
—
38
11,875
16,760
28,635
n/a
n/a
2025 Q4
Subtotal retail
—
—
106 $
31,643 $ 35,793 $ 67,436
n/a
Total projects under construction
2,512
672
213 $
524,848 $ 190,536 $ 715,384
$524,000 -
$534,000
(i)
Estimated GFA and residential units are based on current development plans, final square footage and units may differ.
(ii)
Non-GAAP financial measures, refer to the Non-GAAP Measures section in this MD&A for more information.
(iii)
Includes selling commissions which are included in prepaid expenses and other assets. Costs are transferred to cost of sales upon buyer interim
closing.
(iv) Estimated completion period on condominium developments based on interim closing period of pre-sold units. Final closings of pre-sold units are
expected to occur approximately 6 to 9 months following the first interim closing. The final closing of remaining units will occur in due course
depending on market conditions.
(v)
Equity-accounted joint ventures.
(vi) Total estimated costs include historical carrying amounts of $13.7 million in aggregate transferred from IPP for redevelopment.
(vii) Represents a reduction of $266.0 million from December 31, 2023, primarily from condominium and townhouse closings at U.C. Towns 2 of $13.5
million, U.C. Tower 2 of $59.0 million, 11YV project of $13.7 million and the 11YV project of $180.2 million from the sale of an aggregate 25.0%
interest in the project for inventory revenue of $128.9 million, partially offset by a $0.5 million net increase in the estimated residential sales
revenue for other projects. The $51.3 million difference in the 11YV project represents the assumption of cost-to-complete and risk by the
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 52
purchaser. The purchase price was settled with cash, VTB loan receivable (refer to the Asset Profile - Joint Arrangements section of this MD&A)
and, as part of the acquisition of LP units, the assumption of debt, condominium purchaser deposits and construction accounts payable and other
net working capital balances.
(viii) Firm deal to dispose of 100% of the rental replacement units from all owners expected to close in Q2 2025.
(ix) The information represents all pre-sold and unsold remaining units.
Development Projects in Planning
RioCan is actively identifying high-quality development opportunities in its existing portfolio. The Trust's development pipeline
focuses on mixed-use development projects with substantially all of its developments located in Canada's six largest urban
markets. The Trust aims to generate land value appreciation through re-zoning to increase density on its existing assets.
The following table details RioCan's development projects in planning on a proportionate share basis including equity-accounted
joint ventures as at December 31, 2024:
(in thousands of dollars and at RioCan's
interest unless otherwise noted)
Potential Density (i)
('000 sq.ft.)
Potential
residential
units at
100%
ownership
Greater
Toronto
area
Greater
Ottawa
area
Greater
Montreal
area
Greater
Calgary
area
Greater
Edmonton
area
Greater
Vancouver
area
Total
Carrying
cost
Shovel ready development sites
1,246
282
—
111
—
—
1,639
1,389 $ 183,646
Zoning approved development
10,702
5,112
—
810
1,155
—
17,779
20,259 371,008
Zoning application submitted development
3,013
—
—
—
—
—
3,013
5,661 125,939
Future developments
18,860
—
1,178
—
—
—
20,038
15,453
84,528
Total
33,821
5,394
1,178
921
1,155
—
42,469
42,762 $ 765,121
(i)
Includes 38.1 million square feet of residential density and 4.4 million square feet of commercial density.
2025 Development Spending
For 2025, the anticipated Development Spending is as follows:
2025 (i)
Development Spending related to:
Residential inventory
$105 million - $115 million
Retail in-fill projects
$65 million - $75 million
Mixed-use projects (ii)
$45 million - $55 million
Pipeline advancement
$40 million - $45 million
(i) The Trust continuously reviews its longer-term targets in the context of ever-evolving macroeconomic and business environments.
(ii) No new physical construction of mixed-use properties is expected in 2025.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
53 RioCan Annual Report 2024
CAPITAL RESOURCES AND LIQUIDITY
Capital Management Framework
RioCan defines capital as the aggregate of Unitholder and preferred Unitholders’ equity and debt. RioCan's capital is as follows:
(thousands of dollars)
IFRS basis
RioCan's proportionate share (i)
As at
December 31, 2024
December 31, 2023
December 31, 2024
December 31, 2023
Total debt
$
7,323,914 $
6,861,113 $
7,683,297 $
7,251,368
Total equity
7,558,338
7,437,770
7,558,338
7,437,770
Total capital
$
14,882,252 $
14,298,883 $
15,241,635 $
14,689,138
(i)
This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section in this MD&A for more information on each non-GAAP financial
measure.
The Trust’s capital management framework is designed to maintain a level of capital that:
•
complies with investment and debt restrictions pursuant to the Trust’s Declaration of Trust;
•
complies with debt covenants;
•
enables RioCan to achieve target credit ratings; and
•
funds the Trust’s business strategies and builds long-term Unitholder value.
The key elements of RioCan’s capital management framework are set out in the Declaration of Trust, and/or approved by the
Trust’s Board, through the Board’s annual review of the strategic plan and budget, supplemented by periodic Board and related
committee meetings. Management monitors capital adequacy of the Trust by assessing performance against the approved
annual plan throughout the year, which is updated accordingly, and by monitoring compliance with investment and debt
restrictions contained in the Declaration of Trust and debt covenants. In selecting appropriate funding choices, RioCan’s objective
is to diversify its funding sources while minimizing its funding costs and risks. RioCan expects to satisfy all of its financing
requirements through the use of some or all of the following: cash on hand, cash generated by operations, refinancing of maturing
debt, utilization of its operating line of credit, credit facilities, construction financing facilities, conventional mortgages and CMHC
financing, sale of non-core properties or sale of partial or whole interests in developments or air rights, sale of condominium/
townhouse units and through public offerings of debt and common equity or preferred units.
RioCan's objectives related to managing total debt are to change the weighting of unsecured and secured debt to 70%/30% of
total debt respectively and to extend the weighted average term to maturity of the total debt portfolio beyond the current 3.73
years, as market conditions permit. This transition is expected to take time and will be balanced with credit rating implications,
cost of debt, debt maturity composition and liquidity needs. Refer to the Debt Metrics section of this MD&A for progress against
these objectives.
Declaration of Trust and Debt Covenants
As noted above, the Trust is subject to certain investment and debt restrictions. These restrictions include but are not limited to,
total indebtedness, secured indebtedness, a debt service coverage ratio, minimum Unitholders' equity, a ratio of unencumbered
property assets to unsecured indebtedness and properties held for development as a percentage of consolidated gross book
value of assets. In addition, the Declaration of Trust limits direct and indirect investments in greenfield developments and
development properties held for resale (each net of related mortgage debt but including mezzanine financing which funds the co-
owners’ share of such developments) to no more than 15% of Adjusted Unitholders’ Equity of the Trust (herein referred to as the
"Basket Ratio" which, along with Adjusted Unitholders' Equity, is defined in the Declaration of Trust). As at December 31, 2024,
the Basket Ratio was 6.9%. These and other covenants and restrictions are more fully described in Note 26 of the 2024 Annual
Consolidated Financial Statements.
As at December 31, 2024, the Trust was in compliance with all of the restrictions under the Declaration of Trust and all covenants
pursuant to its various debt agreements.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 54
Debt Metrics
In addition to financial and non-financial covenants and the restrictions under the Declaration of Trust and various debt
agreements, the Trust utilizes certain management-targeted debt metrics noted in the table below to assess performance against
RioCan’s objectives and adherence with its capital management framework. Total Indebtedness Ratio and Debt Service
Coverage Ratio are managed pursuant to the unsecured credit facility agreements and the Interest Coverage Ratio is managed
pursuant to Trust Indentures as defined therein. Refer to Note 26 of the 2024 Annual Consolidated Financial Statements for the
year ended December 31, 2024. As at December 31, 2024, the Trust was in compliance with all of its debt covenants.
The following table summarizes the Trust's long-term management targets for debt metrics, presented on both an IFRS and
RioCan's proportionate share basis:
Rolling 12 months ended
IFRS basis
RioCan's proportionate share (i)
Long-term
targets
December 31,
December 31,
December 31,
December 31,
2024
2023
2024
2023
Adjusted EBITDA (i)
$
805,211 $
735,665 $
820,217 $
760,990
Adjusted Debt to Adjusted EBITDA (i)
8.0x - 9.0x
8.71
9.19
8.98
9.28
Ratio of floating rate debt to total debt (ii)
<15.0%
2.0%
4.6%
4.3%
6.8%
Ratio of Unsecured Debt to Total Contractual Debt
(i) (ii)
70.0%
58.4%
57.4%
55.7%
54.3%
Weighted average term to maturity (in years) (ii)
3.73
3.25
3.72
2.97
Weighted average effective interest rate (ii) (iii)
3.90%
3.74%
3.99%
3.87%
(i)
This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section of this MD&A for more information on each non-GAAP financial
measure.
(ii)
Information is as of respective period end.
(iii) Inclusive of hedges.
The decrease in Adjusted Debt to Adjusted EBITDA at RioCan's Proportionate Share for the rolling twelve months ended
December 31, 2024 when compared to December 31, 2023 was due to the higher Adjusted EBITDA partially offset by higher
Average Total Adjusted Debt. As at December 31, 2024, Adjusted Debt to Adjusted EBITDA at RioCan's Proportionate Share was
within the 8.0x - 9.0x long-term target range.
Adjusted EBITDA at RioCan's Proportionate Share increased for the rolling twelve months ended December 31, 2024 when
compared to December 31, 2023 as a result of higher NOI from rent growth and completed developments, higher residential
inventory gains and higher interest income, partially offset by lower NOI from asset dispositions, net of acquisitions.
Average Total Adjusted Debt increased when compared to December 31, 2023 mainly due to development and incremental
investment activities that were partially funded with debt.
The floating interest rate debt exposure decreased from December 31, 2023 mainly due to refinancing of certain floating rate
mortgages upon maturity with fixed rate mortgages.
Credit Ratings
RioCan is committed to maintaining strong debt-to-EBITDA and interest and debt service coverage ratios as part of its
commitment to maintaining its investment-grade debt ratings. RioCan is rated BBB by DBRS Morningstar (DBRS), an
independent credit rating agency. A credit rating of BBB (low) or higher by DBRS is considered an investment-grade rating.
The following table summarizes RioCan’s credit ratings as at December 31, 2024:
DBRS
Credit Rating
Trend
Issuer Credit Rating
BBB
Stable
Senior Unsecured Debentures
BBB
Stable
In September 2024, Standard and Poor’s (S&P) withdrew its issuer credit rating of BBB with a negative outlook and a credit rating
for senior unsecured debentures of BBB at RioCan's request.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
55 RioCan Annual Report 2024
Total Debt Profile
RioCan’s debt maturity profile and future repayments are as outlined below:
Principal maturities and interest rates
(thousands of dollars, except
otherwise noted)
Debentures
payable
Weighted
average
interest
rate (ii)
Mortgages
payable
Weighted
average
interest
rate (ii)
Lines of
credit
and other
bank loans
Weighted
average
interest
rate (ii)
Total debt
Weighted
average
interest
rate (ii)
Year of debt maturity
2025
$
500,000
2.58 % $
572,564
3.32 % $
10,000
5.69 % $ 1,082,564
3.00 %
2026
600,000
2.64 %
151,918
3.61 %
55,049
5.28 %
806,967
3.00 %
2027
550,000
3.54 %
242,059
2.96 %
83,620
5.49 %
875,679
3.57 %
2028
650,000
3.19 %
413,600
3.20 %
—
— % 1,063,600
3.19 %
2029
550,000
5.36 %
602,585
4.35 %
—
— % 1,152,585
4.83 %
Thereafter
1,250,000
5.13 %
890,642
3.87 %
237,367
4.25 % 2,378,009
4.57 %
Total Contractual Debt (i) (ii)
$ 4,100,000
3.96 % $ 2,873,368
3.67 % $ 386,036
4.70 % $ 7,359,404
3.89 %
Unamortized debt financing
costs, premiums and
discounts on origination and
debt assumed, and
modifications
(11,346)
(21,766)
(2,378)
(35,490)
Total debt (iii)
$ 4,088,654
3.97 % $ 2,851,602
3.68% $ 383,658
4.73 % $ 7,323,914
3.90 %
(i)
This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section of this MD&A for more information on each non-GAAP financial
measure.
(ii)
For hedged floating rate debt, the weighted average contractual interest rate per annum reflects the fixed rate in the interest swaps. Including bond
forward hedges, the weighted average contractual interest rate for total debentures is 3.87%, total mortgages is 3.55% and total debt is 3.79%.
(iii) Weighted average interest rate reflects the effective interest rate, inclusive of bond forward hedges for debentures payable and mortgages
payable.
The Total Contractual Debt continuity schedule for the year ended December 31, 2024 is as follows:
(thousands of dollars, except otherwise noted)
Year ended December 31, 2024
Debentures
Payable
Mortgages
Payable
Lines of Credit and
Other Bank Loans
Total
Total Contractual Debt, beginning of year
$
3,250,000 $
2,753,848 $
881,285 $
6,885,133
Borrowings
1,450,000
427,055
482,272
2,359,327
Debt assumed and vendor take-back mortgage
—
78,800
—
78,800
Scheduled amortization
—
(52,237)
—
(52,237)
Repayments
(600,000)
(316,571)
(977,521)
(1,894,092)
Disposed on the sale of properties
—
(14,850)
—
(14,850)
Transfer to equity-accounted investments
—
(2,677)
—
(2,677)
Total Contractual Debt, end of year
$
4,100,000 $
2,873,368 $
386,036 $
7,359,404
Interest rates of new borrowings, debt
assumed and vendor take-back mortgage
Weighted average contractual interest rate (i)
4.97 %
4.52 %
5.69 %
5.01 %
Weighted average effective interest rate (ii)
5.12 %
4.86 %
5.69 %
5.17 %
(i) For hedged floating rate debt, the contractual interest rate per annum reflects the fixed rate in the interest rate swap. Including bond forward
hedges, the weighted average contractual interest rate for new debentures is 5.03% and the weighted average contractual interest rate for total
contractual debt is 5.05%. For floating rate new borrowings, the interest rate reflects the floating rate at the end of the period.
(ii) Weighted average interest rate reflects the effective interest rate, inclusive of bond forward hedges and premium/discounts on issuance or
assumption.
As at December 31, 2024, there is $605.0 million total debt associated with assets in RioCan Living's residential rental portfolio,
including $562.6 million of CMHC insured fixed rate mortgages payable, a $37.4 million fixed rate CMHC construction line and
$5.0 million of conventional mortgages payable.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 56
Debentures Payable
(thousands of dollars, except otherwise noted)
As at
December 31, 2024
December 31, 2023
Debentures payable (i)
$
4,088,654 $
3,240,943
Weighted average effective interest rate (ii)
3.97 %
3.65 %
Weighted average term to maturity (years)
3.6
3.1
(i)
Amount outstanding deducts a total of $11.3 million as at December 31, 2024 (December 31, 2023 - $9.1 million) in unamortized financing costs.
(ii)
Inclusive of bond forward hedges.
Issuance
On February 12, 2024, RioCan issued $300.0 million Series AJ senior unsecured debentures. These debentures were issued at a
coupon rate of 5.470% per annum and will mature on March 1, 2030. Inclusive of bond forward hedges, the all-in rate is 5.452%.
On March 25, 2024, RioCan issued an additional $150.0 million of Series AJ senior unsecured debentures. These additional
debentures have the same terms and conditions and constitute part of the same series as the existing $300.0 million in Series AJ
debentures issued on February 12, 2024. Inclusive of the premium on issuance and bond forward hedges, the all-in rate is
5.273%.
On May 31, 2024, RioCan issued $300.0 million Series AK senior unsecured debentures. These debentures were issued at a
coupon rate of 5.455% per annum and will mature on March 1, 2031.
On October 3, 2024, RioCan issued $700.0 million aggregate principal amount of senior unsecured debentures of the Trust in two
series: $500.0 million Series AL senior unsecured debentures, which carry a coupon rate of 4.623% per annum and will mature
on October 3, 2031, and $200.0 million Series AM senior unsecured debentures, which carry a coupon rate of 4.004% per annum
and will mature on March 1, 2028. Inclusive of bond forward hedges, the all-in rate for Series AL is 4.832%.
Subsequent to year end, on February 12, 2025, RioCan issued $550.0 million aggregate principal amount of senior unsecured
debentures of the Trust in two series. The $250.0 million Series AN senior unsecured debentures carry a coupon rate of Daily
Compounded CORRA plus 0.85% per annum with an all-in swapped-to-fixed interest rate of 3.31%, and will mature on March 1,
2027. The $300.0 million Series AO senior unsecured debentures carry a coupon rate of 4.671% per annum and will mature on
March 1, 2032. The aggregate $550.0 million of debentures had all-in weighted average interest rate of 4.05% per annum,
inclusive of the interest rate swap, and a weighted average term to maturity of 4.8 years.
Redemption
On February 12, 2024, RioCan repaid, in full, its $300.0 million, 3.287% Series W unsecured debentures upon maturity.
On October 4, 2024, RioCan redeemed, in full, its $300.0 million, 6.488% Series AI senior unsecured debentures due September
29, 2026 in accordance with its terms at a total redemption price of $300.0 million, plus accrued and unpaid interest.
Subsequent to year end, on February 12, 2025, RioCan redeemed, in full, its $500.0 million, 2.576% Series AB senior unsecured
debentures upon maturity.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
57 RioCan Annual Report 2024
RioCan’s debenture maturity profile and future repayments are as outlined below:
(thousands of dollars)
As at
Series
Maturity date
Coupon rate
Interest payment frequency
December 31, 2024
December 31, 2023
W
February 12, 2024
3.29 %
Semi-annual
$
— $
300,000
AB
February 12, 2025
2.58 %
Semi-annual
500,000
500,000
I
February 6, 2026
5.95 %
Semi-annual
100,000
100,000
AD
June 15, 2026
1.97 %
Semi-annual
500,000
500,000
AI
September 29, 2026
6.49 %
Semi-annual
—
300,000
AC
March 10, 2027
2.36 %
Semi-annual
350,000
350,000
AG
October 6, 2027
5.61 %
Semi-annual
200,000
200,000
AM
March 1, 2028
4.00 %
Semi-annual
200,000
—
AE
November 8, 2028
2.83 %
Semi-annual
450,000
450,000
AF
May 1, 2029
4.63 %
Semi-annual
250,000
250,000
AH
October 1, 2029
5.96 %
Semi-annual
300,000
300,000
AJ
March 1, 2030
5.47 %
Semi-annual
450,000
—
AK
March 1, 2031
5.46 %
Semi-annual
300,000
—
AL
October 3, 2031
4.62 %
Semi-annual
500,000
—
Contractual obligations
$
4,100,000 $
3,250,000
Unamortized debt financing costs
(11,346)
(9,057)
Balance, end of year
$
4,088,654 $
3,240,943
The Series I debentures, which are due in 2026 and are $100 million in aggregate, have an additional provision that provides
RioCan with the right, at any time, to convert these debentures to mortgage debt, subject to the acceptability of the security given
to the debenture holders. In such an event, the covenants relating to the 60% leverage limit, and minimum Adjusted Unitholders'
Equity ratio would be eliminated for this series of debentures.
Mortgages Payable
Mortgages payable consist of the following:
(thousands of dollars, except otherwise noted)
As at
December 31, 2024
December 31, 2023
Weighted
average effective
interest rate (i)(iv)
Weighted
average term to
maturity (years)(i)
Total
Total
Fixed rate mortgages - Conventional (ii) (iii)
3.71%
3.4 $
2,289,034 $
2,210,175
Fixed rate mortgages - CMHC (iii)
3.57%
7.7
562,568
379,957
Floating rate mortgages - Conventional
— %
—
—
150,792
Total (iii)
$
2,851,602 $
2,740,924
Weighted average effective interest rate (iv)(ii)
3.68 %
3.59 %
Weighted average term to maturity (years)
4.2
4.2
(i)
Information presented as at December 31, 2024.
(ii)
Includes hedged floating rate mortgages. Interest rate reflects the fixed rate in the interest rate swap.
(iii) Amount outstanding deducts a total of $21.8 million as at December 31, 2024 (December 31, 2023 - $12.9 million) in unamortized financing costs,
net of unamortized differential between contractual and market interest rates on liabilities assumed at the acquisition of properties and unamortized
debt modification losses.
(iv) Inclusive of the bond forward hedges.
At the outset of 2024, RioCan had $398.4 million of mortgage principal maturing in 2024 at a weighted average contractual
interest rate of 4.74%. For the year ended December 31, 2024, RioCan completed total new term mortgage borrowings of $427.1
million and mortgage renewals of $47.8 million at a combined weighted average contractual interest rate of 4.80% and a weighted
average term of 7.3 years, assumed contractual debt and a vendor take-back mortgage of $78.8 million at a weighted average
contractual interest rate of 2.69% and a weighted average remaining term of 3.7 years, and repaid $368.8 million of mortgage
balances and scheduled amortization. Mortgages disposed on the sale of investment properties were $14.9 million and
mortgages transferred to equity-accounted investment were $2.7 million.
Maximizing CMHC insured mortgages is a key component of the Trust’s debt strategy as they provide access to an alternative
source of financing and lower the overall cost of debt.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 58
The majority of our mortgage debt provides recourse to the assets of the Trust or certain subsidiaries of the Trust, as opposed to
only having recourse to the specific property charged. The Trust follows this policy as it generally results in lower interest rates for
the Trust.
Subsequent to year end, the Trust repaid $131.5 million of fixed rate mortgages upon maturity.
Lines of Credit and Other Bank Loans
Lines of credit and other bank loans consist of the following:
(thousands of dollars, except otherwise noted)
As at
December 31,
2024
December 31,
2023
Available
facility (i)
Weighted
average
interest
rate (i)(iii)
Maturity
Date (i)
Amounts
drawn
Amounts
drawn
Revolving unsecured operating line of credit (ii)(iv)
$ 1,250,000
5.07 %
May 31, 2029 $
— $
—
Non-revolving unsecured credit facilities (ii)
200,000
4.47 %
January 31, 2030
200,000
200,000
Non-revolving unsecured credit facilities (ii)
—
—
February 7, 2024
—
350,000
Non-revolving unsecured credit facilities (ii)
—
—
June 27, 2024
—
150,000
Construction lines and other bank loans (v)
332,060
4.95 %
June 2025 to
March 2033
186,036
181,287
Total Contractual
$ 1,782,060
$
386,036 $
881,287
Unamortized debt financing costs, premiums and
discounts on origination and debt assumed, and
modifications
(2,378)
(2,041)
Total
$ 1,782,060
$
383,658 $
879,246
Weighted average effective interest rate (iii)
4.73 %
4.52 %
(i)
Information presented as at December 31, 2024.
(ii)
For the revolving unsecured operating line of credit and the non-revolving unsecured credit facilities, the underlying rates on amounts drawn are
based on floating rates and the credit spreads are based on the Trust's credit rating.
(iii) Inclusive of interest rate swaps used to hedge floating rate debt.
(iv) The weighted average interest rate represents the Canadian Overnight Repo Rate Average (CORRA) as at December 31, 2024 plus credit spread.
The Trust can draw using CORRA, Secured Overnight Financing Rate (SOFR), and Prime rate, plus applicable credit spreads. On June 26, 2024,
the maturity date of the revolving unsecured operating line of credit was extended to May 31, 2029. Certain covenants were amended to be less
restrictive with all other material terms and conditions remaining the same.
(v)
Includes $63.0 million construction facilities that are fixed rate, of which $37.4 million have been drawn at a weighted average fixed interest of
3.07%.
On February 7, 2024, RioCan repaid its $350.0 million non-revolving unsecured credit facility upon maturity, in accordance with its
terms.
On June 27, 2024, RioCan repaid its $150.0 million non-revolving unsecured credit facility upon maturity, in accordance with its
terms.
On September 3, 2024, RioCan unwound the associated interest rate swap agreement and hedge on the $200.0 million non-
revolving unsecured credit facility, recognizing a debt prepayment gain of $0.5 million in net income. On September 25, 2024,
RioCan entered into a forward starting interest rate swap maturing on January 31, 2030, in anticipation of amending the maturity
date of the $200.0 million term loan. On October 2, 2024, RioCan amended the term loan agreement and extended the maturity
date of the $200.0 million non-revolving unsecured credit facility to January 31, 2030, for a hedged annual all-in fixed interest rate
of 4.47%.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
59 RioCan Annual Report 2024
Liquidity
Liquidity refers to the Trust having credit availability under committed credit facilities and/or generating sufficient amounts of cash
and cash equivalents to fund the ongoing operational commitments including maintenance capital and development capital
expenditures, distributions to Unitholders and planned growth in the business.
RioCan maintains a committed revolving unsecured operating credit facility to provide financial flexibility and liquidity which can
be drawn or repaid on short notice, reducing the need to hold liquid resources in cash and deposits. This minimizes costs arising
from the difference between borrowing and deposit rates, while reducing credit exposure.
Liquidity risk is the risk that the Trust may not have access to sufficient debt and equity capital to meet its financial obligations as
they become due. The Trust mitigates its liquidity risk by staggering the maturity dates of its long-term debt, actively renewing
expiring credit arrangements, utilizing undrawn operating lines of credit, maintaining a large number of assets unencumbered by
debt, and issuing equity when considered appropriate.
As at December 31, 2024, RioCan had $1.7 billion of Liquidity as summarized in the following table:
December 31,
December 31,
December 31,
December 31,
As at
2024
2023
2024
2023
Undrawn revolving unsecured operating line of credit
$
1,250,000 $
1,250,000 $
1,250,000 $
1,250,000
Undrawn construction lines and other bank loans
146,024
385,715
243,916
575,278
Cash and cash equivalents
190,243
124,234
200,133
138,740
Liquidity (i)
$
1,586,267 $
1,759,949 $
1,694,049 $
1,964,018
(thousands of dollars)
IFRS basis
RioCan's proportionate share (i)
(i) This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section of this MD&A for more information on each non-GAAP financial
measure.
The $270.0 million decrease in Liquidity on a proportionate share basis over the prior year end was mainly due to the utilization of
credit facilities for investment, including development, and working capital activities and development completions whereby
construction lines with excess capacity have been repaid and refinanced with permanent financing. These were partially offset by
higher cash and cash equivalents due to the timing of debenture issuances for which a portion of the proceeds have been used to
repay maturing mortgages in Q1 2025.
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.
Unencumbered Assets
Through its unencumbered investment properties, RioCan has the potential to obtain additional mortgages to bolster liquidity, if
needed, and preserve credit availability under its revolving unsecured line of credit, while maintaining compliance with debt
covenants under various credit facilities. Unencumbered investment property assets as at December 31, 2024 were as follows:
IFRS basis
RioCan's proportionate share (i)
(thousands of dollars, except where otherwise noted)
December 31,
December 31,
December 31,
December 31,
As at
2024
2023
2024
2023
Unencumbered Assets
$
8,135,120 $
8,030,541 $
8,201,345 $
8,089,927
(i)
This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section of this MD&A for more information on each non-GAAP financial
measure.
Following the repayment of the mortgages that matured subsequent to year end, RioCan's Unencumbered Assets pool increased
by $286.2 million. The Trust manages the Ratio of Unencumbered Property Assets to Unsecured Indebtedness calculated
pursuant to unsecured credit facility agreements. Refer to Note 26 of the 2024 Annual Consolidated Financial Statements. As at
December 31, 2024, the Trust was in compliance with all financial covenants.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 60
Contractual Commitments
The Trust's Liquidity is impacted by contractual debt commitments and committed expenditures on active development projects.
Its contractual debt commitments and committed development expenditures for the next five years are as follows:
Contractual obligations:
Lines of credit and other bank loans
$
10,000 $
55,049 $
83,620 $
— $
— $
237,367 $ 386,036
Mortgages payable
572,564
151,918
242,059
413,600
602,585
890,642 2,873,368
Debentures payable
500,000
600,000
550,000
650,000
550,000 1,250,000 4,100,000
Lease liabilities (i)
1,757
1,824
1,929
1,980
2,077
18,241
27,808
Other operating lease obligations
436
241
128
96
35
—
936
Total Contractual Obligations
$ 1,084,757 $ 809,032 $ 877,736 $ 1,065,676 $ 1,154,697 $ 2,396,250 $ 7,388,148
Total estimated cost-to-complete
projects under construction (ii) (iii)
176,608
12,856
1,071
—
—
—
190,535
Total Commitments (iv)
$ 1,261,365 $ 821,888 $ 878,807 $ 1,065,676 $ 1,154,697 $ 2,396,250 $ 7,578,683
(thousands of dollars)
2025
2026
2027
2028
2029
Thereafter
Total
(i)
Represents the discounted minimum lease payments of lease liabilities under IFRS 16.
(ii)
This includes RioCan's Proportionate Share in Equity-Accounted Investments Joint Ventures. Refer to the Development Activities - Development
Projects Under Construction section of this MD&A.
(iii) Includes costs that do not have committed construction contracts.
(iv) The table above excludes unfunded investment commitments of $79.8 million relating to equity-accounted investments and other investments for
which timing is unknown.
The Trust's contractual debt obligations and total estimated cost-to-complete projects under construction can be funded by
existing cash on hand, net proceeds from the sale of assets (including, but not limited to, sale of excess land and development
density), draws on construction lines, proceeds from mortgage refinancing, the revolving unsecured operating line of credit,
proceeds from the issuance of unsecured debentures and other similar debt instruments or issuance of equity Units.
RioCan has also entered into firm purchase obligations to acquire interests in certain investment properties in future periods as
further described below:
The Trust has agreed to purchase 100% of the retail portion of the 11YV project upon completion, currently estimated to be during
2025, at a 6.0% capitalization rate or a current estimated purchase price of $24 - $26 million for the 87.5% interest the Trust will
acquire. The Trust currently owns a 12.5% interest in the project through an equity-accounted investment. Refer to the Asset
Profile - Joint Arrangements section of this MD&A for further details.
The Trust has agreed to purchase its partners' interest in the retail and residential rental components of Queen & AshbridgeTM
upon stabilization, currently estimated to be during 2026, at the greater of pre-determined capitalization rates of 4.75% and
4.15%, respectively, or total cost plus 5%.
The Trust has agreed to purchase a 100% interest in Bellevue Phase Three provided certain conditions are met, currently
estimated to be in the first half of 2025, for an estimated purchase price of $28.0 million.
The Trust has agreed to purchase 90% interest in Market Laval Phase Two/Three provided certain conditions are met, currently
estimated to be in the first half of 2025, at a capitalization rate of 4.16%.
RioCan, as a mutual fund trust, expects to make monthly distributions to Unitholders with the cash generated from ongoing
operating activities. For more information on monthly distributions see the Distributions to Unitholders section of this MD&A.
Off-Balance Sheet Arrangements
Guarantees
As at December 31, 2024, the maximum exposure to credit loss resulting from the Trust's debt guarantees, on behalf of certain of
our co-owners' interests and mortgages assumed by purchasers on property dispositions, is $600.7 million (December 31, 2023 -
$341.2 million), with expiries between 2025 and 2027. The Trust expects its debt guarantees to decrease materially as
development projects, including the 11YV project, are completed and the related third-party debt is repaid. The maximum
exposure to credit risk relating to a guarantee is the maximum risk of loss if there was a total default, without consideration of
recoveries under recourse provisions against the aforementioned parties or the properties secured.
As at and for the year ended December 31, 2024, there have been no defaults by the primary obligors for debts on which we
have provided guarantees and no provision for expected losses on these guarantees has been recognized in the 2024 Annual
Consolidated Financial Statements.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
61 RioCan Annual Report 2024
The parties on behalf of which RioCan has outstanding guarantees are as follows:
(thousands of dollars)
As at
December 31, 2024 December 31, 2023
Property Type
Partners and co-owners
Expected
maturity date (i)
Development Projects:
11YV project (iv)
Metropia, Capital Development and
other partners
2025 Q1 - 2025 Q2 $
322,022 $
163,619
Verge
Various partners
2025 Q3 - 2026 Q1
120,136
45,696
Queen & Ashbridge (ii)
Context Development
2025 Q1 - 2026 Q4
92,416
24,932
534,574
234,247
Mixed-use
Woodbourne
2024 Q2
—
76,740
Grocery Anchored Centre
Harden
2026 Q4
7,575
30,258
RioCan-HBC JV (iii)
HBC
2027 Q1
58,510
—
$
600,659 $
341,245
(i)
For development projects, the expected maturity date is based on the estimated date of project completion. Repayment of related third-party debt
and the release of the respective guarantee is expected to occur approximately 6 to 9 months following these project completion dates. The last
contractual maturity date is in 2027.
(ii)
Includes a $37.4 million guarantee related to joint and several loan obligations between RioCan Living and Context Development on the rental
component of the project, which is expected to be released in Q4 2026 upon meeting certain income thresholds.
(iii) In exchange for RioCan’s guarantee to a third-party lender on a RioCan-HBC JV loan, the Trust has received security interests in several joint
venture properties, including a large, well-located property with redevelopment potential, an unencumbered asset, and a multi-tenanted property in
which the Trust holds 50% direct ownership outside of the joint venture. The Trust has also obtained a pledge of limited partnership units on
certain properties in the GTA as additional security.
(iv) During the year, the Trust sold 25% of interest in the underlying 11YV project or 50% interest in the LP units, as a result the guarantees on partner
debt has increased as the Trust guarantees 100% of the project debt.
Letter of Credit Facilities and Surety Bonds
The Trust has aggregate letter of credit facilities with certain Schedule I banks totalling $75.3 million (December 31, 2023 - $91.3
million). As at December 31, 2024, the Trust’s outstanding letters of credit under these facilities was $34.5 million (December 31,
2023 - $40.2 million).
The Trust is contingently liable for surety bonds that have been provided to support condominium developments and warranties
in the amount of $219.1 million (December 31, 2023 - $184.4 million).
Hedging Activities
Interest Rate Risk
The Trust is exposed to interest rate risk on its borrowings and could be adversely affected if it were unable to obtain cost-
effective financing. The majority of the Trust's debt is financed at fixed rates with maturities staggered over a number of years,
thereby mitigating its exposure to changes in interest rates and financing risk. As at December 31, 2024, approximately 2.0%
(December 31, 2023 - 4.6%) of the Trust's debt is financed at variable rates (including mortgage debt related to properties held
for sale, if applicable, and excluding debt that has been hedged to fixed rates), exposing the Trust to interest rate risk. In addition,
the Trust is exposed to interest rate risk on fixed rate debt upon refinancing at maturity. The current portion of fixed rate long-term
debt is $1.1 billion as at December 31, 2024.
From time to time, the Trust may enter into floating-for-fixed interest rate swaps as part of its strategy for managing its exposure
to interest rate risk on debt with floating interest rates. The Trust may also enter into bond forward contracts to hedge its exposure
to movements in interest rates from the time it determines it will refinance or issue a fixed rate debt and the time the fixed rate
debt is issued. The intent is to use the bond forwards to manage the change in cash flows of the future interest payments on the
anticipated fixed rate debt. The Trust will generally consider entering into bond forward contracts to reduce interest rate risk
during periods of interest rate volatility. For the $600.0 million bond forward contracts settled during the year ended December 31,
2024 (year ended December 31, 2023 - $500.0 million), the Trust has realized $6.4 million of net loss (year ended December 31,
2023 - $19.6 million gain), which was considered effective and will be included in interest expense over the term of the hedged
debt (year ended December 31, 2023 - $16.8 million gain was effective, and $2.8 million gain was ineffective and recognized in
other income). The $600.0 million of settled bond forward contracts were comprised of $150.0 million of bond forward contracts
entered into on December 14, 2023, which were settled on February 12, 2024 in conjunction with the offering of the Series AJ
debenture, and $150.0 million of bond forward contracts entered into on March 8, 2024, which were settled on March 28, 2024 in
conjunction with the offering of the additional Series AJ debenture, and $300.0 million of bond forward contracts entered into on
June 14, 2024, which were settled on October 3, 2024 in conjunction with the closing of the offering of the Series AL debentures.
As at December 31, 2024, the outstanding notional amount of floating-to-fixed interest rate swaps was $300.0 million
(December 31, 2023 - $833.4 million) and the term to maturity of these agreements ranges from November 2028 to January
2030.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 62
The Trust did not have any unrealized bond forward contracts outstanding as at December 31, 2024 (December 31, 2023 -
$150.0 million outstanding).
The fair value of the interest rate swaps and bond forwards is, in aggregate, a net financial asset of approximately $0.1 million
(December 31, 2023 - net financial asset of approximately $6.8 million).
The Trust assesses the effectiveness of its continuing hedging relationships on a quarterly basis and has determined all such
designated hedging relationships were effective as at December 31, 2024. Refer to Note 25 of the 2024 Annual Consolidated
Financial Statements for further details.
Currency risk on U.S. dollar borrowings
From time to time, the Trust funds its Canadian assets by electing to draw on the revolving unsecured operating line of credit in
U.S. dollars bearing interest at USD-SOFR when it is determined that it is economically advantageous to do so. The Trust will
concurrently enter into cross-currency swaps to hedge foreign exchange risk on these U.S. dollar borrowings. As at
December 31, 2024, the Trust has no cross-currency swaps outstanding.
Trust Units
As at December 31, 2024, there are 300.5 million Units outstanding, including exchangeable limited partnership units. All Units
outstanding have equal rights and privileges and entitle the holder to one vote for each Unit at all meetings of Unitholders. During
the three months and years ended December 31, 2024 and 2023, we issued and repurchased Units as follows:
Three months ended
December 31
Years ended
December 31
(in thousands)
2024
2023
2024
2023
Units outstanding, beginning of period (i)
300,466
300,405
300,455
300,359
Units issued:
Unit-based compensation exercises, net of Units repurchased for
settlement of Unit exercises
—
47
—
85
Direct purchase plan
3
3
14
11
Units outstanding, end of period (i)
300,469
300,455
300,469
300,455
(i)
Included in Units outstanding are exchangeable limited partnership units of three limited partnerships that are subsidiaries of the Trust (the LP
units) which were issued to vendors, as partial consideration for investment properties acquired by RioCan (December 31, 2024 – 499,754 LP
units, December 31, 2023 – 499,754 LP units).
As of February 18, 2025, there are 297.2 million Units issued and outstanding. In addition, 3.8 million Unit options were issued
under the Trust’s incentive Unit Option Plan and 0.7 million deferred Units were issued and outstanding under the Trust's Trustee
Deferred Unit Plan. The convertible securities are convertible into, or exercisable for, Units of the Trust, of which 3.5 million Unit
options were exercisable at December 31, 2024, at a weighted average exercise price of $24.55.
As at December 31, 2024, the Trust also had 0.4 million Senior Executive Restricted Equity Units (REU), 0.6 million Employee
REUs, and 0.4 million Performance Equity Units (PEU) that are outstanding, which, in normal course, will be settled three years
after the grant date by delivery of an equivalent number of Units purchased on the secondary market, and if elected, net of
applicable withholding taxes.
Further information regarding the incentive Unit Option Plan, Trustee Deferred Unit Plan, Senior Executive REUs, Employee
REUs, PEUs and the related performance metrics and other terms attributable to plans are set out in the Trust's Management
Information Circular.
Normal Course Issuer Bid (NCIB)
On November 7, 2023, RioCan received TSX approval of its notice of intention to renew its NCIB (the 2023/2024 NCIB), to
acquire up to a maximum of 29,895,017 Units, or approximately 10% of the public float as of October 31, 2023, for cancellation or
to satisfy RioCan's obligation to deliver Units under the REU and PEU Plans, over the next 12 months, effective November 9,
2023.
On November 8, 2024, RioCan announced that it received TSX approval of its notice of intention to renew its NCIB (the
2024/2025 NCIB), to acquire up to a maximum of 29,878,867 Units, or approximately 10% of the public float as at October 31,
2024, for cancellation or to satisfy RioCan's obligation to deliver Units under the REU and PEU Plans, over the next 12 months,
effective November 12, 2024.
The number of Units that can be purchased pursuant to the 2024/2025 NCIB is subject to a current daily maximum of 209,391
Units (which is equal to 25% of 837,564, being the average daily trading volume for the six months preceding October 31, 2024),
subject to RioCan’s ability to make one block purchase of Units per calendar week that exceeds such limits. RioCan intends to
fund the purchases primarily out of its available cash and undrawn credit facilities.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
63 RioCan Annual Report 2024
RioCan has an automatic securities purchase plan (ASPP) in connection with the 2024/2025 NCIB applicable to its outstanding
Units. The ASPP is intended to allow for the purchase of Units under the NCIB at times when RioCan would ordinarily not be
permitted to purchase Units due to regulatory restrictions and customary self-imposed blackout periods. Pursuant to the ASPP,
purchases will be made by RioCan's designated broker based on periodically pre-established purchasing parameters, in
accordance with the rules of the TSX and applicable securities laws. Outside of pre-determined blackout periods, Units may be
purchased under the NCIB at such times as RioCan determines to be appropriate in compliance with TSX rules and applicable
securities laws.
During the year ended December 31, 2024, the Trust did not acquire and cancel any Units.
Subsequent to December 31, 2024, up to and including February 18, 2025, the Trust purchased 3,240,849 Units at a weighted
average price of $18.51 per unit for a total cost of $61.2 million (including $1.2 million of equity buyback tax).
Distributions to Unitholders
RioCan qualifies as a mutual fund trust and a “real estate investment trust” (REIT Exemption) for Canadian income tax purposes.
We expect to distribute all of our taxable income to Unitholders and are entitled to deduct such distributions for Canadian income
tax purposes. From time to time, RioCan may retain some taxable income and net capital gains, when appropriate, in order to
utilize the capital gains refund available to mutual fund trusts without incurring any income taxes. Accordingly, no provision for
current income taxes payable is required, except for amounts incurred in our incorporated Canadian subsidiaries.
The Trust consolidates certain wholly-owned incorporated entities that are subject to tax. Any tax disclosures, expense and
deferred tax balances relate only to these entities.
If the Trust were to cease to qualify for the REIT Exemption for Canadian income tax purposes, certain distributions (taxable
distributions) would not be deductible in computing income for Canadian income tax purposes and it would be subject to tax on
such distributions at a rate substantially equivalent to the general corporate income tax rate. Any remaining distributions, other
than taxable distributions, would generally continue to be treated as returns of capital to Unitholders. From year-to-year, the
taxability of the Trust's distributions may fluctuate depending upon the timing of recognition of certain gains and losses based on
the activities of the Trust.
The Trust's monthly distribution, effective February 2024, was $0.0925 per unit, which increased from $0.0900 per unit.
Distributions declared to Unitholders were as follows:
(thousands of dollars)
2024
2023
2024
2023
Distributions declared to Unitholders
$
83,379 $
81,114 $
332,763 $
322,924
Three months ended
December 31
Years ended
December 31
Total distributions declared increased for the three months and year ended December 31, 2024 when compared to the same
period in the prior year due to the distribution increase effective February 2024.
Difference between cash flows provided by operating activities and distributions to Unitholders
A comparison of distributions to Unitholders with cash flows provided by operating activities and distributions is as follows:
Three months ended
December 31
Years ended
December 31
(thousands of dollars)
2024
2023
2024
2023
Cash flows provided by operating activities
$
133,116 $
122,416 $
378,280 $
385,516
Add/(deduct) the decrease/(increase) in non-cash working capital
items
(22,180)
(11,185)
71,321
109,098
Cash flows provided by operating activities, excluding non-cash
working capital items
110,936
111,231
449,601
494,614
Less: Distributions declared to Unitholders
(83,379)
(81,114)
(332,763)
(322,924)
Excess cash flows provided by operating activities excluding non-
cash working capital, net of distributions declared (i)
$
27,557 $
30,117 $
116,838 $
171,690
(i)
This is a non-GAAP financial measure. Refer to Non-GAAP Measures section of this MD&A for more information.
For the three months ended December 31, 2024, cash flows provided by operating activities, excluding non-cash working capital
items, were higher than distributions declared to Unitholders during the period by $27.6 million. For the year ended December 31,
2024, cash flows provided by operating activities, excluding non-cash working capital items, were higher than distributions
declared to Unitholders during the period by $116.8 million.
Included in the change of the non-cash working capital items for the three months and year ended December 31, 2024, are $34.9
million and $98.7 million decreases in non-cash working capital from residential inventory related changes, respectively ($4.0
million and $63.1 million decreases for the three months and year ended December 31, 2023, respectively).
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 64
Distribution increase effective February 2024 and February 2025
RioCan's Board of Trustees approved a 2.8% increase to its monthly distributions to Unitholders from $0.0900 per unit to $0.0925
per unit which commenced with the February 2024 distribution, payable in March 2024, bringing RioCan's annualized distribution
to $1.11 per unit. Subsequent to year end, RioCan's Board of Trustees has approved a 4.3% increase to the monthly distribution
to Unitholders from $0.0925 to $0.0965 per unit commencing with the February 2025 distribution, payable on March 7, 2025 to
Unitholders of record as at February 28, 2025. This brings RioCan's annualized distribution to $1.16 per unit. This increase is in
keeping with the Trust's objectives to provide sustainable distribution increases supported by FFO per unit growth while
maintaining a consistent FFO Payout Ratio of approximately 55% to 65% over the long-term. The retained cash flow will be used
to support future growth and to pay down debt. The Trust expects to achieve its payout ratio objective.
The Trust does not use net income in accordance with IFRS as the basis to establish the level of Unitholders’ distributions as net
income includes, among other items, non-cash fair value adjustments related to its investment property portfolio.
The Board continuously reevaluates the level of distributions to Unitholders, considering various factors which include but are not
limited to: cash flow from operating activities, forward-looking cash flow information including forecasts and budgets and the
future business prospects of the Trust, the interest rate environment and cost of capital, estimated development completions and
development spending, the impact of future acquisitions and dispositions, maintenance capital expenditures and leasing
expenditures related to our income producing portfolio, taxable income, and debt covenants.
OTHER DISCLOSURES
Related Party Transactions
In the ordinary course of business, we may enter into transactions with entities whose directors or trustees are also RioCan
trustees and/or part of RioCan's senior management. All such transactions are in the normal course of operations and are
measured at market-based exchange amounts.
RioCan's related parties include the following persons and/or entities:
•
Associates, joint ventures, or entities which are controlled or significantly influenced by the Trust; and
•
Key management personnel including the Trustees and those persons having the authority and responsibility for planning,
directing and controlling the activities of RioCan, directly or indirectly.
Activity and transactions with associates and joint ventures are disclosed in Note 4 of the 2024 Annual Consolidated Financial
Statements and Asset Profile - Joint Arrangements section of this MD&A.
As at December 31, 2024 and 2023, the Trust’s key management personnel include each of the Trustees and the following
officers: President and Chief Executive Officer, Chief Financial Officer, Chief Investment Officer and Chief Operating Officer.
Effective February 1, 2024, Mr. Guy Metcalfe was appointed to RioCan’s Board as a Trustee.
Remuneration of the Trust’s Trustees and Key Executives during the three months and years ended December 31, 2024 and
2023 are as follows:
Trustees
Key Executives
Trustees
Key Executives
(thousands of dollars)
2024
2023
2024
2023 (i)
2024
2023
2024
2023 (i)
Compensation and benefits
$
107 $
107 $
1,261 $
1,260 $
429 $
429 $
5,186 $
5,119
Unit-based compensation
348
328
1,083
1,205
2,503
2,239
3,903
4,626
Post-employment benefit costs
—
—
59
56
—
—
228
216
$
455 $
435 $
2,403 $
2,521 $
2,932 $
2,668 $
9,317 $
9,961
Three months ended December 31
Years ended December 31
(i)
The comparatives for unit-based compensation and post-employment benefit costs for three months and year ended December 31, 2023 have
been restated.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
65 RioCan Annual Report 2024
Selected Quarterly Results and Trend Analysis
(millions of dollars, except where otherwise noted)
2024
2023
As at and for the quarter ended (i)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Revenue
$
358
$
286
$
292
$
303
$
297
$
271
$
276
$
280
Net income (loss) attributable to Unitholders
$
126
$
97
$
122
$
129
$
(118)
$
(74)
$
112
$
118
NOI (ii)
$
184
$
179
$
179
$
170
$
176
$
175
$
175
$
170
FFO (ii)
$
134
$
138
$
128
$
136
$
133
$
135
$
132
$
131
FFO Adjusted (ii)
$
142
$
137
$
128
$
137
$
133
$
136
$
132
$
132
AFFO (ii)
$
113
$
118
$
109
$
116
$
114
$
117
$
114
$
114
AFFO Adjusted (ii)
$
121
$
118
$
109
$
116
$
114
$
118
$
114
$
115
Unitholder distributions
$
83
$
83
$
83
$
83
$
81
$
81
$
81
$
80
Weighted average Units outstanding – diluted
(in thousands)
300,524
300,486
300,463
300,469
300,417
300,471
300,500
300,547
Per unit basis (diluted)
Net income (loss) attributable to Unitholders
$
0.42
$
0.32
$
0.41
$
0.43
$ (0.39)
$ (0.24)
$
0.37
$
0.39
FFO (ii)
$
0.45
$
0.46
$
0.43
$
0.45
$
0.44
$
0.45
$
0.44
$
0.44
FFO Adjusted (ii)
$
0.47
$
0.46
$
0.43
$
0.45
$
0.44
$
0.45
$
0.44
$
0.44
Unitholder distributions
$ 0.2775
$ 0.2775
$ 0.2775
$ 0.2750
$ 0.2700
$ 0.2700
$ 0.2700
$ 0.2650
Net book value per unit
$ 25.16
$ 25.01
$ 25.02
$ 24.89
$ 24.76
$ 25.49
$ 26.00
$ 25.83
Closing market price per unit
$ 18.28
$ 20.38
$ 16.81
$ 18.47
$ 18.62
$ 18.07
$ 19.28
$ 20.39
Key Performance Indicator Ratios
FFO Payout Ratio (ii)
61.9%
61.7%
61.5%
60.7%
60.5%
60.4%
59.7%
59.3%
FFO Payout Ratio Adjusted (ii)
61.0%
61.7%
61.4%
60.5%
60.3%
60.1%
59.6%
58.8%
AFFO Payout Ratio (ii)
72.8%
72.1%
71.8%
70.6%
70.0%
69.5%
68.3%
67.5%
AFFO Payout Ratio Adjusted (ii)
71.5%
72.1%
71.6%
70.4%
69.7%
69.2%
68.1%
66.9%
Total assets
$ 15,472
$ 15,285
$ 15,223
$ 15,037
$ 14,842
$ 15,086
$ 15,523
$ 15,179
Total debt
$ 7,324
$ 7,192
$ 7,141
$ 6,998
$ 6,861
$ 6,889
$ 7,087
$ 6,816
Adjusted Debt to Adjusted EBITDA (RioCan's
Proportionate Share) (ii)
8.98
9.11
9.18
9.17
9.28
9.45
9.49
9.48
Other
Total portfolio NLA (in thousands)
32,179
32,516
32,631
32,603
32,586
33,583
33,545
33,498
Number of properties
178
186
187
188
188
192
193
191
Number of employees (iii)
500
543
554
565
568
565
581
570
Residency of Unitholders (iv)
– Canadian
68.9%
70.2%
69.2%
67.9%
68.4%
67.3%
68.3%
65.0%
– Non-resident
31.1%
29.8%
30.8%
32.1%
31.6%
32.7%
31.7%
35.0%
(i)
Refer to RioCan’s respective annual and interim MD&As issued for a discussion and analysis relating to those periods.
(ii)
This is a non-GAAP financial measure. Refer to the Non-GAAP Measures section of this MD&A for more information on each non-GAAP financial
measure.
(iii) The number of employees reported excludes individuals working exclusively with the third-party residential rental property managers. As at
December 31, 2024, there are 36 individuals who work exclusively with third-party residential rental property managers.
(iv) Estimates based on Unitholder mailing addresses on record at the end of each reporting period.
Our revenue and operating results are not materially impacted by seasonal factors. However, macroeconomic and market trends
impact the demand for space, occupancy levels, cost of funds and consequently, the Trust's revenue, financial performance and
property valuations.
The Trust's quarterly changes in revenue, FFO, AFFO and net income (loss) were primarily impacted by acquisitions and
dispositions, the timing and magnitude of its residential condominium and townhouse projects closings, the magnitude and pace
of development expenditures, project completions and the cost of debt financing/refinancing.
Net income (loss) was further impacted by the changes in the fair values of investment properties.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 66
Fourth Quarter Unaudited Consolidated Statements of Income (Loss)
(thousands of dollars, except per unit amounts)
Revenue
Rental revenue
$
293,327 $
276,510
Residential inventory sales
59,670
13,789
Property management and other service fees
4,606
6,611
357,603
296,910
Operating costs
Rental operating costs
Recoverable under tenant leases
101,997
94,445
Non-recoverable costs
10,989
7,397
Residential inventory cost of sales
48,644
8,994
161,630
110,836
Operating income
195,973
186,074
Other income (loss)
Interest income
12,301
6,401
Income (loss) from equity-accounted investments
3,977
(7,190)
Fair value gain (loss) on investment properties, net
2,004
(222,921)
Investment and other income
3,782
4,459
22,064
(219,251)
Other expenses
Interest costs, net
66,040
58,940
General and administrative
19,070
15,459
Internal leasing costs
3,262
3,156
Transaction and other costs
4,017
6,945
92,389
84,500
Income (loss) before income taxes
125,648
(117,677)
Current income tax recovery
—
(18)
Net income (loss)
$
125,648 $
(117,659)
Net income (loss)
Unitholders
$
125,648 $
(117,659)
$
125,648 $
(117,659)
Net income (loss) per unit
Basic
$
0.42 $
(0.39)
Diluted
$
0.42 $
(0.39)
Weighted average number of units (in thousands):
Basic
300,469
300,417
Diluted
300,524
300,417
Three months ended December 31
2024
2023
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
67 RioCan Annual Report 2024
Accounting Policies and Estimates
Our material accounting policies are described in Note 2 of RioCan's 2024 Annual Consolidated Financial Statements. The
preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates under different
assumptions and conditions.
Estimation Uncertainty
In the preparation of RioCan’s 2024 Annual Consolidated Financial Statements, the Trust has incorporated the potential impact of
the current macroeconomic environment into its significant estimates and assumptions that affect the reported amounts of its
assets, liabilities, net income and related disclosures using available information as at December 31, 2024. Estimates and
assumptions that are most subject to increased uncertainty caused by the current macroeconomic environment relate to the
valuation of investment properties as more fully discussed in Note 3 of the 2024 Annual Consolidated Financial Statements. Due
to the continuing risks and uncertainties arising from the current macroeconomic environment, actual results may differ from
these estimates and assumptions.
Adoption of New Accounting Standards
Effective January 1, 2024, the Trust adopted the following amended standards as issued by the International Accounting
Standards Board (IASB). As a result, significant accounting policies, estimates and judgments most affected by the adoption of
the new pronouncements have been updated as applicable as indicated in Note 2 of the 2024 Annual Consolidated Financial
Statements and further described below.
Amendments to IAS 1, Presentation of Financial Statements - Classification of Liabilities as Current or Non-current
and Non-current Liabilities with Covenants
In January 2020 and October 2022, the IASB issued amendments to paragraphs 69-76 of IAS 1 to clarify the requirements for
classifying liabilities as current or non-current. The amendments specify that the conditions that exist at the end of a reporting
period are those that will be used to determine if a right to defer settlement of a liability exists. The amendments also clarify the
situations that are considered a settlement of a liability.
If an entity's right to defer settlement of a liability is subject to the entity complying with the required covenants only at a date
subsequent to the reporting period (future covenants), the entity has a right to defer settlement of the liability even if it does not
comply with those covenants at the end of the reporting period. The amendments also clarify that the requirement for the right to
exist at the end of the reporting period applies to covenants that the entity is required to comply with on or before the reporting
date regardless of whether the lender tests for compliance at that date or at a later date.
The amendments are effective January 1, 2024. The amendments are to be applied retrospectively. The amendments had no
impact on the Trust's Consolidated Financial Statements.
Critical Accounting Judgements and Estimates
Our critical accounting judgements and estimates relate to the following areas: fair value, impairment of mortgages and loans
receivable, control, the net realizable value of residential inventory, the determination of the type of lease where we are the lessor,
lease term and income taxes.
Fair Value
Fair value is the amount at which an item could be bought or sold in a current transaction between independent, knowledgeable
and willing parties, as opposed to a forced or liquidation sale, in an arm’s length transaction under no compulsion to act.
Quoted market prices in active markets are the best evidence of fair value and are used as the basis for fair value measurement,
when available. When quoted market prices are not available, estimates of fair value are based on the best information available,
including prices for similar items and the results of other valuation techniques. Valuation techniques used would be consistent
with the objective of measuring fair value.
The techniques used to estimate future cash flows will vary from one situation to another depending on the circumstances
surrounding the asset or liability in question.
The Trust’s consolidated financial statements are affected by the fair value based method of accounting, the most significant
areas of which are as follows:
•
Investment properties are initially measured at cost, including all amounts related to the acquisition and costs associated with
improving and/or extending the life of the asset. Judgement is required in determining whether certain costs represent
additions to the carrying amount of the property, in distinguishing between tenant incentives and capital improvements and
for capitalization of costs to properties under development, when the project commences active development and when it is
substantially complete. The investment properties are subsequently measured at fair value. The determination of fair value of
investment property is based upon, among other things, rental revenue from current leases and reasonable and supportable
assumptions that represent what knowledgeable, willing parties would assume about rental revenue from future leases in
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 68
light of current conditions, less future cash outflows in respect of tenant installation costs, capital expenditures and
investment property operations. The Trust uses the direct capitalization method to fairly value its income producing
properties. Under this valuation method, a capitalization rate is applied to Stabilized NOI to yield a fair value. The Trust uses
an internal valuation process to estimate the fair value of certain properties under development that consist of undeveloped
land on a land value per acre or per buildable square foot basis using the particular attributes of the project with respect to
zoning and pre-development work performed on the site. Where a site is partially developed and meets certain thresholds,
the direct capitalization method is applied to capitalize the pro forma Net Operating Income, stabilized with market
allowances, from which the costs to complete the development are deducted. RioCan has involved third-party appraisers in
its valuation process. For the year ended December 31, 2024, RioCan had 21 properties including 2 land parcels (year
ended December 31, 2023 - 26 properties including 2 land parcels) valued by experienced valuation professionals having the
required qualifications in property appraisals. Going forward, our plan is to select a sample of investment properties
(approximately five each quarter) on a rotational basis for external appraisal. Refer to the Property Valuations section of this
MD&A for further discussion of fair values of investment property.
•
IFRS 9, Financial Instruments (IFRS 9) establishes the standard for recognizing and measuring financial assets, financial
liabilities and non-financial derivatives. All financial instruments are required to be measured at fair value on initial
recognition, except for certain related party transactions. Measurement in subsequent periods depends on the classification
of the financial instrument.
Impairment of mortgages and loans receivable
IFRS 9 requires management to use judgment in determining if the Trust's financial assets are impaired. The Trust's mortgages
and loans receivable are subject to the expected credit loss (ECL) model whereby the Trust estimates on a forward-looking basis
possible default scenarios and considers various factors including macroeconomic information and other external market
indicators, when determining whether a provision is necessary.
Control
When determining whether the Trust should consolidate an investment in an entity, the Trust makes judgments in its assessment
of whether it has control over an entity considering the power to direct the relevant activities of the entity, its exposure or rights to
the variable returns of the entity and its ability to use its power to affect its returns.
Net Realizable Value of Residential Inventory
Residential inventory is stated at the lower of cost and net realizable value. In calculating the net realizable value of residential
inventory and assessing for impairment of condominium sales receivables, the Trust estimates the selling prices based on
prevailing market prices, estimated cost-to-complete and selling costs.
Leases - Classification, RioCan as Lessor
The Trust makes judgments in determining whether certain leases, in particular tenant leases where the Trust is the lessor, are
either operating or finance leases. When RioCan has determined, based on an evaluation of terms and conditions of the lease
arrangements, that the Trust retains all of the significant risks and rewards of ownership of these properties, it accounts for these
arrangements as operating leases.
Leases - Determination of lease term of contracts
The Trust determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised by the lessee, or any periods covered by an option to terminate the
lease, if it is reasonably certain not to be exercised by the lessee, including purchase options. The Trust determines the lease
commencement date as the date on which the underlying asset is made available for use by the lessee, which is based on the
terms of the lease contract, the type and extent of tenant improvements, and, for properties under development, the state of
completion of the property. At commencement date, the Trust determines as lessee or as lessor whether there is reasonable
certainty that options to extend or cancel a lease will be exercised. To perform this analysis, the Trust takes into account the
extension terms of the contract including whether the extension is likely to be below market rent, the cost to cancel a lease and
significant investments made on the property. After the commencement date, the Trust revises the lease term when an extension
or termination option is exercised and it was not previously included in the lease term.
Income Taxes
The Trust uses judgment to interpret income tax rules and regulations and to determine the appropriate rates and amounts in
recording current and deferred income taxes, giving consideration to timing and probability. Actual income taxes could
significantly vary from these estimates as a result of future events, including changes in income tax law or the outcome of reviews
by tax authorities and related appeals. To the extent that the final tax outcome is different from the amounts that were initially
recorded, such difference would impact the income tax provision in the period in which such determination is made.
The recognition of deferred income tax assets and liabilities also requires significant judgment as the recognition is dependent on
RioCan's projection of future taxable profits and income tax rates that are expected to be in effect in the period the asset will be
realized or the liability settled. Any changes to this projection will result in changes in the amount of deferred tax assets and
liabilities on the consolidated balance sheets and the deferred tax expense in the consolidated statements of income.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
69 RioCan Annual Report 2024
Future Changes in Accounting Policies
RioCan monitors the potential changes proposed by the IASB and analyzes the effect that changes in the standards may have on
RioCan’s operations. Standards issued, but not yet effective, up to the date of issuance of the 2024 Annual Consolidated
Financial Statements for the year ended December 31, 2024, are described below. This description is of standards and
interpretations issued, which we reasonably expect to be applicable at a future date. We intend to adopt these standards when
they become effective.
IFRS 18, Presentation and Disclosure in Financial Statements
The IASB has issued IFRS 18, Presentation and Disclosure in Financial Statements, which focuses on updates to the statement
of profit or loss, including specified totals and subtotals. The key new concepts introduced in IFRS 18 relate to:
•
The structure of the statement of profit or loss into one of five categories: operating, investing, financing, income taxes and
discontinued operations, whereof the first three are new;
•
Required disclosures in the financial statements for certain profit or loss performance measures that are reported outside an
entity’s financial statements (that is, management-defined performance measures); and
•
Enhanced principles on aggregation and disaggregation, which apply to the primary financial statements and notes in
general.
In addition, narrow-scope amendments have been made to IAS 7, Statement of Cash Flows, which include changing the starting
point for determining cash flows from operations under the indirect method from ‘profit or loss’ to ‘operating profit or loss’ and
removing the optionality around classification of cash flows from dividends and interest. In addition, there are consequential
amendments to several other standards.
IFRS 18 will replace IAS 1. Many of the other existing principles in IAS 1 are retained, with limited changes. IFRS 18 will not
impact the recognition or measurement of items in the financial statements, but it may change what an entity reports as its
"operating profit or loss". IFRS 18 will apply for reporting periods beginning on or after January 1, 2027 and also applies to
comparative information. Management is currently assessing the impact of this standard.
Controls and Procedures
Disclosure Controls and Procedures (DCP)
Management is responsible for establishing and maintaining a system of disclosure controls and procedures to provide
reasonable assurance that all material information relating to RioCan is gathered and reported to senior management, including
the CEO and CFO, on a timely basis so that appropriate decisions can be made regarding public disclosure.
As required by National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”), the CEO
and CFO have caused the adequacy of the design of, and the effectiveness of the operation of, the disclosure controls and
procedures to be evaluated. Based on that evaluation, the CEO and CFO concluded that the design and operation of the system
of disclosure controls and procedures of RioCan were effective as at December 31, 2024.
Internal Controls over Financial Reporting (ICFR)
Management is also responsible for establishing and maintaining appropriate internal controls over financial reporting to provide
reasonable assurance regarding the reliability of RioCan’s financial reporting and preparation of its consolidated financial
statements for external purposes in accordance with IFRS.
All internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial statement preparation and
presentation and may not prevent or detect misstatements or provide absolute assurance that all control issues, including
instances of fraud, if any, have been detected.
As required by NI 52-109, the CEO and the CFO have caused the adequacy of the design of, and the effectiveness of the
operations of, the internal controls over financial reporting to be evaluated using the framework established in “Internal Control -
Integrated Framework (COSO Framework)” (2013) published by The Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”). Based on that evaluation, the CEO and CFO have concluded that the design and operation of the Trust’s
internal controls over financial reporting were effective as at December 31, 2024.
Changes in ICFR
During the quarter and year ended December 31, 2024, there have been no changes in RioCan’s internal controls over financial
reporting that have materially affected, or are reasonably likely to materially affect, RioCan’s internal controls over financial
reporting.
During the second quarter of 2024, RioCan successfully implemented a new ERP system. The new ERP system is expected to
support efficiencies in our financial processes and data management, leading to better overall business operations. Management
employed adequate controls over the data transfer to ensure completeness and accuracy, and user acceptance testing was
performed to test system functionality before go-live.
In connection with this ERP implementation, we updated our ICFR as necessary to accommodate modifications to our business
processes and accounting procedures. This implementation affected multiple financial reporting functions including general ledger
applications, revenue control, accounts receivable, accounts payable, project accounting, and budgeting. As a result of this ERP
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 70
implementation, certain existing control processes and procedures were revised which resulted in changes to the internal controls
over financial reporting. However, these changes to internal controls over financial reporting do not materially affect, or are
reasonably likely to not materially affect the Trust's internal control over financial reporting.
Canadian REIT Status and Monitoring
RioCan currently qualifies for the REIT Exemption for purposes of the Income Tax Act (Canada). Accordingly, RioCan continues to
be able to flow taxable income through to Unitholders on a tax effective basis. Generally, to qualify for the REIT Exemption,
RioCan's Canadian assets must be comprised primarily of real estate and substantially all of our Canadian source revenues must
be derived from rental revenue, capital gains and fee income from properties in which we have an interest.
RioCan monitors its REIT Exemption status to ensure that we continue to qualify as a Canadian REIT. From time-to-time, the
members of the Board of Trustees, Audit Committee and senior management are updated on RioCan's continued REIT
Exemption qualification, including any significant legislation updates.
Climate-Related Financial Disclosures
Commitment to Climate Change
Climate change poses environmental, social and business risks. RioCan understands that managing climate-related risks and
opportunities is essential to growing responsibly and enhancing enterprise value. In 2021, RioCan established a climate strategy
as a part of our broader ESG program. The strategy guides our approach to integrating climate management across our
organization. Our climate strategy outlines three climate-related objectives as follows:
•
Strengthen resilience and protect assets: Protect our operations, portfolio and developments against the physical effects of
climate change
•
Reduce emissions and advance towards net-zero: Decarbonize operations, portfolio and developments to support transition
to a low-carbon economy
•
Enhance climate governance and disclosure: Create accountability and oversight and ensure strong communication with
stakeholders
Since 2020, we have used the recommendations of the Financial Stability Board’s (FSB) Task Force on Climate-Related Financial
Disclosures (TCFD) to guide us in communicating our approach to addressing climate change-related risks and opportunities. We
also continue to monitor the evolution of mandatory disclosure standards and requirements for public companies, including the
Canadian Sustainability Disclosure Standards (CSDS).
This section provides a summary of our approach to identifying, assessing and managing climate-related risk and opportunities,
unless otherwise noted. For additional details related to our climate strategy, please refer to RioCan’s 2024 ESG report, available
on our website.
Governance
Board Oversight
The Board of Trustees has ultimate oversight of risk management and receives quarterly updates on ESG-related issues
including climate-related risks and opportunities. Seven of 11 Trustees have climate and ESG competencies and skills including
risk management, interpreting regulatory frameworks and overseeing decarbonization.
Oversight of climate-related risks and opportunities also falls under the purview of three Board Committees. The Board of
Trustees has formally delegated the responsibility of overseeing the Trust's climate practices and policies to the Nominating,
Environmental, Social and Governance Committee (NESGC). In 2024, the NESGC received climate-related and ESG updates at
three separate meetings.The Audit Committee oversees reporting, internal controls and climate risk management. The Committee
ensures that management integrates climate and sustainability-related risks and the associated monitoring and mitigation
strategies into RioCan’s enterprise risk management (ERM) processes. Lastly, the People, Culture and Compensation Committee
(PCCC) is primarily concerned with remuneration and incentives, with a specific focus on RioCan’s financial and ESG
performance.
Management
Our President and Chief Executive Officer holds overall senior executive accountability for ESG, risk management and our
climate change strategy. Our SVP, General Counsel, ESG & Corporate Secretary is responsible for reporting on ESG goals, plans
and performance, including those related to our climate objectives of strengthening resilience, reducing emissions and enhancing
governance and disclosures. 20% of RioCan’s Executive Management Bonus Plan (EBMP) payout is weighted toward ESG-
specific goals, including those related to climate.
In 2016, RioCan established an ESG Council to oversee our ESG strategy implementation and drive performance improvements.
The Council is comprised of members of our executive and senior leadership teams from key functional areas of our business.
Council members are responsible for integrating ESG criteria, including climate, into RioCan’s decision making and performance
evaluation.
In 2021, RioCan established a dedicated Climate Committee that reports to the ESG Council and consists of subject matter
experts from different business functions. Chaired by the SVP, General Counsel, ESG & Corporate Secretary, this Committee is
mandated to embed climate considerations within our organizational objectives. The Committee ensures that our priorities, input
and achievement towards both long and short-term climate-related goals are fully aligned.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
71 RioCan Annual Report 2024
Strategy
Per our climate strategy, RioCan strives to manage both physical and transition risks associated with climate change. Physical
risks are described as chronic and acute physical impacts of climate change, including as a result of extreme weather events
such as flooding and storms (acute) or increasing flood potential (chronic). Transition risks are the financial and operational risks
that the business faces as we transition to a low-carbon economy. These risks and opportunities include climate-related policy
actions, technological advancements, and market shifts in demand for products.
In partnership with third-party experts, RioCan conducted climate risk assessments to identify the physical and transition risks
and opportunities aligned with TCFD guidelines. Conducting these risk assessments allowed us to validate our approach to
climate change management, prioritize mitigation actions, and plan for the impacts of transitioning to a net-zero economy.
For further details on this process, please refer to RioCan’s 2023 ESG report.
Risk Management
We action our climate strategy and measure and manage our climate-related risks and opportunities through three types of
processes and actions as follows:
1.
Enterprise Risk Management
2.
Climate Risk Assessments
3.
Strategic Initiatives
Enterprise Risk Management
Management has identified climate change as an external enterprise risk. As a result, we have integrated climate-related risks
into our Enterprise Risk Management (ERM) approach, which considers both physical and transitional climate risks. We regularly
review our ERM approach to identify emerging risks, ensure alignment with organizational objectives, and adapt to regulatory
changes.
Climate Risk Assessments
Per the “Strategy” section above, RioCan completes physical and transition risk assessments to inform our ERM approach,
capital planning and strategic initiatives.
Physical Risk Assessment
In 2022, we completed a risk assessment of potential physical climate change impacts on our properties across Canada. The
assessment examined the portfolio in present day conditions and in likely hypothetical cases for 2030, 2050 and 2070, using
three different Shared Socioeconomic Pathways (“SSPs”):
•
SSP1-2.6 representing a sustainability scenario
•
SSP2-4.5 representing a middle of the road scenario
•
SSP5-8.5 representing a fossil fuel development or worst-case scenario
The assessment evaluated hazards such as flooding, high winds, hailstorms, snow, wildfires, extreme temperatures, rising sea
levels, and tsunamis based on:
•
Exposure: Presence of assets that could be affected by climate hazards
•
Sensitivity: Severity of impact an asset may experience if affected by hazards
•
Adaptive capacity: Asset’s ability to withstand or respond to these hazards
Transition Risk Assessment
In 2022, RioCan conducted an assessment of our transition risks and opportunities. Through a series of workshops, we assessed
short, medium and long-term risks and opportunities under three Network for Greening the Financial System scenarios:
•
Net-zero 2050: Develop more stringent policies now as well as more aggressive actions to meet the Paris Agreement
ambition
•
Delayed transition: Delay climate policies and actions until 2030, and draft stronger policies after that
•
Current policies: Business as usual under current policies
For further details on this process, please refer to RioCan’s 2023 ESG report.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 72
Strategic Initiatives
We advance several strategic initiatives to manage our climate-related risks and achieve the objectives of our climate strategy.
Initiative
Description
Climate strategy objective
Strengthen
resilience
Reduce
emissions
Enhance
governance
and
disclosure
Climate-related risks and
opportunities workshop
Completed workshop and training with the Climate
Committee to review risks and opportunities and identify
key initiatives
✔
✔
✔
Integrated climate-related risk
management considerations
and processes throughout
operations
Development
•
Developed sustainability guidelines to embed
climate-related considerations into design and
construction
Operations
•
Developed environmental criteria for
renovations and capital expenditures
✔
✔
GHG modelling
Developed a GHG modelling tool to forecast portfolio
emissions
✔
Net-zero transition studies
Conducted asset-level studies for select sites to align
capital expenditure planning with decarbonization goals
✔
GHG data management plan
Developed plan to streamline the calculation, quality
assurance, and reporting of operational asset emissions
✔
Science-Based Targets
Initiative (SBTi) validation
Set near-term and long-term emission targets validated
by the SBTi
✔
✔
Climate education
Facilitated educational sessions to enhance
organizational alignment
✔
Industry and stakeholder
engagement
Participated in industry events to identify opportunities
for collaboration in achieving mutual decarbonization
objectives
✔
✔
Metrics and Targets
RioCan tracks key performance indicators related to physical risks, such as total floor area of properties located in 100-year
floodplain zones, and transitional risks, such as Scope 1 and Scope 2 emissions, as well as select Scope 3 emissions. For our
2023 performance, please refer to our 2024 ESG Supplement, available on our website. Our 2024 performance will be disclosed
in our 2025 ESG Supplement.
For further details on our targets, please refer to RioCan's 2024 ESG report.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
73 RioCan Annual Report 2024
NON-GAAP MEASURES
The financial statements of RioCan are prepared in accordance with IFRS. In addition to reported IFRS measures, industry
practice is to evaluate real estate entities giving consideration, in part, to certain non-GAAP financial performance measures
described below. Management believes that these measures are helpful to investors because they are widely recognized
measures of a REIT's performance and provide a relevant basis for comparison among real estate entities. In addition to the
IFRS results, we also use these measures internally to measure the operating performance of our investment property portfolio.
These non-GAAP measures, and related per unit amounts, should not be construed as alternatives to net income or comparable
metrics determined in accordance with IFRS as indicators of RioCan’s performance, liquidity, cash flows and profitability. Non-
GAAP financial measures are not standardized financial measures under IFRS and may not be comparable to similar financial
measures presented by other issuers. These non-GAAP measures are defined below and are cross-referenced, as applicable, to
a reconciliation contained within this MD&A to the most comparable IFRS measure. RioCan believes these non-GAAP financial
measures provide useful information to both management and investors in measuring the financial performance and financial
condition of the Trust for the reasons outlined below.
RioCan's
Proportionate Share
All references to “RioCan's Proportionate Share” refer to a non-GAAP financial
measure representing RioCan’s proportionate interest of the financial condition
and results of operations of its entire portfolio, including equity-accounted
investments.
Management
considers
certain
results
presented
on
a
proportionate share basis to be a meaningful measure because it is consistent
with how RioCan and its partners assess the operating performance of each of
its co-owned and equity-accounted properties. The Trust currently accounts for
its investments in joint ventures and associates using the equity method of
accounting.
The remaining definitions outlined below pertain to measures that are key
metrics that we use to manage capital and to assess our liquidity, borrowing
capacity and cost of capital. Certain measures identified in the definitions that
follow in this section are calculated on the basis of both a RioCan's
Proportionate Share basis and using IFRS reported amounts to convey a more
meaningful measure of financial performance with respect to the periods
reported.
(i) RioCan's
Proportionate Share
RioCan's
Proportionate Share
in Equity-Accounted
Investments Joint
Ventures (EAI JV)
or
RioCan's
Proportionate Share
in EAI JV
All references to “RioCan's Proportionate Share in Equity-Accounted
Investments Joint Ventures” refers to a non-GAAP financial measure
representing RioCan’s proportionate interest of the financial condition and
results of operations of its portfolio, including Equity-Accounted Investments
Joint Ventures (EAI JV). Management considers certain results presented on a
proportionate share basis including EAI JV to be meaningful, because it is
consistent with how RioCan operates and manages its development program.
The Trust currently accounts for its investments in joint ventures using the
equity method of accounting.
Asset Profile-Joint
Arrangements
and
Development
Activities
sections
Non-GAAP
Financial Measure
Description
Quantitative
Reconciliation
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 74
Net Operating Income
(NOI), Stabilized NOI,
and
NOI (RioCan's
Proportionate Share)
NOI is a non-GAAP financial measure and is defined by RioCan as rental
revenue from income producing properties less property operating costs, and
adds sublease rents and straight-line rents classified as finance leases.
NOI at RioCan's Proportionate Share is a non-GAAP financial measure and
includes RioCan’s proportionate interest in NOI of its entire portfolio, including
equity-accounted investments.
Stabilized NOI is a forward-looking non-GAAP financial measure based on
budgeted rents and expenses and is supported by the terms of any existing
lease, other contracts or external evidence such as current market rents for
similar properties, adjusted to incorporate allowances for estimated vacancy
rates, and management fees based on current and expected future market
conditions after expiry of any current lease. The resulting capitalized value is
then adjusted for non-recoverable capital expenditures as well as other costs,
including leasing costs, inherent in achieving and maintaining Stabilized NOI.
For the calculation of NOI, rental revenue includes all amounts earned from
tenants related to lease agreements, including property tax and operating cost
recoveries, to the extent recoverable under tenant leases. Amounts payable by
tenants to terminate their lease prior to the contractual expiry date (lease
cancellation fees) are included in rental revenue for the calculation of NOI.
Management believes that NOI is a useful non-GAAP financial measure of
operating performance of the Trust's income producing properties in addition to
the most comparable IFRS measure, which we believe is operating income.
The IFRS measure of operating income also includes residential inventory gains
and losses and property and asset management fees earned from co-owners.
While
management
considers
its
residential
inventory
and
portfolio
management activities parts of its business operations, and thus operating
income, such revenues are not part of how we evaluate the operating
performance of our income producing properties. As such, we report NOI as a
useful non-GAAP financial measure to report the operating performance of our
income producing properties.
NOI is an important measure of the income generated from the income
producing properties and is used by the Trust in evaluating the performance of
the portfolio, as well as being a key input in determining the value of the income
producing properties portfolio.
(ii) NOI
Same Property NOI
(SPNOI),
Commercial Same
Property NOI
(Commercial SPNOI),
Residential Same
Property NOI
(Residential SPNOI)
Commercial Same
Property NOI
excluding provision
(Commercial SPNOI
excluding provision)
Adjusted Commercial
Same Property NOI
(Adjusted Commercial
SPNOI)
Adjusted Residential
Same Property NOI
(Adjusted Residential
SPNOI)
Same Property NOI is comprised of Commercial Same Property NOI and
Residential Same Property NOI.
Commercial Same Property NOI is a non-GAAP financial measure used by
RioCan to assess the period-over-period performance of the commercial
properties owned and operated by RioCan in both periods. In calculating
Commercial Same Property NOI growth, NOI for the period is adjusted to
remove the impact of lease cancellation fees and straight-line rent revenue in
order to highlight the 'cash impact' of rent-free periods and contractual rent
increases embedded in the underlying lease agreements. Commercial Same
Property NOI also excludes NOI for a limited number of properties undergoing
significant de-leasing in preparation for redevelopment or intensification.
Residential Same Property NOI is a non-GAAP financial measure used by
RioCan to assess the period-over-period performance of the stabilized
residential rental properties owned and operated by RioCan in both periods. A
property is considered to have reached stabilization upon the earlier of (i)
achieving 95% occupancy or (ii) 24 months after first occupancy in both periods.
Commercial Same Property NOI and Residential Same Property NOI are
meaningful
measures
of
operating
performance
because
they
allow
management to assess rent growth and leasing activity of its portfolio on a
same property basis, including the impact of capital investments.
Commercial Same Property NOI excluding provision starts with Commercial
Same Property NOI but adds back (deducts) same property provision for credit
losses (recovery).
Adjusted Commercial Same Property NOI starts with Commercial Same
Property NOI but adds back (deducts) same property provision for credit losses
(recovery) and excludes legal and CAM/property tax settlements.
Adjusted Residential Same Property NOI starts with Residential Same Property
NOI but adds back (deducts) same property provision for credit losses
(recovery) and excludes property tax settlement.
(iii) Same Property
NOI
Non-GAAP
Financial Measure
Description
Quantitative
Reconciliation
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
75 RioCan Annual Report 2024
Funds From
Operations (FFO)
and
FFO Adjusted
FFO is a non-GAAP financial measure of operating performance widely used by
the Canadian real estate industry based on the definition set forth by REALPAC.
It is RioCan's view that IFRS net income does not necessarily provide a
complete measure of RioCan's recurring operating performance. This is
primarily because IFRS net income includes items such as fair value changes of
investment property that are subject to market conditions and capitalization rate
fluctuations, unrealized gains or losses on marketable securities, gains and
losses on the disposal of investment properties, including associated
transaction costs, ERP implementation costs (net of amortization), and also
excludes the principal portion of rent payments and straight-line rent for
subleases classified as finance leases, all of which are not representative of
recurring operating performance.
RioCan’s method of calculating FFO is in compliance with REALPAC’s definition
of FFO except that RioCan excludes unrealized fair value gains or losses on
marketable securities and ERP implementation costs (net of amortization) in its
calculation of FFO. The Trust believes that including such unrealized fair value
gains or losses on marketable securities and ERP implementation costs (net of
amortization) in FFO does not represent the recurring operating performance of
the Trust.
FFO Adjusted starts with FFO but adds back net debt prepayment (gain) costs
and restructuring costs, to normalize FFO. Debt prepayment (gain) costs
include yield maintenance, write-off of deferred financing costs and discounts/
premiums, and related swap settlements that are not related to investment
properties dispositions. Restructuring costs are related to elimination of certain
positions.
RioCan regards FFO as a key measure of operating performance and as a key
measure for determining the level of employee incentive based compensation.
RioCan also uses FFO in assessing its distribution paying capacity.
FFO should not be construed as an alternative to net income or cash flows
provided by or used in operating activities determined in accordance with IFRS.
(iv) FFO
Adjusted Funds From
Operations (AFFO)
and
AFFO Adjusted
AFFO is non-GAAP financial measure of operating performance widely used by
the real estate industry in Canada. AFFO is calculated as FFO less straight-line
rent, normalized capital expenditures and internal leasing costs. RioCan
calculates AFFO in accordance with the recommendations of REALPAC's
January 2022 guidance, except RioCan excludes unrealized fair value gains or
losses on marketable securities and ERP implementation costs (net of
amortization) from FFO and by extension AFFO. Management considers AFFO
a meaningful measure of recurring economic earnings and relevant in
understanding RioCan's ability to service its debt, fund capital expenditures and
determine an appropriate level of sustainable common Unitholder distributions
over the long run.
AFFO Adjusted starts with AFFO but adds back net debt prepayment (gain)
costs and restructuring costs, to normalize AFFO. Debt prepayment (gain) costs
and restructuring costs are described in FFO above.
(v) AFFO
FFO and AFFO
Payout Ratios
and
FFO and AFFO
Payout Ratios
Adjusted
FFO and AFFO Payout Ratios, and FFO and AFFO Payout Ratios Adjusted are
supplementary non-GAAP measures of a REIT's distribution paying capacity.
These payout ratios are computed on a rolling twelve-months basis by dividing
total Unitholder distributions paid (including distributions paid under RioCan's
distribution reinvestment program) by FFO and AFFO and FFO Adjusted and
AFFO Adjusted, respectively, over the same period.
RioCan management uses the FFO Payout Ratio and AFFO Payout Ratio in
assessing its distribution paying capacity.
(iv) FFO and
(v) AFFO
Non-GAAP
Financial Measure
Description
Quantitative
Reconciliation
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 76
Adjusted G&A
Expense
and
Adjusted G&A
Expense as a
percentage of rental
revenue
Adjusted G&A Expense is a non-GAAP financial measure calculated as total
general and administrative expense at RioCan's Proportionate Share less ERP
implementation costs net of ERP amortization costs, and restructuring costs.
Adjusted G&A Expense as a percentage of rental revenue is a non-GAAP ratio
calculated as Adjusted G&A Expense at RioCan's Proportionate Share divided
by rental revenue at RioCan's Proportionate Share. This ratio is a useful
measure of the Trust's ongoing general and administrative expenses as a
percentage of rental revenue.
(vi) Adjusted G&A
Expense
Normalized Capital
Expenditures
Normalized Capital Expenditures are estimate made by management of the
amount of ongoing capital investment required to maintain the condition of the
physical property and current rental revenues. Management considers a
number of factors in estimating Normalized Capital Expenditures relative to the
growth in the age and size of the Trust's property portfolio. Such factors include,
but are not limited to, a portfolio assessment to prioritize assets and the type of
capital expenditures, a review and analysis of historical capital spending,
comparison of each quarter's annualized actual spending activity to the annual
budgeted capital expenditures as approved by our Board of Trustees at the
beginning of each year and management's expectations and/or plans for the
properties. Property capital expenditures that are generally expected to add to
the overall earnings capacity of the property are considered revenue enhancing
capital expenditures by management and are also excluded in determining the
Normalized Capital Expenditures estimate.
RioCan does not obtain support from independent sources for its Normalized
Capital Expenditures but relies on internal diligence and expertise in arriving at
this management estimate. RioCan’s long-tenured management team has
extensive experience in commercial real estate and in-depth knowledge of the
property portfolio. As a result, RioCan believes that management is best suited
to make the assessment of Normalized Capital Expenditures without
independent third-party sources.
Since actual capital expenditures can vary widely from quarter-to-quarter
depending on a number of factors, management believes that Normalized
Capital Expenditures is a more relevant input than actual capital expenditures in
assessing a REIT's distribution payout ratio and for determining an appropriate
level of sustainable distributions over the long run.
For 2024, the Trust determined that $55.0 million was a reasonable estimate for
its Normalized Capital Expenditures. Similar to last year, the Trust's estimate for
Normalized Capital Expenditures for 2025 reflects its pursuit of its strategic
objectives of resilient retail and better serving its tenants. The Trust has
determined that $55.0 million is a reasonable Normalized Capital Expenditures
estimate for 2025, although quarterly fluctuations between the $13.8 million
quarterly Normalized Capital Expenditures spend and actual spend are
expected. Normalized Capital Expenditures does not include estimated capital
expenditures for mixed-use residential projects given that these are newly
constructed buildings.
Asset Profile-Capital
Expenditures on
Income Producing
Properties section
Total joint operations
and equity-accounted
investments - Income
producing properties,
PUD, Residential
inventory, Other, Total
assets, Total NOI
This is a non-GAAP measure which represents the sum of RioCan's interest of
joint operations and proportionate share of equity-accounted investments.
This is a useful measure indicating the amount of Income producing properties,
PUD, Residential inventory, Other, Total assets and Total NOI that are jointly
controlled or where RioCan has significant influence.
Asset Profile-Joint
Arrangements section
Development
Spending
Development Spending is a non-GAAP financial measure defined as the sum of
total development expenditures incurred for various properties under
development and for residential inventory and RioCan's proportionate share of
Development Spending from EAI JVs. Development Spending is disaggregated
into mixed-use projects (typically, the complete or partial redevelopment of a
property that consists of retail, office, residential rental and/or residential
condominiums) and retail in-fill projects projects (typically, add-on pad/building
or repurposing a section of an existing retail property).
Development Spending is a useful measure of development progress and
investment in properties under development and residential inventory.
(vii) Development
Spending
Non-GAAP
Financial Measure
Description
Quantitative
Reconciliation
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
77 RioCan Annual Report 2024
Net Cost Transfer
from PUD to IPP
Net Cost Transfer from PUD to IPP is a non-GAAP financial measure defined as
IFRS cost transfer from PUD to IPP, net of adjustments to cash basis. It
excludes vacant land costs and invested costs on retail redevelopment at date
of transfer. It is also net of proceeds from land sales, applicable interim income
or fee income earned, capitalized interest on invested equity, and fair value on
initial amounts transferred into properties under development.
Net Cost Transfer from PUD to IPP is a useful measure of cash investment in
the development projects.
(viii) Net Cost Transfer
from PUD to IPP
Total Development at
Cost
Total Development at Cost is a non-GAAP financial measure defined as the sum
of the cost of residential inventory and related prepaid selling commissions, and
properties under development, and the cost of RioCan's proportionate share of
residential inventory and related prepaid selling commissions, and properties
under development from EAI JVs.
This metric is a useful measure in determining RioCan's development costs
incurred.
(ix) Total
Development at Cost
Total Acquisitions
Total Acquisitions is a non-GAAP financial measure defined as the sum of total
acquisitions incurred for investment properties, residential inventory and
RioCan's proportionate share of investment property and residential inventory
acquisitions from EAI JVs. Total Acquisitions is a useful measure of RioCan's
total acquisition activity.
(x) Total Acquisitions
Total Contractual
Debt
and
Total Debt (RioCan's
Proportionate Share)
and Total Contractual
Debt (RioCan's
Proportionate Share)
Total Contractual Debt is a non-GAAP financial measure defined as the sum of
contractual obligations (excluding unamortized deferred financing costs and
discounts/premiums) of mortgages payable, lines of credit and other bank loans,
mortgages on properties held for sale and debentures payable.
Total Debt (RioCan's Proportionate Share) and Total Contractual Debt (RioCan's
Proportionate Share) are non-GAAP financial measures that include RioCan’s
proportionate interest in the total debt and Total Contractual Debt of its entire
portfolio, including equity-accounted investments.
These measures are useful in assisting us in monitoring various attributes of
secured/unsecured debt in our debt portfolio.
(xi) Total Debt and
Total Contractual Debt
Adjusted EBITDA
and
Adjusted EBITDA
(RioCan's
Proportionate Share)
Adjusted EBITDA and Adjusted EBITDA (RioCan's Proportionate Share) are
non-GAAP financial measures that are used by management as an input in a
key debt metric that we use in measuring our debt profile and assessing our
ability to service our debt.
Adjusted
EBITDA
(RioCan's
Proportionate
Share)
includes
RioCan’s
proportionate interest in Adjusted EBITDA of its entire portfolio, including equity-
accounted investments.
Adjusted EBITDA and Adjusted EBITDA (RioCan's Proportionate Share) are
used as an alternative to IFRS net income, because they exclude major non-
cash items (including, but not limited to, depreciation and amortization expense,
unit-based compensation costs, fair value gains and losses on investment
properties, the change in unrealized gains and losses on marketable securities),
interest costs, income tax expenses and recoveries, transaction gains and
losses on the disposition of investment properties, transaction costs, ERP
implementation costs and other items that management considers either non-
operating in nature or related to the capital cost of our investment properties,
net debt prepayment costs and restructuring costs, and adds the principal
portion of sublease rents and straight-line rent for subleases classified as
finance leases, such that the rent payment is treated as an operating lease.
(xv) Adjusted EBITDA
and Coverage Ratios
Total Adjusted Debt
Average Total
Adjusted Debt,
Adjusted Debt to
Adjusted EBITDA
and
Adjusted Debt to
Adjusted EBITDA
(RioCan's
Proportionate Share)
Total Adjusted Debt is a non-GAAP measure calculated based on total debt less
cash and cash equivalents.
Adjusted Debt to Adjusted EBITDA and Adjusted Debt to Adjusted EBITDA
(RioCan's Proportionate Share) are both non-GAAP ratios of our financial
leverage calculated on a trailing twelve-months basis and are defined as our
quarterly average Total Adjusted Debt (Average Total Adjusted Debt) divided by
Adjusted EBITDA. In the case of Adjusted Debt to Adjusted EBITDA (RioCan's
Proportionate Share), the numerator and denominator factor in RioCan's entire
portfolio, including equity-accounted investments,
These ratios are useful measures of the Trust's ability to satisfy debt obligations.
(xv) Adjusted EBITDA
and Coverage Ratios
Non-GAAP
Financial Measure
Description
Quantitative
Reconciliation
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 78
Ratio of Floating Rate
Debt to Total Debt
(RioCan's
Proportionate Share)
and
Ratio of Fixed Rate
Debt to Total Debt
(RioCan's
Proportionate Share)
Ratio of Floating Rate Debt to Total Debt (RioCan's Proportionate Share) is a
non-GAAP ratio calculated as RioCan's Proportionate Share in total floating rate
debt of RioCan's entire portfolio, including equity-accounted investments divided
by Total Debt (RioCan's Proportionate Share).
Ratio of Fixed Rate Debt to Total Debt (RioCan's Proportionate Share) is a non-
GAAP ratio calculated as RioCan's Proportionate Share in total fixed rate debt
of RioCan's entire portfolio, including equity-accounted investments divided by
Total Debt (RioCan's Proportionate Share).
These ratios are useful measures of the Trust's relative exposure to fixed and
floating rate debt.
(xii) Floating Rate
Debt and Fixed Rate
Debt
Liquidity
and
Liquidity (RioCan's
Proportionate Share)
Liquidity is a non-GAAP measure calculated based on the sum of total cash and
cash equivalents, undrawn revolving unsecured operating lines of credit and
undrawn construction lines and other bank loans.
Liquidity (RioCan's Proportionate Share) is a non-GAAP measure that includes
RioCan's Proportionate Share in the sum of total cash and cash equivalents,
undrawn revolving unsecured operating lines of credit and undrawn construction
lines and other bank loans of RioCan's entire portfolio, including equity-
accounted investments.
These measures are useful measures of the Trust's cash resources and credit
available under committed credit facilities.
(xiv) Liquidity
Ratio of Unsecured
Debt to Total
Contractual Debt and
Ratio of Secured Debt
to Total Contractual
Debt
and
Ratio of Unsecured
Debt to Total
Contractual Debt
(RioCan's
Proportionate Share)
and Ratio of Secured
Debt to Total
Contractual Debt
(RioCan's
Proportionate Share)
Ratio of Unsecured Debt to Total Contractual Debt is a non-GAAP ratio
calculated as total Unsecured Debt (contractual amount of unsecured debt)
divided by Total Contractual Debt.
Ratio of Secured Debt to Total Contractual Debt is a non-GAAP ratio calculated
as total Secured Debt (contractual amount of secured debt) divided by Total
Contractual Debt.
Ratio of Unsecured Debt to Total Contractual Debt (RioCan's Proportionate
Share) is a non-GAAP ratio calculated as RioCan's Proportionate Share in total
Unsecured Debt of RioCan's entire portfolio, including equity-accounted
investments, divided by Total Contractual Debt (RioCan's Proportionate Share).
Ratio of Secured Debt to Total Contractual Debt (RioCan's Proportionate Share)
is a non-GAAP ratio calculated as RioCan's Proportionate Share in total
Secured Debt of RioCan's entire portfolio, including equity-accounted
investments, divided by Total Contractual Debt (RioCan's Proportionate Share).
These ratios are useful measures of the Trust's relative exposure to secured
and unsecured debt.
(xiii) Unsecured Debt
and Secured Debt
Unencumbered
Assets
Unencumbered Assets is a non-GAAP measure calculated as total investment
properties less encumbered investment properties. Unencumbered Assets are
investment properties that have not been pledged as security for debt.
This ratio is a useful measure of investment properties that can be mortgaged to
increase Liquidity.
(xvi) Unencumbered
Assets
Excess cash flows
provided by operating
activities excluding
non-cash working
capital, net of
distributions declared
This is a non-GAAP measure calculated as total cash flows provided by
operating activities excluding non-cash working capital items less the
distributions declared to Unitholders.
This is a useful measure of the excess cash the Trust has retained after
distributions to fund operations, investments and capital activities.
Distributions to
Unitholders section
Non-GAAP
Financial Measure
Description
Quantitative
Reconciliation
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
79 RioCan Annual Report 2024
Below are quantitative reconciliations for all non-GAAP measures indicated:
(i) RioCan's Proportionate Share
The following table reconciles the consolidated balance sheets from IFRS to RioCan's proportionate share basis as at
December 31, 2024 and 2023:
As at
December 31, 2024
December 31, 2023
(thousands of dollars)
IFRS basis
Equity-
accounted
investments
RioCan's
proportionate
share
IFRS basis
Equity-
accounted
investments
RioCan's
proportionate
share
Assets
Investment properties
$ 13,839,154
$
425,690
$ 14,264,844
$ 13,561,718
$
411,811
$ 13,973,529
Equity-accounted investments
408,588
(408,588)
—
383,883
(383,883)
—
Mortgages and loans receivable
470,729
(5,321)
465,408
289,533
(6,707)
282,826
Residential inventory
284,050
337,920
621,970
217,186
407,946
625,132
Assets held for sale
16,707
—
16,707
19,075
—
19,075
Receivables and other assets
262,573
77,571
340,144
246,652
50,681
297,333
Cash and cash equivalents
190,243
9,890
200,133
124,234
14,506
138,740
Total assets
$ 15,472,044
$
437,162
$ 15,909,206
$ 14,842,281
$
494,354
$ 15,336,635
Liabilities
Debentures payable
$ 4,088,654
$
—
$ 4,088,654
$ 3,240,943
$
—
$ 3,240,943
Mortgages payable
2,851,602
160,701
3,012,303
2,740,924
158,292
2,899,216
Lines of credit and other bank loans
383,658
198,682
582,340
879,246
231,963
1,111,209
Accounts payable and other liabilities
589,792
77,779
667,571
543,398
104,099
647,497
Total liabilities
$ 7,913,706
$
437,162
$ 8,350,868
$ 7,404,511
$
494,354
$ 7,898,865
Equity
Unitholders’ equity
7,558,338
—
7,558,338
7,437,770
—
7,437,770
Total liabilities and equity
$ 15,472,044
$
437,162
$ 15,909,206
$ 14,842,281
$
494,354
$ 15,336,635
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 80
RioCan's Proportionate Share (continued)
The following table reconciles the consolidated balance sheets from IFRS to RioCan's proportionate share basis as at
December 31, 2022:
As at
December 31, 2022
(thousands of dollars)
IFRS basis
Equity-
accounted
investments
RioCan's
proportionate
share
Assets
Investment properties
$ 13,807,740
$
398,701
$ 14,206,441
Equity-accounted investments
364,892
(364,892)
—
Mortgages and loans receivable
269,339
—
269,339
Residential inventory
272,005
214,536
486,541
Assets held for sale
42,140
—
42,140
Receivables and other assets
259,514
37,779
297,293
Cash and cash equivalents
86,229
8,001
94,230
Total assets
$ 15,101,859
$
294,125
$ 15,395,984
Liabilities
Debentures payable
$ 2,942,051
$
—
$ 2,942,051
Mortgages payable
2,659,180
172,100
2,831,280
Lines of credit and other bank loans
1,141,112
89,187
1,230,299
Accounts payable and other liabilities
630,624
32,838
663,462
Total liabilities
$ 7,372,967
$
294,125
$ 7,667,092
Equity
Unitholders’ equity
7,728,892
—
7,728,892
Total liabilities and equity
$ 15,101,859
$
294,125
$ 15,395,984
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
81 RioCan Annual Report 2024
RioCan's Proportionate Share (continued)
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, 2024 and December 31, 2023 and year 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
Revenue
Rental revenue
$
293,327 $
8,231 $
301,558 $
276,510 $
8,124 $
284,634
Residential inventory sales
59,670
18,902
78,572
13,789
11,365
25,154
Property management and other service fees
4,606
(375)
4,231
6,611
—
6,611
357,603
26,758
384,361
296,910
19,489
316,399
Operating costs
Rental operating costs
Recoverable under tenant leases
101,997
923
102,920
94,445
881
95,326
Non-recoverable costs
10,989
693
11,682
7,397
605
8,002
Residential inventory cost of sales
48,644
16,764
65,408
8,994
9,117
18,111
161,630
18,380
180,010
110,836
10,603
121,439
Operating income
195,973
8,378
204,351
186,074
8,886
194,960
Other income (loss)
Interest income
12,301
568
12,869
6,401
618
7,019
Income (loss) from equity-accounted
investments
3,977
(3,977)
—
(7,190)
7,190
—
Fair value gain (loss) on investment
properties, net
2,004
(1,855)
149
(222,921)
(13,506)
(236,427)
Investment and other income (loss), net
3,782
(282)
3,500
4,459
(25)
4,434
22,064
(5,546)
16,518
(219,251)
(5,723)
(224,974)
Other expenses
Interest costs, net
66,040
2,723
68,763
58,940
3,108
62,048
General and administrative
19,070
37
19,107
15,459
23
15,482
Internal leasing costs
3,262
—
3,262
3,156
—
3,156
Transaction and other costs
4,017
72
4,089
6,945
32
6,977
92,389
2,832
95,221
84,500
3,163
87,663
Income (loss) before income taxes
$
125,648 $
— $
125,648 $ (117,677) $
— $
(117,677)
Current income tax recovery
—
—
—
(18)
—
(18)
Net income (loss)
$
125,648 $
— $
125,648 $ (117,659) $
— $
(117,659)
Three months ended December 31, 2024 Three months ended December 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 82
RioCan's Proportionate Share (continued)
(thousands of dollars)
IFRS basis
Equity-
accounted
investments
RioCan's
proportionate
share
IFRS basis
Equity-
accounted
investments
RioCan's
proportionate
share
Revenue
Rental revenue
$ 1,137,127 $
32,672 $
1,169,799 $ 1,091,105 $
33,609 $
1,124,714
Residential inventory sales
84,483
166,952
251,435
13,789
63,222
77,011
Property management and other service fees
17,916
(1,320)
16,596
18,977
—
18,977
1,239,526
198,304
1,437,830
1,123,871
96,831
1,220,702
Operating costs
Rental operating costs
Recoverable under tenant leases
397,042
3,453
400,495
374,149
3,549
377,698
Non-recoverable costs
37,147
2,723
39,870
26,320
2,338
28,658
Residential inventory cost of sales
64,389
137,710
202,099
8,994
49,476
58,470
498,578
143,886
642,464
409,463
55,363
464,826
Operating income
740,948
54,418
795,366
714,408
41,468
755,876
Other income (loss)
Interest income
42,469
2,163
44,632
25,131
2,559
27,690
Income from equity-accounted investments
38,507
(38,507)
—
18,383
(18,383)
—
Fair value loss on investment properties, net
(29,353)
(3,582)
(32,935)
(450,408)
(14,123)
(464,531)
Investment and other (loss) income, net
17,531
(2,769)
14,762
8,501
(339)
8,162
69,154
(42,695)
26,459
(398,393)
(30,286)
(428,679)
Other expenses
Interest costs, net
257,544
11,544
269,088
208,948
11,339
220,287
General and administrative
59,847
86
59,933
60,367
56
60,423
Internal leasing costs
13,293
—
13,293
11,919
—
11,919
Transaction and other costs
6,747
93
6,840
9,344
(213)
9,131
337,431
11,723
349,154
290,578
11,182
301,760
Income before income taxes
$
472,671 $
— $
472,671 $
25,437 $
— $
25,437
Current income tax recovery
(794)
—
(794)
(13,365)
—
(13,365)
Net income
$
473,465 $
— $
473,465 $
38,802 $
— $
38,802
Year ended December 31, 2024
Year ended December 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
83 RioCan Annual Report 2024
RioCan's Proportionate Share (continued)
(thousands of dollars)
IFRS basis
Equity-
accounted
investments
RioCan's
proportionate
share
Revenue
Rental revenue
$ 1,074,192 $
29,221 $
1,103,413
Residential inventory sales
118,659
936
119,595
Property management and other service fees
20,996
—
20,996
1,213,847
30,157
1,244,004
Operating costs
Rental operating costs
Recoverable under tenant leases
376,914
2,889
379,803
Non-recoverable costs
27,955
2,394
30,349
Residential inventory cost of sales
96,286
422
96,708
501,155
5,705
506,860
Operating income
712,692
24,452
737,144
Other income (loss)
Interest income
20,902
2,326
23,228
Income from equity-accounted investments
2,349
(2,349)
—
Fair value gain (loss) on investment
properties, net
(241,128)
(16,208)
(257,336)
Investment and other income (loss)
(1,842)
277
(1,565)
(219,719)
(15,954)
(235,673)
Other expenses
Interest costs, net
180,365
8,242
188,607
General and administrative
54,437
74
54,511
Internal leasing costs
12,204
—
12,204
Transaction and other costs
8,274
182
8,456
255,280
8,498
263,778
Income before income taxes
$
237,693 $
— $
237,693
Current income tax recovery
921
—
921
Net income
$
236,772 $
— $
236,772
Year ended December 31, 2022
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 84
(ii) NOI
The following table reconciles operating income to NOI for the three months ended December 31, 2024 and 2023 and years
ended December 31, 2024, 2023 and 2022:
(thousands of dollars, except where otherwise noted)
Three months ended
December 31
Years ended
December 31
2024
2023
2024
2023
2022
Operating Income
$
195,973 $
186,074 $
740,948 $
714,408 $
712,692
Adjusted for the following:
Property management and other service fees
(4,606)
(6,611)
(17,916)
(18,977)
(20,996)
Residential inventory gains
(11,026)
(4,795)
(20,094)
(4,795)
(22,373)
Operational lease revenue from ROU assets, net (i)
3,889
1,638
9,218
6,717
5,666
NOI
$
184,230 $
176,306 $
712,156 $
697,353 $
674,989
(i) Includes $2.1 million straight-line rent from operational lease revenue from ROU assets for three months and year ended December 31, 2024.
NOI at RioCan's Proportionate Share
The following table reconciles operating income to NOI for equity-accounted investments for the three months ended
December 31, 2024 and 2023 and years ended December 31, 2024, 2023 and 2022:
Three months ended
December 31
Years ended
December 31
(thousands of dollars)
2024
2023
2024
2023
2022
NOI at IFRS basis
$
184,230 $
176,306 $
712,156 $
697,353 $
674,989
Add equity-accounted investments:
Operating Income
8,378 $
8,886
54,418 $
41,468 $
24,452
Adjusted for the following:
Property management and other service fees
375
—
1,320
—
—
Residential inventory gains
(2,138)
(2,248)
(29,242)
(13,746)
(514)
Operational lease expenses from ROU assets, net
(222)
(222)
(888)
(858)
(809)
NOI from equity-accounted investments
$
6,393 $
6,416 $
25,608 $
26,864 $
23,129
NOI at RioCan's proportionate share
$
190,623 $
182,722 $
737,764 $
724,217 $
698,118
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
85 RioCan Annual Report 2024
(iii) Same Property NOI
The following table reconciles Same Property NOI to NOI for the three months and years ended December 31, 2024 and 2023:
Commercial
Commercial Same Property NOI
$
150,744 $
147,307 $
588,278 $
581,360
NOI from income producing properties:
Acquired (i)
903
69
5,060
1,780
Disposed (i)
1,726
5,504
8,382
27,250
2,629
5,573
13,442
29,030
NOI from completed commercial developments
10,916
9,033
42,739
31,380
NOI from properties under de-leasing (ii)
5,415
5,239
20,297
22,955
Lease cancellation fees
1,591
70
4,817
5,253
Straight-line rent adjustment (iv)
5,226
2,638
13,359
5,898
NOI from commercial properties
176,521
169,860
682,932
675,876
Residential
Residential Same Property NOI
5,362
5,426
18,008
17,139
NOI from income producing properties:
Acquired (i)
500
—
3,733
1,063
Disposed (i)
73
145
547
695
573
145
4,280
1,758
NOI from completed residential developments
1,774
875
6,936
2,580
NOI from residential rental
7,709
6,446
29,224
21,477
NOI (iii)
$
184,230 $
176,306 $
712,156 $
697,353
Three months ended
December 31
Years ended
December 31
(thousands of dollars)
2024
2023
2024
2023
(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.
(iii) Refer to (ii) NOI in this Non-GAAP Measures section of this MD&A for reconciliation from NOI to operating income.
(iv) Includes $2.1 million straight-line rent from operational lease revenue from ROU assets for three months and year ended December 31, 2024.
Three months ended
December 31
Years ended
December 31
(thousands of dollars)
2024
2023
2024
2023
Commercial Same Property NOI
$
150,744 $
147,307 $
588,278 $
581,360
Residential Same Property NOI
5,362
5,426
18,008
17,139
Same Property NOI
$
156,106 $
152,733 $
606,286 $
598,499
Adjusted Commercial Same Property NOI
Three months ended
December 31
Years ended
December 31
(thousands of dollars)
2024
2023
2024
2023
Commercial Same Property NOI
$
150,744 $
147,307 $
588,278 $
581,360
Add (exclude):
Same property provision for (recovery of) for credit losses
884
(837)
147
(5,344)
Commercial Same Property NOI excluding provision
$
151,628 $
146,470 $
588,425 $
576,016
Exclude:
Legal and CAM/property tax settlements
(1,758)
(1,141)
(7,063)
(5,656)
Adjusted Commercial Same Property NOI
$
149,870 $
145,329 $
581,362 $
570,360
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 86
Adjusted Residential Same Property NOI
Three months ended
December 31
Years ended
December 31
(thousands of dollars)
2024
2023
2024
2023
Residential Same Property NOI
$
5,362 $
5,426 $
18,008 $
17,139
Add (exclude):
Same property provision for (recovery of) for credit losses
105
8
133
50
Residential Same Property NOI excluding provision
$
5,467 $
5,434 $
18,141 $
17,189
Exclude:
Property tax settlements
—
(174)
(299)
(165)
Adjusted Residential Same Property NOI
$
5,467 $
5,260 $
17,842 $
17,024
(iv) FFO
The following table reconciles net income (loss) attributable to Unitholders to FFO for the three months and years ended
December 31, 2024 and 2023:
(thousands of dollars, except where otherwise noted)
2024
2023
2024
2023
Net income (loss) attributable to Unitholders
$
125,648 $
(117,659) $
473,465 $
38,802
Add back (deduct):
Fair value (gains) losses, net
(2,004)
222,921
29,353
450,408
Fair value losses included in equity-accounted investments
1,855
13,506
3,584
14,124
Internal leasing costs
3,262
3,156
13,293
11,919
Transaction (gains) losses on investment properties, net (i)
(1,345)
1,147
534
1,182
Transaction gains on equity-accounted investments
—
(14)
(52)
(83)
Transaction costs on sale of investment properties
2,435
5,094
3,666
5,601
ERP implementation costs
—
3,503
5,368
12,032
ERP amortization
(484)
—
(1,302)
—
Change in unrealized fair value on marketable securities
—
(1,846)
(4,648)
865
Current income tax recovery
—
(18)
(794)
(13,365)
Operational lease revenue from ROU assets
3,534
1,283
7,814
5,116
Operational lease expenses from ROU assets in equity-accounted
investments
(18)
(16)
(69)
(55)
Capitalized interest related to equity-accounted investments(ii):
Capitalized interest related to properties under development
110
134
426
219
Capitalized interest related to residential inventory
1,386
1,699
5,333
4,516
FFO
$
134,379 $
132,890 $
535,971 $
531,281
Add back:
Debt prepayment cost, net
912
—
455
—
Restructuring costs
7,202
24
7,852
1,368
FFO Adjusted
$
142,493 $
132,914 $
544,278 $
532,649
FFO per unit - basic
$
0.45 $
0.44 $
1.78 $
1.77
FFO per unit - diluted
$
0.45 $
0.44 $
1.78 $
1.77
FFO Adjusted per unit - diluted
$
0.47 $
0.44 $
1.81 $
1.77
Weighted average number of Units - basic (in thousands)
300,469
300,417
300,464
300,392
Weighted average number of Units - diluted (in thousands)
300,524
300,417
300,473
300,479
Three months ended
December 31
Years ended
December 31
(i)
Represents net transaction gains or losses connected to certain investment properties during the period.
(ii)
Refer to table below.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
87 RioCan Annual Report 2024
FFO from equity-accounted investments
The following table reconciles income from equity-accounted investments to FFO from equity-accounted investments for the three
months and years ended December 31, 2024 and 2023:
Three months ended
December 31
Years ended
December 31
(thousands of dollars)
2024
2023
2024
2023
Income from equity-accounted investments
$
3,977 $
(7,190) $
38,507 $
18,383
Fair value losses included in equity-accounted investments
1,855
13,506
3,584
14,124
Transaction gains on equity-accounted investments
—
(14)
(52)
(83)
Operational lease expenses from ROU assets in equity-accounted
investments
(18)
(16)
(69)
(55)
Capitalized interest related to equity-accounted investments (i)
1,496
1,833
5,759
4,735
FFO from equity-accounted investments
$
7,310 $
8,119 $
47,729 $
37,104
(i)
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 development projects under IFRS but is allowed
as an adjustment under REALPAC’s definition of FFO.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 88
Quarterly FFO, FFO Adjusted, FFO Payout Ratio and FFO Payout Ratio Adjusted
The following tables reconcile quarterly net income (loss) attributable to Unitholders to FFO for the years ended December 31,
2024, 2023 and 2022:
(thousands of dollars, except where otherwise
noted)
Q4 2024
Q3 2024
Q2 2024
Q1 2024
Twelve months ended
December 31, 2024
Net income (loss) attributable to Unitholders
$
125,648 $
96,858 $
122,363 $
128,596 $
473,465
Add back (deduct):
Fair value losses (gains), net
(2,004)
40,495
(5,887)
(3,251)
29,353
Fair value losses (gains) included in equity-
accounted investments
1,855
(473)
1,810
392
3,584
Internal leasing costs
3,262
3,346
3,092
3,593
13,293
Transaction (gains) losses on investment
properties, net
(1,345)
422
1,508
(51)
534
Transaction gains on equity-accounted
investments
—
(21)
—
(31)
(52)
Transaction costs on sale of investment
properties
2,435
284
73
874
3,666
ERP implementation costs
—
958
1,874
2,536
5,368
ERP amortization
(484)
(409)
(409)
—
(1,302)
Change in unrealized fair value on marketable
securities
—
(5,908)
142
1,118
(4,648)
Current income tax (recovery) expense
—
—
—
(794)
(794)
Operational lease revenue from ROU assets
3,534
1,508
1,427
1,345
7,814
Operational lease expenses from ROU assets in
equity-accounted investments
(18)
(17)
(17)
(17)
(69)
Capitalized interest related to equity-accounted
investments:
Capitalized interest related to properties under
development
110
67
117
132
426
Capitalized interest related to residential
inventory
1,386
741
1,693
1,513
5,333
FFO
$
134,379 $
137,851 $
127,786 $
135,955 $
535,971
Add (Deduct):
Debt prepayment loss (gain), net
912
(457)
—
—
455
Restructuring costs
7,202
4
—
646
7,852
FFO Adjusted
$
142,493 $
137,398 $
127,786 $
136,601 $
544,278
Distribution paid
$
83,379 $
83,380 $
83,377 $
81,875 $
332,011
FFO for last four quarters
$
535,971 $
534,482 $
532,053 $
535,899
FFO Adjusted for last four quarters
$
544,278 $
534,699 $
533,443 $
537,300
Distributions for last four quarters
$
332,011 $
329,741 $
327,471 $
325,195
FFO Payout Ratio
61.9 %
FFO Payout Ratio Adjusted
61.0 %
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
89 RioCan Annual Report 2024
Quarterly FFO, FFO Adjusted, FFO Payout Ratio and FFO Payout Ratio Adjusted (continued)
(thousands of dollars, except per unit amounts)
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Twelve months ended
December 31, 2023
Net income (loss) attributable to Unitholders
$ (117,659) $
(73,510) $
111,967 $
118,004 $
38,802
Add back (deduct):
Fair value losses, net
222,921
199,528
10,594
17,365
450,408
Fair value losses (gains) included in equity-
accounted investments
13,506
167
1,072
(621)
14,124
Internal leasing costs
3,156
3,020
3,018
2,725
11,919
Transaction losses (gains) on investment
properties, net
1,147
(77)
176
(64)
1,182
Transaction (gains) losses on equity-accounted
investments
(14)
(69)
—
—
(83)
Transaction costs (recoveries) on sale of
investment properties
5,094
(4)
344
167
5,601
ERP implementation costs
3,503
2,121
2,454
3,954
12,032
Change in unrealized fair value on marketable
securities
(1,846)
1,898
(173)
986
865
Current income tax (recovery) expense
(18)
20
31
(13,398)
(13,365)
Operational lease revenue from ROU assets
1,283
1,283
1,196
1,354
5,116
Operational lease expenses from ROU assets in
equity-accounted investments
(16)
(14)
(13)
(12)
(55)
Capitalized interest related to equity-accounted
investments:
Capitalized interest related to properties under
development
134
31
28
26
219
Capitalized interest related to residential
inventory
1,699
1,028
938
851
4,516
FFO
$
132,890 $
135,422 $
131,632 $
131,337 $
531,281
Add back:
Restructuring costs
24
720
11
613
1,368
FFO Adjusted
$
132,914 $
136,142 $
131,643 $
131,950 $
532,649
Distribution paid
$
81,109 $
81,110 $
81,101 $
78,094 $
321,414
FFO for last four quarters
$
531,281 $
526,034 $
525,415 $
525,440
FFO Adjusted for last four quarters
$
532,649 $
527,888 $
526,549 $
529,733
Distributions for last four quarters
$
321,414 $
317,500 $
313,887 $
311,603
FFO Payout Ratio
60.5 %
FFO Payout Ratio Adjusted
60.3 %
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 90
Quarterly FFO, FFO Adjusted, FFO Payout Ratio and FFO Payout Ratio Adjusted (continued)
(thousands of dollars, except per unit amounts)
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Twelve months ended
December 31, 2022
Net income attributable to Unitholders
$
(4,961) $
3,215 $
78,460 $
160,058 $
236,772
Add back (deduct):
Fair value losses (gains), net
115,507
118,783
42,270
(35,432)
241,128
Fair value losses included in equity-accounted
investments
8,404
3,537
3,476
790
16,207
Internal leasing costs
3,306
3,088
2,825
2,985
12,204
Transaction losses (gains) on investment
properties, net
560
(270)
353
384
1,027
Transaction costs on sale of investment properties
2,652
1,769
713
600
5,734
Change in unrealized fair value on marketable
securities
382
1,999
1,401
—
3,782
Current income tax (recovery) expense
(184)
834
452
(181)
921
Operational lease revenue from ROU assets
1,120
1,035
985
946
4,086
Operational lease (expenses) from ROU assets in
equity-accounted investments
(12)
(12)
(11)
(11)
(46)
Capitalized interest related to equity-accounted
investments:
Capitalized interest related to properties under
development
25
24
20
12
81
Capitalized interest related to residential
inventory
844
801
713
424
2,782
FFO
$
127,643 $
134,803 $
131,657 $
130,575 $
524,678
Add back:
Restructuring costs
$
510 $
— $
3,170 $
609 $
4,289
FFO Adjusted
$
128,153 $
134,803 $
134,827 $
131,184 $
528,967
Distribution paid
$
77,195 $
77,497 $
78,817 $
75,907 $
309,416
FFO Payout Ratio
59.0 %
FFO Payout Ratio Adjusted
58.5 %
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
91 RioCan Annual Report 2024
(v) AFFO
The following table reconciles FFO to AFFO for the three months and years ended December 31, 2024 and 2023:
Three months ended
December 31
Years ended
December 31
(thousands of dollars)
2024
2023
2024
2023
FFO (i)
$
134,379 $
132,890 $
535,971 $
531,281
Add back (deduct):
Straight-line rent
(5,226)
(2,638)
(13,359)
(5,898)
Straight-line rent in equity-accounted investments
(139)
(258)
(776)
(1,180)
Normalized capital expenditures:
Leasing commissions and tenant improvements
(6,500)
(7,075)
(26,000)
(28,300)
Capital expenditures on recoverable from tenants
(6,750)
(5,875)
(27,000)
(23,500)
Capital expenditures not recoverable from tenants
(500)
(800)
(2,000)
(3,200)
Internal leasing costs
(3,262)
(3,156)
(13,293)
(11,919)
Internal leasing costs related to development properties
602
582
2,452
2,199
AFFO
112,604
113,670
455,995
459,483
Add back:
Debt prepayment cost, net
912
—
455
—
Restructuring costs
7,202
24
7,852
1,368
AFFO Adjusted
$
120,718 $
113,694 $
464,302 $
460,851
(i)
Refer to (iv) FFO of this Non-GAAP Measures section of this MD&A for reconciliation from net income to FFO.
Quarterly AFFO, AFFO Payout Ratio and AFFO Payout Ratio Adjusted
The following tables reconcile FFO to AFFO for the years ended December 31, 2024, 2023 and 2022:
(thousands of dollars, except where otherwise noted)
Q4 2024
Q3 2024
Q2 2024
Q1 2024
Twelve months ended
December 31, 2024
FFO (i)
$ 134,379 $ 137,851 $ 127,786 $ 135,955 $
535,971
Add back (deduct):
Straight-line rent
(5,226)
(2,707)
(2,179)
(3,247)
(13,359)
Straight-line rent in equity-accounted investments
(139)
(169)
(235)
(233)
(776)
Normalized capital expenditures:
Leasing commissions and tenant improvements
(6,500)
(6,500)
(6,500)
(6,500)
(26,000)
Capital expenditures on recoverable from tenants
(6,750)
(6,750)
(6,750)
(6,750)
(27,000)
Capital expenditures not recoverable from tenants
(500)
(500)
(500)
(500)
(2,000)
Internal leasing costs
(3,262)
(3,346)
(3,092)
(3,593)
(13,293)
Internal leasing costs related to development
properties
602
617
570
663
2,452
AFFO
$ 112,604 $ 118,496 $ 109,100 $ 115,795 $
455,995
Add (Deduct):
Debt prepayment loss (gain), net
912
(457)
—
—
455
Restructuring costs
7,202
4
—
646
7,852
AFFO Adjusted
$ 120,718 $ 118,043 $ 109,100 $ 116,441 $
464,302
Distributions paid
$
83,379 $
83,380 $
83,377 $
81,875 $
332,011
AFFO last four quarters
$ 455,995 $ 457,061 $ 455,852 $ 460,793
AFFO Adjusted for last four quarters
$ 464,302 $ 457,278 $ 457,242 $ 462,194
Distributions for last four quarters
$ 332,011 $ 329,741 $ 327,471 $ 325,195
AFFO Payout Ratio
72.8 %
AFFO Payout Ratio Adjusted
71.5 %
(i)
Refer to (iv) FFO of this Non-GAAP Measures section of this MD&A for reconciliation from net income to FFO.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 92
Quarterly AFFO, AFFO Payout Ratio and AFFO Payout Ratio Adjusted (continued)
(thousands of dollars, except where otherwise noted)
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Twelve months ended
December 31, 2023
FFO (i)
$ 132,890 $ 135,422 $ 131,632 $ 131,337 $
531,281
Add back (deduct):
Straight-line rent
(2,638)
(1,660)
(1,027)
(573)
(5,898)
Straight-line rent in equity-accounted investments
(258)
(262)
(353)
(307)
(1,180)
Normalized capital expenditures:
Leasing commissions and tenant improvements
(7,075)
(7,075)
(7,075)
(7,075)
(28,300)
Capital expenditures on recoverable from tenants
(5,875)
(5,875)
(5,875)
(5,875)
(23,500)
Capital expenditures not recoverable from tenants
(800)
(800)
(800)
(800)
(3,200)
Internal leasing costs
(3,156)
(3,020)
(3,018)
(2,725)
(11,919)
Internal leasing costs related to development
properties
582
557
557
503
2,199
AFFO
$ 113,670 $ 117,287 $ 114,041 $ 114,485 $
459,483
Add back:
Restructuring costs
24
720
11
613
1,368
AFFO Adjusted
$ 113,694 $ 118,007 $ 114,052 $ 115,098 $
460,851
Distributions paid
$
81,109 $
81,110 $
81,101 $
78,094 $
321,414
AFFO last four quarters
$ 459,483 $ 457,159 $ 459,483 $ 461,530
AFFO Adjusted for last four quarters
$ 460,851 $ 459,013 $ 460,617 $ 465,823
Distributions for last four quarters
$ 321,414 $ 317,500 $ 313,887 $ 311,603
AFFO Payout Ratio
70.0%
AFFO Payout Ratio Adjusted
69.7%
(i)
Refer to (iv) FFO in this Non-GAAP Measures section of this MD&A for reconciliation from net income to FFO.
(thousands of dollars, except where otherwise noted)
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Twelve months ended
December 31, 2022
FFO (i)
$ 127,643 $ 134,803 $ 131,657 $ 130,575 $
524,678
Add back (deduct):
Straight-line rent
(806)
196
(359)
(915)
(1,884)
Straight-line rent in equity-accounted investments
(295)
(370)
(406)
(390)
(1,461)
Normalized capital expenditures:
Leasing commissions and tenant improvements
(5,625)
(5,625)
(5,625)
(5,625)
(22,500)
Capital expenditures on recoverable from tenants
(5,625)
(5,625)
(5,625)
(5,625)
(22,500)
Capital expenditures not recoverable from tenants
(1,250)
(1,250)
(1,250)
(1,250)
(5,000)
Internal leasing costs
(3,306)
(3,088)
(2,825)
(2,985)
(12,204)
Internal leasing costs related to development
properties
610
570
521
551
2,252
AFFO
$ 111,346 $ 119,611 $ 116,088 $ 114,336 $
461,381
Add back:
Restructuring costs
510
—
3,170
609
4,289
AFFO Adjusted
$ 111,856 $ 119,611 $ 119,258 $ 114,945 $
465,670
Distributions paid
$
77,195 $
77,497 $
78,817 $
75,907 $
309,416
AFFO Payout Ratio
67.1 %
AFFO Payout Ratio Adjusted
66.4 %
(i)
Refer to (iv) FFO in this Non-GAAP Measures section of this MD&A for reconciliation from net income to FFO.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
93 RioCan Annual Report 2024
(vi) Adjusted G&A Expense
Adjusted G&A Expense for the three months and years ended December 31, 2024 and 2023 are as follows:
Total G&A expense - IFRS
$
19,070 $
15,459 $
3,611 $
59,847 $
60,367 $
(520)
Add back (deduct):
ERP implementation costs
—
(3,503)
3,503
(5,368)
(12,032)
6,664
ERP amortization
484
—
484
1,302
—
1,302
Restructuring costs
(7,202)
(24)
(7,178)
(7,852)
(1,368)
(6,484)
Adjusted G&A Expense - IFRS
12,352
11,932
420
47,929
46,967
962
Add:
G&A expense from equity- accounted investments
37
23
14
86
56
30
Adjusted G&A Expense - RioCan's proportionate
share
$
12,389 $
11,955 $
434 $
48,015 $
47,023 $
992
Rental revenue - IFRS
293,327
276,510
16,817 1,137,127 1,091,105
46,022
Add:
Rental revenue from equity-accounted investments
8,221
8,109
112
32,626
33,594
(968)
Rental revenue - RioCan's proportionate share
$ 301,548 $ 284,619 $
16,929 $ 1,169,753 $ 1,124,699 $
45,054
Adjusted G&A Expense as a percentage of
rental revenue
4.1%
4.2%
(0.1)%
4.1%
4.2%
(0.1)%
(thousands of dollars, except where otherwise
noted)
Three months ended December 31
Years ended December 31
2024
2023
Change
2024
2023
Change
(vii) Development Spending
Total Development Spending for the three months and years ended December 31, 2024 and 2023 are as follows:
Three months ended
December 31
Years ended
December 31
(thousands of dollars)
2024
2023
2024
2023
Development expenditures on balance sheet:
Properties under development
$
36,459 $
52,267 $
164,658 $
244,260
Residential inventory
34,447
26,875
128,214
127,118
RioCan's share of Development Spending from equity-accounted
joint ventures
14,175
15,223
56,512
28,568
Total Development Spending
$
85,081 $
94,365 $
349,384 $
399,946
Three months ended
December 31
Years ended
December 31
(thousands of dollars)
2024
2023
2024
2023
Mixed-use projects
$
70,261 $
83,271 $
309,440 $
346,956
Retail in-fill projects
14,820
11,094
39,944
52,990
Total Development Spending
$
85,081 $
94,365 $
349,384 $
399,946
(viii) Net Cost Transfer from PUD to IPP
(thousands of dollars)
Year ended December 31,
2024
2023
IFRS cost transfer from PUD to IPP
$
291,500
530,600
Adjustments to cash basis (i)
(46,900)
(63,800)
Net Cost Transfer from PUD to IPP
$
244,600 $
466,800
(i)
Includes vacant land costs, invested costs on retail redevelopment at date of transfer, proceeds from land sales, applicable interim income or fee
income earned, capitalized interest on invested equity, and fair value on initial amounts transferred into properties under development.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 94
(ix) Total Development at Cost
Total Development at Cost as at December 31, 2024 is as follows:
Residential inventory cost to date
PUD cost to date
Total
Residential
inventory
and PUD
cost to
date
IFRS basis
Adjustments
for EAI JV
(ii)
Total
IFRS
basis
Adjustments
for EAI JV
Total
(thousands of dollars)
Cost
Commissions
(i)
Projects under construction
$ 190,576 $
7,056 $
98,809 $ 296,441 $ 218,212 $
10,195 $ 228,407 $
524,848
Shovel ready development
sites
6,280
—
—
6,280
177,366
—
177,366
183,646
Zoning approved
51,160
—
110,296 161,456
207,153
2,399
209,552
371,008
Zoning application
submitted
31,750
1,137
17,062
49,949
73,767
2,223
75,990
125,939
Future developments
4,284
—
—
4,284
80,244
—
80,244
84,528
Development lands &
others
—
—
—
—
86,884
—
86,884
86,884
Total Development at
Cost
$ 284,050 $
8,193 $
226,167 $ 518,410 $ 843,626 $
14,817 $ 858,443 $ 1,376,853
Cumulative fair value gain on properties under development
1,290
(144)
1,146
Total properties under development at fair value
$ 844,916 $
14,673 $ 859,589
(i)
Includes selling commissions that are included in prepaid expenses and other assets.
(ii)
Includes $3.5 million in commissions for EAI JV.
(x) Total Acquisitions
Total Acquisitions for the three months and years ended December 31, 2024 and 2023 are as follows:
Three months ended
December 31
Years ended
December 31
(thousands of dollars)
2024
2023
2024
2023
Income producing properties
$
— $
— $
118,192 $
75,473
Properties under development
—
—
42,539
34,583
Total Acquisitions (i)
$
— $
— $
160,731 $
110,056
(i)
Includes transaction costs.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
95 RioCan Annual Report 2024
(xi) Total Debt and Total Contractual Debt
RioCan uses both debt and equity in its capital structure, which is summarized as follows as at December 31, 2024 and
December 31, 2023:
As at
December 31, 2024
December 31, 2023
(thousands of dollars)
IFRS basis
Equity-
accounted
investments
RioCan's
proportionate
share
IFRS basis
Equity-
accounted
investments
RioCan's
proportionate
share
Debentures payable
$
4,088,654 $
— $
4,088,654 $
3,240,943 $
— $
3,240,943
Mortgages payable
2,851,602
160,701
3,012,303
2,740,924
158,292
2,899,216
Lines of credit and other bank loans
383,658
198,682
582,340
879,246
231,963
1,111,209
Total debt
$
7,323,914 $
359,383 $
7,683,297 $
6,861,113 $
390,255 $
7,251,368
Total equity
7,558,338
—
7,558,338
7,437,770
—
7,437,770
Total capital
$ 14,882,252 $
359,383 $ 15,241,635 $ 14,298,883 $
390,255 $ 14,689,138
As at
December 31, 2024
December 31, 2023
(thousands of dollars)
IFRS basis
Equity-
accounted
investments
RioCan's
proportionate
share
IFRS basis
Equity-
accounted
investments
RioCan's
proportionate
share
Total debt
$
7,323,914 $
359,383 $
7,683,297 $
6,861,113 $
390,255 $
7,251,368
Less:
Unamortized debt financing costs,
premiums and discounts on
origination and debt assumed, and
modifications
(35,490)
(526)
(36,016)
(24,019)
(484)
(24,503)
Total Contractual Debt
$
7,359,404 $
359,909 $
7,719,313 $
6,885,132 $
390,739 $
7,275,871
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 96
(xii) Floating Rate Debt and Fixed Rate Debt
The following table reconciles total fixed rate debt and floating rate debt as at December 31, 2024 and December 31, 2023:
As at
December 31, 2024
December 31, 2023
(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
$
7,177,150 $
172,925 $
7,350,075 $
6,543,106 $
212,554 $
6,755,660
Total floating rate debt
146,764
186,458
333,222
318,007
177,701
495,708
Total debt
$
7,323,914 $
359,383 $
7,683,297 $
6,861,113 $
390,255 $
7,251,368
Ratio of floating rate debt to total
debt
2.0%
4.3%
4.6%
6.8%
(xiii) Unsecured Debt and Secured Debt
The following table reconciles Total Unsecured and Secured Debt to Total Contractual Debt as at December 31, 2024 and
December 31, 2023:
As at
December 31, 2024
December 31, 2023
(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 Unsecured Debt
$
4,300,000 $
— $
4,300,000 $
3,950,000 $
— $
3,950,000
Total Secured Debt
3,059,404
359,909
3,419,313
2,935,132
390,739
3,325,871
Total Contractual Debt
$
7,359,404 $
359,909 $
7,719,313 $
6,885,132 $
390,739 $
7,275,871
Percentage of Total Contractual Debt:
Unsecured Debt
58.4 %
55.7 %
57.4 %
54.3 %
Secured Debt
41.6 %
44.3 %
42.6 %
45.7 %
(xiv) Liquidity
As at December 31, 2024, RioCan had $1.7 billion of Liquidity as summarized in the following table:
As at
December 31, 2024
December 31, 2023
(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 $ 1,250,000 $
— $ 1,250,000
Undrawn construction lines and other bank
loans
146,024
97,892
243,916
385,715
189,563
575,278
Cash and cash equivalents
190,243
9,890
200,133
124,234
14,506
138,740
Liquidity
$ 1,586,267 $
107,782 $ 1,694,049 $ 1,759,949 $
204,069 $ 1,964,018
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
97 RioCan Annual Report 2024
(xv) Adjusted EBITDA and Coverage Ratios
The following table reconciles consolidated net income attributable to Unitholders to Adjusted EBITDA:
Add (deduct) the following items:
Income tax recovery:
Current
(794)
—
(794)
(13,365)
—
(13,365)
Fair value losses on investment properties,
net
29,353
3,582
32,935
450,408
14,123
464,531
Change in unrealized fair value on
marketable securities (i)
(4,648)
—
(4,648)
865
—
865
Internal leasing costs
13,293
—
13,293
11,919
—
11,919
Non-cash unit-based compensation expense
10,385
—
10,385
10,154
—
10,154
Interest costs, net
257,544
11,544
269,088
208,948
11,339
220,287
Debt prepayment loss, net
455
—
455
—
—
—
Restructuring costs
7,852
—
7,852
1,368
—
1,368
ERP implementation costs
5,368
—
5,368
12,032
—
12,032
Depreciation and amortization
1,450
—
1,450
2,632
—
2,632
Transaction losses (gains) on the sale of
investment properties, net (ii)
2
(52)
(50)
1,180
(83)
1,097
Transaction costs on investment properties
3,672
1
3,673
5,606
1
5,607
Operational lease revenue (expenses) from
ROU assets
7,814
(69)
7,745
5,116
(55)
5,061
Adjusted EBITDA
$
805,211 $
15,006 $
820,217 $
735,665 $
25,325 $
760,990
Year ended
December 31, 2024
December 31, 2023
(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
$
473,465 $
— $
473,465 $
38,802 $
— $
38,802
(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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 98
Add (deduct) the following items:
Income tax recovery:
Current
921
—
921
Fair value losses on investment properties, net
241,128
16,208
257,336
Change in unrealized fair value on marketable securities (i)
3,783
—
3,783
Internal leasing costs
12,204
—
12,204
Non-cash unit-based compensation expense
9,056
—
9,056
Interest costs, net
180,365
8,242
188,607
Restructuring costs
4,289
—
4,289
Depreciation and amortization
4,774
—
4,774
Transaction losses on the sale of investment properties,
net (ii)
1,024
—
1,024
Transaction costs on investment properties
5,734
3
5,737
Operational lease revenue (expenses) from ROU assets
4,086
(46)
4,040
Adjusted EBITDA
$
704,136 $
24,407 $
728,543
Year ended
December 31, 2022
(thousands of dollars)
IFRS basis
Equity-
accounted
investments
RioCan's
proportionate
share
Net income attributable to Unitholders
$
236,772 $
— $
236,772
(i)
The fair value gains on marketable securities include both the change in unrealized fair value and realized gains 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 or
losses on the sale of marketable securities in Adjusted EBITDA and excludes unrealized fair value gains (losses) on marketable securities in
Adjusted EBITDA.
(ii)
Includes transaction gains and losses realized on the disposition of investment properties.
Adjusted EBITDA Ratios
Adjusted Debt to Adjusted EBITDA ratio is calculated as follows:
Twelve months ended
As at
December 31, 2024
December 31, 2023
(thousands of dollars, except where
otherwise noted)
IFRS basis
Equity-
accounted
investments
RioCan's
proportionate
share
IFRS basis
Equity-
accounted
investments
RioCan's
proportionat
e share
Adjusted Debt to Adjusted EBITDA
Average total debt outstanding
$ 7,103,232 $
365,916 $ 7,469,148 $ 6,879,087 $
317,231 $ 7,196,318
Less: average cash and cash equivalents
(89,937)
(10,307)
(100,244)
(120,952)
(11,408)
(132,360)
Average Total Adjusted Debt
$ 7,013,295 $
355,609 $ 7,368,904 $ 6,758,135 $
305,823 $ 7,063,958
Adjusted EBITDA
$
805,211 $
15,006 $
820,217 $
735,665 $
25,325 $
760,990
Adjusted Debt to Adjusted EBITDA
8.71
8.98
9.19
9.28
As at twelve months ended
December 31, 2022
(thousands of dollars, except where
otherwise noted)
IFRS basis
Equity-
accounted
investments
RioCan's
proportionat
e share
Adjusted Debt to Adjusted EBITDA
Average total debt outstanding
$ 6,756,628 $
251,888 $ 7,008,516
Less: average cash and cash equivalents
(74,871)
(8,791)
(83,662)
Average Total Adjusted Debt
$ 6,681,757 $
243,097 $ 6,924,854
Adjusted EBITDA
$
704,136 $
24,407 $
728,543
Adjusted Debt to Adjusted EBITDA
9.49
9.51
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
99 RioCan Annual Report 2024
(xvi) Unencumbered Assets
The table below summarizes RioCan's Unencumbered Assets as at December 31, 2024 and December 31, 2023:
As at
December 31, 2024
December 31, 2023
(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
Investment properties
$ 13,839,154 $
425,690 $ 14,264,844 $ 13,561,718 $
411,811 $ 13,973,529
Less: Encumbered investment properties
5,704,034
359,465
6,063,499
5,531,177
352,425
5,883,602
Unencumbered Assets
$ 8,135,120 $
66,225 $
8,201,345 $ 8,030,541 $
59,386 $
8,089,927
Selected Quarterly Non-GAAP measures
NOI
(thousands of dollars)
2024
2023
Three months ended
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Operating Income
$ 195,973 $ 182,873 $ 185,688 $ 176,415 $ 186,074 $ 176,255 $ 178,836 $ 173,243
Adjusted for the following:
Property management and
other service fees
(4,606)
(5,303)
(3,469)
(4,539)
(6,611)
(2,408)
(5,139)
(4,819)
Residential inventory gains
(11,026)
(356)
(5,266)
(3,446)
(4,795)
—
—
—
Operational lease revenue
from ROU assets
3,889
1,850
1,783
1,695
1,638
1,650
1,571
1,858
NOI
$ 184,230 $ 179,064 $ 178,736 $ 170,125 $ 176,306 $ 175,497 $ 175,268 $ 170,282
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 100
Adjusted Debt to Adjusted EBITDA at RioCan's proportionate share
Twelve months ended
2024
2023
(thousands of dollars, except
where otherwise noted)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Net income attributable to Unitholders
$
473,465 $
230,158 $
59,790 $
49,394 $
38,802 $
151,500 $
228,225 $
194,718
Add (deduct) the following items:
Income tax (recovery) expense:
Current
(794)
(812)
(792)
(761)
(13,365)
(13,531)
(12,717)
(12,296)
Fair value losses on investment
properties, net
29,353
254,278
413,311
429,792
450,408
342,994
262,249
293,925
Change in unrealized fair value on
marketable securities
(4,648)
(6,494)
1,312
997
865
3,094
3,195
4,769
Internal leasing costs
13,293
13,187
12,861
12,787
11,919
12,069
12,137
11,944
Non-cash unit-based compensation
expense
10,385
10,085
10,007
10,436
10,154
10,002
9,766
9,269
Interest costs, net
257,544
250,444
236,823
222,404
208,948
198,328
192,897
186,582
Debt prepayment loss (gain), net
455
(457)
—
—
—
—
—
—
Restructuring costs
7,852
674
1,390
1,401
1,368
1,854
1,134
4,293
ERP implementation costs
5,368
8,870
10,034
10,614
12,032
8,530
6,408
3,954
Depreciation and amortization
1,450
1,737
2,057
2,251
2,632
2,712
4,201
4,461
Transaction losses on the sale of
investment properties, net
2
2,654
2,312
1,136
1,180
594
400
576
Transaction costs on investment
properties
3,672
6,331
6,043
6,314
5,606
3,162
4,935
5,305
Operational lease revenue from ROU
assets
7,814
5,563
5,338
5,107
5,116
4,955
4,706
4,494
Adjusted EBITDA - IFRS basis
$
805,211 $
776,218 $
760,486 $
751,872 $
735,665 $
726,263 $
717,536 $
711,994
Add: equity-accounted investments
Fair value losses on investment
properties, net
3,582
15,233
15,874
15,136
14,123
9,023
12,393
14,797
Interest costs, net
11,544
11,929
12,023
11,879
11,339
10,624
9,812
8,895
Transaction gains on equity-accounted
investments
(52)
(65)
(114)
(114)
(83)
(69)
—
—
Transaction costs on investment
properties
1
1
1
—
1
(1)
—
—
Operational lease expenses from ROU
assets
(69)
(67)
(64)
(60)
(55)
(51)
(48)
(47)
Adjusted EBITDA - RioCan's
proportionate share
$
820,217 $
803,249 $
788,206 $
778,713 $
760,990 $
745,789 $
739,693 $
735,639
IFRS basis:
Average total debt outstanding
$ 7,103,232 $ 7,016,318 $ 6,995,346 $ 6,930,252 $ 6,879,087 $ 6,875,311 $ 6,872,987 $ 6,797,665
Less: average cash and cash
equivalents
(89,937)
(60,532)
(103,374)
(112,642)
(120,952)
(106,768)
(112,497)
(78,746)
Average Total Adjusted Debt
$ 7,013,295 $ 6,955,786 $ 6,891,972 $ 6,817,610 $ 6,758,135 $ 6,768,543 $ 6,760,490 $ 6,718,919
Add: equity-accounted investments
Average total debt outstanding
$
365,916 $
369,811 $
358,122 $
337,145 $
317,231 $
292,517 $
268,708 $
263,022
Less: average cash and cash
equivalents
(10,307)
(10,200)
(10,911)
(11,818)
(11,408)
(10,343)
(10,092)
(9,339)
Average Total Adjusted Debt - Equity-
accounted investments
$
355,609 $
359,611 $
347,211 $
325,327 $
305,823 $
282,174 $
258,616 $
253,683
Average Total Adjusted Debt -
RioCan's proportionate share
$ 7,368,904 $ 7,315,397 $ 7,239,183 $ 7,142,937 $ 7,063,958 $ 7,050,717 $ 7,019,106 $ 6,972,602
Adjusted Debt to Adjusted EBITDA -
RioCan's proportionate share
8.98
9.11
9.18
9.17
9.28
9.45
9.49
9.48
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
101 RioCan Annual Report 2024
RISKS AND UNCERTAINTIES
Achieving RioCan’s objectives is, in part, dependent on mitigating identified business risks. Real estate investments are subject to
a degree of risk. They are affected by factors including changes in general economic and local market conditions, equity and
credit markets, fluctuations in interest costs, the attractiveness of the properties to tenants, competition from other available
space, the stability and creditworthiness of tenants, and various other factors.
The rights in RioCan’s Declaration of Trust are granted as contractual rights afforded to Unitholders (rather than as statutory
rights). Similar to other existing rights contained in the Declaration of Trust (i.e. the take-over bid provisions and conflict of interest
provisions), making these rights and remedies and certain procedures available by contract is structurally different from the
manner in which the equivalent rights and remedies or procedures (including the procedure for enforcing such remedies) are
made available to shareholders of a corporation, who benefit from those rights and remedies or procedures by the corporate
statute that governs the corporation, such as the Canada Business Corporations Act (CBCA). As such, there is no certainty how
these rights, remedies or procedures may be treated by the courts in the non-corporate context or that a Unitholder will be able to
enforce the rights and remedies in the manner contemplated by the Declaration of Trust. Furthermore, how the courts will treat
these rights, remedies and procedures will be in the discretion of the court, and the courts may choose to not accept jurisdiction
to consider any claim contemplated in the provisions.
Financial and Liquidity Risk
Interest Rate and Financing Risk
The terms of RioCan's credit agreements require the Trust to comply with a number of customary financial and other covenants,
such as maintaining debt service coverage and leverage ratios, adequate insurance coverage and certain credit ratings. These
covenants may limit our flexibility in conducting our operations and breaches of these covenants could result in defaults under the
instruments governing the applicable indebtedness.
Diversifying funding sources, maintaining a strong liquidity position, and maintaining a well-distributed debt maturity profile
mitigate (re)financing risk. RioCan’s $1.25 billion revolving unsecured line of credit acts as a backstop to refinance maturing debt,
provides financial flexibility to execute the strategic plan, provides a low cost bridge to "permanent" financing, and safeguards
against a liquidity/financial crisis. Limiting floating rate debt exposure and maintaining a well-distributed debt maturity profile also
help to mitigate interest rate risk.
RioCan’s operations are also impacted by interest rates, as interest expense represents a significant cost in the ownership of real
estate investments. Although the Bank of Canada has reduced the overnight lending rate by 200 basis points since June 2024,
interest rates are still subject to significant volatility and an increase in interest rates may result in a significant increase in the
amount paid by the Trust to service debt, which could in turn adversely affect RioCan’s financial condition and results of
operations. Further, in a higher interest rate environment, the cost of acquiring, financing, developing, expanding and renovating
investment property also increases, and together with upward pressure on capitalization rates and decreased investment property
demand, the Trust’s investment property values may decline as a result.
RioCan has proactively employed a variety of financial tactics to protect against fluctuations in interest rates. The Trust seeks to
reduce interest rate risk by staggering the maturities of long-term debt and limiting the use of floating rate debt so as to minimize
exposure to interest rate fluctuations. As at December 31, 2024, 4.3% of our total debt was at floating interest rates on RioCan's
proportionate basis. From time to time, the Trust may enter into floating-for-fixed interest rate swaps as part of its strategy for
managing its exposure to interest rate risk on debt with floating interest rates. The Trust may also enter into bond forward
contracts to hedge its exposure to movements in interest rates from the time it determines it will refinance or issue a fixed rate
debt and the time the fixed rate debt is issued. The intent is to use the bond forwards to manage the change in cash flows of the
future interest payments on the anticipated fixed rate debt. As at December 31, 2024, the carrying value of our floating rate debt,
not subject to a hedging strategy, is $146.8 million. A 50 basis point increase or decrease in interest rates would result in an
annualized increase or decrease in interest expensed or capitalized in aggregate of $0.7 million (December 31, 2023 - $1.6
million).
Trade Tariffs
On February 1, 2025, the U.S. announced new tariffs on imports from Canada, Mexico, and China, leading Canada to declare
counter-tariffs on U.S. goods. However, on February 3, 2025, both countries agreed to delay the tariffs for at least a month. If
imposed, these tariffs could increase prices for imported goods between Canada and the U.S., leading to reduced margins,
higher consumer prices, decreased demand, economic volatility, and potentially lower interest rates from the Bank of Canada,
which also introduces interest rate risk. To manage this volatility, RioCan maintains a balanced fixed/floating debt ratio, uses
derivatives to lock in long-term fixed rates, and ensures it has a well-distributed debt ladder. Ample Liquidity of $1.7 billion and
Unencumbered Assets of $8.2 billion provide additional financial flexibility to the Trust in the current economic environment.
Risks and uncertainties arising from prolonged tariffs include, but are not limited to, economic instability which may negatively
affect certain tenant categories, potentially leading to downward pressure on occupancy and leasing spreads; changing consumer
demands for tenants’ products or services; tenants' ability to pay rent as required under their leases; increased costs related to
the Trust's development projects; and disruptions in domestic and global supply chains. The duration and severity of any tariffs
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 102
could adversely affect global economies, including credit and capital markets, resulting in a short-term or long-term economic
downturn, which could potentially increase the difficulty and cost of accessing capital.
Access to Capital
A risk to the Trust’s growth program and the refinancing of its debt upon maturity is that of not having sufficient debt and equity
capital available to RioCan. Given the relatively small size of the Canadian marketplace, there are a limited number of lenders
from which RioCan can borrow. RioCan’s financial condition and results of operations would be adversely affected if it were
unable to obtain financing or cost-effective financing.
As at December 31, 2024, RioCan’s total debt on a proportionate share basis had a 3.72 year weighted average term to maturity,
bearing interest at a weighted average contractual interest rate of 3.98% per annum.
Credit Ratings
Real or anticipated changes in credit ratings on our debentures or preferred units may affect the market value thereof. In addition,
such changes can affect the cost at which we can access the debenture market, and the credit spreads on unsecured lines of
credit, as applicable.
Lending Activities
RioCan utilizes mezzanine and co-owner financing as a means to diversify income while earning interest at attractive rates.
RioCan is exposed to customary risks through these forms of financing such as business failure or other defaults or non-
performance by a third-party counterparty or business fluctuations. To mitigate against these risks, the loans are either directly or
indirectly secured by real property, and certain loans are full recourse to or guaranteed by the project/property sponsor, thereby
mitigating counterparty risk.
Joint Ventures and Co-ownerships
RioCan participates in joint ventures, partnerships and similar arrangements that may involve risks and uncertainties not present
absent third-party involvement, including, but not limited to, RioCan's dependency on partners, co-tenants or co-venturers that
are not under our control and that might compete with RioCan for opportunities, become bankrupt or otherwise fail to fund their
share of required capital contributions, or suffer reputational damage that could have an adverse impact on the Trust.
Additionally, our partners might at any time have economic or other business interests or goals that are different than or
inconsistent with those of the Trust, and we may be required to take actions that are in the interest of the partners collectively, but
not in RioCan's sole best interests. Accordingly, we may not be able to favourably resolve issues with respect to such decisions,
or we could become engaged in a dispute with any of them that might affect our ability to operate the business or assets in
question. RioCan has proactively employed a variety of contractual provisions to protect against joint venture and co-ownership
risk. The Trust's joint venture arrangements are typically governed by limited partnership agreements and/or shareholders'
agreements. RioCan’s standard joint arrangement contracts provide exit and transfer provisions, including, but not limited to, buy/
sell and/or right-of-first offers or refusals that allow for the unwinding of these joint arrangements should the circumstances
necessitate. In addition, joint arrangement agreements will typically provide RioCan with an option to remedy any
nonperformance by a defaulting co-owner/partner.
Unexpected Costs or Liabilities Related to Acquisitions
A risk associated with a real property acquisition is that there may be an undisclosed or unknown liability concerning the acquired
properties, and RioCan may not be indemnified for some or all of these liabilities. Following an acquisition, RioCan may discover
that it has acquired undisclosed liabilities, which may be material. RioCan conducts what it believes to be an appropriate level of
investigation in connection with its acquisitions and seeks through contract to ensure that risks lie with the appropriate party.
Ownership of Real Estate
Tenant Concentration
In the event tenants experience financial difficulty as a result of the macro-economic environment, or otherwise, and are unable to
fulfill their lease commitments, a given geographical area suffers an economic decline, or changing consumer/retail trends result
in less demand for rental space, we could experience a decline in revenue.
RioCan strives to manage tenant concentration risk through both geographical and revenue source diversification to mitgate
reliance on any single tenant. RioCan’s objective, outlined in its Declaration of Trust noted above, is to ensure that no individual
tenant contributes a significant percentage of its gross revenue and that a considerable portion of our revenue is earned from
national and anchor tenants. RioCan aims to lease to credit worthy tenants, conducts credit assessments for new tenants when
deemed appropriate and generally is provided security by tenants as part of negotiated deals. RioCan seeks to reduce its risks
associated with occupancy levels and lease renewals through staggered lease maturities, negotiating commercial leases with
base terms between five and 10 years, and by negotiating longer-term commercial leases with built-in minimum rent escalations
where deemed appropriate.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
103 RioCan Annual Report 2024
To reduce RioCan’s exposure to the risks relating to credit and the financial stability of tenants, the Declaration of Trust restricts
the amount of space which can be leased to any person and that person’s affiliates, other than in respect of leases with or
guaranteed by the Government of Canada, a province of Canada, a municipality in Canada or any agency thereof and certain
corporations, the securities of which meet stated investment criteria, to a maximum premises or space having an aggregate gross
leasable area of 20% of the aggregate gross leasable area of all real property held by RioCan. As of December 31, 2024,
RioCan was in compliance with this restriction.
It is common practice for a major tenant, such as Canadian Tire or Loblaws/Shoppers Drug Mart, to lease space from other
landlords similar to RioCan in addition to owning real estate either within a controlled publicly traded REIT or within its own
operating entity. Past experience and industry practice indicate that it is the strength of a location rather than the ownership of the
property that influences the business decisions of RioCan’s tenants. Despite this, there may be instances where a tenant may
forgo the competitive advantage of RioCan’s property location to better utilize its own real estate. RioCan does not consider the
collective impact of this risk to be significant.
Tenant Bankruptcies
The majority of RioCan's properties are anchored by large national tenants. The value of some of our properties, including any
improvements thereto, could be adversely affected if these anchor stores or major tenants fail to comply with their contractual
obligations, experience credit or financial instability or cease their operations.
Bankruptcy filings by retailers occur periodically in the course of normal operations for a number of factors, including, but not
limited to, increased competition, internet sales, changing population demographics, poor economic conditions, rising costs and
changing shopping trends and/or perceptions. Confirmed closures represent 0.3% and 1.0% of the total portfolio in 2024 and
2023, respectively, on a total annualized contractual gross rent basis.
Nonetheless, tenant bankruptcies or restructurings remain a risk that RioCan closely manages. RioCan continually seeks to re-
lease vacant spaces resulting from tenant terminations. The bankruptcy of a tenant, particularly an anchor tenant, may make it
more difficult to lease the remainder of the affected properties or may give rise to certain rights under existing leases with other
tenants.
Lease Renewals and Rental Increases
Growth of rental income is dependent on strong leasing markets to ensure expiring leases are renewed and new tenants are
found promptly to fill vacancies at rental rates similar to those paid by existing tenants in order for us to maintain existing
occupancy levels of our properties. It is possible that we may face a disproportionate amount of space expiring in any one period.
Additionally, rental rates could decline, tenant bankruptcies could increase and tenant renewals may not be achieved, particularly
in the event of a protracted disruption in the economy, such as a recession.
As at December 31, 2024, RioCan had a commercial NLA, at its interest, of 30,560,000 square feet of income producing
properties and a portfolio in-place occupancy rate of 97.4%. Based on our current annualized portfolio weighted average
commercial rental revenue of approximately $37.21 per square foot including CAM and tax recoveries, for every fluctuation in
occupancy by a differential of 1%, our operations would be impacted by approximately $11.4 million annually.
RioCan's aggregate net rental revenue from leases expiring over the next five years is $442.8 million based on current
contractual rental rates, excluding CAM and tax recoveries. If the leases associated with these expiring net rents are renewed
upon maturity at an aggregate rental rate differential of 100 basis points, the Trust's net income would be impacted by
approximately $4.4 million annually.
Some of our retail lease agreements include co-tenancy clauses which allow the tenant to pay a reduced rent amount and, in
certain instances, terminate the lease, if RioCan fails to maintain certain occupancy levels or retain certain anchor tenancies. In
addition, certain of our tenants have the ability to terminate their leases prior to the lease expiration date if their sales do not meet
agreed upon thresholds. If occupancy, tenancy or sales fall below certain thresholds, rents that we are entitled to receive from
tenants could be reduced.
Relative Liquidity of Real Property
Real estate investments are relatively illiquid. A large proportion of RioCan's capital is invested in physical assets which can be
difficult to sell, especially if local market conditions are poor. A lack of liquidity could limit our ability to sell components of the
portfolio promptly in response to changing economic or investment conditions. If RioCan were required to quickly liquidate its
assets, there is a risk that we would realize sale proceeds of less than the current book value of our real estate investments.
As well, certain significant expenditures involved in real property investments, such as property taxes, maintenance costs and
mortgage payments, represent obligations that must be met regardless of whether the property is producing sufficient, or any,
revenue.
Regulatory Risk
Any reintroduction of rent control legislation in the future and/or prolonged rent freezes could impact the Trust's existing
residential rental operations and also certain mixed-use development projects' future NOI growth potential. As at January 1, 2025,
the guideline on rent increases for 2025 in Ontario is 2.5%.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 104
Inclusionary zoning is a land-use planning tool in the Province of Ontario which permits municipalities to require new
developments or redevelopments to dedicate or maintain a portion of new residential units as affordable housing. Based on the
City of Toronto’s inclusionary zoning framework, RioCan’s existing lands in the City of Toronto located within identified Protected
Major Transit Station Areas (“PMTSA”) intended for development or re-development will be subject to the City of Toronto’s
inclusionary zoning requirements unless certain factors are satisfied. At this time, the Minister of Municipal Affairs and Housing
has not approved any PMTSAs in the City of Toronto, therefore, inclusionary zoning is not in force in the City of Toronto as of the
date hereof. The financial impact of the new requirements on the originally contemplated development plans remains unknown,
particularly as other municipalities move forward with their own inclusionary zoning frameworks and recent proposed legislative
changes could potentially impose a cap on the number of units required and limit the affordability period for each unit.
Municipalities are in the process of revamping their Planning Act application review process and the City of Toronto continues to
pursue an Official Plan Amendment ("OPA") making zoning compliance a complete application requirement for the filing of Site
Plan Approval ("SPA") applications. The delays related to the filing of complete SPA applications have the potential to impact the
calculation of Development Charges payable in relation to a development, inclusionary zoning transition requirements, and the
application of costly green building application related requirements such as the City of Toronto Green Standards. RioCan has
appealed related Official Plan Amendments made in the City of Toronto, which is currently proceeding through an Ontario Land
Tribunal led mediation.
In addition to removing the planning application refund scheme set out in the Planning Act, the “Cutting Red Tape to Build More
Homes Act, 2024” (Bill 185) which is substantially in force, has made a number of changes to the planning approval process in
Ontario. Certain of these changes may benefit RioCan (including, but not limited to, limiting third party appeals with respect to
planning and zoning applications), but others may be detrimental (including, but not limited to, limiting RioCan’s right to appeal
planning and zoning applications that it may oppose and allowing municipalities to impose a lapsing provision on Site Plans and
Plans of Subdivision if a building permit is not issued within a set period of time that cannot be less than three years).
Development Risk
As discussed in the Our Business and Our Business Environment section of this MD&A, after many years of construction and
housing booms in Canada's major markets, there are a number of emerging factors that are affecting development risks that the
Trust faces. Such factors include, but are not limited to, rising construction costs and development charges, a shortage of
experienced labour in certain construction related trades and fluctuations in interest rates. Macroeconomic uncertainty has
imposed additional risks and uncertainties on development, including, but not limited to, potential development or construction
delays or shutdowns, volatile costs, pace of property lease-up or condominium pre-sales and lower condominium sales prices.
The impact of development risk factors will be further assessed and observed in terms of broader market reactions. These factors
could impact certain of the Trust's mixed-use development projects' future NOI growth potential, and profit margin or development
yield potential. Regarding development charges specifically, the City of Toronto passed a new development charge by-law in
2022 which increased the development charges payable on new residential development by 46%, with the increase phased in
through May of 2024. It should be noted that the cost of development charges continues to rise, particularly in the City of Toronto.
Residential Business Risk
RioCan's mixed-use development projects under construction include residential condominiums and rental apartments. Currently,
85% of the Trust’s condominum units under construction have been pre-sold, with an average deposit of 20%. Purchaser demand
for residential condominiums is cyclical and is affected by changes in general market and economic conditions, such as
consumer confidence, employment levels, availability of financing for home buyers, interest rates, demographic trends, housing
supply and housing demand. As a landlord of rental apartments, RioCan is subject to the risks inherent in the multi-unit residential
rental business, including, but not limited to, fluctuations in occupancy levels, individual credit risk, heightened reputation risk,
tenant privacy concerns, potential changes to rent control regulations, increases in operating costs including the costs of utilities
and the imposition of new taxes or increased property taxes.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
105 RioCan Annual Report 2024
Other Risks
Environmental Matters
Environmental and ecological related policies have become increasingly important in recent years. Under various Federal,
Provincial, and Municipal laws, RioCan, as an owner or operator of real property, could become liable for the costs of removal or
remediation of certain hazardous or toxic substances released on or in its properties or disposed of at other locations. The failure
to remove or remediate such substances, or address such matters through alternative measures prescribed by the governing
authority, may adversely affect RioCan’s ability to sell such real estate or to borrow using such real estate as collateral, and could,
potentially, also result in claims against the Trust. RioCan is not currently aware of any material non-compliance, liability or other
claim in connection with any of its properties, nor is RioCan currently aware of any environmental condition with respect to any
properties that it believes would involve material expenditures by the Trust.
It is our policy to obtain a Phase I environmental audit conducted by a qualified environmental consultant prior to acquiring any
additional property. In addition, where appropriate, tenant leases generally specify that the tenant will conduct its business in
accordance with environmental regulations and be responsible for any liabilities arising out of infractions to such regulations. It is
RioCan’s practice to regularly inspect tenant premises that may be subject to environmental risk. We maintain insurance to cover
a sudden and/or accidental environmental mishap.
Climate Change Risk
Climate change poses environmental, social and business risks. RioCan believes that climate-related risks and opportunities
should be identified, assessed and managed. To that end, RioCan has aligned our climate change strategy and disclosures with
TCFD. For details, refer to the Climate-Related Financial Disclosures section of this MD&A.
Cyber Security Risk
Cyber security continues to be an increasing area of focus as reliance on digital technologies to conduct business operations has
grown significantly. Cyber attacks can include but are not limited to intrusions into operating systems, cyber extortion, social
engineering fraud, theft of personal or other sensitive data and may cause disruptions to normal operations. Such cyber attacks
could compromise the Trust's confidential information as well as that of the Trust's employees, tenants and third parties with
whom the Trust interacts and may result in negative consequences, including remediation costs, loss of revenue, additional
regulatory scrutiny, litigation and reputational damage.
As a result, the Trust has developed a cyber security program focused across a spectrum of preventative protective and detective
measures. These measures include, but are not limited to, active monitoring of security events, security awareness programs for
employees, regular vulnerability testing performed by both internal and external parties, establishing and maintaining a robust
disaster recovery program, implementation of a formal incident response program and enhancing email security. The Trust
continues to evolve its security tactics and defenses in response to emerging threats. The Trust also follows certain protocols
when it engages technology vendors concerning data security and access control.
Litigation
RioCan’s operations are subject to a wide variety of laws and regulations across all of its operating jurisdictions and RioCan faces
risks associated with legal and regulatory changes and litigation. In the normal course of operations, RioCan becomes involved in
various legal actions, including claims relating to personal injury, property damage, property taxes, land rights, and contractual
and other commercial disputes. The final outcome with respect to outstanding, pending or future actions cannot be predicted with
certainty, and the resolution of such actions may have an adverse effect on our financial position or results of operations. RioCan
retains external legal consultants to assist it in remaining current and compliant with legal and regulatory changes and to respond
to litigation.
Uninsured Losses
RioCan carries comprehensive general liability, environmental, fire, flood, extended coverage and rental loss insurance with
policy specifications, limits and deductibles customarily carried for similar properties. There are, however, certain types of risks
(including, but not limited to, environmental contamination or catastrophic events such as war, insurrection, rebellion, revolution,
civil war, usurped power, or action taken by a government authority in hindering, combating or defending against such an event,
nuclear reaction or nuclear radiation or radioactive contamination or acts of terrorism) which are either uninsurable, in whole or in
part, or not insurable on an economically viable basis. Should an uninsured or underinsured loss occur, the Trust could lose its
investment in, and anticipated profits and cash flows from, one or more of its properties, and the Trust would continue to be
obliged to repay any recourse mortgage indebtedness on such properties.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
RioCan Annual Report 2024 106
Key Personnel
RioCan’s executive and other senior officers have a significant role in our success and oversee the execution of RioCan’s
strategy. Our ability to retain our management team or attract suitable replacements should any members of the management
group leave is dependent on, among other things, the competitive nature of the employment market. RioCan has experienced
departures of key professionals in the past and may do so in the future, and we cannot predict the impact that any such
departures will have on its ability to achieve its objectives. The loss of services from key members of the management team or a
limitation in their availability could adversely impact our financial condition and cash flow.
We rely on the services of key personnel on our executive team, including our President and Chief Executive Officer, Jonathan
Gitlin, our Chief Financial Officer, Dennis Blasutti, our Chief Operating Officer, John Ballantyne and our Chief Investment Officer,
Andrew Duncan, and the loss of their services could have an adverse effect on RioCan. We mitigate key personnel risk through
succession planning, but do not maintain key personnel insurance.
Unitholder Liability
There is a risk that RioCan’s Unitholders could become subject to liability. The Trust’s Declaration provides that no Unitholder or
annuitant under a plan of which a Unitholder acts as trustee or carrier will be held to have any personal liability as such, and that
no resort shall be had to the private property of any Unitholder or annuitant for satisfaction of any obligation or claim arising out of
or in connection with any contract or obligation of RioCan. Only RioCan’s assets are intended to be subject to levy or execution.
The Declaration of Trust further provides that, whenever possible, certain written instruments signed by RioCan must contain a
provision to the effect that such obligation will not be binding upon Unitholders personally or upon any annuitant under a plan of
which a Unitholder acts as trustee or carrier. In conducting its affairs, RioCan has acquired and may acquire real property
investments subject to existing contractual obligations, including obligations under mortgages and leases that do not include such
provisions. RioCan will use its best efforts to ensure that provisions disclaiming personal liability are included in contractual
obligations related to properties acquired, and leases entered into, in the future.
Certain provinces have legislation relating to Unitholder liability protection, including British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario and Quebec. To RioCan’s knowledge, certain of these statutes have not yet been judicially considered and it is
possible that reliance on such statutes by a Unitholder could be successfully challenged on jurisdictional or other grounds.
Income Taxes
RioCan currently qualifies as a mutual fund trust and for the REIT Exemption for income tax purposes. RioCan expects to
distribute the Trust’s taxable income to Unitholders such that it will not be subject to tax. From time to time, RioCan may retain
some taxable income and net capital gains in order to utilize the capital gains refund available to mutual fund trusts without
incurring any income taxes. In order to maintain RioCan’s current mutual fund trust status, the Trust is required to comply with
specific restrictions regarding its activities and the investments held by the Trust. If the Trust was to cease to qualify as a mutual
fund trust, or for the REIT Exemption for income tax purposes, the consequences could be material and adverse.
No assurance can be given that the provisions of the Tax Act regarding mutual fund trusts and the REIT Exemption will not be
changed in a manner that adversely affects RioCan and its Unitholders. From year-to-year, there is a risk that the taxable
allocation to Unitholders can change depending upon the Trust’s activities.
RioCan is of the view that the expenses it has claimed by it and its subsidiaries will be reasonable and deductible, that the cost
amount and capital cost allowance claims of the Trust and entities directly or indirectly owned by the Trust will have been correctly
determined, and the calculation of its tax disposition gains will be appropriate. However, there can be no assurance that the Tax
Act, or the interpretation of the Tax Act, will not change, or that the Canada Revenue Agency (the “CRA”) will agree. If the CRA
successfully challenges the deductibility and positions taken or the allocation of such income, RioCan's taxable income, and
indirectly the taxable income of Unitholders, will increase or change.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Introduction
Our Business
and Our
Business
Environment
Environmental,
Social and
Governance
(ESG)
Initiatives
Property
Portfolio
Overview
Results of
Operations
Asset Profile
Development
Activities
Capital
Resources
and Liquidity
Other
Disclosures
Non-GAAP
Measures
Risks and
Uncertainties
107 RioCan Annual Report 2024
Audited Annual Consolidated Financial Statements
for the Years Ended December 31, 2024 and 2023
TABLE OF CONTENTS
Management's Responsibility for Financial Reporting
109
Independent Auditor's Report
110
Consolidated Balance Sheets
113
Consolidated Statements of Income
114
Consolidated Statements of Comprehensive Income
115
Consolidated Statements of Changes in Equity
116
Consolidated Statements of Cash Flows
117
Notes to Consolidated Financial Statements
118
RioCan Annual Report 2024 108
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The management of RioCan Real Estate Investment Trust (the Trust or RioCan) is responsible for the preparation and fair
presentation of the accompanying annual consolidated financial statements and Management's Discussion and Analysis (MD&A).
The annual consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board.
The annual consolidated financial statements and information in the MD&A necessarily include amounts based on best estimates
and judgments by management of the expected effects of current events and transactions with the appropriate consideration
given to materiality. In addition, in preparing this financial information, we must make determinations about the relevancy of
information to be included, and estimates and assumptions that affect the reported information. The MD&A also includes
information regarding the impact of current transactions and events, sources of liquidity and capital resources, operating trends,
risks and uncertainties. Actual results in the future may differ materially from our present assessment of this information because
future events and circumstances may not occur as expected. The annual consolidated financial statements have been properly
prepared within reasonable limits of materiality and in light of information available up to February 18, 2025.
In meeting our responsibility for the integrity and fairness of the annual consolidated financial statements and MD&A, and for the
accounting systems from which they are derived, management has established the necessary internal controls designed to
ensure that our financial records are reliable for preparing consolidated financial statements and other financial information,
transactions are properly authorized and recorded, and assets are safeguarded against unauthorized use or disposition.
As at December 31, 2024, our Chief Executive Officer and Chief Financial Officer evaluated, or caused an evaluation under their
direct supervision, the design and operation of our internal controls over financial reporting (as defined in National Instrument
52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings) and, based on that evaluation, determined that our
internal controls over financial reporting were appropriately designed and operating effectively.
The Board of Trustees oversees management’s responsibility for financial reporting through an Audit Committee, which is
composed entirely of independent trustees. The Audit Committee reviews RioCan’s annual consolidated financial statements and
MD&A with both management and the independent auditor before such statements are approved by the Board of Trustees. Other
key responsibilities of the Audit Committee include selecting RioCan’s independent auditor, reviewing and approving, with the
delegated authority from the Trustees, the annual consolidated financial statements and MD&A, and monitoring RioCan’s existing
systems of internal controls.
Ernst & Young LLP, the independent auditor appointed by the Unitholders of RioCan upon the recommendation of the Board of
Trustees, has examined our 2024 and 2023 annual consolidated financial statements and has expressed their opinion upon the
completion of such examination in the following report to the Unitholders. The auditor has full and free access to, and meets at
least quarterly with, the Audit Committee to discuss their audits and related matters.
(signed) Jonathan Gitlin
(signed) Dennis Blasutti
Jonathan Gitlin
Dennis Blasutti
President & Chief Executive Officer
Chief Financial Officer
Toronto, Canada
February 18, 2025
109 RioCan Annual Report 2024
INDEPENDENT AUDITOR’S REPORT
To the Unitholders of RioCan Real Estate Investment Trust
Opinion
We have audited the consolidated financial statements of RioCan Real Estate Investment Trust and its subsidiaries (the Trust),
which comprise the consolidated balance sheets as at December 31, 2024 and 2023, and the consolidated statements of income,
consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of
cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy
information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Trust as at December 31, 2024 and 2023, and its consolidated financial performance and its consolidated
cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our
report. We are independent of the Trust in accordance with the ethical requirements that are relevant to our audit of the
consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated
financial statements of the current period. These matters were addressed in the context of the audit of the consolidated financial
statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a separate opinion on these matters.
For the matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report, including in relation to this matter. Accordingly, our audit included the performance of procedures
designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results
of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion
on the accompanying consolidated financial statements.
RioCan Annual Report 2024 110
INDEPENDENT AUDITOR’S REPORT (continued)
Key audit matter
How our audit addressed the key audit matter
Valuation of investment properties
The Trust’s investment property portfolio comprises income-
producing properties and properties under development with a
fair value of $13.8B which represents 89% of total assets at
December 31, 2024.
The Trust measures the vast majority of its investment
properties using valuations prepared by an internal valuations
team, consisting of individuals with specialized industry
experience
in
real
estate
valuations.
The
valuation
methodology for these investment properties is primarily
based
on
an
income
approach,
utilizing
the
direct
capitalization method. Properties under development -
undeveloped land is measured using a comparable sales
approach on a land value per acre or a per buildable square
foot basis. Depending on the property asset type and location,
the Trust may also obtain independent third-party valuations
from firms that employ qualified appraisers.
Note 2.8 of the consolidated financial statements describes
the accounting policy for investment properties, and Note 3
describes the valuation method and key valuation inputs.
Note 3 of the consolidated financial statements discloses the
sensitivity of the fair value of investment properties to a
change in capitalization rates and stabilized net operating
income.
The valuation of the Trust’s investment property portfolio is a
key audit matter given the inherently subjective nature of
significant assumptions including capitalization rates, and
stabilized net operating income including occupancy and
rental rate assumptions. These assumptions are influenced by
property-specific characteristics including location, type and
quality of the properties and tenancy agreements.
For properties under development, depending on the
complexity and stage of completion, costs to complete
construction as well as leasing and construction risk, and land
values per acre or buildable square foot, are additional
significant assumptions that impact the final valuation.
With the assistance of our real estate valuation specialists, we
obtained an understanding of the valuation process, evaluated
the appropriateness of the underlying valuation methodology,
and performed the following audit procedures, among others:
We
assessed
the
competence
and
objectivity
of
management’s internal valuations team, and any third-party
appraisers engaged, by considering the qualifications and
expertise of the individuals involved in the preparation and
review of the valuations.
We selected a sample of properties where either the fair value
change from prior year or significant assumptions fell outside
our expectations, based on our understanding of the
geographical real estate market for the specific asset type. For
this sample of investment properties, we evaluated the
significant assumptions by comparison to the expected real
estate market benchmark range for similar assets and
tenancies, in similar locations. We also considered whether
there were any additional asset-specific characteristics that
may impact the significant assumptions utilized and that these
were appropriately considered in the overall assessment of
fair value. We performed a look-back analysis to assess the
accuracy of management’s historical fair value estimates
through comparison to transactions to acquire and dispose of
interests in investment properties completed by the Trust
during the year.
For properties under development, in addition to the
procedures performed above, we compared construction
budgets to actual expenditures and evaluated estimated costs
to complete by comparing to contractual arrangements or
reference to third party data, as applicable, on a sample basis.
We also evaluated whether the capitalization rate used to
value
properties
under
development
considered
the
complexity of the development, stage of completion, and
timing of cashflows.
We evaluated the Trust’s related accounting policies and
disclosures in the consolidated financial statements to assess
appropriateness and conformity with IFRS.
Other information
Management is responsible for the other information. The other information comprises:
•
Management’s Discussion and Analysis
•
The information, other than the consolidated financial statements and our auditor’s report thereon, in the Annual Report
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information, and in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
We obtained Management’s Discussion & Analysis and the Annual Report prior to the date of this auditor’s report. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact in this auditor’s report. We have nothing to report in this regard.
111 RioCan Annual Report 2024
INDEPENDENT AUDITOR’S REPORT (continued)
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Trust’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Trust or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Trust’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally
accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
•
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Trust’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Trust to cease to continue as a
going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
•
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business units within the Trust as a basis for forming an opinion on the consolidated financial statements. We
are responsible for the direction, supervision and review of the work performed for the purposes of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance
in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Mark Vrooman.
Toronto, Canada
February 18, 2025
RioCan Annual Report 2024 112
As at
Note
December 31, 2024
December 31, 2023
Assets
Investment properties
3
$
13,839,154
$
13,561,718
Equity-accounted investments
4
408,588
383,883
Mortgages and loans receivable
6
470,729
289,533
Residential inventory
5
284,050
217,186
Assets held for sale
3
16,707
19,075
Receivables and other assets
7, 8
262,573
246,652
Cash and cash equivalents
190,243
124,234
Total assets
$
15,472,044
$
14,842,281
Liabilities
Debentures payable
10
$
4,088,654
$
3,240,943
Mortgages payable
11
2,851,602
2,740,924
Lines of credit and other bank loans
12
383,658
879,246
Accounts payable and other liabilities
13
589,792
543,398
Total liabilities
$
7,913,706
$
7,404,511
Equity
Unitholders' equity
7,558,338
7,437,770
Total liabilities and equity
$
15,472,044
$
14,842,281
The accompanying notes are an integral part of the consolidated financial statements.
Approved on behalf of the Board of Trustees
(signed) Janice Fukakusa
(signed) Jonathan Gitlin
Janice Fukakusa
Jonathan Gitlin
Chair of the Audit Committee
President and Chief Executive Officer
Trustee
Trustee
RIOCAN REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands of Canadian dollars)
113 RioCan Annual Report 2024
Years ended December 31,
Note
2024
2023
Revenue
Rental revenue
17
$
1,137,127 $
1,091,105
Residential inventory sales
5, 17
84,483
13,789
Property management and other service fees
17
17,916
18,977
1,239,526
1,123,871
Operating costs
Rental operating costs
Recoverable under tenant leases
397,042
374,149
Non-recoverable costs
37,147
26,320
Residential inventory cost of sales
5
64,389
8,994
498,578
409,463
Operating income
740,948
714,408
Other income (loss)
Interest income
19
42,469
25,131
Income from equity-accounted investments
4
38,507
18,383
Fair value loss on investment properties, net
3
(29,353)
(450,408)
Investment and other income, net
18
17,531
8,501
69,154
(398,393)
Other expenses
Interest costs, net
20
257,544
208,948
General and administrative
21
59,847
60,367
Internal leasing costs
13,293
11,919
Transaction and other costs
22
6,747
9,344
337,431
290,578
Income before income taxes
472,671
25,437
Current income tax recovery
(794)
(13,365)
Net income
$
473,465 $
38,802
Net income per unit
Basic
23
$
1.58 $
0.13
Diluted
23
$
1.58 $
0.13
The accompanying notes are an integral part of the consolidated financial statements.
RIOCAN REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of Canadian dollars, except per unit amounts)
RioCan Annual Report 2024 114
Years ended December 31,
Note
2024
2023
Net income
$
473,465 $
38,802
Other comprehensive income (loss)
Items that may be reclassified subsequently to income, net of tax:
Interest rate swap agreements:
Unrealized gain during the year
14, 25
767
8,877
Reclassified during the year to income
14, 25
(9,404)
(22,921)
Bond forward agreement:
Unrealized gain (loss) during the year
14, 25
1,997
(6,338)
Realized (loss) gain during the year
14, 25
(6,354)
16,770
Reclassified during the year to income
14, 25
(8,269)
(7,127)
Other comprehensive (loss) income from equity-accounted investments
4, 14
(769)
132
Item that is not to be reclassified to income, net of tax:
Actuarial gain (loss) on pension plan
14
142
(517)
Other comprehensive loss, net of tax
(21,890)
(11,124)
Comprehensive income, net of tax
$
451,575 $
27,678
The accompanying notes are an integral part of the consolidated financial statements.
RIOCAN REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of Canadian dollars)
115 RioCan Annual Report 2024
Total equity
$
7,728,892
38,802
(11,124)
(9,054)
210
12,968
(322,924)
$
7,437,770
Total equity
$
7,437,770
473,465
(21,890)
(11,957)
251
13,462
(332,763)
$
7,558,338
RIOCAN REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands of Canadian dollars)
Accumulated other
comprehensive
income (loss)
$
62,373
—
(11,124)
—
—
—
—
$
51,249
Accumulated other
comprehensive
income (loss)
$
51,249
—
(21,890)
—
—
—
—
$
29,359
Retained earnings
$
3,054,526
38,802
—
—
—
—
(322,924)
$
2,770,404
Retained earnings
$
2,770,404
473,465
—
—
—
—
(332,763)
$
2,911,106
Contributed surplus
$
55,210
—
—
(12,227)
—
12,968
—
$
55,951
Contributed surplus
$
55,951
—
—
(11,901)
—
13,462
—
$
57,512
The accompanying notes are an integral part of the consolidated financial statements.
Trust Units
$
4,556,783
—
—
3,173
210
—
—
$
4,560,166
Trust Units
$
4,560,166
—
—
(56)
251
—
—
$
4,560,361
Note
14
14
14
14
16
Note
14
14
14
14
16
Balance, December 31, 2022
Changes during the year:
Net income
Other comprehensive loss
Unit-based compensation exercises, net of Units repurchased
for settlement of Unit exercises
Units issued, net of issuance costs
Unit-based compensation awards
Distributions to Unitholders
Balance, December 31, 2023
Balance, December 31, 2023
Changes during the year:
Net income
Other comprehensive loss
Unit-based compensation exercises, net of Units repurchased
for settlement of Unit exercises
Units issued, net of issuance costs
Unit-based compensation awards
Distributions to Unitholders
Balance, December 31, 2024
RioCan Annual Report 2024 116
Years ended December 31,
2024
2023
Operating activities
Net income
$
473,465 $
38,802
Items not affecting cash:
Depreciation and amortization
1,450
2,632
Amortization of straight-line rent
(11,234)
(5,898)
Amortization of bond forward hedge settlement
(8,269)
(7,127)
Amortization of deferred financing charges
5,951
5,161
Unit-based compensation expense
10,385
10,154
Income from equity-accounted investments
(38,507)
(18,383)
Fair value loss on investment properties, net
29,353
450,408
Fair value (gain) loss on marketable securities
(6,645)
761
Transaction losses, net on disposition of investment properties
6
1,334
(Payments for) proceeds from bond forward hedge settlement in hedge reserve
(6,354)
16,770
Adjustments for changes in other working capital items
(71,321)
(109,098)
Cash provided by operating activities
378,280
385,516
Investing activities
Acquisitions of investment properties
(41,642)
(76,005)
Construction expenditures on properties under development
(192,099)
(265,144)
Capital expenditures on income producing properties
(104,839)
(125,854)
Proceeds from sale of investment properties
104,119
286,541
Contributions to equity-accounted investments
(20,077)
(19,828)
Distributions received from equity-accounted investments
13,166
14,141
Proceeds from disposition of equity-accounted investments
29,601
14,601
Advances of mortgages and loans receivable
(210,527)
(84,080)
Repayments of mortgages and loans receivable
43,056
74,617
Purchase of marketable securities
—
(7,173)
Purchase of other investments
(15,665)
(30,000)
Proceeds from other investments
1,020
9,921
Proceeds from sale of marketable securities, net of selling costs
27,294
2,862
Lease payments received from finance lease receivables
5,827
5,256
Cash used in investing activities
(360,766)
(200,145)
Financing activities
Proceeds from mortgage financing, net of issue costs
420,419
212,739
Repayments of mortgage principal
(368,810)
(172,964)
Advances from bank credit lines, net of issue costs
480,995
320,014
Repayment of bank credit lines
(977,521)
(471,139)
Proceeds from issuance of debentures, net of issue costs
1,443,922
796,114
Repayment of unsecured debentures
(600,000)
(500,000)
Distributions paid to Unitholders
(332,011)
(321,414)
Units repurchased for settlement of Unit compensation exercises and proceeds received from issuance
of Units, net of issue costs
(11,706)
(8,844)
Repayment of lease liabilities
(6,793)
(1,872)
Cash provided by (used in) financing activities
48,495
(147,366)
Net change in cash and cash equivalents
66,009
38,005
Cash and cash equivalents, beginning of year
124,234
86,229
Cash and cash equivalents, end of year
$
190,243 $
124,234
Supplemental cash flow information
Note 28
The accompanying notes are an integral part of the consolidated financial statements.
RIOCAN REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of Canadian dollars)
117 RioCan Annual Report 2024
TABLE OF CONTENTS
1.
General Information
119
18.
Investment and Other Income
151
2.
Material Accounting Policy Information
119
19.
Interest Income
151
3.
Investment Properties
129
20.
Interest Costs
151
4.
Equity-accounted Investments
135
21.
General and Administrative
151
5.
Residential Inventory
138
22.
Transaction and Other Costs
152
6.
Mortgages and Loans Receivable
138
23.
Net Income per Unit
152
7.
Receivables and Other Assets
139
24.
Fair Value Measurement
152
8.
Leases
140
25.
Risk Management
153
9.
Income Taxes
142
26.
Capital Management
157
10.
Debentures Payable
142
27.
Subsidiaries
158
11.
Mortgages Payable
144
28.
Supplemental Cash Flow Information
159
12.
Lines of Credit and Other Bank Loans
144
29.
Changes in Other Working Capital Items
160
13.
Accounts Payable and Other Liabilities
145
30.
Related Party Transactions
160
14.
Unitholders' Equity
146
31.
Employee Benefits
160
15.
Unit-based Compensation Plans
147
32.
Segmented Information
161
16.
Distributions to Unitholders
150
33.
Contingencies and Other Commitments
161
17.
Revenue
150
34.
Events after the Balance Sheet Date
162
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED December 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts, except
per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 118
1. GENERAL INFORMATION
RioCan Real Estate Investment Trust and its consolidated subsidiaries (collectively, the Trust or RioCan) own, develop and
operate one of Canada's largest portfolios of retail-focused and mixed-use properties. The parent trust, RioCan Real Estate
Investment Trust, is an unincorporated closed-end trust governed under the laws of the Province of Ontario, Canada, and
constituted pursuant to a Declaration of Trust (Declaration) dated November 30, 1993, as most recently amended and restated on
June 2, 2020. The Trust’s corporate headquarters and registered head office are located at the RioCan Yonge Eglinton Centre,
2300 Yonge Street, Toronto, Ontario, Canada.
RioCan's trust units (Units) are listed on the Toronto Stock Exchange (TSX) under the ticker symbol REI.UN.
These annual audited consolidated financial statements of the Trust as at and for the years ended December 31, 2024 and 2023
were authorized for issue by RioCan's Board of Trustees on February 18, 2025.
2. MATERIAL ACCOUNTING POLICY INFORMATION
The material accounting policies (and any changes thereto) used in the preparation of these consolidated financial statements are
summarized below. These accounting policies have been applied consistently in all material respects in the preparation of these
consolidated financial statements. Any International Financial Reporting Standards (IFRS) issued but not yet effective for the
current accounting year are described in Note 2.25.
2.1 Statement of compliance
RioCan’s consolidated financial statements are prepared in accordance with IFRS as issued by the International Accounting
Standards Board (IASB).
2.2 Basis of presentation
These consolidated financial statements are prepared on a going concern basis using the historical cost method modified to
include the fair value measurement of investment property, including properties held for sale, and certain financial instruments, as
set out in the relevant accounting policies. These consolidated financial statements are presented in Canadian dollars, which is
the functional and presentation currency of the Trust. All dollar amounts discussed herein are in thousands of Canadian dollars,
unless otherwise stated.
The Trust presents its consolidated balance sheets based on the liquidity method, whereby all assets and liabilities are presented
in increasing order of liquidity. RioCan considers this presentation to be more relevant than a classified balance sheet as the Trust
considers its operating cycle to be longer than one year. The notes to the consolidated financial statements distinguish between
current and non-current assets and liabilities. Current assets and liabilities are those expected to be recovered or settled within
one year from the reporting period, and non-current assets and liabilities are those where the recovery or settlement is expected
to be greater than a year from the reporting period. Any IFRS issued but not yet effective up to the date of issuance of these
consolidated financial statements are described in Note 2.25. Certain comparative amounts have been reclassified to conform to
the current year's presentation.
2.3 Significant judgments
The preparation of RioCan's consolidated financial statements requires management to make significant judgments that affect the
carrying amounts of assets and liabilities, and the reported amounts of revenues and expenses. In the process of applying
RioCan's accounting policies, management was required to apply judgment in the areas discussed below.
Control
When determining whether the Trust should consolidate an investment in an entity, the Trust makes judgments in its assessment
of whether it has control over an entity considering the power to direct the relevant activities of the entity, its exposure or rights to
the variable returns of the entity and its ability to use its power to affect its returns.
Investment properties
RioCan's accounting policies relating to investment properties are described in Note 2.8. In applying these policies, judgment is
required in determining whether certain costs represent additions to the carrying amount of the property and in distinguishing
between tenant incentives and capital improvements.
Properties under development and residential inventory
Development costs for properties under development and residential inventory are capitalized during active development in
accordance with the accounting policy in Note 2.8. Management’s judgment is required in determining when a property is in
active development, which generally begins when a development commences and ceases when a development is substantially
completed and the asset can operate in a manner intended by management.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
119 RioCan Annual Report 2024
Impairment of mortgages and loans receivable
IFRS 9 requires management to use judgment in determining if the Trust's financial assets are impaired. The Trust's mortgages
and loans receivable are subject to the expected credit loss (ECL) model whereby the Trust estimates on a forward-looking basis
possible default scenarios and considers various factors including macroeconomic information and other external market
indicators, when determining whether a provision is necessary.
Leases - Classification, RioCan as lessor
The Trust makes judgments in determining whether certain leases, in particular tenant leases where the Trust is the lessor, are
either operating or finance leases. When RioCan has determined, based on an evaluation of terms and conditions of the lease
arrangements, that the Trust retains all of the significant risks and rewards of ownership of these properties, it accounts for these
arrangements as operating leases.
Leases - Determination of lease term of contracts
The Trust determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised by the lessee, or any periods covered by an option to terminate the
lease, if it is reasonably certain not to be exercised by the lessee, including purchase options. The Trust determines the lease
commencement date as the date on which the underlying asset is made available for use by the lessee, which is based on the
terms of the lease contract, the type and extent of tenant improvements, and, for properties under development, the state of
completion of the property. At commencement date, the Trust determines as lessee or as lessor whether there is reasonable
certainty that options to extend or cancel a lease will be exercised. To perform this analysis, the Trust takes into account the
extension terms of the contract including whether the extension is likely to be below market rent, the cost to cancel a lease and
significant investments made on the property. After the commencement date, the Trust revises the lease term when an extension
or termination option is exercised and it was not previously included in the lease term.
Income taxes
The Trust uses judgment to interpret income tax rules and regulations and to determine the appropriate rates and amounts in
recording current and deferred income taxes, giving consideration to timing and probability. Actual income taxes could
significantly vary from these estimates as a result of future events, including changes in income tax law or the outcome of reviews
by tax authorities and related appeals. To the extent that the final tax outcome is different from the amounts that were initially
recorded, such difference would impact the income tax provision in the period in which such determination is made.
The recognition of deferred income tax assets and liabilities also requires significant judgment as the recognition is dependent on
RioCan's projection of future taxable profits and income tax rates that are expected to be in effect in the period the asset will be
realized or the liability settled. Any changes to this projection will result in changes in the amount of deferred tax assets and
liabilities on the consolidated balance sheets and the deferred tax expense in the consolidated statements of income.
2.4 Use of estimates and assumptions
The preparation of RioCan's consolidated financial statements requires management to make estimates and assumptions that
have a significant risk of causing a material adjustment to the reported amounts of assets, liabilities, net income and related
disclosures over the following reporting period. Estimates made by management are based on events and circumstances that
existed as at the consolidated balance sheet date. Accordingly, actual results may differ from these estimates.
Given the volatility in the current macroeconomic environment, it is difficult to predict with certainty the nature and extent of, and
the impact of changes in inflation and interest rates and their combined effects on demand and economic growth. Estimates and
assumptions that are most subject to increased uncertainty caused by the current macroeconomic environment relate to the
valuation of investment properties (Note 3). Changes in assumptions and estimates could result in outcomes that could require a
material adjustment to the carrying amount of the affected asset or liability in the future.
Investment property
Estimates and assumptions used in determining fair value of the Trust's investment properties include, but are not limited to,
capitalization rates, stabilized net operating income (including vacancy allowances and management fees), and costs to
complete. Other temporary valuation allowances, if applicable, are adjusted to reflect lease-up assumptions and construction risk,
when appropriate. The Trust examines the key assumptions at the end of each reporting period and updates these assumptions
based on recent leasing activity and external data available at the time. A change to any of these inputs may significantly alter the
fair value of an investment property. The carrying value for the Trust's investment properties reflects its best estimate for the
highest and best use as at December 31, 2024 (Note 3).
Net realizable value of residential inventory
Residential inventory is stated at the lower of cost and net realizable value. In calculating the net realizable value of residential
inventory and assessing for impairment of condominium sales receivables, the Trust estimates the selling prices based on
prevailing market prices, estimated cost-to-complete and selling costs.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 120
Financial instruments
The Trust uses estimates and assumptions that affect the carrying amounts of certain financial instruments; these are described
in Note 2.15. In addition, the Trust uses estimates and assumptions for determining the fair values of financial instruments for
disclosure purposes (Note 24).
2.5 Basis of consolidation
These consolidated financial statements include the accounts of the parent trust, RioCan Real Estate Investment Trust, and its
subsidiaries, after elimination of intercompany transactions, balances, revenues and expenses.
(i)
Subsidiaries
Subsidiaries are entities over which the Trust has control. The Trust reassesses whether it controls an investee based on
current facts and circumstances.
All subsidiaries are consolidated from the date RioCan obtains control and continue to be consolidated until the date that
such control ceases.
(ii) Associates and joint ventures
Associates are entities over which RioCan has significant influence but not control or joint control, generally accompanying
an ownership between 20% and 50% of the voting rights, although other factors such as the ability to impact key operating
decisions could also indicate significant influence.
Joint ventures are entities over which the Trust has joint control and whereby the parties that share joint control have rights to
the net assets of the joint venture. Investments in associates and joint ventures are accounted for using the equity method.
The financial statements of RioCan's associates and joint ventures are prepared for the same reporting period as the Trust,
and where necessary, adjustments are made to bring the accounting policies of such entities in line with those of the Trust.
(iii) Joint operations
A joint operation is a joint arrangement where parties have joint control and have rights to the assets and obligations for the
liabilities relating to the arrangement. RioCan records only its share of the assets, liabilities and share of the results of
operations of the joint operation. The assets, liabilities and results of joint operations are included within the respective line
items of the consolidated balance sheets, consolidated statements of income and consolidated statements of comprehensive
income.
2.6 Business combinations
At the time of acquisition of property, whether through a controlling share investment or directly, the Trust considers whether the
acquisition represents the acquisition of a business. The Trust accounts for an acquisition as a business combination where an
integrated set of activities, which include significant processes, are acquired in addition to the property. If no significant processes
or only insignificant processes are acquired, the acquisition is treated as an asset acquisition rather than a business combination.
The Trust has an option to apply a ‘concentration test’ on an asset-by-asset basis that permits a simplified assessment of whether
an acquired set of activities and assets is not a business. The optional concentration test is met, and the acquisition can be
treated as an asset acquisition, if substantially all of the fair value of the gross assets acquired is concentrated in a single
identifiable asset or group of similar identifiable assets.
The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities
incurred or assumed at the acquisition date. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at fair value at the date of acquisition. Transaction costs associated with business
combinations are expensed in the period incurred.
When an acquisition does not meet the criteria for a business, it is accounted for as an acquisition of a group of assets and
liabilities, the cost of which includes transaction costs that are allocated to the assets and liabilities acquired based upon their
relative fair values.
2.7 Fair value measurement
The Trust measures certain financial instruments, such as derivatives, and non-financial assets, such as investment properties, at
fair value as at each consolidated balance sheet date. Fair value incorporates all factors that market participants would consider
in setting a price acting in their economic best interests, including commonly accepted valuation approaches. The fair value
measurement presumes that the transaction to sell the asset or transfer the liability takes place either:
•
In the principal market for the asset or liability; or
•
In the absence of a principal market, in the most advantageous market for the asset or liability that is accessible by
RioCan.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits
by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest
and best use.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
121 RioCan Annual Report 2024
The Trust uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to
measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized
within the fair value hierarchy, described as follows, based on the lowest-level input that is significant to the fair value
measurement as a whole:
•
Level 1 - quoted (unadjusted) market prices in active markets for identical assets or liabilities;
•
Level 2 - valuation techniques for which the lowest-level input that is significant to the fair value measurement is directly
or indirectly observable; and
•
Level 3 - valuation techniques for which the lowest-level input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognized in the consolidated financial statements on a recurring basis, the Trust determines
whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest-level input
that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, RioCan has determined classes of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
2.8 Investment properties
Investment properties comprise income producing properties and property under development that are held to earn rental
revenue or for capital appreciation or both. Real estate property held under a lease is classified as investment property if it meets
the definition of investment property, as further described in Note 2.11 A(i).
(i) Income producing properties
Income producing properties are initially measured at cost. Costs include all amounts related to acquisition, including
transaction costs related to an asset acquisition as outlined in Note 2.6, and improvements of the properties. All costs
associated with upgrading and extending the economic life of the existing facilities other than ordinary repairs and
maintenance are capitalized to investment property. Subsequent to initial recognition, income producing properties are
recorded at fair value. The determination of fair value is based on, among other things, rental revenue from current leases
and reasonable and supportable assumptions that represent what knowledgeable, willing parties would assume about rental
revenue from future leases in light of current conditions, less future cash outflows in respect of tenant installation costs,
income producing property operations and capital expenditures. Gains or losses arising from differences between current
period fair value and the sum of previously measured fair value and capitalized costs are recognized in net income in the
period in which they arise.
(ii) Properties under development
Properties under development include those properties, or components thereof, that will undergo activities that will take a
substantial period of time to prepare the properties for their intended use as income producing properties.
The cost of a development property that is an asset acquisition comprises the fair value of consideration, paid to acquire the
property, including transaction costs. Subsequent to the acquisition, the cost of a development property includes costs that
are directly attributable to these assets, including development costs, common area maintenance costs, property taxes and
borrowing costs on both specific and general debt (Development Carrying Costs). Development Carrying Costs are
capitalized when the activities necessary to prepare an asset for development or redevelopment begin, and continue until the
date that construction is substantially complete and the unit of the property can operate in a manner intended by
management, which may include that all necessary occupancy and related permits have been received, whether or not the
space is leased. If RioCan is required as a condition of a lease to construct tenant improvements that enhance the value of
the property, then capitalization of costs continues until improvements are completed. Development Carrying Costs are
suspended if there are prolonged periods when development activity is interrupted.
Interest capitalized is calculated using the Trust’s weighted average cost of borrowing after adjusting for borrowing
associated with specific developments. Where borrowing is associated with specific developments, the amount capitalized is
the gross interest incurred on such borrowing less any investment income arising on temporary investment of such
borrowing.
Properties under development are also adjusted to fair value as at each consolidated balance sheet date with fair value
adjustments recognized in net income.
Investment properties are derecognized on disposal or when no future economic benefits are expected from their use or disposal.
2.9 Residential inventory
Residential inventory consists of assets acquired or developed that RioCan has no intention of using for rental income purposes
and plans to sell in the ordinary course of business. Residential inventory is recorded at the lower of cost and net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated selling costs and estimated
development costs to complete. The Trust intends to sell residential inventory projects in the ordinary course of business within
the normal operating cycle, which may be greater than 12 months from the balance sheet date.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 122
Residential inventory is reviewed for impairment at each reporting period date. An impairment loss is recognized in net income
when the carrying value of the asset exceeds its net realizable value.
Transfers between residential inventory and investment property occur when there is a change in use. A change in use occurs
when the property meets, or ceases to meet, the definition of investment property based on management's intentions and there is
observable evidence of a change in use.
2.10 Investment properties classified as held for sale
Investment property is classified as held for sale when it is expected that the carrying amount will be recovered principally through
sale rather than from continuing use. Upon designation as held for sale, the investment property continues to be measured at fair
value and is presented separately on the consolidated balance sheets.
2.11 Leases
A. As a lessee
(i) Right-of-use (ROU) assets
The Trust recognizes ROU assets at the date the underlying asset is available to the Trust for use. As lessee, the Trust has
used the practical expedient to combine lease and non-lease components for gross leases. At inception, the ROU assets are
recognized at the present value of the future minimum lease payments, and an equivalent amount is recognized as a lease
obligation. Subsequent to initial recognition, ROU assets for property leases are carried at fair value.
(ii) Lease liabilities
At the commencement date of the lease, the Trust recognizes lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed
payments), variable lease payments that depend on an index or a rate and amounts expected to be paid under residual
value guarantees, less any lease incentives receivable. The lease payments also include the exercise price of a purchase
option reasonably certain to be exercised by the Trust and payments of penalties for terminating a lease, if the lease term
reflects the Trust exercising the option to terminate. The variable lease payments that do not depend on an index or a rate
are recognized as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Trust uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the
amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In
addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change
in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
(iii) Short-term leases and leases of low-value assets
The Trust applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those
leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It
also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low
value. Lease payments on short-term leases and leases of low-value assets are recognized as an expense on a straight-line
basis over the lease term.
B. As a lessor
When the Trust acts as a lessor, it determines and classifies each lease as a finance lease or operating lease at the lease
commencement date.
When a lease transfers to the lessee substantially all the risk and rewards of ownership incidental to the ownership of the
underlying asset, the lease is classified as a finance lease; otherwise, the lease is classified as an operating lease.
When the Trust is an intermediate lessor, it accounts for its interests in the head lease and sublease separately. The Trust
assesses the sublease with reference to the ROU asset arising from the head lease.
If a lease arrangement contains lease and non-lease components, the Trust applies IFRS 15, Revenue from Contracts with
Customers to allocate the consideration to the various components of the contract.
(i) Finance lease receivables
At the commencement date of a finance lease, the Trust recognizes a finance lease receivable at the amount of its net
investment in the lease, which is measured at the present value of lease payments to be made over the lease term. The
lease payments included are similar to those noted under lease liabilities above but refer to payments that a landlord is
receiving.
In calculating the present value of lease payments, the Trust uses the interest rate implicit in the lease, or in the case of a
sublease if the rate is not readily determinable, the discount rate used for the head lease. After the commencement date, the
amount of finance lease receivables is increased to reflect the accretion of interest and reduced for the lease payments
received.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
123 RioCan Annual Report 2024
In addition, the finance lease receivable is derecognized and impairment is measured in accordance with the expected credit
loss (ECL) model pursuant to IFRS 9, Financial Instruments (IFRS 9).
2.12 Revenue
The following is a description of the principal activities from which the Trust generates its revenues, including the nature of
revenues, timing of satisfaction of performance obligations and significant payment terms.
The following specific recognition criteria must also be met before revenue is recognized:
(i) Rental revenue
The majority of the Trust's rental revenue is earned from its lease contracts with customers.
Base rent
Revenue recognition under an operating lease commences when the tenant has the right to use the leased asset, which is
typically when the tenant takes possession of, or controls, the physical use of the leased property. Generally, this occurs on
the lease commencement date. When RioCan is required to make additions to the property in the form of tenant
improvements that enhance the value of the property or when the property is still under development, revenue recognition
begins upon substantial completion of such additions or when the development is substantially complete and in a state that
can be used in the manner intended. Lease contracts that contain rent escalation and/or rent-free periods are recognized on
a straight-line basis over the term of the lease. A straight-line rent receivable, which is included in the carrying amount of
investment properties, is recorded for the difference between the rental revenue recorded and the contractual amount of
minimum base rent received or receivable.
Tenant incentives are recognized as a reduction of rental revenue on a straight-line basis over the term of the lease contract
where it is determined that the tenant fixturing has no benefit to RioCan beyond the existing tenancy.
Realty tax and insurance recoveries
Tenant reimbursements for real estate taxes and insurance incurred by the Trust relate specifically to the leased property and
are considered to be unavoidable costs directly related to the leased asset. The Trust recognizes realty tax and insurance
recoveries as they become due.
Common area maintenance (CAM) services
The Trust has obligations pursuant to its lease contracts with tenants to provide CAM services in exchange for CAM
recoveries, which are considered non-lease components. These CAM services are delivered to tenants during the period in
which the tenants occupy the premises, and as such, CAM recoveries are recognized in revenue over time. The Trust
receives variable consideration for the CAM recoveries to the extent of costs incurred, and revenue is recognized on this
basis as this is the best estimate of amounts earned over the period these services are performed. Revenue is constrained
by actual costs incurred and any restrictions in the lease contracts. The Trust is obligated to continue to provide CAM
services over the remainder of the lease contract term and will recognize revenue based on actual cost incurred to fulfill the
CAM services.
(ii) Residential inventory
Revenue from contracts with customers for residential land sales, the sale of townhomes and residential condominium units
is recognized at the point in time when control over the property has been transferred, which is generally when possession
passes to the customer (i.e., the purchaser) since the customer then has the ability to direct the use and obtain substantially
all of the benefits of the respective property. Revenue is measured at the transaction price agreed to under the contract.
Funds received from the customer prior to the customer taking possession are recognized as deferred revenue (a contract
liability). Non-refundable sales commissions paid by the Trust prior to the customer taking possession are capitalized as
contract assets and expensed when the residential inventory revenue is recognized.
Directly attributable marketing and disposition costs are expensed as incurred.
2.13 Investment and other income and transaction and other costs
Transaction gains included in investment and other income, net, and transaction and other costs on the consolidated statements
of income, are recognized on the settlement date or on the settlement of post-transaction adjustments. Transaction gains and
losses may also arise from the settlement of liabilities for more or less than their carrying values.
2.14 Unit-based compensation
RioCan and its subsidiaries issue unit-based equity-settled awards to certain employees and trustees. The cost of these unit-
based payments equals the fair value of each tranche of awards at their grant date. The cost of the unit-based equity settled
awards is recognized on a proportionate basis consistent with the vesting features of each tranche of the grant. On settlement of
the unit-based equity-settled awards the amount recognized in contributed surplus for the grant is reclassified to trust unit capital.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 124
2.15 Financial instruments
Financial assets include RioCan's net contractual rents and other tenant receivables, mortgages and loans receivable, cash and
cash equivalents, amounts due on condominium final closings, funds held in trust, marketable securities, other investments,
derivative contracts, and other receivables. Financial liabilities include RioCan's operating lines of credit, mortgages payable,
debentures payable, accounts payable related to property operating costs, and capital expenditures and leasing commissions,
trade payables and accruals, deposits received from customers on residential inventory, the bond forward agreement and certain
other liabilities.
The Trust determines the classification of its financial assets and financial liabilities at initial recognition by considering the
purpose for which they were acquired or incurred. Financial instruments are initially recorded at fair value and, in the case of
financial assets or financial liabilities carried at amortized cost, adjusted for directly attributable transaction costs.
Financial Instruments
IFRS 9 Classification
Financial assets
Cash and cash equivalents (i)
Amortized cost
Marketable securities (ii)
FVTPL (vii)
Other investments (ii) (viii)
FVTPL
Receivables and other assets (iii)
Amortized cost
Mortgages and loans receivable
Amortized cost or FVTPL
Interest rate swap assets (iv)
FVTPL
Financial liabilities
Debentures payable
Amortized cost
Mortgages payable
Amortized cost
Lines of credit and other bank loans
Amortized cost
Interest rate swap liabilities (iv)
FVTPL
Bond forward agreement (v)
FVTPL
Accounts payable and other liabilities (vi)
Amortized cost
(i)
As at December 31, 2024, cash equivalents amount to $0.6 million (December 31, 2023 - $0.4 million).
(ii)
Included in receivables and other assets on the consolidated balance sheets.
(iii) Financial instruments in receivables and other assets that are classified as amortized cost include net contractual rents and other tenant
receivables, amounts due on condominium final closings, funds held in trust, and other receivables.
(iv) Interest rate swaps are derivative financial instruments that are recorded at fair value on the consolidated balance sheets as interest rate swap
assets or interest rate swap liabilities. The effective portion of the fair value gains (losses) is recorded in other comprehensive loss as they are
designated in an effective cash flow hedging relationship. See Note 2.19 for further discussion regarding hedge accounting policies.
(v)
The bond forward agreement is a derivative financial instrument that is recorded at fair value on the consolidated balance sheets as bond forward
asset or bond forward liability. The effective portion of the fair value gains (losses) is recorded in other comprehensive loss as it is designated in an
effective cash flow hedging relationship. See Note 2.19 for further discussion regarding hedge accounting policies.
(vi) Financial instruments in accounts payable and other liabilities that are classified as amortized cost include accounts payable related to property
operating costs, development expenditures, capital expenditures and leasing commissions, other trade payables and accruals and deposits
received from customers on residential inventory.
(vii) Fair value through profit or loss (FVTPL).
(viii) Includes investment funds.
The amortized cost method referenced in the table above uses an effective interest rate that discounts estimated future cash
receipts or payments through the expected life of the financial asset or liability to the net carrying amount of the financial asset or
liability.
Financial instruments are initially recorded at fair value and, in the case of financial assets or financial liabilities carried at
amortized cost, adjusted for directly attributable transaction costs.
Financial assets
The Trust's financial assets are classified and measured on the basis of both the business model in which the assets are
managed and the contractual cash flow characteristics of the asset.
(i) Financial assets at amortized cost
Financial assets are recorded at amortized cost when financial assets are held with the objective of collecting contractual
cash flows and those cash flows represent solely payments of principal and interest and are not designated as FVTPL.
These assets are measured at amortized cost subsequent to initial recognition using the effective interest rate method. The
amortized cost is reduced by impairment losses, if any. Interest income and impairment losses are recognized in profit or
loss. Any gain or loss on derecognition is recognized in profit or loss.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
125 RioCan Annual Report 2024
(ii) Financial assets at FVTPL
Financial assets at FVTPL are managed and evaluated on a fair value basis and measured at fair value subsequent to initial
recognition. Net gains and losses, including any interest or dividend income, are recognized in profit or loss unless they are
derivative instruments designated in an effective hedging relationship.
Financial liabilities
(i) Financial liabilities at amortized cost
Financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Interest expense is
recognized in profit or loss. Any modification that results in substantially different terms or in a 10% change in carrying value
is accounted for as an extinguishment or derecognition of the original financial liability and the recognition of a new financial
liability. Any gain or loss on derecognition is recognized in profit or loss.
(ii) Financial liabilities at FVTPL
A financial liability is classified as FVTPL if it is classified as held for trading, it is a derivative or designated as FVTPL on
initial recognition. Financial liabilities at FVTPL are subsequently measured at fair value, and net gains and losses, including
any interest expenses, are recognized in profit or loss unless they are derivative instruments designated in an effective
hedging relationship.
2.16 Impairment of financial assets
At each reporting date, each financial asset measured at amortized cost is assessed for impairment under an ECL model. The
Trust applies the simplified approach, which uses lifetime ECLs, for net contractual rents and other tenant receivables, and the
general approach for all other financial assets measured at amortized cost. Mortgages and loans receivable, amounts due on
condominium final closings and finance lease receivables are classified as impaired when there is objective evidence that the full
carrying amount of the loans and receivables is not collectible.
The Trust uses an accounts receivable aging provision matrix to measure the ECL for net contractual rents and other tenant
receivables and applies loss factors accordingly, incorporating forward-looking information including assessing the viability of
retail tenants.
Under the general approach of IFRS 9, ECLs for all other financial assets measured at amortized cost are based on which one of
the three stages the financial asset is in and the difference between the cash flows the Trust expects to receive and the
contractual cash flows due, discounted at the asset’s original effective interest rate (if applicable). Any changes in impairment are
recognized in net income.
Financial assets together with the associated allowance, are written off when there is no realistic prospect of future recovery and
all collateral has been realized or has been transferred to RioCan.
2.17 Financial guarantee contracts
Financial guarantee contracts are contracts issued by RioCan that contingently require the Trust to make specified payments to
reimburse the holder for a loss it incurs because the specified debtor fails to make payment when due in accordance with the
terms of a debt instrument. Financial guarantees are recognized on the consolidated balance sheets initially as a liability
measured at the fair value of the obligation undertaken in issuing the guarantee, which is generally equal to the guarantee fee
received, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is
measured at the higher of (i) the amount initially recognized less amortization for the passage of time; and (ii) the loss allowance
measured using an ECL model.
2.18 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amounts are reported in the consolidated balance sheets if there is
an enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the
assets and settle the liabilities simultaneously.
2.19 Hedges
The Trust may enter into interest rate swaps or bond forward contracts to hedge its interest rate risks. Such derivative financial
instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently
remeasured at fair value.
At the inception of a hedging relationship, RioCan formally designates and documents the hedging relationship to which the Trust
is applying hedge accounting and the risk management objective and strategy for undertaking the hedge. For the Trust's
purposes of hedge accounting, interest rate swap hedges and bond forward contract hedges are classified as cash flow hedges.
Cash flow hedges
In a cash flow hedging relationship, the effective portion of the gain or loss on the hedging instrument is recognized in other
comprehensive income (OCI) and accumulated in the cash flow hedge reserve within equity. The ineffective portion is recognized
immediately in net income.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 126
Amounts accumulated in the cash flow hedge reserve are reclassified to the consolidated statements of income in the same
periods as the hedged future cash flow. If the hedging instrument expires or is sold, terminated or exercised without replacement
or rollover (as part of the hedging strategy) or no longer qualifies for hedge accounting, and the forecasted transaction is still
expected to occur, the related cash flow hedge reserve is reclassified into the consolidated statements of income in the period the
forecasted transaction occurs. Otherwise, it is immediately reclassified from OCI to the consolidated statements of income.
2.20 Comprehensive income
Comprehensive income comprises net income and OCI, which generally would include changes in the fair value of the effective
portion of cash flow hedging instruments, actuarial gains and losses related to RioCan's defined benefit pension plans and other
comprehensive income of equity-accounted investments. The Trust reports consolidated statements of comprehensive income
comprising net income and OCI for the year.
2.21 Income taxes
The Trust qualifies as a mutual fund trust and a “real estate investment trust” (REIT Exemption) for income tax purposes. The
Trust intends to distribute all of its taxable income to Unitholders and is entitled to deduct such distributions for income tax
purposes. From time to time, RioCan may retain some taxable income and net capital gains in order to utilize the capital gains
refund available to mutual fund trusts without incurring any income taxes. The Trust is therefore considered, in substance, tax
exempt and does not account for income taxes, except for amounts incurred in its incorporated Canadian taxable subsidiaries
that continue to be subject to income taxes. These taxable subsidiaries account for income taxes as follows:
Current income tax assets and liabilities are measured at the amount expected to be received from or paid to tax authorities
based on the tax rates and laws enacted or substantively enacted as at the consolidated balance sheet dates.
Deferred tax liabilities are measured by applying the appropriate tax rate to taxable temporary differences between the carrying
amounts of assets and liabilities, and their respective tax basis. The appropriate tax rate is determined by reference to the rates
that are expected to apply to the year and the jurisdiction in which the assets are expected to be realized or the liabilities settled.
Deferred tax assets are recorded for all deductible temporary differences, carryforward of unused tax credits and unused tax
losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences,
unused tax credits and unused tax losses can be utilized. Current and deferred income taxes are recognized in correlation to the
underlying transaction either in OCI or directly in equity.
2.22 Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term investments with original maturities from the date of acquisition of three
months or less.
2.23 Provisions
Provisions are recognized when the Trust has a present obligation (legal or constructive) as a result of a past event, when it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation. Where the Trust expects some or all of a provision to be reimbursed, for
example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision is presented in net income, net of any reimbursement. If the effect of the
time value of money is material, provisions are discounted using a current rate that reflects, where appropriate, the risks specific
to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
2.24 Changes in accounting policies
The accounting policies used in the preparation of the consolidated financial statements are consistent with those of the prior
year, except for the adoption of new standards and interpretations effective January 1, 2024 as follows:
Amendments to IAS 1, Presentation of Financial Statements - Classification of Liabilities as Current or Non-current and Non-
current Liabilities with Covenants
In January 2020 and October 2022, the IASB issued amendments to paragraphs 69-76 of IAS 1 to clarify the requirements for
classifying liabilities as current or non-current. The amendments specify that the conditions that exist at the end of a reporting
period are those that will be used to determine if a right to defer settlement of a liability exists. The amendments also clarify the
situations that are considered a settlement of a liability.
If an entity's right to defer settlement of a liability is subject to the entity complying with the required covenants only at a date
subsequent to the reporting period (future covenants), the entity has a right to defer settlement of the liability even if it does not
comply with those covenants at the end of the reporting period. The amendments also clarify that the requirement for the right to
exist at the end of the reporting period applies to covenants that the entity is required to comply with on or before the reporting
date regardless of whether the lender tests for compliance at that date or at a later date.
The amendments are effective January 1, 2024. The amendments are to be applied retrospectively. The amendments had no
impact on the Trust's Consolidated Financial Statements.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
127 RioCan Annual Report 2024
2.25 Future changes in accounting policies
RioCan monitors the potential changes proposed by the IASB and analyzes the effect that changes in standards may have on
RioCan’s operations.
Standards issued but not yet effective up to the date of issuance of these consolidated financial statements are described below.
This description is of the standards and interpretations issued that the Trust reasonably expects to be applicable at a future date.
The Trust intends to adopt these standards when they become effective.
IFRS 18, Presentation and Disclosure in Financial Statements
The IASB has issued IFRS 18, Presentation and Disclosure in Financial Statements, which focuses on updates to the statement
of profit or loss, including specified totals and subtotals. The key new concepts introduced in IFRS 18 relate to:
•
The structure of the statement of profit or loss into one of five categories: operating, investing, financing, income taxes and
discontinued operations, whereof the first three are new;
•
Required disclosures in the financial statements for certain profit or loss performance measures that are reported outside an
entity’s financial statements (that is, management-defined performance measures); and
•
Enhanced principles on aggregation and disaggregation, which apply to the primary financial statements and notes in
general.
In addition, narrow-scope amendments have been made to IAS 7, Statement of Cash Flows, which include changing the starting
point for determining cash flows from operations under the indirect method from ‘profit or loss’ to ‘operating profit or loss’ and
removing the optionality around classification of cash flows from dividends and interest. In addition, there are consequential
amendments to several other standards.
IFRS 18 will replace IAS 1. Many of the other existing principles in IAS 1 are retained, with limited changes. IFRS 18 will not
impact the recognition or measurement of items in the financial statements, but it may change what an entity reports as its
"operating profit or loss". IFRS 18 will apply for reporting periods beginning on or after January 1, 2027 and also applies to
comparative information. Management is currently assessing the impact of this standard.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 128
3. INVESTMENT PROPERTIES
As at
December 31, 2024
December 31, 2023
Income producing properties (IPP)
$
12,994,238 $
12,632,473
Properties under development (PUD)
844,916
929,245
$
13,839,154 $
13,561,718
Year ended December 31, 2024,
Income
producing
properties
Properties
under
development
Total (iv)
Balance, beginning of year
$
12,651,237 $
929,556 $
13,580,793
Acquisitions
118,192
42,539
160,731
Dispositions
(120,457)
(290)
(120,747)
Development expenditures
—
164,658
164,658
Capital expenditures:
Recoverable and non-recoverable expenditures
47,369
—
47,369
Leasing commissions and tenant improvements
67,916
—
67,916
Transfers, net (i)
195,529
(195,529)
—
Fair value gain (loss), net
64,724
(94,077)
(29,353)
Straight-line rent (ii)
11,234
—
11,234
Transfers to finance lease receivables
(10,150)
—
(10,150)
Transfer to equity-accounted investment (iii)
(9,950)
(1,941)
(11,891)
Other changes
(4,432)
—
(4,432)
Earn-out consideration
(267)
—
(267)
Balance, end of year
$
13,010,945 $
844,916 $
13,855,861
Investment properties
$
12,994,238 $
844,916 $
13,839,154
Properties held for sale
16,707
—
16,707
$
13,010,945 $
844,916 $
13,855,861
(i)
During the year ended December 31, 2024, transfers to income producing properties from properties under development totalled $225.8 million,
reflecting completed developments. Transfers from income producing properties to properties under development totalled $30.3 million, reflecting
the commencement of active development on certain income producing properties during the year.
(ii)
Included in investment properties is $130.7 million of net rents receivable arising from the recognition of rental revenue on a straight-line basis
over the lease term.
(iii) On October 1, 2024, RioCan formed a new joint venture and transferred its co-ownership interest of the King & Sherbourne properties to equity-
accounted investments.
(iv) Included in investment properties are eight properties held as (ROU) assets as at December 31, 2024.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
129 RioCan Annual Report 2024
Year ended December 31, 2023
Income
producing
properties
Properties
under
development
Total (v)
Balance, beginning of year
$
12,676,651
$
1,173,229
$
13,849,880
Acquisitions
75,473
34,583
110,056
Dispositions
(285,921)
(9,485)
(295,406)
Development expenditures
—
244,260
244,260
Capital expenditures:
Recoverable and non-recoverable expenditures
83,781
—
83,781
Leasing commissions and tenant improvements
52,472
—
52,472
Transfers, net (i)
417,417
(417,417)
—
Transfers to residential inventory (ii)
—
(6,400)
(6,400)
Fair value losses, net
(372,464)
(77,944)
(450,408)
Straight-line rent (iii)
5,898
—
5,898
Transfers to finance lease receivables
(3,774)
—
(3,774)
Transfers to equity-accounted investments (iv)
—
(11,270)
(11,270)
Other changes
1,456
—
1,456
Earn-out consideration
248
—
248
Balance, end of year
$
12,651,237
$
929,556
$
13,580,793
Investment properties
$
12,632,473
$
929,245
$
13,561,718
Properties held for sale
18,764
311
19,075
$
12,651,237
$
929,556
$
13,580,793
(i)
During the year ended December 31, 2023, transfers to income producing properties from properties under development totalled $574.0 million,
reflecting completed developments. Transfers from income producing properties to properties under development totalled $156.6 million, reflecting
the commencement of active development on certain income producing properties during the year.
(ii)
During the year ended December 31, 2023, East Hills South Block was transferred to residential inventory from investment property as appropriate
evidence of a change in use was established.
(iii) Included in investment properties is $119.3 million of net rents receivable arising from the recognition of rental revenue on a straight-line basis over
the lease term.
(iv) On September 28, 2023, RioCan formed a new joint venture and transferred its ownership of the 11YV project to equity-accounted investments.
(v)
Included in investment properties are 10 properties held as ROU assets as at December 31, 2023.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 130
Acquisitions
The following table summarizes the Trust's acquisitions of properties:
Income producing properties
Properties under development
For the years ended December 31,
2024
2023
2024
2023
Properties acquired during the year:
Total consideration
$
118,192 $
75,473 $
42,539 $
34,583
Vendor take-back mortgage (VTB) or debt assumed
(73,146)
(40,848)
—
—
Total consideration, net of VTB, purchase price payable and/or
debt assumed
$
45,046 $
34,625 $
42,539 $
34,583
Investment properties acquisitions
Property name and location
Date
acquired
Interest
acquired
IPP
purchase
price (i)
PUD
purchase
price (i)
VTB mortgage,
purchase price
payable and/or
debt assumed
Q4 2024 - No acquisitions
Q3 2024 - No acquisitions
Q2 2024
Property adjacent to Mega Centre Notre Dame, Laval, QC
May 22
50.0 % $
3,631 $
— $
—
$
3,631 $
— $
—
Q1 2024
Land at Georgian Mall, Barrie, ON (ii)
March 25
50.0 % $
5,133 $
— $
—
The Underwood Apartments, Calgary, AB (iii)
February 2
50.0 %
48,654
—
28,280
Lawrence Plaza, Toronto, ON (iv)
January 11
50.0 %
60,774
42,539
44,866
$ 114,561 $
42,539 $
73,146
Total acquisitions for the year ended December 31, 2024
$ 118,192 $
42,539 $
73,146
(i)
Purchase price includes transaction costs.
(ii)
RioCan exercised the purchase option in a land lease to acquire a parcel of land at the property. Refer to Note 8.
(iii) Gross purchase price before transaction costs of $0.2 million was $52.9 million, of which $48.5 million was allocated to investment properties and
$4.4 million was allocated to mortgages payable. The mortgages payable assumed on closing had an aggregate contractual balance of $32.7
million, weighted average contractual interest rate of 1.97% and weighted average maturity term of 6.73 years.
(iv) Gross purchase price before transaction costs of $4.3 million was $100.2 million, of which $99.0 million was allocated to investment properties and
$1.2 million was allocated to mortgages payable. The transaction includes density contingent consideration valued at $40.9 million. The debt
assumed on closing had an aggregate contractual balance of $46.1 million, with a weighted average contractual interest rate of 3.20% and
weighted average term to maturity of 1.58 years.
Purchase obligations
The Trust has agreed to purchase 100% of the retail portion of the 11YV project upon completion, currently estimated to be during
2025, at a 6.0% capitalization rate or a current estimated purchase price of $24 - $26 million for the 87.5% interest the Trust will
acquire. The Trust currently owns a 12.5% interest in the project through an equity-accounted investment. Refer to Note 4 for
further details.
The Trust has agreed to purchase its partners' interest in the retail and residential rental components of Queen & AshbridgeTM
upon stabilization, currently estimated to be during 2026, at the greater of pre-determined capitalization rates of 4.75% and
4.15%, respectively, or total cost plus 5%.
The Trust has agreed to purchase a 100% interest in Bellevue Phase Three provided certain conditions are met, currently
estimated to be in the first half of 2025, for an estimated purchase price of $28.0 million.
The Trust has agreed to purchase 90% interest in Market Laval Phase Two/Three provided certain conditions are met, currently
estimated to be in the first half of 2025, at a capitalization rate of 4.16%.
Refer to Note 34 for properties acquired subsequent to the balance sheet date.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
131 RioCan Annual Report 2024
Dispositions
The following table summarizes the Trust's dispositions of investment properties:
Income producing properties
Properties under development
For the years ended December 31,
2024
2023
2024
2023
Properties disposed during the year:
Total consideration
$
120,457 $
285,921 $
290 $
9,485
Mortgages associated with investment property dispositions
(14,850)
—
—
—
Vendor take-back mortgages receivable on dispositions
(2,976)
(6,000)
—
—
Total consideration, net of related debt
$
102,631 $
279,921 $
290 $
9,485
Investment properties dispositions
Q4 2024
RioCan Centre Vaughan, Vaughan, ON
December 30
100.0 % $
45,400 $
—
2335 Boulevard Lapiniere, Brossard, QC
December 12
100.0 %
1,600
—
541 Boulevard Saint-Joseph, Gatineau, QC
December 3
100.0 %
1,315
—
Strada - 555-563 College Street, Toronto, ON
November 29
50.0 %
23,896
—
1556 Bank Street, Ottawa, ON
November 28
100.0 %
4,000
—
145 Woodbridge Avenue, Woodbridge, ON
November 21
100.0 %
2,740
—
Timberlea Landing - office building, Fort McMurray, AB
October 18
100.0 %
7,570
—
2422 Fairview Street, Burlington, ON (i)
October 1
100.0 %
4,200
—
$
90,721 $
—
Q3 2024
Timmins Square, Timmins, ON
August 21
30.0 % $
8,850 $
—
$
8,850 $
—
Q2 2024
519 Brant Street, Burlington, ON (ii)
June 20
100.0 % $
2,076 $
—
$
2,076 $
—
Q1 2024
Belleville Centre, Belleville, ON
March 28
100.0 % $
5,200 $
—
Galaxy Centre, Owen Sound, ON
February 20
100.0 %
13,610
290
$
18,810 $
290
Total dispositions for the year ended December 31, 2024
$
120,457 $
290
Property name and location
Date
disposed
Interest
disposed
IPP
sales proceeds
PUD
sales proceeds
(i)
RioCan provided a VTB mortgage of $2.0 million.
(ii)
RioCan provided a VTB mortgage of $1.0 million.
Properties held for sale
Presented below are details of the Trust's properties held for sale:
As at
December 31, 2024 December 31, 2023
Assets
Income producing properties
$
16,707 $
18,764
Properties under development
—
311
Total assets held for sale
$
16,707 $
19,075
As at December 31, 2024, RioCan has two investment properties held for sale with a carrying value of $16.7 million. As at
December 31, 2023, RioCan had two investment properties held for sale with a carrying value of $19.1 million.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 132
Valuation methodology
Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date (i.e., an exit price). Expectations about future improvements or modifications to be made to
the investment property to reflect its highest and best use may be considered in the valuation.
Investment properties and properties held for sale are carried at fair value, and the Trust uses significant unobservable inputs to
estimate fair value of these assets at each reporting date. See below for further description of inputs used by the Trust in
estimating the fair value of its properties. Significant unobservable inputs are classified as Level 3 inputs under IFRS. See Note
24 for further details.
Quoted market prices in active markets are the best evidence of fair value and are used as the basis for fair value measurement,
when available. When quoted market prices are not available, judgment is required to estimate fair value based on the best
information available, including prices for similar assets and the use of other valuation techniques. These valuation techniques
are consistent with the objective of measuring fair value and involve a degree of estimation depending on the availability of
market-based information.
Valuation processes
Internal valuations
The Trust's Valuations Committee is responsible for approving any fair value changes to the investment properties and consists of
senior management of the Trust including the Chief Investment Officer, Chief Operating Officer, Chief Financial Officer and other
executive members.
RioCan measures the vast majority of its investment properties, including co-owned properties, using valuations prepared by its
internal valuation team. This team consists of individuals who are knowledgeable and have specialized industry experience in real
estate valuations and report directly to a senior member of the Trust's management. The internal valuation team's processes and
results are reviewed and approved by the Valuations Committee on a quarterly basis, in line with the Trust's quarterly reporting
dates.
External valuations
Depending on the property asset type and location, management may opt to obtain independent third-party valuations from firms
that employ experienced valuation professionals having the required qualifications in property appraisals for purposes of adopting
such appraised values in the case of land parcels or assessing the reasonableness of its internal investment property valuations.
The internal valuation team also verifies all major inputs used by the external valuator in preparing the valuation report, assesses
changes to fair value by comparing the current year fair value against the fair value determined in the prior year valuation report,
and holds discussions with the external valuator.
During the year, the Trust obtained a total of 21 external property appraisals (including two vacant land parcels), which supported
an IFRS fair value of approximately $1.8 billion, or 13.3% of the Trust's investment property portfolio (at 100% interest), as at
December 31, 2024. In 2025, the Trust intends to select approximately five income producing properties for external appraisal on
a quarterly basis.
Valuation techniques
Income producing properties
The internal valuation team estimates the fair value of each income producing property based on a valuation technique known as
the direct capitalization income approach. The fair value is determined by applying a capitalization rate to stabilized net operating
income (SNOI). The significant unobservable inputs are based on the following:
•
SNOI is based on budgeted rents and expenses and supported by the terms of any existing lease, other contracts or external
evidence such as current market rents for similar properties, adjusted to incorporate allowances for estimated vacancy rates,
and management fees based on current and expected future market conditions after expiry of any current lease. The
resulting capitalized value is then adjusted for non-recoverable capital expenditures as well as other costs, including leasing
costs, inherent in achieving and maintaining SNOI.
•
The capitalization rate is based on the location and quality of the properties and takes into account market data at the
valuation date.
Properties under development
Management uses an internal valuation process to estimate the fair value of properties under development that consist of
undeveloped land on a land value per acre or per buildable square foot basis using the particular attributes of the project with
respect to zoning and pre-development work performed on the site. Where a site is partially developed but has not met certain
thresholds, the valuation method is a dollar per buildable square foot plus costs incurred. Where a site is partially developed and
meets certain thresholds, the direct capitalization method is applied to capitalize the pro forma net operating income, stabilized
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
133 RioCan Annual Report 2024
with market allowances, from which the costs to complete the development are deducted. The significant unobservable inputs are
based on the following:
•
Pro forma SNOI is based on the location, type and quality of the properties and supported by the terms of actual or
anticipated future leases, other contracts or external evidence such as current market rents for similar properties, adjusted
for estimated vacancy rates based on expected future market conditions and estimated maintenance costs, which are
consistent with internal budgets, based on management's experience and knowledge of the market conditions.
•
Costs to complete are derived from internal budgets based on management's experience and knowledge of the market
conditions.
•
The capitalization rate is based on the location and quality of the properties and takes into account market data at the
valuation date.
The primary method of valuation for undeveloped land is the comparable sales approach, which considers recent sales activity for
similar land parcels in the same or similar markets. Land values are estimated using either a per acre or per buildable square foot
basis based on highest and best use. Such values are applied to RioCan's properties after adjusting for factors specific to the
site, including its location, intended use, zoning, servicing and configuration.
For certain properties under development with multi-phased and mixed-use attributes, the Trust employs a corroborative
approach using a discounted cash flow valuation method.
The table below summarizes the classification, valuation approach and inter-relationship between the Level 3 key unobservable
inputs and fair value measurements for the Trust's investment properties:
Classification
Valuation
approach
Key
unobservable
input
Relationship between key unobservable inputs
and fair value measurement
Income producing properties/
Properties under development
Direct capitalization
income approach
Capitalization rate
There is an inverse relationship between the
capitalization rate and the fair value; in other words,
the higher the capitalization rate, the lower the
estimated fair value.
SNOI
Generally, an increase in SNOI will result in an
increase in the estimated fair value of the properties.
Costs to complete
There is an inverse relationship between costs to
complete and fair value; in other words, the higher the
costs to complete, the lower the estimated fair value.
Properties under development -
undeveloped land and partially
developed sites
Comparable sales
approach
Market
comparison
Site value is in line with market trends.
As at December 31, 2024, the weighted average capitalization rate for the Trust's investment properties and properties held for
sale is 5.41% (December 31, 2023 - 5.41%). The carrying value of the Trust's investment properties reflects its best estimate for
the highest and best use as at December 31, 2024.
The Trust has reviewed the valuation of its properties in light of the difficulty in anticipating the impact of the current global
macroeconomic environment on property cash flows and capitalization rates. The impact of changes in inflation and fluctuations
in interest rates and their effect on demand and economic growth continue to be uncertain. Such effects could be material to
investment properties valuations. As events associated with the current macroeconomic environment continue to unfold, further
adjustments to the Trust's IFRS value of investment properties, which could be negative or positive, may be required. Refer to the
table below for a sensitivity analysis of investment properties valuations.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 134
Sensitivity analysis of changes in stabilized SNOI, capitalization rates and costs to complete
The following table is a sensitivity analysis applied to the portion of the Trust's investment properties and properties held for sale
carrying value that is measured using the direct capitalization approach and, therefore, is sensitive to changes in capitalization
rates:
(1.00%)
4.41 % $
3,304,025
(0.75%)
4.66 %
2,297,740
(0.50%)
4.91 %
1,440,230
(0.25%)
5.16 %
681,840
December 31, 2024
5.41 %
—
0.25%
5.66 %
(614,220)
0.50%
5.91 %
(1,174,030)
0.75%
6.16 %
(1,684,830)
1.00%
6.41 %
(2,153,800)
Capitalization rate sensitivity increase (decrease)
Weighted average
capitalization rate
Fair value variance
A 0.25% increase in capitalization rate would result in a lower portfolio fair value of $614.2 million. A 0.25% decrease in
capitalization rate would result in a higher portfolio fair value of $681.8 million. In addition, a 1% increase in SNOI would result in
a higher portfolio fair value of $134.1 million. A 1% decrease in SNOI would result in a lower portfolio fair value of $132.5 million.
A 1% increase in SNOI coupled with a 0.25% decrease in capitalization rates would result in a higher portfolio fair value of
$820.7 million. A 1% decrease in SNOI coupled with a 0.25% increase in capitalization rates would result in a lower portfolio fair
value of $741.7 million. A 1% increase in costs to complete for the development properties would result in a lower portfolio fair
value of $1.6 million, and a 1% decrease in costs to complete for the development properties would result in a higher portfolio fair
value of $1.6 million.
4. EQUITY-ACCOUNTED INVESTMENTS
Equity-accounted investments
The Trust has certain equity-accounted investments in associates and joint ventures. The following table details the Trust's
ownership interest in each equity investee:
Equity investee
Principal activity
December 31, 2024 December 31, 2023
RC Yorkville LP(i)
Development of mixed-use project and sale of
residential inventory
25.0 %
75.0 %
PR Bloor Street LP
Development of mixed-use project and sale of
residential inventory
50.0 %
50.0 %
RioCan-Fieldgate LP
Development of mixed-use project and sale of
residential inventory
50.0 %
50.0 %
Dawson-Yonge LP
Owns and operates an income producing
property
40.0 %
40.0 %
RioCan-HBC JV
Owns and operates income producing
properties
22.0 %
22.0 %
RC (Queensway) LP
Development and sale of residential inventory
20.0 %
20.0 %
RC (Leaside) LP - Class B
Development and sale of residential inventory
25.0 %
25.0 %
RCLC King and Sherbourne LP
Development and sale of residential rental
50.0 %
— %
WhiteCastle New Urban Fund 2, LP (WNUF 2)
Development of mixed-use project and sale of
residential inventory
19.3 %
19.3 %
WhiteCastle New Urban Fund 3, LP (WNUF 3)
20.0 %
20.0 %
WhiteCastle New Urban Fund 4, LP (WNUF 4)
18.4 %
18.4 %
WhiteCastle New Urban Fund 5, LP (WNUF 5)
14.2 %
14.2 %
(i)
RioCan's effective ownership interest in the underlying 11YV project was 12.5% as at December 31, 2024 (37.5% as at December 31, 2023).
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
135 RioCan Annual Report 2024
The following table shows the changes in the aggregate carrying value of RioCan's investment in associates and joint ventures:
Years ended December 31,
2024
2023
Balance, beginning of year
$
383,883 $
364,892
Contributions (i)
20,077
19,828
Distributions
(13,166)
(14,141)
Disposition of units (ii)
(29,601)
(14,601)
Total cash flow activities
(22,690)
(8,914)
Non-cash contributions:
Contribution accrual
1,153
(145)
New joint venture from previously consolidated subsidiary (iii)
9,262
9,958
Share of net income and gains from redemption of units (ii)
38,507
18,383
Other comprehensive (loss) income from equity-accounted investments (ii) (iv)
(769)
132
Other
(758)
(423)
Balance, end of year (v)
$
408,588 $
383,883
(i)
During the year ended December 31, 2024, the Trust made no contributions to the RioCan-HBC JV and $20.1 million to the other equity-
accounted investments. (December 31, 2023 - $2.1 million and $17.7 million, respectively).
(ii)
During the year ended December 31, 2024, RioCan disposed 50.0% of its interest in RC Yorkville LP for proceeds of $29.6 million, resulting in a
gain of $23.9 million, including the recycling of $0.4 million hedge reserve from OCI to net income (December 31, 2023 - $14.6 million of proceeds,
$12.1 million of IFRS gain and $0.6 million of hedge reclass, respectively).
Years ended December 31,
2024
2023
Share of net income from equity-accounted investments
$
14,642 $
6,271
Gains from partial disposition of RC Yorkville LP
23,865
12,112
Share of net income and gains from redemption of units
$
38,507 $
18,383
(iii) During the year ended December 31, 2024, the Trust made non-cash contribution of $9.3 million to King & Sherbourne properties into equity-
accounted investments (December 31, 2023 - $10.0 million non-cash contribution to 11YV properties).
(iv) Changes in OCI from equity-accounted investments consist of:
Years ended December 31,
2024
2023
Interest rate swap hedge reserve in RC Yorkville LP on initial contribution to equity-
accounted investment
$
— $
2,265
Hedge reserve recycled from OCI to net income on partial disposition of RC Yorkville LP
(355)
(566)
Changes to interest rate swap hedge reserve for other equity-accounted investments
(414)
(1,567)
Other comprehensive (loss) income from equity-accounted investments
$
(769) $
132
(v)
In addition to its net equity in equity-accounted investments, RioCan has guaranteed its share of debt within equity-accounted investments to third-
party lenders in the aggregate amount of $160.1 million (December 31, 2023 - $190.8 million).
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 136
Financial results of equity-accounted investees
The following tables present the financial results of RioCan's equity-accounted investees on a 100% basis:
As at
December 31, 2024
December 31, 2023
RioCan-HBC JV
Other
Total
RioCan-HBC
JV
Other
Total
Current assets (i)
$
12,375 $
1,537,047 $
1,549,422
$
8,608 $
1,311,926 $
1,320,534
Non-current assets (ii)
1,869,003
114,169
1,983,172
1,870,226
61,714
1,931,940
Current liabilities (iii)
518,220
934,308
1,452,528
203,269
346,243
549,512
Non-current liabilities (iv)
269,288
173,840
443,128
583,759
566,016
1,149,775
Net assets
$
1,093,870 $
543,068 $
1,636,938
$
1,091,806 $
461,381 $
1,553,187
Equity-accounted investments
$
248,983 $
159,605 $
408,588
$
248,628 $
135,255 $
383,883
Years ended December 31,
2024
2023
RioCan-HBC JV
Other
Total
RioCan-HBC
JV
Other
Total
Revenue
$
146,124 $
80,379 $
226,503
$
143,979 $
21,119 $
165,098
Operating expenses
22,826
65,790
88,616
21,022
13,375
34,397
Fair value (losses) gains
(9,574)
(5,267)
(14,841)
(64,667)
894
(63,773)
Interest expense
61,035
433
61,468
52,467
399
52,866
Net income
$
52,689 $
8,889 $
61,578
$
5,823 $
8,239 $
14,062
Income from equity-accounted investments (v)
$
11,584 $
26,923 $
38,507
$
2,440 $
15,943 $
18,383
(i)
As at December 31, 2024, total current assets include $1.3 billion of residential inventory (December 31, 2023 - $1.2 billion), for which the
expected completion and sale may be greater than 12 months.
(ii)
As at December, 31, 2024, the RioCan-HBC JV non-current assets include 10 investment properties with a carrying value of $1.7 billion and 2
finance lease receivables with a carrying value of $0.2 billion (December 31, 2023 - $1.7 billion and $0.2 billion, respectively). During the year,
RioCan-HBC JV obtained total of three external valuations for investment properties, which supported an IFRS fair value of $0.9 billion, or 51.8%
of the JV's investment property portfolio.
(iii) As at December 31, 2024, total current liabilities include $1.2 billion of mortgages payable and other loans, of which $500.4 million relates to the
RioCan-HBC JV (December 31, 2023 - $363.8 million, of which $190.3 million relates to the RioCan-HBC JV).
(iv) As at December 31, 2024, total non-current liabilities include $0.3 billion of mortgages payable and lines of credit with maturities beyond twelve
months, of which $221.5 million relates to the RioCan-HBC JV (December 31, 2023 - $1.0 billion, of which $535.6 million relates to the RioCan-
HBC JV).
(v) Includes $23.9 million gains from two dispositions of a combined 25.0% interest in the 11YV project for the year ended December 31, 2024
($12.1 million for the year ended December 31, 2023).
RC Yorkville LP
On January 1, 2024, RioCan sold 25.0% interest in the units of RC Yorkville LP reducing its interest to 50.0% or 25.0% in the
underlying 11YV project for proceeds of $15.0 million, which resulted in a gain of $12.2 million, including the recycling of $0.2
million hedge reserve from OCI to net income. RioCan provided a loan of $9.8 million to the purchaser to finance the acquisition
of units from RC Yorkville LP.
On September 20, 2024, RioCan sold an additional 25.0% interest in the units of RC Yorkville LP further reducing its interest to
25.0% or 12.5% in the underlying 11YV project for proceeds of $14.6 million, which resulted in a gain of $11.6 million, including
the recycling of $0.1 million hedge reserve from OCI to net income. RioCan provided a loan of $10.6 million to the purchaser to
finance the acquisition of units from RC Yorkville LP.
RioCan-HBC JV
On February 12, 2024, RioCan advanced a mezzanine loan of $19.5 million to the RioCan-HBC JV with a CORRA + 7.75% with
CORRA floor of 5.0% maturing on February 12, 2029 to partially repay a maturing mortgage, and on March 22, 2024, an
additional $4.8 million to finance the exercise of a purchase option for land. On October 3, 2024, RioCan advanced a mezzanine
loan of $14.2 million to the RioCan-HBC JV with a CORRA + 7.75% with CORRA floor of 4.25% maturing on October 3, 2029 to
partially repay a maturing mortgage. Both loans are secured by a second mortgage on the related income producing property.
On November 30, 2023, RioCan advanced a $30.0 million bridge financing loan to the RioCan-HBC JV. This bridge financing loan
was subsequently repaid on January 26, 2024, upon the re-financing of a property in the RioCan-HBC JV for $75.0 million, for
which RioCan has provided a guarantee to the third-party lender. This guarantee is inclusive of RioCan's 22.0% interest. In
exchange for this guarantee, RioCan has received security interests in other assets of RioCan-HBC JV.
For the year ended December 31, 2024, RioCan earned $6.6 million in fees in respect of certain financing services provided to
the RioCan-HBC JV (year ended December 31, 2023 - nil).
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
137 RioCan Annual Report 2024
RCLC King and Sherbourne LP
On October 1, 2024, RioCan and its partner restructured their co-ownership arrangement into a joint venture arrangement,
forming RCLC King and Sherbourne LP, for the development of King and Sherbourne properties into residential mixed-use
development. RioCan retained a 50% interest in the limited partnership. As a result of the re-organization, RioCan transferred net
assets of $9.3 million, including investment property of $11.9 million and mortgage liabilities of $2.7 million, into the limited
partnership.
Joint operations
RioCan has co-ownership interests in investment properties, where it has joint control and owns an undivided interest in the
assets and liabilities with the co-owners, representing joint operations under IFRS 11, Joint Arrangements. As at December 31,
2024, the Trust has 43 such joint operations, of which two are considered individually significant: The WellTM and FourFifty The
WellTM, located in Toronto, Canada. RioCan has a 50% ownership interest in the commercial component of The Well and a 50%
interest in the residential project FourFifty The Well.
5. RESIDENTIAL INVENTORY
Residential inventory consists of assets that are developed by RioCan for sale in the ordinary course of business. Where market
conditions result in the carrying value exceeding net realizable value, a valuation allowance is made. As at December 31, 2024,
no valuation allowance has been recorded.
The following table shows the changes in the aggregate carrying value of RioCan's residential inventory:
Years ended December 31,
2024
2023
Balance, beginning of year
$
217,186 $
272,005
Dispositions
(61,350)
(8,602)
Development expenditures
128,214
127,118
Transfers from investment properties
—
6,400
Transfers to equity-accounted investments
—
(179,735)
Balance, end of year
$
284,050 $
217,186
The following table provides details on residential inventory gains for the years ended December 31, 2024 and 2023:
Years ended December 31,
2024
2023
Residential inventory sales
$
84,483 $
13,789
Residential inventory cost of sales:
Dispositions
61,350
8,602
Commission cost and other
3,039
392
Residential inventory cost of sales
$
64,389 $
8,994
Residential inventory gains
$
20,094 $
4,795
6. MORTGAGES AND LOANS RECEIVABLE
For the years ended December 31,
2024
2023
Current
$
218,495 $
49,391
Non-current
252,234
240,142
Mortgages and loans receivable measured at amortized cost
$
470,729 $
289,533
As at December 31, 2024, mortgages and loans receivable bear interest at a weighted average effective and contractual rate of
9.13% and 8.81% per annum, respectively (December 31, 2023 - 9.06% and 8.57%, respectively) and mature between 2025 and
2033. Mortgages and loans receivable are either directly or indirectly secured by real property, and as at December 31, 2024,
$141.3 million are full recourse to or guaranteed by the project/property sponsors.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 138
Future repayments of mortgages and loans receivables by year of maturity are as follows:
2025
$
218,495
2026
126,952
2027
45,183
2028
40,752
2029
38,321
Thereafter
1,026
$
470,729
7. RECEIVABLES AND OTHER ASSETS
The following table details the Trust's receivables and other assets as at December 31, 2024 and December 31, 2023:
Current
Non-
current
Total
Current
Non-
current
Total
Prepaid expenses and other assets
$
20,685 $
58,498 $
79,183 $
67,593 $
43,277 $
110,870
Net contractual rents and other tenant
receivables
45,856
—
45,856
35,345
—
35,345
Finance lease receivables
5,327
39,106
44,433
5,627
34,483
40,110
Amounts due on condominium final closings
51,619
—
51,619
6,529
—
6,529
Other receivables (i)
19,182
13,569
32,751
15,184
20,972
36,156
Funds held in trust
3,883
4,565
8,448
8,872
—
8,872
Interest rate swap agreements
—
283
283
4,202
4,568
8,770
$
146,552 $
116,021 $
262,573 $
143,352 $
103,300 $
246,652
As at
December 31, 2024
December 31, 2023
(i)
Other receivables primarily include fees and cost reimbursements receivable from partners, and disposition proceeds receivable.
Prepaid expenses and other assets
Prepaid expenses and other assets primarily include other investments, prepaid property taxes, prepaid selling commissions,
office furniture and equipment, and management information systems.
RioCan pays certain upfront non-refundable selling commissions with respect to the sale of residential inventory, which are
included in other assets when it is probable that future economic benefits will flow to the Trust. No amortization prior to the
recognition of revenue is recognized but, rather, a charge to income occurs when the revenue associated with the sale is
recognized.
Selling commissions (contract costs)
The following table shows the change in selling commissions:
Years ended December 31,
2024
2023
Balance, beginning of year
$
7,653 $
10,603
Additions
1,042
3,597
Transfers to equity-accounted investments (i)
—
(6,155)
Selling commissions expensed during the year
(3,039)
(392)
Balance, end of year
$
5,656 $
7,653
(i)
Relates to the 11YV project. Refer to Note 4 for further details.
Net contractual rents and other tenant receivables
Net contractual rents and other tenant receivables include CAM, realty tax and insurance recoveries and are presented net of an
allowance for doubtful accounts of $8.5 million as at December 31, 2024 (December 31, 2023 - $9.6 million).
RioCan determines its allowance for doubtful accounts using the simplified lifetime ECL model for contractual rents receivable.
The Trust uses an accounts receivable aging provision matrix to assess the ECL and applies loss factors based on historical loss
experience calibrated with forward-looking information to its aging buckets.
The Trust recognized a $1.1 million net provision of rent abatements and bad debts for the year ended December 31, 2024 (year
ended December 31, 2023 - net recovery of $5.6 million). These provisions (recoveries) are recorded to non-recoverable
operating costs.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
139 RioCan Annual Report 2024
The following table summarizes the Trust's movement in allowance for doubtful accounts:
Years ended December 31,
2024
2023
Allowance for doubtful accounts, beginning of year
$
9,643 $
13,469
Provision for (recovery of) credit losses
1,082
(5,587)
Write-offs, net of recoveries
(2,267)
1,761
Allowance for doubtful accounts, end of year
$
8,458 $
9,643
Funds held in trust
Funds held in trust include property-specific deposits held by the Trust's solicitors in the name of the Trust. These funds will be
released upon funding the construction of the residential inventory projects, after posting the requisite security, or upon final
closing of units within such projects. Funds held in trust may also relate to certain funds held in escrow pursuant to agreements of
purchase and sale, which are to be used for the acquisition of investment properties.
8. LEASES
A. As lessee
Real estate leases
Included in investment properties are eight properties held as ROU assets arising from land and/or building leases where RioCan
is the lessee as at December 31, 2024 (December 31, 2023 - 10 properties). On March 25, 2024, RioCan exercised a purchase
option in a land lease at Georgian Mall and acquired land that was previously held as an ROU asset (refer to Note 3). The
corresponding lease obligation included $5.0 million for the anticipated exercise of the purchase option and was settled upon the
closing of the acquisition.
The real estate lease may be a lease for a portion of a property (including access roads and parking lots) or the entire property
(including land and building). The carrying value of total investment properties related to these leases, including the portions
relating to RioCan's leasehold building interests, and certain other property or related property interests, and excluding sublease
finance lease receivables (refer to Note 7) is $134.5 million (December 31, 2023 - $215.0 million). The corresponding lease
liability in accounts payable and other liabilities is $27.8 million (December 31, 2023 - $35.1 million).
The following table shows the change in lease liabilities during the year:
Years ended December 31,
2024
2023
Balance, beginning of year
$
35,050 $
36,572
Renewal of leases of properties held under lease and other changes in estimates
—
350
Assignment of lease in conjunction with the sale of property
(449)
—
Repayments of lease liabilities (i)
(6,793)
(1,872)
Balance, end of year
$
27,808 $
35,050
(i)
Includes a $5.0 million payment for the exercise and settlement of a land lease purchase option at Georgian Mall for the year ended December 31,
2024.
Future lease payments under these leases are as follows:
Year ended December 31,
2024
Within twelve months
$
3,202
Two to five years
12,592
Over five years
48,694
Total future lease payments (inclusive of renewal options) (i)
$
64,488
Less: Future interest costs
36,680
Present value of lease payments (inclusive of renewal options)
$
27,808
(i) Includes all renewal options at current fixed payment amounts; excludes variable rent payments (percentage rent) on two properties.
The following are the amounts recognized in net income:
Years ended December 31,
2024
2023
Revenue from subleasing ROU assets (i)
$
23,476 $
23,480
Interest expense on lease liabilities
(1,570)
(1,985)
Office equipment lease payments
(832)
(984)
(i) Includes variable lease payments and excludes finance lease interest income, disclosed below as lessor.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 140
During the year ended December 31, 2024, the Trust had total cash outflows for leases of $10.4 million (December 31, 2023 -
$6.1 million), including office equipment lease payments and variable lease payments of $2.0 million (December 31, 2023 - $2.2
million).
B. As lessor
Finance lease receivable
RioCan has real estate subleases that are classified as finance leases and that are included in receivables and other assets on
the consolidated balance sheets.
The following table shows the change in finance lease receivables during the year:
Years ended December 31,
2024
2023
Balance, beginning of year
$
40,110 $
41,592
New sublease arrangements classified as finance leases
10,150
3,774
Repayments of finance lease receivables
(5,827)
(5,256)
Balance, end of year
$
44,433 $
40,110
Future minimum lease payments under these finance leases for the first five years and remaining thereafter are as follows:
2025
$
7,740
2026
10,557
2027
11,259
2028
11,378
2029
10,681
Thereafter
—
Total minimum lease payments
$
51,615
Less: Future interest income
7,182
Present value of minimum lease payments
$
44,433
For the years ended December 31,
2024
Lease commitments
The Trust as lessor has entered into leases on its property portfolio. The leases typically have lease terms between five and
twenty years and include clauses to enable periodic upward revision of the rental charge according to prevailing market
conditions. Some leases contain options to terminate before the end of the lease term.
Future minimum lease payments under non-cancellable operating leases in the aggregate and for each of the following periods
are as follows:
2025
$
674,342
2026
581,773
2027
508,701
2028
419,682
2029
325,611
Thereafter
1,360,270
Total
$
3,870,379
For the years ended December 31,
2024
Supplemental lease disclosures in addition to Note 17 regarding income from lease contracts in which the Trust is a lessor are as
follows:
Years ended December 31,
2024
2023
Variable lease payments from realty tax and insurance recoveries (i)
$
213,555 $
200,858
Variable lease payments from percentage and contractual rent credits (i)
8,184
8,424
Interest income from finance subleases
2,350
2,552
(i) For tenant operating and finance leases, and subleases.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
141 RioCan Annual Report 2024
9. INCOME TAXES
The Trust qualifies for the REIT Exemption for Canadian income tax purposes; therefore, it will be entitled to deduct distributions
for income tax purposes. The Trust expects to distribute its taxable income to Unitholders such that it will not be subject to tax.
From time to time, RioCan may retain some taxable income and net capital gains in order to utilize the capital gains refund
available to mutual fund trusts without incurring any income taxes. Accordingly, no provision for Canadian current income taxes
payable is required, except for amounts incurred in its incorporated Canadian subsidiaries.
Where the Trust does not qualify for the REIT Exemption for Canadian income tax purposes, certain distributions will not be
deductible by the Trust in computing its income for Canadian tax purposes. As a result, the Trust will be subject to tax at a rate
substantially equivalent to the general corporate income tax rate on distributed taxable income. Distributions paid in excess of
taxable income will continue to be treated as a return of capital to Unitholders. Undistributed taxable income is generally subject
to the top marginal personal tax rate. The Trust consolidates certain wholly owned incorporated entities that remain subject to tax.
The income tax recovery relates only to these entities.
10. DEBENTURES PAYABLE
As at
December 31, 2024
December 31, 2023
Current
$
500,000 $
300,000
Non-current
3,588,654
2,940,943
$
4,088,654 $
3,240,943
As at December 31, 2024, total debentures payable bear interest at weighted average contractual interest rates of 3.96% and a
weighted average effective interest rate of 3.97% inclusive of bond forward hedges (December 31, 2023 - 3.68% and 3.65%,
respectively).
Issuance activity
On February 12, 2024, RioCan issued $300.0 million Series AJ senior unsecured debentures. These debentures were issued at a
coupon rate of 5.470% per annum and will mature on March 1, 2030. Inclusive of bond forward hedges, the all-in rate is 5.452%.
On March 25, 2024, RioCan issued an additional $150.0 million of Series AJ senior unsecured debentures. These additional
debentures have the same terms and conditions and constitute part of the same series as the $300.0 million in Series AJ
debentures issued on February 12, 2024. Inclusive of the premium on issuance and bond forward hedges, the all-in rate is
5.273%.
On May 31, 2024, RioCan issued $300.0 million Series AK senior unsecured debentures. These debentures were issued at a
coupon rate of 5.455% per annum and will mature on March 1, 2031.
On October 3, 2024, RioCan issued $700.0 million aggregate principal amount of senior unsecured debentures of the Trust in two
series: $500.0 million Series AL senior unsecured debentures, which carry a coupon rate of 4.623% per annum and will mature
on October 3, 2031; and $200.0 million Series AM senior unsecured debentures, which carry a coupon rate of 4.004% per annum
and will mature on March 1, 2028. Inclusive of bond forward hedges, the all-in rate for Series AL is 4.832%.
Redemption activity
On February 12, 2024, RioCan repaid, in full, its $300.0 million, 3.287% Series W unsecured debentures upon maturity.
On October 4, 2024, RioCan redeemed, in full, its $300.0 million, 6.488% Series AI senior unsecured debentures due September
29, 2026 in accordance with their terms at a total redemption price of $300.0 million, plus accrued and unpaid interest of $0.3
million, up to, but excluding, the redemption date. The Trust recorded $0.8 million write-off of the related unamortized deferred
financing costs.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 142
The Trust has the following series of senior unsecured debentures outstanding as at December 31, 2024 and 2023:
(thousands of dollars)
As at
December 31,
December 31,
Series
Maturity date
Coupon rate
Interest payment frequency
2024
2023
W
February 12, 2024
3.29 %
Semi-annual
$
— $
300,000
AB
February 12, 2025
2.58 %
Semi-annual
500,000
500,000
I
February 6, 2026
5.95 %
Semi-annual
100,000
100,000
AD
June 15, 2026
1.97 %
Semi-annual
500,000
500,000
AI
September 29, 2026
6.49 %
Semi-annual
—
300,000
AC
March 10, 2027
2.36 %
Semi-annual
350,000
350,000
AG
October 6, 2027
5.61 %
Semi-annual
200,000
200,000
AM
March 1, 2028
4.00 %
Semi-annual
200,000
—
AE
November 8, 2028
2.83 %
Semi-annual
450,000
450,000
AF
May 1, 2029
4.63 %
Semi-annual
250,000
250,000
AH
October 1, 2029
5.96 %
Semi-annual
300,000
300,000
AJ
March 1, 2030
5.47 %
Semi-annual
450,000
—
AK
March 1, 2031
5.46 %
Semi-annual
300,000
—
AL
October 3, 2031
4.62 %
Semi-annual
500,000
—
Contractual obligations
$
4,100,000 $
3,250,000
Future repayments are as follows:
Years ending December 31:
2025
2.58 % $
500,000
2026
2.64 %
600,000
2027
3.54 %
550,000
2028
3.19 %
650,000
2029
5.36 %
550,000
Thereafter
5.13 %
1,250,000
Contractual obligations
4,100,000
Unamortized debt financing costs
(11,346)
$
4,088,654
Weighted average
contractual interest rate
Principal
maturities
Covenant compliance
The debentures have covenants relating to RioCan’s leverage limit of up to 60% of aggregate assets as set out in the Declaration
and applicable supplemental indenture. In addition, under the indenture, the Trust is required to maintain a $1.0 billion Adjusted
Book Equity (as defined in the indenture) and an interest coverage ratio of 1.65 times or greater. There are no requirements
under the unsecured debenture covenants for RioCan to maintain unencumbered assets. RioCan has the right, at any time, to
convert the Series I debentures to mortgage debt, subject to the acceptability of the security given to the debenture holders. In
such an event, the covenants relating to the 60% leverage limit, minimum book equity and interest coverage ratio would be
eliminated for those debentures. As at and during the year ended December 31, 2024, the Trust is in compliance with its
covenants pursuant to the Declaration and debenture indentures.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
143 RioCan Annual Report 2024
11. MORTGAGES PAYABLE
Mortgages payable, net of deferred financing costs, consist of the following:
As at
December 31, 2024
December 31, 2023
Current
$
572,564 $
398,406
Non-current
2,279,038
2,342,518
$
2,851,602 $
2,740,924
Future repayments of mortgages payable by year of maturity are as follows:
2025
3.32 % $
51,074 $
521,490 $
572,564
2026
3.61 %
47,296
104,622
151,918
2027
2.96 %
46,727
195,332
242,059
2028
3.20 %
38,865
374,735
413,600
2029
4.35 %
28,223
574,362
602,585
Thereafter
3.87 %
36,857
853,785
890,642
3.67 % $
249,042 $
2,624,326 $
2,873,368
Unamortized debt financing costs, net of premiums, discounts, market
interest rate differential on debt assumed and debt modification losses
(21,766)
$
2,851,602
Year
Weighted
average
contractual
interest rate (i)
Scheduled
principal
amortization
Principal
maturities
Total
repayments
(i) Inclusive of interest rate swap hedges.
As at December 31, 2024, total mortgages payable bear interest at a weighted average contractual interest rate of 3.67%, and a
weighted average effective interest rate of 3.68% inclusive of bond forward hedges (December 31, 2023 - 3.66% and 3.59%,
respectively), and mature between 2025 and 2034.
During the year ended December 31, 2024, RioCan completed new term mortgage borrowings of $427.1 million and mortgage
renewals of $47.8 million at a combined weighted average contractual interest rate of 4.80% and a weighted average term of 7.3
years, and assumed contractual debt and a VTB mortgage of $78.8 million at a weighted average contractual interest rate of
2.69% and a weighted average remaining term of 3.7 years. During the year ended December 31, 2024, repayments of mortgage
balances and scheduled amortization amounted to $368.8 million, mortgages disposed on the sale of investment properties were
$14.9 million and mortgages transferred to equity-accounted investment were $2.7 million.
Pledged properties
As at December 31, 2024, $6.0 billion of the aggregate carrying value of investment properties, properties held for sale,
residential inventory and certain other assets serve as security for RioCan's mortgages payable (December 31, 2023 - $5.8
billion).
12. LINES OF CREDIT AND OTHER BANK LOANS
The Trust's revolving unsecured operating line of credit and secured construction lines and other bank loans, net of deferred
financing costs, are as follows:
As at
December 31, 2024
December 31, 2023
Revolving unsecured operating line of credit (i)
$
(1,905) $
(1,875)
Non-revolving unsecured credit facilities
199,527
699,836
Construction lines and other bank loans
186,036
181,285
$
383,658 $
879,246
Current
$
10,000 $
567,015
Non-current
373,658
312,231
$
383,658 $
879,246
(i)
There are no drawn amounts as at December 31, 2024 and December 31, 2023. Balance represents unamortized deferred financing costs.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 144
Revolving unsecured operating line of credit
As at December 31, 2024, RioCan has a nil drawn balance, and $1,250.0 million of credit is available to be drawn from this
revolving unsecured operating line of credit (December 31, 2023 - nil and $1,250.0 million, respectively).
On June 26, 2024, the Trust exercised its option to extend the maturity date on its operating line of credit to May 31, 2029.
Certain covenants were amended to be less restrictive with all other material terms and conditions remaining the same.
Non-revolving unsecured credit facilities
As at December 31, 2024, the Trust has a $200.0 million non-revolving unsecured credit facility with two Schedule I financial
institutions, with a weighted average all-in fixed interest rate of 4.47% (December 31, 2023 - all-in fixed interest rate of 4.93%)
through interest rate swaps and maturity date of January 31, 2030. As at December 31, 2024, this facility is fully drawn.
On February 7, 2024, RioCan repaid its $350.0 million non-revolving unsecured credit facility upon maturity, in accordance with its
terms.
On June 27, 2024, RioCan repaid its $150.0 million non-revolving unsecured credit facility upon maturity, in accordance with its
terms.
On September 3, 2024, RioCan unwound the associated interest rate swap agreement and hedge on the $200.0 million non-
revolving unsecured credit facility for a debt prepayment gain of $0.5 million. On September 25, 2024, RioCan entered into a
forward starting interest rate swap maturing on January 31, 2030, in anticipation of amending the maturity date of the
$200.0 million term loan. On October 2, 2024, RioCan amended the term loan agreement, and extended the maturity date of the
$200.0 million non-revolving unsecured credit facility to January 31, 2030, for a hedged annual all-in fixed interest rate of 4.47%.
The underlying spreads for the revolving unsecured operating line of credit and the non-revolving unsecured credit facilities are
based on the Trust's credit ratings. The revolving unsecured operating line of credit and the non-revolving unsecured credit
facilities agreements require the Trust to maintain certain financial covenants. Refer to Note 26 for additional details.
Construction lines of credit and other bank loans
In addition to the revolving unsecured operating line of credit and non-revolving unsecured credit facilities, the Trust has secured
credit facilities and other bank loans, which include fixed rate and variable rate non-revolving secured construction and acquisition
facilities for the funding of certain development properties. As at December 31, 2024, these facilities have drawn balances of
$186.0 million (December 31, 2023 - $181.3 million), an aggregate maximum borrowing capacity of $332.1 million (December 31,
2023 - $567.0 million) and maturity dates between June 2025 to March 2033.. The weighted average contractual interest rate on
amounts outstanding is 4.95% (December 31, 2023 - 6.51%).
13. ACCOUNTS PAYABLE AND OTHER LIABILITIES
Current
Non-
current
Total
Current
Non-
current
Total
Property operating costs (i)
$
82,632 $
41,372 $ 124,004 $
68,516 $
41,612 $ 110,128
Development expenditures
111,730
—
111,730
125,007
—
125,007
Capital expenditures and leasing commissions on
income producing properties
62,534
—
62,534
52,087
—
52,087
Deferred revenue
85,730
17,087
102,817
31,445
74,346
105,791
Unitholder distributions payable
27,790
—
27,790
27,038
—
27,038
Interest payable
56,118
—
56,118
42,043
—
42,043
Lease liability (ii)
1,757
26,051
27,808
6,793
28,257
35,050
Unfunded employee future benefits
—
10,309
10,309
—
10,579
10,579
Contingent consideration (iii)
209
40,914
41,123
476
—
476
Interest rate swap agreements
—
152
152
—
—
—
Bond forward agreement
—
—
—
—
1,997
1,997
Other payables and accruals
25,407
—
25,407
31,166
2,036
33,202
$ 453,907 $ 135,885 $ 589,792 $ 384,571 $ 158,827 $ 543,398
As at
December 31, 2024
December 31, 2023
(i)
Includes amounts billed in advance for CAM, realty taxes and insurance recoveries.
(ii)
Refer to Note 8 for further details.
(iii) Contingent consideration relates to Lawrence Plaza acquisition. Refer to Note 3 for further details.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
145 RioCan Annual Report 2024
Deferred revenue
Deferred revenue consists of the following:
As at
December 31, 2024
December 31, 2023
Deposits received on residential inventory sales (contract liabilities)
$
67,965 $
75,601
Other deferred revenue (i)
34,852
30,190
$
102,817 $
105,791
(i)
Includes prepaid rental income from tenants to be recognized over time.
Deposits received from customers on residential inventory sales (contract liabilities)
The following table shows the change in deposits received from customers (contract liabilities):
As at
December 31, 2024
December 31, 2023
Balance, beginning of year
$
75,601 $
129,400
Amounts deferred from new contracts with customers during the year
6,465
15,525
Deposits transferred to equity-accounted investments (i)
—
(68,322)
Recognized as revenue during the year
(14,101)
(1,002)
Balance, end of year
$
67,965 $
75,601
(i)
Relates to the 11YV project. Refer to Note 4 for further details.
During the year ended December 31, 2024, $14.1 million of deposits received from customers on condominium and townhouse
sales (contract liabilities) were recognized in revenue upon the purchasers taking possession of units (December 31, 2023 -
$1.0 million).
14. UNITHOLDERS' EQUITY
Trust Units
The Trust is authorized to issue an unlimited number of Units. The Units are entitled to distributions, as and when declared by the
Board (and upon liquidation), and to a pro-rata share of the residual net assets remaining after the preferential claims, thereon, of
debt holders and preferred Unitholders. As the Trust is a closed-end trust, the Units are not puttable.
The following represents the number of Units issued and outstanding, and the related carrying value of Unitholders' equity, for the
years ended December 31, 2024 and 2023:
Units
$
Units
$
Balance, beginning of year
300,455 $
4,560,166
300,359 $
4,556,783
Units issued:
Unit-based compensation exercises, net of Units
repurchased for settlement of Unit exercises
—
(56)
85
3,173
Direct purchase plan
14
251
11
210
Balance, end of year
300,469 $
4,560,361
300,455 $
4,560,166
Years ended December 31,
2024
2023
Included in Units outstanding as at December 31, 2024 are exchangeable limited partnership Units totalling 0.5 million
(December 31, 2023 - 0.5 million Units) of three limited partnerships that are subsidiaries of the Trust (the LP Units), which were
issued to vendors as partial consideration for income producing properties acquired by RioCan. RioCan is the general partner of
the limited partnerships. The LP Units are entitled to distributions equivalent to distributions on RioCan Units and are
exchangeable for RioCan Units on a one-for-one basis at any time at the option of the holder.
Normal course issuer bid (NCIB)
On November 7, 2023, RioCan received TSX approval of its notice of intention to renew its NCIB (the 2023/2024 NCIB), to
acquire up to a maximum of 29,895,017 Units, or approximately 10% of the public float as of October 31, 2023, for cancellation or
to satisfy RioCan's obligation to deliver Units under the REU and PEU Plans, over the next 12 months, effective November 9,
2023.
On November 8, 2024, RioCan announced that it received TSX approval of its notice of intention to renew its NCIB (the
2024/2025 NCIB), to acquire up to a maximum of 29,878,867 Units, or approximately 10% of the public float as at October 31,
2024, for cancellation or to satisfy RioCan's obligation to deliver Units under the REU and PEU Plans, over the next 12 months,
effective November 12, 2024.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 146
The number of Units that can be purchased pursuant to the 2024/2025 NCIB is subject to a current daily maximum of 209,391
Units (which is equal to 25% of 837,564, being the average daily trading volume for the six months preceding October 31, 2024),
subject to RioCan’s ability to make one block purchase of Units per calendar week that exceeds such limits. RioCan intends to
fund the purchases primarily out of its available cash and undrawn credit facilities.
RioCan has an automatic securities purchase plan (ASPP) in connection with the 2024/2025 NCIB applicable to its outstanding
Units. The ASPP is intended to allow for the purchase of Units under the NCIB at times when RioCan would ordinarily not be
permitted to purchase Units due to regulatory restrictions and customary self-imposed blackout periods. Pursuant to the ASPP,
purchases will be made by RioCan's designated broker based on periodically pre-established purchasing parameters, in
accordance with the rules of the TSX and applicable securities laws. Outside of pre-determined blackout periods, Units may be
purchased under the NCIB at such times as RioCan determines to be appropriate in compliance with TSX rules and applicable
securities laws.
During the years ended December 31, 2024 and December 31, 2023, the Trust did not acquire and cancel any Units.
Refer to Note 34 for Units repurchased subsequent to December 31, 2024.
Contributed surplus
Awards under the Restricted Equity Unit Plans and Performance Equity Unit Plan of RioCan and its consolidated subsidiaries are
settled by the delivery of Units purchased on the secondary market, net of applicable withholdings as further described in Note
15. The fair values of these equity-settled awards are recognized as an expense over the vesting period with a corresponding
increase to contributed surplus, which is presented as a separate component of total Unitholders' equity.
For the year ended December 31, 2024, RioCan recorded $13.5 million in unit-based compensation costs (year ended
December 31, 2023 - $13.0 million).
Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss) as at and for the year ended December 31, 2024 consists of the following
amounts:
As at December 31, 2023
$
(963) $
9,259 $
388 $
42,565 $
51,249
Other comprehensive income (loss)
142
(8,637)
(769)
(12,626)
(21,890)
As at December 31, 2024
$
(821) $
622 $
(381) $
29,939 $
29,359
Actuarial loss on
pension plan
Interest rate
swap agreements
(hedge reserve)
Equity-accounted
investments
Bond forward
agreement
(hedge reserve)
Total
15. UNIT-BASED COMPENSATION PLANS
Restricted Equity Unit Plans (REU Plans)
Senior Executive REU Plan
As at December 31, 2024, 430,218 Senior Executive REUs are outstanding (December 31, 2023 - 478,426), of which 129,628
are vested (December 31, 2023 - 189,319). The Senior Executive REU Plan provides for the allotment of REUs to the President
and Chief Executive Officer (CEO), Chief Investment Officer, Chief Operating Officer, and Chief Financial Officer of the Trust, and
such other officers or executive employees of the Trust that are determined by the CEO and approved by RioCan's People,
Culture and Compensation Committee. Each REU notionally represents the value of one Unit of the Trust on the date of grant.
Unit distributions paid during the period from grant date until settlement date will be credited to each REU participant in the form
of additional REUs.
All REUs granted prior to December 8, 2023 shall vest one-third on each of the first, second and third anniversary of the grant
date, provided however that all vested REUs are only eligible for settlement upon the third anniversary of the grant date. Pursuant
to amendments to the Senior Executive REU Plan approved by the Board on December 8, 2023, all REUs granted after
December 8, 2023 shall vest and settle on the third anniversary of the grant date (or such other date as contemplated by the
Senior Executive REU Plan) (this date, together with the vesting date of REUs granted prior to December 8, 2023, being the
“Settlement Date”). Settlement of vested REUs is generally made within 30 days after the Settlement Date by the delivery of an
equivalent number of trust Units purchased on the secondary market, net of applicable withholdings. Additional amendments
made to the Senior Executive REU Plan set out the requirement for a ‘double trigger’ before permitting REUs to vest upon a
change of control. This change means that REUs will now require both a termination of the executive’s employment and a change
of control to trigger vesting, which aligns RioCan with equity plan best-practices.
During the year ended December 31, 2024, the Trust granted 154,893 REUs under its Senior Executive REU Plan. The weighted
average grant date price was $18.56 per unit, with each grant price based on the five-day volume weighted average market price
of RioCan's Units traded on the TSX prior to the grant date, resulting in an aggregate fair value of $2.9 million.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
147 RioCan Annual Report 2024
Employee REU Plan
As at December 31, 2024, 645,839 Employee REUs are unvested and outstanding (December 31, 2023 - 511,086). The
Employee REU Plan provides for the allotment of REUs to certain employees of the Trust that do not participate in the Senior
Executive REU Plan. Each REU notionally represents the value of one Unit of the Trust on the date of grant. Unit distributions
paid during the period from grant date until settlement date will be credited to each REU participant in the form of additional
REUs.
The number of REUs granted shall vest fully on the third anniversary of the grant date (the Settlement Date), including distribution
equivalents that have accumulated during the vesting period. Settlement of vested REUs is generally made within 30 days after
the Settlement Date by the delivery of an equivalent number of trust Units purchased on the secondary market, net of applicable
withholdings.
During the year ended December 31, 2024, the Trust granted 301,099 REUs under its Employee REU Plan. The weighted
average grant date price was $18.56 per unit, with each grant price based on the five-day volume weighted average market price
of RioCan's Units traded on the TSX prior to the grant date, resulting in an aggregate fair value of $5.6 million.
Performance Equity Unit Plan (PEU Plan)
As at December 31, 2024, 424,105 PEUs are unvested and outstanding (December 31, 2023 - 451,522). PEUs are awarded to
certain officers and senior management of the Trust, subject to Board approval. Each PEU notionally represents the value of one
Unit of the Trust on the date of grant. PEUs issued contain a multiplier factor and the final number of PEUs that will be paid out
upon vesting will vary based on the achievement of certain performance targets over a three-year period from the year the award
was granted. The performance targets attributable to PEUs are set by the Trust at the time the awards are granted, or from time
to time adjusted as permitted under the terms of the PEU Plan. The performance targets may vary between grants. Unit
distributions paid during the period from grant date until settlement date will be credited to each PEU participant in the form of
additional PEUs.
The PEUs vest on the Financial Statement Approval Date immediately following the last year in the three-year period and are
generally settled within 30 days after the vesting date by the delivery of an equivalent number of trust Units to be acquired on the
secondary market, net of applicable withholdings.
During the year ended December 31, 2024, the Trust granted 154,893 PEUs under its PEU Plan at a fair value of $3.1 million.
The grant date fair value assumptions using a Monte-Carlo simulation model are as follows:
Fair value of PEUs granted
$
3,092 $
2,923
PEUs granted (in thousands)
155
126
Weighted average grant date fair value per unit
$
19.96 $
23.29
Weighted average expected risk-free interest rate (i)
3.9%
4.0%
Weighted average expected unit price volatility (ii)
19.1%
34.0%
Weighted average initial total Unitholder return (iii)
1.4%
5.2%
Years ended December 31,
2024
2023
(i)
Derived using the yield on Government of Canada benchmark bonds with an average term similar to the PEU vesting period.
(ii)
Expected unit price volatility is calculated based on the average of the actual daily closing price of RioCan's trust Units measured over a three-year
historical period up to the grant date.
(iii) PEUs are subject to certain internal and external measures of performance. The 2024 PEU grants will vest based on the following performance
metrics: 40% is subject to an internal performance hurdle over three-year funds from operations per unit growth, 40% is subject to a relative total
Unitholder return (TUR) performance hurdle over a three-year performance period where vesting is dependent upon RioCan's TUR performance
relative to a comparative group of peer companies, 10% is subject to an internal performance hurdle over three-year cumulative average net asset
value (NAV) per Unit growth and 10% is subject to an internal hurdle on ESG objectives.
The initial TUR performance has incorporated actual historical TUR performance for RioCan and each entity in the comparator group over the
period from January 1, 2024 to February 22, 2024 for the 2024 PEU grants.
Units Purchased for Settlement
During the year ended December 31, 2024, RioCan purchased 298,620 Units, net of applicable withholdings, at an average price
of $18.59, for satisfying RioCan's existing obligations under the REU and PEU Plans (December 31, 2023 - 153,263 Units at
average price of $21.79).
Incentive Unit Option Plan
The Trust provides long-term incentives to certain employees by granting options through the incentive Unit option plan (Plan).
RioCan is authorized to issue up to a maximum of 22 million Unit options under the Plan. As at December 31, 2024, 15.3 million
Unit options remain available to be granted under the Plan. Pursuant to a board resolution in October 2021, the Board has
committed to no longer issue Unit options as part of RioCan’s long-term incentive plan or as special awards.
The exercise price for each option is equal to the volume weighted average trading price of the Units on the TSX for the five
trading days immediately preceding the dates of grant.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 148
Options granted prior to February 2021 have a contractual life of 10 years and vest at 25% per annum commencing on the first
anniversary of the grant date, and become fully vested after four years.
The outstanding Unit options granted on February 23, 2021 have a term of seven years and the following vesting conditions:
•
500,000 Unit options have vesting conditions that are time-based and will vest 50% on April 1, 2022 and 50% on April 1,
2023; and
•
700,000 Unit options have vesting conditions that are 50% time-based service condition only (Time-Based Options) and 50%
with a time-based service condition and market-based performance condition (Performance Options). The Time-Based
Options will vest 50% on February 23, 2023 and 50% on February 23, 2025. Vesting of the Performance Options depends
on achieving certain performance measures based on 20 consecutive trading days (the 20-day VWAP) and only when
certain time-vesting conditions are also met as follows: (i) 50% of the Performance Options shall be exercisable on or after
the second anniversary of the Grant Date provided that the 20-day VWAP is equal to or greater than $20, at any point during
the seven-year term; and (ii) 50% of the Performance Options shall be exercisable on or after the fourth anniversary of the
Grant Date provided that the 20-day VWAP is equal to or greater than $24, at any point during the seven-year term.
The Trust accounts for the Plan by estimating the fair value of each tranche of an award at the grant date and subsequently
recognizing the compensation expense over the vesting period.
For the years ended December 31, 2024 and December 31, 2023, there were no Unit options granted to senior management.
The following summarizes the changes in Unit options outstanding during the years ended December 31, 2024 and 2023:
Years ended December 31,
2024
2023
Options
Units
(in thousands)
Weighted
average
exercise price
Units
(in thousands)
Weighted
average
exercise price
Outstanding, beginning of year
4,722 $
24.52
5,691 $
25.03
Expired
(873)
26.98
(969)
27.51
Outstanding, end of year
3,849 $
23.97
4,722 $
24.52
Options exercisable at end of year
3,499 $
24.55
4,372 $
25.03
The following table summarizes the Trust's outstanding options and related exercise price ranges of Units granted under the Plan:
Outstanding options
Vested options
Exercise price range ($/unit)
Number of Units
issuable
(in thousands)
Weighted average
exercise price per
unit
Weighted average
remaining life
(years)
Number of Units
issuable
(in thousands)
Weighted average
exercise price per
unit
As at December 31, 2024
$18.13 to $20.36
1,200 $
18.13
3.1
850 $
18.13
$20.37 to $22.60
—
—
—
—
—
$22.61 to $24.84
350
24.00
3.2
350
24.00
$24.85 to $27.08
1,566
25.96
1.9
1,566
25.96
$27.09 to $29.31
733
29.24
0.2
733
29.24
3,849 $
23.97
2.1
3,499 $
24.55
Trustee Unit Plan
Deferred Unit Plan (DU Plan)
The DU Plan was introduced in 2014 for non-employee Trustees of the Trust (Trustees). Trustees may be awarded deferred
Units, each of which is economically equivalent to one Unit, from time to time at the discretion of the Board of Trustees upon
recommendation from the People, Culture and Compensation Committee, subject to a maximum annual grant not to exceed that
number of deferred Units that is $150,000 divided by the average market price of a Unit on the award date. Trustees may also
elect to receive up to 100% of his or her annual retainer and meeting fees for a calendar year otherwise payable in cash in the
form of deferred Units. Pursuant to amendments to the DU Plan that were approved by Unitholders in 2023, the maximum
number of Units reserved for issuance under the DU Plan at any time is 1,500,000. Unit distributions paid during the period from
grant date until settlement date will be credited to each DU Plan participant in the form of additional deferred Units.
Trustees have up to two years after ceasing to be a Trustee to redeem deferred Units, upon which the Trust will issue and deliver
Units.
As at December 31, 2024, there are 719,820 deferred Units vested and outstanding (December 31, 2023 - 579,234).
During the year ended December 31, 2024, 101,802 deferred Units were granted at weighted average grant price of $17.54 per
unit, with each grant price based on the five-day volume weighted average market price of RioCan's Units traded on the TSX prior
to each grant date, resulting in an aggregate fair value of $1.8 million, and nil deferred Units were exercised (year ended
December 31, 2023 - 79,591 deferred Units granted and 183,838 deferred Units exercised).
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
149 RioCan Annual Report 2024
16. DISTRIBUTIONS TO UNITHOLDERS
Total distributions declared to Unitholders are as follows:
Years ended December 31,
2024
2023
Distributions declared to Unitholders
$
332,763 $
322,924
Distributions per unit
$
1.1075 $
1.0750
Commencing with the February 2024 distribution, payable in March 2024, the Trust increased its monthly distribution by $0.0025
per unit to $0.0925 per unit or $1.11 per unit on an annualized basis.
On January 15, 2025, RioCan declared a distribution payable of $0.0925 per unit for the month of January 2025, which was paid
on February 7, 2025 to Unitholders of record as at January 31, 2025.
Refer to Note 34 for an increase in the monthly distribution approved by the Board of Trustees subsequent to December 31,
2024.
17. REVENUE
Rental revenue
Years ended December 31,
2024
2023
Base rent
$
710,525 $
689,609
Realty tax and insurance recoveries
213,555
200,858
CAM
183,501
176,080
Percentage rent
8,184
8,424
Straight-line rent
11,234
5,898
Lease cancellation fees
4,817
5,253
Parking revenue
5,311
4,983
Rental revenue
$
1,137,127 $
1,091,105
The following tables provide additional disclosure of the Trust's various revenue streams:
Revenue from contracts with customers
Revenue from contracts with customers includes CAM recoveries and parking revenue that are included in rental revenue:
Years ended December 31,
2024
2023
CAM
$
183,501 $
176,080
Property management and other service fees
17,916
18,977
Parking revenue
5,311
4,983
Residential inventory sales
84,483
13,789
Revenue from contracts with customers
$
291,211 $
213,829
Property management and other service fees
Property management and other service fees consist of the following:
Years ended December 31,
2024
2023
Property management fees (i)
$
4,269 $
3,525
Construction and development fees (i)
3,380
5,928
Leasing fees (ii)
385
381
Financing fees (iii)
7,833
5,018
Other (iv)
2,049
4,125
Property management and other service fees
$
17,916 $
18,977
(i)
Recognized over time.
(ii)
Recognized at a point in time.
(iii) During the year ended December 31, 2024, $1.1 million is recognized at a point in time and $6.7 million is recognized over time (year ended
December 31, 2023 - $5.0 million and nil, respectively).
(iv) During the year ended December 31, 2024, $2.0 million is recognized over time and nil is recognized at a point in time (year ended December 31,
2023 - $4.0 million and $0.2 million, respectively).
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 150
Residential inventory sales
The following table identifies estimated revenue from residential inventory sales to be recognized in future periods at the point in
time when purchasers take possession of their respective residential units based on pre-sold condominiums and townhouses as
at December 31, 2024 and 2023:
As at
December 31, 2024 December 31, 2023 (i)
Within one year
$
239,845 $
72,483
More than one year
46,661
284,528
Total
$
286,506 $
357,011
(i)
The comparatives for estimated revenue of pre-sold residential inventory for the year ended December 31, 2023 have been restated.
18. INVESTMENT AND OTHER INCOME
Years ended December 31,
2024
2023
Income earned on marketable securities
$
690 $
932
Fair value gain (loss) on marketable securities
6,645
(761)
Transaction gains and other income, net
10,196
8,330
$
17,531 $
8,501
The following table breaks down the fair value gain (loss) on marketable securities for the years ended December 31, 2024 and
2023:
Years ended December 31,
2024
2023
Realized gains on sale of marketable securities during the year
$
1,997 $
104
Change in unrealized fair value on marketable securities during the year
4,648
(865)
Fair value gain (loss) on marketable securities during the year
$
6,645 $
(761)
19. INTEREST INCOME
Years ended December 31,
2024
2023
Interest income from mortgages and loans receivable
$
35,619 $
19,511
Other interest income (i)
6,850
5,620
$
42,469 $
25,131
(i)
Includes interest from finance subleases of $2.4 million for the year ended December 31, 2024 (year ended December 31, 2023 - $2.6 million).
20. INTEREST COSTS
Years ended December 31,
2024
2023
Total interest (i)
$
289,251 $
250,537
Less: Interest capitalized
(31,707)
(41,589)
$
257,544 $
208,948
(i)
Includes interest from lease liabilities of $1.6 million for the year ended December 31, 2024 (year ended December 31, 2023 - $2.0 million).
For the year ended December 31, 2024, interest was capitalized to properties under development and residential inventory at a
weighted average effective interest rate of 4.27% (year ended December 31, 2023 - 3.88%).
21. GENERAL AND ADMINISTRATIVE
Years ended December 31,
2024
2023
Non-recoverable salaries and benefits, net
$
30,293 $
22,438
Unit-based compensation expense
7,795
7,807
Depreciation and amortization
1,450
2,632
Other general and administrative expenses
14,941
15,458
G&A expense before Enterprise Resource Planning (ERP) implementation costs
54,479
48,335
ERP implementation costs
5,368
12,032
Total G&A expense
$
59,847 $
60,367
Other general and administrative costs include information technology costs, public company costs, professional fees, travel
expenses, occupancy costs, donations, advertising, promotion and marketing costs.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
151 RioCan Annual Report 2024
During the second quarter of 2024, RioCan deployed a new ERP system. ERP implementation costs incurred during the year
include salaries and benefits, consultant and licensing costs.
During the year, RioCan restructured its organization, reducing its workforce by approximately 9.5% and incurred a restructuring
charge of $7.9 million, which is included in non-recoverable salaries and benefits, net. As at December 31, 2024, RioCan had
$3.9 million accrued related to restructuring charge reported in accounts payable and other liabilities.
22. TRANSACTION AND OTHER COSTS
For the year ended December 31, 2024, transaction and other costs totalling $6.7 million (year ended December 31, 2023 - $9.3
million) primarily include property disposition costs, marketing costs and net debt prepayment loss.
23. NET INCOME PER UNIT
Net income per basic and diluted unit is calculated based on net income available to Unitholders divided by the weighted average
number of Units outstanding taking into account the dilution effect of Unit options.
Years ended December 31,
2024
2023
Net income attributable to Unitholders
$
473,465 $
38,802
Weighted average number of Units outstanding (in thousands):
Basic
300,464
300,392
Dilutive effect of Unit options (i)
9
87
Diluted
300,473
300,479
Net income per unit (basic)
$
1.58 $
0.13
Net income per unit (diluted)
$
1.58 $
0.13
(i) The calculation of diluted weighted average number of Units outstanding excludes 2.9 million Unit options for the year ended December 31, 2024
(year ended December 31, 2023 - 3.8 million Unit options), as the exercise price of these Unit options was greater than the average market price of
Units.
24. FAIR VALUE MEASUREMENT
The fair value hierarchy of assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets is
as follows:
December 31, 2024
December 31, 2023
As at
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Assets measured at fair value:
Marketable securities
$
— $
— $
— $
20,198 $
— $
—
Other investments
594
—
44,537
—
—
30,142
Investment properties:
Income producing properties
—
— 12,994,238
—
— 12,632,473
Properties under development
—
—
844,916
—
—
929,245
Properties held for sale
—
—
16,707
—
—
19,075
Interest rate swap assets
—
283
—
—
8,770
—
Total assets measured at fair value
$
594 $
283 $ 13,900,398 $
20,198 $
8,770 $ 13,610,935
Liabilities measured at fair value:
Interest rate swaps
—
152
—
—
—
—
Bond forward agreement
—
—
—
—
1,997
—
Total liabilities measured at fair value
$
— $
152 $
— $
— $
1,997 $
—
For assets and liabilities measured at fair value as at December 31, 2024, there were no transfers between Level 1, Level 2 and
Level 3 during the year ended December 31, 2024. For changes in fair value measurements of investment properties and
properties held for sale included in Level 3 of the fair value hierarchy, refer to Note 3 for details on the changes in beginning and
ending balances.
Fair value of financial instruments
The following presents the carrying values and fair values of the Trust's financial instruments, excluding those classified as
amortized cost and whose carrying value reasonably approximates their fair value and lease liabilities. Financial instruments that
are classified as amortized cost and whose carrying value reasonably approximates their fair value include net contractual rents
and other tenant receivables, amounts due on condominium final closings, funds held in trust, other receivables, accounts
payable related to property operating costs, development expenditures, capital expenditures and leasing commissions, other
trade payables and accruals, and deposits received from customers on residential inventory.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 152
As at
Carrying value
Fair value
Carrying value
Fair value
Financial assets:
Marketable securities
$
— $
— $
20,198 $
20,198
Other investments
45,131
45,131
30,142
30,142
Finance lease receivables
44,433
44,433
40,110
40,110
Mortgages and loans receivable
470,729
469,398
289,533
284,512
Interest rate swap assets
283
283
8,770
8,770
Financial liabilities:
Debentures payable
$
4,088,654 $
4,139,512 $
3,240,943 $
3,137,722
Mortgages payable
2,851,602
2,816,060
2,740,924
2,631,379
Lines of credit and other bank loans
383,658
385,083
879,246
879,460
Interest rate swap liabilities
152
152
—
—
Bond forward agreement
—
—
1,997
1,997
December 31, 2024
December 31, 2023
The fair values of the Trust's financial instruments were determined as follows:
Other investments
Other investments primarily include an investment in a real estate debt investment fund for which fair value is determined based
on the reported NAV, where the underlying assets are carried at fair value, provided by the investment fund manager and is
considered a Level 3 input.
Finance lease receivables
The fair value of finance lease receivables is determined by the discounted cash flow method using applicable inputs such as
prevailing discount rates. Fair value measurements of these instruments were estimated using Level 3 inputs.
Mortgages and loans receivable
The fair value of mortgages and loans receivable is determined by the discounted cash flow method using applicable inputs such
as prevailing interest rates, contractual rates and discounts, and considers the fair value of the underlying collateral. Fair value
measurements of these instruments were estimated using Level 3 inputs. The carrying values of short-term and variable rate
loans generally approximate their fair values.
Mortgages payable, lines of credit and other bank loans and debentures payable
The fair values of these instruments are estimates made at a specific point in time, based on relevant market information. These
estimates are based on quoted market prices for the same or similar issues or on the current rates offered to the Trust for similar
financial instruments subject to similar risk and maturities. Fair value measurements of these instruments were estimated using
Level 2 inputs. The carrying values of short-term and variable rate debt generally approximate their fair values.
Interest rate swaps
The fair values of the interest rate swaps reported in receivables and other assets and accounts payable and other liabilities on
the consolidated balance sheets represent estimates at a specific point in time using financial models based on interest rates that
reflect current market conditions, the credit quality of counterparties and interest rate curves.
Bond forward agreement
The fair values of the bond forward agreement reported in accounts payable and other liabilities on the consolidated balance
sheets represent estimates at a specific point in time using financial models based on interest rates that reflect current market
conditions, the credit quality of counterparties and interest rate curves.
25. RISK MANAGEMENT
The main risks arising from the Trust's financial instruments are interest rate risk, liquidity risk and credit risk. The Trust's
approach to managing these risks is summarized below.
Interest rate risk
The Trust is exposed to interest rate risk on its borrowings and could be adversely affected if it were unable to obtain cost-
effective financing. The majority of the Trust's debt is financed at fixed rates with maturities staggered over a number of years,
thereby mitigating its exposure to changes in interest rates and financing risks. As at December 31, 2024, approximately 2.0%
(December 31, 2023 - 4.6%) of the Trust's debt is financed at variable rates (including mortgage debt related to properties held
for sale, if applicable, and excluding debt that has been hedged to fixed rates), exposing the Trust to interest rate risk.
From time to time, the Trust may enter into floating-for-fixed interest rate swaps as part of its strategy for managing its exposure
to interest rate risk on debt with floating interest rates. The Trust may also enter into bond forward contracts to hedge its exposure
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
153 RioCan Annual Report 2024
to movements in interest rates from the time it determines it will refinance or issue a fixed rate debt and the time the fixed rate
debt is issued. The intent is to use the bond forwards to manage the change in cash flows of the future interest payments on the
anticipated fixed rate debt.
Hedge effectiveness is determined at the inception of the hedge relationship, and through quarterly effectiveness assessments to
ensure that an economic relationship exists between hedged item and hedging instrument. The hedge ratio is set at a ratio of 1:1
for the specific portions of floating rate debt that have been designated as the hedged item or at a ratio of 1:1 for the specific
portion of forecasted debenture issuance.
The Trust enters into floating-for-fixed interest rate swap hedge relationships where the critical terms of the hedging instrument
match with the terms of the hedged item; as a result, the Trust does not expect any sources of hedge ineffectiveness, except from
changes in credit risk of the Trust and the counterparty. For bond forward contracts, sources of ineffectiveness include differences
in the timing of duration and maturities, and changes in credit risk of the Trust and the counterparty.
The Trust has applied hedge accounting and recorded the changes in fair value for the effective portion of these derivatives in
OCI accumulated in the cash flow hedge reserve in equity from the date of hedge designation. Accumulated amounts are
reclassified from OCI to net income in the periods where the forecasted cash flows impact net income. For any interest rate
swaps for which the Trust does not apply hedge accounting, the change in fair value of the swap contracts is recognized in net
income.
As at December 31, 2024, the outstanding notional amount of the floating-for-fixed interest rate swaps is $300.0 million
(December 31, 2023 - $833.4 million) and the term to maturity of these agreements ranges from November 2028 to January
2030.
The outstanding interest rate swaps by year of maturity are as follows:
Maturity
Notional outstanding principal amount
Weighted average effective fixed interest rate
2025
—
— %
2026
—
— %
2027
—
— %
2028
100,000
3.94 %
Thereafter
200,000
4.47 %
$
300,000
As at December 31, 2024, the Trust did not have any unrealized bond forward contracts outstanding (December 31, 2023 -
$150.0 million outstanding with a settlement date on February 12, 2024 with an effective bond yield of 3.168%).
During the year ended December 31, 2024, the Trust entered into two bond forward contracts to sell a total of $450.0 million
Government of Canada Bonds with a weighted average effective bond yield of 3.270%, to hedge its exposure to movements in
underlying risk-free interest rates on a highly probable anticipated fixed rate debt issuance.
During the year ended December 31, 2024, the Trust settled a total of $600.0 million of bond forward contracts, all of which were
considered fully effective. Including the effective $6.4 million realized bond forward net loss, the weighted average hedged
interest rate was 5.115% for $950.0 million of debentures issued with a weighted average term of 6.3 years. The net loss will be
included in interest expense over the term of the hedged debt. The $600.0 million of settled bond forward contracts were
composed of $150.0 million of bond forward contracts entered into on December 14, 2023, which were settled on February 12,
2024 in conjunction with the offering of the Series AJ debenture, and $150.0 million of bond forward contracts entered into on
March 8, 2024, which were settled on March 28, 2024 in conjunction with the offering of the additional Series AJ debenture, and
$300.0 million of bond forward contracts entered into on June 14, 2024, which were settled on October 3, 2024 in conjunction
with the closing of the offering of the Series AL debentures.
The Trust assessed the effectiveness of its continuing hedging relationships and determined all such designated hedging
relationships are effective as at December 31, 2024. As at December 31, 2024, the fair value of the interest rate swaps and bond
forward agreements are, in aggregate, a net financial asset of approximately $0.1 million (December 31, 2023 - net financial
asset of approximately $6.8 million).
As at December 31, 2024, the carrying value of the Trust's floating rate debt that is not subject to a hedging strategy is $146.8
million and a 50 basis point increase in market interest rates would result in an annualized decrease of $0.7 million in the Trust's
net income.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 154
The amounts relating to items designated as hedging instruments and hedge ineffectiveness were as follows:
2024
During the year - 2024
Nominal
amount of
hedging
instrument
Carry amount of the hedging
instrument
Line item in the
consolidated
balance sheets
Fair value
gain (loss)
recognized in
OCI
Hedge
ineffectiveness
recognized in
profit or loss
Amounts
reclassified
from the hedge
reserve to
profit or loss
Line item in
profit or loss
affected by
reclassification/
ineffectiveness
Assets
Liabilities
Interest
rate swaps
$300,000
$283
$152
Receivables and
other assets
(assets),
Accounts
payable and
other liabilities
(liabilities)
$767
$—
$(9,404)
Interest costs/
Debt
prepayment
costs, net
Bond
forward
agreement
$—
$—
$—
Receivables and
other assets
(assets),
Accounts
payable and
other liabilities
(liabilities)
$(4,357)
$—
$(8,269)
Interest costs
2023
During the year - 2023
Nominal
amount of
hedging
instrument
Carry amount of the hedging
instrument
Line item in the
consolidated
balance sheets
Fair value
gain
recognized in
OCI
Hedge
ineffectiveness
recognized in
profit or loss
Amounts
reclassified
from the hedge
reserve to
profit or loss
Line item in
profit or loss
affected by
reclassification
Assets
Liabilities
Interest
rate swaps
$833,404
$8,770
$—
Receivables and
other assets
(assets),
Accounts
payable and
other liabilities
(liabilities)
$8,877
$—
$(22,921)
Interest costs/
Debt
prepayment
costs, net
Bond
forward
agreement
$150,000
$—
$1,997
Receivables and
other assets
(assets),
Accounts
payable and
other liabilities
(liabilities)
$10,432
$2,792
$(7,127)
Interest costs
The amounts at the reporting date relating to items designated as hedged items were as follows:
2024
2023
Fair value gain
(loss) used for
calculating hedge
ineffectiveness
during the year
Cash flow hedge
reserve for
continuing
hedges
Balance in cash
flow hedge
reserve for
discontinued
hedges
Fair value gain
used for
calculating hedge
ineffectiveness
during the year
Cash flow hedge
reserve (loss) for
continuing
hedges
Balance in cash
flow hedge
reserve for
discontinued
hedges
Interest rate risk
Variable rate mortgages
and lines of credit and the
bank loans
$767
$622
$—
$8,877
$9,259
$—
Bond forward agreement
$(4,357)
$—
$29,939
$10,432
$(1,997)
$44,562
The Trust's hedged items and hedging instruments for interest rate swaps were previously indexed to the one-month Canadian
Dollar Offered Rate (CDOR). Under Interbank offered rates (IBOR) reform, a new risk-free benchmark interest rate, the Canadian
Overnight Repo Rate Average (CORRA), was introduced as a fallback rate to CDOR, and the one-month CDOR ceased to be a
benchmark rate on June 30, 2024. During the year, the Trust updated its hedge documentation and there was no impact to
effective interest rates as the new benchmark rate was implemented.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
155 RioCan Annual Report 2024
Currency risk on U.S. dollar borrowings
From time to time, the Trust funds its Canadian assets by electing to draw on the revolving unsecured operating line of credit in
U.S. dollars bearing interest at USD-SOFR when it is determined that it is economically advantageous to do so. The Trust will
concurrently enter into cross-currency swaps to hedge foreign exchange risk on these U.S. dollar borrowings. As at
December 31, 2024, the Trust has no cross-currency swaps outstanding.
Liquidity risk
Liquidity risk is the risk that the Trust may not have access to sufficient debt and equity capital to meet its financial obligations as
they become due. The Trust mitigates its liquidity risk by staggering the maturity dates of its long-term debt, actively renewing
expiring credit arrangements, utilizing undrawn operating lines of credit, maintaining a large number of assets unencumbered by
debt and issuing equity when considered appropriate.
• For the current and non-current scheduled repayments of mortgages, and funds drawn against the Trust's lines of credit and
other bank loans, refer to Notes 11 and 12, respectively, for details.
• For current and non-current scheduled repayments of debentures, refer to Note 10 for details.
The Trust expects to continue financing future acquisitions, development, debt obligations and other financing requirements
through existing cash balances, internally generated cash flows, refinancing maturing debt, utilization of its operating line of
credit, credit facilities, construction financing facilities, mortgaging unencumbered assets, issuance of unsecured debentures, the
sale of non-core assets, sales proceeds from residential inventory or air rights sales, strategic development partnerships and the
issuance of equity when considered appropriate.
Credit risk
Credit risk is the risk of financial loss to RioCan that arises from the possibility that:
• Tenants may experience financial difficulty and are unable to fulfill their lease commitments or tenants fail to occupy and pay
rent in accordance with existing lease agreements, some of which are conditional.
• Borrowers default on the repayment of their mortgages or loans receivable to the Trust or investment entity in which the Trust
has an investment.
• Third parties default on the repayment of debt whereby RioCan has provided guarantees, including guarantees by RioCan on
behalf of its co-owners and on behalf of purchasers who assumed mortgages on property dispositions.
• Customers may not be able to close financing on a condominium unit previously occupied and recognized in revenue.
The Trust mitigates tenant credit risk through geographical diversification, staggered lease maturities, diversification of revenue
sources resulting from a large tenant base, avoiding dependence on any single tenant by ensuring no individual tenant
contributes a significant percentage of the Trust’s gross revenue, ensuring a considerable portion of the Trust’s revenue is earned
from national and anchor tenants and conducting credit assessments for new tenants. Furthermore, RioCan holds security
deposits and letters of credit from a number of tenants, which can serve to offset rents owed on a tenant-by-tenant basis in the
unfortunate event of unresolved tenant defaults. For condominium or townhouse sales RioCan and its partners require deposits
on signing, mortgage pre-approvals, actively monitor the collection of interim occupancy payments, work closely with project-
specific mortgage brokers where applicable, retain title to the unit until final closing, and initiate recovery procedures when
required.
Management reviews contractual rent receivables on a regular basis and reduces carrying amounts through the use of an
allowance for doubtful accounts recognizing the amount of any loss in the consolidated statements of income (loss) within non-
recoverable property operating costs.
As at December 31, 2024 and December 31, 2023, the allowance for doubtful accounts totals $8.5 million and $9.6 million,
respectively. RioCan holds approximately $40.5 million of security deposits and approximately $2.0 million in letters of credit from
a number of tenants, which could be used to offset rents owed on a tenant-by-tenant basis in the event of unresolved tenant
defaults.
Credit risk relating to mortgages and loans receivable and third-party guarantees is mitigated through recourse against such
counterparties and/or the underlying real estate. These financial instruments are considered to have low credit risk. The Trust
monitors the debt service ability and the fair value of the properties underlying the mortgages and loans receivable and third-party
guarantees to assess for changes in credit risk. Credit risk relating to finance lease receivables is mitigated through recourse
against such counterparties and/or re-recognition of the forfeited leased unit as investment property. Refer to Note 33 for third-
party guarantees.
RioCan’s Declaration contains provisions that have the effect of limiting the amount of space that can be leased to one tenant and
its investment in mortgages and loans receivable.
The maximum exposure to credit risk on financial assets on the consolidated balance sheets is their carrying values.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 156
26. CAPITAL MANAGEMENT
The Trust defines capital as the aggregate of Unitholders’ equity and debt. The Trust’s capital management framework is
designed to maintain a level of capital that complies with investment and debt restrictions pursuant to RioCan’s Declaration,
complies with existing debt covenants, enables the Trust to achieve target credit ratings, implements its business strategies and
builds long-term unitholder value. The key elements of RioCan’s capital management framework are approved by its Unitholders
via the Trust’s Declaration and by its Board through their annual review of the Trust’s strategic plan and budget, supplemented by
periodic Board and Board Committee meetings. Capital adequacy is monitored by the Trust by assessing performance against
the approved annual plan throughout the year, which is updated accordingly, and by monitoring adherence to investment and
debt restrictions contained in the Declaration and debt covenants.
RioCan’s Declaration provides for maximum total debt levels up to 60% of Aggregate Assets (as defined in the Declaration). The
Trust is in compliance with this restriction.
Additionally, RioCan’s Declaration contains provisions that have the effect of limiting capital expended by the Trust for, among
other items, the following:
•
Direct and indirect investments (net of related mortgages payable) in non-income-producing properties (including greenfield
developments and mortgages receivable to fund the Trust’s co-owners’ share of such developments) to no more than 15% of
the Adjusted Unitholders’ Equity of the Trust (herein referred to as the Basket Ratio with Adjusted Unitholders’ Equity as
defined in the Declaration);
•
Total investment by the Trust in mortgages receivable, other than mortgages taken back by the Trust on the sale of its
properties, to no more than 30% of the Adjusted Unitholders’ Equity of the Trust;
•
Any property acquired by the Trust, directly or indirectly, if the cost to the Trust of such acquisition (net of the amount of
mortgages payable assumed) exceeds 10% of the Adjusted Unitholders’ Equity of the Trust;
•
Subject to the Basket Ratio, securities of an entity, other than to the extent that such securities would, for the purpose of the
Declaration, constitute an investment in real estate; and
•
The amount of space that can be leased or subleased to any tenant, with certain exceptions, to a maximum space having an
aggregate gross leasable area of 20% of the aggregate gross leasable area of all real estate investments held by the Trust.
The Trust is in compliance with each of the above-noted restrictions as at and for the year ended December 31, 2024. The Trust
intends, but is not contractually obligated, to distribute to its Unitholders in each year an amount not less than the Trust’s income
for the year, as calculated in accordance with the Income Tax Act (Canada) (the Tax Act) after all permitted deductions under the
Tax Act have been taken. RioCan’s Trustees rely upon forward-looking cash flow information, including forecasts and budgets
and the future business prospects of RioCan, to establish the level of cash distributions.
The Trust’s debentures payable have covenants that are consistent with the Debt to Aggregate Assets ratio as discussed above,
maintenance of at least $1 billion of Adjusted Book Equity (defined in the indenture), and maintenance of at least an interest
coverage ratio (defined in the indenture) of 1.65x for a rolling twelve-month period. As at and for the year ended December 31,
2024, the Trust was in compliance with these covenants.
The following table presents RioCan's capital structure:
For the years ended December 31,
Note
2024
2023
Debentures payable
10 $
4,088,654
$
3,240,943
Mortgages payable
11
2,851,602
2,740,924
Lines of credit and other bank loans
12
383,658
879,246
Total debt
7,323,914
6,861,113
Unitholders’ equity
7,558,338
7,437,770
Total capital
$
14,882,252
$
14,298,883
Revolving unsecured operating line of credit and non-revolving unsecured credit facilities
The Trust is subject to certain key financial covenants pursuant to the agreements governing its revolving unsecured operating
line of credit and non-revolving unsecured credit facilities, which are calculated on a rolling twelve-month basis. As at and for the
year ended December 31, 2024, the Trust is in compliance with all applicable financial covenants.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
157 RioCan Annual Report 2024
The following table summarizes the Trust's performance relative to these key financial covenants:
As at
Key covenant
December 31, 2024
December 31, 2023
Total Indebtedness (i) (vi)
< 60%
54.0 %
50.9 %
Secured Indebtedness (ii) (vi)
< 40%
21.7 %
22.0 %
Debt Service Coverage (iii) (vi)
> 1.5x
2.0x
2.2x
Minimum unitholders' equity (in millions)
> $5,000
$7,558
$7,438
Ratio of Unencumbered Property Assets to
Unsecured indebtedness (iv) (v) (vi)
> 1.5x
1.8x
1.7x
Properties held for development as a percentage of consolidated
gross book value of assets
< 15%
7.3 %
7.7 %
(i)
Total Indebtedness consists of the contractual amounts outstanding on mortgages payable, lines of credit and other bank loans, debentures
payable, capital lease obligations, contingent liabilities and the maximum exposure to loss for all third-party debt where RioCan has provided a
financial guarantee.
(ii)
Secured Indebtedness includes mortgages payable, secured construction lines and other bank loans and capital lease obligations, which are
secured against investment properties.
(iii) Debt Service Coverage is calculated on a rolling twelve-month basis and includes regular mortgage principal and interest payments, including
interest capitalized on properties under development.
(iv) Effective June 26, 2024, Unsecured Indebtedness includes the contractual amounts outstanding of the revolving unsecured operating line of
credit, non-revolving unsecured credit facility, debentures, contingent liabilities and any third-party debt amounts guaranteed by RioCan recorded
as liabilities on the consolidated balance sheets.
(v)
Unencumbered Property Assets consist of properties that have not been pledged as security for debt. The Unencumbered Property Asset to
Unsecured Indebtedness Ratio is calculated as Unencumbered Assets divided by Unsecured Indebtedness.
(vi) These ratios reflect equity-accounted investments on a proportionately consolidated basis.
27. SUBSIDIARIES
The subsidiaries listed below are wholly owned and reflect significant entities of the Trust, and are located in Canada:
Name
Name
RioCan Management (BC) Inc.
RC Dufferin LP
RioCan Management Inc.
RC 3180 Dufferin LP
RioCan (KS) Management LP
RC 2290 Lawrence (White Shield) LP
RioCan (Festival Hall) Trust
RC Well Commercial LP
Timmins Square Limited Partnership
RC Kirkland Trust
Shoppers World Brampton Investment Trust
RC Eglinton Avenue LP
RioCan Realty Investments Partnership Four LP
RC Sheppard Centre LP
RioCan Realty Investments Partnership Seven LP
RC Condo Management Trust
RioCan Realty Investments Partnership Eleven LP
RC Durham Centre LP
RioCan Realty Investments Partnership Twelve LP
RC Grand Park LP
RioCan Realty Investments Partnership Fifteen LP
RC Scarborough Centre LP
RioCan Realty Investments Partnership Twenty LP
RioCan (Bloor/St. Thomas) LP
RioCan Realty Investments Partnership Twenty-Two LP
RC Clarkson LP
RioCan Realty Investments Partnership Twenty-Three LP
RC Lachine Trust
RioCan Realty Investments Partnership Twenty-Four LP
RC Sandalwood LP
RioCan Realty Investments Partnership Twenty-Five LP
RC Holding I LP
RioCan Realty Investments Partnership Twenty-Six LP
RC Holding II LP
RioCan Realty Investments Partnership Twenty-Eight LP
RC Rental IPP LP
RioCan (GH) Limited Partnership
RioCan Living LP
RioCan Property Services Trust
RC Bloor-Lansdowne LP
RioCan White Shield Limited Partnership
RC Lender LP
RC NA Property 5 LP
RC Pierrefonds Trust
RC Elmvale Acres LP
RC Condo Development Trust
RC Westgate LP
RC Parkway Lease LP
RC Lincoln Fields LP
RC King and Sherbourne LP
RC Yonge Roehampton LP
The Trust has investments in certain joint ventures that are structured using entities that separate the investor and the investee.
As a result, the Trust only has rights to and is liable for the net assets of the investee for these joint ventures.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 158
Refer to Note 4 for the financial information of PR Bloor Street LP, RC Yorkville LP, RioCan-Fieldgate LP, RioCan-HBC JV,
Dawson-Yonge LP, RC (Queensway) LP, RC (Leaside) LP - Class B, RCLC King and Sherbourne LP, WNUF 2, WNUF 3, WNUF
4, and WNUF 5, which are the Trust's 12 associates and joint ventures that are accounted for using the equity method as at
December 31, 2024.
28. SUPPLEMENTAL CASH FLOW INFORMATION
Operating activities
Years ended December 31,
2024
2023
Interest received
$
25,433 $
16,365
Interest paid
(272,950)
(235,875)
Investing activities
The following table provides a reconciliation of capital expenditures on income producing properties:
Years ended December 31,
2024
2023
Recoverable and non-recoverable costs
$
(53,412) $
(79,235)
Tenant improvements and external leasing commissions
(51,427)
(46,619)
Capital expenditures on income producing properties
$
(104,839) $
(125,854)
Financing activities
Years ended December 31,
2024
2023
Distributions paid:
Distributions declared during the year
$
(332,763) $
(322,924)
Distributions declared in the prior year paid in the current year
(27,038)
(25,528)
Distributions declared in current year paid in the next year
27,790
27,038
Distributions paid
$
(332,011) $
(321,414)
The following provides a reconciliation of liabilities arising from financing activities:
Year ended December 31, 2024
Mortgages payable
Lines of credit and
other bank loans
Debentures
Balance, beginning of year
$
2,740,924 $
879,246 $
3,240,943
Proceeds/advances, net
420,419
480,995
1,443,922
Repayments
(368,810)
(977,521)
(600,000)
Non-cash changes:
Deferred financing costs and premiums and discounts
(2,204)
938
3,789
Transfers to equity-accounted investment
(2,677)
—
—
VTB mortgage or contractual principal assumed on
acquisition/disposition, net
63,950
—
—
Balance, end of year
$
2,851,602 $
383,658 $
4,088,654
Year ended December 31, 2023
Mortgages payable
Lines of credit and
other bank loans
Debentures
Balance, beginning of year
$
2,659,180 $
1,141,112 $
2,942,051
Proceeds/advances, net
212,739
320,014
796,114
Repayments
(172,964)
(471,139)
(500,000)
Non-cash changes:
Deferred financing costs and premiums and discounts
(3,048)
1,044
2,778
Transfers to equity-accounted investment
—
(111,785)
—
VTB mortgage or contractual principal assumed on
acquisition/disposition, net
45,017
—
—
Balance, end of year
$
2,740,924 $
879,246 $
3,240,943
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
159 RioCan Annual Report 2024
29. CHANGES IN OTHER WORKING CAPITAL ITEMS
Years ended December 31,
2024
2023
Receivables and other assets
$
(25,200) $
6,671
Mortgage receivable interest
(16,749)
(5,700)
Residential inventory
(66,864)
(116,610)
Accounts payable and other liabilities
41,221
(6,339)
Deposits received from customers on residential inventory sales
(7,636)
14,766
Other
3,907
(1,886)
Net change in other working capital items
$
(71,321) $
(109,098)
30. RELATED PARTY TRANSACTIONS
RioCan's related parties include the following persons and/or entities:
•
Associates, joint ventures or entities that are controlled or significantly influenced by the Trust; and
•
Key management personnel including the Trustees and those persons having the authority and responsibility for planning,
directing and controlling the activities of RioCan, directly or indirectly.
Activity and transactions with associates and joint ventures are disclosed in Note 4.
As at December 31, 2024 and 2023, the Trust’s key management personnel include each of the Trustees and the following
officers: President and Chief Executive Officer, Chief Financial Officer, Chief Investment Officer and Chief Operating Officer.
Effective February 1, 2024, Mr. Guy Metcalfe was appointed to RioCan’s Board as a Trustee.
Remuneration of the Trust’s Trustees and Key Executives during the years ended December 31, 2024 and 2023 are as follows:
Trustees
Key Executives
Years ended December 31,
2024
2023
2024
2023 (i)
Compensation and benefits
$
429 $
429 $
5,186 $
5,119
Unit-based compensation
2,503
2,239
3,903
4,626
Post-employment benefit costs
—
—
228
216
$
2,932 $
2,668 $
9,317 $
9,961
(i)
The comparatives for unit-based compensation and post-employment benefit costs for the year ended December 31, 2023 have been restated.
31. EMPLOYEE BENEFITS
Plan characteristics
RioCan sponsors a defined contribution plan and three defined benefit plans that provide pension and certain post-employment
benefits to eligible employees. Plan members are not required, nor are they permitted, to contribute to these plans. The defined
benefit plans are closed to new members and any new employees are generally eligible to join the defined contribution pension
plan. All plans are administered by separate funds that are legally segregated from RioCan.
Defined contribution plan
The Trust's defined contribution pension plan provides pension benefits based on accumulated RioCan contributions. RioCan's
contributions are based on a percentage of an employee’s annual earnings. For the year ended December 31, 2024, RioCan's
contributions to the defined contribution plan were $3.4 million (December 31, 2023 - $3.0 million).
Defined benefit plans
RioCan's defined benefit pension plans, one of which is a registered plan and two of which are supplemental unregistered plans,
provide pension benefits mostly based on years of credited service, the average of the highest five years of earnings and the age
of the member at retirement.
The Trust measures its benefit obligations and pension assets as at December 31 each year. All plans are valued using the
projected unit-credit method. The Trust funds its registered defined benefit pension plans in accordance with actuarially
determined amounts required to satisfy employee benefit obligations under current pension regulations. The most recent funding
actuarial valuation for the Trust's defined benefit plans was completed as at January 1, 2022, and the next valuation is scheduled
for January 1, 2025.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 160
The fair value of the registered plan assets as at December 31, 2024 is $4.2 million (December 31, 2023 - $4.0 million). The
recognized pension obligation (net of plan assets) as at December 31, 2024 is $10.3 million (December 31, 2023 - $10.6 million).
Pension costs of $0.2 million were recorded in net income for the year ended December 31, 2024 (pension costs for the year
ended December 31, 2023 - $0.2 million). The discount rate used was 4.5% (December 31, 2023 - 4.4%), the compensation
growth rate was 4.0% (December 31, 2023 - 4.0%) and the expected long-term rate of return on plan assets was 4.5%
(December 31, 2023 - 4.4%).
Actuarial gains and losses for the defined benefit plans are recognized in full in the period in which they occur in OCI and are not
reclassified to income in subsequent periods.
32. SEGMENTED INFORMATION
RioCan primarily owns, develops, manages and operates retail-focused properties and mixed-use developments located in
Canada. In measuring its performance, the Trust does not distinguish or group its operations on a geographical or other basis
and, accordingly, has a single reportable segment. Management has applied judgment by aggregating its operating segments into
one reportable segment for disclosure purposes. Such judgment considers the nature of property operations, tenant mix and an
expectation that operating segments within a reportable segment have similar long-term economic characteristics. The Trust's
President and CEO is the chief operating decision-maker and regularly reviews RioCan's operations and performance on an
individual property basis. RioCan does not have any single major tenant or a significant group of tenants.
33. CONTINGENCIES AND OTHER COMMITMENTS
Third-party guarantees
As at December 31, 2024, the maximum exposure to credit loss resulting from the Trust's debt guarantees on behalf of certain
co-owners' interests and mortgages assumed by purchasers on property dispositions is $600.7 million (December 31, 2023 -
$341.2 million), which expires between 2025 and 2027. There have been no defaults by the primary obligors for debts on which
the Trust has provided its guarantees, and no provision for expected losses on these guarantees has been recognized in the
annual audited consolidated financial statements.
Expiry of guarantees by year is as follows:
2025
$
322,022
2026
220,127
2027
58,510
2028
—
2029
—
Thereafter
—
Total
$
600,659
Letters of credit and surety bonds
The Trust has aggregate letter of credit facilities with certain Schedule I banks totalling $75.3 million (December 31, 2023 -
$91.3 million). As at December 31, 2024, the Trust’s outstanding letters of credit under these facilities are $34.5 million
(December 31, 2023 - $40.2 million).
The Trust is contingently liable for surety bonds that have been provided to support condominium developments and warranties
in the amount of $219.1 million (December 31, 2023 - $184.4 million).
Investment commitments
As at December 31, 2024, the Trust has total unfunded investment commitments of $79.8 million relating to equity-accounted
investments and other investments (December 31, 2023 - $84.7 million). In addition, within RioCan's investment in equity-
accounted investments there are $27.5 million in construction commitments at RioCan's ownership interest pertaining to
development activities (December 31, 2023 - $59.8 million). Refer to Note 3 for investment property purchase commitments.
Construction commitments
RioCan has entered into commitments for development activity and building renovations from leasing activity. As at December 31,
2024, the commitments for investment properties and residential inventory are $118.6 million (December 31, 2023 - $248.0
million).
Litigation
The Trust is involved with litigation and claims that arise from time to time in the normal course of business. In the opinion of
management, any liability that may arise from such contingencies will not have a significant adverse effect on the Trust’s
Consolidated Financial Statements.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
161 RioCan Annual Report 2024
34. EVENTS AFTER THE BALANCE SHEET DATE
Acquisitions
On February 03, 2025, RioCan acquired a 50% interest in a property located in Calgary, Alberta, for the purchase price of $51.2
million including transaction costs. The acquisition included the assumption of $34.6 million of debt at a floating interest rate of
CORRA plus 2.55%. RioCan also assumed its share of the remaining cost-to-complete estimated to be $11.4 million. A
mezzanine loan receivable due to RioCan from the vendor of $15.7 million was settled upon closing.
On January 1, 2025, RioCan acquired its partner's 75% interest in the condominium lands at RioCan Leaside Centre in Toronto,
Ontario, for the purchase price of $59.3 million. A mezzanine loan receivable due to RioCan from the vendor of $59.1 million was
settled upon closing.
Unit repurchases for cancellation
Subsequent to December 31, 2024, up to and including February 18, 2025, the Trust purchased and cancelled 3,240,849 Units at
a weighted average price of $18.51 per unit for a total cost, including $1.2 million equity buyback tax, of $61.2 million. These
purchases were made pursuant to the ASPP adopted in connection with the Trust's 2024/2025 NCIB.
Debenture issuance
Subsequent to year end, on February 12, 2025, RioCan issued $550.0 million aggregate principal amount of senior unsecured
debentures of the Trust in two series. The $250.0 million Series AN senior unsecured debentures carry a coupon rate of Daily
Compounded CORRA plus 0.85% per annum with an all-in swapped-to-fixed interest rate of 3.31%, and will mature on March 1,
2027. The $300.0 million Series AO senior unsecured debentures carry a coupon rate of 4.671% per annum and will mature on
March 1, 2032. The aggregate $550.0 million of debentures have an all-in weighted average interest rate of 4.05% per annum,
inclusive of the interest rate swap, and a weighted average term to maturity of 4.8 years.
Debenture redemption
On February 12, 2025, RioCan redeemed, in full, its $500.0 million, 2.576% Series AB senior unsecured debentures upon
maturity.
Unit distribution
On February 18, 2025, RioCan's Board of Trustees approved an increase to its per unit monthly distributions to Unitholders from
$0.0925 to $0.0965 beginning with the distributions declared in February 2025, payable on March 7, 2025 to Unitholders of record
as of February, 28, 2025. This brings RioCan's annualized distribution to $1.16 per unit.
RIOCAN REAL ESTATE INVESTMENT TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)
RioCan Annual Report 2024 162
Head Office
RioCan Real Estate Investment Trust
RioCan Yonge Eglinton Centre
2300 Yonge Street, Suite 2200
P.O. Box 2386, Toronto, Ontario M4P 1E4
Tel: (416) 866-3033 or 1 (800) 465-2733 | Fax: (416) 866-3020
Website: www.riocan.com | Email: ir@riocan.com
Ava Ghukasyan, Director, Investor Relations
Tel: (416) 646-8326 | Email: ir@riocan.com
UNITHOLDER INFORMATION
INVESTOR CONTACT
TSX Trust Company
100 Adelaide Street West, Suite 301
Toronto, Ontario M5H 4H1
Telephone: (416) 682-3860 or 1 (800) 387-0825
Fax: (416) 595-9593
Website: www.tsxtrust.com | Email: shareholderinquiries@tmx.com
The Toronto Stock Exchange
Trading Symbol: Trust Units – REI.UN
TRANSFER AGENT AND REGISTRAR
STOCK EXCHANGE LISTING
Edward Sonshine, O.Ont., K.C.
Non-Executive Chairman
Siim A. Vanaselja 2,3
Lead Trustee and Chair of the Nominating, Environmental,
Social and Governance Committee
Bonnie R. Brooks, C.M.1,4
Richard Dansereau 2,3
Janice Fukakusa, C.M. 1
Chair of the Audit Committee
Jonathan Gitlin
Marie-Josée Lamothe 1,4
BOARD OF TRUSTEES
Dale H. Lastman, C.M., O.Ont.
Jane Marshall 4
Chair of the People, Culture and Compensation Committee
Guy Metcalfe 3,4
Charles M. Winograd 2
Chair of the Investment Committee
1 Member of the Nominating, Environmental, Social and Governance Committee.
2 Member of the Audit Committee.
3 Member of the People, Culture and Compensation Committee.
4 Member of the Investment Committee.
CORPORATE INFORMATION
Jonathan Gitlin, President & Chief Executive Officer
Dennis Blasutti, Chief Financial Officer
John Ballantyne, Chief Operating Officer
Andrew Duncan, Chief Investment Officer
Terri Andrianopoulos, Senior Vice President, People & Brand
Oliver Harrison, Senior Vice President, Leasing and Tenant Experience
Franca Smith, Senior Vice President, Finance
Jennifer Suess, Senior Vice President, General Counsel, ESG & Corporate Secretary
SENIOR MANAGEMENT
Head Office
RioCan Yonge Eglinton Centre | 2300 Yonge Street, Suite 2200
P.O. Box 2386 | Toronto, Ontario M4P 1E4