RioCan’s First Quarter 2022 Delivers Growth Across Key Metrics Driven by its Quality Portfolio

  • Net income of $160.1 million and FFO per unit 1 of $0.42; reaffirms 2022 guidance
  • 1.1 million sq. ft. of new and renewed leases with new leasing spread of 13.5% and blended spread of 8.9%

TORONTO, May 09, 2022 (GLOBE NEWSWIRE) — RioCan Real Estate Investment Trust (“RioCan” or the “Trust”) announced today its financial results for the three months ended March 31, 2022 (the “First Quarter”).

“RioCan is pleased to report another strong quarter. We continued to advance our strategic objectives from a position of strength, driven by the quality of our portfolio, resilience of our tenants, and capacity to execute our growth initiatives,” said Jonathan Gitlin, President and CEO of RioCan. “In any environment, our portfolio, business, and team remain well-positioned to drive performance, overcome challenges and emerge even stronger. In the face of rapidly changing market conditions, our focus remains on the long-term. We will continue to capitalize on the strength of our portfolio, our embedded development pipeline, and our compelling growth prospects to deliver solid performance and maximize Unitholder return.”  

(in millions, except where otherwise noted, and per unit values)          
Three months ended March 31     2022       2021
Financial Highlights          
Net income   $         160.1     $         106.7
Weighted average Units outstanding – diluted (in thousands)             310,114               317,758
FFO 1   $         130.6     $         106.0
FFO per unit – diluted 1   $         0.42     $         0.33
           

FFO per Unit and Net Income

  • FFO per unit of $0.42 for the First Quarter was $0.09 per unit or 27% higher than the same period last year and on track to achieve full year 2022 guidance of 5% to 7% FFO per unit growth. Strong Same Property NOI1 growth of 4.1% accounted for $0.02 of the increase. Higher NOI from completed properties under development1 and higher fee income each contributed approximately $0.01 of incremental FFO per unit. The combination of other items including lower net debt prepayment and one-time compensation costs, lower interest expense and higher residential inventory gains contributed $0.06 to the variance in FFO per unit. These items were partially offset by the reduction of FFO from assets sold, an impact of $0.02 on FFO per unit. The Trust reported an FFO Payout Ratio1 for the quarter of 57.3%, which is in-line with its target range of 55% to 65%.
  • Net income for the First Quarter was $160.1 million and exceeded the comparable period last year by $53.3 million, due to similar items described above as well as increased fair value gains of $26.6 million.
  • RioCan continued to advance its industry leading development program of preeminent mixed-use communities. This program will continue to deliver FFO growth in the near term. Our current projects are insulated from inflation as the majority of costs are already secured with fixed price contracts. For our next wave of projects, we will be developing on lands that we already own with in-place income, which affords us with the ability to maintain discipline.
  • The Trust is well-positioned to take advantage of opportunities and mitigate risk during the current economic environment. Our targeted FFO Payout Ratio, ample Liquidity1 of $1.6 billion, low proportion of floating rate debt and staggered debt maturities all contribute to the Trust’s financial flexibility.
1. A non-GAAP measurement. For definitions, reconciliations and the basis of presentation of RioCan’s non-GAAP measures, refer to the Basis of Presentation and Non-GAAP Measures section in this News Release. 

Operation Highlights

Three months ended March 31   2022       2021  
           
Operation Highlights (i)          
Occupancy – committed (ii)   97.0 %     95.8 %
Blended leasing spread   8.9 %     8.1 %
New leasing spread   13.5 %     14.2 %
Renewal leasing spread   6.7 %     5.0 %
           

(i)   Includes commercial portfolio only.
(ii)   Information presented as at respective periods then ended.
  • Same Property NOI grew by 4.1% in the First Quarter when compared to the same period last year and was driven by occupancy gains, rent growth and a lower pandemic-related provision partially offset by certain 2021 favourable items which did not recur in 2022. Rent collection of 99.1% of First Quarter billed gross rents collected to date is in-line with pre-pandemic levels and as such, no pandemic-related provision was necessary in Q1 2022, compared to $6.4 million in Q1 2021.
  • Committed occupancy for the total portfolio of 97.0% showed solid improvement, increasing by 120 basis points when compared to the same period last year and by 20 basis points when compared to Q4 2021, driven by increases in retail committed occupancy.
  • New and renewed leases totalled 1.1 million square feet (at 100% ownership interest) for the First Quarter at a blended leasing spread of 8.9%. New leasing of 0.4 million square feet was completed at new leasing spreads for the overall portfolio of 13.5%. Leasing momentum at The WellTM continued into Q1 2022 and accounted for the majority of new property under development leases. Renewed leases of 0.7 million square feet were completed at renewal leasing spreads of 6.7% for the overall portfolio.
  • On March 28, 2022, RioCan announced the transfer of property management responsibilities for 18 of its Quebec retail properties to Harden, a local third-party manager, with a view of maximizing value from this portfolio.

RioCan Living Update

                       
Residential Rental Buildings in Operation   Number of total units     Date of
lease launch
    % of leased units as of
May 9, 2022
    % of leased
units as of
February 9, 2022
                       
Stabilized (i)   996     December 2018 to
December 2020
    96.3 %     95.7 %
In lease-up                      
Pivot (Yonge Sheppard Centre, Toronto)   361     October 2020     91.4 %     84.8 %
Litho. (Toronto)   210     July 2021     75.7 %     61.9 %
Latitude (Ottawa)   209     July 2021     62.5 %     27.4 %
Strada (Toronto)   61     November 2021     62.3 %     27.9 %
Luma (Ottawa) (ii)   168     March 2022     11.9 %     %
                       

(i)   A property is considered to have reached stabilization upon the earlier of (i) achieving 95% occupancy or (ii) 24 months after first occupancy. Stabilized properties include eCentral, Frontier, Brio, and Market Phase One which was acquired on February 8, 2022.
(ii)   Luma, which is expected to be substantially complete and have move-ins in Q2 2022, commenced pre-leasing in Q1 2022.
  • RioCan’s residential brand, RioCan LivingTM, includes purpose-built residential rental buildings developed or acquired by RioCan. As of May 9, 2022, the Trust’s residential rental portfolio is comprised of 1,837 purpose-built completed units (at 100% ownership interest) across eight buildings located in Toronto, Ottawa, Calgary and Montreal. The 139-unit building acquired in Montreal is the first phase of a three-phase development and RioCan will also acquire a 90% interest upon stabilization in the 297 units currently under construction in the two additional phases.
  • Leasing velocity was strong at the two most recently completed multi-unit properties, LatitudeTM, the 209-unit project in Ottawa and StradaTM, the 61-unit project in Toronto. Occupancy at these two buildings commenced in Q1 2022. Latitude is now 62.5% leased and Strada is now 62.3% leased, up 35.1% and 34.4% respectively since last reported. Leasing at LumaTM in Ottawa launched during the quarter and is progressing well.
  • RioCan Living, also encompasses townhouse and condominium developments. Demand at our most recent phase of the condominium and townhouse development at our Windfields Farm site in Oshawa, Ontario continues to be strong. All released condominium units at U.C. Tower 2 have sold out and sales of 386 units at U.C. Tower 3 that commenced in April 2022 are averaging over $1,050 per square foot. Buyers of 66 townhouse units at U.C. Uptowns TM took interim occupancy in the First Quarter, generating a $2.0 million inventory gain. Final closings at U.C. Uptowns commenced upon obtaining condominium registration subsequent to quarter end.

Development Highlights

(in millions except square feet)          
Three months ended March 31     2022       2021
           
Development Highlights          
Development Completions – sq. ft. in thousands             145.0               30.0
Development Spending (i) 1   $         91.9     $         87.7
Under Active Development – sq. ft. in thousands (ii) (iii)             2,206.0               2,575.0
           

(i)   Effective Q1 2022, the definition of total development spending was revised to include RioCan’s share of development spending from equity-accounted joint ventures, accordingly, the comparative period has been restated.
(ii)   Information presented as at the respective periods then ended and includes properties under development and residential inventory.
(iii)   As at March 31, 2022, excludes a total of 0.7 million square feet of completed phases and includes 0.6 million square feet of residential inventory (March 31, 2021 – 1.2 million square feet and 0.5 million square feet, respectively).
  • RioCan’s in-house development team delivered 145,000 square feet of completions during Q1 2022, including two RioCan Living purpose-built residential rental buildings, Strada in Toronto and Latitude in Ottawa. The total embedded development potential within the Trust’s portfolio is 42.6 million square feet, of which 23.7 million square feet are currently zoned or have submitted applications. Many of our development properties are currently income producing and have been owned by the Trust for many years. Therefore, they are situated on land with a low cost base. Both of these elements provide a significant competitive advantage, particularly in an inflationary environment with rising land costs. 
  • Our development pipeline includes 16.8 million square feet of permitted projects, of which 2.2 million square feet is currently under development. Construction projects include The Well and two purpose-built residential rental projects in Ottawa, Luma and RhythmTM, which are on schedule for completion by Q2 2022 and Q4 2022, respectively. The start of construction is imminent at NextTM, our development at Strawberry Hill, an additional purpose-built rental project located in Surrey, British Columbia and additional lands at Queen & AshbridgeTM were acquired, expediting the development of this mixed-use project which is scheduled for a 2025 completion.
  • As of May 9, 2022, 2,780 condominium and townhouse units are either under construction or in the process of interim or final closing. These projects include U.C. Uptowns, U.C. Tower, U.C. Tower 2, 11 YV, Queen & Ashbridge and Verge (Phase One and Two) with estimated completion dates between 2022 and 2026. An additional 451 units at U.C. Towns 2 and U.C. Tower 3 are in pre-sale.
  • The Trust’s Development Spending target for 2022 is estimated to be in the $475 million to $525 million range, excluding acquisitions for purposes of development.
  • In 2022, the Trust expects to deliver projects with costs of $675 million to $725 million, the largest amount of annual cost transfers since the inception of this development program.
1. A non-GAAP measurement. For definitions, reconciliations and the basis of presentation of RioCan’s non-GAAP measures, refer to the Basis of Presentation and Non-GAAP Measures section in this News Release.

Investing and Capital Recycling

  • RioCan continued to enhance its development pipeline through opportunistic asset acquisitions including land assembly adjacent to properties it already owns. In Q1 2022, the Trust entered into a 50/50 joint venture partnership with Parallax Properties Inc. to develop a high-rise residential condominium building with luxury street-front retail in Yorkville, an exclusive Toronto neighbourhood. Each partner vended in their respective owned properties and completed the assembly by acquiring four adjacent properties. RioCan’s cost for a 50% interest in the acquired properties totalled $52.5 million, or $225 per buildable square foot, based on density pursuant to the zoning application.
  • As of May 9, 2022, closed, firm or conditional dispositions totaled $191.8 million at a weighted average capitalization rate of 6.6%, including $86.1 million of completed dispositions in the First Quarter.
  • Total Acquisitions1 including land assemblies and properties acquired within equity-accounted joint ventures were $187.8 million in the First Quarter. This included the previously announced Market residential rental property in Montreal.
1. A non-GAAP measurement. For definitions, reconciliations and the basis of presentation of RioCan’s non-GAAP measures, refer to the Basis of Presentation and Non-GAAP Measures section in this News Release.  

Capital Management Update

  • The Trust continued to execute on its target of achieving 70% of total debt as unsecured over the long-term and to extend the weighted average term to maturity of its total debt portfolio while further strengthening its liquidity.
  • On April 18, 2022, RioCan issued $250.0 million, 4.628% of Series AF senior unsecured debentures with a 7-year term. Inclusive of the benefit of bond-forward hedges, the all-in interest rate of the Series AF debentures is 3.829%. This issuance provides additional liquidity to RioCan to support its strategy, pursue opportunities and manage potential risks.
  • The Trust has $250.0 million of bond-forward contracts remaining as of May 9, 2022 with an effective 7-year government of Canada bond yield of 1.46% to hedge its exposure to changes in the risk-free interest rates on anticipated refinancings.

Balance Sheet Strength

(in millions except percentages)
As at
March 31, 2022
    December 31, 2021  
           
Balance Sheet Strength Highlights          
Total assets   $         15,346       $         15,177  
Total debt   $         6,710       $         6,611  
Liquidity (i) 1   $         1,335       $         1,010  
    Adjusted Debt to Adjusted EBITDA (i) 1   9.48x
      9.59x  
Total Adjusted Debt to Total Adjusted Assets (i) 1     44.2%         43.9%  
Ratio of Unsecured Debt and Secured Debt (i) 1     57.9% / 42.1%       59.4% / 40.6%  
Unencumbered Assets (i) 1   $         9,248       $         9,392  
Unencumbered Assets to Unsecured Debt (i) 1     229%         231%  
           

(i)    At RioCan’s proportionate share.
  • The Trust had $1.3 billion of Liquidity in the form of cash and cash equivalents and undrawn lines of credit, or $1.6 billion including the $250.0 million increase relating to Series AF senior unsecured debentures subsequent to quarter end.
  • RioCan’s unencumbered asset pool was $9.2 billion, which generated 62.4% of Annual Normalized NOI1 and provided 2.29x coverage over Unsecured Debt.
  • The Trust’s Total Adjusted Debt to Total Adjusted Assets at RioCan’s proportionate share increased marginally from December 31, 2021 mainly due to higher Total Adjusted Debt resulting from timing of development spend relative to development completions partially offset by improvements in the Trust’s operations and valuations.
  • Adjusted Debt to Adjusted EBITDA was 9.48x on a proportionate share basis, as at March 31, 2022, compared to 9.59x as at the end of 2021. The decrease was primarily due to higher Adjusted EBITDA partially offset by higher average Total Adjusted Debt balances.

1. A non-GAAP measurement. For definitions, reconciliations and the basis of presentation of RioCan’s non-GAAP measures, refer to the Basis of Presentation and Non-GAAP Measures section in this News Release.

Conference Call and Webcast

Interested parties are invited to participate in a conference call with management on Tuesday, May 10, 2022 at 10:00 a.m. (ET). Participants will be required to identify themselves and the organization on whose behalf they are participating.

In order to participate, please dial 647-427-3230 or 1-877-486-4304. For those unable to participate in the live mode, a replay will be available at 1-855-859-2056, passcode 8402859#.

For a copy of the slides to be used for the conference call or to access the simultaneous webcast, visit RioCan’s website at http://investor.riocan.com/investor-relations/events-and-presentations/ and click on the link for the webcast.

About RioCan

RioCan is one of Canada’s largest real estate investment trusts. RioCan owns, manages and develops retail-focused, increasingly mixed-use properties located in prime, high-density transit-oriented areas where Canadians want to shop, live and work. As at March 31, 2022, our portfolio is comprised of 204 properties with an aggregate net leasable area of approximately 36.2 million square feet (at RioCan’s interest) including office, residential rental and 13 development properties. To learn more about us, please visit www.riocan.com.

Basis of Presentation and Non-GAAP Measures

All figures included in this News Release are expressed in Canadian dollars unless otherwise noted. RioCan’s unaudited interim condensed consolidated financial statements (“Condensed Consolidated Financial Statements”) are prepared in accordance with International Financial Reporting Standards (IFRS). Financial information included within this News Release does not contain all disclosures required by IFRS, and accordingly should be read in conjunction with the Trust’s Condensed Consolidated Financial Statements and MD&A for the three months ended March 31, 2022, which are available on RioCan’s website at www.riocan.com and on SEDAR at www.sedar.com.

Consistent with RioCan’s management framework, management uses certain financial measures to assess RioCan’s financial performance, which are not in accordance with generally accepted accounting principles (GAAP) under IFRS. Funds From Operations (“FFO”), FFO per unit, Net Operating Income (“NOI”), Same Property NOI, Development Spending, Total Acquisitions, Liquidity, Adjusted Debt to Adjusted EBITDA, Total Adjusted Debt to Total Adjusted Assets, RioCan’s Proportionate Share, Ratio of Unsecured Debt to Total Contractual Debt, Ratio of Secured Debt to Total Contractual Debt, Unencumbered Assets to Unsecured Debt and Percentage of Normalized NOI Generated from Unencumbered Assets, as well as other measures that may be discussed elsewhere in this News Release, do not have a standardized definition prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. RioCan supplements its IFRS measures with these Non-GAAP measures to aid in assessing the Trust’s underlying performance and reports these additional measures so that investors may do the same. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of RioCan’s performance, liquidity, cash flow, and profitability. For full definitions of these measures, please refer to the “Non-GAAP Measures” section in RioCan’s MD&A for three months ended March 31, 2022.

The reconciliations for non-GAAP measures included in this News Release are outlined as follows:

RioCan’s Proportionate Share

The following table reconciles the consolidated balance sheet from IFRS to RioCan’s proportionate share basis as at March 31, 2022 and December 31, 2021:

As at March 31, 2022 December 31, 2021
(in thousands) IFRS basis Equity-
accounted
investments
RioCan’s
proportionate
share
IFRS basis Equity-
accounted
investments
RioCan’s
proportionate
share
Assets            
Investment properties $         14,132,107 $         411,059   $         14,543,166 $         14,021,338 $         409,794   $         14,431,132
Equity-accounted investments           363,663           (363,663 )                      327,335           (327,335 )           —
Mortgages and loans receivable           217,911                        217,911           237,790           —             237,790
Residential inventory           256,147           193,447             449,594           217,043           121,291             338,334
Assets held for sale           38,352                        38,352           47,240           —             47,240
Receivables and other assets           253,058           35,945             289,003           248,959           35,367             284,326
Cash and cash equivalents           85,188           9,556             94,744           77,758           9,113             86,871
Total assets $         15,346,426 $         286,344   $         15,632,770 $         15,177,463 $         248,230   $         15,425,693
             
Liabilities            
Debentures payable $         2,991,357 $            $         2,991,357 $         2,990,692 $         —   $         2,990,692
Mortgages payable           2,398,702           167,235             2,565,937           2,334,016           166,368             2,500,384
Lines of credit and other bank loans           1,320,167           90,000             1,410,167           1,285,910           48,049             1,333,959
Accounts payable and other liabilities           590,353           29,109             619,462           655,501           33,813             689,314
Total liabilities $         7,300,579 $         286,344   $         7,586,923 $         7,266,119 $         248,230   $         7,514,349
             
Equity            
Unitholders’ equity           8,045,847                        8,045,847           7,911,344           —             7,911,344
Total liabilities and equity $         15,346,426 $         286,344   $         15,632,770 $         15,177,463 $         248,230   $         15,425,693

The following tables reconcile the consolidated statements of income from IFRS to RioCan’s proportionate share basis for the three months ended March 31, 2022 and 2021:

  Three months ended March 31, 2022 Three months ended March 31, 2021
(in thousands) IFRS basis Equity-
accounted
investments
RioCan’s
proportionate
share
IFRS basis Equity-
accounted
investments
RioCan’s
proportionate
share
Revenue            
Rental revenue $         272,131   $         6,938   $         279,069   $         273,624   $         5,977   $         279,601  
Residential inventory sales           15,969             936             16,905             —             841             841  
Property management and other service fees           5,882                          5,882             3,175             —             3,175  
            293,982             7,874             301,856             276,799             6,818             283,617  
Operating costs            
Rental operating costs            
Recoverable under tenant leases           100,122             622             100,744             97,287             448             97,735  
Non-recoverable costs           6,056             588             6,644             12,410             641             13,051  
Residential inventory cost of sales           13,936             422             14,358             —             362             362  
            120,114             1,632             121,746             109,697             1,451             111,148  
Operating income           173,868             6,242             180,110             167,102             5,367             172,469  
Other income (loss)            
Interest income           4,061             570             4,631             2,929             469             3,398  
Income from equity-accounted investments           4,090             (4,090 )                        3,629             (3,629 )           —  
Fair value gain (loss) on investment properties, net           35,432             (790 )           34,642             8,866             (512 )           8,354  
Investment and other income (loss)           (185 )           (58 )           (243 )           221             (139 )           82  
            43,398             (4,368 )           39,030             15,645             (3,811 )           11,834  
Other expenses            
Interest costs, net           41,766             1,842             43,608             43,924             1,541             45,465  
General and administrative           11,463             16             11,479             17,831             12             17,843  
Internal leasing costs           2,985                          2,985             2,852             —             2,852  
Transaction and other costs           1,175             16             1,191             4,556             3             4,559  
Debt prepayment costs, net                                                  7,018             —             7,018  
            57,389             1,874             59,263             76,181             1,556             77,737  
Income before income taxes $         159,877   $            $         159,877   $         106,566   $         —   $         106,566  
Current income tax recovery           (181 )                        (181 )           (163 )           —             (163 )
Net income $         160,058   $            $         160,058   $         106,729   $         —   $         106,729  

NOI and Same Property NOI

The following table reconciles operating income to NOI and Same Property NOI to NOI for the three months ended March 31, 2022 and 2021:

(thousands of dollars, except where otherwise noted)    
Three months ended March 31   2022     2021  
Operating Income $         173,868   $         167,102  
Adjusted for the following:    
Property management and other service fees           (5,882 )           (3,175 )
Residential inventory gains           (2,033 )           —  
Operational lease revenue and (expenses) from ROU assets           1,346             1,105  
NOI $         167,299   $         165,032  

(thousands of dollars)    
Three months ended March 31   2022   2021
Same Property NOI $ 155,531 $ 149,338
NOI from income producing properties:    
Acquired (i)   108   19
Disposed (i)   820   7,613
    928   7,632
NOI from completed properties under development   4,188   1,806
NOI from properties under de-leasing under development   2,507   2,157
Lease cancellation fees   883   1,748
Straight-line rent adjustment   915   1,686
NOI from residential rental   2,347   665
NOI $ 167,299 $ 165,032

(i)   Includes properties acquired or disposed during the periods being compared.

Same Property NOI including completed PUD

(thousands of dollars)      
Three months ended March 31   2022   2021 % change
Same Property NOI $         155,531 $ 149,338 4.1 %
Add:      
NOI from completed properties under development           4,188   1,806  
Same Property NOI including completed PUD $         159,719 $ 151,144 5.7 %

Same Property NOI excluding the pandemic-related provision

(thousands of dollars)      
Three months ended March 31   2022   2021 % change
Same Property NOI $         155,531 $ 149,338 4.1 %
Add back:      
Same property pandemic-related provision              6,267  
Same Property NOI excluding the pandemic-related provision $         155,531 $ 155,605 %

FFO

The following table reconciles net income attributable to Unitholders to FFO for the three months ended March 31, 2022 and 2021:

(thousands of dollars, except where otherwise noted)    
Three months ended March 31   2022     2021  
Net income attributable to Unitholders $ 160,058   $ 106,729  
Add back/(Deduct):    
Fair value (gains)           (35,432 )   (8,866 )
Fair value losses included in equity-accounted investments   790     512  
Internal leasing costs   2,985     2,852  
Transaction losses on investment properties, net (i)   384     155  
Transaction costs on sale of investment properties   600     3,638  
Current income recovery   (181 )   (163 )
Operational lease revenue from ROU assets   946     763  
Operational lease expenses from ROU assets in equity-accounted investments   (11 )   (9 )
Capitalized interest on equity-accounted investments (ii)   436     425  
FFO $ 130,575   $ 106,036  
     
FFO per unit – basic $ 0.42   $ 0.33  
FFO per unit – diluted $ 0.42   $ 0.33  
Weighted average number of Units – basic (in thousands)   309,837     317,758  
Weighted average number of Units – diluted (in thousands)   310,114     317,758  
FFO for last 4 quarters  $ 531,521   $ 468,847  
Distributions paid for last 4 quarters $ 304,433   $ 432,121  
FFO Payout Ratio   57.3 %   92.2 %

(i)   Represents net transaction gains or losses connected to certain investment properties during the period.
(ii)   This amount represents the interest capitalized to RioCan’s equity-accounted investment in WhiteCastle New Urban Fund, LP, 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 and RC (Leaside) LP- Class B. This amount is not capitalized to properties under development under IFRS, but is allowed as an adjustment under REALPAC’s definition of FFO.

Development Spending

Total Development Spending for the three months ended March 31, 2022 and 2021 are as follows:

(thousands of dollars)    
Three months ended March 31   2022 2021 (i)
Development expenditures on balance sheet:    
Properties under development $ 61,165 $ 74,245
Residential inventory   28,345   13,329
RioCan’s share of development spending from equity-accounted joint ventures   2,374   130
Total Development Spending $ 91,884 $ 87,704

(i) Beginning Q1 2022, the definition of total development spending was revised to include RioCan’s share of development spending from equity-accounted joint ventures, accordingly, the comparative period has been restated.

Total Acquisitions

Total Acquisitions for the three months ended March 31, 2022 and 2021 are as follows:

(thousands of dollars)    
Three months ended March 31 2022 2021
     
Income producing properties $             89,948 $            11,482 
Properties under development 11,946
Residential inventory 19,440
RioCan’s share of acquisitions from equity-accounted joint ventures 66,497
Total Acquisitions $           187,831 $            11,482 

Total Adjusted Debt and Total Contractual Debt

The following tables reconcile total debt to Total Adjusted Debt, total assets to Total Adjusted Assets, and total debt to Total Contractual Debt as at March 31, 2022 and December 31, 2021:

As at March 31, 2022 December 31, 2021

(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
Debentures payable $ 2,991,357 $ $ 2,991,357 $ 2,990,692 $ $ 2,990,692
Mortgages payable   2,398,702   167,235   2,565,937   2,334,016   166,368   2,500,384
Lines of credit and other bank loans   1,320,167   90,000   1,410,167   1,285,910   48,049   1,333,959
Total debt $ 6,710,226 $ 257,235 $ 6,967,461 $ 6,610,618 $ 214,417 $ 6,825,035
Cash and cash equivalents   85,188   9,556   94,744   77,758   9,113   86,871
Total Adjusted Debt $ 6,625,038 $ 247,679 $ 6,872,717 $ 6,532,860 $ 205,304 $ 6,738,164
             
Total assets $ 15,346,426 $ 286,344 $ 15,632,770 $ 15,177,463 $ 248,230 $ 15,425,693
Cash and cash equivalents   85,188   9,556   94,744   77,758   9,113   86,871
Total Adjusted Assets $ 15,261,238 $ 276,788 $ 15,538,026 $ 15,099,705 $ 239,117 $ 15,338,822
             
Total Adjusted Debt to Total Adjusted Assets   43.4%     44.2%   43.3%     43.9%

As at March 31, 2022 December 31, 2021
(thousands of dollars)   IFRS basis   Equity-
accounted
investments
  RioCan’s
proportionate
share
  IFRS basis   Equity-
accounted
investments
  RioCan’s
proportionate
share
Total debt $ 6,710,226 $ 257,235 $ 6,967,461 $ 6,610,618 $ 214,417 $ 6,825,035
Less:            
Unamortized debt financing costs, premiums and discounts on origination and debt assumed, and modifications   (16,163)   (502)   (16,665)   (16,414)   (386)   (16,800)
Total Contractual Debt $ 6,726,389 $ 257,737 $ 6,984,126 $ 6,627,032 $ 214,803 $ 6,841,835

Liquidity

As at March 31, 2022, RioCan had approximately $1.3 billion of liquidity as summarized in the following table:

As at March 31, 2022 December 31, 2021

(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
Undrawn revolving unsecured operating line of credit $ 903,000 $ $ 903,000 $ 634,080 $ $ 634,080
Undrawn construction lines and other bank loans   282,503   54,981   337,484   241,883   47,641   289,524
Cash and cash equivalents   85,188   9,556   94,744   77,758   9,113   86,871
Liquidity $ 1,270,691 $ 64,537 $ 1,335,228 $ 953,721 $ 56,754 $ 1,010,475
Total Contractual Debt $ 6,726,389 $ 257,737 $ 6,984,126 $ 6,627,032 $ 214,803 $ 6,841,835
Liquidity as percentage of Total Contractual Debt   18.9%     19.1%   14.4%     14.8%
Liquidity as at March 31, 2022 $ 1,270,691 $ 64,537 $ 1,335,228      
Increase subsequent to quarter end:            
Proceeds from debenture issuance   250,000     250,000      
Liquidity as of May 9, 2022 $ 1,520,691 $ 64,537 $ 1,585,228      
Liquidity as percentage of total contractual debt as of May 9, 2022   22.6%     22.7%      

Unsecured Debt and Secured Debt

The following table reconciles total Unsecured Debt and Secured Debt to Total Contractual Debt as at March 31, 2022 and December 31, 2021:

As at March 31, 2022 December 31, 2021
(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 $ 4,047,000 $ $ 4,047,000 $ 4,065,920 $ $ 4,065,920
Total Secured Debt   2,679,389   257,737   2,937,126   2,561,112   214,803   2,775,915
Total Contractual Debt $ 6,726,389 $ 257,737 $ 6,984,126 $ 6,627,032 $ 214,803 $ 6,841,835
             
Percentage of Total Contractual Debt:            
Unsecured Debt   60.2%     57.9%   61.4%     59.4%
Secured Debt   39.8%     42.1%   38.6%     40.6%

Adjusted EBITDA

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

  12 months ended
As at March 31, 2022 December 31, 2021
(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 $ 651,718 $ $ 651,718 $ 598,389 $ $ 598,389
Add (deduct) the following items:            
Income tax expense (recovery):            
Current   (77)     (77)   (59)     (59)
Fair value losses (gains) on investment properties, net   (150,618)   1,391   (149,227)   (124,052)   1,113   (122,939)
Internal leasing costs   11,940     11,940   11,807     11,807
Non-cash unit-based compensation expense   7,575     7,575   12,546     12,546
Interest costs, net   169,363   7,327   176,690   171,521   7,026   178,547
Debt prepayment costs, net   3,896     3,896   10,914     10,914
One-time cash compensation costs         1,932     1,932
Restructuring costs   609     609      
Depreciation and amortization   3,986     3,986   4,022     4,022
Transaction losses on the sale of investment properties, net (i)   631     631   402     402
Transaction costs on investment properties   11,323   30   11,353   14,363   28   14,391
Operational lease revenue and expenses from ROU assets   3,491   (44)   3,447   3,308   (42)   3,266
Adjusted EBITDA $ 713,837 $ 8,704 $ 722,541 $ 705,093 $ 8,125 $ 713,218

(i) Includes transaction gains and losses realized on the disposition of investment properties.

Adjusted Debt to Adjusted EBITDA Ratio

Adjusted Debt to Adjusted EBITDA is calculated as follows:

  12 months ended
As at March 31, 2022 December 31, 2021
(thousands of dollars) IFRS basis Equity-
accounted
investments
RioCan’s
proportionate
share
IFRS basis Equity-
accounted
investments
RioCan’s
proportionate
share
             
Adjusted Debt to Adjusted EBITDA            
Average total debt outstanding $ 6,729,616 $ 216,840 $ 6,946,456 $ 6,773,147 $ 192,804 $ 6,965,951
Less: average cash and cash equivalents   (88,746)   (7,110)   (95,856)   (119,400)   (5,639)   (125,039)
Average Total Adjusted Debt $ 6,640,870 $ 209,730 $ 6,850,600 $ 6,653,747 $ 187,165 $ 6,840,912
Adjusted EBITDA $ 713,837 $ 8,704 $ 722,541 $ 705,093 $ 8,125 $ 713,218
Adjusted Debt to Adjusted EBITDA   9.30     9.48   9.44     9.59

Unencumbered Assets

The tables below summarize RioCan’s Unencumbered Assets to Unsecured Debt and Percentage of Normalized NOI Generated from Unencumbered Assets as at March 31, 2022 and December 31, 2021:

As at   March 31, 2022 December 31, 2021
(thousands of dollars, except where otherwise noted) Targeted
Ratios
IFRS basis Equity-
accounted
investments
RioCan’s
proportionate
share
IFRS basis Equity-
accounted
investments
RioCan’s
proportionate
share
Unencumbered Assets   $ 9,189,147 $ 59,086 $ 9,248,233 $ 9,332,833 $         59,433 $         9,392,266
Total Unsecured Debt   $ 4,047,000 $ $ 4,047,000 $ 4,065,920 $ $ 4,065,920
Unencumbered Assets to Unsecured Debt > 200%   227%     229%   230%     231%
               
Annual Normalized NOI – total portfolio (i)   $ 654,440 $ 22,104 $ 676,544 $ 649,208 $ 22,688 $ 671,896
Annual Normalized NOI – Unencumbered Assets (i)   $ 419,048 $ 3,440 $ 422,488 $ 432,820 $ 3,440 $ 436,260
Percentage of Normalized NOI Generated from Unencumbered Assets > 50.0%   64.0%     62.4%   66.7%     64.9%

(i) Annual Normalized NOI are reconciled in the table below.

  Three months ended
March 31, 2022
Three months ended
December 31, 2021
(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
NOI (i) $         167,299   $         5,526 $         172,825   $         165,798   $         5,672 $         171,470  
Adjust the following:            
Miscellaneous revenue           (1,279 )                      (1,279 )           (540 )           —           (540 )
Percentage rent           (1,527 )                      (1,527 )           (2,562 )           —           (2,562 )
Lease cancellation fees           (883 )                      (883 )           (394 )           —           (394 )
Normalized NOI – total portfolio $         163,610   $         5,526 $         169,136   $         162,302   $         5,672 $         167,974  
Annual Normalized NOI – total portfolio(ii) $         654,440   $         22,104 $         676,544   $         649,208   $         22,688 $         671,896  
             
NOI from unencumbered assets $         106,220   $         860 $         107,080   $         110,517   $         860 $         111,377  
Adjust the following:            
Miscellaneous revenue- Unencumbered Assets           (357 )                      (357 )           (253 )           —           (253 )
Percentage rent- Unencumbered Assets           (1,018 )                      (1,018 )           (1,852 )           —           (1,852 )
Lease cancellation fees- Unencumbered Assets           (83 )                      (83 )           (207 )           —           (207 )
Normalized NOI – Unencumbered Assets $         104,762   $         860 $         105,622   $         108,205   $         860 $         109,065  
Annual Normalized NOI – Unencumbered Assets (ii) $         419,048   $         3,440 $         422,488   $         432,820   $         3,440 $         436,260  

(i) Refer to the NOI and Same Property NOI table of this section for reconciliation from NOI to operating income.
(ii) Calculated by multiplying Normalized NOI by a factor of 4.

Forward-Looking Information

This News Release contains forward-looking information within the meaning of applicable Canadian securities laws. This information reflects RioCan’s objectives, our strategies to achieve those objectives, as well as statements with respect to management’s beliefs, estimates and intentions concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information 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 information reflects management’s current beliefs and is based on information currently available to management. All forward-looking information in this News Release is qualified by these cautionary statements. Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan’s current estimates and assumptions, which are subject to numerous risks and uncertainties, including those described in the “Risks and Uncertainties” section in RioCan’s MD&A for the three months ended March 31, 2022 and in our most recent Annual Information Form, which could cause actual events or results to differ materially from the forward-looking information contained in this News Release. General economic conditions, including interest 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 gradual recovery and growth of the retail environment and the general economy over 2022; relatively historically low interest costs; a continuing trend toward 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, access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable our refinancing of debts as they mature; the availability of investment opportunities for growth in Canada; the timing and ability of RioCan to sell certain properties; the valuations to be realized on property sales relative to current IFRS values; and the Trust’s ability to utilize the capital gain refund mechanism. 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.

Given the current level of uncertainty arising from the COVID-19 pandemic, there can be no assurance regarding the impact of COVID-19 on the business, operations, and financial performance of RioCan and its tenants, as well as on consumer behaviors and the economy in general. General risks and uncertainties related to the COVID-19 pandemic also include, but are not limited to, the length, spread and severity of the pandemic; efficacy of the vaccines and any applicable boosters, the nature and length of the restrictive measures implemented or to be implemented, including any loosening or tightening of the restrictive measures, by the various levels of government in Canada; RioCan’s tenants’ ability to pay rents as required under their leases; the availability of various support programs that are or may be offered by the various levels of government in Canada; the introduction or extension of temporary or permanent rent control or other forms of regulation or legislation that may limit the Trust’s ability or the extent to which it can raise rents based on market conditions upon lease renewals or restrict existing landlord rights or a landlord’s ability to reinforce such rights; domestic and global supply chains; timelines and costs related to the Trust’s development projects; the pace of property lease-up and rents and yields achieved upon development completion; potential changes in leasing activities, market rents and property valuations; the capitalization rates that arm’s length buyers and sellers are willing to transact on properties; the availability and extent of rent deferrals offered or to be offered by the Trust; domestic and global credit and capital markets, and the Trust’s ability to access capital on favourable terms or at all and its ability to maintain its credit ratings; the total return and dividend yield of RioCan’s Units; and the health and safety of our employees, tenants and people in the communities that our properties serve.

The forward-looking statements contained in this News Release are made as of the date hereof, and should not be relied upon as representing RioCan’s views as of any date subsequent to the date of this News Release. Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

Contact Information
RioCan Real Estate Investment Trust
Dennis Blasutti
Chief Financial Officer
416-866-3033 | www.riocan.com

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