RioCan Real Estate Investment Trust

Good day, ladies and gentlemen, and welcome to the Rio Can Real Estate Investment Trust third quarter 2025 conference call and webcast. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Ms. Jennifer Seuss, Senior Vice President, General Counsel, ESG, and Corporate Secretary. Ms. Seuss, you may begin.

Thank you and good morning, everyone. I am Jennifer Seuss, Senior Vice President, General Counsel, ESG and Corporate Secretary of RioCan. Before we begin, I am required to read the following cautionary statement. In talking about our financial and operating performance and in responding to your questions, We may make forward-looking statements, including statements concerning REOCAN'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. These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from the conclusions in these forward-looking statements. In discussing our financial and operating performance and in responding to your questions, we will also be referencing certain financial measures that are not generally accepted accounting principle measures under IFRS. These measures do not have any standardized definition prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other reporting issuers. 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 flows and profitability. RioCAN's management uses these measures to aid in assessing the Trust's underlying poor performance and provides these additional measures so that investors may do the same. Additional information on the material risks that could impact our actual results and the estimates and assumptions we applied in making these forward-looking statements, together with details on our use of non-GAAP financial measures, can be found in the financial statements filed yesterday and management's discussion and analysis related thereto, as applicable, together with REOCAN's most recent annual information form that are all available on our website and at www.cedarplus.com. I will now turn the call over to RioCan's President and CEO, Jonathan Gitlin.

Thank you, Jennifer, and good morning to everyone joining us today. We're pleased to share our Q3 2025 results. RioCan's operating momentum accelerated this quarter. Our trio of high retention rates, strong leasing spreads, and quality tenants represent the sustainable, long-term outcome we've strategically built toward. Key performance indicators reflect consistent, sustainable growth, underscoring the strength and resilience of our platforms. Committed occupancy of 97.8%, retail occupancy of 98.4%, and our Q3 retention ratio of 92.7% highlights the value tenants place on space in Rio Can assets. This demand translated into strong performance with commercial same property NOI up 4.6%. RioCan is operating from a position of strength. Our performance is driven by a number of factors, but relies heavily on our focus on tenant quality and disciplined asset management. Premium retail space remains scarce and exceptionally high barriers to entry make meaningful new supply unlikely. At the same time, demand continues to be strong from top tier necessity-based retailers. These retailers are not just getting by, they're focusing on growth. They're proving out their strength and ability to thrive in any economic backdrop. These tenants exemplify the caliber of retailers that comprise RioCan's portfolio. This supply demand imbalance is most acute where RioCan's assets are concentrated. Our properties are in Canada's major markets with an average of 277,000 people and a $155,000 household income within five kilometers. Our strategy is straightforward. We optimize our portfolio by selling assets that don't align with our strategic vision. On the flip side, we invest in those that do. Over the past decade, we've diligently executed this approach and it's yielding measurable success. We are keeping our centers full and generating strong leasing spreads, and we're doing so with high quality tenants. We're in our third quarter of operating under the current tariff environment, and we're pleased, though not at all surprised, to see our portfolio and tenants performing exceptionally well. This is the benefit of a tenant mix that features necessity-based retailers with strong balance sheets that provide everyday needs. Canada remains an attractive market for our tenants, and our centers are ideally located to support their growth. RioCan's leasing spreads remain at record highs. We captured market rent growth across the portfolio, achieving blended leasing spreads of 20.8% this quarter, including 44.1% on new leases. Year-to-date, the average net rent for new leases was $29.58 per square foot, nearly 30% above the average for occupied space. Renewal spreads were also strong at 15.2%. This is especially noteworthy given that an outsized proportion, 48%, were fixed at lower growth rates this quarter. Same property NOI will continue to benefit from this mark-to-market gap. Specifically, there are 10.7 million square feet of leases coming up for renewal at a relatively consistent pace over the next three years. Combined with our success in embedding annual growth in new leases and unlocking fixed options in existing leases, this trajectory is sustainable. We are striking an extremely healthy balance between replacement and retention. we're enhancing tenant quality and rental rates by replacing certain transitional tenants. At the same time, we are retaining strong established tenants to reduce downtime and capital requirements. When opportunities emerge, we secure high quality tenants for our properties. Alternatively, we also like to help our reliable established tenants expand their existing footprints within our assets. We put our platform to work and we help those tenants by seeking out opportunities in adjacent and surrounding space and help them execute on the enhancement and expansion of existing space. We're excited to share a number of examples to demonstrate the strategy at work later this month at our investor day. Our strong quarterly performance goes beyond the numbers. It reflects the quality of our portfolio and the discipline behind our strategy. We previously indicated our plan to repatriate $1.3 to $1.4 billion of capital, which will be infused back into the business over 2025 and 2026, and we remain firmly on track. Progress continues on monetizing our residential rental portfolio. We've sold our interest in six RioCAN living properties, five of which closed in 2025. These five transactions have contributed to the almost $500 million of capital repatriated since the start of this year. Based on the quality and desirability of our Rio Can living assets, we're highly confident in our ability to continue to monetize these assets and to put the capital to work accretively in the numerous capital allocation opportunities we have at our disposal. Our business is rooted in a strong portfolio of favorable retail environment and strong operators. This lends itself to the simplification of our business around our retail core, leveraging our decades of experience to deliver reliable, durable income and growth. Focusing our resources, human and capital, on this core is a logical conclusion that will serve our unit holders well into the future. I'll wrap up in a moment, but before I do, I'd be remiss if I didn't mention that our commitment to excellence was further validated by our impressive performance in the 2025 Grasby assessment. Among other recognitions, we maintain regional sector leader status in the Americas under the retail sector and the first rank among North American retail peers in the standing investment assessment. So as we look ahead, our outlook remains aligned with the guidance we provided in the first quarter. FFO per unit of $1.85 to $1.88, FFO pair ratio of approximately 62%, and commercial same property NOI growth of approximately 3.5%. We continue to see strong demand for high quality, necessity-based retail space in Canada's major markets. Our leasing strategies are fueling organic growth, and our disciplined capital management is amplifying that growth now and for the future. We're excited to share more at our Investor Day on November 18th. Our team is energized, our strategy is clear, and our portfolio is positioned for continued success. Thank you for your time today. I look forward to your questions and to sharing more about our progress in the coming weeks.