TORONTO, ONTARIO–(Marketwired – May 5, 2015) –
RioCan’s HIGHLIGHTS for the three months ended March 31, 2015 (“First Quarter”) were:
- RioCan’s Operating Funds From Operations (“Operating FFO”) increased 8.8% to $138 million for the three months ended March 31, 2015 compared to $127 million for the same period in 2014. On a per unit basis, Operating FFO increased by $0.02 or 4.8% to $0.44 compared to $0.42 during 2014;
- During the First Quarter, RioCan announced a strategic joint venture with Hudson’s Bay Company (“HBC”) focused on real estate growth opportunities in Canada. The joint venture will enable RioCan and HBC to build on the strength of existing real estate assets through potential future redevelopment, as well as identify retail and enclosed mall acquisitions, and redevelopment opportunities;
- RioCan’s concentration of rental revenue in Canada’s six major markets at March 31, 2015 increased to 73.6% from 72.2% at March 31, 2014;
- Overall occupancy was 96.7% as of March 31, 2015, compared to 96.8% at March 31, 2014;
- RioCan’s retention rate in Canada was 90.0% for the first quarter compared to 91.2% for the same period in 2014. RioCan’s U.S. renewal retention rate of 64.3% was unfavourably impacted due to a tenant vacancy and the relatively small number of expiring leases during the quarter;
- During the First Quarter, RioCan renewed 1.1 million square feet in the Canadian portfolio at an average rent increase of $1.70 per square foot, representing an increase of 9.8%;
- RioCan’s same store growth was slightly negative in Canada (0.1%) while same property NOI increased 0.1%. Same store NOI increased 1.9% and same property NOI increased 1.6% in the U.S. in the first quarter; and
- RioCan has raised $475 million through two debenture offerings in the first four months of 2015 at a weighted average effective interest rate of 2.8% and has redeemed two previously outstanding series of debentures of US$100 million and $225 million that carried an interest rate of 4.1% and 4.5% respectively. As a result of these and other mortgage financing activities, RioCan has reduced its overall contractual interest rate on outstanding debt to 3.96% at March 31, 2015 from 4.12% at December 31, 2014.
RioCan Real Estate Investment Trust (TSX:REI.UN) (“RioCan”) today announced its financial results for the three months ended March 31, 2015.
“I am very pleased with what our team has been able to accomplish this past quarter. We have been able to take advantage of historically low interest rates by securing long term debt in the form of a nine year debenture issue. Most recently, with the re-opening and issuance of $175 million of the Trust’s Series Q debentures, RioCan achieved the lowest effective interest rate for a debenture offering in the Trust’s history of 2.04%,” said Edward Sonshine, Chief Executive Officer of RioCan. “The retail environment is challenging, and the headlines are full of negative stories. Despite these headlines, the RioCan portfolio continues to demonstrate the value of diversification and the resilience of the Trust’s portfolio with solid rental revenue and Operating FFO growth on a year over year basis.”
All figures in Canadian dollars unless otherwise noted. RioCan’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). Consistent with RioCan’s management framework, management uses certain financial measures to assess RioCan’s financial performance, which are not generally accepted accounting principles (GAAP) under IFRS. For a full definition of these measures, please refer to the “Use of Non-GAAP Measures” in RioCan’s first quarter 2015 Management Discussion and Analysis.
|In millions except percentages and per unit values||Three months ended March 31,|
|Net earnings attributable to common and preferred unitholders||$||89||$||171||(48.0)%|
|Net earnings before taxes and fair value adjustment||$||98||$||105||(7.4)%|
|Net earnings per Unit attributable to common Unitholders – basic||$||0.27||$||0.55||(50.9)%|
|In millions except percentages and per unit values||Three months ended March 31,|
|Operating FFO per Unit||$||0.44||$||0.42||4.8%|
|(1)||A non-GAAP measurement. A reconciliation to net earnings can be found under “Results of Operations” in RioCan’s Management’s Discussion and Analysis for the period ending March 31, 2015|
|In millions. As at||March 31, 2015||March 31, 2014|
|Total enterprise value (1)||$||16,188||$||14,549|
|Total assets – at RioCan’s interest(2)||$||15,129||$||13,820|
|Debt – at RioCan’s interest(3)||$||6,729||$||6,124|
|(1)||A non-GAAP measurement. Calculated by the Trust as debt at RioCan’s interest plus common Unit market capitalization plus total Preferred Unit market capitalization.|
|(2)||A non-GAAP measurement. Calculated as consolidated assets of the Trust and adding back RioCan’s share of assets for its equity accounted associates and joint ventures, less non-controlling interests’ share of assets.|
|(3)||A non-GAAP measurement. Calculated as consolidated mortgages and debentures payable of the Trust plus RioCan’s share of mortgages payable for its equity accounted associates and joint ventures and mortgages on properties held for sale, less non-controlling interests’ share of mortgages payable.|
Operating FFO at RioCan’s interest for the three months ended March 31, 2015 was $138 million or $0.44 per Unit, compared to $127 million or $0.42 per Unit for the same period in 2014, representing an increase of $11 million or 8.8%. On a per Unit basis, Operating FFO increased by $0.02 per Unit or 4.8% as compared to the same period in 2014.
The $11 million increase in Operating FFO at RioCan’s interest for the three months ended March 31, 2015 as compared to the same period in 2014 is primarily due to the following:
- an increase in NOI from rental properties of $14 million, which includes the impact of the following items: acquisitions, net of dispositions (completed over the last 12 months); additional income property NLA resulting from completion of development projects; Canadian and U.S. NOI growth; and a $4.9 million higher foreign currency gain from U.S. operations as compared to the same period in 2014; and
- an increase in fees and other income of $2.5 million due to an increase in investment income and construction fees from joint arrangement projects as compared to the same period in 2014;
partly offset by the following:
- lower interest income of $2.4 million due primarily to the impact of the settlement of certain mezzanine loans during the first quarter of 2014 in connection with the acquisition of interests in three development projects;
- an increase in interest expense of $0.2 million, due to an unfavourable foreign exchange impact on U.S. dollar denominated interest expense mostly offset by interest savings due to the refinancing of maturing mortgages and debentures at lower interest rates; and
- an increase in general and administrative costs of $2.8 million primarily due to the timing of recognition of variable compensation and public company costs, higher annualized depreciation and amortization, and merit based salary increases. RioCan expects to realize an offset in compensation costs in the second half of 2015 due to the timing of expenses and anticipates modest growth in full year general and administrative expense as compared to 2014.
The impact of foreign exchange on Operating FFO is $3.1 million, comprised of $4.9 million higher foreign currency gains in NOI, partially offset by $1.8 million in higher interest expense on U.S. dollar denominated debt.
Same Store and Same Property NOI
|Three Months ended|
|Canada||March 31, 2015||March 31, 2014|
|Same Store Growth||(0.1%||)||3.1%|
|Same Property Growth||0.1%||2.6%|
|Same Store Growth||1.9%||3.0%|
|Same Property Growth||1.6%||3.0%|
|Refers to same store and same property NOI growth on a year over year basis.|
|Leasing and Operational Highlights|
|(thousands of square feet, millions of
dollars, except where otherwise noted)
|NLA leased but not paying rent||623||512||488||520||519||542||716||642|
|Annualized rental impact||$||17.6||$||15.7||$||15.6||$||15.3||$||12.9||$||14.0||$||16.7||$||15.2|
|Retention rate – Canada||90.0%||85.0%||91.7%||88.8%||91.2%||97.0%||91.1%||95.9%|
|% increase in average net rent per sq ft – Canada||9.8%||11.8%||12.9%||13.9%||7.0%||8.8%||11.2%||12.0%|
|Retention rate – U.S.||64.3%(i)||78.3%||92.2%||97.3%||86.4%||98.2%||98.4%||92.0%|
|% increase in average net rent per sq ft – U.S.||8.3%||7.8%||9.3%||7.0%||8.3%||4.8%||3.8%||4.3%|
|Average in place rent||$||16.10||$||16.15||$||16.01||$||16.00||$||16.01||$||16.08||$||16.07||$||15.77|
|(i)||See explanation below.|
|(ii)||Refers to same store NOI growth on a year over year basis.|
- Reflecting the strength of RioCan’s locations, the Trust renewed 1.1 million square feet in the Canadian portfolio at an average rent increase of $1.70 per square foot, representing an increase of 9.8% while retaining 90.0% of its tenants in the First Quarter. In the same period of 2014, RioCan achieved an average rent increase of 7.0% ($1.02 per square foot), while retaining 91.2% of its tenants;
- In the U.S., RioCan renewed 64 thousand square feet at an average rent increase of $1.61 per square foot, representing an increase of 8.3% while retaining 64.3% of its tenants in the First Quarter. RioCan’s U.S. renewal retention rate was unfavourably impacted due to a Best Buy tenant vacancy, and the relatively small number of expiring leases during the quarter. In the same period of 2014, RioCan achieved an average rent increase of 8.3% ($1.73 per square foot), while retaining 86.4% of its tenants;
- Consistent with RioCan’s stated Canadian strategy, its portfolio is concentrated in Canada’s six major markets (consisting of Calgary, Edmonton, Montreal, Ottawa, Toronto and Vancouver). Assets in these markets contribute approximately 73.6% of RioCan’s Canadian annualized rental revenue (73.3% at December 31, 2014);
- National and anchor tenants represented about 86.3% of RioCan’s total annualized rental revenue at March 31, 2015, consistent with 86.4% at December 31, 2014; and
- No individual tenant comprised more than 4.1% of annualized rental revenue. At March 31, 2015, Loblaws (which includes Shoppers Drug Mart) was RioCan’s largest revenue source.
Target Canada Corporation
On January 15, 2015, Target Corporation (Target) announced plans to discontinue its Canadian operations through its indirect wholly-owned subsidiary, Target Canada, and that it was utilizing the Companies’ Creditors Arrangement Act (Canada) (CCAA) to wind down its operations. As at March 31, 2015, RioCan has 26 locations under lease with Target Canada representing approximately 1.9% of RioCan’s total annualized rental revenue with an average remaining lease term of approximately 12.7 years. All but one of these leases are guaranteed through an indemnity arrangement with Target, generally for the remaining term of each lease. The one lease that is not covered by the Target indemnity is guaranteed by Walmart Canada.
Target liquidated its store inventory and closed all of its Canadian locations effective April 12, 2015.
Subsequent to the quarter end, RioCan received notice from Target that they have disclaimed 15 leases in properties owned by RioCan as a result of the ongoing Target Canada Corporation’s CCAA proceedings. These 15 stores represent 1.3 million square feet of GLA at a weighted average rental rate of $6.42 psf aggregating to $8.6 million of annualized rental revenue (at RioCan’s interest). Subsequent to receiving the disclaimer notices, RioCan has commenced negotiations with potential retailers to backfill the vacant premises and mitigate damages to be pursued from Target under the terms of the indemnity agreement. The 11 locations that have not been disclaimed remain protected under the CCAA. These locations comprise 1.3 million square feet (845,000 square feet at RioCan’s interest) at an average lease rate of $6.88 per square foot.
Portfolio Activity and Acquisition Pipeline
During the three months ended March 31, 2015, RioCan completed four acquisitions of interests in 21 income properties aggregating to $169 million, at a weighted average capitalization rate of 5.5%.
Acquisitions Completed in the First Quarter
- On January 15, 2015, RioCan completed the acquisition of the remaining 50% interest in 845 Eglinton Avenue East at a purchase price of approximately $31.5 million, representing a capitalization rate of 5.5%. 845 Eglinton Avenue East is a 133,000 square foot non-grocery anchored shopping centre located in Toronto, Ontario. In connection with the acquisition, RioCan assumed $16 million in mortgage financing carrying interest at 3.34%, maturing in March 2017. As part of the transaction, the vendor is entitled to additional consideration of up to approximately $6 million if RioCan is successful in its efforts to rezone the property to permit a mixed use project.
- On January 15, 2015, RioCan completed the acquisition of a 100% interest in an 18 property portfolio at a purchase price of approximately $50.2 million, representing a capitalization rate of 5.5%. The properties, which are all single-tenant units occupied by the Bank of Montreal totalling 174,000 square feet, were acquired free and clear of financing. Eleven of the properties are located in Ontario, six are located in British Columbia and one is located in Quebec.
Transaction with Kimco Realty Corp. (“Kimco”)
As previously disclosed on March 27, 2015, RioCan has entered into an agreement with Kimco whereby RioCan purchased Kimco’s 50% interest in two Canadian properties, Brentwood Village and RioCan Grand Park. As part of the transaction Kimco has agreed to purchase RioCan’s 80% interest in Montgomery Plaza. The acquisitions of Brentwood Village and Grand Park by RioCan were completed on March 31, 2015. The two properties were acquired at a total purchase price of $83.5 million. In connection with the purchase, RioCan assumed Kimco’s 50% interest on the in-place debt of $8 million (at 50%) which carries a weighted average interest rate of 6.35% and is scheduled to mature in 2019 and 2024.
The sale of RioCan’s 80% interest in Montgomery Plaza to Kimco will be completed upon obtaining customary lender consents. RioCan has agreed to sell its 80% interest in Montgomery Plaza at a sales price of approximately US$58 million ($74 million). Kimco will assume RioCan’s 80% interest in the in-place debt of US$23 million ($30 million) (at 80%), carrying an interest rate of 3.90% and maturing in 2022.
Acquisitions Under Contract – Committed
Joint Venture with Hudson’s Bay Company (“HBC”)
On February 25, 2015, RioCan announced that it has agreed to form a joint venture with HBC focused on real estate growth opportunities in Canada. The joint venture will enable RioCan and HBC to build on the strength of existing real estate assets through potential future redevelopment, as well as identify new real estate acquisition and redevelopment opportunities.
RioCan has one income property in the US under firm contract to acquire an additional retail pad at its Bird Creek Crossing centre in Temple, Texas at a purchase price of approximately $3 million (US$2 million), at RioCan’s interest.
RioCan is currently in negotiations, including with respect to potential joint venture arrangements, regarding various income property acquisitions in Canada that, if completed, would represent approximately $147 million of additional acquisitions at RioCan’s interest. These transactions are in various stages of negotiations and while efforts will be made to complete these negotiations, no assurance can be given with respect to the completion of the arrangements or acquisitions.
During the First Quarter, RioCan disposed of five income properties aggregating to $120 million representing a weighted average capitalization rate of 6.8%, comprised of 748,000 square feet. The Trust’s mortgage obligations related to these properties was $21 million. These dispositions were completed as part of RioCan’s ongoing capital recycling program to sell lower growth assets, the majority of which were located outside of RioCan’s six major markets.
Property Dispositions Under Contract and Being Marketed
In addition to the transactions with Kimco and the HBC joint venture, RioCan has one income property disposition in Canada under conditional contract where conditions have not yet been waived that, if completed, would represent a disposition of $9 million, at RioCan’s interest. The property is free and clear of financing. This transaction is undergoing due diligence procedures and while efforts will be made to complete the transaction, no assurance can be given.
RioCan is also in the process of marketing for sale income properties in Canada with an aggregate fair value as at March 31, 2015 calculated in accordance with IFRS of approximately $51 million, at RioCan’s interest. There is $14 million of mortgage financing associated with these properties. RioCan is under no obligation to proceed with the proposed dispositions which, if completed, will be done to facilitate its objectives of paring its portfolio and focusing on major markets.
RioCan has dispositions of land parcels under conditional contracts where conditions have not yet been waived for total sales proceeds of approximately $18 million, at RioCan’s interest. These land parcels are free and clear of financing. While efforts will be made to complete the transactions, no assurance can be given.
RioCan is also in the process of marketing for sale land parcels with an aggregate fair value as at March 31, 2015 calculated in accordance with IFRS of approximately $59 million, at RioCan’s interest. These land parcels are free and clear of financing. RioCan is under no obligation to proceed with the proposed dispositions.
As at March 31, 2015, RioCan had ownership interests in 15 development projects that will, upon completion, comprise about 7.0 million square feet (3.8 million square feet at RioCan’s interest). In addition to its development projects, RioCan continued its urban intensification activities, primarily in the Toronto, Ontario and Calgary, Alberta markets.
RioCan has filed applications for rezoning eight mixed use projects which, upon completion, should comprise a total of 5.7 million square feet, of which approximately 2.5 million square feet will be residential rental units held for long- term rental income; approximately 1.0 million square feet will be condominiums for sale; and 2.2 million square feet will be incremental commercial gross leasable area. This would permit RioCan to have an interest in approximately 2,992 residential units. The majority of these properties are located directly on, or in close proximity, to major transit lines such as the existing Toronto Transit Commissions’ subway lines or The Crosstown Eglinton LRT line, which is currently under construction. The ability to intensify its existing retail properties into transit-oriented mixed use developments is indicative of both the locational attributes of RioCan’s urban land holdings and its development capabilities.
Liquidity and Capital
|Quarter Ended (i)||Rolling 12 months ended (ii)|
|March 31, 2015||March 31, 2015||December 31, 2014|
|Interest coverage ratio – RioCan’s interest||3.41x||2.93x||2.89x|
|Debt service coverage ratio – RioCan’s interest||2.54x||2.25x||2.20x|
|Fixed charge coverage ratio – RioCan’s interest||1.16x||1.09x||1.08x|
|Net debt to Adjusted EBITDA ratio – RioCan’s interest||8.08x||8.14x||8.09x|
|Net Operating debt to Operating EBITDA – RioCan’s interest||7.70x||7.72x||7.67x|
|Unencumbered assets (millions)||$2,933||$2,777|
|Unencumbered assets to unsecured debt||161%||149%|
|(i)||Excludes capitalized interest to properties under development|
|(ii)||Includes capitalized interest to properties under development|
Financing Highlights for the First Quarter
At March 31, 2015, RioCan has five revolving lines of credit in place having an aggregate capacity of $726 million with $413 million available to be drawn ($568 million available to be drawn as of the date hereof).
- RioCan obtained approximately $107 million fixed-rate mortgage financing during the quarter at an average interest rate of 2.89% and an average term to maturity of 4.9 years.
- During the quarter, RioCan completed the early redemption of Series N debentures due September 21, 2015. The US$100 million Series N Debentures were redeemed on March 9, 2015, in accordance with their terms, at a total redemption price of US$101.8 million plus accrued and unpaid interest of US$1.9 million up to but excluding the redemption date.
- During the quarter, RioCan completed the early redemption of Series O debentures due January 21, 2016. The $225 million Series O Debentures were redeemed on March 11, 2015, in accordance with their terms, at a total redemption price of $231.8 million plus accrued and unpaid interest of $1.4 million up to but excluding the redemption date.
- On February 12, 2015, RioCan completed the offering of $300 million Series W senior unsecured debentures. The debentures carry a coupon of 3.287% and will mature on February 12, 2024.
- Subsequent to the quarter end, RioCan completed the offering of an additional $175 million principal amount of Series Q debentures. The debentures carry a coupon rate of 3.85% and will mature on June 28, 2019. The Additional Debentures were issued at a price of $107.31 per $100 principal amount plus accrued interest, which equates to an effective yield of 2.04% if held to maturity.
- During the quarter, RioCan incurred a prepayment penalty of $9.9 million in the quarter, but going forward, the Trust will realize interest expense savings from the new lower rate debentures.
- During the quarter, RioCan obtained approximately $20 million fixed-rate mortgage financing in the U.S. at an average interest rate of 3.46% and an average term to maturity of 7.9 years.
As a result of these activities in Canada and the U.S., RioCan has reduced its overall contractual interest rate on outstanding debt to 3.96% at March 31, 2015 from 4.12% at December 31, 2014.
RioCan’s Consolidated Financial Statements, Management’s Discussion and Analysis for the three months ended March 31, 2015 is available on RioCan’s website at www.riocan.com.
Conference Call and Webcast
Interested parties are invited to participate in a conference call with management on Tuesday, May 5, 2015 at 10:00 a.m. eastern time. You will be required to identify yourself and the organization on whose behalf you are participating.
In order to participate, please dial 416-340-2216 or 1-800-355-4959. If you cannot participate in the live mode, a replay will be available until June 2, 2015. To access the replay, please dial 905-694-9451 or 1-800-408-3053 and enter passcode 1455172#.
Scheduled speakers include Edward Sonshine, O.Ont. Q.C., Chief Executive Officer, and Rags Davloor, President and Chief Operating Officer and Cynthia Devine, Executive Vice President, Chief Financial Officer and Corporate Secretary. Management’s presentation will be followed by a question and answer period. To ask a question, press “star 1” on a touch-tone phone. The conference call operator will be notified of all requests in the order in which they are made, and will introduce each questioner.
Alternatively, to access the simultaneous webcast, go to the following link on RioCan’s website http://investor.riocan.com/investor-relations/events-and-presentations/events/ and click on the link for the webcast. The webcast will be archived 24 hours after the end of the conference call and can be accessed for 120 days.
RioCan is Canada’s largest real estate investment trust with a total enterprise value of approximately $16.2 billion as at March 31, 2015. It owns and manages Canada’s largest portfolio of shopping centres with ownership interests in a portfolio of 353 retail properties containing more than 79 million square feet, including 48 grocery anchored and new format retail centres containing 13 million square feet in the United States as at March 31, 2015. RioCan’s portfolio also includes 15 properties under development in Canada. For further information, please refer to RioCan’s website at www.riocan.com.
RioCan’s consolidated financial statements are prepared in accordance with IFRS. Consistent with RioCan’s management framework, management uses certain financial measures to assess RioCan’s financial performance, which are not generally accepted accounting principles (GAAP) under IFRS. The following measures, RioCan’s Interest, Funds From Operations (“FFO”), Operating Funds From Operations (“Operating FFO”), Adjusted Funds From Operations (“AFFO”), and Adjusted Earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), Operating EBITDA, Interest Coverage Ratio, Debt Service Coverage Ratio, Net Debt to Operating EBITDA, Net Operating Income (“NOI”), Same Store NOI, Same Property NOI, and Total Enterprise Value as well as other measures discussed elsewhere in this release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. RioCan uses these measures to better assess the Trust’s underlying performance and provides these additional measures so that investors may do the same. Non GAAP measures should not be considered as alternatives to net earnings or comparable metrics determined in accordance with IFRS as indicators of RioCan’s performance, liquidity, cash flow, and profitability. For a full definition of these measures, please refer to the “Use of Non-GAAP Measures” in RioCan’s first quarter 2015 Management Discussion and Analysis.
This news release contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements made in this News Release (including the sections entitled “Highlights for the three months ended March 31, 2015”, “Financial Highlights”, “Leasing and Operational Highlights”, “Portfolio Activity and Acquisition Pipeline”, “Liquidity and Capital”, and “Development Portfolio”), 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. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management’s current beliefs and are based on information currently available to management. All forward-looking statements in this News Release are qualified by these cautionary statements.
Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan’s current estimates and assumptions, which are subject to numerous risks and uncertainties, including those described under “Risks and Uncertainties” in RioCan’s Management’s Discussion and Analysis for the period ended March 31, 2015, which could cause actual events or results to differ materially from the forward-looking statements contained in this News Release. Those risks and uncertainties include, but are not limited to, those related to: liquidity and general market conditions; tenant concentrations and related risk of bankruptcy, occupancy levels and defaults; lease renewals and rental increases; retailer competition; access to debt and equity capital; interest rate and financing risk; joint ventures and partnerships; the relative illiquidity of real property; unexpected costs or liabilities related to acquisitions and dispositions; development risk associated with construction commitments, project costs and related approvals; environmental matters; litigation; reliance on key personnel; management information systems; unitholder liability; income and indirect taxes; U.S. investments, property management and foreign currency risk; and credit ratings.
RioCan currently qualifies as a real estate investment trust for tax purposes and intends to continue to qualify for future years. The Income Tax Act (Canada) contains provisions which potentially impose tax on publicly traded trusts which qualify as specified investment flow-through entities (the SIFT Provisions). However, the SIFT Provisions do not impose tax on a publicly traded trust which qualifies as a real estate investment trust (REIT). Should RioCan no longer qualify as a REIT under the SIFT Provisions, certain statements contained in this MD&A may need to be modified.
The Trust’s US subsidiary qualifies as a REIT for US income tax purposes. The subsidiary expects to distribute all of its US taxable income (if any) to Canada and is entitled to deduct such distributions for US income tax purposes. The subsidiary’s qualification as a REIT depends on the REIT’s satisfaction of certain asset, income, organizational, distribution, unitholder ownership and other requirements on a continuing basis. The Trust anticipates that the subsidiary will continue to qualify as a US REIT in the future.
Other factors, such as general economic conditions, including interest rate and foreign exchange rate fluctuations, may also have an effect on RioCan’s results of operations. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a stable retail environment; relatively low and stable interest costs; a continuing trend toward land use intensification, including residential development in high growth markets; access to equity and debt capital markets to fund, at acceptable costs, the future growth program to enable the Trust to refinance debts as they mature; and the availability of purchase opportunities for growth in Canada and the U.S..
For a description of additional risks that could cause actual results to materially differ from management’s current expectations, see “Risks and Uncertainties” in RioCan’s Management’s Discussion and Analysis in its 2014 Annual Report, and for the period ended March 31, 2015, and in “Risks and Uncertainties” in RioCan’s AIF. Although the forward-looking information contained in this News Release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information. Certain statements included in this News Release may be considered “financial outlook” for purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this News Release. The forward-looking information contained in this News Release is made as of the date of this News Release, and should not be relied upon as representing RioCan’s views as of any date subsequent to the date of this News Release.
Except as required by applicable law, RioCan under takes no obligation to publicly update or revise any forward- looking statement, whether as a result of new information, future events or otherwise.
Executive Vice President, Chief Financial Officer
and Corporate Secretary