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REAL ESTATE INVESTMENT TRUST

TRANSFORMING . . .

RIOCAN FINANCIAL ANNUAL REPORT 2012

Real Estate Portfolio Fact Sheet a s a t D e c e m b e r 3 1 , 2 0 1 2

Canadian Properties US Properties GrandTotalTotal Net Leasable Area (“NLA”) (sq.ft.): Retail Office Total Retail Office Total

Income Producing Properties 38,878,787 1,794,524 40,673,311 8,816,294 – 8,816,294 49,489,605Properties Under Development 3,596,250 – 3,596,250 – – – 3,596,250Total 42,475,037 1,794,524 44,269,561 8,816,294 – 8,816,294 53,085,855

Number of Tenancies 7,500

Portfolio Occupancy

Canadian Properties US Properties TotalRetail 97.2% 98.1% 97.3%Office 97.7% – 97.7%Total 97.2% 98.1% 97.4%

Geographic Diversification

Number of properties

Percentageof annualized

rentalrevenue

Incomeproducingproperties

Propertiesunder

development TotalOntario 53.8% 179 8 187Quebec 13.9% 46 – 46Alberta 9.9% 28 2 30British Columbia 5.4% 17 – 17Other Canada 3.4% 13 1 14Northeastern United States 6.4% 26 – 26Texas 7.2% 26 – 26

100.0% 335 11 346

Anchor and National Tenants (including US)

Percentage of annualized rental revenue Percentage of total NLA86.1% 85.3%

Top Ten Sources of Revenue by Tenant (including US)

Ranking TenantPercentage of

annualized rental revenueWeighted average remaining

lease term (yrs)1. Walmart 4.3% 13.32. Canadian Tire Corporation (i) 4.1% 9.13. Famous Players/Cineplex/Galaxy Cinemas 3.6% 10.64. Metro/Super C/Loeb/Food Basics 3.6% 7.35. Winners/HomeSense/ Marshalls 2.9% 6.96. Loblaws/No Frills/Fortinos/Zehrs/Maxi 2.5% 7.27. Staples/Business Depot 2.1% 6.48. Future Shop/Best Buy 1.8% 6.59. Target Corporation 1.8% 9.1

10. Shoppers Drug Mart 1.6% 9.4Total 28.3%

(i) Canadian Tire Corporation includes Canadian Tire/PartSource/Mark’s Work Wearhouse/Sport Mart/ Sport Chek/Sports Experts/National Sports/Atmosphere

Lease Expiries - Canada

Lease expiries (NLA)

Retail Class Total NLA 2013 2014 2015 2016 2017New Format Retail 19,889,482 1,180,511 1,572,666 1,997,259 2,151,310 1,852,971

5.9% 7.9% 10.0% 10.8% 9.3%Grocery Anchored Centre 8,262,178 651,310 1,195,113 1,007,849 1,248,139 1,371,991

7.9% 14.5% 12.2% 15.1% 16.6%Enclosed Shopping Centre 7,007,045 716,766 687,057 773,706 958,736 505,778

10.2% 9.8% 11.0% 13.7% 7.2%Non–Grocery Anchored Centre 2,164,448 192,968 132,023 309,252 189,399 102,641

8.9% 6.1% 14.3% 8.8% 4.7%Urban Retail 1,555,634 223,215 398,121 88,777 95,378 139,826

14.3% 25.6% 5.7% 6.1% 9.0%Office 1,794,524 130,113 131,070 82,805 198,754 133,534

7.3% 7.3% 4.6% 11.1% 7.4%Total 40,673,311 3,094,883 4,116,050 4,259,648 4,841,716 4,106,741

7.6% 10.1% 10.5% 11.9% 10.1%Average net rent per square foot $ 16.07 $ 17.89 $ 16.33 $ 15.89 $ 16.78 $ 17.72

Lease Expiries - US

Lease expiries (NLA)

Retail Class Total NLA 2013 2014 2015 2016 2017New Format Retail 6,142,858 334,711 469,430 377,437 188,423 434,136

5.4% 7.6% 6.1% 3.1% 7.1%Grocery Anchored Centre 2,469,628 70,759 192,655 68,692 264,159 161,201

2.9% 7.8% 2.8% 10.7% 6.5%Non–Grocery Anchored Centre 203,808 13,830 40,000 15,403 1,200 14,520

6.8% 19.6% 7.6% 0.6% 7.1%Total 8,816,294 419,300 702,085 461,532 453,782 609,857

4.8% 8.0% 5.2% 5.1% 6.9%Average net rent per square foot $ 14.02 $ 17.00 $ 14.63 $ 17.73 $ 16.31 $ 17.25

ProPerty Portfolio

RioCan Real estate investment tRust annual RepoRt 2012

*Non-owned anchor1

ALBERTA

As at December 31, 2012 Ownership RioCan’s Interest Interests Total Site Property and Location (%) NLA (sq. ft.) NLA (sq. ft.) Major or Anchor Tenants

CANADA

17004 & 17008 107th Avenue NW Edmonton, AB

100% 11,963 11,963

5020 97th Street NW Edmonton, AB

100% 11,943 11,943

Brentwood Village Calgary, AB

50% 138,354 276,708 Safeway, London Drugs, Bed Bath & Beyond, Sears Whole Home

Cimarron Centre Calgary, AB

50% 39,763 323,762 Winners, Michaels, Home Depot*, Costco*

Edmonton Walmart Centre Edmonton, AB

40% 125,734 365,944 Walmart, Golf Town, Totem Building Supplies*

Glenmore Landing Calgary, AB

50% 73,617 147,234 Safeway

Jasper Gates Shopping Centre Edmonton, AB

100% 94,460 149,460 London Drugs, Safeway*

Lethbridge Towne Square Lethbridge, AB

100% 79,396 79,396 London Drugs

Lethbridge Walmart Centre Lethbridge, AB

100% 279,760 331,260 Walmart, Shoppers Drug Mart, Totem Building Supplies*

Lowe’s Sunridge Centre Calgary, AB

100% 211,416 211,416 Lowe's, Golf Town

Mayfield Common Edmonton, AB

30% 133,279 444,263 Winners, Save-On-Foods, Value Village, JYSK, World Health

Mill Woods Town Centre Edmonton, AB

40% 216,690 537,160 Safeway, Canadian Tire, Target, Goodlife Fitness

North Edmonton Cineplex Centre Edmonton, AB

100% 75,836 75,836 Cineplex

Northgate Village Shopping Centre Calgary, AB

100% 277,519 404,609 Safeway, Gold's Gym, JYSK, Staples/Business Depot, Home Depot*

RioCan Beacon Hill Calgary, AB

50% 263,967 786,934 Canadian Tire, Winners, Future Shop, Sport Chek, Home Depot*, Costco*

RioCan Centre Grand Prairie Grande Prairie, AB

100% 235,731 335,731 Rona, London Drugs, Cineplex, Staples/Business Depot, Walmart*

RioCan Centre Grand Prairie II Grande Prairie, AB

50% 31,707 63,413 Winners, Michaels, JYSK

RioCan Meadows Edmonton, AB

50% 152,819 470,637 Home Depot, Staples/Business Depot, Winners, Best Buy, Loblaws*

RioCan Shawnessy Calgary, AB

50% 235,299 841,243 Target, Sport Chek, Future Shop, Canadian Tire* Home Depot*, Co-op*

RioCan Signal Hill Centre Calgary, AB

100% 466,083 581,083 Target, Winners, Michaels, Staples/Business Depot, Indigo, Loblaws*

Riverbend Square Shopping Centre Edmonton, AB

100% 136,291 136,291 Safeway, Shoppers Drug Mart


ProPerty Portfolio


*Non-owned anchor2

BRITISH COLUMBIA

MANITOBA

South Edmonton Common Edmonton, AB

50% 214,373 979,816 London Drugs, The Brick, Home Outfitters, Old Navy, Home Depot*, Walmart*, Loblaws*, Cineplex*, Staples/Business Depot*, Best Buy*

South Trail Crossing Calgary, AB

100% 314,002 464,002 Co-op, Winners, Staples/Business Depot, Sport Chek, Walmart*, Safeway*

Southland Crossing Shopping Centre Calgary, AB

100% 132,072 132,072 Safeway

Summerwood Centre Edmonton, AB

100% 83,911 83,911 Save-On Foods, Shoppers Drug Mart

The Market at Citadel Edmonton, AB

100% 51,029 51,029 Shoppers Drug Mart

Timberlea Landing Fort McMurray, AB

100% 135,802 135,802

Abbotsford Power Centre, Abbotsford, BC 50% 111,586 463,172 Target, Winners, PetSmart, Costco*, Rona/Revy*

Cambie Street, Vancouver, BC 100% 148,215 148,215 Canadian Tire, Best Buy

Chahko Mika Mall, Nelson, BC 100% 173,106 173,106 Walmart, Save-On-Foods, Shoppers Drug Mart

Clearbrook Town Square, Abbotsford, BC 50% 94,132 188,264 Safeway, Staples/Business Depot

Cowichan Commons, Duncan, BC 100% 186,625 186,625 Walmart

Dilworth Shopping Centre, Kelowna, BC 100% 197,432 197,432 Safeway, Staples/Business Depot

Grandview Corners, Surrey, BC 50% 256,886 598,772 Walmart, Future Shop, Indigo, Home Depot*

Impact Plaza, Surrey, BC 100% 134,241 134,241 T&T Supermarket (Loblaws)

Parkwood Place Shopping Centre Prince George, BC

50% 186,363 372,725 The Bay, Overwaitea, London Drugs, Famous Players, Staples/Business Depot

Peninsula Village Shopping Centre South Surrey, BC

50% 85,353 170,706 Safeway, London Drugs

RioCan Langley Centre, Langley, BC 50% 190,319 380,638 Sears Whole Home, Chapters, HomeSense

Southwinds Mall, Oliver, BC 100% 72,972 72,972 Canadian Tire

Strawberry Hill Shopping Centre Surrey, BC

50% 168,966 337,932 Home Depot, Cineplex, Winners, Chapters, Sport Chek

The Junction, Mission, BC 50% 135,731 319,536 Save-On-Foods, Famous Players, London Drugs, Canadian Tire*

Tillicum Centre, Victoria, BC 50% 236,295 472,590 Target, Famous Players, Safeway, Winners, London Drugs

Vernon Square Shopping Centre Vernon, BC

100% 98,110 151,110 London Drugs, Safeway*

Garden City Shopping Centre Winnipeg, MB

30% 90,726 395,025 Canadian Tire, Goodlife, Winners, Sears*

Kildonan Crossing Shopping Centre Winnipeg, MB

100% 178,877 178,877 Safeway, PetSmart

ProPerty Portfolio


*Non-owned anchor3


Brookside Mall, Fredericton, NB 50% 138,165 276,330 Sobeys, The Province of New Brunswick

Corbett Centre, Fredericton, NB 100% 155,458 375,458 Winners, Bed Bath & Beyond, Home Depot*, Costco*

Madawaska Centre, St. Basile, NB 100% 271,924 271,924 Staples/Business Depot, Hart

Northumberland Square Miramichi, NB

100% 208,408 208,408 Sport Chek

Quispamsis Town Centre Quispamsis, NB


Wheeler Park Power Centre Moncton, NB

100% 271,973 647,588 Sears Whole Home, Winners, Old Navy, Empire Theatres, Staples/Business Depot, Costco*, Kent Building*, Loblaws*

Shoppers on Topsail, St. John’s, NFLD 100% 29,689 29,689 Shoppers Drug Mart

Trinity Conception Square Carbonear, NFLD

100% 182,642 182,642

Halifax Walmart Centre, Halifax, NS 50% 69,047 138,094 Walmart

12 Vodden Street, Brampton, ON 100% 32,294 32,294 Big Lots

1208 & 1260 Dundas Street East Whitby, ON

100% 7,697 7,697

1650-1660 Carling Avenue Ottawa, ON

100% 142,188 142,188 Canadian Tire

1910 Bank Street, Ottawa, ON 100% 6,425 6,425

2422 Fairview Street, Burlington, ON 100% 6,221 6,221

2950 Carling Avenue (Rexall Centre) Ottawa, ON

100% 10,422 10,422 Pharma Plus

2955 Bloor Street West, Toronto, ON 100% 8,777 8,777

2990 Eglinton Avenue East Scarborough, ON

100% 6,140 6,140

3736 Richmond Road Nepean, ON

100% 2,938 2,938

404 Town Centre, Newmarket, ON 50% 134,034 268,069 Walmart, Metro

410-444 Bathurst Street, Toronto, ON 60% 18,110 30,183

4055-4065 Carling Avenue Kanata, ON

100% 22,509 22,509

410 King Street North, Waterloo, ON 100% 2,067 2,067

NEW BRUNSWICK

NEWFOUNDLAND

NOVA SCOTIA

ONTARIO

Loblaws, Walmart

ProPerty Portfolio



*Non-owned anchor4

506 & 510 Hespeler Rd Cambridge, ON

100% 12,515 12,515

547-563 College Street, Toronto, ON 100% 64,218 64,218 LCBO

649 Queen Street, Toronto , ON 100% 14,200 14,200 Crate & Barrel

6666 Lundy’s Lane, Niagara Falls, ON 100% 8,434 8,434

735 Queenston Road, Hamilton, ON 100% 8,818 8,818

740 Dupont Street, Toronto, ON 100% 25,000 25,000

Adelaide Centre, London, ON 100% 80,938 80,938 Metro

Ajax Marketplace, Toronto, ON 100% 70,724 70,724 Food Basics, Pharma Plus

Albion Centre, Toronto, ON 50% 192,654 385,308 Canadian Tire, Fortinos

Belleville Stream Centre, Belleville, ON 100% 89,237 89,237 Stream International

Belleville Walmart Centre, Belleville, ON 100% 275,489 275,489 Walmart, JYSK, PetSmart

Bellfront Shopping Centre, Belleville, ON 100% 110,400 160,400 Bed Bath & Beyond, Canadian Tire*

Brant Power Centre, Burlington, ON 50% 57,538 115,076 Best Buy, PetSmart, Home Outfitters

Cambrian Mall, Sault Ste. Marie, ON 100% 129,697 311,528 Shoppers Drug Mart, Winners, Canadian Tire*, Loblaws*

Campus Estates, Guelph, ON 100% 72,846 72,846 No Frills

Chapman Mills Marketplace, Ottawa, ON 75% 323,873 546,831 Walmart, Winners, Staples/Business Depot, Loblaws*

Cherry Hill Shopping Centre, Fergus, ON 100% 73,837 73,837 Zehr's

Churchill Plaza, Sault Ste. Marie, ON 100% 145,329 145,329 Metro

City View Plaza, Nepean, ON 100% 60,400 60,400 Le Baron Sports, Pharma Plus, PartSource

Clarkson Crossing, Mississauga, ON 50% 106,534 213,068 Metro, Canadian Tire, Shoppers Drug Mart

Clarkson Village Shopping Centre Mississauga, ON

100% 50,034 50,034 HomeSense

Colborne Place, Brantford, ON 100% 70,397 70,397 No Frills

Coliseum Ottawa, Ottawa, ON 100% 109,260 109,260 Cineplex, Shoppers Drug Mart

Collingwood Centre, Collingwood, ON 100% 248,009 248,009 IGA, Canadian Tire

Commissioners Court Plaza London, ON

100% 94,140 94,140 Food Basics

Coulter’s Mill Marketplace Thornhill, ON

100% 73,667 73,667 Staples/Business Depot

County Fair Mall, Smiths Falls, ON 100% 162,942 162,942 Target, Food Basics

Dougall Plaza, Windsor, ON 100% 126,903 126,903 Food Basics

Dundas/427 Marketplace, Toronto, ON 100% 97,860 97,860 Staples/Business Depot

Eastcourt Mall, Cornwall, ON 100% 179,861 179,861 Shoppers Drug Mart

Elmvale Acres Shopping Centre Ottawa, ON

100% 147,332 147,332 Loblaws, Pharma Plus

Empress Walk, Toronto, ON 100% 180,811 238,811

Fairlawn Centre, Ottawa, ON 100% 8,322 8,322

Fallingbrook Shopping Centre Ottawa, ON

100% 97,109 97,109 Loeb, Shoppers Drug Mart

Empire Theatres, Future Shop, Staples/Business Depot, Loblaws*

ProPerty Portfolio



*Non-owned anchor5

Five Points Shopping Centre Oshawa, ON

100% 408,784 408,784 Target, Metro, Staples/Business Depot, Value Village, Sears, Goodlife Fitness, National Sports

Flamborough Power Centre Flamborough, ON

100% 186,688 186,688 Target, Value Village

Flamborough Walmart Centre Flamborough, ON

100% 282,256 282,256 Walmart, Rona

Frontenac Mall, Kingston, ON 30% 84,456 281,520 Food Basics, Value Village, Big Lots

Galaxy Centre, Owen Sound, ON 100% 91,563 91,563 No Frills, Galaxy Theatres

Garrard & Taunton, Whitby, ON 100% 141,717 141,717 Lowe's

Gates of Fergus, Fergus, ON 50% 53,478 106,955 Target

Glendale Marketplace, Toronto, ON 100% 53,963 53,963 YIG, Pharma Plus

Goderich Walmart Centre, Goderich, ON 100% 96,930 204,786 Walmart, Canadian Tire*, Loblaws*

Goodlife Plaza, St. Catharines, ON 100% 144,983 144,983 Goodlife Fitness, Canadian Tire (call centre)

Grant Crossing, Kanata, ON 60% 113,410 289,017 Winners, HomeSense, Lowe's*

Green Lane Centre, Newmarket, ON 33% 53,345 417,638 Bed Bath & Beyond, Michaels, PetSmart, Costco*, Loblaws*

Halton Hills Shopping Centre Georgetown, ON

100% 75,366 75,366 Food Basics

Hamilton Highbury Plaza London, ON

100% 5,269 5,269

Hamilton Walmart Centre Hamilton, ON

100% 271,888 271,888 Walmart, Winners, Staples/Business Depot

Hartsland Market Square Guelph, ON

100% 108,717 108,717 Zehr's

Hawkesbury Centre Hawkesbury, ON

50% 36,891 73,782 Price Chopper, Shoppers Drug Mart

Heart Lake Town Centre Brampton, ON

100% 126,745 126,745 Metro

Herongate Mall, Ottawa, ON 75% 76,742 102,322 Food Basics, Pharma Plus

Highbury Shopping Plaza, London, ON 100% 70,987 70,987 LA Fitness

Hunt Club Centre, Ottawa, ON 100% 67,147 67,147 Metro

Huron Heights, London, ON 50% 45,106 90,212 Shoppers Drug Mart

Innes Road Plaza, Ottawa, ON 100% 47,511 167,511 PetSmart, Costco*

Kanata Centrum Shopping Centre Kanata, ON

100% 316,402 496,402 Walmart, Chapters, Loblaws, Canadian Tire*, AMC Theatres*

Kendalwood Park Plaza, Whitby, ON 50% 79,345 158,690 Price Chopper, Value Village, Shoppers Drug Mart

Kennedy Commons, Toronto, ON 50% 193,359 467,718 The Brick, Metro, Sears Whole Home, Chapters, Lansing Buildall*

Keswick Walmart Centre, Keswick, ON 75% 122,062 162,749 Walmart

King George Square, Belleville, ON 50% 35,965 71,930 Metro

King Plaza, Oshawa, ON 100% 34,202 34,202 Shoppers Drug Mart

King & Portland Toronto, ON

50% 44,306 88,612

Lawrence Square, Toronto, ON 100% 678,246 678,246 Target, Fortinos, Canadian Tire

ProPerty Portfolio



*Non-owned anchor6

Lincoln Fields Shopping Centre Ottawa, ON

50% 143,634 287,267 Walmart, Loeb

London Plaza, London, ON 100% 122,183 122,183 Gold's Gym, Value Village

March Road, Ottawa, ON 50% 54,500 109,000 Sobeys, Pharma Plus

Markington Square, Scarborough, ON 100% 139,997 139,997 Metro, Big Lots, Gold's Gym

Meadowlands Power Centre Ancaster, ON

100% 145,573 589,177 HomeSense, Future Shop, Sport Chek, Costco*, Home Depot*, Sobey's*, Staples/Business Depot*, Target*

Meadow Ridge Plaza, Toronto, ON 20% 14,144 70,722 Sobeys

Merivale Market, Nepean, ON 75% 59,135 78,847 Food Basics, Shoppers Drug Mart

Midtown Mall, Oshawa, ON 100% 137,542 177,542 Dollarama, Metro*

Millcroft Shopping Centre, Burlington, ON 50% 185,227 370,454 Target, Canadian Tire, Metro

Miracle Plaza, Hamilton, ON 100% 83,765 83,765 Metro

Mississauga Plaza, Mississauga, ON 100% 176,286 176,286 FreshCo, Big Lots

New Liskeard Walmart Centre New Liskeard, ON

100% 110,522 155,278 Walmart, Canadian Tire*

Niagara Falls Plaza, Niagara Falls, ON 100% 143,815 143,815 Foodland

Niagara Square, Niagara Falls, ON 30% 114,687 382,291 Cineplex, Winners, Future Shop, JYSK, The Brick

Nortown Centre, Chatham, ON 50% 35,712 71,423 Food Basics

Norwest Plaza, Kingston, ON 100% 40,603 40,603 Goodlife Fitness

Oakridge Centre, London, ON 100% 39,557 145,057 Pharma Plus, CIBC, Loblaws*

Orillia Square Mall, Orillia, ON 100% 322,536 322,536 Target, Canadian Tire, No Frills, The Brick

Pine Plaza, Sault Ste. Marie, ON 100% 42,380 42,380 Food Basics

Port Elgin Shopping Centre Port Elgin, ON

100% 47,076 82,076 Giant Tiger, LCBO, Canadian Tire*

Queensway Cineplex, Toronto, ON 50% 55,350 110,700 Cineplex

RioCan Centre Barrie, Barrie, ON 100% 244,407 244,407 Mountain Equipment Co-op, Loblaws, Lowe’s

RioCan Centre Belcourt, Kanata, ON 60% 76,464 269,440 Empire Theatres, Food Basics, Lowe's*

RioCan Centre Burloak, Oakville, ON 50% 227,312 552,623 Cineplex, Home Outfitters, Longo's, Home Depot*

RioCan Centre Kingston, Kingston, ON 100% 631,169 752,214 Sears, Staples/Business Depot, Winners, Future Shop, HomeSense, Old Navy, Cineplex, Home Depot*

RioCan Centre London North London, ON

100% 105,040 165,040 Chapters, PetSmart, Loblaws*

RioCan Centre London South London, ON

100% 139,600 139,600 Metro

RioCan Centre Merivale, Nepean, ON 100% 201,670 201,670 Your Independent Grocer, Winners, Home Outfitters

RioCan Centre Milton, Milton, ON 100% 169,838 254,838 Cineplex, LA Fitness, Home Depot*

RioCan Centre Newmarket Newmarket, ON

40% 26,688 66,720 Mark's Work Wearhouse, Staples/Business Depot

RioCan Centre Sudbury, Sudbury, ON 50% 201,912 669,220 Famous Players, Staples/Business Depot, Chapters, Sears, Old Navy, Costco*, Home Depot*

RioCan Centre Thunder Bay Thunder Bay , ON

100% 334,430 334,430 Walmart, Staples/Business Depot, Future Shop, Winners, Chapters

ProPerty Portfolio



*Non-owned anchor7

RioCan Centre Vaughan, Vaughan, ON 100% 260,708 260,708 Walmart

RioCan Centre Windsor, Windsor, ON 100% 239,321 349,321 Famous Players, Sears, The Brick, Staples/Business Depot, Costco*

RioCan Colossus Centre, Vaughan, ON 80% 466,105 712,631 HomeSense, Rona, Golf Town, Marshalls, Cineplex, Costco*

RioCan Durham Centre (I, II, III IV, V) Ajax, ON

100% 944,731 1,325,731 Walmart, Canadian Tire, Cineplex, Winners, Chapters, Sport Chek, HomeSense, Best Buy, Old Navy, Target, Home Depot*, Loblaws*, Costco*

RioCan Elgin Mills Crossing Richmond Hill, ON

100% 320,325 441,325 Costco, Staples/Business Depot, Michaels, PetSmart, Home Depot*

RioCan Fairgrounds, Orangeville, ON 100% 330,729 474,804 Walmart, Future Shop, Galaxy Theatres

RioCan Georgian Mall Barrie, ON

100% 488,109 604,624 The Bay, Atmosphere, HomeSense, H&M, Sears*

RioCan Grand Park, Mississauga, ON 50% 59,319 118,638 Winners, Shoppers Drug Mart, Staples/Business Depot

RioCan Gravenhurst, Gravenhurst, ON 100% 149,551 149,551 Canadian Tire, Sobeys

RioCan Hall, Toronto, ON 100% 247,420 247,420 Cineplex, Chapters, Marshalls

RioCan Leamington, Leamington, ON 100% 192,889 192,889 Walmart, Metro

RioCan Leaside Centre, Toronto, ON 50% 66,518 133,036 Canadian Tire, Future Shop, PetSmart

RioCan Marketplace Toronto, Toronto, ON 33% 56,972 413,511 Winners, Loblaws*, Home Depot*

RioCan Niagara Falls, Niagara Falls, ON 100% 269,136 367,711 Target, Staples/Business Depot, Loblaws, Home Depot*

RioCan Orleans, Orleans, ON 100% 182,251 297,251 Metro, JYSK, Staples/Business Depot, Home Depot*

RioCan Renfrew Centre, Renfrew, ON 100% 53,098 127,098 Loblaws*

RioCan Scarborough Centre, Toronto, ON 100% 330,226 330,226 Target, Staples/Business Depot, LA Fitness

RioCan St. Laurent, Ottawa, ON 50% 150,672 301,343 Target, Loeb, Winners

RioCan Thickson, Whitby, ON 50% 181,520 493,040 Home Outfitters, Winners, JYSK, Future Shop, PetSmart, HomeSense, Home Depot*

RioCan Thickson Ridge - Bed Bath & Beyond, Whitby, ON

16% 4,374 28,222 Bed Bath & Beyond

RioCan Victoria, Whitby, ON 50% 49,290 98,580 Rona

RioCan Warden, Toronto, ON 100% 245,368 245,368 Lowe's, Marshalls, Future Shop

RioCan West Ridge Place, Orillia, ON 100% 240,303 370,303 Sport Chek, Metro, Galaxy Cinemas, Sears, Big Lots, Home Depot*

RioCan Yonge Eglinton Centre, Toronto, ON 100% 1,012,648 1,012,648 Famous Players, Chapters, Metro

RioCentre Brampton, Brampton, ON 100% 103,607 103,607 Food Basics

RioCentre Newmarket, Newmarket, ON 100% 92,679 92,679 Metro, Shoppers Drug Mart

RioCentre Oakville, Oakville, ON 100% 106,884 106,884 Metro, Shoppers Drug Mart

RioCentre Thornhill, Thornhill, ON 100% 140,345 140,345 No Frills, Winners, HomeSense

Sandalwood Square Shopping Centre Mississauga, ON

100% 107,860 107,860 Value Village

Sherwood Forest Mall, London, ON 100% 218,347 218,347 Metro, Shoppers Drug Mart, Goodlife Fitness

Shoppers City East, Ottawa, ON 28% 40,887 148,142 Staples/Business Depot, Shoppers Drug Mart

ProPerty Portfolio



*Non-owned anchor8

Shoppers on Argyle, Caledonia, ON 100% 17,024 17,024 Shoppers Drug Mart

Shoppes on Avenue, Toronto, ON 100% 19,291 19,291 Bank of Montreal, Pharma Plus

Shoppes on Queen West, Toronto, ON 100% 89,773 89,773 Loblaws, Winners

Shoppers Drug Mart Pembroke Pembroke, ON


Shoppers World Brampton Brampton, ON

100% 701,723 701,723 Target, Canadian Tire, Winners, Staples/Business Depot, Oceans

Shoppers World Danforth, Toronto, ON 50% 164,099 328,198 Target, Metro, Staples/Business Depot

Silver City Gloucester, Gloucester, ON 80% 181,778 287,223 Cineplex, Chapters, Future Shop, Old Navy, Loblaws*

South Hamilton Square, Hamilton, ON 100% 305,292 305,292 Target, Fortinos, Shoppers Drug Mart, Goodlife Fitness

Southgate Shopping Centre Ottawa, ON

100% 72,669 72,669 Metro, Shoppers Drug Mart

Spring Farm Marketplace Toronto, ON

100% 73,202 73,202 Sobeys, Shoppers Drug Mart

St. Clair Beach Shopping Centre Windsor, ON

100% 76,001 126,001 National Sports, Zehrs*

Stratford Centre, Stratford, ON 100% 158,758 158,758 Target, Metro

Sudbury Place, Sudbury , ON 100% 145,439 201,183 Target, Your Independent Grocer*

Sunnybrook Plaza, Toronto, ON 100% 50,766 50,766 Pharma Plus

Tanger Outlets Cookstown Cookstown, ON

50% 80,876 161,751

Timiskaming Square New Liskeard, ON

100% 164,142 164,142 Food Basics

Timmins Square, Timmins, ON 30% 117,424 391,413 Sears, No Frills, Winners, Sport Chek, Urban Planet

Trafalgar Ridge Shopping Centre Oakville, ON

100% 131,223 131,223 Goodlife Fitness, HomeSense

Trenton Walmart Centre, Trenton, ON 100% 147,327 147,327 Walmart

Trinity Common Brampton Brampton, ON

80% 530,040 877,550 Target, Famous Players, Metro, Winners, HomeSense, Future Shop, Staples/Business Depot, Canadian Tire*, Home Depot*

Trinity Crossing, Ottawa, ON 100% 191,448 371,448 Michaels, HomeSense, Value Village, Loblaws*

The Brick Plaza, Windsor, ON 100% 49,615 49,615 The Brick

Upper James Plaza, Hamilton, ON 100% 128,652 128,652 Canadian Tire, Metro

Victoria Crossing Marketplace Toronto, ON

100% 65,859 65,859 FreshCo (Sobeys)

Viewmount Centre, Nepean, ON 50% 65,458 130,916 Metro, Best Buy, HomeSense

Walker Place, Burlington, ON 50% 34,929 69,858 FreshCo (Sobeys)

Walker Towne Centre, Windsor, ON 100% 39,476 39,476

West Side Place, Port Colborne, ON 100% 93,383 93,383 No Frills, Big Lots

Westgate Shopping Centre Ottawa, ON


Wharncliffe Shopping Centre, London, ON 100% 60,711 60,711 No Frills

ProPerty Portfolio



*Non-owned anchor9

White Shield Plaza, Scarborough, ON 60% 93,547 155,911 Lone Thai Grocery (Metro)

Woodview Place, Burlington, ON 100% 147,849 147,849 Metro, JYSK, Chapters

Yonge & Erskine Avenue, Toronto, ON 50% 5,841 11,682

Yonge Sheppard Centre, Toronto, ON 50% 339,182 678,362 Goodlife Fitness, Winners

Charlottetown Mall, Charlottetown, PEI 50% 166,717 333,434 Target, Loblaws Atlantic Superstore, Winners, Sport Chek

2335 Boul Lapiniere, Brossard, PQ 100% 2,259 2,259

541 Boul Saint Joseph, Gatineau, PQ 100% 2,584 2,584

Carrefour Carnaval - St. Leonard St. Leonard, PQ

100% 171,312 171,312 Super C, Value Village

Carrefour Neufchatel, Neufchatel, PQ 100% 209,843 209,843 Super C, Gold's Gym, Staples/Business Depot

Centre Carnaval - Drummondville Drummondville, PQ

100% 144,501 144,501 Super C, Staples/Business Depot

Centre Carnaval - Montreal, Montreal, PQ 100% 67,815 67,815 Super C

Centre Carnaval - Pierrefonds Pierrefonds, PQ

100% 129,589 129,589 Super C

Centre Carnaval - Trois Rivieres Trois Rivieres, PQ

100% 112,882 112,882 Super C, Rossy

Centre Commercial Forest Montreal, PQ

100% 120,986 120,986 Staples/Business Depot, Rossy

Centre de la Concorde, Laval, PQ 100% 105,056 105,056 Super C

Centre Jacques Cartier, Longueuil, PQ 50% 108,822 217,643 IGA, Guzzo Cinema, Value Village

Centre La Prairie, La Prairie, PQ 50% 34,541 69,081 Sobeys

Centre Regional Chateauguay Chateauguay, PQ

50% 100,133 200,266 Super C

Centre Rene A. Robert Ste. Therese, PQ

50% 25,919 51,837 Sobeys

Centre RioCan Kirkland Kirkland, PQ

100% 320,030 320,030 Cineplex, Staples/Business Depot, Winners

Centre Sicard, Ste. Therese, PQ 100% 106,948 106,948 IGA, Jean Coutu

Centre St. Jean St. Jean Sur Richelieu, PQ

100% 103,396 103,396 Sobeys

Centre St. Julie, Ste. Julie, PQ 50% 30,097 60,193 Sobeys

Centre St. Martin, Laval, PQ 100% 241,457 241,457 Provigo, Shoppers Drug Mart

Centre Concorde, Laval, PQ 50% 31,649 63,298 Sobeys

Desserte Ouest, Laval, PQ 50% 58,074 116,147 Target

PRINCE EDWARD ISLAND

QUEBEC

Cineplex,


ProPerty Portfolio


*Non-owned anchor10

Galeries Laurentides, St. Jerome, PQ 100% 448,887 448,887 Maxi

Galeries Mille Iles, Rosemere, PQ 100% 249,717 249,717 Staples/Business Depot, Maxi

Granby, Granby, PQ 100% 49,304 49,304 L'Aubainerie

Lachute Walmart Centre Lachute, PQ

100% 75,681 110,681 Walmart, Loblaws*

Les Factories Tanger Bromont Bromont, PQ

50% 80,918 161,836 Sports Experts, Urban Planet

Les Factories Tanger Saint-Sauveur Saint-Sauveur, PQ

50% 58,099 116,197 Atmosphere, Merrell, Nike

Les Galeries Lachine, Lachine, PQ 100% 167,447 167,447 Maxi, Rossy

Levis, Levis, PQ 100% 19,081 19,081

Mega Centre Beauport, Quebec City, PQ 100% 180,937 341,937 Cineplex, Staples/Business Depot, Future Shop, Reno Depot*

Mega Centre Lebourgneuf Quebec City, PQ

100% 456,263 866,263 Winners, Value Village, Staples/Business Depot, Costco*, Home Depot*, Canadian Tire*, Maxi*

Mega Centre Notre Dame Sainte Dorothee, PQ

100% 425,173 494,726 Winners, Sports Experts, Super C*, Shoppers Drug Mart*

Mega Centre Rive-Sud, Levis, PQ 100% 207,201 207,201 Walmart, Canadian Tire*, Home Depot*

Place Carnaval - LaSalle, LaSalle, PQ 100% 206,869 206,869 Super C, L’Aubainerie

Place Carnaval Laval, LaSelle, PQ 100% 104,218 104,218 Super C, Jean Coutu

Place Kennedy, Levis, PQ 100% 105,640 155,640 Bureau en Gros, Winners, Canadian Tire*

Place Newman, LaSalle, PQ 100% 194,423 194,423 Maxi, Winners, Rossy

Quartier DIX/30, Brossard, PQ 50% 571,567 1,423,134 Canadian Tire, Cineplex, Winners/HomeSense, Future Shop, Staples/Business Depot, Rona*, Walmart*

RioCan Gatineau, Gatineau, PQ 50% 143,254 286,507 Walmart, Canadian Tire, Super C

RioCan Greenfield, Greenfield Park, PQ 50% 185,852 371,704 Maxi, Winners, Staples/Business Depot, Guzzo Cinemas

RioCan La Gappe, Gatineau, PQ 100% 320,103 320,103 Walmart, Winners, Golf Town

RioCan Sainte Foy, Sainte Foy, PQ 100% 527,648 706,229 Walmart, Staples/Business Depot, Cineplex, Sears Whole Home, JYSK, Metro*, Home Depot*

Shoppers Drug Mart - Repentigny Repentigny, PQ


Silver City Hull, Hull, PQ 100% 84,590 469,590 Cineplex, Rona*, Walmart*, Maxi*, Staples/Business Depot*, Winners*

St. Hyacinthe Walmart Centre Ste Hyacinthe, PQ

100% 166,813 254,313 Walmart, Staples/Business Depot, Canadian Tire*

Vaudreuil Shopping Centre Vaudreuil-Dorion, PQ

100% 118,330 198,330 Golf Town, Staples/Business Depot, Canadian Tire*, Super C*

Parkland Mall, Yorkton, SA 100% 267,667 267,667 Canadian Tire, Value Village, IGA

SASKATCHEWAN

ProPerty Portfolio

UNITED STATES


*Non-owned anchor11


Montville Commons, Montville, CT 100% 117,916 236,722 Stop & Shop, Home Depot*

Stop N Shop Plaza, Bridgeport, CT 100% 54,510 54,510 Giant Foods

Northwoods Crossing, Taunton, MA 100% 159,562 159,562 BJ's Wholesale Club

Shaw’s Plaza, Raynham, MA 100% 176,609 176,609 Shaw's, Marshalls

Marlboro Crossroads, Upper Marlboro, MD 100% 67,975 67,975 Giant Foods

Cross Keys Place, Turnersville, NJ 100% 148,173 253,173 Sports Authority, Old Navy, Bed Bath & Beyond, Home Depot*

Deptford Landing, Deptford, NJ 100% 517,057 517,057 Walmart, Sam's Club, hhgregg, Michaels, PetSmart

Sunrise Plaza, Forked River, NJ 100% 260,895 260,895 Home Depot, Kohl's

Huntington Square, East Northport, NY 100% 116,221 116,221 Stop & Shop, Best Buy

Village Shoppes at Salem, Salem, NH 100% 170,270 170,270 Sports Authority, PetSmart

NEW HAMPSHIRE

Blue Mountain Commons, Harrisburg, PA 100% 123,353 123,353 Giant

Columbus Crossing Shopping Center Philadelphia, PA

100% 142,166 142,166 Super Fresh, Old Navy, AC Moore

Creekview, Warrington, PA 100% 136,423 425,339 Giant, LA Fitness, JoAnn Fabrics, Lowe's*, Target*

Exeter Commons, Exeter, PA 100% 361,321 494,191 Lowe's, Giant Foods Supermarket, Target*

Gettysburg Marketplace, Gettysburg, PA 100% 82,785 82,785 Giant Foods

Loyal Plaza, Williamsport, PA 100% 293,825 293,825 Kmart, Staples

MASSACHUSETTS

MARYLAND

NEW JERSEY

NEW YORK

PENNSYLVANIA

CONNECTICUT

ProPerty Portfolio



*Non-owned anchor12

Monroe Marketplace, Selinsgrove, PA 100% 340,930 467,772 Giant Foods, Kohl's, Dick's Sporting Goods, Best Buy, Target*

Northland Center, State College, PA 100% 111,496 111,496 Giant Foods, CVS Pharmacy

Pitney Road, Lancaster, PA 100% 45,915 183,848 Best Buy, Lowe's*

Sunset Crossing, Dickson City, PA 100% 74,142 74,142 Giant Foods

Town Square Plaza, Reading, PA 100% 127,678 254,678 Giant Foods, PetSmart, AC Moore, Target*

York Marketplace, York, PA 100% 305,410 305,410 Giant Foods, Lowe’s

Super Stop & Shop Plaza, Richmond, RI 100% 60,488 60,488 Stop & Shop

1890 Ranch, Austin, TX 80% 389,517 793,896 Cinemark, Office Depot, PetSmart, Target*, Hobby Lobby*

Alamo Ranch, San Antonio, TX 80% 331,754 789,692 Dick's Sporting Goods, Best Buy, Ross, Marshalls,

Arbor Park, San Antonio, TX 85% 118,760 139,718 Ross Dress, Office Max, Michaels

Bear Creek Shopping Center Houston, TX

80% 70,330 87,912 HEB

Bird Creek Crossing, Temple, TX 80% 99,953 388,975 Best Buy, PetSmart, Super Target*, Home Depot*

Cinco Ranch, Houston, TX 80% 78,209 271,761 HomeGoods, Michaels, Office Max, SuperTarget*

Coppell Town Center, Coppell, TX 80% 73,086 91,357 Tom Thumb

Cypress Mill Plaza, Houston, TX 80% 93,125 420,573 Hobby Lobby, Palais Royal, Walmart*, Home Depot*

Great Southwest Crossing Grand Prairie, TX

80% 73,816 283,173 Office Depot, PetSmart, Sam's Club*, Kroger*

Ingram Hills Shopping Center San Antonio, TX

90% 72,357 80,397 La Fiesta

Las Colinas Village, Irving, TX 85% 89,030 104,741 Staples

Las Palmas Marketplace, El Paso, TX 32% 202,015 717,272 Lowe's, Kohl's, Bed Bath & Beyond, Ross Stores

Lincoln Square, Arlington, TX 82% 386,144 471,597 Best Buy, Ross, PetSmart, Stein Mart, Michaels

Louetta Central, Houston, TX 85% 152,996 391,995 Kohl's, Ross Dress For Less, Michaels, Walmart*

Market Street - Colleyville Center Dallas, TX

100% 72,617 72,617 Market Street

Market Street - Stonebridge Ranch Dallas, TX

100% 88,389 88,389 Market Street

Montgomery Plaza, Fort Worth, TX 80% 232,931 465,054 Marshalls, Ross, Office Depot, PetSmart, SuperTarget*

New Forest Crossing, Houston, TX 80% 118,452 486,771 Big Lots, Ross Stores, 99 Cents Only, Walmart*, Lowe's*

Riverpark Shopping Center I, II Sugar Land, TX

80% 202,409 317,340 HEB, Walgreen's, LA Fitness, Dollar Tree, Gander Mountain*

RHODE ISLAND

TEXAS

Super Target*, JC Penny*, Lowes*

ProPerty Portfolio



*Non-owned anchor13

Sawyer Heights, Houston, TX 80% 86,101 241,361 Staples, PetSmart, Target*

Southlake Corners, Southlake, TX 80% 107,915 134,894 Staples, HomeGoods (TJX), Toys R Us

Southpark Meadows, Austin, TX 80% 736,913 1,071,141 Walmart, JC Penny, Hobby Lobby, Target*

Suntree Square, Southlake, TX 80% 79,415 99,269 Tom Thumb

Timber Creek, Dallas, TX 80% 376,046 470,057 Walmart, JC Penny

New River Valley, Christianburg, VA 100% 164,663 164,663 Best Buy, Ross Stores, Bed Bath & Beyond

Towne Crossing Shopping Center Richmond, VA

100% 111,016 111,016 Bed Bath & Beyond, Michaels

The Commons, Martinsburg, WVA 100% 274,103 401,926 Dick's , Best Buy, TJ Maxx, PetSmart,

VIRGINIA

WEST VIRGINIA

Sporting GoodsTarget *

FINANCIAL REVIEW

MANAGEMENT’S DISCUSSION AND ANALYSIS

TABLE OF CONTENTS

Management’s Discussion and Analysis

15 Forward-Looking Statement Advisory15 Basis of Preparation16 Operational and Financial Highlights18 About RioCan20 Canadian Portfolio21 United States Portfolio23 2012 Highlights27 Outlook and Strategy31 Occupancy and Leasing Profile40 Results of Operations41 Operating Funds from Operations (“FFO”) & Adjusted FFO43 Net Operating Income48 Other Revenue49 Other Expenses50 Asset Profile50 Investment Property52 Income Properties52 Acquisitions During 201257 Capital Expenditures on Income Properties58 Joint Venture and Partnership Activities60 Properties Under Development61 Development Property Acquisitions65 Development Pipeline Summary69 Mortgages and Loans Receivable

70 Capital Strategy and Resources

71 Capital Structure

72 Debt and Leverage Metrics

74 Debt

74 Revolving Lines of Credit

74 Debentures Payable

75 Mortgages Payable

76 Hedging Activities

77 Aggregate Maturities

78 Trust Units

79 Preferred Units

79 Guarantees

79 Liquidity

80 Deferred Income Taxes

81 Distributions to Unitholders

82 Selected Quarterly Consolidated Information

83 Use of Non-GAAP Measures

83 Significant Accounting Policies and Estimates

83 Future Changes in Significant Accounting Policies

86 Controls and Procedures

87 Risks and Uncertainties

TRANSFORMING . . .


The terms “RioCan” and the “Trust” in the following Management’s Discussion and Analysis (“MD&A”) refer to RioCan Real EstateInvestment Trust and its consolidated financial position and results of operations for the years ended December 31, 2012 and 2011.

Forward-Looking Statement Advisory

Certain information included in this MD&A contains forward-looking statements within the meaning of applicable securities laws. Thesestatements include, but are not limited to, statements made in “About RioCan”, “Asset Profile”, “Capital Structure”, “Outlook”, and otherstatements concerning RioCan’s objectives, its strategies to achieve those objectives, as well as statements with respect tomanagement’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 theuse 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 statementsreflect management’s current beliefs and are based on information currently available to management. All forward-looking statements inthis MD&A are qualified by these cautionary statements.

These forward-looking statements are not guarantees of future events or performance and, by their nature, are based on RioCan’scurrent estimates and assumptions, which are subject to risks and uncertainties, including those described under “Risks andUncertainties” in this MD&A, which could cause actual events or results to differ materially from the forward-looking statementscontained in this MD&A. Those risks and uncertainties include, but are not limited to, those related to: liquidity in the global marketplaceassociated with economic conditions, tenant concentrations, occupancy levels, access to debt and equity capital, interest rates, jointventures/partnerships, the relative illiquidity of real property, unexpected costs or liabilities related to acquisitions, construction,environmental matters, legal matters, reliance on key personnel, unitholder liability, income taxes, the investment and conducting ofoperations in the United States of America (“US”), fluctuations in the currency exchange rate between the Canadian and US dollar, andRioCan’s qualification as a real estate investment trust for tax purposes. Material factors or assumptions that were applied in drawing aconclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a stable retailenvironment; relatively low and stable interest costs; a continuing trend toward land use intensification in high growth markets; access toequity and debt capital markets to fund, at acceptable costs, the future growth program and to enable the Trust to refinance debts as theymature; and the availability of purchase opportunities for growth in Canada and the US. Although the forward-looking informationcontained in this MD&A is based upon what management believes are reasonable assumptions, there can be no assurance that actualresults will be consistent with these forward-looking statements. Certain statements included in this MD&A may be considered “financialoutlook” for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this MD&A.

The Income Tax Act (Canada) contains provisions which potentially impose tax on publicly traded trusts (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”). RioCancurrently qualifies as a REIT and intends to continue to qualify for future years. Should this not occur, certain statements contained in thisMD&A may need to be modified.

Except as required by applicable law, RioCan undertakes no obligation to publicly update or revise any forward-looking statement,whether as a result of new information, future events or otherwise.

BASIS OF PRESENTATION

RioCan has adopted International Financial Reporting Standards (“IFRS”) as issued by the International Accounting StandardsBoard (“IASB”), as its basis of financial reporting which commenced with the interim financial statements for the three monthsended March 31, 2011. The Trust’s date of transition to IFRS was January 1, 2010.

Accordingly, financial data provided in this MD&A (including fiscal 2011 comparative results) has been prepared in accordance withIFRS. For a complete discussion on the Trust’s adoption of IFRS and its impact on the Trust’s reported consolidated balance sheetsand statements of earnings please refer to the Trust’s audited consolidated financial statements for the year ended December 31,2011 and 2010, together with the MD&A related thereto.

This MD&A is current as of February 13, 2013 unless otherwise stated, and should be read in conjunction with the Auditedconsolidated financial statements and appended notes, which begin on page 78. Historical results and percentage relationshipscontained in the interim and annual consolidated financial statements and MD&A related thereto, including trends which mightappear, should not be taken as indicative of future operations.

Certain figures in this MD&A are non-GAAP measures. For further discussion, please see page 70.

Additional information is also available on our website at www.riocan.com.

Unless otherwise indicated, all amounts are expressed in Canadian dollars.

The role of RioCan’s Audit Committee and Board of Trustees (the “Board”) in respect of financial information included in thisMD&A and consolidated financial statements is set out in “Management’s Responsibility for Financial Reporting”. Additionalinformation relating to RioCan, including the Annual Information Form, is filed at www.sedar.com.

15RIOCAN REAL ESTATE INVESTMENT TRUST ANNUAL REPORT 2012


OPERATIONAL AND FINANCIAL HIGHLIGHTSOperational Information

(thousands of square feet, except other data)

As at December 31, 2012 2011 2010US Canada Total US Canada Total US Canada Total

Number of properties:Income properties 52 283 335 45 276 321 31 256 287Under development (i) – 11 11 – 10 10 – 10 10

Portfolio occupancy 98.1% 97.2% 97.4% 98.1% 97.5% 97.6% 98.2% 97.3% 97.4%Net leasable area (“NLA”) at 100% * 13,579 60,962 74,541 11,868 59,674 71,542 7,468 56,251 63,719NLA at RioCan’s interest:

Total portfolio 8,816 40,674 49,490 6,873 39,129 46,002 3,998 36,849 40,847Average in place rent $ 14.02 $ 16.07 $ 15.70 $ 14.74 $ 15.21 $ 15.14 $ 14.69 $ 14.82 $ 14.75Completed development during

the period ended – 33 33 – 91 91 – 261 261Acquired during the period ended 2,216 1,257 3,473 2,875 1,923 4,798 3,840 1,819 5,659

Development pipeline upon completion:Total project NLA – 9,948 9,948 – 8,915 8,915 – 8,090 8,090RioCan’s interest of project NLA – 4,910 4,910 – 4,632 4,632 – 3,046 3,046

Percentage of portfolio rental revenuederived from:

Six Canadian high growth markets(annualized) (ii) n/a 67.5% 67.5% n/a 65.9% 65.9% n/a 65.2% 65.2%

US market (annualized) 13.6% n/a 13.6% 12.5% n/a 12.5% 8.2% n/a 8.2%National and anchor tenants

(annualized) 86.3% 86.1% 86.1% 86.8% 85.6% 85.7% 90.2% 85.5% 85.9%Largest tenant (annualized) 9.2% 4.9% 4.3% 13.8% 5.1% 4.7% 21.3% 4.9% 4.6%

Percentage of portfolio NLA anchored orshadow anchored by grocery stores 58.0% 70.5% 68.8% 60.6% 70.5% 69.3% 71.0% 75.2% 74.8%

Number of employees (excludingseasonal) 687 630 598

(i) The number of properties under development excludes those properties with phased development where tenancies have already commencedoperations. These properties are included in the number of income properties.

(ii) The six Canadian high growth markets are Calgary, AB; Edmonton, AB; Montreal, QC; Ottawa, ON (includes Gatineau region); Toronto, ON;and Vancouver, BC.

* Includes retailer owned anchors



Financial Information

(millions of dollars, except per Unit amounts)As at and for the year ended December 31, 2012 2011 2010

Total revenue $ 1,128 $ 988 $ 882Change in fair value of investment properties $ 913 $ 533 $ 273Net earnings before taxes and fair value adjustment $ 446 $ 352 $ 338Net earnings attributable to unitholders $ 1,344 $ 873 $ 1,495Net earnings per Unit attributable to common Unitholders – basic $ 4.59 $ 3.26 $ 6.06Net earnings per Unit attributable to common Unitholders – diluted $ 4.57 $ 3.25 $ 6.04Adjusted EBITDA (i) $ 702 $ 625 $ 573Operating FFO (ii) $ 440 $ 380 $ 329Operating FFO per Unit (ii) $ 1.52 $ 1.43 $ 1.33Weighted average common Units outstanding (in thousands) 289,950 265,583 246,608Distributions to common Unitholders $ 401 $ 367 $ 340Distributions to common Unitholders per Unit $ 1.38 $ 1.38 $ 1.38Distributions per common Unit (annualized) (iii) $ 1.38 $ 1.38 $ 1.38Distributions to common Unitholders net of distribution reinvestment plan $ 293 $ 285 $ 281Distributions to common Unitholders net of distribution reinvestment plan per Unit

(last twelve months) $ 1.01 $ 1.07 $ 1.14Common Unit issue proceeds under distribution reinvestment plan $ 108 $ 82 $ 59Distribution reinvestment plan (“DRIP”) participation rate 26.9% 22.4% 17.2%

(millions of dollars, except other data)As at

December 31,2012

December 31,2011

December 31,2010

Total enterprise value (iv) $ 14,295 $ 12,690 $ 10,126Total assets $ 12,943 $ 10,767 $ 8,886Debt (mortgages and debentures payable) $ 5,738 $ 5,034 $ 4,410Debt to total assets (v) 43.5% 46.4% 43.5%Debt to total capitalization (vi) 40.1% 39.7% 43.6%Interest coverage ratio (vii) 2.69 2.46 2.45Debt service coverage ratio (viii) 1.99 1.87 1.90Fixed charge coverage ratio (ix) 1.05 1.00 1.00Net debt to adjusted EBITDA (x) 7.28 7.26 6.98Operating debt to adjusted operating EBITDA (xi) 7.08 7.00 6.87Total unitholders’ equity $ 6,847 $ 5,363 $ 4,165Common Units outstanding (in thousands) 300,099 279,113 259,818Closing market price per common Unit $ 27.56 $ 26.43 $ 22.00Common Units – market capitalization (xii) $ 8,271 $ 7,377 $ 5,716Series A preferred units outstanding (in thousands) 5,000 5,000 n/aClosing market price per Series A preferred unit $ 25.94 $ 25.81 $ n/aSeries C preferred units outstanding (in thousands) 5,980 5,980 n/aClosing market price per Series C preferred unit $ 26.15 $ 25.15 $ n/aPreferred units – market capitalization (xiii) $ 286 $ 279 $ n/a

Please note: RioCan’s method of calculating non-GAAP measures may differ from other issuers’ methods and accordingly may not be comparable to suchamounts reported by other issuers.(i) A non-GAAP measurement. Adjusted EBITDA is defined as net earnings before changes in fair value of income properties, net interest expense

and income taxes as well as other one-time adjustments such as expense for early redemption of debentures. A reconciliation of AdjustedEBITDA to net earnings can be found under “Capital Strategy and Resources”.

(ii) A non-GAAP measurement for which a reconciliation to net earnings can be found under “Results of Operations”.(iii) Annualized amount is based on the latest quarter’s distribution.(iv) A non-GAAP measurement. Calculated by the Trust as debt plus common Unit market capitalization plus preferred unit market capitalization.(v) A non-GAAP measurement. Calculated as debt net of cash divided by total assets net of cash.(vi) A non-GAAP measurement. Calculated by the Trust as debt divided by total enterprise value.(vii) A non-GAAP measurement. Interest coverage is calculated on a rolling twelve month basis and is defined as Adjusted EBITDA divided by total

interest expense (including interest that has been capitalized).(viii) A non-GAAP measurement. Debt service coverage is calculated on a rolling twelve month basis and is defined as Adjusted EBITDA divided by

total interest expense (including interest that has been capitalized) and scheduled mortgage principal amortization.(ix) A non-GAAP measurement. Fixed charge coverage ratio is calculated on a rolling twelve month basis and is defined as Adjusted EBITDA

divided by total interest expense (including interest that has been capitalized) and distributions to common and preferred unitholders.(x) A non-GAAP measurement. Net debt to Adjusted EBITDA is calculated on a rolling twelve month basis and is defined as the average debt

outstanding (net of cash) for the period divided by Adjusted EBITDA.(xi) A non-GAAP measurement. Net operating debt to Adjusted Operating EBITDA is defined as the average debt outstanding (net of cash) for the

period less debt related to property under development divided by Adjusted EBITDA excluding amounts related to property under development.(xii) A non-GAAP measurement. Calculated by the Trust as closing market price of the common Units trading on the TSX on December 31,

2012, December 31, 2011, and December 31, 2010, respectively, multiplied by the number of common Units outstanding at such date.(xiii) A non-GAAP measurement. Calculated by the Trust as the aggregate of the closing market price of each series of preferred units trading on

the TSX on December 31, 2012, December 31, 2011, and December 31, 2010, respectively, multiplied by the number of preferred units of suchseries outstanding at such date.

n/a – not applicable



ABOUT RIOCANRioCan is an unincorporated “closed-end” trust governed by the laws of the Province of Ontario and constituted pursuant to aDeclaration of Trust dated November 30, 1993, as most recently amended and restated on March 30, 2012 (the “Declaration”). TheTrust’s Units, excluding the preferred units, (the “Units” and a holder of Units, a “Unitholder”) are listed on the Toronto StockExchange (the “TSX”) under the symbol REI.UN. The Trust’s Preferred Units, Series A and Preferred Units, Series C are listed onthe TSX under the symbol REI.PR.A and REI.PR.C, respectively.

Overview of the business

RioCan is Canada’s largest real estate investment trust (“REIT”), with a total enterprise value of approximately $14.3 billion as atDecember 31, 2012. RioCan owns and manages Canada’s largest portfolio of shopping centres, with ownership interests in aportfolio of 346 retail properties in Canada and the US combined, including 11 under development, containing an aggregate of82.8 million square feet as at December 31, 2012.

Included in RioCan’s portfolio, as of December 31, 2012, are 52 shopping centres, predominantly grocery anchored and new formatretail centres that are located in the US, held through outright ownership (28 centres), as well as through five joint venturearrangements (24 centres). RioCan’s primary joint venture arrangements are with Retail Properties of America, Inc. (formerlyInland Western Retail REIT) (“RPAI”), Kimco Realty Corporation (“Kimco”), Dunhill Partners, Inc. (“Dunhill”) and the SterlingOrganization LLC (“Sterling”). In October 2012, RioCan dissolved its joint venture agreement with Cedar Realty Trust (“Cedar”). Asa result, RioCan acquired Cedar’s 20% interest in 21 of the properties in the joint venture and sold RioCan’s 80% interest in oneproperty to Cedar. The dissolution of the Cedar joint venture resulted in RioCan owning 100% of its properties in the Northeast USand enabled RioCan to establish its own platform and internalize management of these properties. On February 7, 2013, RioCandisposed of all its shares in Cedar (which represented an approximately 13% equity interest) for proceeds of US$48 million. RioCanno longer has an equity interest in Cedar.

The Trust’s purpose is to deliver to its unitholders stable and reliable cash distributions that increase over the long term. The Trustaccomplishes this goal by following a strategy of focusing on owning, operating, and developing (including redeveloping andintensifying) retail and mixed use real estate. RioCan has grown its business by using prudent strategies, core competencies,conservative financial leverage, long-term strategic partnerships and by adapting to trends in commercial real estate.

RioCan’s core strategy is the ownership and management of retail properties consisting of all retail formats. Its investmentstrategy is to focus on stable, lower risk, predominantly retail properties in either stable or high growth urban markets in order tocreate stable and, over time, growing cash flows from the property portfolio.

Due to RioCan’s focus on major urban markets, RioCan has significant opportunities to redevelop and intensify urban properties.These activities can significantly increase cash flows and values and generate capital through transaction gains where additionaldensity is created and sold.

The specific retail assets in which RioCan currently invests are:

• New format retail centresNew format retail centres (or power centres) are large aggregations of dominant retailers grouped together at high traffic andeasily accessible locations. These unenclosed campus-style centres are generally anchored by supermarkets and/or juniordepartment stores and may include entertainment (movie theatres and restaurants) and fashion components.

• Neighbourhood convenience unenclosed centresNeighbourhood convenience unenclosed centres are generally supermarket and/or junior department store anchored shoppingcentres, typically comprising between 60,000 to 250,000 square feet of leasable area. Other tenants generally include drugstores, restaurants, banks and other service providers.

• Enclosed shopping centresEnclosed shopping centres are generally large retail complexes containing stores, restaurants and other facilities with interiorcommon areas with access to all retail units. Typically these centres have one or more anchor tenants and are located close toor in larger population centers.

• Urban retail propertiesUrban retail properties are high-quality, innovative, multi-level format retail centres located in major urban markets. Thecentres are situated in high-density locations and may sometimes be part of a multi-use complex, thereby including office spaceand/or a residential component as part of the property.

• Outlet Shopping CentresRioCan’s joint venture arrangement with Tanger Factory Outlet Centers, Inc. (“Tanger”) introduced the outlet shopping centreconcept to RioCan’s portfolio providing an opportunity for customers to purchase directly from the manufacturer at substantialsavings. Currently the joint venture owns three such centres, Tanger Outlet Cookstown, in Cookstown, Ontario, located north ofToronto, Ontario and two additional centres located outside of Montreal, Quebec acquired in November 2012. In addition to the threecentres, RioCan and Tanger plan to develop a number of outlet centres across Canada. The planned outlet centres are expected to besimilar in concept and design to those within Tanger’s existing US portfolio, which are characterized by a tenant mix of leadingdesigner and brand-name manufacturers and have a typical size of approximately 300,000 to 350,000 square feet. The intendedlocations of the planned centres are to be within close proximity to larger urban markets and tourist areas across Canada.



Top Twenty-five Tenants – Total portfolio

As at December 31, 2012, RioCan’s twenty-five largest tenants in Canada and the US have the following profile:

Rank Tenant name

Annualizedrental

revenueNumber

of locationsNLA*

(in thousands)Percentage of

total NLA

Weightedaverage

remaininglease term

(years)**

1 Walmart 4.3% 34 4,112 8.6% 13.32 Canadian Tire Corporation (i) 4.1% 106 2,103 4.4% 9.13 Famous Players/Cineplex/Galaxy Cinemas 3.6% 30 1,355 2.9% 10.64 Metro/Super C/Loeb/Food Basics 3.6% 58 2,125 4.5% 7.35 Winners/HomeSense/ Marshalls 2.9% 72 1,646 3.5% 6.96 Loblaws/No Frills/Fortinos/Zehrs/Maxi 2.5% 31 1,266 2.7% 7.27 Staples/Business Depot 2.1% 57 1,138 2.4% 6.48 Future Shop/Best Buy 1.8% 34 797 1.7% 6.59 Target Corporation 1.8% 24 1,972 4.1% 9.1

10 Shoppers Drug Mart 1.6% 46 531 1.1% 9.411 Giant Food Stores/ Stop & Shop (Royal Ahold) 1.5% 20 1,025 2.2% 13.112 Reitmans/Penningtons/Smart Set/Addition-Elle/Thyme

Maternity 1.4% 125 520 1.1% 4.513 Petsmart 1.4% 41 638 1.3% 5.714 Harvey’s/Swiss Chalet/Kelsey’s/Montana’s/Milestone’s (Cara) 1.3% 95 390 0.8% 7.715 Sobeys/IGA/Price Chopper/Empire Theatres 1.3% 24 703 1.5% 12.516 Dollarama 1.1% 72 597 1.3% 6.617 Zellers/The Bay/Home Outfitters 0.9% 18 892 1.9% 7.518 TD Bank 0.9% 55 223 0.5% 5.919 Chapters/Indigo 0.9% 24 323 0.7% 2.620 Lowes 0.9% 7 903 1.9% 16.521 Michael’s 0.8% 29 451 0.9% 5.522 Safeway 0.8% 15 500 1.1% 7.523 Blue Notes/Stitches/Suzy Shier/Urban Planet (YM Inc.) 0.7% 51 240 0.5% 4.524 The Brick 0.6% 14 309 0.7% 7.525 Sears 0.6% 14 451 0.9% 5.0

43.4% 1,096 25,210 53.2% 8.5

* – Net Leasable Area (“NLA”)** – Weighted average based on gross rental revenue(i) Canadian Tire Corporation includes Canadian Tire/PartSource/Mark’s Work Wearhouse/Sport Mart/ Sport Chek/Sports Experts/National

Sports/Atmosphere

Canada 82.2%

US 17.8%

86.4% Canada

13.6% US

NLA of the total portfolioat December 31, 2012

Annualized rental revenueof the total portfolioat December 31, 2012



Canadian Portfolio

As at December 31, 2012, the geographical diversification of RioCan’s Canadian property portfolio is as follows:

Ontario 60.5%

Quebec 18.0%

Western Canada 17.7%

Eastern Canada 3.8%

62.3% Ontario

16.1% Quebec

18.7% Western Canada

2.9% Eastern Canada

NLA* of the Canadian portfolioat December 31, 2012

Annualized rental revenue of theCanadian portfolio by geographicarea at December 31, 2012

* Net leasable area

As at December 31, 2012, the diversification of RioCan’s Canadian property portfolio by property type is as follows:

NLA of the Canadian portfolioby property type at

December 31, 2012

Non-Grocery Anchored Centre 5.3%

Urban Retail 3.8%

Office 4.4%

Grocery Anchored Centre 20.3%

Enclosed Shopping Centre 17.2%

New Format Retail 49.0%

16.1% Enclosed Shopping Centre

18.6% Grocery Anchored Centre

48.3% New Format Retail

7.6% Urban Retail

5.0% Non-Grocery Anchored Centre

4.4% Office

Annualized rental revenue of theCanadian portfolio by property typeat December 31, 2012

The occupancy rate of the Canadian portfolio has remained relatively stable over the most recent eight fiscal quarters:

95.0%

100.0%

Q1 2011 Q2 2011 Q3 2011 Q1 2012 Q4 2012Q3 2012Q2 2012Q4 2011

97.4% 97.3% 97.2% 97.2%97.5% 97.5% 97.5%96.7%



Top Ten Tenants – Canada

As at December 31, 2012, RioCan’s ten largest tenants in Canada have the following profile:

Rank Tenant name

Annualizedrental

revenueNumber of

locationsNLA


total NLA

Weightedaverage

remaininglease term

(years)*

1 Canadian Tire Corporation (i) 4.9% 106 2,103 5.4% 9.12 Walmart 4.7% 29 3,335 8.6% 12.93 Famous Players/Cineplex/Galaxy Cinemas 4.3% 30 1,355 3.5% 10.64 Metro/Super C/Loeb/Food Basics 4.3% 58 2,125 5.5% 7.35 Winners/HomeSense/ Marshalls 3.3% 67 1,521 3.9% 6.96 Loblaws/No Frills/Fortinos/Zehrs/Maxi 2.9% 31 1,266 3.3% 7.27 Staples Business Depot 2.1% 48 972 2.5% 6.68 Target 2.1% 24 1,972 5.1% 9.19 Shoppers Drug Mart 1.9% 46 531 1.4% 9.4

10 Reitmans/Penningtons/Smart Set/Addition-Elle/Thyme Maternity 1.7% 125 520 1.3% 4.532.2% 564 15,700 40.5% 8.8

* – Weighted average based on gross rental revenue(i) Canadian Tire Corporation includes Canadian Tire/PartSource/Mark’s Work Wearhouse/Sport Mart/ Sport Chek/Sports Experts/National

Sports/Atmosphere

US Portfolio

As at December 31, 2012, the geographical diversification of RioCan’s US property portfolio is as follows:

NLA of the US portfolioat December 31, 2012

Annualized rental revenue of theUS portfolio by Stateat December 31, 2012

Texas 48.7%

Pennsylvania 24.3%

New York 1.3%

West Virginia 3.1%

Connecticut 2.0%

Maryland 0.8%Massachusetts 3.8%

New Jersey 10.4%New Hampshire 1.9%

Virginia 3.0%

Rhode Island 0.7%

2.9% West Virginia

0.8% Rhode Island2.2% New York

53.2% Texas

22.6% Pennsylvania

2.3% Connecticut

0.9% Maryland6.4% New Jersey2.4% New Hampshire

2.8% Virginia

3.5% Massachusetts

The historical occupancy rate of the US portfolio is as follows:

95.0%

100.0%

Q1 2011 Q2 2011 Q3 2011 Q1 2012 Q4 2012Q3 2012Q2 2012Q4 2011

98.0%97.4%

97.8% 98.1%97.5% 97.8% 97.8% 98.1%



Top Ten Tenants – US

As at December 31, 2012, RioCan’s ten largest tenants in the US have the following profile:

Rank Tenant name

Annualizedrental

revenueNumber of

locationsNLA


total NLA

Weightedaverage

remaininglease term

(years)*

1 Giant Food Stores/ Stop & Shop (Royal Ahold) 9.2% 20 1,025 11.6% 13.12 Best Buy 3.6% 10 331 3.7% 7.73 PetSmart 2.9% 15 286 3.2% 6.04 Walmart 2.3% 5 776 8.8% 15.55 Michael’s 2.0% 12 219 2.5% 6.06 Ross Dress 1.8% 10 235 2.7% 5.87 Staples 1.6% 9 166 1.9% 5.88 Bed Bath & Beyond 1.3% 9 195 2.2% 7.49 Lowes 1.3% 3 353 4.0% 15.5

10 Market Street 1.2% 2 138 1.6% 11.127.2% 95 3,724 42.2% 10.1

* – Weighted average based on gross rental revenue



2012 HIGHLIGHTSIn 2012, RioCan remained focused on its core portfolio and continued to execute its growth strategy through acquisitions anddevelopment. Acquisition and development activity during the year led to a net increase in owned net leasable area (“NLA”) of3.5 million square feet. At December 31, 2012, NLA totalled 49.5 million square feet, an increase of 7.6% over December 31, 2011.During 2012, RioCan completed 43 income property acquisitions totalling $926 million.

In 2012, RioCan raised $531 million of equity through the issuance of $423 million of equity in offerings that occurred in April andSeptember 2012, as well as, $108 million through its common Unit DRIP program during 2012, representing a DRIP participationrate of 26.9%. The generation of this additional capital supports the Trust’s growth strategy and provides liquidity for RioCan’sdevelopment program, where there has been a substantial increase in activity in 2012 on multiple projects. RioCan expects thisincreased level of activity to continue in 2013 and for several years thereafter, with an increased focus on urban development.

On December 12, 2012, RioCan announced an increase to its monthly distribution to 11.75 cents per Unit, which commenced withthe distribution for January 2013. This increase of just over 2%, or 3 cents per Unit on an annualized basis, will increase RioCan’sannualized distribution to $1.41 per Unit.

Operationally, RioCan continues to experience good demand for space by tenants. Occupancy for the portfolio was 97.4% atDecember 31, 2012 (December 31, 2011 – 97.6%) and rental rate increases on renewing leases continue to be positive, which isexpected to continue to contribute to future rental revenue growth.

Operating Funds from Operations (“Operating FFO”) and Net Earnings attributable to unitholders

(millions of dollars, except per unit amounts)For the year ended December 31, 2012 2011

Increase/(Decrease)

Operating FFO $ 440 $ 380 16%Operating FFO per Unit $ 1.52 $ 1.43 6%

Net earnings attributable to unitholders $ 1,344 $ 873 54%Net earnings per Unit attributable to common

Unitholders – basic $ 4.59 $ 3.26 41%

Operating FFO for the three months ended December 31, 2012 was $116 million ($0.39 per Unit) compared to $100 million($0.36 per Unit) for the same period in 2011, an increase of 16%. On a per Unit basis, Operating FFO increased by $0.03 or 8%.Please see the “Results of Operations” section of this MD&A.

The $16 million increase in Operating FFO for the three months ended December 31, 2012 is primarily due to the following factors:

• increased net operating income (“NOI”) from rental properties of $20 million as a result of acquisitions, same property growth of0.2% for the Canadian portfolio and the completion of greenfield developments and lower interest and general andadministrative expense of $2 million; partially offset by

• increased preferred unit distributions of $1 million, and lower fees and other revenue of $7 million.

RioCan reported net earnings attributable to Unitholders for the three months ended December 31, 2012 of $468 million ($1.55 perUnit) compared to $241 million ($0.87 per Unit) for the same period in 2011. The fourth quarter increase of $227 million ($0.68 perUnit) was primarily as a result of the increase in fair value gains of $202 million.

Fair value gains for the three months ended December 31, 2012 were $348 million, as compared to $146 million for the sameperiod in 2011. Capitalization rates for the portfolio for the fourth quarter of 2012 decreased by 12 basis points on average, ascompared to September 30, 2012.

Excluding the impact of fair value gains on investment properties, net earnings for the three months ended December 31, 2012were $123 million as compared to $98 million during the same period in 2011. Net income for the fourth quarter of 2012 includes$7 million of transactions gains, net of tax.

Operating FFO for the year ended December 31, 2012 was $ 440 million ($1.52 per Unit) compared to $380 million ($1.43 per Unit)for the same period in 2011, an increase of 16%. On a per Unit basis, Operating FFO increased by $0.09 or 6%. Please see the“Results of Operations” section of this MD&A.

The $60 million increase in Operating FFO for the year ended December 31, 2012 is primarily due to the following factors:

• increased NOI from rental properties of $91 million which is due to acquisitions, higher lease cancellation fees of $12 million,same property growth of 1.0% for the Canadian portfolio and the completion of greenfield developments; partially offset by

• higher interest expense of $6 million, which included $2.3 million prepayment costs on the early repayment of $90 million ofsecured debt, as well as increased preferred unit distributions of $7 million, higher general and administrative expense of $3million and lower fees and other income of $13 million.



RioCan reported net earnings attributable to Unitholders for the year ended December 31, 2012 of $1.34 billion ($4.59 per Unit)compared to $873 million ($3.26 per Unit) in 2011, an increase of $471 million ($1.33 per Unit – basic). This increase is primarily asa result of a $380 million increase in fair value gains (discussed below), increased lease cancellation fees of $12 million, lowerdebenture redemption costs of $31 million, as well as higher revenues from acquisitions resulting in a $72 million increase in netoperating income.

Fair value gains for the year ended December 31, 2012 were $913 million, as compared to $533 million for the same period in 2011.Capitalization rates for the portfolio for 2012 decreased by 52 basis points, on average, as compared to the year ended 2011.

Excluding the impact of fair value gains on investment properties, net earnings for the year ended December 31, 2012 were $446million as compared to $351 million during the same period in 2011. In 2012, net income includes $7.8 million of transactionsgains, net of tax, and a $12 million impairment in respect of RioCan’s shares of Cedar.

Operating and Leasing Activities

RioCan’s committed occupancy increased to 97.4% as at December 31, 2012 as compared to 97.3% at September 30, 2012 butdown from 97.6% at December 31, 2011. The decrease in committed occupancy was due primarily to bankruptcies, such asPremier Fitness, and lease buyouts. Included in this occupancy rate is 711,000 square feet of NLA that has been leased but is notyet paying rent, resulting in an economic occupancy rate of 95.9%, which represents the occupied NLA for which tenants are payingrent. The annualized rental impact once these tenants take occupancy and commence paying rent is approximately $15 million.

Various operating and leasing metrics over the last eight quarters are as follows:

2012 2011

(thousands of square feet,millions of dollars)

Fourthquarter

Thirdquarter

Secondquarter

Firstquarter

Fourthquarter

Thirdquarter

Secondquarter

Firstquarter

Committed occupancy 97.4% 97.3% 97.4% 96.9% 97.6% 97.5% 97.5% 97.4%Economic occupancy 95.9% 95.5% 95.5% 95.7% 96.6% 96.3% 96.3% 96.3%NLA leased but not paying rent 711 855 871 542 466 541 485 470Annualized rental impact $ 15.0 18.0 $ 18.0 $ 12.0 $ 11.0 $ 12.0 $ 13.0 $ 11.7Retention rate – Canada 94.3% 84.8% 89.9% 91.2% 90.5% 88.9% 92.1% 87.1%% increase in average net rent

per sq ft – Canada 18.4% 12.9% 13.4% 10.0% 14.5% 7.2% 13.9% 8.7%Retention rate – US 87.6% 96.3% 84.2% 83.1% 95.7% 89.9% 96.9% 66.1%% increase in average net rent

per sq ft – US 5.1% 6.0% 7.3% 7.2% 8.9% 6.4% 9.3% 10.6%Average in place rent $ 15.70 15.85 $ 15.33 $ 15.37 $ 15.14 $ 15.09 $ 14.91 $ 14.92Same store growth (i) – Canada 0.2% 0.0% 1.5% 1.5% 1.9% 1.3% 0.3% 0.6%Same store growth (i) – US 1.9% (0.3%) 1.3% (0.6%) 1.3% 1.0% 1.4% 6.2%

(i) – Refers to the growth in same store on a year over year basis

Cedar Dissolution

On September 6, 2012, RioCan announced it had entered into an agreement to dissolve its joint venture agreement with Cedar.Under the joint venture, RioCan and Cedar had aggregated a portfolio of 22 properties that were owned on an 80/20 basis (80%owned by RioCan and 20% owned by Cedar). The dissolution was completed on October 10, 2012. Under the terms of thedissolution, Cedar conveyed its 20% interest in 21 properties to RioCan for a gross purchase price of US$119.5 million,representing a capitalization rate of 6.5%. Under the terms of the transaction, RioCan assumed Cedar’s share of the existing in-place mortgage financing of US$54.4 million in respect of such 21 properties, which carries a weighted average interest rate of5.2% and a weighted average term to maturity of 5.2 years.

In turn, RioCan conveyed its 80% interest in Franklin Village (located in Franklin, MA) to Cedar for a gross sale price of US$60.1million (less debt assumed by Cedar from RioCan in the amount of US$34.7 million). Cedar contracted to provide propertymanagement services to RioCan for a period of up to one year, cancellable by RioCan on 90 days notice, under similar terms as theproperty management services previously provided by Cedar. During January 2013, RioCan established a property managementplatform in the northeastern United States and assumed management duties at the 21 properties previously held in the Cedar jointventure, as well as four properties RioCan owns outright but were previously managed by Cedar, on February 1, 2013. OnFebruary 7, 2013, RioCan sold its 9.4 million shares of Cedar, its entire holding, for proceeds of US$48 million.

Target and Zellers

In 2011, Target Corporation announced its expansion into Canada and acquired the leaseholds of 189 Zellers stores. RioCan had 34stores that were leased to Zellers, and of these locations, 23 of the stores were subsequently assigned to Target. Target also



assumed another location within the RioCan portfolio by assuming the Walmart lease at RioCan Niagara Falls and announced thatthe Zellers leases at 404 Town Centre and Parkland Mall were assumed by Walmart and Canadian Tire, respectively.

The majority of the Zellers stores assigned to Target will cease, or have ceased, operations at predetermined dates throughout thesecond half of 2012 and the first half of 2013. The stores are presently undergoing extensive renovations that are required toconvert the premises into Target stores. The renovations entail full demolition/replacement of the store interior, replacement ofelectrical and mechanical systems, demolition/replacement of the exterior façade and storefront as well as aestheticimprovements to the exterior common area including new landscaping and signage. Target is spending an estimated $8-to-$10million on each of the store conversions. Nine of these locations will commence operations in March 2013 and the majority of theremaining stores will open over the course of 2013. In addition to Target’s expenditures, RioCan expects to spend between $14 and$18 million to upgrade existing shopping center infrastructure and aesthetics.

In addition, Target will be the anchor tenant at The Stockyards, RioCan’s 547,000 square foot development project in Toronto,which will be Target’s first purpose built store in Canada. Currently, Target is RioCan’s eighth largest tenant in Canada. Target’slargest landlord in Canada is RioCan.

One of the remaining nine Zellers locations owned by RioCan that was not selected by Target ceased operations in August 2012.The lease terms of an additional three of the nine remaining stores expired in January 2013 and the premises were returned toRioCan. These four stores comprise a total GLA of approximately 261,000 square feet (174,000 square feet at RioCan’s interest),contributed $2.1 million of gross income annually ($1.6 million at RioCan’s interest) and had an average net rental rate of $3.26per square foot.

The remaining five locations, all owned 100% by RioCan, had a weighted average remaining lease term of approximately six years,comprised 466,000 square feet, contribute $4.5 million of gross income annually and had an average net rental rate of $6.41 persquare foot. As a means to control our real estate and to maximize the potential revenue from the premises, RioCan hasnegotiated a lease termination on these five remaining Zellers locations. The five premises will be returned to RioCan on April 1,2013 along with a termination fee of $9.3 million.

In total, RioCan will be in possession of nine former Zellers stores by April 2013 comprising approximately 727,000 square feet(640,000 square feet at RioCan’s interest). Zellers paid an average base rental rate of $5.28 per square foot contributing $6.6million of annual gross revenue ($6 million at RioCan’s interest). To-date, RioCan has negotiated firm leases and conditional LOI’sfor 341,000 square feet or 53% of the Zeller’s space (at RioCan’s ownership interest) accounting for $4.98MM of gross revenue or83% of the gross rent formerly paid by Zellers (at RioCan’s ownership interest). The average base rent on the released space is$9.48 per square foot compared to the $5.45 per square foot formerly received from Zellers representing a 74% increase. Giventhe significant amount of work required to re-tenant the buildings, RioCan estimates that the construction and tenant fixturingperiod will average eleven months.

Acquisitions

During the three months ended December 31, 2012, RioCan acquired interests in 31 income properties totalling $378 million, atRioCan’s interest, comprising six properties in Canada for $98 million and 25 properties in the US for $280 million, at a weightedaverage capitalization rate of 6.4%.

During the year ended December 31, 2012, RioCan acquired interests in 43 income properties totalling $926 million, at RioCan’sinterest, comprising 14 properties in Canada for $543 million and 29 properties in the US for $383 million, at a weighted averagecapitalization rate of 6.1%.

Included in the figures above is RioCan’s fourth quarter acquisition of the remaining 20% interest in 21 properties formerly ownedwith Cedar at a purchase price of US$119.5 million. RioCan now holds a 100% interest in each of these properties.

RioCan’s most significant individual acquisition in 2012 was the third quarter acquisition of a 100% interest in Georgian Mall inBarrie, Ontario. The purchase price of the property was $318 million, which equates to a capitalization rate of 5.4% for the incomeproducing components. The property has a weighted average lease term to maturity of 4.5 years, is 98% leased, and contains morethan 604,600 square feet of retail space (of which 488,100 square feet are owned by RioCan). The mall has more than 150 storesand is anchored by The Bay and shadow anchored by a Sears department store. The site encompasses 61.9 acres (including 6.6acres of excess lands), and has parking for 3,105 vehicles. In connection with the acquisition, RioCan arranged six-year firstmortgage financing in the amount of $185 million at a rate of 3.09%.

RioCan has two income properties under firm contract that, if completed, will represent acquisitions of $61 million at RioCan’sinterest. Conditions have been waived and it is expected that the transactions will close during the first and second quarters of2013. Additionally, RioCan has $397 million of income property acquisitions (at RioCan’s interest) under contract where conditionshave not yet been waived. These transactions are in various stages of due diligence and while efforts will be made to completethese transactions, no assurance can be given.

During the quarter ended December 31, 2012, RioCan acquired an interest in the Globe and Mail site, a development property indowntown Toronto, at a purchase price of $54 million, at RioCan’s interest. During the year ended December 31, 2012, RioCanacquired interests in development properties in Canada at an aggregate purchase price of $89 million, at RioCan’s interest.

Subsequent to year end, RioCan acquired a co-ownership interest in the Sage Hill development property in Calgary with KingSettCapital at a purchase price of $16 million, at RioCan’s interest.



RioCan has two development properties under firm contract for a purchase price of $29 million, at RioCan’s interest. Conditionshave been waived and it is expected that these acquisitions will close in the first and third quarters of 2013. Additionally, RioCanhas $51 million of development property acquisitions (at RioCan’s interest) under contract where conditions have not yet beenwaived. These transactions are in various stages of due diligence and while efforts will be made to complete these transactions, noassurance can be given.

Enclosed Malls

In 2012, RioCan began to increase its presence in the enclosed mall sector with the purchase of Georgian Mall in the third quarterof 2012 for $318 million and with the recently announced conditional agreement to acquire Oakville Place and a 50% interest inBurlington Mall for $362 million. These significant additions to the enclosed mall portfolio will provide RioCan greater reach to itsretail tenant base and provide US retailers looking to expand into Canada, greater access to RioCan’s diverse and growing retailportfolio.

Outlet Centers and Tanger Joint Venture

In 2011, RioCan formed an exclusive joint venture arrangement with Tanger for the acquisition, development and leasing of sitesacross Canada that are suitable for development or redevelopment as outlet shopping centres similar in concept and design tothose within the existing Tanger US portfolio. It is the intention of the joint venture to develop as many as 10 outlet centres in closeproximity to larger urban markets and tourist areas across Canada over a five to seven year period. Any projects acquired ordeveloped will be co-owned on a 50/50 basis and will be branded as Tanger Outlet Centers.

During 2011, RioCan and Tanger purchased the Cookstown Outlet Mall and entered into a purchase and sale agreement for 50acres of land in Kanata, near Ottawa, to be developed as a Tanger Outlet Center.

On November 2, 2012, RioCan and Tanger purchased Le Carrefour Champêtre located in Bromont, Québec. The Bromont propertyis approximately 80 kilometers southeast of Montreal and is an established outlet format centre consisting of 161,276 square feetof existing retail with excess density suitable for an additional 73,000 square feet of retail to be developed.

On November 1, 2012, RioCan and Tanger purchased Les Factories located in St. Sauveur, Québec. The St. Sauveur property isapproximately 60 kilometers north of Montreal and is an established outlet format centre consisting of 116,647 square feet ofexisting retail with excess density suitable for an additional 15,000 square feet of retail to be developed.

KingSett Capital Joint Venture

During 2011, RioCan entered into a joint venture with KingSett Capital (“KingSett”), a private equity real estate fund, to co-invest invarious projects. On December 1, 2011, the RioCan and Kingsett (“the partners”) acquired Sheppard Centre on a 50/50 joint venturebasis for $218 million. Sheppard Center, located at the northeast corner of Yonge and Sheppard, is a 673,000 square foot urbanmixed use centre that contains retail, office, and residential uses. In January 2013 the joint venture partners invested $32.5 million,again on a 50/50 joint venture basis, to acquire a 34 acre development site, Sage Hill, in north eastern Calgary. The partners intendto build a 377,000 square foot shopping center on the site. In February 2013, the partners announced their third investment, thepurchase of Burlington Mall, on a 50/50 basis, from Primaris REIT. Burlington Mall is a 782,000 square foot enclosed mall, locatedin Burlington, Ontario, west of Toronto. Target will be opening at Burlington Mall in the spring of 2013 as an anchor tenant.

Allied Joint Venture

In July 2012, RioCan and Allied Properties Real Estate Investment Trust (“Allied”) (TSX:AP.UN) entered into a non-exclusiveagreement to create a joint venture to acquire sites in the urban areas of major Canadian cities that on a stand-alone basis aresuitable for mixed use intensification. The joint venture will also seek to identify properties currently within the Allied and/orRioCan portfolio that are suitable for redevelopment or intensification on a stand-alone basis or those where an assembly ofadjacent lands is possible.

Any joint venture properties will be owned on a 50/50 basis between RioCan and Allied. RioCan and Allied will act as jointdevelopment and construction managers or will appoint one or the other as development and construction managers on a project-by-project basis. Upon completion of any projects RioCan will act as property manager for any retail portion of the property andAllied will act as property manager for any office portion.

The first of such properties that the joint venture will consider are located in Toronto, Ontario at College and Manning Streets andKing and Portland Streets.

College and Manning Joint Venture

This site is comprised of 551-555 College Street, formerly owned exclusively by Allied, and 547 and 549 College Street,formerly owned exclusively by RioCan. It includes 23,000 square feet of land with 185 feet of frontage on College Street. Alliedand RioCan have combined their respective properties with a view to intensify the site by creating a mixed-use office, retailand residential complex with approximately 125,000 square feet of gross floor area.

King and Portland Joint Venture

This site is comprised of 602-606 King Street West, formerly owned exclusively by Allied, and adjacent properties to the westextending from King through to Adelaide Street West (the “Adjacent Properties”) that Allied and RioCan acquired jointly. Itincludes 61,600 square feet of land with frontage on King, Portland and Adelaide. By virtue of RioCan’s acquisition of a 50%



interest in 602-606 King Street West, Allied and RioCan have combined the properties with a view to intensify the site bycreating a mixed-use office, retail and residential complex with approximately 400,000 square feet of gross floor area.

The Adjacent Properties are comprised of 620 and 622 King, 501 and 505 Adelaide, 106 Portland and 1 and 11 Adelaide Place.The purchase price for the Adjacent Properties was $22 million ($11 million at RioCan’s 50% interest), the purchase of whichwas completed on July 20, 2012. The Adjacent Properties were free and clear of mortgage financing on closing.

Downtown West Joint Venture ( Globe and Mail Site)

During December 2012, RioCan completed the acquisition of the Globe & Mail Lands in Toronto’s Downtown West. Currently thehome of The Globe & Mail Newspaper, the property is comprised of 252,600 square feet of office space and 579 parking spaces, allset on 6.47 acres of land forming part of the large city block bounded by Spadina, Front, Draper and Wellington Streets.

The acquisition has established the basis for a joint venture (the “Downtown West JV”) between RioCan, Allied and Diamond, witheach of RioCan and Allied having an undivided 40% interest and Diamond having an undivided 20% interest. RioCan has a beneficialownership in the Downtown West JV of 43.9% including its 19.3% participation in Diamond’s Whitecastle New Urban Fund 2. Thejoint-venture partners intend to redevelop the Property as a mixed-use retail, office and residential complex with approximately2.3 million square feet of gross floor area. In February 2013, the three partners included in the Downtown West Joint Ventureconcluded a conditional agreement to acquire an additional 1.2 acres of land adjacent to the 6.47 acres previously acquired. Thisadditional land zoned for 450,000 square feet of commercial space, will provide the partners the opportunity to develop thecombined Globe and Mail parcels beyond the 2.3 million square feet planned for the first parcel acquired (6.47 acres). This secondacquisition is expected to close in the first quarter of 2013.

Capital Management

At December 31, 2012, RioCan’s cash position was $183 million, with available undrawn operating facilities of $330 million.

On September 19, 2012, RioCan issued an aggregate of 6.9 million trust Units at a price of $27.90 per unit for aggregate grossproceeds of $193 million. The aggregate offering was comprised of the issuance of 6.3 million Units at $27.90 per unit for grossproceeds of $175 million, together with the option granted to underwriters, which was exercised in part, for an issuance of anadditional 0.7 million Units for $27.90 per unit for additional gross proceeds of $18 million.

In the fourth quarter of 2012, RioCan arranged secured financing totalling $ 255 million at a weighted average interest rate of2.70% and an average term of 4.1 years of which $ 193 million represented RioCan’s share and $ 62 million represented RioCan’spartners’ share.

During 2012, through its dividend re-investment program (“DRIP”), RioCan raised additional capital of $108 million. For 2012 theTrust’s DRIP ratio, the percentage of Units which elect to participate in the DRIP, was 26.9%.

During 2012, RioCan arranged secured financing totalling $ 969 million at a weighted average interest rate of 2.97% and aweighted average term of 4.4 years of which $ 822 million represented RioCan’s share and $ 147 million represented RioCan’spartners’ share.

During 2012, RioCan obtained $575 million of unsecured financing ($475 million, net of the repayment of the Series H debenture inJune 2012), issuing 3 debentures during the year. The weighted average interest rate and term of the issued debentures was 3.77%and 7 years, respectively.

Net of cash, RioCan’s debt to total assets at December 31, 2012 was 43.5%. (December 31, 2011 – 46.4%)

As at December 31, 2012, the Trust’s debt strategy has resulted in approximately 17.1% of its income properties beingunencumbered by debt on a NLA basis, providing RioCan with access to a pool of assets for obtaining additional secured debt. Thefair value of the unencumbered income property assets as of December 31, 2012 is estimated at approximately $1.2 billion,comprising 66 properties, or 10.25% of the fair value of the Trust’s income properties as compared to 58 properties with a fairvalue of $644 million as at December 31, 2011. In addition to the unencumbered income property assets, the Trust has 13unencumbered properties under development with a fair value of $123 million as at December 31, 2012, bringing the total fairvalue of unencumbered assets to $1.3 billion.

OUTLOOK & STRATEGYRioCan’s strong operating performance and access to capital coupled with its measured US initiative has facilitated its continuedgrowth and positioning as a leading North American REIT with a retail focus. RioCan’s prudent management of its balance sheethas provided it with the ability to take advantage of the growth that accompanies a recovering economic environment throughsame property rental income growth, acquisitions, greenfield development and asset intensification on its own or through strategicjoint venture partnerships. RioCan will continue to seek acquisitions in selected markets, with a focus on properties that meet theTrust’s investment criteria in both Canada and the US. The Trust will also continue to pursue a disciplined approach todevelopment of new properties in Canada with a focus on major urban markets.

The current economy remains stable and while expectations for the economy are cautious, management believes that RioCan iswell positioned with a strong balance sheet and the ability to take advantage of opportunities as they arise. The acquisition market



has become very competitive, with the financing market in Canada and the US generally strong. RioCan continues to have strongaccess to capital, thereby positioning itself to have a competitive advantage relative to its peers. Demand from tenants is steadyand continues to provide upward pressure on rental rates. The expansion of US and international retailers into Canada and therepositioning of Canadian retailers in advance of added competition is creating additional demand for space. Retailers are,however, moving into the Canadian market cautiously and are very selective in their location decisions. RioCan will continue tomonitor both the economy and real estate markets with a view to ensuring adequate access to capital, either by way of equity ordebt, to meet its business requirements and maximize opportunities that may become available to it.

In addition to growth generated by acquisitions, RioCan’s growth is expected to continue to come from organic growth from withinthe portfolio, asset intensification and development in Canada. RioCan is committed to remaining focused on its portfolio in orderto preserve high occupancy levels through the active management and leasing in order to maintain a stable stream of cash flowsfrom long term assets which increase in value. RioCan believes that it is well positioned in the marketplace, due to the depth of itsmanagement team and its size, as well as its stable portfolio, solid tenant base, flexible capital structure, and conservativeborrowing practices.

In 2013:

• Fundamentals in retail real estate in Canada are expected to remain steady. The Canadian market benefits from concentratedretail tenants who generally are financially strong, and from fewer development sites which should create a market in whichRioCan can maintain pricing power as a greater number of tenants compete for prime locations.

• The trend of selected US retailers entering the Canadian market is expected to improve retail fundamentals and drive rentappreciation as they compete for space in desirable locations. In the short-term, however, there may be some uncertainty as tothe impact to existing retailers created by the entry of Target into Canada and increased competition.

• Target’s acquisition of Zellers stores is expected to lead to enhancement of certain of RioCan’s properties. The replacement ofZellers stores with Target is expected to revitalize the centres in which such stores are located and ultimately increaseoccupancy, rents and value through higher NOI and a lower cap rate. Target has assumed the leases in 23 of RioCan’s 34properties in which Zellers was a tenant and is in the early stages of changing over their first tranche of stores. The first trancheof Target store openings is expected to occur in the spring of 2013, with the majority of the Target openings completed by the endof 2013. Of the 11 properties not assumed by Target, Canadian Tire and Walmart each assumed one of the locations. Of the nineremaining stores, four of the store leases expired in January 2013 and the remaining five will be returned to RioCan by way of alease buyout totalling $9.3 million, effective April 1, 2013.

• Leasing of the Zellers stores not taken by Target should in aggregate provide an opportunity for RioCan to generate additionalrental income going forward, as the lease income previously generated by Zellers was considerably below current market rentalrates. RioCan is in advanced talks with a number of tenants to backfill the space. The repositioning of these assets createsopportunity to create significant value in these properties.

• RioCan expects to invest $18 million upgrading Target occupied centers and those centers where a Zellers tenancy is beingbackfilled.

• The Trust expects to realize organic growth from within the portfolio by way of scheduled rental increases in existing leases,additional rental income that can be achieved from positive rental spreads on lease renewals and the potential for positiveabsorption in occupancy due to improving property fundamentals.

• The significant amount of acquisitions that have been completed during the past year will contribute strongly to RioCan’sOperating FFO growth.

• Developments completed during 2012 along with future developments are expected to contribute to FFO growth. Strongfundamentals, growth in certain cities with strong economic and population growth (Greater Toronto Area and Calgary) and newretailers entering Canada will allow RioCan to increase its development activities. RioCan’s joint venture partnership withTanger for the development of outlet shopping centres in Canada and RioCan’s agreement with Allied and Kingsett furtherexpand the potential development and intensification opportunities available across multiple retail formats.

• The Trust will continue to capitalize on the strength of its partnerships in Canada and the US to acquire property, enhanceRioCan’s development projects, and generate additional income for its Unitholders pursuant to arrangements where RioCanearns fees for its services. RioCan’s joint venture with Allied will provide further opportunities to develop, redevelop and intensifyurban properties.

• RioCan will continue its focus on the enclosed mall segment, integrating its recently announced purchases, and looking foradditional opportunities to grow the enclosed mall portfolio.

• Interest expense savings derived from refinancing at current market interest rates are anticipated to continue due to the lowinterest rate environment, which is expected to remain in 2013.

• The Trust will review its portfolio for properties with a view towards selective dispositions of property where appropriate. One ofthe objectives of the Trust is to increase its weighting in the six major markets in Canada.

• RioCan has established a property management platform in the northeastern United States to manage the Trust’s assets thatwere previously managed by Cedar, with effective control as of February 1, 2013. RioCan’s dissolution of its joint venture with



Cedar and the development of its own platform in the US is expected to provide a basis for RioCan to expand its reach in the USand provide the ability to realize additional economies of scale as the portfolio grows.

• RioCan continues to evaluate its strategy in connection with its US investments and explore various opportunities.

Leasing Activities and Shopping Centre Portfolio

RioCan expects to continue to see growth in NOI in 2013 as compared to 2012 due to contractual rental increases, acquisitions, andrental rate increases on lease renewals. For 2013, RioCan expects to see growth in NOI on a same store basis due to contractualrent increases and rental rate increases on lease renewals.

Acquisitions

RioCan has noted that there is currently greater competition for acquisitions as more investors have returned to the market. Whilecapitalization rates on acquisitions declined during 2011 and 2012, interest rates have remained at historically low levels providingfor good leveraged returns and an accretive environment for building RioCan’s portfolio. Management will continue to maintain adisciplined approach to evaluating acquisition opportunities. Management believes that RioCan will be able to take advantage of itsstrength to acquire real estate in both the Canadian and US markets notwithstanding the increased competition for potentialinvestment opportunities.

RioCan’s ongoing joint venture arrangements in Texas have allowed RioCan to team up with strong, experienced and wellestablished partners who possess management platforms that provide RioCan access to transaction opportunities in the USmarket and ensures that RioCan’s US properties within these joint ventures are well managed. In October 2012, RioCan dissolvedits joint venture agreement with Cedar. RioCan established its own property management platform to assume the managementresponsibilities of its assets in the northeastern US on February 1, 2013.

RioCan has currently selected two geographic areas of focus for acquisitions, being the northeastern US and the four major urbanmarkets in Texas (Dallas-Fort Worth, Houston, Austin and San Antonio), which offer a complementary mix of tenants to RioCan’sCanadian portfolio of largely nationally branded tenants. As management gains experience with the US markets and expands itsrelationships, it is possible that RioCan will look to expand into new geographic areas within the US.

Development

RioCan’s development pipeline is expected to add approximately 9.9 million square feet (4.9 million square feet at RioCan’sinterest) of space upon completion over the next five years.

RioCan is committed to property development and redevelopment opportunities and is focused on completing the developmentpipeline currently underway. These developments will be an important component of RioCan’s organic growth strategy. During thethird quarter of 2011, RioCan launched the development of The Stockyards property located at St. Clair Avenue and Weston Road,Toronto, with completion expected in the spring of 2014. Target will be the anchor tenant at the site. RioCan commencedconstruction on its East Hills joint venture development located in Calgary late in the second quarter of 2012. The expansion ofYonge Eglinton Centre in Toronto is expected to commence in early 2013. RioCan added to its urban development property portfolioin 2011 with the acquisition of two urban development sites in Toronto: a land assembly at Bathurst Street and College Street,which is expected to be developed into a 126,000 square foot three storey urban retail building, expecting to commencedevelopment in 2014; and a land assembly at the northeast corner of Yonge and Eglinton, with partners Metropia and Bazis Inc.,which is expected to be developed into a mixed use urban development site is expected to commence construction in 2014. InDecember 2012, RioCan, with partners Allied and Diamond, acquired 6.47 acres in downtown Toronto, currently occupied by theGlobe and Mail newspaper, that will be redeveloped into a mixed use development. RioCan’s joint venture agreements with Tangerand Allied are also expected to provide additional development opportunities in the Canadian market.

Intensification

In addition to RioCan’s various development projects, the Trust contributes to portfolio growth through the intensification ofexisting properties where RioCan has identified opportunities to increase density or add to an existing asset. This intensification ofexisting properties contributes to NOI growth in an efficient manner, leveraging the existing asset base.

In December 2011, the Trust acquired the Sheppard Centre in north Toronto for $218 million on a 50/50 joint venture basis with itspartner KingSett Capital (“KingSett”). Sheppard Centre is a 673,000 square foot urban mixed use centre that contains retail, office,and residential uses with direct access to both the Yonge and Sheppard subway lines. Beyond the current retail, office, andresidential uses, this well located property has the potential for additional intensification through retail expansion and the additionof a larger residential/condominium component.

The proposed transit line along Toronto’s Eglinton Avenue corridor is expected to create a number of development andintensification projects. RioCan is well positioned to take advantage of these opportunities as it currently has five propertieslocated along, or near, this important infrastructure undertaking (including the land assembly at the northeast corner of Yonge andEglinton). The City of Toronto has stated a policy to rezone areas surrounding new transit stops to permit higher densitydevelopments, which will enable RioCan to redevelop its Eglinton properties more quickly, as many of them are located nearanticipated transit stops.

RioCan’s joint venture with Allied also forms a part of RioCan’s strategy to grow the portfolio through urban intensification.



Enclosed Malls

RioCan plans to actively increase its presence in two sectors: enclosed regional malls and urban retail centers, as a means ofleveraging its retail tenant base across the US and Canada.

The 2012 purchase of Georgian Mall along with conditional acquisitions of Oakville Place and a 50% interest in Burlington Mall willcomplement RioCan’s strategic purchases and development of certain retail centers such as Yonge Eglinton Center, SheppardCenter, and the Globe and Mail lands, as RioCan considers these sectors to have strong growth and value creation potential.

Dispositions

As a further means of raising and re-cycling capital, the Trust intends to selectively sell assets as part of a process of activelymanaging the portfolio and a means of increasing the portfolio weighting to the urban markets in Canada.

The Trust has identified fourteen properties that are non-core holdings, that it intends to market for sale. The fair value of theseproperties, at December 31, 2012, is in excess of $645 million and there are mortgage borrowings of approximately $230 millionsecured by these properties. Although the properties will be marketed for sale, there can be no guarantee that any of them will besold.

Capital Management

RioCan’s capital management framework limits the Trust’s maximum indebtedness to 60% of Aggregate Assets as defined by theDeclaration of Trust. RioCan remains focused on preserving a strong balance sheet and continuing to maintain substantialliquidity. Based on the fair market value of its portfolio, its leverage ratio of 43.5% is currently substantially lower than thespecified limit. Furthermore, RioCan believes it has sufficient unencumbered assets and assets with low loan-to-value ratios thatcan be financed and/or refinanced to generate capital to meet its capital requirements and grow its asset base. RioCan’s ability toaccess such financing is dependent on the availability of debt in the market.

RioCan has developed other metrics regarding debt and leverage that are tracked and disclosed on a quarterly basis to helpfacilitate financial statement users’ and stakeholders’ understanding of RioCan’s leverage and its ability to service such leverage.These metrics include net debt to adjusted EBITDA ratio, debt service coverage ratio, interest coverage ratio and fixed chargecoverage ratio, which are outlined in the “Capital Strategy and Resources” section of this MD&A.

While having relatively low debt leverage exposure is important, the quality of the rental revenue available to service the Trust’sdebt and pay distributions to Unitholders is equally important. The Trust strives to reduce its exposure to rental revenue risk in theshopping centre portfolio through geographical diversification, staggered lease maturities, diversification of revenue sourcesresulting from a large tenant base, avoiding dependence on any single tenant by ensuring no individual tenant contributes asignificant percentage of its gross revenue and ensuring a considerable portion of its rental revenue is earned from national andanchor tenants. In addition, RioCan staggers its debt maturities to reduce its exposure to potential volatility in availability of debtand interest rate movements. RioCan is able to access multiple sources of capital including, but not limited to, secured andunsecured debt, preferred units and Units, to provide the Trust with greater flexibility in raising capital and to manage its overallcost of capital.

SIFT Legislation

RioCan currently qualifies as a REIT for purposes of the Income Tax Act (Canada). Accordingly, RioCan continues to be able to flowtaxable income through to unitholders on a tax effective basis. The Canadian government introduced revisions to the SIFTlegislation in December 2012. The Trust does not believe that the revisions, which are generally less restrictive than the existingtax legislation, will impair its ability to continue to qualify as a REIT.

CORPORATE RESPONSIBILITYCorporate responsibility continues to be an area of focus for RioCan as it endeavours to maintain its role as one of Canada’scorporate leaders. RioCan’s corporate responsibility philosophy is based on three cornerstones: Environmental Responsibility,Corporate Philanthropy, and Responsibility to Employees.

Environmental Responsibility

RioCan continuously makes efficiency improvements in its property portfolio and works with its tenants to facilitate their energyconservation needs, which contribute to lowered emissions and reduced energy use. In addition, development projects are viewedthrough the lens of sustainable building with these factors being incorporated wherever possible. RioCan has worked with tenantsas they customize their space to include geothermal heating and cooling, waste water collection and lower carbon footprintinitiatives. RioCan has also taken specific initiatives at its properties to reduce waste, such as the installation of recyclingreceptacles to reduce the amount of waste generated at RioCan properties across Canada. At its head office location, the RioCanYonge Eglinton Centre, RioCan has taken a number of initiatives since acquiring the property to improve the efficiency andenvironmental footprint of the building. The property was BOMA BESt certified in 2009, and RioCan continues to upgrade theproperty’s efficiency. At its own offices, RioCan has undertaken a number of initiatives to reduce paper usage. Recent initiatives toreduce water consumption have reduced water usage by more than a half million litres of water, and aggressive recycling andwaste management programs have resulted in a waste diversion rate of approximately 94% at RioCan Yonge Eglinton Centre, 64%at RioCan Sheppard Centre and 57% at Georgian Mall in 2012.



RioCan also strives to make each of its shopping centres a safe and integral part of its local community. Adequate lighting inparking lots, a clean environment and attentive staff all assist in providing a safe shopping environment in RioCan’s centres.RioCan has installed automated external defibrillators (AEDs) in many of RioCan’s enclosed shopping centres to provideemergency care in the event of a heart attack. An AED is a device that can monitor heart rhythms, and if necessary deliver anelectric shock to restore heart rhythm and potentially save lives.

Corporate Philanthropy

Corporate Philanthropy is a key facet of RioCan’s profile as a good corporate citizen and one that RioCan has always viewed as apriority. RioCan regularly sponsors a number of charitable organizations with a focus towards children’s and medical charities.RioCan views its participation in the community where it does business to be of great importance, whether it is through directfinancial contributions, the donation of space for use by charitable organizations, or through the donation of the time taken by itsemployees through volunteerism across Canada.

RioCan recognizes the importance of its dedication to the development of communities through civic involvement and the fundingof vital programs. RioCan believes that support in fundraising efforts returns long-lasting benefits to society, its employees, andthe Trust. In 2012, RioCan was a proud supporter of several non-profit organizations including the United Way, the Heart & StrokeFoundation, the Baycrest Foundation, the University Health Network, the Hospital for Sick Children, and Mount Sinai Hospital.

Responsibility to Employees

RioCan strives to provide its employees with a safe work environment, free from discrimination and harassment. RioCan has anumber of employee-focused initiatives that are designed to improve workplace satisfaction. These initiatives include developmentand education programs. RioCan also has a comprehensive Code of Conduct for all employees, which includes protections againstharassment and discrimination and provides guidelines for employee conduct including anti-bribery and fair dealing with RioCan’sstakeholders. Furthermore RioCan provides a Whistleblower hotline to provide employees with the ability to anonymously reportviolations of RioCan’s Code of Conduct.

OCCUPANCY AND LEASING PROFILE

RioCan’s committed occupancy increased to 97.4% as at December 31, 2012 as compared to 97.3% at September 30, 2012 butdown from 97.6% at December 31, 2011. The decrease in committed occupancy was due primarily to bankruptcies, such asPremier Fitness, and lease buyouts. Included in this occupancy rate is 711,000 square feet of NLA that has been leased but is notyet paying rent, resulting in an economic occupancy rate of 95.9%, which represents the occupied NLA for which tenants are payingrent. The annualized rental impact once these tenants take occupancy and commence paying rent is approximately $15 million.

Various operating and leasing metrics over the last eight quarters are as follows:

2012 2011

(thousands of square feet,millions of dollars)

Fourthquarter

Thirdquarter

Secondquarter

Firstquarter

Fourthquarter

Thirdquarter

Secondquarter

Firstquarter

Committed occupancy 97.4% 97.3% 97.4% 96.9% 97.6% 97.5% 97.5% 97.4%Economic occupancy 95.9% 95.5% 95.5% 95.7% 96.6% 96.3% 96.3% 96.3%NLA leased but not paying rent 711 855 871 542 466 541 485 470Annualized rental impact $ 15.0 18.0 $ 18.0 $ 12.0 $ 11.0 $ 12.0 $ 13.0 $ 11.7Retention rate – Canada 94.3% 84.8% 89.9% 91.2% 90.5% 88.9% 92.1% 87.1%% increase in average net rent per sq ft –

Canada 18.4% 12.9% 13.4% 10.0% 14.5% 7.2% 13.9% 8.7%Retention rate – US 87.6% 96.3% 84.2% 83.1% 95.7% 89.9% 96.9% 66.1%% increase in average net rent per sq ft – US 5.1% 6.0% 7.3% 7.2% 8.9% 6.4% 9.3% 10.6%Average in place rent $ 15.70 15.85 $ 15.33 $ 15.37 $ 15.14 $ 15.09 $ 14.91 $ 14.92Same store growth (i) – Canada 0.2% 0.0% 1.5% 1.5% 1.9% 1.3% 0.3% 0.6%Same store growth (i) – US 1.9% (0.3%) 1.3% (0.6%) 1.3% 1.0% 1.4% 6.2%

(i) – Refers to the growth in same store on a year over year basis

RioCan has consistently maintained high occupancy rates of between 96.9% and 97.6% over the most recent eight fiscal quarters.



The historical portfolio occupancy rate broken down by property type is as follows:

2012 2011

(in percentages)Fourth

quarterThird

quarterSecondquarter

Firstquarter

Fourthquarter

Thirdquarter

Secondquarter

Firstquarter

Canada

New format retail 98.7 99.0 98.8 98.4 98.8 98.6 98.8 98.8Grocery anchored centre 97.0 97.6 97.0 96.6 97.3 97.3 97.4 97.0Enclosed shopping centre 92.3 91.1 92.2 92.1 93.7 93.8 93.7 93.6Non-grocery anchored centre 97.4 97.8 98.4 94.0 97.1 97.8 97.6 97.8Urban retail 99.4 98.5 98.4 99.2 99.3 99.8 99.6 99.1Office 97.7 98.0 97.9 97.3 97.8 97.2 95.7 95.6

Total Canada 97.2 97.2 97.3 96.7 97.5 97.5 97.5 97.4

United States

New format retail 98.2 98.2 98.1 97.8 98.3 98.1 98.0 99.1Grocery anchored centre 98.3 97.8 97.7 97.7 98.2 97.9 96.8 97.0Non-grocery anchored centre 93.1 93.7 93.7 94.8 95.4 96.4 96.4 96.4Office 98.1 79.7 79.7 80.0 84.2 84.2 80.1 80.1

Total United States 98.1 97.8 97.8 97.5 98.1 97.9 97.4 98.0Total Portfolio 97.4 97.3 97.4 96.9 97.6 97.5 97.5 97.4

Economic Occupancy

At December 31, 2012, RioCan’s committed occupancy rate of the total portfolio is 97.4% which includes 711,000 square feet ofNLA that has been leased but is not yet paying rent, resulting in an economic occupancy rate of 95.9%. A rent commencementtimeline for the NLA which has been leased but is not currently open is as follows:

(in thousands, except percentage amounts) Total Q1 2013 Q2 2013 Q3 2013 Q4 2013

Square feet:NLA commencing 711 320 187 117 87Cumulative NLA commencing 711 320 507 624 711% of NLA commencing 45% 26% 16% 12%Cumulative % total 45% 71% 88% 100%Average net rent:Monthly rent commencing $ 1,290 $ 589 $ 422 $ 173 $ 106Cumulative monthly rent commencing $ 1,290 $ 589 $ 1,011 $ 1,184 $ 1,290% of rent for NLA commencing 46% 33% 13% 8%Cumulative % total rent commencing 46% 78% 92% 100%

A continuity of RioCan’s committed and economic occupancy for the year ended December 31, 2012 is as follows:



Three months ended December 31, 2012

(in thousands of square feet)CommittedOccupancy

EconomicOccupancy

Annualized rentalimpact

(in millions ofdollars)

Leased area, September 30, 2012 46,395 46,395Less: space leased but not paying rent – (855)

Leased area, September 30, 2012 46,395 45,540

Total NLA September 30, 2012 47,681 47,681Occupancy rate, September 30, 2012 97.3% 95.5% $ 18

Q4 Vacancy adjustmentsLess: NLA vacated in Q4 2012 (203) (203)Add: Re-leasing of vacant space 196 196Acquisitions 1,760 1,760Other 32 32

1,785 1,785Q4 Economic occupancy adjustmentsLess: NLA leased in Q4 2012 but not paying rent – (250)Add: Tenant openings in Q4 2012 – 394

– 144

Leased area, December 31, 2012 48,180 47,469

Total NLA, December 31, 2012 49,490 49,490Occupancy rate, December 31, 2012 97.4% 95.9% $ 15



Year ended December 31, 2012

(in thousands of square feet)CommittedOccupancy

EconomicOccupancy

Annualized rentalimpact

(in millions ofdollars)

Leased area, December 31, 2011 44,905 44,905Less: space leased but not paying rent – (465)


Total NLA December 31, 2011 46,002 46,002Occupancy rate, December 31, 2011 97.6% 96.6% $ 12

Vacancy adjustmentsLess: NLA vacated in 2012 (1,246) (1,246)Add: Re-leasing of vacant space 1,083 1,083Acquisitions 3,188 3,188Other 250 250

3,275 3,275Economic occupancy adjustmentsLess: NLA leased in 2012 but not paying rent – (1,207)Other – 11Add: Tenant openings in 2012 – 950

– (246)


Total NLA, December 31, 2012 49,490 49,490Occupancy rate, December 31, 2012 97.4% 95.9% $ 15

During the year committed occupancy decreased from 97.6% to 97.4% and economic occupancy decreased from 96.6% to 95.9%.The net effect of these changes was to increase the annualized rent impact of the difference between economic and committedoccupancy from $12 million to $15 million.



Renewal Leasing

A summary of RioCan’s 2012 and 2011 renewal leasing is as follows:

Renewal Leasing

(in thousands, except per sqft amounts)

2012Full

Year

2012Fourth

quarter

2012Third

quarter

2012Secondquarter

2012First

quarter

2011Full

Year

Square feet renewed:

Canada 3,481 586 879 867 1,149 3,828US 361 29 65 122 145 202Average net rent per square foot:

Canada $ 18.78 $ 21.37 $ 20.25 $ 19.36 $ 15.88 $ 16.04US $ 17.32 $ 24.84 $ 21.33 $ 13.05 $ 17.59 $ 17.73Increase in average net rent per square foot:

Canada $ 2.19 $ 3.32 $ 2.32 $ 2.29 $ 1.44 $ 1.59US $ 1.11 $ 1.21 $ 1.21 $ 0.89 $ 1.18 $ 1.35Percentage increase in average net rent per square foot:

Canada 13.2% 18.4% 12.9% 13.4% 10.0% 11.0%US 6.8% 5.1% 6.0% 7.3% 7.2% 8.2%Retention rate:

Canada 89.7% 94.3% 84.8% 89.9% 91.2% 90.5%US 85.9% 87.6% 96.3% 84.2% 83.1% 96.3%

Including anchor tenants, the components of renewal activity for the three months and year ended December 31, 2012 by country isas follows:

For the three months endedDecember 31, 2012

For the year endedDecember 31, 2012

(in thousands, except per sqft amounts) Canada US Canada US

Renewals at market rental rates:

Square feet renewed 446 23 2,186 177Average net rent per sqft $ 23.82 $ 25.81 $ 20.89 $ 20.25Increase in average net rent per sqft $ 4.02 $ 1.47 $ 3.00 $ 1.28Percentage increase in average net rent per sqft 20.3% 6.0% 16.8% 6.7%

Renewals at fixed rental rate options:

Square feet renewed 140 5 1,295 184Average net rent per sqft $ 13.62 $ 20.35 $ 15.21 $ 14.54Increase in average net rent per sqft $ 1.1 $ – $ 0.83 $ 0.94Percentage increase in average net rent per sqft 8.8% 0.0% 5.8% 6.9%

Total:

Square feet renewed 586 28 3,481 361Average net rent per sqft $ 21.37 $ 24.84 $ 18.78 $ 17.32Increase in average net rent per sqft $ 3.32 $ 1.21 $ 2.19 $ 1.11Percentage increase in average net rent per sqft 18.4% 5.1% 13.2% 6.8%



Tenant Vacancies and Recent Events

RioCan strives to diversify its tenant base by location, by property type, by anchor type and by minimizing the degree of reliance onany single tenant. In the regular course of business, RioCan will, however, encounter tenants that are subject to restructuring,insolvency or bankruptcy activities. In most cases, rental revenue continues to be paid to RioCan by, or on behalf of, the tenant.RioCan actively monitors such situations and, in those cases where vacancies result, RioCan endeavours to replace tenants asquickly as possible at economically similar or better lease terms.

In February 2012, Premier Fitness Clubs Inc. (“Premier”) was placed into receivership by its lender. Premier leased 10 of itslocations from RioCan totalling 291,000 square feet at RioCan’s ownership interest, contributing annual rental revenue of $6.2million, representing a net rent of $14.51 per square foot. The tenant was removed from receivership protection and RioCansubsequently terminated the leases on eight of the ten locations for non-payment of rents. The eight vacant units comprise 278,000square feet (227,000 at RioCan’s ownership interest) – RioCan has completed leases with two national gym operators (LA Fitnessand Goodlife) for six of the locations comprising 211,000 square feet (at 100%) at a weighted average rent of $8.71 per square foot,and is in discussions with a number of retailers for the remaining two locations. The two remaining Premier locations are in goodfinancial standing and continue to operate within the respective shopping centres.

In December 2011, Hart Stores (“Hart”) provided notice in accordance with its Companies’ Creditors Arrangement Act (“CCAA”)filing that, in February 2012, it would disclaim the leases for four of the five locations that it occupied within the RioCan portfolio.The four premises comprise 107,000 square feet (97,000 square feet at RioCan’s interest) and are predominantly located in EasternCanada. RioCan has successfully re-leased two of the locations, totalling 53,000 square feet (43,000 square feet at RioCan’sinterest) at rents slightly lower than the Hart rents. RioCan is in discussions with a number of national tenants for the remainingtwo locations.

Sterling Shoes operates 158 stores in five provinces under five banners and sought court protection from creditors under theCCAA in October 2011. RioCan’s portfolio included six locations totalling 23,050 square feet (14,200 square feet at RioCan’sinterest). In April 2012, Sterling Shoes reported that it entered into an agreement with Town Shoes Limited whereby Town Shoespurchased four of the six locations by way of an assignment of the existing leases. RioCan has leased one of the two locations andis in discussions with a number of national tenants for the remaining location.

In May 2011, Blockbuster Canada was placed into receivership and subsequently disclaimed all twenty-three of their leases withinRioCan’s portfolio (of which six were co-owned with partners). At RioCan’s interest, these locations comprised approximately100,000 square feet and contributed annually approximately $2.9 million of rental revenue. Of these twenty-three disclaimedleases, twenty-two locations comprising 112,000 square feet (98,000 at RioCan’s ownership interest) have been re-leased at anaverage net rent of $24.06 per square foot, as compared to the rent previously paid by Blockbuster of $20.68 per square foot.RioCan has submitted offers to lease with national tenants on the remaining space.

2012 Vacancy Activity

For the three months ended December 31,(thousands of square feet)

2012 2011

TotalRioCan’s

Share TotalRioCan’s

Share

Total vacancies in current period (i) 219 166 187 1662012 vacancies re-leased in current period 225 196 129 112

(i) Excluding lease buyouts

For the year ended December 31,(thousands of square feet)

2012 2011

TotalRioCan’s

Share TotalRioCan’s

Share

Total vacancies in current period (i) 1,251 1,022 911 7792012 vacancies re-leased to date in 2012 757 669 478 404

(i) Excluding lease buyouts

In the fourth quarter of 2012, RioCan experienced vacancies excluding lease buyouts, of approximately 219,000 square feet, ofwhich RioCan’s interest was 166,000 square feet. The average gross rent on its ownership interest was $24.81 per square foot.

During the three months ended December 31, 2012, approximately 225,000 square feet of space vacated in 2012 has been leased tonew tenants, of which RioCan’s interest was 196,000 square feet, at an average gross rent of $21.22 per square foot.

During the year ended December 31, 2012, RioCan experienced vacancies of approximately 1.3 million square feet, excluding leasebuyouts, of which RioCan’s interest was 1.0 million square feet. The average gross rent on RioCan’s ownership interest was $23.16per square foot. As at December 31, 2012, approximately 757,000 square feet of space vacated in 2012 has been leased to newtenants, of which RioCan’s interest was 669,000 square feet, at an average gross rent of $21.22 per square foot.



In the fourth quarter of 2012, tenant vacancies for which lease cancellation fees of $4.3 million (of which $3.3 million relates toZellers as discussed below) were recognized by RioCan totalled 44,000 square feet of vacated NLA (38,000 square feet at RioCan’sinterest) at an average net rent of $16.23 per square foot ($14.98 per square foot at RioCan’s interest).

In the third quarter of 2012, RioCan received a lease cancellation fee of $3.8 million in respect of 70,000 square feet of space atKennedy Commons, in Toronto. The space is being resized to approximately 83,000 square feet, 69,000 of which has been leased toLA Fitness and Michael’s. The property manager is currently negotiating with a national tenant for the remaining 14,000 squarefoot box.

In 2012, tenant vacancies for which lease cancellation fees of $13.3 million were recognized by RioCan totalled 715,000 square feetof vacated NLA (667,000 square feet at RioCan’s interest) at an average net rent of $10.68 per square foot ($9.47 per square foot atRioCan’s interest). The lease cancellation fees include five months of amortization of the $9.3 million termination fee payable fromZellers on five locations comprising 466,000 square feet. This fee will be recognized in income over the period from July 22, 2012 toApril 1, 2013, which is the period during which Zellers will continue to lease and pay rent on the five stores to which the terminationfee applies. The fee will be paid to RioCan on April 1, 2013.

To date, of the vacant space that arose due to lease buyouts in 2012, 270,000 square feet (228,000 square feet at RioCan’s interest)have been re-leased at an average net rent of $15.17 per square foot ($13.65 per square foot at RioCan’s interest).

New Leasing

Canadian Portfolio

For the quarter ended December 31, 2012, approximately 507,000 square feet of space (including 78,000 square feet pertaining tospace leased at development sites) was leased at an average net rent of $ 15.30 per square foot compared to approximately342,000 square feet of space that was leased at an average net rent of $ 21.74 per square foot during the fourth quarter of 2011.

Approximately 1.7 million square feet (including 185,000 square feet pertaining to space leased at development sites) of space wasleased in the Canadian portfolio during the year ended December 31, 2012 at an average net rent of $ 15.95 per square footcompared to approximately 1.5 million square feet of space that was leased at an average net rent of $ 19.42 per square footduring the year ended December 31, 2011.

A summary of RioCan’s 2012 and 2011 new leasing on the existing Canadian portfolio by property type is as follows:

New Leasing

(in thousands, except per sqft amounts)2012

Full Year

2012Fourth

quarter

2012Third

quarter

2012Secondquarter

2012First

quarter

2011Full

Year

Square feet leased:

New format retail 516 109 108 196 103 587Grocery anchored centre 293 96 79 53 65 277Enclosed shopping centre 638 266 67 177 128 359Non-grocery anchored centre 165 5 11 130 19 66Urban retail 51 17 19 7 8 122Office 59 14 14 22 9 121

Total 1,722 507 298 585 332 1,532

Average net rent per square foot:

New format retail $ 20.33 $ 24.88 $ 17.57 $ 19.89 $ 19.27 $ 21.65Grocery anchored centre 15.50 11.77 18.77 18.45 14.58 16.72Enclosed shopping centre 13.11 11.88 23.22 11.63 12.40 15.79Non-grocery anchored centre 11.27 9.19 23.70 9.66 15.49 16.56Urban retail 27.98 28.70 18.00 39.39 38.87 31.64Office 13.19 15.72 14.32 10.75 13.57 14.70

Total $ 15.95 $ 15.30 $ 19.45 $ 14.88 $ 15.84 $ 19.42



In addition to the new leasing, RioCan continues to add square footage to its portfolio through greenfield development. During theyear ended December 31, 2012, 225,500 square feet of greenfield developments at an average net rent of $16.50 per square footwere completed, compared to 279,000 square feet at an average net rent of $24.21 per square foot during the year endedDecember 31, 2011.

During the three months ended December 31, 2012, 33,000 square feet of greenfield developments were completed compared to91,000 square feet during the three months ended December 31, 2011.

US portfolio

During the fourth quarter of 2012, RioCan achieved approximately 26,000 square feet of new leasing in the US at an average rate of$ 22.40 per square foot. During the year ended December 31, 2012, RioCan achieved approximately 182,000 square feet of newleasing in the US at an average rate of $ 18.48 per square foot.

A summary of RioCan’s 2012 and 2011 new leasing on the existing US portfolio by property type is as follows:New Leasing

2012 2012 2012 2012 2012 2011

(in thousands, except per sqft amounts)Full

YearFourth

quarterThird


Firstquarter

FullYear

Square feet leased:New format retail 139 12 57 45 25 69Grocery anchored centre 43 14 3 12 14 39Office – – – – – 4

Total 182 26 60 57 39 112

Average net rent per square foot (US dollars):New format retail $ 19.15 25.97 $ 16.25 $ 18.16 $ 24.59 $ 20.76Grocery anchored centre 16.33 19.43 17.00 16.69 12.88 18.57Office – – – – – 20.37

Total $ 18.48 22.40 $ 16.28 $ 17.85 $ 20.29 $ 19.88

Lease Expiries

RioCan’s lease expiries for the Canadian portfolio, at RioCan’s interest, by property type for the next five years are as follows:

Lease expiries for the years ending

(in thousands, except per sqft and percentage amounts)Portfolio

NLA (i) 2013 2014 2015 2016 2017

Square feet:

New format retail 19,891 1,182 1,573 1,997 2,151 1,853Grocery anchored centre 8,262 651 1,195 1,008 1,248 1,372Enclosed shopping centre 7,007 717 687 774 959 506Non-grocery anchored centre 2,164 193 132 309 189 103Urban retail 1,555 223 398 89 95 140Office 1,795 130 131 83 199 134

Total 40,674 3,096 4,116 4,260 4,841 4,108

Square feet expiring/Portfolio NLA 7.6% 10.1% 10.5% 11.9% 10.1%

Average net rent per occupied square foot:

New format retail $ 16.87 $ 19.32 $ 18.00 $ 17.53 $ 17.59 $ 18.63Grocery anchored centre 15.21 16.99 14.11 15.18 14.95 14.25Enclosed shopping centre 14.76 17.60 16.44 13.77 17.18 20.12Non-grocery anchored centre 11.85 15.63 17.20 13.35 16.20 20.49Urban retail 24.95 18.71 16.73 16.70 22.65 31.07Office 12.96 12.96 13.64 13.14 15.44 15.64

Total average net rent per square foot $ 16.07 $ 17.89 $ 16.33 $ 15.89 $ 16.78 $ 17.72

(i) Represents RioCan’s proportionate ownership share.



RioCan’s lease expiries for the US portfolio, at RioCan’s interest, by property type for the next five years are as follows:

Lease expiries for the years ending

(in thousands, except per sqft and percentage amounts)Portfolio

NLA (i) 2013 2014 2015 2016 2017

Square feet:

New format retail 6,143 335 469 377 188 434Grocery anchored centre 2,470 71 193 69 264 161Non-grocery anchored centre 204 14 40 15 1 15

Total 8,817 420 702 461 453 610

Square feet expiring/Portfolio NLA 4.8% 8.0% 5.2% 5.1% 6.9%

Average net rent per occupied square foot (US dollars):

New format retail $ 14.24 $ 15.81 $ 15.62 $ 17.55 $ 21.93 $ 17.70Grocery anchored centre 13.65 21.53 13.28 18.09 12.27 16.71Non-grocery anchored centre 11.60 22.77 9.50 20.52 24.75 10.08

Total average net rent per square foot $ 14.02 $ 17.00 $ 14.63 $ 17.73 $ 16.31 $ 17.25

(i) Represents RioCan’s proportionate ownership share.

The components of RioCan’s Canadian and US lease expiries for 2013 by property type are as follows:

(in thousands, except per sqft amounts) Total

Newformat

retail

Groceryanchored

centre

Enclosedshopping

centre

Non-grocery

anchoredcentre

Urbanretail Office

2013 expiries at market rental rates:

Square feet expiring 2,630 1,102 583 564 168 113 100Average net rent per sqft $ 18.84 $19.23 $ 18.16 $ 19.20 $ 16.15 $ 24.99 $ 13.92

2013 expiries with fixed rental rate options:

Square feet expiring 886 415 139 153 39 110 30Average in-place net rent per sqft $ 14.65 $16.72 $ 14.38 $ 11.65 $ 15.93 $ 12.21 $ 9.70Average renewal net rent per sqft $ 15.44 $17.62 $ 15.58 $ 12.19 $ 16.15 $ 12.80 $ 9.77Increase in average net rent per sqft $ 0.79 $ 0.90 $ 1.20 $ 0.54 $ 0.22 $ 0.59 $ 0.07

Total

Square feet expiring 3,516 1,517 722 717 207 223 130Average net rent per sqft $ 17.78 $18.54 $ 17.43 $ 17.60 $ 16.10 $ 18.71 $ 12.96

For the quarter ended December 31, 2012, retention rate in Canada, or the percentage of tenants who have renewed their leasesduring the period, was 94.3%, an increase of 9.5% from the quarter ended September 30, 2012 (84.8%).

In the US, the retention rate decreased during the fourth quarter of 2012, from 96.3% to 87.6% as at December 31, 2012.

Contractual Rent Increases

Certain of RioCan’s leases allow for periodic increases in rates during the term of the leases which contributed to growth in samestore NOI. Contractual rent increases, including rent increases at time of renewal, in each year for the next five years are asfollows:

For the years ending

(in millions) 2013 2014 2015 2016 2017

Net increase in contractual rent receipts $ 6 $ 5 $ 4 $ 4 $ 3



RESULTS OF OPERATIONS

The components of RioCan’s net earnings attributable to Unitholders for each respective period are as follows:

(thousands of dollars, except per Unit amounts)

Three months endedDecember 31, Increase

(decrease)

Year endedDecember 31, Increase

(decrease)2012 2011 2012 2011

Rental revenue $ 286,945 $ 253,688 $ 1,090,705 $ 947,465Property operating costs 99,407 86,471 377,253 325,267

Net operating income 187,538 167,217 12% 713,452 622,198 15%Fees and other income 3,626 10,803 16,439 27,631Transaction gain 7,290 – 8,319 –Interest income 3,218 3,193 11,968 13,361

201,672 181,213 11% 750,178 663,190 13%Interest expense 61,828 62,310 246,374 240,269Expense for early retirement of

debentures – 4,059 – 31,276General and administrative expense 15,390 16,720 40,710 37,593Impairment of investment – – 11,999 –Foreign exchange (gain) loss 11 19 (84) 112Demolition costs 813 214 2,210 1,552Aborted deal costs 50 28 1,280 351Acquisition transaction costs 1,065 203 1,795 450

Earnings before deferred income taxexpense and fair value gains 122,515 97,660 25% 445,894 351,587 27%

Fair value gains 348,304 145,839 912,682 533,221Current income tax expense (150) (80) (521) (198)Deferred income tax income (expense) 750 – 750 (700)

Net earnings $ 471,419 $ 243,419 94% $ 1,358,805 $ 883,910 54%

Net earnings attributable to Unitholders $ 468,200 $ 240,973 94% $ 1,344,220 $ 873,311 54%

Net earnings attributable to non-controlling interests $ 3,219 $ 2,446 32% $ 14,585 $ 10,599 38%

Net earnings per Unit attributable tocommon Unitholders – basic $ 1.55 $ 0.87 78% $ 4.59 $ 3.26 41%

Net earnings per Unit attributable tocommon Unitholders – diluted $ 1.55 $ 0.87 78% $ 4.57 $ 3.25 41%

Weighted average number of commonUnits outstanding – basic (in thousands) 299,411 274,012 9% 289,950 265,583 9%

Weighted average number of commonUnits outstanding – diluted (in thousands) 300,691 275,304 9% 291,298 267,017 9%



The following tables provide an analysis of RioCan’s FFO, Operating FFO and AFFO for the three months and years endedDecember 31, 2012 and 2011.

(thousands of dollars, except per Unit amounts and other data)Three months ended December 31, 2012 2011

OperatingFFO

Transactiongain (loss)*

Development/redevelopment

activities (ii) FFOOperating

FFO


activities andother FFO

OperatingFFO

Increase

Net operating income $ 187,764 $ – $ (226) $ 187,538 $ 167,430 $ (213) $ 167,217Other revenue 7,215 6,769 – 13,984 13,996 – 13,996

194,979 6,769 (226) 201,522 181,426 (213) 181,213Interest expense 59,829 – 1,999 61,828 60,909 1,401 62,310General and administrative 15,390 – – 15,390 16,800 – 16,800Demolition costs – – 813 813 – 214 214Preferred unit distributions 3,397 – – 3,397 2,237 – 2,237Non – controlling interest 752 – – 752 1,504 – 1,504Aborted deal costs 50 – – 50 28 – 28Expense for early retirement of debentures – – – – – – 4,059

79,418 – 2,812 82,230 81,478 1,615 87,152

Operating FFO $ 115,561 $ 99,948 16%Other activities $ 6,769 $ (3,038) $ (1,828)FFO (i) $ 119,292 $ 94,061Operating FFO per Unit $ 0.39 $ 0.36 8%FFO per Unit $ 0.40 $ 0.34FFO, excluding expenses for early

retirement of debentures $ 119,292 $ 98,120FFO per Unit, excluding expenses for early

retirement of debentures $ 0.40 $ 0.36

Adjustments to bring Operating FFO to AFFO (iii):

Add back/(deduct):Deduction of rents recorded on a straight-

line basis (3,084) (2,547)Non-cash unit based compensation expense 1,426 1,120Normalized productive capacity

maintenance cash expenditurescapitalized:

Leasing commissions and tenantimprovements (4,750) (4,000)

Maintenance capital expendituresrecoverable from tenants (2,750) (3,250)

Maintenance capital expenditures notrecoverable from tenants (1,500) (750)

AFFO $ 104,903 $ 90,521 16%AFFO per Unit $ 0.35 $ 0.33 6%Weighted average number of common Units

outstanding (in thousands) 299,411 274,012

Distribution Coverage Ratios:Cash distributions per Unit $ 0.345 $ 0.345Distributions paid as a percentage of

Operating FFO 88.5% 95.8%Distributions as a percentage of AFFO 98.6% 104.5%Distributions paid net of DRIP, per Unit $ 0.24 $ 0.27Distributions net of DRIP as a percentage

of AFFO 68.6% 81.8%

* – Transaction gains (losses) are presented net of tax(i) FFO is generally the same as IFRS net earnings other than excluding changes in the fair values of investment properties, deferred income

taxes, acquisition transaction costs and deducting preferred unit distributions.(ii) The Trust has added back certain costs not capitalized during the development period for accounting purposes that, in management’s view,

forms part of the cost of its development projects.(iii) AFFO is calculated by adjusting Operating FFO for straight-line rent adjustments, non-cash compensation expenses, costs for capital

expenditures and leasing costs for maintaining shopping centre infrastructure and current lease revenues (“productive capacitymaintenance”). In addition, non-recurring costs that impact operating cash flow may be adjusted. FFO amounts related to transactions gainsand losses and development/redevelopment are also excluded from AFFO.



(thousands of dollars, except per Unit amounts and other data)

Year ended December 31, 2012 2011

OperatingFFO

Transactiongain (loss)*


activities (ii) FFOOperating

FFO


activities andother FFO

OperatingFFO

Increase

Net operating income $ 714,223 $ – $ (771) $ 713,452 $ 623,375 $ (1,177) $ 622,198Other revenue 28,407 7,798 – 36,205 40,992 – 40,992

742,630 7,798 (771) 749,657 664,367 (1,177) 663,190

Interest expense 240,145 – 6,229 246,374 233,811 6,458 240,269General and administrative 40,710 – – 40,710 37,791 – 37,791Demolition costs – – 2,210 2,210 – 1,552 1,552Preferred unit distributions 13,589 – – 13,589 6,669 – 6,669Non–controlling interest 6,591 – – 6,591 5,411 – 5,411Aborted deal costs 1,280 – – 1,280 351 – 351Impairment charge-Cedar shares – 11,999 – 11,999 – – –

Expense for early retirement ofdebentures – – – – – – 31,276

302,315 11,999 8,439 322,753 284,033 8,010 323,319

Operating FFO $ 440,315 $ 380,334 16%

Other activities $ (4,201) $ (9,210) $ (9,187)

FFO (i) $ 426,904 $ 339,871

Operating FFO per Unit $ 1.52 $ 1.43 6%

FFO per Unit $ 1.47 $ 1.28

FFO, excluding expenses for earlyretirement of debentures $ 426,904 $ 371,147

FFO per Unit, excluding expenses for earlyretirement of debentures $ 1.47 $ 1.40

Adjustments to bring Operating FFO to AFFO (iii):

Add back/(deduct):Deduction of rents recorded on a straight–

line basis (7,549) (9,527)Non-cash unit based compensation

expense 5,171 3,500Normalized productive capacity

maintenance cash expenditurescapitalized:

Leasing commissions and tenantimprovements (19,000) (16,000)

Maintenance capital expendituresrecoverable from tenants (11,000) (13,000)

Maintenance capital expenditures notrecoverable from tenants (6,000) (3,000)

AFFO $ 401,937 $ 342,307 17%

AFFO per Unit $ 1.39 $ 1.29 8%

Weighted average number of commonUnits outstanding (in thousands) 289,950 265,583

Distribution Coverage Ratios:

Cash distributions per Unit $ 1.38 $ 1.38

Distributions paid as a percentage ofOperating FFO 90.8% 96.5%

Distributions as a percentage of AFFO 99.3% 107.0%

Distributions paid net of DRIP, per Unit $ 1.01 $ 1.07Distributions net of DRIP as a percentage

of AFFO 72.7% 82.9%

* – Transaction gains (losses) are presented net of tax(i) FFO is generally the same as IFRS net earnings other than changes in the fair values of investment properties, deferred income taxes,

acquisition transaction costs and deducting preferred unit distributions.(ii) The Trust has added back certain costs not capitalized during the development period for accounting purposes that, in management’s view,

forms part of the cost of its development projects.



(iii) AFFO is calculated by adjusting Operating FFO for straight-line rent adjustments, non-cash compensation expenses, costs for capitalexpenditures and leasing costs for maintaining shopping centre infrastructure and current lease revenues (“productive capacitymaintenance”). In addition, non-recurring costs that impact operating cash flow may be adjusted. FFO amounts related to transactions gainsand losses and development/redevelopment are also excluded from AFFO.

A reconciliation of IFRS net earnings to FFO is as follows:

(thousands of dollars, except per Unit amounts)

Three months endedDecember 31,

Increase(decrease)

Year endedDecember 31,

Increase(decrease)2012 2011 2012 2011

Net earnings attributable to unitholders’ $ 468,200 $ 240,973 94% $ 1,344,220 $ 873,311 54%Add back/(Deduct):Fair value gains (348,304) (145,839) (912,682) (533,221)Non controlling interest relating to fair value gains 2,467 942 7,994 5,188Deferred income tax (income) expense (750) – (750) 700Acquisition transaction costs 1,065 203 1,795 450Preferred unit distributions (3,397) (2,237) (13,589) (6,669)Foreign exchange (gain) loss 11 19 (84) 112FFO $ 119,292 $ 94,061 27% $ 426,904 $ 339,871 26%

FFO per Unit $ 0.40 $ 0.34 18% $ 1.47 $ 1.28 15%

Weighted average number of common Units outstanding 299,411 274,012 289,950 265,583

Net Operating Income

Net operating income (“NOI”) is defined by RioCan as rental revenue from income properties less property operating costs.RioCan’s method of calculating NOI may differ from other issuers’ methods and, accordingly, may not be comparable to NOIreported by other issuers.

Rental revenue includes all amounts earned from tenants related to lease agreements, including property tax and operating costrecoveries, to the extent recoverable under tenant leases. Amounts payable by tenants to terminate their lease prior to thecontractual expiry date (“lease cancellation fees”) are included in rental revenue.

Consolidated NOI for the three months and years ended December 31, 2012 and 2011 is as follows:

(thousands of dollars)


(decrease)


(decrease)2012 2011 2012 2011

Base rent $ 188,045 $ 167,821 12% $ 717,553 $ 627,335 14%Percentage rent 1,936 1,554 25% 6,011 3,991 51%Rents subject to tenants’ sales thresholds 1,198 1,309 (8%) 4,778 5,269 (9%)Property taxes and operating cost recoveries 91,478 82,403 11% 349,113 309,515 13%

282,657 253,087 12% 1,077,455 946,110 14%Lease cancellation fees 4,290 601 nm 13,252 1,356 nm

Rental revenue 286,947 253,688 13% 1,090,707 947,466 15%

Recoverable property taxes and operating costs 96,093 84,171 14% 364,559 316,371 15%

Non-recoverable property operating and siteadministration costs 3,314 2,300 44% 12,694 8,896 43%

Property operating costs 99,407 86,471 15% 377,253 325,267 16%

NOI $ 187,540 $ 167,217 12% $ 713,454 $ 622,199 15%

NOI as a percentage of rental revenue (excluding theimpact of lease cancellation fees) 65% 66% (1%) 65% 66% (1%)

“nm” – not meaningful.

The amount of property taxes and operating costs that can be recovered from tenants is impacted by property vacancy and fixedcost recovery tenancies.

The NOI margin for the three months and year ended December 31, 2012 remained consistent when compared to the same periodin 2011.



RioCan’s proportionate interest in NOI is as follows:


Three months endedDecember 31,

Increase

Year endedDecember 31,

Increase2012 2011 2012 2011

Canadian Portfolio $ 159,926 $ 145,030 10% $ 606,909 $ 553,918 10%US Portfolio 26,477 19,657 35% 96,301 59,111 63%

RioCan’s proportionate interest in NOI 186,403 164,687 13% 703,210 613,029 15%Non-controlling interest 1,137 2,530 nm 10,244 9,170 nm

NOI $ 187,540 $ 167,217 12% $ 713,454 $ 622,199 15%


Canadian Portfolio

Canadian portfolio NOI for the three months and years ended December 31, 2012 and 2011 is as follows:


(decrease)


(decrease)(thousands of dollars) 2012 2011 2012 2011

Base rent $ 158,522 $ 143,867 10% $ 603,515 $ 554,606 9%Percentage rent 1,803 1,282 41% 5,278 3,719 42%Rents subject to tenants’ sales thresholds 1,198 1,309 (8%) 4,778 5,269 (9%)Property taxes and operating cost recoveries 82,269 75,961 8% 317,587 290,100 9%

243,792 222,419 10% 931,158 853,694 9%Lease cancellation fees 4,290 601 nm 13,252 1,356 nm

Rental revenue 248,082 223,020 11% 944,410 855,050 10%

Recoverable property taxes and operating costs 85,188 76,033 12% 326,169 293,357 11%Non-recoverable property operating and site

administration costs 2,968 1,957 52% 11,332 7,775 46%


NOI $ 159,926 $ 145,030 10% $ 606,909 $ 553,918 10%

NOI as a percentage of rental revenue (excludingthe impact of lease cancellation fees) 64% 65% (1%) 64% 65% (2%)




Same store and same property NOI for the three months and years ended December 31, 2012 and 2011 for RioCan’s Canadianportfolio are as follows:


(decrease)



Net Operating Income:Same store (i) $ 138,485 $ 138,246 0.2% $ 536,705 $ 532,173 0.9%Land use intensification 739 673 nm 1,992 1,322 nm

Same properties (ii) 139,224 138,919 0.2% 538,697 533,495 1.0%Acquisitions 10,675 – nm 35,353 – nmDispositions – 16 nm – 1 nmGreenfield development 3,576 3,655 (2.2%) 15,441 11,577 33.4%

NOI before adjustments 153,475 142,590 7.6% 589,491 545,073 8.1%Lease cancellation fees 4,290 601 nm 13,139 1,355 nmStraight-lining of rents 2,161 1,839 17.5% 4,279 7,489 (42.9%)

NOI $ 159,926 $ 145,030 10.3% $ 606,909 $ 553,917 9.6%


(i) Same store refers to those income properties that were owned by RioCan and had consistent leasable area in both periods.(ii) Same properties refer to those income properties that were owned by RioCan throughout both periods.

The change in same store NOI is the result of a combination of factors: contractual rent increases, lease renewals and netabsorption of existing space in the portfolio, which is a product of vacancies and the resultant new leasing.

Same store and same property NOI remained relatively flat, both increasing 0.2% during the three months ended December 31,2012 as compared to the three months ended December 31, 2011, primarily due to the following:

• increased NOI as a result of new leasing of approximately $3.3 million;• renewals and rent steps increased NOI by $ 1.6 million;• adjustments related to tenant recoverable expenses increased NOI by $0.4 million; and• re-leasing of space vacated due to bankruptcy or lease cancellations increased NOI by $2.3 million; partially offset by• reduced NOI due to vacancy caused by normal course turnover of $4.3 million;• unanticipated vacancies reduced NOI by $1.2 million; and• NOI was reduced by $0.4 million from lease buyouts that have occurred in the last 12 months.

During the three months ended December 31, 2012, 33,000 square feet of greenfield developments were completed as comparedto 91,000 square feet during the same period of 2011.

For the year ended December 31, 2012 same store and same property NOI increased by 0.9% and 1.0%, respectively, whencompared to 2011.

The following items were the major components of same store growth:

• increased NOI as a result of new leasing of approximately $15.0 million;• renewals and rent steps increased NOI by $6.0 million;• re-leasing of space vacated due to bankruptcy or lease cancellations increased NOI by $5.7 million; partially offset by• reduced NOI due to vacancy caused by normal course turnover of $14.0 million;• unanticipated vacancies reduced NOI by $5.4 million;• NOI was reduced by $1.5 million from lease buyouts that have occurred in the last 12 months; and• adjustments related to tenant recoverable expenses increased NOI by $0.3 million.



Same store and same property NOI for the Canadian portfolio on a consecutive quarter-over-quarter basis is as follows:

(thousands of dollars)Three months ended

December 31,2012

September 30,2012

Increase(decrease)

Same store (i) $ 146,696 $ 143,996 1.9%Land use intensification 600 856 (29.9%)

Same properties (ii) 147,296 144,852 1.7%Acquisitions 4,451 – nmDispositions – 24 nmGreenfield development 1,728 2,219 (22.1%)

NOI before adjustments 153,475 147,095 4.3%Lease cancellation fees 4,290 7,357 nmStraight-lining of rents 2,161 673

NOI $ 159,926 $ 155,125 3.1%

“nm” – not meaningful.(i) Same store refers to those income properties that were owned by RioCan and had consistent leasable area in both periods.(ii) Same properties refer to those income properties that were owned by RioCan throughout both periods.

Same store NOI increased sequentially by 1.9% (same property increased by 1.7%) during the fourth quarter of 2012 as comparedto the third quarter of 2012, primarily due to the following:

• increased NOI as a result of new leasing of approximately $1.9 million;• renewals and rent steps increased NOI by $0.5 million;• adjustments related to tenant recoverable expenses increased NOI by $0.3 million; and• re-leasing of space vacated due to bankruptcy or lease cancellations, increased NOI by $0.4 million; partially offset by• reduced NOI due to vacancy caused by normal course turnover of $1.4 million.

US Portfolio

US portfolio NOI for the three months and years ended December 31, 2012 and 2011 is as follows:


(decrease)



Base rent $ 28,401 $ 21,482 32% $ 103,664 $ 63,196 64%Property taxes and operating cost recoveries 8,821 5,758 53% 28,703 16,885 70%

Rental revenue 37,222 27,240 37% 132,367 80,081 65%

Recoverable property taxes and operating costs 10,416 7,289 43% 34,881 20,037 74%Non-recoverable property operating and site

administration costs 329 294 12% 1,185 933 27%


NOI $ 26,477 $ 19,657 35% $ 96,301 $ 59,111 63%

NOI as a percentage of rental revenue 71% 72% (1%) 73% 74% (1%)



Same store and same property NOI for the three months and years ended December 31, 2012 and 2011 for RioCan’s US portfolioare as follows (at RioCan’s interest):

For the three months endedDecember 31, Increase

(decrease)

For the year endedDecember 31, Increase


Base rent – US$ $ 19,287 $ 18,969 1.7% $ 60,836 $ 60,368 0.8%Property tax and operating cost recoveries – US$ 6,183 5,563 11.1% 16,741 16,693 0.3%Other – US$ 175 222 nm 460 358 nm

Rental revenue – US$ 25,645 24,754 3.6% 78,037 77,419 0.8%Property operating costs–US$ 7,651 7,095 7.8% 21,171 20,855 1.5%

Same store and same properties (i) (ii) – US$ 17,994 17,659 1.9% 56,866 56,564 0.5%Foreign currency translation adjustment (168) 438 nm 71 (400) nm

Same store and same properties (i) (ii) – CDN$ 17,826 18,097 (1.5%) 56,937 56,164 1.4%Acquisitions 7,727 12 nm 36,094 51 nm

NOI before adjustments 25,553 18,109 41.1% 93,031 56,215 65.5%Dispositions – 840 nm – – nmLease cancellation fee – – nm – 856 nmStraight-lining of rents 924 708 nm 3,270 2,040 nm

NOI $ 26,477 $ 19,657 34.7% $ 96,301 $ 59,111 62.9%



Same store and same property NOI increased 1.9% during the three months ended December 31, 2012 as compared to the sameperiod in 2011, primarily due to increased NOI as a result of new leasing, increase in renewals upon expiry and rent steps ofapproximately $0.3 million.

Same store and same properties NOI increased 0.5% during the year ended December 31, 2012 as compared to the same period in2011, primarily due to the following:

• increased NOI as a result of new leasing, increase in renewals upon expiry, and rent steps of approximately $0.5 million; offsetby

• adjustments related to the 2012 realty tax assessment in Texas and the corresponding shortfall associated with vacancies ofapproximately $0.2 million.



Same store and same property NOI for the US portfolio on a sequential quarter-over-quarter basis is as follows (at RioCan’sinterest):

(thousands of dollars)Three months ended

December 31,2012

September 30,2012

Increase(decrease)

Base rent – US$ $ 23,973 $ 23,877 –Property tax and operating cost recoveries – US$ 7,897 6,809 16%Other – US$ 270 218 nm

Rental revenue – US$ 32,140 30,904 4%Property operating costs – US$ 9,724 8,537 14%

Same store and same properties (i) (ii) – US$ 22,416 22,367 0.2%Foreign currency translation (208) 27 nm

Same store and same properties (i) (ii) – CDN$ 22,208 22,394 (1%)Acquisitions 3,345 13 nm

NOI before adjustments 25,553 22,407 14%Dispositions – 917Lease cancellation fees – – nmStraight-lining of rents 924 647 nm

NOI $ 26,477 $ 23,971 10%



Same store and same property NOI for the fourth quarter of 2012 increased by 0.2% when compared to the third quarter of 2012due to the following:

• increased NOI as a result of new leasing, increase in renewals upon expiry, and rent steps of approximately $0.1 million; offsetby

• adjustments related to the 2012 realty tax assessment in Texas and the corresponding shortfall associated with vacancies ofapproximately $50,000.

Other Revenue

Fees and Other Income

RioCan holds certain of its interests in various real estate investments through joint arrangements and investments accounted forby the equity method. Generally, RioCan provides asset, property management, development and financing services for theCanadian co-ownerships and investments for which the Trust earns market based fees (“Fees”).

The significant sources of fees and other income are as follows:



(decrease)


(decrease)2012 2011 2012 2011

Fees and other income $ 3,154 $ 9,932 $ 14,547 $ 24,278Dividends earned on Cedar shares 472 871 1,892 3,353

Fees and other income before transaction gain $ 3,626 $ 10,803 (66%) $ 16,439 $ 27,631 (41%)Transaction gain 7,290 – 8,319 –

$ 10,916 $ 10,803 1% $ 24,758 $ 27,631 (10%)

During the year ended December 31, 2012 fees earned decreased as compared to 2011, primarily due to decreased leasing,financing and development activities with joint venture partners.

The Cedar dividends are earned from the Cedar common shares held by the Trust. The decrease in dividends for the currentquarter and year to date is due to the reduced quarterly dividend rate of US$0.05 per share declared in 2012 compared to US$0.09per share in 2011. On February 7, 2013, RioCan disposed of all its shares in Cedar for proceeds of US$48 million.



The transaction gains of $7.3 million were primarily the result of proceeds from the sale of a Toronto development property in theWhitecastle New Urban Fund in which RioCan has an interest and the sale of a portfolio investment.

Interest Income

Interest income, for the three months ended December 31, 2012, was $3.2 million, which is consistent to the same period in2011. For the year ended December 31, 2012, interest income was $12.0 million, compared to $13.4 million for the year endedDecember 31, 2011. In the second quarter of 2011, there was a $1.6 million interest adjustment, which resulted from therenegotiation of the terms of an underlying mortgage receivable. Excluding the impact of this adjustment, interest income for 2012increased $0.2 million compared to 2011 due to higher loan activity.

Other Expenses

Interest

The components of interest expense are as follows:



(decrease)


(decrease)2012 2011 2012 2011

Interest $ 66,292 $ 66,184 0% $ 264,330 $ 255,299 4%Capitalized to real estate investments (4,464) (3,874) 15% (17,956) (15,030) 19%

Net interest expense $ 61,828 $ 62,310 (1%) $ 246,374 $ 240,269 3%

Percentage capitalized to real estate investments 7% 6% 7% 6%

The increase in total interest expense during the year ended December 31, 2012, compared to the same period in 2011, resultedprimarily from higher aggregate debt levels during 2012 largely due to increased acquisition activity, as well as, a $2.3 millionprepayment cost as a result of the early repayment of secured debt in April 2012, offset by interest savings resulting fromrefinancing maturing debt at lower interest rates. As at December 31, 2012, the weighted average interest rate of RioCan’s debtportfolio was 4.66%, a decrease of 45 basis points from the weighted average rate of 5.11% as at December 31, 2011.

Interest is capitalized to investment properties when they are considered to be in active development. The amounts capitalizedincreased as a result of increased development activities in 2012 as compared to 2011.

General and Administrative

The components of general and administrative expense are as follows:



(decrease)


(decrease)2012 2011 2012 2011

Non-recoverable salaries and benefits $ 13,661 $ 12,473 10% $ 31,017 $ 28,572 9%Directly capitalized to properties under development and

tenant installations costs (i) (3,844) (3,424) 12% (11,500) (10,514) 9%9,817 9,049 8% 19,517 18,058 8%

Public company costs 936 998 (6%) 4,114 4,122 (0%)Professional fees 1,827 3,319 (45%) 5,500 6,848 (20%)Unit based compensation expense 1,426 1,055 35% 5,171 3,465 49%Other general and administrative 1,384 2,299 (40%) 6,408 5,100 26%

General and administrative expense $ 15,390 $ 16,720 (8%) $ 40,710 $ 37,593 8%

Demolition costs 813 214 280% $ 2,210 $ 1,552 42%Aborted deal costs 50 28 nm 1,280 351 265%Acquisition transaction costs 1,065 203 nm 1,795 450 299%Foreign exchange (gain) loss 11 19 nm (84) 112 (175%)

Other costs $ 1,939 $ 464 318% $ 5,201 $ 2,465 111%

General and administrative expense:As a percentage of rental revenue 5.4% 6.6% (1%) 3.7% 4.0% (6%)As a percentage of total assets 0.1% 0.2% nm 0.3% 0.4% (20%)

(i) Amounts capitalized to properties under development and tenant installation costs are primarily comprised of salaries and benefits directlyrelated to development and leasing activities at the properties.



Non-recoverable salaries and benefits for the year ended December 31, 2012 increased primarily due to higher headcount due tothe growth in the portfolio, and increased complexity of the operations of the Trust when compared to 2011. For the quarter endedDecember 31, 2012, non-recoverable salaries and benefits increased due to a higher bonus accrual, which is based on the Trust’sfinancial results, partially offset by lower termination costs.

Professional fees for 2012 and also for the fourth quarter decreased, when compared to 2011, due to lower tax compliance, legaland recruiting costs, partially offset by higher costs related to the Trust’s information technology initiative.

The increase in unit based compensation cost in 2012 is due to a higher Unit price, which results in a higher valuation of Unit optiongrants according to the Black-Scholes option pricing model.

Other general and administrative costs increased on a year to date basis due to favourable foreign exchange in the first threequarters of 2011 and the reversal of a contingency related to the disposition of a property in the first quarter of 2011, whereas in2012, there were no such gains. Additionally, in the second and fourth quarters of 2012, other general and administrative costswere positively impacted by GST/HST recoveries.

Demolition costs increased for the quarter and year ended December 31, 2012, when compared to the same respective periods in2011, due to higher levels of redevelopment activity.

During the first quarter of 2012, Tanger and RioCan elected not to proceed with the outlet centre project at Halton Hills. Aborteddeal costs of $0.7 million related to this project, on a year to date basis, were expensed.

Acquisition transaction costs primarily relate to contingent consideration paid in respect of RioCan’s ownership interest inRiverpark Shopping Centre (Houston, TX) of $0.7 million during the first quarter of 2012 and costs related to the acquisition andrelated assumption of property management activities of the properties acquired from the Trust’s joint venture with Cedar.

RioCan expects to continue to experience overall increases in general and administrative costs due to growth of the asset base,continued US expansion, including the creation of a US property management platform, costs related to RioCan’s compliance withIFRS and monitoring of compliance under the SIFT Legislation. In addition, RioCan has begun a significant information technologyinitiative, which will result in higher consulting expenditures during the course of the initiative, and is expected to be 24 months induration, with a target completion date of the first half of 2014.

Despite the overall increases in general and administrative expense, (“G&A expense”), during 2012, RioCan’s spending on G&Aexpense both as a percentage of rental revenue and total assets decreased when compared to last year.

ASSET PROFILEAs at December 31, 2012, RioCan had ownership interests in a portfolio of 335 shopping centres comprising 74.5 million squarefeet (RioCan’s share being 49.5 million square feet), compared to 321 shopping centres comprised of 71.5 million square feet(RioCan’s share being 46 million square feet) at December 31, 2011. In addition, RioCan had ownership interests in 11 developmentprojects at December 31, 2012 that will, upon completion, comprise approximately 9.9 million square feet, of which RioCan’sownership interest will be approximately 4.9 million square feet.

INVESTMENT PROPERTY

(millions of dollars)As at December 31, 2012 2011

Investment property is comprised of:Income properties $ 11,914 $ 10,024Properties under development 462 362Properties held for resale 25 23

$ 12,401 $ 10,409

Change in the Fair Value of Investment Property During 2012

Of the $2 billion increase in RioCan’s investment property since December 31, 2011, the fair value gain was $913 million of which$902 million relates to income properties and $11 million relates to properties under development. During this period, thecapitalization rates used to value the portfolio are estimated to have decreased by 52 basis points.



The table below provides the fair value and weighted average capitalization rate split between Canada and US for the last fourquarters:

As at December 31,2012

September 30,2012

June 30,2012

March 31,2012

December 31,2011

(in millions, exceptpercentages)

Weightedaverage

Cap. rate* Value

WeightedAverage

Cap. Rate* Value

WeightedAverage

Cap. Rate* Value

WeightedAverage

Cap. Rate* Value

Weightedaverage

Cap. rate* Value

Canada 5.91% $ 10,635 6.05% $ 10,131 6.08% $ 9,668 6.29% $ 9,298 6.47% $ 8,986US 6.58% 1,766 6.64% 1,577 6.62% 1,622 6.70% 1,490 6.91% 1,423

Total 6.01% $ 12,401 6.13% $ 11,708 6.15% $ 11,290 6.35% $ 10,788 6.53% $ 10,409

* at RioCan’s interest

During 2012, the weighted average capitalization rate in Canada utilized for valuation decreased from 6.47% to 5.91%, resulting inan increase of fair value of the Canadian properties of $0.8 billion. In the US, capitalization rates also decreased through 2012. Forthe full year of 2012, the fair value of US assets increased $0.1 billion.

The table below provides details of the average capitalization rates (weighted based on stabilized NOI) and ranges for each retailclass and market category as at December 31, 2012.

Canadian Portfolio

Overall Portfolio Primary Market Secondary Market

Retail Class

WeightedAverage Cap.

Rate* Range


Rate* Range


Rate* Range

Enclosed Shopping Centre 6.39% 5.3% – 9.0% 6.23% 5.8% – 8.3% 6.48% 5.3% – 9.0%Grocery Anchored Shopping Centre 6.08% 5.3% – 9.0% 5.87% 5.3% – 7.3% 6.50% 5.8% – 9.0%Mixed Use 5.98% 5.0% – 8.5% 5.72% 5.0% – 7.0% 7.46% 6.3% – 8.5%New Format Retail 5.69% 5.2% – 7.3% 5.54% 5.2% – 6.5% 6.15% 5.3% – 7.3%Non-Grocery Anchored Centre 6.53% 5.3% – 9.0% 6.17% 5.3% – 7.3% 7.09% 5.8% – 9.0%Urban Retail 5.37% 4.2% – 7.2% 5.37% 4.2% – 7.2% – –

5.91% 4.2% – 9.0% 5.70% 4.2% – 8.3% 6.28% 5.3% – 9.0%

* at RioCan’s interest

US Portfolio

Overall Portfolio North East** Texas

Retail Class


Rate* Range


Rate* Range


Rate* Range

Grocery Anchored Shopping Centre 6.55% 5.5% – 7.8% 6.51% 5.5% – 7.3% 6.68% 6.0% – 7.8%New Format Retail 6.58% 5.8% – 7.8% 6.67% 6.3% – 7.3% 6.52% 5.8% – 7.8%Non-Grocery Anchored Centre 7.50% 7.5% – 7.5% 7.50% 7.5% – 7.5% 0.00% 0.0% – 0.0%

6.58% 5.5% – 7.8% 6.64% 5.5% – 7.5% 6.53% 5.8% – 7.8%

* at RioCan’s interest**Area includes Connecticut, Maryland, Massachusetts, New Jersey, New York, Rhode Island, Pennsylvania, West Virginia, Virginia and New

Hampshire.



INCOME PROPERTIES

(millions of dollars)Year ended December 31, 2012 2011

Balance, beginning of period $ 10,024 $ 8,185Acquisitions:

Canada (i) 552 499US (i) 297 582

Changes in fair values of income properties 902 510Capital expenditures 18 37Dispositions (71) –Tenant installation costs 37 42Transfers from properties under development 159 150Transfers to properties under development (13) (14)Foreign currency translation (35) 24Other 44 9

Balance, end of period $ 11,914 $ 10,024

(i) Comprised of the purchase price including closing costs and other acquisition related costs.

The NLA of RioCan’s income properties at the end of the current and comparative years was as follows:(square feet in thousands)As at and for the year ended December 31, 2012 2011

NLA, beginning of year 46,002 40,846Acquisitions of income properties – Canada 1,257 1,923Acquisitions of income properties – US 2,215 2,875Completed greenfield development and land use intensification 227 280Other (211) 78

NLA, end of year 49,490 46,002

Acquisitions During 2012

During the three months ended December 31, 2012, RioCan completed acquisitions of income properties aggregating $378 million,representing RioCan’s share of the purchase price comprised of approximately 2.0 million additional square feet (including earn-out space).

During the year ended December 31, 2012, RioCan completed acquisitions of income properties aggregating $926 million,representing RioCan’s share of the purchase price comprised of approximately 3.5 million additional square feet (including earn-out space).



Property name andlocation

Capitali-zation

rate

RioCan’spurchase

price (i)(millions)

NLAat RioCan’s

interest(in thousands

of sqft)

Weightedaveragein place

rent

Assetclass

(ii)YearBuilt

%Leased

WeightedAverage

RemainingLeaseTerm

(years) (iii)

Largest tenant(s) andNLA

(thousands of sqft)

RioCan’sownership

interest

Q4 2012: CANADAWestgate Shopping

Centre, Ottawa, ON(additional 50% in landlease)

5.0% $ 9 – $17.71 NGA 1979 99% 3.7 Shoppers Drug Mart (30)Bitheads (15)

100%

Les Factoreries, St.Sauveur, PQ

5.3% 27 58 29.09 OUT/PUD 1990/2000 100% 3.6 Tommy Hilfiger (8), FGLSports (8), Nike (7)

50%

Le Carrefour Champetre,Bromont, PQ

6.9% 20 81 18.84 OUT/PUD 2004/2011 89% 4.0 Borealis Spa (13), SportsExperts (11), UrbanPlanet (9)

50%

Elgin Mills Crossing,Richmond Hill, ON(additional 25%)

5.8% 20 80 21.23 NFR 2009 100% 5.6 Costco (115), Michael’s(22), Staples (21)

100%

Shoppers City East,Ottawa, ON

6.5% 8 41 12.06 NGA 1965 94% 0.6 Giant Tiger (35), Staples(20), Shoppers Drug Mart(16)

27.6%

649 Queen Street West,Toronto, ON

4.9% 14 14 46.48 URB 1875/2011 100% 14.7 Crate & Barrel CB2 (14) 100%

Canada – Q4 2012Acquisitions

5.7% 98 274 22.11

Q4 2012: UNITED STATES(by partner)

DunhillArbor Park, San Antonio,

TX6.7% 22 119 12.89 GA 1998 98% 4.7 Ross Dress for Less (30),

Office Max (24), Michael’s(24)

85%

Louetta Central, Spring,TX

6.9% 26 153 12.32 NGA 2000 100% 6.4 Kohl’s (87), Ross Dressfor Less (30), Michael’s(24)

85%

Without PartnerAcquisitions from Cedar

(additional 20% in 21properties)

6.5% 117 677 12.83 Various Various 96% 8.1 Various 100%

Deptford Landing,Deptford, NJ

6.6% 64 517 8.82 NFR 2008 92% 9.9 Walmart (220), SamsClub (140), hhgregg (31)

100%

The Commons,Martinsburg, WV

7.0% 51 277 14.97 NFR 2009 97% 6.4 Dick’s Sporting Goods(45), Best Buy (30), TJMaxx (25)

100%

US – Q4 2012Acquisitions

6.7% 280 1,743 11.94

Total Q4 2012Acquisitions

6.4% $378 2,017 $13.32

Q3 2012: CANADAGeorgian Mall, Barrie, ON 5.4% $318 488 $37.25 ENC 1973/2006 97% 4.5 The Bay (91),

Atmosphere (41),HomeSense (25), Sears*

100%

Trinity Crossing, Ottawa,ON (additional 50%)

6.0% 29 96 18.45 NFR 2006 100% 5.2 Winners (46), ValueVillage (28), Michael’s(22), Loblaws*

100%


5.5% 347 584 32.07


DunhillLas Colinas Village,

Irving, TX7.8% 22 89 20.64 NFR 2001 99% 4.4 Staples (24) 85%

US – Q3 2012Acquisitions

7.8% 22 89 20.64

Total Q3 2012Acquisitions

5.7% $369 673 $30.67

Q2 2012: CANADA2453-2457 Yonge Street &

4-6 Erskine Avenue,Toronto, ON

3.9% $ 3 6 $33.50 MIX 1915/1960 97% 3.0 TD Bank (2) 50%

Chahko Mika Mall,Nelson, BC

6.7% 31 173 13.93 GA 1979/2011 96% 8.5 Walmart (72), Save-OnFoods (34)

100%


6.4% 34 179 14.59


KimcoMontgomery Plaza, Fort

Worth, TX6.7% 46 233 17.22 NFR 2005 89% 5.3 Marshalls (38), Ross

Dress for Less (30),Office Depot (20)

80%



Property name andlocation

Capitali-zation

rate

RioCan’spurchase

price (i)(millions)

NLAat RioCan’s

interest(in thousands

of sqft)

Weightedaveragein place

rent

Assetclass

(ii)YearBuilt

%Leased

WeightedAverage

RemainingLeaseTerm

(years) (iii)

Largest tenant(s) andNLA

(thousands of sqft)

RioCan’sownership

interest

SterlingIngram Hills, San Antonio,

TX8.0% 7 72 8.82 GA 1980/1986 100% 5.2 La Fiesta (43) 90%

US – Q2 2012 Acquisitions 6.9% 53 305 15.23

Total Q2 2012 Acquisitions 6.7% $ 87 484 $14.99

Q1 2012: CANADA

Trinity Common Brampton,Brampton (GTA), ON(additional 10%)

6.0% $ 19 66 $17.90 NFR 1999/2004 100% 5.5 Famous Players – Cineplex(84), Target (118), Metro(55)

80%

RioCan Colossus Centre,Vaughan (GTA), ON(additional 10%)

6.3% 17 58 19.29 NFR 2000/2008 100% 6.9 Rona (121), FamousPlayers – Cineplex (101),Costco*

80%

Silver City Gloucester,Gloucester (Ottawa), ON(additional 10%)

6.3% 8 23 21.14 NFR 2000 100% 4.2 Famous Players – Cineplex(121), Future Shop (23)

80%

Campus Estates, Guelph,ON

6.4% 20 73 17.39 GA 1976/1986 98% 4.3 No Frills (27) 100%


6.2% 64 220 18.43


Retail PropertiesSouthlake Corners, Dallas,

TX6.7% 28 107 18.56 NFR 2004/2006 99% 6.9 Toys ‘R’ Us (34),

HomeGoods (28), Staples(20)

80%

US – Q1 2012 Acquisitions 6.7% 28 107 18.56

Total Q1 2012 Acquisitions 6.4% $ 92 327 $18.48

2012 Acquisitions:

Canada 5.7% $543 1,257 $25.02

US

Retail Properties 6.7% 28 107 18.56

Kimco 6.7% 46 233 17.22

Sterling 8.0% 7 72 8.82

Dunhill 7.1% 70 361 14.56

Without Partner 6.6% 232 1,471 11.82

6.8% 383 2,244 13.05

Total 2012 Acquisitions 6.1% $926 3,501 $17.35

(i) Excludes closing costs and other acquisition related costs.(ii) “GA” – Grocery Anchored Centre; “NGA” – Non Grocery Anchored Centre; “NFR” – New Format Retail; “ MIX” – Mixed use; “PUD” – Property

Under Development; “OUT” – Outlet Mall.(iii) Weighted average based on gross rental revenue.* Shadow anchor

Further details around RioCan’s current quarter income property acquisitions are provided as follows.

Canada

• On November 1, 2012 RioCan acquired a 50% interest in Les Factoreries with its partner Tanger. Les Factoreries is a 116,600square foot (58,300 square feet at RioCan’s interest) outlet shopping centre located in St. Sauveur, Québec, approximately 60kilometers north of Montreal, Québec. The property, which includes tenants Nike, Melanie Lyne, Guess and Atmosphere, wasbuilt in 1990 and renovated in 2000, has a weighted average remaining lease term of 3.6 years and is currently 100% occupied.The site includes excess density providing the potential for a further 15,000 square feet of development of retail space. Thepurchase price of the property was $54 million ($27 million at RioCan’s share), which equates to a capitalization rate of 5.3% forthe income producing components. In connection with the acquisition, the existing mortgages totalling $18 million ($9 million atRioCan’s interest) have been assumed, bearing interest rates of 5.10% and 5.75% with maturity dates of June 2015 and May2020.



• On November 2, 2012 RioCan acquired a 50% interest in Le Carrefour Champêtre with its partner Tanger. Le CarrefourChampetre is a 161,300 square foot (80,600 square feet at RioCan’s interest) outlet shopping centre located in Bromont, Québec,approximately 80 kilometers southeast of Montreal, Québec. The property, which includes tenants Puma, Bombay, Mexx andAtmosphere, was built in 2004 and renovated in 2011, has a weighted average remaining lease term of 4.0 years and is currently89% occupied. The site includes excess density providing the potential for further development of 73,000 square feet of retailspace. The purchase price of the property was $40 million ($20 million at RioCan’s interest), which equates to a capitalizationrate of 6.9% for the income producing components. The property was acquired free and clear of mortgage financing.

• On November 5, 2012 RioCan acquired the remaining 25% interest in RioCan Elgin Mills Crossing in Richmond Hill, Ontario. Theacquisition increases RioCan’s ownership of this property to 100%. Elgin Mills Crossing is a 425,200 square foot new formatretail shopping centre (320,300 square feet owned by RioCan; the remainder owned by a tenant) anchored by Costco, Michael’sand Staples with Home Depot as a shadow anchor. The purchase price for RioCan’s additional interest was $20 million, whichequates to a capitalization rate of 5.8%. In connection with the purchase, RioCan has assumed its proportionate share of theexisting mortgage debt that is in place for this property, representing an additional principal amount of $11 million that carriesan interest rate of 6.05% and matures in October 2018. RioCan benefited from a mark-to-market adjustment of $1 million inconsideration of the above market interest rate.

• On November 9, 2012 RioCan acquired a 27.6% interest in Shoppers City East Shopping Centre, Ottawa, Ontario. Shoppers CityEast is a 148,100 square foot non grocery anchored retail shopping centre anchored by Giant Tiger. Other notable tenantsinclude Staples and Shoppers Drug Mart. The site is 19.4 acres. RioCan’s interest was acquired at a purchase price of $8 million,which equates to a capitalization rate of 6.5%. The property was acquired free and clear of financing and represents aredevelopment opportunity.

• On December 10, 2012 RioCan acquired a 100% interest in 649 Queen Street West, a 14,200 square foot single-tenant propertyoccupied by CB2, the urban version of Crate & Barrel (there is an additional 6,450 square feet of basement space). Built in the1870’s and completely renovated in 2011, the property is positioned at the intersection of Queen St. and Bathurst St. withfrontage along Queen St. in the downtown core of Toronto, Ontario and has a lease term of 14.7 years. The purchase price for theproperty was $13.5 million at a capitalization rate of 4.9%, and was acquired free and clear of financing.

• On October 1, 2012 RioCan acquired the remaining 50% interest in the land lease at Westgate Shopping Centre at a purchaseprice of $9 million. Westgate Shopping Centre is a 165,800 square foot non-grocery anchored retail outlet located in Ottawa,Ontario. RioCan now has a 100% interest in the property, including the land portion.

United States

Acquisitions of Interests in Cedar Properties

On October 10, 2012, in accordance with the terms of the dissolution of the RioCan/Cedar joint venture, Cedar conveyed its 20%interest in 21 properties owned by the RioCan/Cedar joint venture to RioCan for a gross purchase price of US$119.5 million,representing a capitalization rate of 6.5%. RioCan assumed Cedar’s share of the existing in-place mortgage financing of US$54.4million in respect of such 21 properties, which carries a weighted average interest rate of 5.2% and a weighted average term tomaturity of 5.2 years. RioCan benefited from a mark-to-market adjustment of $0.8 million in consideration of the above marketinterest rate.

As part of the dissolution, RioCan conveyed its 80% interest in Franklin Village (located in Franklin, Massachusetts) to Cedar for agross sale price of US$60.1 million (less debt assumed by Cedar from RioCan in the amount of US$34.7 million).

Cedar contracted to provide property management services to RioCan for a period of up to one year, cancellable by RioCan on 90days notice, under similar terms as the property management services previously provided by Cedar. Effective January 1, 2013,RioCan has established a property management platform in the northeastern United States that has allowed it to take overproperty management from Cedar on February 1, 2013.

Other acquisitions in the United States during the fourth quarter include:

• On October 18, 2012 RioCan acquired an 85% interest in Arbor Park with Dunhill for a purchase price of US$26 million at 100%(US$22 million at RioCan’s interest) which equates to a capitalization rate of 6.7%. Dunhill, who previously owned a 100%managing interest in the property, retained a 15% interest and manages the property on behalf of the joint venture. Arbor Park isa 139,700 square foot new format retail centre located near the downtown core of San Antonio, Texas. The property, which iscurrently 98% occupied, was built in 1998 and has a weighted average remaining lease term of 4.7 years. The property isanchored by Sprouts Grocery Store, Ross Dress for Less, Office Max and Michaels. Other notable tenants include Dress Barn,GameStop and Payless Shoesource. As part of the acquisition, the joint venture assumed the existing mortgage in the amount ofUS$17 million (US$14 million at RioCan’s interest) with an interest rate of 4.65% and maturity date of July 6, 2016.

• On November 21, 2012 RioCan acquired an 85% non-managing interest in Louetta Central for a purchase price of US$31 millionat 100% (US$26 million at RioCan’s interest) which equates to a capitalization rate of 6.9%. Dunhill acquired the remaining 15%interest and manages the property on behalf of the joint venture. Louetta Central is a 180,000 square foot non-grocery anchoredretail centre located in Spring, Texas. The property, which is currently 100% occupied, has a weighted average remaining leaseterm of 6.4 years and is anchored by Kohl’s, Ross Dress for Less and Michaels. Financing of US$17 million (US$14 million atRioCan’s interest) was procured on closing at an interest rate of 3.7%, interest only, and a maturity date of November 2022.



• On October 22, 2012 RioCan acquired a 100% interest in Deptford Landing for a purchase price of US$65 million which equates toa capitalization rate of 6.6%. Deptford Landing is a 517,100 square foot new format retail centre located in Deptford Township,New Jersey. The property, which is currently 100% occupied, was built in 2008 and has a weighted average remaining lease termof 9.9 years. The property is anchored by Walmart and Sam’s Club. Other notable tenants include Michaels, PetSmart and DSWShoe Warehouse. As part of the acquisition, RioCan assumed the existing mortgage in the amount of US$33 million with aninterest rate of 6.10% and maturity date of January 1, 2021. RioCan benefited from a mark-to-market adjustment of $4 million inconsideration of the above market interest rate.

• On December 28, 2012 RioCan acquired a 100% interest in The Commons for a purchase price of US$52 million which equates toa capitalization rate of 7.0%. The Commons is a 277,300 square foot new format retail centre located in Martinsburg, WestVirginia. The property, which is currently 97% occupied, was built in 2009 and has a weighted average remaining lease term of6.4 years. Notable tenants include Dick’s Sporting Goods, Best Buy and TJ Maxx. The property was acquired free and clear offinancing.

Income Property Acquisitions under Contract

Firm Acquisitions

RioCan has two income properties under firm contract (one in Canada and one in the US) where conditions have been waived that,if completed, represent acquisitions of $61 million at RioCan’s interest, at a weighted average capitalization rate of 5.5%.

• The acquisition of a 100% interest in 1860 Bayview Avenue in Toronto, Ontario. 1860 Bayview Avenue is a development sitelocated at the northwest corner of Bayview Avenue and Broadway Avenue in the Leaside area of Toronto. KingSett and TrinityDevelopment Group are currently developing a grocery-anchored centre on the site, and RioCan will be acquiring the completedsite on a forward purchase basis at an expected purchase price of $58 million, at a capitalization rate of 5.4%. Once completed,the centre will consist of approximately 74,220 square feet of retail space and will be anchored by a 50,220 square foot WholeFoods. This acquisition is expected to close during the second quarter of 2013.

• The acquisition of a 100% interest in a 24,000 square foot unit at Monroe Marketplace in Selinsgrove, Pennsylvania to beoccupied by TJ Maxx. Acquired by RioCan in 2010 (and, with respect to Cedar’s 20% interest, 2012), Monroe Marketplace is a340,000 square foot power centre anchored by Giant Foods and Kohl’s. The purchase price for the 24,000 square foot addition isUS$3 million which equates to a capitalization rate of 7.6% and will be acquired free and clear of financing. The acquisition isexpected to close during the first quarter of 2013.

Conditional Acquisitions

RioCan has $397 million of income property acquisitions (at RioCan’s interest) under contract where conditions have not yet beenwaived. These transactions are in various stages of due diligence and while efforts will be made to complete these transactions, noassurance can be given.

Included in the amount above is the conditional agreement with Primaris Retail REIT (“Primaris”) to purchase a 50% interest inBurlington Mall in Burlington, Ontario, and a 100% interest in Oakville Place in Oakville, Ontario, which was announced by RioCanon February 5, 2013. The aggregate gross purchase price for these two properties is approximately $362 million (at RioCan’sinterest) and the properties will be acquired at a capitalization rate estimated to be approximately 5.0% to 5.25%. In connectionwith the purchase, RioCan will assume, at its interest, the in place first mortgage financing of approximately $165 million inaggregate. The purchase price will be reduced by a mark-to-market adjustment on closing in consideration of the debt’s abovemarket interest rate, which is currently estimated at approximately $8 million. RioCan will fund this acquisition through cash onhand and existing operating facilities.

Oakville Place is located directly off of Queen Elizabeth Way (“QEW”), the major highway running through Ontario’s “GoldenHorseshoe”, in Oakville, Ontario. Oakville is a fast growing community with a strong, diversified economic base, and possesses oneof Canada’s highest income demographics with an average household income statistic that is well above the national average.Oakville Place is a fashion focused, two level regional mall containing approximately 455,000 square feet of gross leasable area.The property was built in 1981 and has undergone significant renovations in 2004 and 2008. Oakville Place is 100% occupied and isanchored by The Bay and Sears. Other major retail tenants at Oakville Place include American Eagle, H&M, Jacob, Birks, Roots,Laura, Mexx and Shoppers Drug Mart. At September 30, 2012, the property’s Commercial Retail Units (“CRU”) generated averagesales of approximately $493 per square foot. Approximately 94% of the gross rent is generated by national and regional tenants.RioCan will purchase a 100% interest in the property at a purchase price of $259 million. In connection with the purchase, RioCanwill assume the in place first mortgage financing of $112 million which carries an interest rate of 4.7%, maturing in 2021.

Burlington Mall, located near the QEW at Guelph Line and Fairview Street, is a 782,000 square foot enclosed mall. The property willbe owned on a 50/50 joint venture basis with the KingSett Canadian Real Estate Income Fund. Burlington Mall was constructed in1968 and has undergone significant renovations in 2001, 2004 and 2006. The property is 99% occupied and is anchored by Target(opening Spring 2013), Canadian Tire and Winners/HomeSense, and is shadow anchored by The Bay. Other major tenants includeDollarama, Old Navy, Shoppers Drug Mart and SportChek. At September 30, 2012, the property’s CRU generated average sales ofapproximately $386 per square foot. Approximately 87% of the gross rent is generated by national and regional tenants. RioCanwill provide asset and property management functions for the property. The purchase price for the property is $206 million at



100% ($103 million at RioCan’s interest). In connection with the purchase, the parties will assume the in place first mortgagefinancing of $105 million ($52.5 million at RioCan’s interest) which carries an interest rate of 3.8%, maturing in 2016.

These properties will add to RioCan’s growing enclosed mall portfolio that includes such properties as Georgian Mall, RioCanYonge Eglinton Centre, Lawrence Square, RioCan Sheppard Centre and Shoppers World Brampton, all located in the GTA andsurrounding markets. The acquisition of Oakville Place and Burlington Mall will allow RioCan to gain a stronger foothold in theenclosed mall sector, specifically in the GTA, a segment otherwise difficult to enter. As well as strengthening RioCan’s marketleading retail platform, there are additional opportunities for organic growth within both shopping centres, which RioCan believesit can realize with its deep infrastructure and management strength. It is expected that the purchase will be completed in earlyApril.

Also included in the conditional acquisitions amount is the acquisition of a 100% interest in South Cambridge Centre in Cambridge,Ontario, from H&R REIT at a purchase price of $35 million, which equates to an estimated capitalization rate of approximately6.75% and 7.0%. South Cambridge Centre is a 190,131 square foot grocery anchored shopping centre. The property is 100%occupied and is anchored by a Zehrs grocery store (Loblaws). Other major tenants at the property include the Liquor Control Boardof Ontario, The Beer Store and Home Hardware. In connection with the purchase, RioCan will assume the in place first mortgagefinancing of $19.7 million which carries an interest rate of 5.5% maturing in June 2016.

The purchases of Burlington Mall, Oakville Place and South Cambridge Centre are conditional on the successful completion of theH&R REIT and KingSett Consortium acquisition of Primaris. On February 5, 2013, H&R REIT and H&R Finance Trust (collectively“H&R”) and Primaris and the KingSett Capital-led consortium announced that H&R and Primaris, together with PRR InvestmentsInc., have amended their previously announced arrangement agreement (dated January 16, 2013). The transaction is expected toclose in April 2013.

Acquisitions During 2011

Location Capitalization rateRioCan’s purchase price

(i) (millions)NLA (in sqft) at RioCan’s interest

(thousands)

CANADA 6.2% $ 298 1,006UNITED STATES 6.9% 311 1,502

Fourth Quarter 2011 Acquisitions 6.6% $ 609 2,508

CANADA 6.4% 74 298UNITED STATES 6.5% 166 786

Third Quarter 2011 Acquisitions 6.5% $ 240 1,084

CANADA 6.7% 46 227UNITED STATES 7.3% 90 587

Second Quarter 2011 Acquisitions 7.1% $ 136 814

CANADA 6.6% 88 392

First Quarter 2011 Acquisitions 6.6% $ 88 392

2011 Acquisitions:Canada 6.4% $ 506 1,923

USCedar 7.6% 18 128

Retail Properties 6.9% 287 1,425

Dunhill 6.6% 125 736

Sterling 8.0% 14 78

Without Partner 6.9% 123 508

6.9% 567 2,875

2011 Acquisitions 6.6% $ 1,073 4,798

(i) Excludes closing costs and other acquisition related costs.

Income Property Dispositions

The Trust has identified fourteen properties that are non-core holdings, that it intends to market for sale. The fair value of thesefourteen properties, at December 31, 2012 is in excess of $645 million and there are mortgage borrowings of approximately$230 million secured by these properties. Although the properties will be marketed for sale, there can be no guarantee that any ofthem will be sold.

Capital Expenditures on Income Properties

Capital spending for new property acquisitions, greenfield developments and the redevelopment of RioCan’s existing properties tocreate and/or extract additional value are expected to improve the overall earnings capacity of the property portfolio. RioCanconsiders such amounts to be investing activities. As a result, RioCan does not expect such expenditures to be funded from cashflows from operating activities and does not consider such amounts as a key determinant in setting the amount that is distributedto its Unitholders.



Productive capacity maintenance capital expenditures refer to capital expenditures that are necessary to maintain the existingearnings capacity of the Trust’s property portfolio and are dependent upon many factors, including, but not limited to the age andlocation of the income properties. As at December 31, 2012, the estimated weighted average age of the income property portfolio is17.4 and 11.1 years for the Canadian and US portfolios respectively (December 31, 2011 – 15.4 and 11.1 years for the Canadian andUS portfolios respectively). Productive capacity maintenance capital expenditures are considered in determining the amount that isdistributed to Unitholders and primarily consist of:

• Tenant installation costsRioCan’s portfolio requires ongoing investments of capital for tenant installation costs related to new and renewal tenant leases.Tenant installation costs consist of tenant improvements and other leasing costs, including certain costs associated withRioCan’s internal leasing professionals, primarily compensation costs.Investments of capital for tenant installation costs for RioCan’s income properties are dependent upon many factors, including,but not limited to, the lease maturity profile, unforeseen tenant bankruptcies and the location of the income properties.

• Recoverable and non-recoverable maintenance capital expendituresRioCan also invests capital on a continuous basis to physically maintain the income properties. Typical costs incurred are forroof replacement programs and the resurfacing of parking lots. Tenant leases generally provide for the ability to recover asignificant portion of such costs from tenants over time as property operating costs. RioCan expenses or capitalizes theseamounts to income properties, as appropriate.As the majority of the portfolio is located in Canada and the northeastern US, the majority of such activities occur when weatherconditions are favourable. As a result, these expenditures are not consistent throughout the year.

Expenditures for tenant installation costs and recoverable and non-recoverable maintenance capital included in income propertiesare as follows:


Estimatedexpenditures

for 2013Normalized

expenditures

Tenant installation costs $ 41 $ 23 $ 24 $19 to $24Maintenance capital expenditures:

Recoverable from tenants 10 10 11 $11 to $13Non-recoverable from tenants 8 7 9 $6 to $9

$ 59 $ 40 $ 44 $36 to $46

Expenditures related to revenue enhancement (i) – 9 – –Expenditures related to Target/Zellers tenancies – – 18 –Office capital investment (ii) 8 4 1 –

$ 67 $ 53 $ 63 $36 to $46

(i) Related to retrofit/redevelopment of properties to enhance revenue or facilitate a change in use of a premises.(ii) Expenditures related to one-time upgrades to mechanical/electrical components (that will have a 30-year life) of urban office assets.

Joint Venture and Partnership Activities

Co-ownership activities represent real estate investments in which RioCan owns an undivided interest and where it has jointcontrol with its partners. RioCan records its proportionate share of assets, liabilities, revenue and expenses of all co-ownerships inwhich it participates. RioCan consolidates 100% of the accounts of the properties it acquired with Cedar, Dunhill and Sterling.Where there is a party with a minority investment in a property that the Trust controls, that minority interest is reflected as “Non-controlling interest” in the consolidated financial statements.

The Trust’s co-ownership arrangements are governed by co-ownership agreements with its various partners. RioCan’s standardco-ownership agreement provides exit and transfer provisions, including, but not limited to, buy/sell and/or right of first offers thatallow for the unwinding of these co-ownership arrangements should the circumstances necessitate.

Generally, the Trust is only liable for its proportionate share of the obligations of the co-ownerships in which it participates, exceptin limited circumstances. Credit risk arises in the event that co-owners default on the payment of their proportionate share of suchobligations. Co-ownership agreements will typically provide RioCan with an option to remedy any non-performance by a defaultingco-owner. These credit risks are mitigated as the Trust has recourse against the asset under its co-ownership agreements in theevent of default by its co-owners, in which case the Trust’s claim would be against both the underlying real estate investments andthe co-owners that are in default. In addition to the matter noted above, RioCan has provided guarantees on debt totalling $285million as at December 31, 2012 (December 31, 2011 – $360 million) on behalf of partners and co-owners.



Selected Financial Information by Joint-Venture – proportionate share*

As at December 31,2012

For thethree months endedDecember 31, 2012

For the year endedDecember 31, 2012

(millions of dollars) Total Assets Total Liabilities NOI NOI

Kimco $ 1,215 $ 504 $ 18 $ 70Trinity 693 293 9 39CPPIB 363 62 5 18CPPIB/Trinity 98 13 – –Devimco 186 96 3 10Sun Life 68 13 1 4Kimco/Dunhill 33 16 1 2RPAI 547 275 8 34Other 688 288 8 33

Total Co-ownership 3,891 1,560 53 210Dunhill 262 146 4 12Sterling 31 16 1 2Whiteshield 23 – – 1

Total Joint-Venture $ 4,207 $ 1,722 $ 58 $ 225

* Excluding Sterling, Whiteshield and Dunhill which are shown at 100%. On October 10, 2012, RioCan acquired 21 of the 22 assets in the Cedarjoint venture as described under “Income Properties – Acquisitions during 2012 – United States”



PROPERTIES UNDER DEVELOPMENT

RioCan has a development program primarily focused on new format and urban retail centres. The provisions of the Trust’sDeclaration have the effect of limiting direct and indirect investments, net of related mortgage debt, in non-income producingproperties to no more than 15% of the Adjusted Unitholders’ Equity of the Trust. “Adjusted Unitholders’ Equity” is a non-GAAPmeasure defined in RioCan’s Declaration as the amount of unitholders’ equity plus the amount of accumulated amortization ofincome properties recorded by the Trust, calculated in accordance with GAAP. At December 31, 2012, RioCan was in compliancewith this restriction. RioCan undertakes such developments on its own, or on a co-ownership or partnership basis, withestablished developers to whom the Trust generally provides mezzanine financing. With some exceptions for land in the highgrowth markets, RioCan will generally not acquire or fund significant expenditures for undeveloped land unless it is zoned and anacceptable level of space has been pre-leased or pre-sold. An advantage of unenclosed, new format retail is that it lends itself tophased construction keyed to leasing levels, which avoids the creation of meaningful amounts of vacant space. In addition toRioCan’s various development projects, the Trust also contributes to portfolio growth through the intensification of existingproperties where RioCan has identified opportunities to increase density or add to an existing asset. This intensification of existingproperties contributes to NOI growth in an efficient manner, leveraging the existing asset base, and can also lead to significantgains resulting from the sale of residential rights.

Development square feetby property type as at

December 31, 2012

Convenience Retail 1%

Excess Land Development 11%

Main Street/Urban 19%

Power Centre 69%

5% New Brunswick

18% Other Ontario

12% Ottawa

13% Toronto

14% Alberta

38% GTA

Development square feet by Geographic area as atDecember 31, 2012

Development Properties Continuity

The change in the net carrying amount is as follows:


Balance, beginning of period $ 362 $ 268Acquisitions (i) 99 88Development expenditures 136 101Changes in fair values of properties under development 11 23Completion of properties under development (159) (150)Transfers from income properties 13 14Other – 18

Balance, end of period $ 462 $ 362

(i) Comprised of the purchase price including closing costs and other acquisition related costs.

As at December 31, 2012 2011

Comprised of:Greenfield and Urban Development $ 325 $ 228Expansion and redevelopment 65 75Other (i) 72 59

$ 462 $ 362

(i) Including excess buildable density, earnouts and other



The book value of greenfield development property at December 31, 2012 is $462 million, which includes costs of $453 million anda fair value increment of $9 million.

As at December 31, 2012, RioCan’s greenfield development pipeline will, upon completion, comprise approximately 9.9 millionsquare feet, of which RioCan’s ownership interest will be approximately 4.9 million square feet which includes approximately1.2 million square feet that is income producing.

DEVELOPMENT PROPERTY ACQUISITIONS

During the three months ended December 31, 2012, RioCan acquired an interest in the Globe and Mail development site in Toronto,Ontario, at a purchase price of $54 million, at RioCan’s interest.

During the year ended December 31, 2012, RioCan acquired interests in four development sites in Toronto, Ontario, at a purchaseprice of $89 million, at RioCan’s interest. Additionally, RioCan completed acquisitions of excess density at a purchase price of $6million at RioCan’s interest in connection with the acquisitions of interests in two income properties during the year endedDecember 31, 2012. In total, acquisitions of development properties aggregated $95 million in 2012.

Property name and location

RioCan’spurchase

price (i)(millions)

Expected NLA(in sqft)

at RioCan’s interestupon completion of

re/development

Assetclass to be

re/developed (ii)

Expectedyear of

completion Partner’s

RioCan’sownership

interest

Acquisitions of development sites

Yonge Street & Eglinton Avenueland assembly,

Toronto, ON (iii)

$ 4 27,000 URB 2017 Metropia (Yonge andEglinton) LP (25%),Bazis E Inc. (25%)

50%

King Street West & PortlandStreet land assembly,

Toronto, ON (iv)

21 120,000 MIX (vii) Allied (50%) 50%

College Street & ManningAvenue land assembly,Toronto, ON (v)

10 33,500 MIX (vii) Allied (50%) 50%

Globe & Mail lands,Toronto, ON (vi)

54 480,000 MIX 2020 Allied (40%),Diamond Corp. (20%)

40%

Total acquisitions of developmentsites

$ 89

Acquisitions of excess density in connection with acquisitions of income properties

Georgian Mall,Barrie, Ontario

$ 5 n/d NFR (vii) None 100%

Bromont Outlet Centre,Bromont (Montreal), Québec

1 73,200 OUT 2014 Tanger (50%) 50%

Total acquisitions of excessdensity in connection withacquisitions of incomeproperties

$ 6

Total 2012 acquisitions ofdevelopment property

$ 95



(i) Excludes closing costs and other acquisition related costs.(ii) “URB”– Urban Retail; “MIX – Mixed Use Centre; “NFR” – New Format Retail; “OUT” – Outlet Mall(iii) The Yonge Street & Eglinton Avenue land assembly is a multi-parcel assembly located on the north east corner of the intersection of Yonge

Street and Eglinton Avenue in Toronto, ON. Depending on the total land area RioCan and its partners are able to acquire, it is expected thatthe site will be redeveloped into between 54,000 and 109,000 square feet of urban retail space in addition to a 600,000 square foot multi storeyresidential development. The land parcel acquired in 2012 was acquired free and clear of financing.

(iv) The King Street West & Portland Street land assembly is a multi-parcel assembly located near the intersection of King Street West andPortland Street in Toronto, ON. It is expected that the site will be redeveloped into 240,000 square feet of retail and office space in addition toa 160,000 square foot multi storey residential development. In connection with the acquisitions, RioCan assumed its proportionate share ofthe existing mortgage debt of $3 million at RioCan’s interest, bearing interest at 5.16% with maturity date of November 2015.

(v) The College Street & Manning land assembly is a multi-parcel assembly located near the intersection of College Street and Manning Avenuein Toronto, ON. It is expected that the site will be redeveloped into 67,000 square feet of retail and office space in addition to a 58,000 squarefoot multi storey residential development. In connection with the acquisitions, RioCan assumed its proportionate share of the existingmortgage debt of $4 million at RioCan’s interest, bearing interest at 5.67% with maturity date of November 2017.

(vi) The Globe & Mail lands are located slightly west of Spadina Avenue, between Front Street West and Wellington Street West, in Toronto, ON. Itis expected that the 6.47 acre site will be redeveloped into 1.2 million square feet of retail and office space in addition to a 1.1 million squarefoot multi storey residential development. In connection with the acquisition, RioCan assumed its proportionate share of the vendor take backmortgage of $32 million at RioCan’s interest, bearing interest at 2.00% (interest only) with maturity date of November 2017. The squarefootage of the retail, office and residential portions of the development are preliminary estimates and are subject to change during thedesign, zoning and development processes.

(vii) To be determined based on market conditions.n/d not determined

Subsequent to year end, RioCan acquired a 50% interest in Sage Hill Crossing, a 34 acre greenfield development site located inNorthwest Calgary, Alberta, at a purchase price of $32 million ($16 million at RioCan’s interest) with KingSett on a joint venturebasis. Once completed, the anticipated gross leasable area is 377,000 square feet of retail use. A Letter of Intent is in place withWalmart for a land lease and a binding offer to lease has been executed with Loblaws for a 45,000 square foot store. Developmentis expected to commence during the summer of 2013. The site was acquired free and clear of financing and RioCan will developand manage the asset on behalf of the joint venture.

Development Property Acquisitions under Contract

RioCan currently has two development sites in Canada under Firm contract where conditions have been waived that, if completed,represent $29 million of acquisitions at RioCan’s interest.

• The acquisition of phase II of the Globe & Mail lands development site, a 1.2 acre piece of land adjacent to the 6.47 acresacquired in Q4 2012, located west of Spadina Avenue, between Front Street West and Wellington Street West, in Toronto,Ontario. Consistent with the acquisition of phase I, phase II will be acquired on a 40%/40%/20% joint venture basis betweenRioCan, Allied and Diamond Corp. The purchase price will be $37 million ($15 million at RioCan’s interest) and the acquisitionis expected to close in the first quarter of 2013. This additional land is currently zoned for 450,000 square feet of commercialspace. It is expected that the total site will be redeveloped into an estimated 1.65 million square feet of retail and office spacein addition to an estimated 1.1 million square foot multi storey residential development.

• The acquisition of Calaway Park, a 35 acre parcel of land located approximately 25 kilometers west of Calgary, Alberta. Thesite is to be acquired on a 50%/50% joint venture basis between RioCan and Tanger at a purchase price of $28 million ($14million at RioCan’s interest). RioCan would acquire a managing interest in the development property. The site represents anopportunity for the RioCan/Tanger joint venture to enter the Calgary market with the intention to develop the land into anoutlet mall. This acquisition is expected to close in the third quarter of 2013.

Additionally, RioCan has $51 million of development sites in Canada (at RioCan’s interest) under contract where conditions havenot yet been waived. These transactions are in various stages of due diligence and while efforts will be made to complete thesetransactions, no assurance can be given.

Development Activities in 2012

During the three months ended December 31, 2012, RioCan completed 33,000 square feet (three months ended December 31,2011 – 91,000 square feet) of redevelopment and development activities which pertain to the completion of development projects in2012.

In addition to its development projects, RioCan continues its urban intensification activities, primarily in the Toronto, Ontariomarket.



A summary of RioCan’s 2012 transfers to Income Properties from development projects is as follows:

NLA (in thousands of square feet) atRioCan’s Interest

2012

Property location

RioCan’sownership

interest TotalFourth

quarterThird


Firstquarter

NLA at100%

404 Town Centre, Newmarket, ON 50% 12 – – 12 – 24Brant Power Centre, Burlington, ON 50% 4 – 4 – – 8Carrefour Neufchatel, Neufchatel, QC 100% 68 – – 35 33 68Cimarron Shopping Centre, Okotoks, AB 50% 1 – – 1 – 2Corbett Centre, Fredericton, NB 100% 22 13 8 – 1 22Flamborough Walmart Centre, Waterdown, ON 100% 15 – 15 – – 15Grant Crossing, Ottawa, ON 60% 19 2 1 – 16 32Place Newman, LaSalle, QC 100% 3 3 – – – 3Lowe’s Sunridge Centre, Calgary, AB 100% 5 – – 5 – 5Quartier 10/30, Brossard, QC 50% 8 8 – – – 16March Road, Ottawa, ON 50% 1 – – 1 – 1Meadow Ridge Plaza, Ajax, ON 20% 2 2 – – – 10RioCan Centre Belcourt, Ottawa, ON 60% 5 – 2 – 3 8Shoppers World Brampton, Brampton, ON 100% 60 5 55 – – 60Yonge Eglinton Centre, Toronto, ON 100% 1 – – 1 – 1

226 33 85 55 53 275

A summary of RioCan’s 2011 transfers to Income Properties from development projects is as follows:

NLA (in thousands of square feet) atRioCan’s Interest

2011

Property location

RioCan’sownership

interest TotalFourth

quarterThird


Firstquarter

NLA at100%

Avenue Road, Toronto, ON 100% 19 – – 12 7 19Brentwood Village, Brentwood, AB 50% 4 4 – – – 8Cimarron Shopping Centre, Okotoks, AB 50% 38 3 4 11 20 76Grant Crossing, Ottawa, ON 60% 48 4 25 4 15 80March Road, Ottawa, ON 50% 44 – 13 31 – 88RioCan Centre Belcourt, Ottawa, ON 60% 35 24 – 9 2 58Westney Road & Taunton Road, Ajax, ON 20% 2 – 1 1 – 10Shoppes on Queen West, Toronto, ON 100% 89 56 33 – – 89

279 91 76 68 44 428

Urban Intensification

Land use intensification opportunities arise from the fact that retail centres are generally built with lot coverage of approximately25% of the underlying land. Therefore, particularly in urban markets, RioCan can obtain additional density, retail or otherwise, onits existing property portfolio and, as the Trust already owns the underlying land, it is able to achieve relatively high returns on thesale of non-retail use density. A summary of significant projects underway is as follows.

Downtown West Joint Venture ( Globe and Mail Site)

In December 2012, RioCan completed the acquisition of the Globe & Mail Lands in Toronto’s Downtown West. Currently the homeof The Globe & Mail Newspaper, the property is comprised of 252,600 square feet of office space and 579 parking spaces, all set on6.47 acres of land forming part of the large city block bounded by Spadina, Front, Draper and Wellington Streets.



The acquisition has established the basis for a joint venture (the “Downtown West JV”) between RioCan, Allied and Diamond, witheach of RioCan and Allied having an undivided 40% interest and Diamond having an undivided 20% interest. RioCan has a beneficialownership in the Downtown West JV of 43.9% including its 19.3% participation in Diamond’s Whitecastle New Urban Fund 2. Thejoint-venture partners intend to redevelop the Property as a mixed-use retail, office and residential complex.It is expected that the site will be redeveloped into 1.2 million square feet of retail and office space in addition to a 1.1 millionsquare foot multi storey residential development. In February 2013, RioCan, Allied and Diamond conditionally contracted topurchase an additional 1.2 acres on the northwest corner of Front and Spadina which is adjacent to the 6.47 acres of land acquiredby the joint-venture partners in December, 2012.This additional land zoned for 450,000 square feet of commercial space which will provide the partners the opportunity to developthe additional 1.2 acres as a mixed-use retail and office complex that will integrate with, and complement the redevelopmentplanned for the larger site acquired last year. This additional parcel will allow the partners to develop the combined Globe and Maillands beyond 2.3 million square feet. This second acquisition is expected to close in the first quarter of 2013.RioCan Yonge Eglinton Centre

RioCan has launched a thorough revitalization and expansion plan at RioCan Yonge Eglinton Centre in Toronto, Ontario that willcapitalize on the area’s residential intensification, including 46,000 square feet of new retail space, a connection to the officetowers and ingress/egress to the food court and subway, improvements to parking, as well as a combined 12-storey, 210,000square foot expansion of the office towers. In April 2010, RioCan received approval for its rezoning application for this expansion. InAugust 2010, RioCan submitted plans for site plan approval and in July 2011 the zoning by-law was passed at the Toronto CityCouncil meeting. Subject to receipt of all final approvals, it is anticipated that construction of the new retail space can begin inearly 2013.Dupont Street, Toronto, Ontario

This 1.4 acre site, located on Dupont Street near Christie Avenue, is north-west of the downtown core of Toronto. The site isexpected to be developed into a 184,000 square foot three storey urban retail building. RioCan has a 100% ownership interest in thesite.Bathurst Street and College Street, Toronto, Ontario

This 1.3 acre, four parcel land assembly is located just west of the downtown core in Toronto near Bathurst Street and CollegeStreet. The site is expected to be developed into a 126,000 square foot three storey urban retail building. The site is owned byRioCan (60%) and Trinity (40%). RioCan is responsible for the development at this site.North East Corner of Yonge and Eglinton, Toronto

RioCan, along with Metropia and Bazis Inc., residential developers focused on the City of Toronto, have assembled six parcels of amulti-parcel land assembly on the northeast corner of Yonge Street and Eglinton Avenue in Toronto. The parcels include an 8,000square foot single tenant building, three multi-tenant use buildings totalling 33,000 square feet and a 30-unit apartment building.Depending on the total land area RioCan and its partners are able to acquire, it is expected that the site will be redeveloped intobetween 54,000 and 109,000 square feet of urban retail space in addition to a multi storey residential development. RioCan has a50% interest and each of Metropia and Bazis Inc. hold a 25% interest in the site.Sheppard Centre, Toronto

Sheppard Centre in north Toronto, acquired for $218 million in December 2011, is a 673,000 square foot urban mixed use centrethat contains retail, office, and residential uses. The property has direct access to both the Yonge and Sheppard subway lines andhas three levels of underground parking. Beyond the current retail, office, and residential uses, this well located property has thepotential for additional intensification through retail expansion and the addition of a larger residential/condominium component.The site is owned on a 50/50 basis with Kingsett.College and Manning Joint Venture

This site is comprised of 551-555 College Street, 547 College Street and 549 College Street, all owned equally by Allied and RioCan.It includes 23,000 square feet of land with 185 feet of frontage on College. Allied and RioCan have combined the properties with aview to intensify the site by creating a mixed-use office, retail and residential complex with approximately 125,000 square feet ofgross floor area.King and Portland Joint Venture

This site is comprised of 602-606 King Street West and adjacent properties to the west extending from King through to AdelaideStreet West (the “Adjacent Properties”), all owned equally by Allied and RioCan. It includes 61,600 square feet of land with frontageon King, Portland and Adelaide. Allied and RioCan have combined the properties with a view to intensify the site by creating amixed-use office, retail and residential complex with approximately 400,000 square feet of gross floor area. The AdjacentProperties are comprised of 620 and 622 King, 501 and 505 Adelaide, 106 Portland and 1 and 11 Adelaide Place.Brentwood Village Shopping Centre, Calgary, Alberta

Brentwood Village Shopping Centre is owned in a joint venture between RioCan and Kimco where air rights and residential densityassociated with a 3.6 acre parcel has been sold. The purchaser is redeveloping the site, which will involve approximately 50,000square feet of the existing retail being demolished and replaced with a number of mixed-use buildings, with approximately 40,000square feet of retail space. The RioCan and Kimco joint venture (“RioKim”) retained the ownership of the retail component of thesite.



Development Pipeline Summary

On an individual development basis, the majority of the projects are estimated to generate yields of approximately 7% to 11%(based on estimated costs excluding IFRS fair value adjustments and including interest costs). On an aggregate basis, RioCanexpects these development projects to generate a weighted average net operating income yield of 8.5% to 9.5%. Capitalexpenditures for greenfield development projects for 2013 are estimated to be approximately $48 million before constructionfinancing, or approximately $36 million, net of current construction financing arranged. For 2013, RioCan expects to fundapproximately $17 million of certain partners’ costs under the Trust’s mezzanine lending program, primarily with Trinity. Duringthe year ended December 31, 2012, total costs incurred and mezzanine loans advanced were approximately $92 million.

RioCan is committed to property development and redevelopment opportunities and is focused on completing the construction ofthe development pipeline underway, on time and on budget, and continuing to make progress on leasing. Commencement ofconstruction for several of the development projects have been deferred until economic conditions warrant. Potential anchortenants are currently more cautious in committing to new developments, which will impact the timing of several developments, asRioCan will not commence construction until it has secured the requisite leasing commitments and appropriate risk-adjustedreturns.

RioCan’s estimated development project square footage and development costs are subject to change, which changes may bematerial to the Trust, as assumptions regarding, among other items, anchor tenants, tenant rents, building sizes, projectcompletion timelines, availability and cost of construction financing, and project costs, are updated periodically based on revisedsite plans, the cost tendering process and continuing tenant negotiations.

Development activity is expected to increase in the upcoming years due to demand from US based tenants entering the Canadianmarket and the demand from existing tenants especially in urban locations. Due to the economic recession of the last few years,the level of development in general has been low across the country. In addition, RioCan’s exclusive joint venture with Tanger willresult in the development of outlet shopping centers.

The development (including expansions and redevelopment projects) pipeline NLA expected to be completed by year, as atDecember 31, 2012 is as follows:



Highlights of RioCan’s development pipeline as at December 31, 2012, are as follows:

Estimated square feet upon completion of thedevelopment project

Anticipated date ofdevelopment completion

(thousands of square feet)

RioCan’s%

ownership Partner(s)

Totalestimated

development

Retailerowned

anchors(i)

RioCan’sinterest

Partners’interests

Totalleasingactivity

(ii)%

LeasedCurrent

development

Potentialfuture

developments

Active Development Sites:

Cimarron Shopping Centre, Okotoks,AB 50%

Trinity /Tristar 421 276 73 72 137 94% Q1 2014 2014

Corbett Centre, Fredericton, NB 100% 466 242 224 – 159 71% Q2 2013 2014

East Hills, Calgary, AB 30%

CPP /Trinity /

Sidorski /Tristar 1,485 – 445 1,040 198 13% Q2 2014 2017

Eglinton Avenue & Warden Avenue,Toronto, ON 100% 169 – 169 – 151 89% – 2014

Flamborough Power Centre,Hamilton, ON 100% 281 – 281 – 187 67% – 2014

Flamborough Walmart Centre,Hamilton, ON 100% 317 – 317 – 306 97% Q1 2013 2014

Grant Crossing, Ottawa, ON 60%Trinity /

Shenkman 399 128 162 108 223 82% Q2 2014 2015Herongate Mall, Ottawa, ON 75% Trinity 180 – 135 44 75 42% Q1 2013 2014RioCan Centre Belcourt, Ottawa, ON

60%Trinity /

Shenkman 396 142 152 101 201 79% – 2014

The Stockyards, Toronto, ON 25%CPP /

Trinity 547 – 137 411 373 68% Q2 2014 2014Westney Road & Taunton Road, Ajax,

ON 20% Sunlife 174 – 35 139 110 63% Q1 2013 2014

4,835 788 2,130 1,915 2,120 52%

Greenfield and Urban DevelopmentProperties:

Bathurst Street & College Street,Toronto, ON 60% Trinity 126 – 76 50 – 0% – 2015

Dupont Street, Toronto, ON 100% 184 – 184 – – 0% – 2017

Globe & Mail Lands, Toronto, ON 40%Allied /

Diamond 1,200 – 480 720 – 0% – 2019(iii)

Highway 401 & Thickson Road –Phase II, Whitby, ON 100% 115 – 115 – – 0% – 2015

McCall Landing, Calgary, AB 25%CPP /

Trinity 1,141 427 179 535 – 0% – 2015(iii)

NE Yonge Eglinton, Toronto, ON 50%Metropia /

Bazis 54 – 27 27 – 0% – 2017RioCan Centre Vaughan, Vaughan, ON

Ph 2 & 3 31.25%Trinity /

Strathallan 300 – 94 206 – 0% – 2015

Stouffville, ON 41.75%Trinity /

Minto 60 – 25 35 – 0% – 2015Windfield Farms, Oshawa, ON 100% 1,217 156 1,061 – – 0% – 2015(iii)

4,397 583 2,241 1,573 – 0%

Excess Land Sites:

Highway 401 & Thickson Road –Phase I, Whitby, ON 50% Wynn 205 – 102 103 99 48% – 2015

RioCan Gravenhurst, ON 100% 301 – 301 – 150 50% – 2015RioCan Renfrew Centre, Renfrew, ON 100% 210 74 136 – 53 39% – 2015

716 74 539 103 302 47%

Total 9,948 1,445 4,910 3,591 2,422 28%

(i) Retailer owned anchors include both completed and contemplated sales.(ii) Leasing activity includes leasing that is conditional on receiving municipal approvals and meeting construction deadlines.(iii) The first phases are expected to be substantially complete by the dates indicated.




RioCan’s%

ownership

Estimatedproject cost

(100%)(i)

Acquisition and development expenditures incurred to dateEstimated remaining construction

expenditures to complete

RioCan’s interest

Amountincluded in

IPP

Amountincluded in

PUD TotalPartners’

interest TotalRioCan’sinterest

Partners’interest Total

Active Development Sites:

Cimarron Shopping Centre,Okotoks, AB 50% $ 34,317 $ 11,632 $ 2,365 $ 13,997 $ 13,997 $ 27,994 $ 3,161 $ 3,162 $ 6,323

Corbett Centre, Fredericton, NB 100% 45,340 31,532 3,442 34,974 – 34,974 10,366 – 10,366

East Hills, Calgary, AB 30% 290,758 – 32,320 32,320 75,412 107,732 54,908 128,119 183,027

Eglinton Avenue & WardenAvenue, Toronto, ON 100% 44,627 35,730 4,167 39,897 – 39,897 4,730 – 4,730

Flamborough Power Centre,Hamilton, ON 100% 56,059 30,742 6,599 37,341 – 37,341 18,718 – 18,718

Flamborough Walmart Centre,Hamilton, ON 100% 52,947 47,958 418 48,376 – 48,376 4,571 – 4,571

Grant Crossing, Ottawa, ON 60% 68,003 30,175 3,176 33,351 22,234 55,585 7,450 4,967 12,417

Herongate Mall, Ottawa, ON 75% 45,786 – 17,772 17,772 5,924 23,696 16,568 5,523 22,091

RioCan Centre Belcourt, Ottawa,ON 60% 59,477 23,982 5,057 29,039 19,360 48,399 6,646 4,431 11,077

The Stockyards, Toronto, ON 25% 165,713 – 22,117 22,117 66,350 88,467 19,312 57,935 77,247

Westney Road & Taunton Road,Ajax, ON 20% 54,059 5,128 2,014 7,142 28,569 35,711 3,670 14,678 18,348

917,086 216,879 99,447 316,326 231,846 548,172 150,100 218,815 368,915

Greenfield and Urban DevelopmentProperties:

Bathurst Street & College Street,Toronto, ON 60% 72,934 – 10,099 10,099 6,733 16,832 33,661 22,441 56,102

Dupont Street, Toronto, ON 100% 79,936 – 12,917 12,917 – 12,917 67,019 – 67,019

Globe & Mail Lands, Toronto, ON 40% 551,146 – 55,882 55,882 83,823 139,705 164,577 246,865 411,442

Highway 401 & Thickson Road –Phase II, Whitby, ON 100% 29,753 – 8,048 8,048 – 8,048 21,705 – 21,705

McCall Landing, Calgary, AB 25% 183,366 – 10,979 10,979 32,937 43,916 34,862 104,587 139,449

NE Yonge Eglinton, Toronto, ON 50% 36,115 – 26,278 26,278 26,278 52,556 (ii) (ii) (ii)

RioCan Centre Vaughan,Vaughan, ON Ph 2 & 3 31.25% 57,494 – 7,698 7,698 24,413 32,111 7,932 17,450 25,382

Stouffville, ON 41.75% 24,810 – 7,699 7,699 10,741 18,440 2,659 3,710 6,369

Windfield Farms, Oshawa, ON 100% 198,165 – 47,302 47,302 – 47,302 150,863 – 150,863

1,233,719 – 186,902 186,902 184,925 371,827 483,278 395,053 878,331

Excess Land Sites:

Highway 401 & Thickson Road –Phase I, Whitby, ON 50% 45,129 9,679 1,282 10,961 10,961 21,922 11,604 11,604 23,208

RioCan Gravenhurst, ON 100% 61,167 28,872 11,339 40,211 – 40,211 20,955 – 20,955

RioCan Renfrew Centre,Renfrew, ON 100% 28,376 11,010 2,882 13,892 – 13,892 14,484 – 14,484

134,672 49,561 15,503 65,064 10,961 76,025 47,043 11,604 58,647

$ 2,285,477 $ 266,440 $ 301,852 $ 568,292 $ 427,732 $ 996,024 $ 680,421 $ 625,472 $ 1,305,893

(i) Proceeds from sale to shadow anchors reduce projected cost.(ii) Cost to complete cannot be determined due to the early stage of the project.



Estimated remaining development activity to be funded by RioCan

2013 2014 2015 & Thereafter Future Development


RioCan’s%

ownershipRioCan’sinterest

Mezzaninefinancing

RioCan’sinterest

Mezzaninefinancing

RioCan’sinterest

Mezzaninefinancing

RioCan’sinterest

Mezzaninefinancing

Active Development Sites:Cimarron Shopping Centre, Okotoks, AB 50% $ 2,891 $ 1,446 $ 270 $ 135 $ – $ – $ – $ –Corbett Centre, Fredericton, NB 100% 172 – 87 – – – 10,107 –East Hills, Calgary, AB 30% 5,379 2,914 1,740 943 1,781 965 46,008 24,921Eglinton Avenue & Warden Avenue,

Toronto, ON 100% 174 – – – – – 4,557 –Flamborough Power Centre, Hamilton,

ON 100% 330 – 346 – – – 18,041 –Flamborough Walmart Centre, Hamilton,

ON 100% 2,110 – – – – – 2,461 –Grant Crossing, Ottawa, ON 60% 2,863 1,909 556 371 – – 4,030 2,687Herongate Mall, Ottawa, ON 75% 5,728 1,909 2,563 854 – – 8,277 2,759RioCan Centre Belcourt, Ottawa, ON 60% 1,687 1,125 326 217 – – 4,634 3,089The Stockyards, Toronto, ON 25% 11,501 11,501 7,811 7,811 – – – –Westney Road & Taunton Road, Ajax, ON 20% 610 – – – – – 3,059 –

33,445 20,804 13,699 10,331 1,781 965 101,174 33,456

Greenfield and Urban DevelopmentProperties:Bathurst Street & College Street,

Toronto, ON 60% 303 202 318 212 334 223 32,706 21,804Dupont Street, Toronto, ON 100% 646 – 678 – 2,136 – 63,559 –Globe & Mail Lands, Toronto, ON 40% 2,794 – 2,934 – 12,322 – 146,527 –Highway 401 & Thickson Road – Phase II,

Whitby, ON 100% 402 – 423 – – – 20,880 –McCall Landing, Calgary, AB 25% 6,502 6,502 712 712 729 729 26,920 26,920NE Yonge Eglinton, Toronto, ON 50% – – – – – – – –RioCan Centre Vaughan, Vaughan, ON Ph

2 & 3 31.25% 1,553 932 2,086 1,252 – – 4,293 2,576Stouffville, ON 41.75% 192 269 202 282 – – 2,265 3,160Windfield Farms, Oshawa, ON 100% 1,765 – 1,853 – 1,946 – 145,298 –

14,157 7,905 9,206 2,458 17,467 952 442,448 54,460

Excess Land Sites:Highway 401 & Thickson Road – Phase I,

Whitby, ON 50% – – – – – – 11,604 –RioCan Gravenhurst, ON 100% – – – – – – 20,955 –RioCan Renfrew Centre, Renfrew, ON 100% – – – – – – 14,484 –

– – – – – – 47,043 –

Gross development activity 47,602 28,709 22,905 12,789 19,248 1,917 590,665 87,916

Third party in place financing (11,501) (11,501) (7,811) (7,811) – – – –

RioCan funded development activity netof in place financing $ 36,101 $ 17,208 $ 15,094 $ 4,978 $ 19,248 $ 1,917 $ 590,665 $ 87,916



Highlights of RioCan’s expansion and redevelopment projects are as follows:As at December 31, 2012

Estimated projectcost including land Development

expendituresto date atRioCan’sinterest

Estimated remainingdevelopment

activity atRioCan’s interest(thousands of square feet,

millions of dollars)RioCan’s % Project RioCan’s Partners’ownership Tenant(s) NLA interest interest Total 2013 2014

Shoppers WorldBrampton, Brampton,ON 100%

Bad Boy, ImperialBuffet, Winners, BulkBarn 81 $ 30 $ – $ 30 $ 30 $ – $ –

Yonge & Eglinton Centre,Toronto, ON 100% – 43 35 – 35 5 14 16

Five Points ShoppingCentre, Oshawa, ON 100% Burger King 4 1 – 1 – 1 –

128 $ 66 $ – $ 66 $ 35 $ 15 $ 16

RioCan’s expansion and redevelopment project costs for 2013 are currently expected to be approximately $15.3 million. The yieldson these activities are expected to be approximately 7% to 11%. During the three months ended December 31, 2012, costs of $1.3million have been incurred ($2.4 million for the three months ended December 31, 2011). During the year ended December 31,2012, costs of $17.9 million have been incurred ($4.7 million for the year ended December 31, 2011).

Properties Held for Resale

Properties held for resale are properties acquired or developed for which RioCan generally intends to sell rather than hold on along term basis. RioCan’s plan is to dispose of all or part of such properties in the ordinary course of business. It is expected thatthe Trust will earn a return on these assets through a combination of property operating income earned during the relatively shortholding period, which will be included in net earnings, and sales proceeds. As at December 31, 2012, the Trust has $ 25 million ofproperties held for resale comprising 3 assets ($23 million as at December 31, 2011).

Mortgages and Loans Receivable

RioCan’s Declaration contains provisions that have the effect of limiting the aggregate value of the investment by the Trust inmortgages, other than mortgages taken back on the sale of RioCan’s properties, to a maximum of 30% of Adjusted Unitholders’Equity. Additionally, RioCan is limited to the amount of capital that can be invested in non-income producing properties to no morethan 15% of the Adjusted Unitholders’ Equity, which limitation applies to both greenfield development projects and mortgagesreceivable to fund the co-owners’ share of such developments, referred to in this MD&A as “mezzanine financing”. AtDecember 31, 2012, RioCan was in compliance with these restrictions.

Contractual mortgages and loans receivable as at December 31, 2012 and December 31, 2011 are comprised of the following:

(millions of dollars)As at December 31,

Contractual rates WeightedAverage

RateDecember 31,

2012December 31,

2011Low High

Mezzanine financing to co-owners 0% 8% 6.2% $ 167 $ 115Vendor-take-back and other 0% 7% 5.4% 33 32

Total 0% 8% 6.1% $ 200 $ 147

Prior to maturity, payments on these mortgages and loans receivable from co-owners are made from the cash flows generatedfrom operations and capital transactions relating to the underlying properties.



The changes in the carrying amount of mortgages and loans receivable are as follows:


Balance, beginning of year $ 147 $ 190Principal advances (i) 72 26Principal repayments (i) (21) (69)Interest receivable – repaid (9) (9)Interest receivable – accrued 11 9

Balance, end of year $ 200 $ 147

(i) Advances and repayments related to properties held for resale are included in cash flows from operating activities (see “Distributions toUnitholders” below). All other such amounts are included in cash flows used in investing activities.

Future repayments are as follows:

(millions of dollars)

Mezzaninefinancing

to co-owners

Vendor-take-backand other Total

Due on demand $ 54 $ – $ 54Year ending December 31:

2013 49 5 542014 17 10 272015 9 18 272016 33 – 332017 5 – 5

$ 167 $ 33 $ 200

RELATED PARTY TRANSACTIONSRioCan may have transactions in the normal course of business with entities whose directors or trustees are also its trustees and/or management. Any such transactions are in the normal course of operations and are measured at market based exchangeamounts. Unless otherwise noted, these transactions are not considered related party transactions for financial statementpurposes.

Transactions subsequent to the formation of a co-ownership that are not contemplated by the co-ownership agreement areconsidered to be related party transactions for financial statement purposes.

To date in 2012, RioCan had no such related party transactions.

CAPITAL STRATEGY AND RESOURCESRioCan strives for an optimal financial structure to drive appropriate risk adjusted total returns. The principal objectives of thecapital strategy are to:

• optimize the risk-adjusted cost of capital through an appropriate mix of debt and equity;• raise debt from a variety of sources and maintain a well staggered maturity schedule with longer-term financing and committed

income under long term tenant leases;• maintain significant committed undrawn loan facilities to support current and future business requirements;• actively manage financial risks, including interest rate, foreign exchange, liquidity and counterparty risks; and• selectively sell assets as part of actively managing the portfolio and to increase the portfolio weighting to the six urban markets

in Canada as a means to strategically re-cycle capital.

Management believes that the quality of RioCan’s assets and strong balance sheet are attractive to lenders and equity investorsand should enable RioCan to continue to access multiple sources of capital. In addition, management believes that current marketconditions will continue to provide opportunities for RioCan – a well capitalized, highly experienced and growing company – toacquire high-quality assets at attractive levels. Opportunities to acquire properties may come through outright propertyacquisitions or joint venture arrangements. RioCan maintains a disciplined investment strategy, which focuses on high-qualityassets in its targeted markets, emphasizing long-term value creation.



Capital Strategy Supporting Continued Growth

To support growth, RioCan employs a three-fold capital strategy:

• provide the capital necessary to fund growth;

• maintain sufficient flexibility to access capital in many forms, both public and private; and

• manage the overall financial structure in a fashion that preserves investment grade credit ratings.

RioCan plans to further strengthen its balance sheet by reducing its overall debt leverage over time, thereby strengthening variousinterest and cash flow coverage ratios. It is management’s intention that the Trust continually have access to the capital resourcesnecessary to expand and develop its business. Accordingly, the Trust may, from time-to-time, seek to obtain funds throughadditional common and preferred equity offerings, unsecured debt financings and/or mortgage/construction loan financings andother capital alternatives in a manner consistent with its intention to operate with a conservative debt structure.

Liquidity and Cash Management

RioCan maintains committed revolving bank facilities to provide financial liquidity. These can be drawn/repaid at short notice,reducing the need to hold liquid resources in cash and deposits. This minimizes costs arising from the difference betweenborrowing and deposit rates, while reducing credit exposure.

Capital Management Framework

RioCan defines capital as the aggregate of common and preferred unitholders’ equity and debt. The Trust’s capital managementframework is designed to maintain a level of capital that:

• complies with investment and debt restrictions pursuant to the Trust’s Declaration;

• complies with debt covenants;

• enables RioCan to achieve target credit ratings;

• 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 theTrust’s Declaration, and/or approved by the Trust’sBoard, through the Board’s annual review of the strategic plan and budget, supplemented by periodic Board and Board committeemeetings. Capital adequacy is monitored by management of the Trust by assessing performance against the approved annual planthroughout the year, which is updated accordingly, and by monitoring adherence to investment and debt restrictions contained inthe Declaration and debt covenants (see Note 26 to RioCan’s Audited consolidated financial statements as at December 31, 2012).In selecting appropriate funding choices, RioCan’s objective is to manage its capital structure in such a way so as to diversify itsfunding sources while minimizing its funding costs and risks. For 2013, RioCan expects to be able to satisfy all of its financingrequirements through the use of cash on hand, cash generated by operations, refinancing of maturing debt, financing of certainassets currently unencumbered by debt, construction financing facilities, sale of non-core properties, utilization of its operatinglines, and through public offerings of unsecured debentures, preferred units and common equity.

Capital Structure

As at December 31, 2012 and December 31, 2011, RioCan’s capital structure was as follows:

(millions of dollars, except percentage amounts) 2012 2011Increase

(decrease)

Capital:

Mortgages payable $ 4,446 $ 4,212 $ 234Debentures payable 1,292 822 470

Total Debt 5,738 5,034 704

Common and preferred unitholders’ equity 6,847 5,363 1,484

Total capital $ 12,585 $ 10,397 $ 2,188

Ratio of Debt, net of cash, to Total assets, net of cash 43.5% 46.4% (2.9%)

The year over year decrease in the Debt to Total Assets ratio primarily arises as a result of the relative increase in the value ofinvestment property and equity raised.



Debt and Leverage Metrics

TargetedRatios

Three months ended Rolling 12 months ended

December 31,2012(vii)

December 31,2012

December 31,2012(vi)

December 31,2012

December 31,2011

Interest coverage ratio (i) >2.5x 3.03 2.82 2.72 2.69 2.46Debt service coverage ratio (ii) >2.0x 2.18 2.07 2.00 1.99 1.87Fixed charge coverage ratio (iii) >1.1x 1.11 1.08 1.05 1.05 1.00Net debt to Adjusted EBITDA ratio (iv) n/a 7.22 7.22 7.28 7.28 7.26Net Operating debt to Adjusted

Operating EBITDA (v) <6.5x 7.19 7.19 7.08 7.08 7.00

(i) Interest coverage defined as: Adjusted EBITDA for the period, divided by total interest expense (including interest that has been capitalized).Adjusted EBITDA is calculated below.

(ii) Debt service coverage defined as: Adjusted EBITDA for the period, divided by total interest expense and scheduled mortgage principalamortization (including interest that has been capitalized).

(iii) Fixed charge coverage is defined as: Adjusted EBITDA for the period, divided by total interest expense (including interest that has beencapitalized) and distributions to common and preferred unitholders.

(iv) Net debt to Adjusted EBITDA is defined as: the average debt outstanding (net of cash) for the period divided by Adjusted EBITDA

(v) Net operating debt to Adjusted Operating EBITDA is defined as: the average debt outstanding (net of cash) for the period less debt related toproperty under development divided by Adjusted EBITDA excluding amounts related to property under development

(vi) Adjusted to exclude prepayment costs of $2.3 million related to the early repayment of secured debt.

(vii) Adjusted to exclude interest capitalized.

For the three months ended December 31, 2012, the interest coverage ratio has improved slightly, enabling the Trust to exceed itstarget ratio on a rolling 12 months basis. Debt service coverage ratio, for the three months ended December 31, 2012 and on arolling 12 months basis, improved modestly due to higher net operating income and refinancing debt at lower interest rates.

As part of its capital management strategy, it is RioCan’s objective to further improve its leverage and coverage ratios. It is theTrust’s objective to achieve the targeted ratios indicated in the above table over time.

In 2012, RioCan raised $423 million of additional common equity, issuing 15.5 million common Units at an average price of $27.29per share in offerings that occurred in April and September 2012. As well, the Trust generated $108 million through its commonUnit DRIP program during 2012, representing a DRIP participation rate of 26.9%. The generation of this additional capital supportsthe Trust’s growth strategy and provides liquidity in support of RioCan’s development program, where there has been a substantialincrease in activity in 2012 on multiple projects. It is RioCan’s objective for this increased level of activity to continue in 2013 and forseveral years thereafter, with an increased focus on urban development.



Adjusted EBITDA is calculated as follows:


Threemonths ended

12 months ended

December 31,2012

December 31,2012

December 31,2011

Net earnings attributable to unitholders $ 468,200 $ 1,344,220 $ 873,311Deferred income tax expense (750) (750) 700Fair value gains on investment property (348,304) (912,682) (533,221)Non-cash unit based compensation expense 1,426 5,171 3,465Interest expense 61,828 246,374 240,269Expense for early redemption of debentures – – 31,276Amortization of capital assets included in general and administrative expense 486 1,664 1,269Net earnings attributable to non-controlling interest 3,219 14,585 10,599Foreign exchange loss (gain) on monetary item not forming part of a net

investment in a foreign operation 7 (90) 112Impairment of investment – 11,999 –Acquisition transaction costs 1,065 1,795 450

Adjusted EBITDA $ 187,177 $ 712,286 $ 628,230

Adjust: Transaction gains (6,769) (7,798) –

Adjust: Items related to properties under development 2,067 2,981 2,729

Operating EBITDA $ 182,475 $ 707,469 $ 630,959

Three months annualized – Adjusted EBITDA $ 748,708

Three months annualized – Operating EBITDA $ 729,900

Net debt is calculated as follows:(thousands of dollars)

Average debt outstanding $ 5,493,004 $ 5,246,156 $ 4,639,264Less: average cash on hand (89,867) (62,697) (77,816)

Net debt $ 5,403,137 $ 5,183,459 $ 4,561,448Less: Debt related to properties under development (i) (187,190) (176,715) (145,450)

Net Operating Debt $ 5,215,947 $ 5,006,744 $ 4,415,998

(i) Allocated based on the ratio of Debt to Total Assets



Debt

RioCan intends to maintain strong debt service coverage and fixed charge coverage ratios as part of its commitment to maintainingits investment – grade debt ratings from Standard and Poor’s (“S&P”) and from Dominion Bond Rating Services Limited (“DBRS”).A credit rating generally provides an indication of the risk that the borrower will not fulfill its obligations in a timely manner withrespect to both interest and principal commitments. Rating categories range from highest credit quality (generally AAA) to defaultpayment (generally D).

As at December 31, 2012, S&P provided RioCan with an entity credit rating of BBB and a credit rating of BBB - relating to RioCan’ssenior unsecured debentures payable (“Debentures”). An obligor with a credit rating of BBB by S&P exhibits adequate capacity tomeet its financial obligations. However, adverse economic conditions or changing circumstances are more likely to lead to aweakened capacity of the obligor to meet its financial commitment on the obligation. A credit rating of BBB - or higher is aninvestment grade rating.

As at December 31, 2012, DBRS provided RioCan with a credit rating of BBB (high) relating to RioCan’s Debentures. A credit ratingof BBB by DBRS is generally an indication of adequate credit quality, the capacity for the payment of financial obligations isconsidered acceptable but the entity may be vulnerable to future events.

Revolving Lines of Credit

As at December 31, 2012, RioCan had four revolving lines of credit in place with three Canadian Schedule 1 financial institutions,having an aggregate capacity of $428.5 million.

The following table summarizes the details of the secured lines of credit as at December 31, 2012:

(in millions of dollars)Amounts drawn

FacilityMaximum Loan

Amount*Cash

advancesLetters

of CreditAvailable

to be drawn Interest rates Maturity

1 $ 200(i) $ 73 $ 11 $ 116 CDN$ advances – prime plus 0.5% per annum or Bankers’Acceptance plus 1.5%;US$ advances – US$ Base Rate plus 0.5% per annum or US$ LIBORplus 1.5%

November 2014

2 100(i) – 13 87 CDN$ advances – prime plus 0.5% per annum or Bankers’Acceptance plus 1.5%;US$ advances – US$ Base Rate plus 0.5% per annum or US$ LIBORplus 1.5%

June 2014

3 125(i) – – 124 CDN$ advances – prime plus 0.5% per annum or Bankers’Acceptance plus 1.5%;US$ advances – US$ Base Rate plus 0.5% per annum or US$ LIBORplus 1.5%

December 2013(plus one year

extension subjectto Bank approval)

4 4(ii) – 1 3 Letters of Credit fees – 2.25% Upon demand forunused amounts

$ 429 $ 73 $ 25 $ 330

(i) Secured by a charge against certain income properties. Should the aggregate agreed values for lending purposes of such properties fall to alevel which would not support a borrowing of the maximum loan amount, RioCan has the option to provide substitute income properties asadditional security.

(ii) RioKim Letter of Credit facility, which provides for a maximum aggregate amount of $7 million, or $3.5 million at RioCan’s interest.

* The above facilities are subject to customary terms and conditions which RioCan’s management believe would not limit the distributionscurrently expected to be distributed to unitholders in the foreseeable future.

Debentures Payable

As at December 31, 2012, RioCan had eight series of Debentures outstanding totalling $1.3 billion (December 31, 2011 – six seriestotalling $ 822 million).

The Debentures have covenants relating to RioCan’s 60% leverage limit to Aggregate Assets as set out in RioCan’s Declaration, themaintenance of a $1.0 billion Adjusted Book Equity, defined in the indenture, and maintenance of an interest coverage ratio of 1.65times or better. There are no requirements under the unsecured Debenture covenants to require RioCan to maintainunencumbered assets. The Series I debentures, which are due in 2026 and aggregate $100 million, have an additional provisionthat provides RioCan with the right, at any time, to convert these debentures to mortgage debt, subject to the acceptability of thesecurity given to the debenture holders. In such an event, the covenants relating to the 60% leverage limit, minimum book equityand interest coverage ratio would be eliminated for this series of debenture.



2012 Activity

On January 26, 2012, the Trust issued $150 million principal amount of Series P senior unsecured debentures which mature onMarch 1, 2017, and carry a coupon rate of 3.80%.

At maturity on June 15, 2012, the Trust redeemed the $100 million Series H debentures with a coupon rate of 4.70%, in accordancewith their terms.

On June 28, 2012, the Trust issued $150 million of Series Q debentures which mature on June 28, 2019 and carry a coupon rate of3.85%.

On July 19, 2012, the Trust issued an additional $25 million of Series Q debentures, resulting in an aggregate of $175 million ofSeries Q debentures outstanding. The additional debentures carry a coupon rate of 3.85%, mature on June 28, 2019 and were soldat a price of $25.4 million plus accrued interest, with an effective yield of 3.609%.

On December 12, 2012, the Trust issued $250 million of Series R debentures which mature on December 13, 2021 and carry acoupon rate of 3.716%.

2011 Activity

On January 20, 2011, the Trust redeemed early all of the outstanding $200 million Series F debentures which were contractuallydue on March 8, 2011 and on February 24, 2011, the Trust redeemed all of the outstanding $180 million Series L debentures whichwere due on April 3, 2014. Both debentures were redeemed in accordance with their terms. The early redemption of the Series Fand L debentures resulted in one-time expenses of $27.2 million, negatively impacting first quarter 2011 earnings.

On January 21, 2011, the Trust issued $225 million principal amount of Series O senior unsecured debentures bearing contractualinterest at 4.499% and which mature on January 21, 2016.

The debentures are subject to the same covenants as the other above noted outstanding debentures, with the exception of Series Iwhich has an additional provision as discussed above.

Changes in the carrying amount of the debentures payable resulted primarily from the following:


Balance, beginning of year $ 827 $ 1,099Issuances 575 225Repayments (100) (500)Foreign currency translation (3) 3

Contractual obligations 1,299 827Unamortized debt financing costs (7) (5)

Balance, end of year $ 1,292 $ 822

Mortgages Payable

During the year ended December 31, 2012, RioCan had new mortgage borrowings as follows:

Year ended December 31, 2012

(millions of dollars, except other data)

Weightedaverage

contractualinterest rate

Averageterm to

maturityin years

New borrowings:

Fixed rate term mortgages – Canada $ 449 3.14% 5.1

Fixed rate term mortgages – US 92 4.34% 6.8

Floating rate term mortgages – Canada 81 1.85% 4.6

Construction 12 2.42% 1.1Operating lines of credit 188 2.34% 1.4

$ 822 2.97% 4.4



As at December 31, 2012, RioCan had mortgages payable of $4.4 billion ($4.2 billion as at December 31, 2011). The vast majority ofthe Trust’s mortgage indebtedness provides recourse to the assets of the Trust, as opposed to only having recourse to the specificproperty charged. RioCan follows this policy as it generally results in lower interest costs than would otherwise be obtained.

As at December 31, 2012, the contractual interest rates on the mortgages payable ranged from 1.71% to 8.45% per annum with theweighted average interest rate of 4.71% per annum. Changes in the carrying amount of the mortgages payable resulted primarilyfrom the following:


Balance, beginning of period $ 4,220 $ 3,324New Borrowings:

Fixed rate term mortgages – Canada 449 516

Fixed rate term mortgages – US 92 285

Floating rate term mortgages – Canada 83 4

Construction 12 45

Advances on operating line of credit 188 105

Assumed on the acquisition of properties 174 200Principal repayments:

Scheduled amortization (94) (80)

Operating line of credit (221) –

At maturity: Fixed rate term mortgages (354) (139)

Floating rate term mortgage (18) –

Construction financing (26) (51)

On the disposition of properties (42) –Foreign currency translation (23) 11

Contractual obligations 4,440 4,220Unamortized differential between contractual and market interest rates on liabilities assumed at the

acquisition of properties 23 9Unamortized debt financing costs (17) (17)

Balance, end of period $ 4,446 $ 4,212

At December 31, 2012, $377 million of the debt was at floating interest rates. Of the floating rate debt, $296 million pertains tomortgages and $9 million pertains to construction financing. The percentage of RioCan’s aggregate debt at floating rates is 6.6%.

At the outset of 2012, RioCan had $381 million of principal maturities at a weighted average contractual interest rate of 5.47%.During 2012, RioCan had new term borrowings of $624 million at a weighted average interest rate of 3.15% and an average term of5.3 years. For the year ended December 31, 2012, the maturity of fixed rate term mortgages and scheduled amortization amountedto repayments of $448 million.

In April 2012, RioCan made an early repayment of $90.3 million (at RioCan’s interest) of secured debt, including prepayment costsof approximately $2.3 million. This debt carried a weighted average interest rate of 5.91% and was incurred in the ordinary course.Originally due in July and August 2015, the debt was secured by four assets, three of which are now unencumbered.

For 2013, RioCan has $509 million of principal maturities (including unsecured debt of $150 million) at a weighted averagecontractual interest rate of 5.62%.

During the fourth quarter of 2012, RioCan had new term borrowings of $116 million at a weighted average interest rate of 3.32%and an average term of 5.6 years. Aggregate repayments at the maturity of fixed rate term mortgages and scheduled amortizationin the fourth quarter of 2012 was $132 million.

Hedging Activities

The effectiveness of the hedging relationships is reviewed on a quarterly basis. At December 31, 2012 the Trust has assessed thatthere is no ineffectiveness in the hedge of its interest rate exposure.



Aggregate Maturities

On a combined basis, RioCan’s mortgages and debentures payable bear a weighted average contractual interest rate of 4.7% witha weighted average term to maturity of 4.7 years. RioCan’s debt maturity profile and future repayments are as outlined below:

Contractual

Principal maturities

(millions of dollars, except percentageamounts)As at December 31, 2012

Scheduledprincipal

amortizationMortgages

payable

Weightedaverageinterest

rateDebentures

payable


rate Total


rate

Year ending December 31:2013 $ 93 $ 359 5.79% $ 150 5.23% $ 602 5.62%2014 87 459 4.24% – 0.00% 546 4.24%2015 80 663 4.65% 249 5.03% 992 4.75%2016 68 545 4.85% 225 4.50% 838 4.75%2017 56 805 3.97% 150 3.80% 1,011 3.94%

Thereafter 131 1,094 5.04% 525 4.19% 1,750 4.81%

$ 515 $ 3,925 4.71% $ 1,299 4.48% $ 5,739 4.66%

The principal maturities by lender by year of maturity are as follows:Contractual

Principal maturities by type of lender

(millions of dollars)As at December 31, 2012

Scheduledprincipal

amortization

Lifeinsurance

industryMortgage

conduit BanksPension

funds OtherUnsecureddebentures Total

Year ending December 31:2013 $ 93 $ 110 $ 106 $ 134 $ – $ 9 $ 150 $ 6022014 87 112 8 322 6 11 – 5462015 80 190 186 214 62 11 249 9922016 68 139 173 228 – 5 225 8382017 56 290 71 303 96 45 150 1,011

Thereafter 131 298 312 377 107 – 525 1,750

$ 515 $ 1,139 $ 856 $ 1,578 $ 271 $ 81 $ 1,299 $ 5,739

The table below presents assets at fair value (“FV”) that are available to RioCan to finance and/or refinance its debt maturities for2013 and 2014:

Number ofProperties

FV ofIncome

Properties atDecember 31,

2012

Principal balanceof debt maturing

(millions of dollars) 2013 2014

Unencumbered income property assets 66 $ 1,221 $ – $ –Unencumbered development property assets 13 123 – –

Unencumbered assets 79 1,344 – –Encumbered assets with debt maturing in 2013 24 849 358 –Encumbered assets with debt maturing in 2014 22 1,520 – 447Construction financing on properties under development 1 – – 28VTB on properties under development 1 – 1 3Unsecured debt maturity – – 150 –

Total 127 $ 3,713 $ 509 $ 478

RioCan has the continued flexibility to generate additional funds in 2013 through financing maturing loan balances as well as repayadditional balloon balances to increase the size of RioCan’s pool of unencumbered assets. As at December 31, 2012 RioCan had 79properties that are unencumbered with a fair value of approximately $1.3 billion. During the first and second quarters of 2013, it isRioCan’s intention to repay mortgages on 11 properties with a fair value of approximately $274 million.



Considering RioCan’s current levels of cash, undrawn credit facilities, relatively low leverage and demonstrated historical accessto debt capital markets, the Trust expects that all maturities will be refinanced or repaid in the normal course of business, and assuch, RioCan does not currently anticipate that it will be required to sell assets and/or issue equity to meet its maturing debtobligations for 2013.

Trust Units

As at February 13, 2013, there are 300.8 million common Units issued and outstanding and 8.4 million options outstanding underthe Trust’s incentive unit option plan (the “Plan”). All common Units outstanding have equal rights and privileges and entitle theholder thereof to one vote for each Unit at all meetings of Unitholders. During the years ended December 31, 2012 and 2011, theTrust issued Units as follows:(number of Units in thousands)Year ended December 31, 2012 2011

Units outstanding, beginning of year (i) 279,113 259,818Units issued:Exchangeable limited partnership units 29 3,290Public offerings 15,510 10,477Distribution reinvestment plan 4,081 3,433Direct purchase plan 47 48Unit option plan 1,319 2,047

Units outstanding, end of year (i) 300,099 279,113

(i) Included in units outstanding are exchangeable limited partnership units of four limited partnerships that are subsidiaries of the Trust (the“LP units”) which were issued to vendors, as partial consideration for income properties acquired by RioCan (December 31, 2012 – 2,312,661LP units; December 31, 2011 – 4,397,085 LP units). RioCan is the general partner of the limited partnerships. The LP units are entitled todistributions equivalent to distributions on RioCan Units, must be exchanged for RioCan Units on a one-for-one basis and are exchangeable atany time at the option of the holder.

RioCan’s continued access to capital allows the Trust to be an active acquirer of properties both in Canada and the US asopportunities arise.

On April 20, 2012, RioCan issued an aggregate of 8.6 million common Units at a price of $26.80 per Unit for aggregate grossproceeds of $230 million. The aggregate offering was comprised of the issuance of 7.5 million Units at $26.80 per Unit for grossproceeds of $200 million, together with the option granted to underwriters, which was exercised in full, for an issuance of anadditional 1.1 million Units at $26.80 per Unit for additional gross proceeds of $30 million.

On September 19, 2012, RioCan issued an aggregate of 6.9 million common Units at a price of $27.90 per Unit for aggregate grossproceeds of $193 million. The aggregate offering was comprised of the issuance of 6.3 million Units at $27.90 per Unit for grossproceeds of $175 million, together with the option granted to underwriters, which was exercised in part, for an issuance of anadditional 650,000 Units at $27.90 per Unit for additional gross proceeds of $18 million.

During the fourth quarter of 2012, 1.1 million Units were issued pursuant to the Trust’s distribution reinvestment plan compared to0.9 million Units during the same period in 2011. Participation in the distribution reinvestment plan was 29.2% for the threemonths ended December 31, 2012, compared to 22.2% for the three months ended December 31, 2011.

During the fourth quarter of 2012, nil options were granted under the Plan compared to 25,000 granted during the same period in2011. Additionally, RioCan has a Restricted Equity Unit (“REU”) plan which provides for an allotment of REUs to each non-employeetrustee. The value of the REUs allotted appreciate and depreciate with increases or decreases in the market price of the Trust’sUnit. During the fourth quarter of 2012 nil REU’s were granted (nil for the same period in 2011).

The Trust provides long-term incentives to certain employees by granting options through the Plan. The objective of granting unit-based compensation is to encourage Plan members to acquire an ownership interest in RioCan over time and acts as a financialincentive for such persons to act in the long term interests of RioCan and its unitholders. The exercise price for each option isequal to the volume weighted average trading price of the Units on the Toronto Stock Exchange for the five trading daysimmediately preceding the date of grant except for those options granted prior to May 27, 2009 which have an exercise price equalto the closing price of the Trust’s Units on the date prior to the day the option was granted. Of the 29.2 million Units approved to begranted under the Plan, 6.5 million Units remain available for grant under the Plan as at December 31, 2012 (December 31, 2011 –8.5 million Units). During the fourth quarter of 2012, 0.3 million Units were issued pursuant to exercises of the incentive Unitoptions, compared to 0.6 million Units for the comparable period of 2011.

REU members are also entitled to be credited with REUs for distributions paid in respect of Units of the Trust based on an AverageMarket Price of the Units as defined by the plan. The REUs vest and are settled three years from the date of issuance by a cashpayment equal to the number of vested REUs credited to the member multiplied by the Average Market Price of the Trust’s Units atthe settlement date, less applicable withholdings. The REU plan liability at December 31, 2012 was $ 1.9 million ($ 1.8 million atDecember 31, 2011).



Preferred Units

On December 6, 2010, the Trust’s Declaration was amended and restated to permit the future authorization and issuance of a classof preferred equity securities (“Preferred Units”). RioCan believes that Preferred Units provides the Trust with further enhancedability to more actively pursue value enhancing opportunities and acquisitions by providing the Trust with greater flexibility inraising capital. In addition, the Preferred Units potentially provide the Trust with an opportunity to reduce its cost of capital.

In the first quarter of 2011, the Trust issued 5 million 5.25% Cumulative Rate Reset Preferred Trust Units, Series A (the “Series AUnits”) at a price of $25 per unit for aggregate gross proceeds of $125 million. Also, on November 20, 2011, the Trust issued5.98 million 4.7% Cumulative Rate Reset Preferred Trust Units, Series C (the “Series C Units”) at a price of $25 per unit foraggregate gross proceeds of $149.5 million.

S&P and DBRS provided credit ratings for the Series A and Series C Units of the Trust. The Series A and Series C Units have bothbeen assigned a rating of “Pfd-3 (high)” by DBRS and a rating of “P-3 (high)” by S&P. DBRS has five rating categories of preferredshares for which it will assign a rating. The ‘‘Pfd-3’’ rating is the third highest category available from DBRS for preferredsecurities and is considered to be of adequate credit quality. According to DBRS, preferred securities rated ‘‘Pfd-3’’are of adequatecredit quality and while protection of distributions and principal is still considered acceptable, the issuing entity is moresusceptible to adverse changes in financial and economic conditions, and there may be other adverse conditions present whichdetract from debt protection. Pfd-3 ratings generally correspond with companies whose senior bonds are rated in the higher end ofthe BBB category. A “P-3 (High)” rating by S&P is the third of the three sub-categories within the second highest rating of the eightstandard categories of ratings utilized by S&P for preferred units. “High” and “low” grades may be used to indicate a relativestanding of a credit within a particular rating category.

Guarantees

RioCan provides guarantees on behalf of third parties, including co-owners and partners, for which the Trust generally is paid afee, as, among other reasons, it generally results in lower interest costs and higher loan-to-value ratios than would otherwise beobtained. Also, RioCan’s guarantees remain in place for debts assumed by purchasers in connection with certain propertydispositions and will remain until such debts are extinguished or lenders agree to release RioCan’s covenants. Credit risks arise inthe event that these parties default on repayment of their debt since they are guaranteed by RioCan. These credit risks aremitigated as RioCan has recourse under these guarantees in the event of a default by the borrowers, in which case the Trust’sclaim has security against the underlying real estate investments. As at December 31, 2012, the estimated amount of debt subjectto such guarantees and, therefore, the maximum exposure to credit risk was approximately $299 million with expiries between2013 and 2034. As at December 31, 2012 and during 2012 there have been no defaults by the primary obligors for debts on whichRioCan has provided guarantees, and as a result, no contingent loss on these guarantees has been recognized in the Trust’sfinancial statements.

At December 31, 2012, the parties on behalf of which RioCan had outstanding guarantees are as follows:

(millions of dollars)As at December 31, 2012 2011

Partners and co-ownersKimco $129 $163Trinity 53 55Other 52 52

Assumption of mortgages by purchasers on property dispositionsRetrocom Mid-Market REIT (“Retrocom”) 48 49Other 17 41

$299 $360

Liquidity

Liquidity refers to the Trust having and/or generating sufficient amounts of cash and equivalents to fund the ongoing operationalcommitments, distributions to unitholders and planned growth in the business.

RioCan retains a portion of its annual operating cash flows to help fund ongoing maintenance capital expenditures, tenantinstallation costs and long term unfunded contractual obligations, among other items.

Cash on hand, borrowings under the revolving credit facilities, the equity and debt capital markets and the potential sale of assetsalso provide the necessary liquidity to fund ongoing and future capital expenditures and obligations. At December 31, 2012, RioCanhad:

• $183 million of cash and short term investments;

• $330 million of cash available under undrawn bank lines of credit;



• Indebtedness net of cash is 43.5% of total assets net of cash based on fair value; and

• 79 unencumbered properties with a fair value of $1.3 billion.

Unitholder distributions reinvested through the distribution reinvestment and direct purchase plans result in the issuance of Units,as opposed to a cash outlay, thereby providing an additional source of capital to fund RioCan’s activities (see “Distributions toUnitholders” elsewhere in this MD&A).

RioCan’s liquidity profile at December 31, 2012 is as follows:

(millions of dollars)

As atDecember 31,

2012

As atDecember 31,

2011

Cash and short term investments $ 183 $ 77Undrawn lines of credit 330 273

Liquidity $ 513 $ 350

Contractual debt:Unsecured debentures payable $ 1,299 $ 827Mortgages payable 4,440 4,220

Total contractual debt $ 5,739 $ 5,047

Liquidity as a percentage of total contractual debt 8.9% 6.9%

Percentage unsecured 22.6% 16.4%

Percentage secured 77.4% 83.6%

RioCan’s contractual commitments and development expenditures for active projects at December 31, 2012 are as follows:

Contractual Debt Commitments and Development Expenditures(in millions) 2013 2014 2015 2016 2017 2018 Thereafter Total

Mortgages $ 452 $ 546 $ 743 $ 613 $ 861 $ – $ 1,225 $ 4,440Debentures 150 – 249 225 150 525 - 1,299Developments 76 36 21 – – – - 133

Total $ 678 $ 582 $ 1,013 $ 838 $ 1,011 $ 525 $ 1,225 $ 5,872

Deferred Income Taxes

The Trust qualifies as a mutual fund trust and a REIT for Canadian income tax purposes. The Trust expects to distribute all of itstaxable income to unitholders and is entitled to deduct such distributions for Canadian income tax purposes. Accordingly, noprovision for current income taxes payable is required, except for amounts incurred in its incorporated Canadian subsidiaries.

The Trust’s US subsidiary qualifies as a REIT for US income tax purposes. This subsidiary expects to distribute all of its US taxableincome (if any) to Canada and is entitled to deduct such distributions for US income tax purposes. Accordingly, no provision for UScurrent income tax payable is required.

The Trust consolidates certain wholly owned incorporated entities that are subject to tax. The tax disclosures, expense anddeferred tax balances relate only to these entities.

Deferred income tax assets and liabilities are recognized for temporary differences between the tax and accounting bases ofassets and liabilities as well as for the benefit of unused tax credits and losses that are available to be carried forward to future taxyears to the extent that it is probable that the deductions, unused tax credits and losses can be realized. Deferred tax assets andliabilities are measured at the undistributed tax rates that are expected to apply when the assets are realized or the liabilities aresettled, based on the tax laws that have been enacted or substantively enacted at the balance sheet date. Deferred income taxrelating to items recognized in equity will also be recognized in equity.

The Trust consolidates certain wholly owned incorporated entities that are subject to tax. The tax disclosures and expense afterJanuary 1, 2011 relate only to these entities.

At December 31, 2012, the Trust had deferred tax assets of $9 million (December 31, 2011 – $8 million) primarily related to agoodwill balance that arose during the restructuring the Trust undertook to qualify as a REIT for purposes of the Income Tax Act(Canada).



If the Trust were to cease to qualify as a REIT for Canadian income tax purposes, certain distributions would not be deductible incomputing income for Canadian income tax purposes and the Trust would be subject to tax on such distributions at a ratesubstantially equivalent to the general corporate income tax rate. Other distributions would generally continue to be treated asreturns of capital to unitholders.

Distributions to Unitholders

The Trust expects to distribute to its Unitholders in each year an amount not less than the Trust’s income for the year, ascalculated in accordance with the Act after all permitted deductions under the Act have been taken.

RioCan’s monthly distribution in 2012 was $0.115 per Unit, representing, on an annualized basis, $1.38 per Unit.

On December 12, 2012, RioCan announced an increase to its monthly distribution to 11.75 cents per Unit, which will commencewith the distribution for January 2013. This increase of just over 2%, or 3 cents per Unit on an annualized basis, will increaseRioCan’s annualized distribution to $1.41 per Unit.

Distributions to Unitholders are as follows:(millions of dollars)Year ended December 31, 2012 2011

Distributions to Unitholders $ 401 $ 367Distributions reinvested through the distribution reinvestment plan (108) (82)

Net distributions $ 293 $ 285

Distributions reinvested through the distribution reinvestment plan as a percentage of distributions toUnitholders 26.9% 22.4%

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 net distributions is as follows:(millions of dollars)Cash Flows Provided By (Used In)Year ended December 31, 2012 2011 2010

Cash flows provided by operating activities $ 444 $ 356 $ 341Adjust for:Changes in non-cash operating items and other 10 (12) (18)Properties held for resale 2 3 12

Adjusted operating cash flow $ 456 $ 347 $ 335

Distributions to Unitholders $ 401 $ 367 $ 340Distributions reinvested through the distribution reinvestment plan (108) (82) (59)

Net distributions $ 293 $ 285 $ 281

Excess of adjusted operating cash flow over net distributions $ 163 $ 62 $ 54

In determining the annual level of distributions to Unitholders, the Trust considers at forward-looking cash flow informationincluding forecasts and budgets and the future business prospects of the Trust. Furthermore, RioCan does not consider periodiccash flow fluctuations resulting from items such as the timing of property operating costs and tax installments, and semi-annualdebenture and mortgages payable interest payments in determining the level of distributions to Unitholders in any particularquarter. Additionally, in establishing the level of cash distributions to Unitholders the Trust considers the impact of, among otheritems, the future growth in the income producing portfolio, completion of properties under development, impact of futureacquisitions and capital expenditures and leasing related to the income producing portfolio. Distributions to Unitholders areexpected to continue to be funded by cash flows generated from RioCan’s real estate investments and fee generating activities.



Difference between net earnings and distributions to Unitholders

A comparison of distributions to Unitholders with cash flows provided by operating activities and net earnings is as follows:

(millions of dollars)Year ended December 31, 2012 2011 2010

Cash flows provided by operating activities $ 444 $ 356 $ 341

Net earnings attributable to Unitholders $ 1,330 $ 866 $1,495

Distributions to Unitholders $ 401 $ 367 $ 340

Difference between cash flows provided by operating activities and distributions to Unitholders $ 43 $ (11) $ 1

Difference between net earnings and distributions to Unitholders $ 929 $ 499 $1,155

The Trust does not use net earnings in accordance with IFRS as the basis to establish the level of Unitholders’ distributions as netearnings include, among other items, non-cash fair value adjustment related to its investment property portfolio and deferredincome taxes. Consideration is given by RioCan to maintenance capital expenditures for the property portfolio and preferreddistributions in establishing the level of annual distributions to Unitholders.

SELECTED QUARTERLY CONSOLIDATED INFORMATION(millions of dollars, except per Unit amounts)

2012 2011As at and for the quarter ended Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

Total revenue $ 301 $ 283 $ 269 $ 274 $ 267 $ 246 $ 237 $ 237Net earnings* 472 127 412 349 244 170 118 352Net earnings per common Unit*– basic 1.55 0.42 1.41 1.21 0.87 0.63 0.44 1.33– diluted 1.55 0.42 1.40 1.20 0.87 0.63 0.44 1.32Operating FFO 116 115 106 103 100 97 93 90Operating FFO per Unit 0.39 0.40 0.37 0.37 0.36 0.37 0.36 0.35Total assets 12,943 12,249 11,876 11,171 10,767 9,906 9,507 9,281Total mortgages and debentures payable 5,738 5,352 5,228 5,143 5,034 4,749 4,574 4,418Total distributions to common Unitholders 103 101 100 96 95 91 90 90Total distributions to common Unitholders per

Unit 0.345 0.345 0.345 0.345 0.345 0.345 0.345 0.345Net book value per common Unit** 21.93 20.69 20.53 19.16 18.27 17.51 17.10 17.03Market price per common Unit– high 27.90 29.20 27.78 27.67 26.56 26.90 26.20 25.50– low 26.02 27.27 25.72 25.45 24.11 21.05 24.27 21.95– close 27.56 27.67 27.70 27.03 26.43 26.00 25.94 25.46Market price per preferred unit – Series A– high 26.34 26.25 26.10 26.38 26.03 26.21 26.16 26.10– low 25.85 25.62 25.50 25.42 25.70 25.42 25.41 25.05– close 25.94 26.20 25.60 25.42 25.81 25.55 25.56 26.00Market price per preferred unit – Series C– high 26.21 26.00 25.93 25.80 25.50 – – –– low 25.51 25.31 25.06 25.15 24.62 – – –– close 26.15 25.60 25.30 25.31 25.15 – – –

* Refer to RioCan’s annual and interim MD&As issued for the three months ended March 31, 2012 and 2011, the six months ended June 30, 2012and 2011, the nine months ended September 30, 2012 and 2011 for a discussion and analysis relating to those periods.

** A non-GAAP measurement. Calculated by RioCan as common Unitholders’ equity divided by Units outstanding at the end of the period. RioCan’smethod of calculating net book value per Unit may differ from other issuers’ methods and accordingly may not be comparable to net book valueper unit reported by other issuers.



USE OF NON-GAAP MEASURESRioCan’s audited consolidated financial statements are prepared in accordance with IFRS. The following measures, as well asother measures discussed elsewhere in this MD&A, 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 assessthe Trust’s underlying performance and provides these additional measures so that investors may do the same.

Funds From Operations (“FFO”)

FFO is a supplemental non-GAAP financial measure of operating performance widely used by the real estate industry. Congruentwith the Real Property Association of Canada’s (“REALpac”) intended use of FFO, RioCan considers FFO to be a meaningfulmeasure of operating performance as it adjusts for items included in IFRS net earnings that do not necessarily provide an accuratepicture of the Trust’s past or recurring performance, such as unrealized changes in fair value of real estate property, gains orlosses on disposal of income properties and other non-cash items.

FFO should not be construed as an alternative to net earnings or cash flows provided by operating activities determined inaccordance with IFRS. RioCan’s method of calculating FFO is in accordance with REALpac’s recommendations but may differ fromother issuers’ methods and, accordingly, may not be comparable to FFO reported by other issuers.

FFO is generally the same as IFRS net earnings other than excluding changes in the fair values of investment properties, deferredincome taxes, acquisition transaction costs and deducting preferred unit distributions. Please see “Results of Operations” for thecalculation of FFO.

Operating Funds From Operations (“Operating FFO”)

RioCan’s Operating FFO represents the recurring cash flow generated through the ownership and management of incomeproperties. This is the basis for determining RioCan’s Adjusted Funds From Operations. In contrast to FFO (defined above),Operating FFO also excludes transactional gains from the sale of real estate as well as the expenditures related to developmentactivities that, in management’s view, form part of the costs of its development projects. There is no standard industry definedmeasure of Operating FFO. As such, RioCan’s method of calculating Operating FFO will differ from other issuers’ methods and,accordingly, will not be comparable to such amounts reported by other issuers. Please see “Results of Operations” for thecalculation of Operating FFO.

Adjusted Funds From Operations (“AFFO”)

AFFO is a supplemental non-GAAP financial measure of reporting operating performance widely used in the real estate industry.Management views AFFO as an alternative measure of cash generated from operations. AFFO is calculated by adjusting OperatingFFO for straight-line rent adjustments, non-cash compensation expenses, normalized costs for capital expenditures and leasingcosts for maintaining shopping centres and current lease revenues (“productive capacity maintenance”). In addition, non-recurringcosts that impact operating cash flow may be adjusted. There is no standard industry defined measure of AFFO. As such, RioCan’smethod of calculating AFFO will differ from other issuers’ methods and, accordingly, will not be comparable to such amountsreported by other issuers.

Productive capacity maintenance can vary widely from quarter to quarter due to the lease expiry profile, vacancies and capitalexpenditure estimates due to the life cycle of the property resulting in volatility in AFFO. As well, the Trust reviews capitalmaintenance spending levels based on the performance of the portfolio. For these reasons, normalized capital maintenanceexpenditures have been estimated based on historical activity and management’s expectations on a normalized level of activity.Productive capacity maintenance expenditures are further discussed in “Capital Expenditures on Income Properties” indicating theTrust’s expectation of such annualized expenditures. Please see “Results of Operations” for the calculation of AFFO.

Adjusted Earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”)

Adjusted EBITDA is an important measure that is used in several of the Trust’s debt metrics, providing information with respect tothe Trust’s ability to satisfy its obligations including debt service. It is used in place of net income because it excludes major non-cash items, interest expense, acquisition related costs, and other items of a non-operational nature. Please see “CapitalStructure” for the reconciliation of Adjusted EBITDA to net earnings and the debt metrics that utilize Adjusted EBITDA.

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATESThe discussion and analysis of RioCan’s financial position and results of operations are based upon the Trust’s consolidatedfinancial statements, which have been prepared in accordance with IFRS. The preparation of financial statements requiresmanagement to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses duringthe reporting period. Actual results may differ from those estimates under different assumptions and conditions.

RioCan believes that the following significant accounting policies are most affected by judgments and estimates used in thepreparation of its consolidated financial statements. For a detailed description of these and other accounting policies refer to theNotes to RioCan’s annual consolidated financial statements.



Fair value

Fair value is the amount at which an item could be bought or sold in a current transaction between independent, knowledgeablewilling 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 consistentwith the objective of measuring fair value.

The techniques used to estimate future cash flows will vary from one situation to another depending on the circumstancessurrounding the asset or liability in question.

The Trust’s financial statements are affected by the fair value based method of accounting, the most significant areas of which areas follows:

• The determination of fair value of Investment property is based upon, among other things, rental revenue from current leasesand reasonable and supportable assumptions that represent what knowledgeable, willing parties would assume about rentalrevenue from future leases in light of current conditions, less future cash outflows in respect of tenant installation costs andinvestment property operations. The Trust uses the direct capitalization method to fair value its income properties. Under thisvaluation method a capitalization rate is applied to normalized NOI to yield a fair value. Please see “Asset Profile” for a furtherdiscussion of fair values of investment property and sensitivities to changes in capitalization rates.

• Unit based compensation expense is measured at fair value and expensed over the options’ vesting periods, calculated using theBlack-Scholes Model for option valuation. For the year ended December 31, 2012, RioCan recorded Unit based compensationexpense of approximately $5.2 million ($3.5 million for the comparative period of 2011).

• International Financial Reporting Standards IAS 39, “Financial Instruments: Recognition and Measurement” establishes thestandard for recognizing and measuring financial assets, financial liabilities and non-financial derivatives (please see the Notesto RioCan’s annual consolidated financial statements). All financial instruments are required to be measured at fair value oninitial recognition, except for certain related party transactions. Measurement in subsequent periods depends on whether thefinancial instrument has been classified as held-for-trading, available-for-sale, held-to-maturity, loans and receivables or otherliabilities.

• For the year ended December 31, 2012, the consideration for real estate acquired during 2012 included $174 million relating tothe assumption of mortgages payable and the granting of vendor-take-back mortgages by the vendors. These financial liabilitieswere measured at fair value on initial recognition. If the interest rate used in the assessment of fair value has a differential of100 basis points, RioCan’s operations would be impacted by approximately $2 million annually.

• At least annually, RioCan reports in its financial statements the fair value of its mortgages and debentures payable, whichamounts are based upon discounted future cash flows using discount rates that reflect current market conditions forinstruments with similar terms and risks. Such fair value estimates are not necessarily indicative of the amounts that RioCanmight pay or receive in actual market transactions. Potential transaction costs have also not been considered in estimating fairvalue.

The carrying cost of RioCan’s mortgages and debentures payable at December 31, 2012 is $ 5.74 billion. The Trust reported a$6.04 billion fair value relating to these mortgages and debentures payable in the notes to the annual consolidated financialstatements. If the interest rate used in the assessment of fair value has a differential of 100 basis points, RioCan’s reported fairvalue relating to mortgages and debentures payable would be impacted by approximately $60 million.

Guarantees

GAAP requires RioCan to assess whether there are contingent losses relating to guarantees that the Trust provided on behalf ofthird parties, including co-owners and partners. In addition, RioCan’s guarantees remain in place for debts assumed by purchasersin connection with certain property dispositions, and will remain until such debts are extinguished or the lenders agree to releaseits covenants. Credit risk arises in the event that these parties default on repayment of their debt since they are guaranteed byRioCan. These credit risks are mitigated as RioCan has recourse under these guarantees in the event of a default by theborrowers, in which case the Trust would also have a claim against the underlying real estate investments. A contingent loss isrecorded by RioCan when the carrying values of the related real estate investments are not recovered either as a result of theinability of the underlying assets’ performance to meet the contractual debt service terms of the underlying debt and the fair valueof the collateral assets are insufficient to cover the obligations and encumbrances in a sale between unrelated parties in thenormal course of business. RioCan’s estimates of future cash flow which, among other things, involve assumptions of estimatedoccupancy, rental rates and residual value, and the effects of other factors, including general and local economic conditions andchanging tenant formats, could vary and result in a significantly different assessment of such contingent loss. As at December 31,2012, there have been no defaults by the primary obligors for debts on which the Trust has provided its guarantees and as a result,no contingent loss on these guarantees has been recognized in the Trust’s financial statements.



FUTURE CHANGES IN SIGNIFICANT ACCOUNTING POLICIES

RioCan monitors the IASB and CICA’s recently issued accounting pronouncements to assess the applicability and impact, if any, ofthese pronouncements on its consolidated financial statements and note disclosures.

Standards issued but not yet effective up to the date of issuance of the audited consolidated financial statements for the yearsended December 31, 2012 and 2011 are described below. This description is of standards and interpretations issued, which theTrust reasonably expects to be applicable at a future date. The Trust intends to adopt those standards when they become effective.

Financial Instruments (“IFRS 9”)

IFRS 9 as issued reflects the IASB’s work to date on the replacement of Financial Instruments: Recognition and Measurement (“IAS39”), and applies to the classification and measurement of financial assets and financial liabilities as defined in IAS 39. Theapproach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and thecontractual cash flow characteristics of its financial assets. The standard is effective for annual periods beginning on or afterJanuary 1, 2015. In subsequent phases, the IASB will address impairment and hedge accounting. The Trust has not yet determinedthe impact of IFRS 9 on its consolidated financial statements.

Consolidated Financial Statements (“IFRS 10”)

On May 12, 2011, the IASB issued IFRS 10, Consolidated Financial Statements, which will replace IAS 27, Consolidated and SeparateFinancial Statements and SIC-12, Consolidation – Special Purpose Entities. The new standard provides a single model forconsolidation based on control, which exists when an investor is exposed or has the right to variable returns from its involvementwith the investee and has the current ability to affect those returns through its power over the investee. The standard also providesguidance on how to evaluate power and requires that control be assessed as facts and circumstances change. IFRS 10 is effectivefor annual periods beginning on or after January 1, 2013, with early adoption permitted. The Trust does not expect that thisstandard will result in a material impact to the consolidated financial statements.

Joint Arrangements (“IFRS 11”)

On May 12, 2011, the IASB issued IFRS 11, Joint Arrangements. This new standard replaces IAS 31, Interests in Joint Ventures. Thenew standard eliminates the option to proportionately consolidate interests in certain types of joint ventures. IAS 28, Investments inAssociates has also been amended and will establish the requirements for the application of the equity method to theseinvestments. This new standard is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted.While the Trust expects that implementation of this standard will result in net balance sheet presentation of assets and liabilitiesfor certain US joint ventures, the Trust does not expect this standard will have a material impact on net earnings. As atSeptember 30, 2012, RioCan expects that assets and liabilities will be reduced by approximately $600 million and $300 million,respectively, and be replaced with balance sheet presentation of a net investment in equity accounted investments of $300 million,as well as for the nine months ended September 30, 2012, a reduction of net operating income (“NOI”) of $28 million, replaced byincreased other income of $28 million in the consolidated statement of earnings. As at December 31, 2011, RioCan expects thatassets and liabilities will be reduced by $600 million and $300 million, respectively, and be replaced with balance sheetpresentation of a net investment in equity accounted investments of $300 million, as well as for the twelve months endedDecember 31, 2011, a reduction of NOI of $18 million, replaced by increased other income of $18 million in the consolidatedstatement of earnings.

Disclosure of Interests in Other Entities (“IFRS 12”)

The IASB issued IFRS 12, Disclosure of Interests in Other Entities, on May 12, 2011. The standard includes disclosure requirementsabout subsidiaries, joint ventures, and associates, replacing existing requirements. Additional disclosures include judgments andassumptions made in determining how to classify involvement with another entity, interests that non-controlling interests have inthe consolidated entities, and the nature and risks associated with interests in other entities. This standard is effective for annualperiods beginning on or after January 1, 2013, with early adoption permitted. Adoption of this standard will not materially impactthe consolidated financial statements.

Fair Value Measurement (“IFRS 13”)

IFRS 13, Fair Value Measurement, establishes a single source of guidance for fair value measurements when fair value is permittedor required by IFRS. The standard also requires enhanced disclosures when fair value is applied. The standard is effective forannual periods beginning on or after January 1, 2013, with early adoption permitted. The Trust does not expect that this standardwill result in a material impact to the consolidated financial statements.

Presentation of Financial Statements (“IAS 1”)

In June 2011, the IASB made amendments to IAS 1, Presentation of Financial Statements, which will require entities to group itemspresented in other comprehensive income (“OCI”) on the basis of whether they will or will not subsequently be reclassified to profitor loss. The amended version of IAS 1 is effective for annual periods beginning on or after July 1, 2012, with early adoptionpermitted. The Trust has adopted IAS 1.



Employee Benefits (“IAS 19”)

In June 2011, the IASB made amendments to IAS 19, Employee Benefits. The amendments include eliminating the option to deferthe recognition of gains and losses, streamlining the presentation of changes to assets and liabilities with all changes fromremeasurement to be recognized in OCI and enhancing the disclosure of the characteristics of defined benefit plans and the risksthat entities are exposed to through participation in those plans. The amended version of IAS 19 is effective for annual periodsbeginning on or after January 1, 2013, with early adoption permitted. The Trust does not expect that this amendment will result in amaterial impact to the consolidated financial statements.

CONTROLS AND PROCEDURESInternal Controls for Disclosure and Financial Reporting

RioCan maintains appropriate information systems, procedures and controls to ensure that information disclosed externally iscomplete, reliable and timely. RioCan’s Chief Executive Officer and Chief Financial Officer evaluated, or caused an evaluation undertheir direct supervision of, the design and operating effectiveness of the Trust’s disclosure controls and procedures (as defined inNational Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings) as at December 31, 2012 and haveconcluded that such disclosure controls and procedures were appropriately designed and were operating effectively.

RioCan has also established adequate internal controls over financial reporting to provide reasonable assurance regarding thereliability of the Trust’s financial reporting and the preparation of the financial statements for external purposes in accordancewith IFRS. RioCan’s Chief Executive Officer and the Chief Financial Officer assessed, or caused an assessment under their directsupervision, of the design and operating effectiveness of the Trust’s internal controls over financial reporting (as defined inNational Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings) as at December 31, 2012 using theCommittee of Sponsoring Organizations Internal Control – Integrated Framework. Based on that assessment, it was determinedthat RioCan’s internal controls over financial reporting were appropriately designed and were operating effectively.

During the three month period ended December 31, 2012 there were no changes in the Trust’s internal controls over financialreporting that occurred that have significantly affected, or are reasonably likely to significantly affect the Trust’s internal controlsover financial reporting.

It should be noted that a control system, no matter how well conceived and operated, can provide only reasonable, not absolute,assurance that the objectives of the control system are met. Given the inherent limitations in all control systems, no evaluation ofcontrols can provide absolute assurance that all control issues, including instances of fraud, if any, have been detected. Theseinherent limitations include, among other items: (i) that management’s assumptions and judgments could ultimately prove to beincorrect under varying conditions and circumstances; (ii) the impact of any undetected errors; and (iii) controls may becircumvented by the unauthorized acts of individuals, by collusion of two or more people, or by management override.

Canadian Income Tax Legislation – REIT Status

The Trust currently qualifies as a REIT for purposes of the Income Tax Act (Canada). Accordingly RioCan continues to be able to flowtaxable income through to unitholders on a tax effective basis.

Generally, to qualify as a REIT, RioCan’s Canadian assets must be comprised primarily of income producing real property andsubstantially all of RioCan’s Canadian source revenues must be derived from rental revenue, capital gains and fee income fromproperties in which RioCan has an interest.

On December 16, 2010 the Minister of Finance announced draft changes to the REIT provisions (the “Draft Legislation”) which, ifenacted, will be effective retroactively as of January 1, 2011. The Draft Legislation will create a new 10% basket for the holding ofnon-qualifying assets, and will increase the non-qualifying revenue basket from 5% to 10%. RioCan does not expect that the DraftLegislation will have any negative consequences on its continuing qualification as a REIT. RioCan also expects that the draftlegislation will allow it more latitude to pursue intensification activities involving the sale of residential air rights and to providemezzanine financing to development partners.

On November 21, 2012, Bill C-48, Technical Tax Amendments Act, 2012 received first reading in the House of Commons andtherefore has been substantively enacted for IFRS purposes. Bill C-48, included changes to the rules applicable to real estateinvestment trusts that were originally announced on December 16, 2010.

REIT Qualification Monitoring

A key activity of RioCan is the monitoring processes to ensure that RioCan continues to qualify as a REIT for purposes of the IncomeTax Act (Canada) following the adoption of the SIFT Provisions in 2010. In this regard training of both accounting and operationalstaff was carried out.

From time to time the Trust holds REIT information sessions with members of the Board of Trustees, Audit Committee and seniormanagement, including but not limited to, reporting on REIT Exception qualification monitoring and the business implications ofqualifying as a REIT.


Management’s Discussion and Analysis

RISKS AND UNCERTAINTIESThe achievement of RioCan’s objectives is, in part, dependent on the successful mitigation of business risks identified. Real estateinvestments are subject to a degree of risk. They are affected by various factors including changes in general economic and localmarket conditions, equity and credit markets, fluctuations in interest costs, the attractiveness of the properties to tenants,competition from other available space, the stability and credit-worthiness of tenants, currency and exchange rate risks andvarious other factors.

Liquidity and General Market Conditions

RioCan faces risks associated with general market conditions and their potential consequent effects. Current general marketconditions may include, among other things, the insolvency of market participants, tightening lending standards and decreasedavailability of cash, and changes in unemployment levels, retail sales levels, and real estate values. These market conditions mayaffect occupancy levels and RioCan’s ability to obtain credit on favourable terms or to conduct financings through the publicmarket.

Tenant Concentrations, Occupancy Levels and Defaults

The value of RioCan’s real estate and any improvements thereto, may depend on the credit and financial stability of tenants. TheTrust’s financial position would be adversely affected if a significant number of tenants were to become unable to meet theirobligations to RioCan or if RioCan were unable to lease a significant amount of available space in the properties on economicallyfavourable lease terms.

With respect to tenant concentration risk, in the event a given tenant, or group of tenants, experience financial difficulty and isunable to fulfill its lease commitments, or a given geographical area suffers an economic decline, the Trust could experience adecline in revenue.

In order to reduce RioCan’s exposure to the risks relating to credit and the financial stability of tenants, the Trust’s Declarationrestricts the amount of space which can be leased to any person and that person’s affiliates, other than in respect of leases with orguaranteed by the Government of Canada, a province of Canada, a municipality in Canada or any agency thereof and certaincorporations, the securities of which meet stated investment criteria, to a maximum premises or space having an aggregate grossleasable area of 20% of the aggregate gross leasable area of all real property held by RioCan. At December 31, 2012, RioCan was incompliance with this restriction.

RioCan’s operating results may be adversely impacted by a decline in revenues if the Trust is unable to maintain the existingoccupancy levels of its properties, if existing tenants experience financial difficulty and become unable to fulfill their leasecommitments, if RioCan becomes unable to attract new tenants at rental rates similar to those paid by existing tenants, or ifexisting tenants do not renew at the expiry of the lease term and such space cannot be re-leased. As well, certain significantexpenditures involved in real property investments, such as property taxes, maintenance costs and mortgage payments, representobligations that must be met regardless of whether the property is producing sufficient, or any, revenue.

At December 31, 2012, RioCan had NLA, at its interest, of 49.5 million square feet and a portfolio occupancy rate of 97.4%. Basedon the Trust’s current annualized rental revenue on a weighted average portfolio basis of approximately $23 per square foot, forevery fluctuation in occupancy by a differential of 1%, the Trust’s operations would be impacted by approximately $11 millionannually.

RioCan’s aggregate lease renewals over the next five years represent annual net rent payments of approximately $329 millionbased on current contractual rental rates. Should such tenancies be renewed upon maturity at an aggregate rental rate differentialof 100 basis points, the Trust’s operations would be impacted by approximately $3 million annually.

Lease expiries (Canadian Portfolio)

(in thousands)Portfolio

NLA 2013 2014 2015 2016 2017

Square feet 40,672 3,096 4,116 4,260 4,841 4,108Square feet expiring portfolio NLA 40.1% 7.6% 10.1% 10.5% 11.9% 10.1%

Total net rent $ 344,281 $ 55,357 $ 67,198 $ 67,668 $ 81,267 $ 72,791

Lease expiries (US Portfolio)

(in thousands)Portfolio

NLA 2013 2014 2015 2016 2017

Square feet 8,817 420 702 461 453 610Square feet expiring portfolio NLA 23.1% 4.8% 8.0% 5.2% 5.1% 6.9%

Total net rent $ 43,506 $ 7,128 $ 10,272 $ 8,182 $ 7,402 $ 10,522



RioCan strives to manage tenant concentration risk through geographical diversification (See “Asset Profile”) and diversification ofrevenue sources in order to avoid dependence on any single tenant. RioCan’s objective, as exemplified by the requirements of itsDeclaration noted above, is that no individual tenant contributes a significant percentage of its gross revenue and that a considerableportion of the Trust’s revenue is earned from national and anchor tenants (see “About RioCan”). RioCan attempts to lease tocreditworthy tenants and will generally conduct credit assessments for new tenants. RioCan attempts to reduce its risks associatedwith occupancy levels and lease renewal risk by having staggered lease maturities, negotiating leases with base terms between fiveand ten years, and by negotiating longer term leases with built-in minimum rent escalations where deemed appropriate.

Access to Debt and Equity 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 equitycapital available to RioCan. Given the relatively small size of the Canadian marketplace, there are a limited number of lenders fromwhich RioCan can borrow. RioCan’s financial condition and results of operations would be adversely affected if it were unable toobtain financing or cost-effective financing.

At December 31, 2012, RioCan’s total indebtedness had a 4.7 year weighted average term to maturity bearing a weighted averagecontractual interest rate of 4.7% per annum.

Interest Rates

RioCan’s operations are impacted by interest rates, as interest expense represents a significant cost in the ownership of realestate investments. At December 31, 2012, RioCan had aggregate contractual debt comprised of mortgages and debenturespayable having principal maturities through to December 31, 2015 of $1.9 billion (33.5% of the aggregated debt) with a weightedaverage contractual interest rate of 4.9%. Should such amounts be refinanced upon maturity at an aggregate interest ratedifferential of 100 basis points, RioCan’s operations would be impacted by approximately $18.8 million annually.

RioCan seeks to reduce its interest rate risk by staggering the maturities of long term debt and limiting the use of floating ratedebt so as to minimize exposure to interest rate fluctuations. At December 31, 2012, 6.6% of the Trust’s aggregate debt was atfloating interest rates.

From time to time, the Trust may enter into interest rate swap transactions to modify the interest rate profile of its current orfuture variable rate debts without an exchange of the underlying principal amount.

Relative Illiquidity of Real Property

Real estate investments are relatively illiquid. This will tend to limit the Trust’s ability to sell components of the portfolio promptlyin response to changing economic or investment conditions. If RioCan were required to quickly liquidate its assets, there is a riskthat the Trust would realize sale proceeds of less than the current book value of its real estate investments.

Unexpected Costs or Liabilities Related to Acquisitions

A risk associated with real property acquisition is that there may be an undisclosed or unknown liability concerning the acquiredproperties, and RioCan may not be indemnified for some or all of these liabilities. Following an acquisition, RioCan may discoverthat 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 acquisition of properties andseeks through contract to ensure that risks lie with the appropriate party.

Construction

RioCan’s construction commitments are subject to those risks usually attributable to construction projects, which include:(i) construction or other unforeseen delays including municipal approvals; (ii) cost overruns; and (iii) the failure of tenants tooccupy and pay rent in accordance with existing lease agreements, some of which are conditional. Construction risks areminimized through the provisions of the Trust’s Declaration, which have the effect of limiting direct and indirect investments, net ofrelated mortgage debt, in non-income producing properties to no more than 15% of the Adjusted Book Value of RioCan’sunitholders’ equity. RioCan also seeks to undertake such developments with established developers. With some exceptions forland in the high growth markets, RioCan will generally not acquire or fund significant expenditures for undeveloped land unless itis zoned and an acceptable level of space has been pre-leased or pre-sold. An advantage of unenclosed, new format retail is that itlends itself to phased construction keyed to leasing levels, which reduces the creation of significant amounts of vacant butdeveloped space.

Environmental Matters

Environmental and ecological related policies have become increasingly important in recent years. Under various federal,provincial, state and municipal laws, RioCan, as an owner or operator of real property, could become liable for the costs of removalor remediation of certain hazardous or toxic substances released on or in its properties or disposed of at other locations. Thefailure to remove or remediate such substances, or address such matters through alternative measures prescribed by thegoverning 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 withrespect to any properties that it believes would involve material expenditures by the Trust.



It is the Trust’s policy to obtain a Phase I environmental audit conducted by a qualified environmental consultant prior to acquiringany additional property. In addition, where appropriate, tenant leases generally specify that the tenant will conduct its business inaccordance with environmental regulations and be responsible for any liabilities arising out of infractions to such regulations. It isRioCan’s practice to regularly inspect tenant premises that may be subject to environmental risk. The Trust maintains insurance tocover a sudden and/or accidental environmental mishap.

Legal Risks

RioCan’s operations are subject to a wide variety of laws and regulations across all of its operating jurisdictions and RioCan facesrisks associated with legal and regulatory changes and litigation. RioCan retains external legal consultants to assist it in remainingcurrent and compliant with legal and regulatory changes and to respond to litigation.

Human Resources and Key Personnel

RioCan faces certain human resource risks, including the risk that it will not have the necessary human resources to performsuccessfully. RioCan relies on the services of certain key personnel on its executive team, including its Chief Executive Officer,Edward Sonshine, its President and Chief Operating Officer, Frederic Waks, and its Executive Vice President and Chief FinancialOfficer, Raghunath Davloor, and the loss of their services could have an adverse effect on RioCan. RioCan mitigates key personnelrisks through succession planning.

Unitholder Liability

There is a risk that RioCan’s unitholders could become subject to liability. The Trust’s Declaration provides that no unitholder orannuitant under a plan of which a unitholder acts as trustee or carrier will be held to have any personal liability as such, and thatno resort shall be had to the private property of any unitholder or annuitant for satisfaction of any obligation or claim arising out ofor in connection with any contract or obligation of RioCan. Only RioCan’s assets are intended to be subject to levy or execution. TheDeclaration further provides that, whenever possible, certain written instruments signed by RioCan must contain a provision to theeffect that such obligation will not be binding upon unitholders personally or upon any annuitant under a plan of which a unitholderacts as trustee or carrier. In conducting its affairs, RioCan has acquired and may acquire real property investments subject toexisting contractual obligations, including obligations under mortgages and leases that do not include such provisions. RioCan willuse its best efforts to ensure that provisions disclaiming personal liability are included in contractual obligations related toproperties 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 ispossible that reliance on such statute by a unitholder could be successfully challenged on jurisdictional or other grounds.

Income Taxes

RioCan currently qualifies as a mutual fund trust and REIT for income tax purposes. RioCan expects to distribute all of the Trust’staxable income to unitholders and is, therefore, generally not subject to tax on such amounts. In order to maintain RioCan’scurrent mutual fund trust status, the Trust is required to comply with specific restrictions regarding its activities and theinvestments held by the Trust. If the Trust were to cease to qualify as a mutual fund trust, or a REIT for income tax purposes, theconsequences could be material and adverse.

No assurance can be given that the provisions of the Income Tax Act (Canada) regarding mutual fund trusts and REITs will not bechanged in a manner that adversely affects RioCan and its unitholders.

United States Investment and Currency Risk

In 2010, RioCan completed its purchases of the initial portfolio in connection with the Cedar transaction. Since that time, RioCanhas also made additional acquisitions in the United States through joint venture platforms with Cedar, Sterling, RPAI, Kimco andDunhill. RioCan intends to continue to make acquisitions from time to time in the United States as determined to be appropriate ordesirable. It is possible that such additional acquisitions may not be completed. Further there may be a lack of availability ofacquisition opportunities for these joint venture and exposure to economic, real estate and capital market conditions in the UnitedStates.

As noted above, Cedar represented the Trust’s first investment outside of Canada and has been followed with additionalinvestments made through joint ventures with Kimco, Retail Properties of America, Dunhill and Sterling. This, together withRioCan’s recent dissolution of the joint venture with Cedar and its development of a property management platform in the US willexpand the Trust’s direct involvement in the US real estate market. The US real estate market differs from the Canadianenvironment in many ways and the Trust’s expertise and experience in Canada may not prove beneficial in a foreign jurisdiction.The Trust is mitigating the risks relating to its entry into and exposure to the US by aligning itself with experienced US operatingcompanies, hiring US based employees with real estate experience, and making investments of moderate scale. There can be nocertainty, however, that RioCan’s US investments will be successful.

Additionally, it is possible that the Trust’s US investments will expose the Trust to foreign exchange fluctuations. The Trust will inpart mitigate this risk through the use of US denominated debt.



Transition to IFRS

In February 2008, the Canadian Accounting Standards Board confirmed that all publicly accountable enterprises would be requiredto report under IFRS for fiscal years beginning on or after January 1, 2011. As new standards and recommendations are issued bythe International Accounting Standards Board and the Canadian Accounting Standards Board, RioCan will continue to assess theeffect of IFRS on the Trust’s financial reporting and disclosure requirements, which may be material.

Credit Ratings

Real or anticipated changes in credit ratings on RioCan’s debentures or Preferred Units may affect the market value thereof. Inaddition, real or anticipated change in credit ratings can affect the cost at which RioCan can access the debenture or Preferred unitmarket, as applicable.


AUDITED ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

INDEX

Audited Annual Consolidated Financial Statements

Management’s Responsibility for Financial Reporting 92Independent Auditors’ Report 93Consolidated Balance Sheets 94Consolidated Statements of Changes in Equity 95Consolidated Statements of Earnings 96Consolidated Statements of Comprehensive Income 96Consolidated Statements of Cash Flows 97Notes to Consolidated Financial Statements 99

TRANSFORMING . . .

Management’s Responsibil i ty for Financial Reporting

The management of RioCan Real Estate Investment Trust (“RioCan”) is responsible for the preparation and fair presentation of theaccompanying annual consolidated financial statements and Management’s Discussion and Analysis (“MD&A”). The consolidatedfinancial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”).

The consolidated financial statements and information in the MD&A necessarily include amounts based on best estimates andjudgments by management of the expected effects of current events and transactions with the appropriate consideration tomateriality. In addition, in preparing this financial information we must make determinations about the relevancy of information tobe included, and estimates and assumptions that affect the reported information. The MD&A also includes information regardingthe 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 andcircumstances may not occur as expected.

In meeting our responsibility for the integrity and fairness of the annual consolidated financial statements and MD&A and for theaccounting systems from which they are derived, management has established the necessary internal controls designed to ensurethat our financial records are reliable for preparing financial statements and other financial information, transactions are properlyauthorized and recorded, and assets are safeguarded against unauthorized use or disposition.

As at December 31, 2012, our Chief Executive Officer and Chief Financial Officer evaluated, or caused an evaluation under theirdirect supervision of the design and operation of our internal controls over financial reporting (as defined in National Instrument52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings) and, based on that assessment, determined that our internalcontrols 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 iscomposed entirely of independent trustees. This committee reviews RioCan’s annual consolidated financial statements and MD&Awith both management and the independent auditors before such statements are approved by the Board of Trustees. Other keyresponsibilities of the Audit Committee include selecting the RioCan’s auditors, approving our interim unaudited condensedconsolidated financial statements and MD&A, and monitoring RioCan’s existing systems of internal controls.

Ernst & Young LLP, independent auditors appointed by the unitholders of RioCan upon the recommendation of the Board ofTrustees, have examined our 2012 and 2011 annual consolidated financial statements and have expressed their opinion upon thecompletion of such examination in the following report to the unitholders. The auditors have full and free access to, and meet atleast quarterly with, the Audit Committee to discuss their audit and related matters.

Edward Sonshine, O.Ont., Q.C. Raghunath Davloor, C.A.Chief Executive Officer Executive Vice President and Chief Financial Officer

Toronto, CanadaFebruary 13, 2013


INDEPENDENT AUDITORS’ REPORT

To the Unitholders of

RioCan Real Estate Investment Trust

We have audited the accompanying consolidated financial statements of RioCan Real Estate Investment Trust, which comprise theconsolidated balance sheets as at December 31, 2012 and 2011, and the consolidated statements of changes in equity, earnings,comprehensive income, and cash flows for the years ended December 31, 2012 and 2011, and a summary of significant accountingpolicies and other explanatory information.

Management’s responsibility for the consolidated financial statementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withInternational Financial Reporting Standards, and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted ouraudits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statementsare free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financialstatements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of materialmisstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, theauditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statementsin order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion onthe effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies usedand the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our auditopinion.

OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of RioCan RealEstate Investment Trust as at December 31, 2012 and 2011, and its financial performance and its cash flows for the years endedDecember 31, 2012 and 2011 in accordance with International Financial Reporting Standards.

Toronto, CanadaFebruary 13, 2013

Ernst & Young LLPChartered AccountantsLicensed Public Accountants


RIOCAN REAL ESTATE INVESTMENT TRUSTCONSOLIDATED BALANCE SHEETS(Audited – Canadian dollars, in millions)

NoteAs at December 31,

2012As at December 31,

2011

ASSETSInvestment property 3 $ 12,401 $ 10,409Mortgages and loans receivable 4 200 147Deferred tax assets 9 9 8Investment 5 50 41Receivables and other assets 6 100 85Cash and equivalents 183 77

Total assets $ 12,943 $ 10,767

LIABILITIESMortgages payable and lines of credit 7 $ 4,446 $ 4,212Debentures payable 8 1,292 822Accounts payable and other liabilities 10 325 291

Total liabilities $ 6,063 $ 5,325

EQUITYPreferred unitholders’ equity $ 265 $ 265Common unitholders’ equity 6,582 5,098

Total unitholders’ equity 6,847 5,363Non-controlling interests 33 79

Total equity 6,880 5,442

Total liabilities and equity $ 12,943 $ 10,767

The accompanying notes are an integral part of the consolidated financial statements

Approved by the Board of Trustees

“Paul Godfrey, C.M.” “Edward Sonshine, O.Ont., Q.C.”Paul Godfrey, C.M. Edward Sonshine, O.Ont., Q.C.Chairman of the Board of Trustees Trustee


RIOCAN REAL ESTATE INVESTMENT TRUSTCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Audited – Canadian dollars, in millions)

As at December 31, 2011 Note

CommonTrustUnits

CumulativeEarnings

CumulativeDistributions

toUnitholders

AccumulatedOCI (loss)

TotalCommon

Equity

TotalPreferred

Equity

Non-Controlling

Interests Total

Equity, December 31, 2010 $ 3,130 $ 3,908 $ (2,860) $ (13) $ 4,165 $ - $ 59 $ 4,224

Changes during the year

Net earnings 873 873 11 884

Other comprehensive loss (21) (21) 1 (20)

Distributions to unitholders 13 (374) (374) (5) (379)

Units issue proceeds, net 11(a) 451 451 265 13 729

Value associated with unitoptions granted 12(a) 4 4 4

Reclassification of pension 11(c) 1 (1) - -

Equity, December 31, 2011 $ 3,585 $ 4,782 $ (3,234) $ (35) $ 5,098 $ 265 $ 79 $ 5,442

As at December 31, 2012 Note

CommonTrustUnits

CumulativeEarnings

CumulativeDistributions

toUnitholders

AccumulatedOCI (loss)

TotalCommon

Equity

TotalPreferred

Equity

Non-Controlling

Interests Total

Equity, December 31, 2011 $ 3,585 $ 4,782 $ (3,234) $ (35) $ 5,098 $ 265 $ 79 $ 5,442

Changes during the year

Net earnings 1,344 1,344 15 1,359

Other comprehensive income 11(c) 10 10 2 12

Distributions to unitholders 13 (415) (415) (6) (421)

Units issue proceeds, net 11(a) 540 540 - 19 559

Value associated with unitoptions granted 12(a) 5 5 5

Change in ownership interest 19 (76) (76)

Reclassification of pension 11(c) (1) 1 - -

Equity, December 31, 2012 $ 4,130 $ 6,125 $ (3,649) $ (24) $ 6,582 $ 265 $ 33 $ 6,880



RIOCAN REAL ESTATE INVESTMENT TRUSTCONSOLIDATED STATEMENTS OF EARNINGS(Audited – Canadian dollars, in millions, except per unit amounts)

For the year ended December 31, Note 2012 2011

Rental revenue 14 $ 1,091 $ 947Property operating costs

Recoverable under tenant leases 15 365 316Non-recoverable from tenants 13 9

378 325

Net operating income 713 622Other income

Fees and other 16 25 28Interest 12 13Fair value gains on investment property, net 3 913 533

950 574Other expenses

Interest 17 246 240General and administrative and other 18 46 40Impairment of investment 5 12 –Expense for early redemption of debentures 17 – 31

304 311Earnings before income taxes 1,359 885Current income tax expense 1 –Deferred income tax expense (1) 1

Net earnings $ 1,359 $ 884Net earnings attributable to:

Common and preferred unitholders 20 $ 1,344 $ 873Non-controlling interests 15 11

$ 1,359 $ 884

Net earnings per unit attributable to common unitholders – basic $ 4.59 $ 3.26

Net earnings per unit attributable to common unitholders – diluted $ 4.57 $ 3.25

Weighted average number of common units outstanding – basic (in thousands) 20 289,950 265,583

Weighted average number of common units outstanding – diluted (in thousands) 20 291,298 267,017


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


Net earnings $ 1,359 $ 884Other comprehensive income:

Items that may be reclassified subsequently to net earnings:

Unrealized gain (loss) on interest rate swap agreements 21 – (10)Unrealized gain (loss) on translation of foreign operations (7) 7Unrealized gain (loss) on available-for-sale investment 8 (18)Impairment of investment 5 12 –Actuarial gain (loss) on pension plans (1) 1

Other comprehensive income, net of tax 12 (20)

Comprehensive income $ 1,371 $ 864

Comprehensive income attributable to

Unitholders $ 1,354 $ 852Non-controlling interest $ 17 $ 12



RIOCAN REAL ESTATE INVESTMENT TRUSTCONSOLIDATED STATEMENTS OF CASH FLOWS(Audited – Canadian dollars, in millions)


CASH FLOWS PROVIDED BY (USED IN):Operating activities

Net earnings $ 1,359 $ 884Items not affecting cash

Amortization 2 1Impairment of investment 5 12 –Recognition of rents on a straight-line basis (8) (10)Unit-based compensation expense 5 4Deferred income tax expense (1) 1Fair value gains on investment property, net 3 (913) (533)

Properties held for resale (2) (3)Net change in non-cash operating items and other 22 (10) 12

Cash flows provided by operating activities 444 356

Investing activities

Acquisition of investment properties (713) (873)Expenditures on properties under development (143) (122)Maintenance capital expenditures recoverable from tenants (10) (18)Maintenance capital expenditures not recoverable from tenants (7) (8)Tenant installation costs (36) (41)Proceeds on disposition of investment property 19 25 –Mortgages and loans receivable

Advances (72) (26)Repayments 21 70

Cash flows used in investing activities (935) (1,018)

Financing activities

Mortgages payableBorrowings 596 840Repayments (491) (271)

Advances of lines of credit 188 105Borrowings of lines of credit (221) -Issue of debentures payable, net 8 571 223Repayment of debentures payable 8 (100) (500)Acquisition of non-controlling interest 19 (67) –Distributions paid to common unitholders 13 (401) (364)Distributions paid to preferred unitholders 13 (12) (7)Distributions paid to non-controlling interest (6) (5)Units issued under distribution reinvestment plan 11(a) 108 82Issue of preferred units, net – 265Issue of common units, net 432 279

Cash flows provided by financing activities 597 647

Net increase (decrease) in cash and equivalents during the year 106 (15)

Cash and equivalents, beginning of year 77 92

Cash and equivalents, end of year $ 183 $ 77

Supplemental cash flow information 23



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Audited – Canadian dollars, tabular amounts in millions, except per unit amounts or unless otherwise noted)


TABLE OF CONTENTS

1. Trust information 992. Significant accounting policies 993. Investment property 1094. Mortgages and loans receivable 1125. Investment 1126. Receivables and other assets 1127. Mortgages payable and lines of credit 118. Debentures payable 1149. Income taxes 11510. Accounts payable and other liabilities 11611. Unitholders’ equity 11612. Unit-based compensation plans 11813. Distributions to unitholders 11914. Rental revenue 11915. Property operating costs – recoverable under

tenant leases 119

16. Fees and other income 11917. Interest expense 12018. General and administrative and other 12019. Segmented disclosures and additional information 12020. Earnings per unit 12321. Hedging activities 12322. Net change in non-cash operating items and other 12423. Supplemental cash flow information 12424. Operating leases – Trust as lessor 12425. Investments in jointly controlled entities and assets 12526. Capital management 12727. Financial instruments 12828. Related party transactions 13029. Employee benefits 13130. Contingencies and commitments 13231. Events after the balance sheet date 132

TRANSFORMING . . .

2

RIOCAN REAL ESTATE INVESTMENT TRUSTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Audited – Canadian dollars, tabular amounts in mil l ions, except per unit amounts or unless otherwise noted)


1. Trust InformationRioCan Real Estate Investment Trust (the “Trust” or “RioCan”) is an unincorporated “closed-end” trust governed by the laws of theProvince of Ontario and constituted pursuant to a Declaration of Trust (the “Declaration”) dated November 30, 1993, as mostrecently amended and restated on March 30, 2012. The Trust’s Units are listed on the Toronto Stock Exchange (the “Exchange”)under the symbol REI.UN. Preferred Units, Series A and Series C of the Trust are listed on the Exchange under the symbolsREI.PR.A and REI.PR.C, respectively.

The Trust’s registered office is at 2300 Yonge Street, Suite 500, Toronto, Ontario, M4P 1E4.

The Trust’s principal business activities are owning, developing and operating shopping centres in Canada and the United States.

The consolidated financial statements of the Trust for the year ended December 31, 2012 and 2011 were authorized for issue inaccordance with a resolution of the Board of Trustees on February 13, 2013.

2. Significant accounting policies(a) Basis of preparation and statement of compliance

The consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) asissued by the International Accounting Standards Board (“IASB”).

The consolidated financial statements of the Trust have been prepared on a cost basis, except for investment property, derivativefinancial instruments and available-for-sale financial assets, which have been measured at fair value. The consolidated financialstatements are presented in Canadian dollars and all values are rounded to the nearest million, except where otherwise indicated.

The Trust presents its consolidated balance sheets based on the liquidity method, whereby all assets and liabilities are presentedin increasing order of their liquidity. The Trust considers this presentation to be reliable and more relevant than a classifiedbalance sheet as the Trust considers its operating cycle to be longer than one year. The notes to the consolidated financialstatements distinguish between current and non-current assets and liabilities. Current assets and liabilities are those expected tobe recovered or settled within twelve months from the reporting period and non-current assets and liabilities are those where therecovery or settlement is expected to be greater than twelve months from the reporting period. Note 7(b) provides information onthe Trust’s net current assets and current liabilities.

(b) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Trust and its subsidiaries. Subsidiaries are fullyconsolidated from the date of acquisition, being the date on which the Trust obtains control, and continue to be consolidated untilthe date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as theTrust, using consistent accounting policies. All inter-company balances, income and expenses and unrealized gains and lossesresulting from inter-company transactions are fully eliminated.

(i) Subsidiaries

The consolidated financial statements include the accounts of the Trust and its consolidated subsidiaries, which are theentities over which the Trust has control. Control exists when the company has the power, directly or indirectly, to govern thefinancial and operating policies of an entity so as to obtain benefit from its activities. The non-controlling interest componentof the Trust’s subsidiaries is included in equity. Where necessary, adjustments are made to bring the accounting policies inline with those of the Trust.

(ii) Associates

Associates are entities over which the Trust has significant influence. Significant influence is the power to participate in thefinancial and operating policy decisions of the investee but is not control or joint control over those policies. The Trustaccounts for investments over which it has significant influence using the equity method.

Interests in investments accounted for using the equity method are initially recognized at cost. The carrying value of theTrust’s interest in an investee is adjusted for the Trust’s share of income, other comprehensive income and distributions of theinvestee.

The financial statements of the equity-accounted for investments are prepared for the same reporting period as the Trust.Where necessary, adjustments are made to bring the accounting policies in line with those of the Trust.

(iii) Joint arrangements

The Trust enters into joint arrangements with two or more parties whereby economic activity and decision making are shared.These arrangements may take the form of jointly controlled assets or jointly controlled entities.




A jointly controlled asset is a shared asset to which each party has rights and a contractual agreement exists as to sharing ofbenefits and risks generated from the asset. The Trust recognizes its share of the assets and liabilities and benefits generatedfrom the asset in proportion to its rights.

A jointly controlled entity involves the establishment of a corporation, partnership or other entity in which each venturer hasan interest. The entity operates in the same way as other entities, except that a contractual arrangement between theventurers establishes joint control over the economic activity of the entity. Each venturer does not have rights to individualassets or obligations of the venture, but is entitled to a share of the outcome of activities of the arrangement. The Trustaccounts for its interests in jointly controlled entities using the proportionate consolidation method.

The financial statements of the Trust’s joint arrangements are prepared for the same reporting period as the Trust.Adjustments are made where necessary to bring the accounting policies in line with those of the Trust.

(c) Business combinations

At the time of acquisition of property whether through a controlling share investment or directly, the Trust considers whether theacquisition represents the acquisition of a business. The Trust accounts for an acquisition as a business combination where anintegrated set of activities is acquired in addition to the property. More specifically, consideration is made of the extent to whichsignificant processes are acquired. If no, or only insignificant processes are acquired, the acquisition is treated as an assetacquisition rather than a business combination.

The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilitiesincurred or assumed at the acquisition date. Identifiable assets acquired and liabilities and contingent liabilities assumed in abusiness combination are measured initially at fair value at the date of acquisition. The Trust recognizes assets or liabilities, if any,resulting from a contingent consideration arrangement at their acquisition date fair value and such amounts form part of the costof the business combination. Subsequent changes in the fair value of contingent consideration arrangements are recognized in netearnings. The difference between the purchase price and the Trust’s net fair value of the acquired identifiable net assets andliabilities is goodwill. On the date of acquisition, the purchaser records positive goodwill as an asset. Negative goodwill isimmediately recognized in the consolidated statement of earnings. Goodwill is not amortized and must be tested for impairment atleast annually, or more frequently, if events or changes in circumstances indicate that impairment has occurred.

The Trust expenses transaction costs associated with business combinations in the period incurred.

When an acquisition does not represent a business, it is accounted for as an acquisition of a group of assets and liabilities, the costof the acquisition including transaction costs is allocated to the assets and liabilities acquired based upon their relative fair values,and no goodwill is recognized.

(d) Investment property

Investment property is held to earn rental revenue or for capital appreciation or both. A key characteristic of an investmentproperty is that it generates cash flows largely independently of the other assets held by an entity.

Real estate property held under an operating lease is not classified as investment property. Instead, these leases are accountedfor in accordance with Leases (“IAS 17”). However, certain land leases held under an operating lease are classified as investmentproperty when the definition of an investment property is met. At the inception of these leases, investment property is recognizedat the lower of the fair value of the property and the present value of the future minimum lease payments and an equivalentamount is recognized as a lease liability.

(i) Income properties

Income property is initially measured at cost. Subsequent to initial recognition, income properties are recorded at fair valueand related gains or losses arising from changes in fair value are recognized in net earnings in the period of change. Thedetermination of fair value is based upon, among other things, rental revenue from current leases and reasonable andsupportable assumptions that represent what knowledgeable, willing parties would assume about rental revenue from futureleases in light of current conditions, less future cash outflows in respect of tenant installation costs and income propertyoperations.

(ii) Properties under development

Properties under development include those properties, or components thereof, that will undergo activities that will take asubstantial period of time to complete in order to prepare the properties for their use as income properties.

The cost of a development property that is an asset acquisition is comprised of the amount of cash, or the fair value of theother consideration, given to acquire the property including transaction costs.




Subsequent to acquisition, the cost of a property under development includes third party and direct internal development andinitial leasing costs, property taxes, and interest on both specific and general debt.

Direct and indirect borrowing costs, direct internal development costs, and property taxes are capitalized when developmentactivities that change the property’s condition occur.

Interest capitalized is calculated using the Trust’s weighted average cost of borrowing after adjusting for borrowingassociated with specific developments. Where borrowing is associated with specific developments, the amount capitalized isthe gross interest incurred on such borrowing less any investment income arising on temporary investment of suchborrowing. Interest is capitalized from commencement of development work until the date of completion. Capitalization offinance costs is suspended if there are prolonged periods when development activity is interrupted. Interest is also capitalizedon the purchase cost of a property acquired specifically for redevelopment, where activities necessary to prepare the asset forredevelopment are in progress.

Capitalization of costs to properties under development continues until all the activities necessary to prepare the property foruse as a rental property are complete.

Properties under development are also adjusted to fair value at each balance sheet date with fair value adjustmentsrecognized in net earnings.

(iii) Properties held for resale

Properties held for resale are properties acquired or developed by the Trust of which it has no intention of them being used ona long-term basis and the Trust plans to dispose of in the ordinary course of business. The Trust expects to earn a return onsuch assets through a combination of property operating income earned during the holding period and sales proceeds.Properties held for resale are stated at the lower of cost and net realizable value. No amortization is recorded on these assets.

(e) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Trust and the revenue can bereliably measured. Revenue is measured at the fair value of the consideration received. The following specific recognition criteriamust also be met before revenue is recognized:

(i) Rentals

The Trust has not transferred substantially all of the benefits and risks of ownership of its investment properties and,therefore, the Trust accounts for leases with its tenants as operating leases. Rental revenue includes all amounts earned fromtenants related to lease agreements including property tax and operating cost recoveries.

The Trust reports minimum rental revenue on a straight-line basis, whereby the total amount of cash to be received under alease is recognized into net earnings in equal periodic amounts over the term of the lease. Contingent rents are recognized asrevenue in the period in which they are earned.

Amounts payable by tenants to terminate their lease prior to their contractual expiry date (“lease cancellation fees”) areincluded in rental revenue.

Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset. Tenantincentives are recognized as a reduction of rental revenue on a straight-line basis over the term of the lease.

(ii) Fee income

The Trust has interests in various investment properties through joint arrangements and investments in associates. Generally,the Trust provides asset and property management services for these investments for which it earns market based fees.

Fees are recognized as the service or contract activity is performed using the percentage of completion method. Under thepercentage of completion method, where services are provided over a specific period of time, revenue is recognized on astraight-line basis unless there is evidence that some other method would better reflect the pattern of performance. Wherethe contract outcome cannot be measured reliably, revenue is recognized only to the extent that the expenses incurred areeligible to be recovered.

(iii) Properties held for sale

Revenue from completed properties held for sale is recognized when the Trust has transferred to the purchaser thesignificant risks and rewards of ownership, has no continuing managerial involvement in the property, revenues and costs canbe reliably measured and the purchaser has made a substantial commitment demonstrating its intent to honour its obligation,and collection of any additional consideration is reasonably assured. For arrangements involving multiple elements, the Trustallocates the consideration to each element based on relative fair values.




(iv) Interest income

Revenue is recognized as interest accrues using the effective interest method.

(v) Dividend income

Dividends are recorded as dividend income in net earnings when declared. Currently, the Trust’s investment in the commonshares of Cedar Realty Trust Inc. (“Cedar”) provides the Trust with dividend income.

(f) Unit-based compensation plans

(i) Share-based awards – equity settled

The Trust and its subsidiaries issue share-based awards to certain employees. The cost of equity-settled share-basedpayment transactions equals the fair value of each tranche of options as at their grant date. The cost of the stock options isrecognized on a proportionate basis consistent with the vesting features of each tranche of the grant.

(ii) Share-based awards – cash settled

The Trust has a Restricted Share Unit (“REU”) plan which provides for an allotment of REUs to each non-employee trustee.The cost of cash-settled share-based payment transactions is measured at fair value, and expensed over the vesting periodwith the recognition of a corresponding liability. The liability is re-measured at each reporting date at fair value with the vestedchanges in fair value recognized in net earnings.

(g) Financial assets and liabilities

Financial assets include the Trust’s accounts receivable, mortgages and loans receivable, cash and equivalents, investments incommon shares, and interest rate swaps. Financial liabilities include the Trust’s operating lines of credit, mortgages anddebentures payable and accounts payable and other liabilities.

(i) Recognition and measurement of financial instruments

The Trust determines the classification of its financial assets and liabilities at initial recognition. Financial instruments arerecognized initially at fair value and, in the case of financial assets and liabilities carried at amortized cost, adjusted fordirectly attributable transaction costs.

Measurement in subsequent periods depends on whether the financial instrument has been classified as held-for-trading,loans and receivables, available-for-sale, held-to-maturity, or other liabilities.

(1) Held-for-trading

Financial assets and financial liabilities classified as held-for-trading are required to be measured at fair value with gainsand losses recognized in net earnings. Transaction costs are expensed as incurred for a financial instrument classified asheld-for-trading. Other than cash and equivalents, the Trust has no significant financial instruments classified as held-for-trading.

Derivative instruments are recorded on the consolidated balance sheets at fair value including those derivatives that areembedded in a financial instrument or other contract but are not closely related to the host financial instrument orcontract. Changes in the fair values of derivative instruments are required to be recognized in net earnings, except forderivatives that are designated as a cash flow hedge, in which case the fair value change for the effective portion of suchhedging relationship is required to be recognized in other comprehensive income (“OCI”).

(2) Loans and receivables or held-to-maturity

Loans and receivables are financial instruments with fixed or determinable payments that are not quoted in an activemarket. Financial instruments with fixed or determinable payments and fixed maturities are classified as held-to-maturityonly when the Trust has the positive intention and ability to hold it to maturity.

Financial assets classified as held-to-maturity, loans and receivables and other liabilities (other than those held-for-trading) are required to be measured at amortized cost using the effective interest method. This method uses an effectiveinterest rate that discounts estimated future cash receipts through the expected life of the financial asset or liability to thenet carrying amount of the financial asset or liability. Amortized cost is computed using the effective interest method lessany allowance for impairment. Gains and losses are recognized in net earnings when the loans and receivables arederecognized or impaired, as well as through amortization.

The principal categories of the Trust’s financial assets and liabilities measured at amortized cost using the effectiveinterest method include: (a) accounts receivable and payable; (b) mortgages and loans receivable and mortgages payable;and (c) debentures payable.




(3) Available-for-sale

Available-for-sale financial assets are financial assets that are designated for accounting purposes as available-for-sale orare not classified in any of the two preceding categories.

Available-for-sale financial assets are required to be measured at fair value with unrealized gains and losses recognized inOCI until the investment is derecognized or impaired, at which time the cumulative gain or loss recorded is recognized innet earnings. Investments in equity instruments classified as available-for-sale that do not have a quoted market price inan active market and whose fair value cannot be reliably measured are measured at cost. Other than its investment inCedar, the Trust has no significant financial instruments classified as available-for-sale.

(ii) Impairment of financial assets

The Trust assesses at each balance sheet date whether there is any objective evidence of impairment for each financial asset(or a group of financial assets). A financial asset is deemed to be impaired if there is objective evidence of impairment as aresult of an event that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event hasan impact on the estimated future cash flows of the financial asset that can be reliably estimated. Evidence of impairment mayinclude indications that the debtor(s) is experiencing financial difficulty, which may include default or delinquency in interestor principal payments, the probability that it will enter bankruptcy or other financial reorganization, and where observabledata indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears payments oreconomic conditions that correlate with defaults.

(1) Impairment of loans and receivables

The Trust assesses whether there is objective evidence of an indicator of impairment at each balance sheet date for eachloan and receivable. If there is objective evidence that an impairment loss has occurred, the amount of the loss ismeasured as the difference between the asset’s carrying amount and the present value of estimated future cash flows(excluding future expected credit losses that have not yet been incurred). The carrying amount of the asset is reducedthrough the use of an allowance account and the amount of the loss is recognized in net earnings. Interest incomecontinues to be accrued on the reduced carrying amount based on the original effective interest rate of the asset. Loansand receivables, together with the associated allowance, are written off when there is no realistic prospect of futurerecovery and all collateral has been realized or has been transferred to the Trust. If, in a subsequent year, the amount ofthe estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized,the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a past write-off islater recovered, the recovery is recognized in net earnings.

The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. Ifa loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interestrate.

(2) Impairment of available-for-sale financial assets

For available-for-sale financial assets, the Trust assesses at each balance sheet date whether there is objective evidencethat an asset is impaired. In the case of equity investments classified as available-for-sale, objective evidence wouldinclude a significant or prolonged decline in the fair value of the investment below its cost. Where there is evidence ofimpairment, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, lessany impairment loss on that investment previously recognized in net earnings, is removed from equity and recognized innet earnings. Impairment losses on equity investments are not reversed through the statement of earnings; increases intheir fair value after impairment are recognized directly in equity. In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as financial assets carried at amortized cost. Interestcontinues to be accrued at the original effective interest rate on the reduced carrying amount of the asset and is recordedas part of interest income. If, in a subsequent year, the fair value of a debt instrument increases and the increase can beobjectively related to an event occurring after the impairment loss was recognized in net earnings, the impairment loss isreversed through net earnings.

(iii) Financial guarantee contracts

Financial guarantee contracts issued by the Trust are those contracts that require a payment to be made to reimburse theholder of the guarantee for a loss it incurs because the specified debtor fails to make a payment when due in accordance withthe terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted fortransaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at thehigher of the best estimate of the expenditure required to settle the present obligation at the balance sheet date and the initialamount recognized less cumulative amortization.




(iv) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated balance sheets if there isan enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize theassets and settle the liabilities simultaneously.

(v) Hedges

The accounting standard Financial Instruments: Recognition and Measurement (“IAS 39”) specifies the criteria under whichhedge accounting can be applied and how hedge accounting should be executed for each of the permitted hedging strategies:fair value hedges, cash flow hedges and hedges of a foreign currency exposure of a net investment in a foreign operation.

From time to time, the Trust may enter into interest rate swap (option) transactions to modify the interest rate profile of itscurrent or future debts without an exchange of the underlying principal amount. In such cash flow hedging relationships, theeffective portion of the change in the fair value of the hedging derivative is recognized in OCI. The ineffective portion (asdefined for accounting purposes by the standard) is recognized in net earnings. The Trust has entered into interest rate swapson certain of its variable rate mortgages payable.

Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value isnegative.

At the inception of a hedging relationship, the Trust formally designates and documents the hedge relationship to which theTrust is applying hedge accounting and the risk management objective and strategy for undertaking the hedge. Thedocumentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk beinghedged and how the Trust will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in thehedged item’s cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achievingoffsetting changes in cash flows and are assessed on an ongoing basis to determine that they actually have been highlyeffective throughout the financial reporting periods for which they were designated.

In a net investment hedging relationship, the effective portion of foreign exchange gains and losses on the hedging instrumentis recognized in OCI and the ineffective portion is recognized in net earnings. The amounts recorded in accumulated othercomprehensive income (“AOCI”) are recognized in net earnings upon certain reductions in the net investment in the foreignsubsidiary.

(vi) Comprehensive income

Comprehensive income is comprised of net earnings and OCI, which represents changes in unitholders’ equity during a periodarising from transactions and other events with non-owner sources. OCI generally would include unrealized gains and losseson financial assets classified as available-for-sale, unrealized foreign currency translation adjustments net of hedging arisingfrom foreign operations, changes in the fair value of the effective portion of cash flow hedging instruments, and actuarial gainsand losses related to the Trust’s defined benefit pension plans. The Trust reports a consolidated statement of comprehensiveincome comprising net earnings and OCI for the period.

(vii) Fair value

The fair value of a financial instrument is the amount of consideration that could be agreed upon in an arm’s lengthtransaction between knowledgeable, willing parties who are under no compulsion to act. In certain circumstances, however,the initial fair value may be based on other observable current market transactions in the same instrument, withoutmodification or on a valuation technique using market based inputs. Except as noted below, the carrying value of the Trust’sfinancial assets and financial liabilities approximate their fair values because of the short period until receipt or payment ofcash. The fair values of mortgages and loans receivable are based on the current market conditions for mortgage financingloans with similar terms and risks. The fair values of term mortgages, debentures and designated hedging derivativeinstruments included in receivables and other assets and accounts payable and other liabilities are estimated based ondiscounted future cash flows using discount rates that reflect current market conditions for instruments with similar termsand risks.

Financial instrument fair value measurements recognized in the balance sheets are categorized using a fair value hierarchythat reflects the significance of inputs used in determining the fair values:

(1) Level 1 inputs – quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity hasthe ability to access at the measurement date;

(2) Level 2 inputs – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, eitherdirectly (i.e. as prices) or indirectly (i.e. derived from prices); and




(3) Level 3 inputs – inputs for the asset or liability that are not based on observable market data (unobservable inputs). Theseunobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use inpricing the asset or liability, and are developed based on the best information available in the circumstances (which mightinclude the reporting entity’s own data).

Each type of fair value is categorized based on the lowest level input that is significant to the fair value measurement in itsentirety.

(h) Income taxes

Upon qualifying as a real estate investment trust (“REIT”) in the fourth quarter of 2010, the Trust is considered, in substance, taxexempt and therefore does not account for income taxes. Prior to qualifying as a REIT, the Trust was considered taxable. Upon theTrust’s change in tax status, all deferred taxes of the Trust were reversed through net earnings or OCI based upon where theamounts initially arose. The Trust’s US operations are qualifying US REITs and are not subject to income taxes. The Trustconsolidates certain wholly owned incorporated entities that continue to be subject to income taxes. These taxable subsidiaries,and the Trust prior to its change in tax status, account for income taxes as follows:

(i) Current income tax

The Trust qualifies as a mutual fund trust and a REIT for income tax purposes. The Trust intends to distribute all of its taxableincome to unitholders and is entitled to deduct such distributions for income tax purposes. Accordingly, a provision for currentincome taxes payable is not required, except for amounts incurred in its incorporated Canadian taxable subsidiaries.

The Trust’s US subsidiary qualifies as a REIT for US income tax purposes. The subsidiary expects to distribute all of its UStaxable income (if any) to Canada and is entitled to deduct such distributions for US income tax purposes. Accordingly, noprovision for US current income tax payable is required.

(ii) Deferred income tax

Deferred income taxes are provided using the liability method for temporary differences at the balance sheet date between thetax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences, except:

(1) where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is nota business combination and, at the time of the transaction, affects neither the accounting nor taxable income or loss; and

(2) in respect of taxable temporary differences associated with investments in subsidiaries and interests in jointly controlledentities, where the timing of the reversal of the temporary differences can be controlled and it is probable that thetemporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognized for all deductible temporary differences to the extent that it is probable thattaxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax creditsand unused tax losses, can be utilized except:

(1) where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition ofan asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neitherthe accounting profit nor taxable profit or loss; and

(2) in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests injointly controlled entities, deferred income tax assets are recognized only to the extent that it is probable that thetemporary differences will reverse in the foreseeable future and taxable profit will be available against which thetemporary differences can be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to undistributed profits inthe year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted orsubstantively enacted at the balance sheet date and reflect the tax consequences that would follow from the manner in whichthe entity expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.Deferred income taxes relating to temporary differences that are in equity are recognized in equity.

Deferred income tax assets and deferred income tax liabilities of the same taxable entity related to the same taxationauthority are offset.

(i) Cash and equivalents

Cash and equivalents are comprised of cash and short term investments with original maturities of three months or less.




(j) Provisions

Provisions are recognized when the Trust has a present obligation (legal or constructive) as a result of a past event, it is probablethat an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can bemade of the amount of the obligation. Where the Trust expects some or all of a provision to be reimbursed, for example under aninsurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. Theexpense relating to any provision is presented in net earnings, net of any reimbursement. If the effect of the time value of money ismaterial, provisions are discounted using a current rate that reflects, where appropriate, the risks specific to the liability. Wherediscounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

(k) Foreign currency translation

The financial statements are presented in Canadian dollars, which is the functional currency of the Trust and the presentationcurrency for the consolidated financial statements.

Assets and liabilities of operations having a functional currency other than Canadian dollars are translated at the rate of exchangeat the balance sheet date. Revenues and expenses are translated at average rates for the period, unless exchange rates fluctuatedsignificantly during the period, in which case the exchange rates at the dates of the transaction are used. The resulting foreigncurrency translation adjustments are recognized in OCI.

Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the date of thetransactions. At the end of each reporting period, foreign currency denominated monetary assets and liabilities are translated tothe functional currency using the prevailing rate of exchange at the balance sheet date. Gains and losses on translation ofmonetary items are recognized in the consolidated statement of earnings in general and administrative and other, except for thoserelated to monetary liabilities qualifying as hedges of the Trust’s investment in foreign operations or certain intercompany loans toa foreign operation for which settlement is neither planned nor likely to occur in the foreseeable future, which are included in OCI.

(l) Employee future benefits

The Trust operates a defined contribution pension plan and three defined benefit pension plans for certain employees. The Trustexpenses its required contributions to the defined contribution pension plan.

The cost of providing benefits under the defined benefit plans is determined separately for each plan. Actuarial gains and lossesfor the defined benefit plans are recognized in full in the period in which they occur in OCI. Such actuarial gains and losses are alsoimmediately recognized in retained earnings and are not reclassified to profit or loss in subsequent periods. The past service costsare recognized as an expense on a straight-line basis over the average period until the benefits become vested. If the benefits havealready vested, immediately following the introduction of, or changes to, a pension plan, past service costs are recognizedimmediately.

The defined benefit asset or liability comprises the present value of the defined benefit obligation (using a discount rate based onhigh quality corporate bonds), less unamortized past service costs and less the fair value of plan assets out of which theobligations are to be settled.

(m) Significant accounting judgments, estimates and assumptions

The preparation of the Trust’s consolidated financial statements requires management to make judgments, estimates andassumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingentliabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes thatrequire a material adjustment to the carrying amount of the asset or liability affected in future periods.

(i) Judgments

In the process of applying the Trust’s accounting policies, management has made the following judgments, which have themost significant effect on the amounts recognized in the consolidated financial statements:

(1) Investment property

The Trust’s accounting policies relating to investment property are described in Note 2(d). In applying these policies,judgment is applied in determining whether certain costs are additions to the carrying amount of the property, indistinguishing between tenant incentives and improvements and for properties under development, in identifying the pointat which completion of the property occurs and identifying the directly attributable borrowing costs to be included in thecarrying value of the development property.




(2) Development costs

Development costs for properties under development are capitalized in accordance with the accounting policy in Note2(d)(ii). Initial capitalization of costs is based on management’s judgment that the development project is in activedevelopment. This amount includes capitalized direct internal development and initial leasing costs, primarily comprisingcompensation costs, property taxes and interest on both specific and general debt.

(ii) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date thathave a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the nextfinancial year are discussed below.

(1) Valuation of investment property

Estimates and assumptions used in the valuation of investment properties are described in Note 3.

(2) Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet or disclosed in the notescannot be derived from active markets, they are determined using valuation techniques including the discounted cash flowsmodel. The inputs to these models are taken from observable markets where possible, but where this is not feasible, adegree of judgment is required in establishing fair values. The judgments include considerations of inputs such as liquidityrisk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financialinstruments.

(3) Guarantees

The Trust reviews its contingent liabilities relating to guarantees it provides on behalf of third parties. The Trust’sguarantees remain in place for certain debts assumed by purchasers in connection with property dispositions, and willremain until such debts are extinguished or lenders agree to release RioCan’s covenants. Recourse would be available tothe Trust under these guarantees in the event of a default by the borrowers, in which case the Trust would have a claimagainst the underlying real estate investments. A provision is recorded by the Trust when it is expected that the borrowerwill not honour its obligations as a result of the inability of the underlying assets’ performance to meet the contractual debtservice terms of the underlying debt and the fair value of the collateral assets are insufficient to cover the obligations andencumbrances in a sale between unrelated parties in the normal course of business. The Trust’s estimates of future cashflow (which amongst others, involve assumptions of estimated occupancy, rental rates and residual value) and fair valuecould vary and result in a significantly different assessment of the need for and amount of any provisions.

(4) Deferred income taxes

Deferred income taxes are determined using the liability method for temporary differences at the balance sheet datebetween the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, and bygenerally applying the substantively enacted tax rates applicable to the Trust to such temporary differences that wouldfollow from the manner in which the Trust expects to recover or settle the carrying value of its assets and liabilities.

As of January 1, 2011, the Trust qualified as a mutual fund trust and a REIT for Canadian income tax purposes and as aresult does not account for deferred taxes (except those within certain wholly owned incorporated entities) after January 1,2011. The Trust expects to continue to qualify as a mutual fund trust and a REIT, however, should it no longer qualify itwould not be able to flow through its taxable income to unitholders and the Trust would therefore be subject to tax.

The Trust expects its US subsidiary to continue to qualify as a REIT for US tax purposes and as a result does not account fordeferred taxes related to the US subsidiary. If the US subsidiary were to no longer qualify as a US REIT, it would be subjectto tax.

(n) Future accounting policy changes

Standards issued but not yet effective up to the date of these consolidated financial statements are described below. Thisdescription is of standards and interpretations issued, which the Trust reasonably expects to be applicable at a future date. TheTrust intends to adopt these standards when they become effective.

Financial Instruments (“IFRS 9”)

IFRS 9 as issued reflects the IASB’s work to date on the replacement of Financial Instruments: Recognition and Measurement (“IAS39”), and applies to the classification and measurement of financial assets and financial liabilities as defined in IAS 39. Theapproach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the




contractual cash flow characteristics of its financial assets. The standard is effective for annual periods beginning on or afterJanuary 1, 2015. In subsequent phases, the IASB will address impairment and hedge accounting. The Trust has not yet determinedthe impact of IFRS 9 on its consolidated financial statements.

Consolidated Financial Statements (“IFRS 10”)

On May 12, 2011, the IASB issued IFRS 10, Consolidated Financial Statements, which will replace IAS 27, Consolidated and SeparateFinancial Statements and SIC-12, Consolidation – Special Purpose Entities. The new standard provides a single model forconsolidation based on control, which exists when an investor is exposed or has the right to variable returns from its involvementwith the investee and has the current ability to affect those returns through its power over the investee. The standard also providesguidance on how to evaluate power and requires that control be assessed as facts and circumstances change. IFRS 10 is effectivefor annual periods beginning on or after January 1, 2013, with early adoption permitted. The Trust does not expect that thisstandard will result in a material impact to the consolidated financial statements.

Joint Arrangements (“IFRS 11”)

On May 12, 2011, the IASB issued IFRS 11, Joint Arrangements. This new standard replaces IAS 31, Interests in Joint Ventures. Thenew standard eliminates the option to proportionately consolidate interests in certain types of joint ventures. IAS 28, Investments inAssociates has also been amended and will establish the requirements for the application of the equity method to theseinvestments. This new standard is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted.While the Trust expects that implementation of this standard will result in net balance sheet presentation of assets and liabilitiesfor certain US joint ventures, the Trust does not expect that this standard will have an impact on net earnings. As at December 31,2012, RioCan expects that assets and liabilities will be reduced by approximately $600 million and $300 million, respectively, andbe replaced with balance sheet presentation of a net investment in equity accounted investments of approximately $300 million.For the twelve months ended December 31, 2012, RioCan expects a reduction of net operating income (“NOI”), interest expenseand fair value gains of approximately $38 million, $13 million and $44 million, respectively, replaced by an equity pick up in otherincome of approximately $69 million in the consolidated statement of earnings. As at December 31, 2011, RioCan expects thatassets and liabilities will be reduced by approximately $600 million and $300 million, respectively, and be replaced with balancesheet presentation of a net investment in equity accounted investments of approximately $300 million. For the twelve monthsended December 31, 2011, a reduction of NOI, interest expense and fair value gains of approximately $18 million, $7 million and$13 million, respectively, replaced by increased other income of approximately $24 million in the consolidated statement ofearnings.

Disclosure of Interests in Other Entities (“IFRS 12”)

The IASB issued IFRS 12, Disclosure of Interests in Other Entities, on May 12, 2011. The standard includes disclosure requirementsabout subsidiaries, joint ventures, and associates, replacing existing requirements. Additional disclosures include judgments andassumptions made in determining how to classify involvement with another entity, interests that non-controlling interests have inthe consolidated entities, and the nature and risks associated with interests in other entities. This standard is effective for annualperiods beginning on or after January 1, 2013, with early adoption permitted. Adoption of this standard will not materially impactthe consolidated financial statements other than disclosure.

Fair Value Measurement (“IFRS 13”)

IFRS 13, Fair Value Measurement, establishes a single source of guidance for fair value measurements when fair value is permittedor required by IFRS. The standard also requires enhanced disclosures when fair value is applied. The standard is effective forannual periods beginning on or after January 1, 2013, with early adoption permitted. The Trust does not expect that this standardwill result in a material impact to the consolidated financial statements.

Presentation of Financial Statements (“IAS 1”)

In June 2011, the IASB made amendments to IAS 1, Presentation of Financial Statements, which will require entities to group itemspresented in OCI on the basis of whether they will or will not subsequently be reclassified to profit or loss. The amended version ofIAS 1 is effective for annual periods beginning on or after July 1, 2012, with early adoption permitted. The Trust has adopted theamendments to IAS 1.

Employee Benefits (“IAS 19”)

In June 2011, the IASB made amendments to IAS 19, Employee Benefits. The amendments include eliminating the option to deferthe recognition of gains and losses, streamlining the presentation of changes to assets and liabilities with all changes fromremeasurement to be recognized in OCI and enhancing the disclosure of the characteristics of defined benefit plans and the risksthat entities are exposed to through participation in those plans. The amended version of IAS 19 is effective for annual periodsbeginning on or after January 1, 2013, with early adoption permitted. The Trust does not expect that this amendment will result in amaterial impact to the consolidated financial statements.




3. Investment Property

For the year ended December 31,December 31,

2012December 31,

2011

Composed of:

Income properties $ 11,914 $ 10,024Properties under development 462 362Properties held for resale 25 23

$ 12,401 $ 10,409

(a) Income Properties

For the year ended December 31, 2012 2011

Balance, beginning of year $ 10,024 $ 8,185Acquisitions 849 1,081Capital expenditures 18 37Tenant installation costs 37 42Dispositions (71) –Transfers from properties under development 159 150Transfers to properties under development (13) (14)Fair value gains, net 902 510Foreign currency translation gain (loss) (35) 24Other changes 44 9

Balance, end of year $ 11,914 $ 10,024

(b) Properties Under Development


Balance, beginning of year $ 362 $ 268Acquisitions 99 88Development expenditures 136 101Completion of properties under development (159) (150)Transfers from income properties 13 14Fair value gains, net 11 23Other – 18

Balance, end of year $ 462 $ 362

(c) Properties Held For Resale

As at December 31, 2012, properties held for resale were $24.5 million (December 31, 2011 – $22.8 million). Properties heldfor resale is inventory valued at the lower of cost and net realizable value.




Investment Property

Included in investment property is $95.3 million (December 31, 2011 – $86.4 million) of net straight-line rents receivable arisingfrom the recognition of rental revenue on a straight-line basis over the lease term in accordance with IAS 17, Leases.

Included in investment property are finance leases for which the Trust has exercised its options to purchase these properties in2034 and 2037. As at December 31, 2012, the fair value of these properties was $33.9 million (December 31, 2011 – threeproperties, $78.4 million).

Included in investment property are three properties, Albion Centre, Georgian Mall and Shoppers World Danforth, which aresubject to land leases from third parties. The land lease for Georgian Mall, which expires in 2020, includes a buy-out option. Theland leases for Albion Centre and Shoppers World Danforth, which both expire in 2029, do not include buy-out options. Thesethree properties are operating leases, but subject to IAS 40, Investment Property, have been accounted for as finance leases andrecorded at fair value within income properties. The fair value of these three properties is $381.3 million for the land and building(December 31, 2011 – two properties, $59.6 million) and the lease obligation is $17.2 million (December 31, 2011 – two properties,$14.8 million) and is included in accounts payable and other liabilities.

Valuation Process

The Trust determined the fair value of each income property internally based upon the direct capitalization income approachmethod of valuation. The fair value was determined by applying a capitalization rate to stabilized NOI, which incorporatesallowances for vacancy, management fees and structural reserves for capital expenditures for the property. The resultingcapitalized value was further adjusted, where appropriate, for costs to stabilize the income and non-recoverable capitalexpenditures.

The Trust valued properties under development that consist of undeveloped land on a land value per acre basis, based on theparticular attributes of the project with respect to zoning and pre-development work performed on the site. Where a site waspartially developed, the direct capitalization method was applied to capitalize the pro forma income, from which the costs tocomplete the development were deducted.

The valuation for income properties and properties under development was determined internally by management.

Properties held for resale are stated at the lower of cost and net realizable value.

The table below provides further details of the average capitalization rates for income properties (weighted based on stabilizedNOI), and ranges for each retail class.

December 31, 2012 December 31, 2011

Retail Class


Rate* Range


Rate* Range

Enclosed Shopping Centre 6.39% 5.25% – 9.00% 7.34% 6.00% – 9.23%

Grocery Anchored Shopping Centre 6.16% 5.25% – 9.00% 6.68% 5.75% – 9.00%

Mixed Use 5.98% 5.00% – 8.50% 6.45% 5.50% – 8.65%

New Format Retail 5.88% 5.15% – 7.83% 6.34% 5.65% – 8.00%

Non-Grocery Anchored Centre 6.58% 5.25% – 9.00% 6.78% 5.75% – 9.00%

Urban Retail 5.37% 4.21% – 7.22% 5.84% 5.50% – 6.75%

Total Weighted Average 6.01% 4.21% – 9.00% 6.53% 5.50% – 9.23%

* – at RioCan’s interest




Canadian Portfolio Overall Portfolio Primary Market Secondary Market

Retail Class


Rate* Range


Rate* Range


Rate* Range

Enclosed Shopping Centre 6.39% 5.3% – 9.0% 6.23% 5.8% – 8.3% 6.48% 5.3% – 9.0%

Grocery Anchored Shopping Centre 6.08% 5.3% – 9.0% 5.87% 5.3% – 7.3% 6.50% 5.8% – 9.0%

Mixed Use 5.98% 5.0% – 8.5% 5.72% 5.0% – 7.0% 7.46% 6.3% – 8.5%

New Format Retail 5.69% 5.2% – 7.3% 5.54% 5.2% – 6.5% 6.15% 5.3% – 7.3%

Non-Grocery Anchored Centre 6.53% 5.3% – 9.0% 6.17% 5.3% – 7.3% 7.09% 5.8% – 9.0%

Urban Retail 5.37% 4.2% – 7.2% 5.37% 4.2% – 7.2% – –

5.91% 4.2% – 9.0% 5.70% 4.2% – 8.3% 6.28% 5.3% – 9.0%

* — at RioCan’s interest

US Portfolio Overall Portfolio North East** Texas

Retail Class


Rate* Range


Rate* Range


Rate* Range

Grocery Anchored Shopping Centre 6.55% 5.5% – 7.8% 6.51% 5.5% – 7.3% 6.68% 6.0% – 7.8%

New Format Retail 6.58% 5.8% – 7.8% 6.67% 6.3% – 7.3% 6.52% 5.8% – 7.8%

Non-Grocery Anchored Centre 7.50% 7.5% – 7.5% 7.50% 7.5% – 7.5% 0.00% 0.0% – 0.0%

6.58% 5.5% – 7.8% 6.64% 5.5% – 7.5% 6.53% 5.8% – 7.8%

* — at RioCan’s interest** Area includes Connecticut, Maryland, Massachusetts, New Jersey, New York, Rhode Island, Pennsylvania, West Virginia, Virginia and New

Hampshire.

The fair value change in investment property for the year ended December 31, 2012 was $913 million (December 31, 2011—$533million).

The following table provides a sensitivity analysis for the weighted average capitalization rate applied at December 31, 2012:

(in billions, except percentages)

Capitalization rate sensitivityIncrease (decrease)

Weightedaverage

capitalizationrate*

Fair value ofinvestment property

(at RioCan’sownership)

Fair valuevariance % change

Ratio ofdebt, net of

cash, to totalassets, net

of cash

(1.00%) 5.01% $ 14.9 $ 2.5 20.0% 36.4%(0.75%) 5.26% $ 14.2 $ 1.8 14.3% 38.2%(0.50%) 5.51% $ 13.5 $ 1.1 9.1% 40.0%(0.25%) 5.76% $ 12.9 $ 0.5 4.4% 41.8%December 31, 2012 6.01% $ 12.4 – – 43.5%0.25% 6.26% $ 11.9 $ (0.5) (4.0%) 45.3%0.50% 6.51% $ 11.5 $ (0.9) (7.6%) 47.0%0.75% 6.76% $ 11.0 $ (1.4) (11.0%) 48.8%1.00% 7.01% $ 10.6 $ (1.8) (14.9%) 50.6%

* — at RioCan’s interest




4. Mortgages and Loans ReceivableDecember 31,

2012December 31,

2011

Current $ 108 $ 72Non-current 92 75

$ 200 $ 147

As at December 31, 2012, mortgages and loans receivable bear interest at effective rates between 5.1% and 8.0% (contractualrates between 0% and 8.0%) per annum with a weighted average effective rate of 6.2% (contractual rate of 6.1%) per annum, andmature between 2013 and 2017. As at December 31, 2011, mortgages and loans receivable bear interest at effective rates between4.5% and 10% (contractual rates between 0% and 10%) per annum with a weighted average effective rate of 7.1% (contractual rateof 6.9%) per annum.Future repayments are as follows:

Due on demand $ 54For the year ending December 31:2013 542014 272015 272016 332017 5

Mortgages and loans receivable $ 200

5. InvestmentInvestment represents the Trust’s investment in Cedar Realty Trust (“Cedar”). As at December 31, 2012 and December 31, 2011,the Trust’s investment consists of its ownership of 9.4 million common shares of Cedar. Cedar’s (CDR:NYSE) closing stock price asat December 31, 2012 was US$5.28 (December 31, 2011 – US$4.31). In the second quarter of 2012, as a result of the prolongeddecrease in the fair value of this investment below the Trust’s original cost, management recorded a $12 million impairmentcharge based on the share price as at June 30, 2012 of US$5.05.

6. Receivables and Other AssetsDecember 31, 2012 December 31, 2011

CurrentNon-

current Total CurrentNon-

current Total

Contractual rents receivable $ 35 $ – $ 35 $ 27 $ – $ 27Prepaid expenses and other assets 49 16 65 35 23 58

$ 84 $ 16 $ 100 $ 62 $ 23 $ 85

Contractual rents receivable, including both billed and accrued amounts, are non-interest bearing and are generally on 30-90 dayterms.

7. Mortgages Payable and Lines of Credit(a) Mortgages Payable and Lines of Credit

December 31,2012

December 31,2011

Current $ 452 $ 373Non-current 3,994 3,839

$ 4,446 $ 4,212




As at December 31, 2012, mortgages payable bear interest at effective rates between 1.72% and 8.73% (contractual rates between1.71% and 8.45%) per annum with a weighted average effective rate of 4.83% (contractual rate of 4.71%) per annum and maturebetween 2013 and 2041. As at December 31, 2011, mortgages payable bear interest at effective rates between 1.78% and 8.73%(contractual rates between 1.78% and 8.45%) per annum with a weighted average effective rate of 5.25% (contractual rate of5.14%) per annum.

Future repayments are as follows:

Scheduledprincipal

amortizationPrincipal

maturitiesTotal

repayments

Weightedaverage

contractualinterest rate

For the year ending December 31: 2013 $ 93 $ 359 $ 452 5.79%

2014 87 459 546 4.24%

2015 80 663 743 4.65%

2016 68 545 613 4.85%

2017 56 805 861 3.97%

Thereafter 131 1,094 1,225 5.04%

Contractual obligations $515 $3,925 $4,440Unamortized differential between contractual

and market interest rates on liabilitiesassumed at the acquisition of properties 23

Unamortized debt financing costs (17)

$4,446

As at December 31, 2012, US dollar denominated debt amounted to US$1.2 billion (December 31, 2011 – US$1.1 billion).

As at December 31, 2012, RioCan had four revolving lines of credit in place with three Canadian Schedule 1 financial institutions,having an aggregate capacity of $428.5 million.

The following table summarizes the details of the secured lines of credit as at December 31, 2012:

Amounts drawn

Facilitymaximum loan

amountCash

advancesLetters

of credit

Availableto be

drawn Interest rates Maturity

1 $ 200 (i) $ 73 $ 11 $ 116 CDN$ advances - prime plus 0.5% per annum or Bankers’ Acceptanceplus 1.5%; US$ advances - US$ Base Rate plus 0.5% per annum orUS$ LIBOR plus 1.5%

November 2014

2 100 (i) — 13 87 CDN$ advances - prime plus 0.5% per annum or Bankers’ Acceptanceplus 1.5%; US$ advances - US$ Base Rate plus 0.5% per annum orUS$ LIBOR plus 1.5%

June 2014

3 125 (i) — — 124 CDN$ advances - prime plus 0.5% per annum or Bankers’ Acceptanceplus 1.5%; US$ advances - US$ Base Rate plus 0.5% per annum orUS$ LIBOR plus 1.5%

December 2013(plus one year

extension subjectto Bank approval)

4 4 (ii) — 1 3 Letters of credit fees - 2.25% Upon demand forunused amounts

$ 429 $ 73 $ 25 $ 330

(i) Secured by a charge against certain income properties. Should the aggregate agreed values for lending purposes of such properties fall to alevel which would not support a borrowing of the maximum loan amount, RioCan has the option to provide substitute income properties asadditional security.

(ii) RioKim (a joint venture in which RioCan has a 50% interest) letter of credit facility, which provides for a maximum aggregate amount of$7 million, or $3.5 million at RioCan’s interest.




(b) Net Current Liabilities


Cash and equivalents $ 183 $ 77Receivables and other assets (Note 6) 84 62Mortgages and loans receivable (Note 4) 108 72

Current assets 375 211Accounts payable and other liabilities (Note 10) 259 229Debentures payable (Note 8) 150 100

Net current liabilities before undernoted (34) (118)Mortgages payable and lines of credit (Note 7) 452 373

Net current liabilities $ (486) $ (491)

8. Debentures Payable


Current $ 150 $ 100Non-current 1,142 722

$ 1,292 $ 822

The Trust has the following series of senior unsecured debentures outstanding as at December 31, 2012:

Series Principal amount Maturity date Coupon rate Interest payment frequency

G $ 150 March 11, 2013 5.23% Semi-annualM 150 March 31, 2015 5.65% Semi-annualN (i) 99 September 21, 2015 4.10% Semi-annualO 225 January 21, 2016 4.50% Semi-annualP 150 March 1, 2017 3.80% Semi-annualQ 175 June 28, 2019 3.85% Semi-annualR 250 December 13, 2021 3.72% Semi-annualI 100 February 6, 2026 5.95% Semi-annual

$ 1,299

(i) US dollar denominated $100 million debenture

The debentures have covenants relating to RioCan’s leverage limit of up to 60% of aggregate assets as set out in the Trust’sDeclaration, the maintenance of a $1.0 billion Adjusted Book Equity (as defined in the debenture), and maintenance of an interestcoverage ratio of 1.65 times or greater. There are no requirements under the unsecured debenture covenants for RioCan tomaintain unencumbered assets. RioCan has the right, at any time, to convert the Series I debentures to mortgage debt, subject tothe 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.

On January 26, 2012, the Trust issued $150 million of Series P debentures which mature on March 1, 2017 and carry a coupon rateof 3.80%. These debentures are subject to the same covenants as the other above noted outstanding debentures, with theexception of Series I, which has an additional provision as discussed above. Debenture issuance costs were approximately $1.3million.

On June 28, 2012, the Trust issued $150 million of Series Q debentures. During the third quarter on July 19, 2012, the Trust issuedan additional $25 million Series Q debentures, resulting in an aggregate of $175 million of Series Q debentures outstanding. The




Series Q debentures carry a coupon rate of 3.85%, mature on June 28, 2019 and are subject to the same covenants as the otherabove noted outstanding debentures, with the exception of Series I, which has an additional provision as discussed above.Debenture issuance costs were approximately $1.2 million.

On December 12, 2012, the Trust issued $250 million of Series R debentures which mature on December 13, 2021 and carry acoupon rate of 3.716%. These debentures are subject to the same covenants as the other above noted outstanding debentures, withthe exception of Series I, which has an additional provision as discussed above. Debenture issuance costs were approximately $2.0million.

As at December 31, 2012, debentures payable bear interest at a weighted average effective rate of 4.63% (contractual rate of4.48%) per annum. Future repayments are as follows:

Principalmaturities

Weighted averagecontractual

interest rate

For the year ending December 31: 2013 $ 150 5.23%2014 – –2015 249 5.03%2016 225 4.50%2017 150 3.80%Thereafter 525 4.19%

Contractual obligations 1,299Unamortized debt financing costs (7)

$ 1,292

9. Income TaxesThe Trust qualifies as a mutual fund trust and a REIT for Canadian income tax purposes. The Trust expects to distribute all of itstaxable income to unitholders and is entitled to deduct such distributions for income tax purposes. Accordingly, no provision forCanadian current income tax payable is required, except for amounts incurred in its incorporated Canadian subsidiaries.

The Trust’s US subsidiary qualifies as a REIT for US income tax purposes. The subsidiary expects to distribute all of its US taxableincome (if any) to Canada and is entitled to deduct such distributions for US income tax purposes. Accordingly, no provision for UScurrent income tax payable is required.

The Income Tax Act (Canada) (the “Tax Act”) contains legislation affecting the tax treatment of publicly traded trusts (the “SIFTLegislation”). The SIFT Legislation provided for a transition period until 2011 for publicly traded trusts like RioCan which existedprior to November 1, 2006. In addition, the SIFT Legislation did not impose tax on a trust which qualifies under such legislation as aREIT (the “REIT Exception”). The Trust completed the necessary tax restructuring in the fourth quarter of 2010 to qualify for theREIT Exception commencing for the 2011 taxation year. As a result, there will not be any deferred income tax assets or liabilitiesrecognized for the Trust for either its Canadian or US operations except for amounts incurred in its incorporated Canadian or UStaxable subsidiaries.

Where an entity does not qualify for the REIT Exception, certain distributions will not be deductible by that entity in computing itsincome for Canadian tax purposes. As a result, the entity will be subject to tax at a rate substantially equivalent to the generalcorporate income tax rate on distributed taxable income. Distributions paid in excess of taxable income will continue to be treatedas a return of capital to unitholders. Undistributed taxable income is subject to the top marginal personal tax rate. The Trustconsolidates certain wholly owned incorporated entities that remain subject to tax. The tax disclosures and expense relate only tothese entities.

Components of deferred tax assets on the consolidated balance sheetsDecember 31,

2012December 31,

2011

Tax effected temporary differences between accounting and tax basis of:Intangibles and other $ 9 $ 8

Deferred tax assets $ 9 $ 8




As at December 31, 2012, the Trust’s incorporated Canadian subsidiaries recorded deferred tax assets of $9 million (December 31,2011 – $8 million).

10. Accounts Payable and Other Liabilities


CurrentNon-

current Total CurrentNon-

current Total

Property operating costs $ 48 $ 22 $ 70 $ 42 $ 15 $ 57Development costs and other capital expenditures 43 – 43 39 – 39Contingent consideration 37 – 37 27 – 27Interest on mortgages and debentures payable 31 – 31 29 – 29Distributions to unitholders payable 35 – 35 32 – 32Property taxes 26 – 26 20 – 20Tenant installation costs 12 – 12 11 – 11Unfunded employee future benefits (Note 29) – 10 10 – 7 7Trustees’ restricted equity unit plan (Note 12 (b)) – 2 2 – 2 2Fair value of interest rate swap agreements (Note 21) – 15 15 – 15 15

Other 27 17 44 29 23 52

$ 259 $ 66 $ 325 $ 229 $ 62 $ 291

11. Unitholders’ Equity

(a) Common units

The Trust is authorized to issue an unlimited number of common units. The common units are entitled to distributions as and whendeclared by the Board of Trustees and on liquidation to a pro rata share of the residual net assets remaining after the preferentialclaims thereon of debt holders and preferred unitholders. As the Trust is a closed end trust, the units are not puttable. The unitsissued and outstanding are as follows:


Units(in

thousands) $

Units(in

thousands) $

Units outstanding, beginning of year (i) 279,113 3,585 259,818 3,130Units issued:Exchangeable limited partnership units 29 1 3,290 83Public offerings (ii) 15,510 424 10,477 260Distribution reinvestment plan 4,081 108 3,433 82Direct purchase plan 47 1 48 1Unit option plan 1,319 24 2,047 37Value associated with unit options granted – 5 – 4Unit issue costs – (18) – (12)

Units outstanding, end of year (i) 300,099 4,130 279,113 3,585

(i) Included in units outstanding are exchangeable limited partnership units of four limited partnerships that are subsidiaries of the Trust (the“LP units”), which were issued to vendors as partial consideration for income properties acquired by RioCan (December 31, 2012 – 2,312,661units; December 31, 2011– 4,397,085 units). RioCan is the general partner of the limited partnerships. The LP units are entitled todistributions equivalent to distributions on RioCan units, and are exchangeable for RioCan units on a one-for-one basis at any time at theoption of the holder.




(ii) On April 20, 2012, RioCan issued an aggregate of 8,584,750 trust units at a price of $26.80 per unit for aggregate gross proceeds of $230million. The aggregate offering was comprised of the issuance of 7,465,000 units at $26.80 per unit for gross proceeds of $200 million,together with the option granted to underwriters, which was exercised in full, for an issuance of an additional 1,119,750 units at $26.80 perunit for additional gross proceeds of $30 million.

On September 19, 2012, RioCan issued an aggregate of 6,925,000 trust units at a price of $27.90 per unit for aggregate gross proceeds of $193million. The aggregate offering was comprised of the issuance of 6,275,000 units at $27.90 per unit for gross proceeds of $175 million,together with the option granted to underwriters, which was exercised in part for an issuance of an additional 650,000 units at $27.90 per unitfor additional gross proceeds of $18 million.

(b) Preferred units

The Trust is authorized to issue 50 million preferred units.

(i) Series A

In the first quarter of 2011, the Trust issued a total of 5,000,000 perpetual Cumulative Rate Reset Preferred Trust Units, SeriesA (the “Series A Units”) for aggregate gross proceeds of $125 million. The Series A Units pay a cumulative distribution yield of5.25% per annum, payable quarterly, as and when declared by the Board of Trustees of RioCan, for the initial five-year periodending March 31, 2016. The distribution rate will be reset on March 31, 2016 and every five years thereafter at a rate equal tothe sum of the then five-year Government of Canada bond yield and 2.62%.

The Series A Units are redeemable by RioCan, at its option, on March 31, 2016 and on March 31 of every fifth yearthereafter. Holders of Series A Units have the right to reclassify all or any part of their units as perpetual Cumulative FloatingRate Preferred Trust Units, Series B (the “Series B Units”), subject to certain conditions, on March 31, 2016 and on March 31of every fifth year thereafter. Holders of Series B Units will be entitled to receive a cumulative quarterly floating distribution ata rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 2.62%, as and when declared by theBoard of Trustees of RioCan. Holders of Series B Units will have the right to reclassify all or part of their units as Series AUnits on March 31, 2021 and on March 31 of every fifth year thereafter.

(ii) Series C

In the fourth quarter of 2011, the Trust issued an aggregate of 5,980,000 Cumulative Rate Reset Preferred Trust Units, SeriesC (the “Series C Units”) for aggregate gross proceeds of $149.5 million. The Series C Units pay a fixed cumulative distributionyield of 4.70% per annum, payable quarterly, as and when declared by the Board of Trustees of RioCan, for the initialapproximately five and a half-year period ending June 30, 2017. The distribution rate will be reset on June 30, 2017 and everyfive years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield and 3.18%.

The Series C Units are redeemable by RioCan, at its option, on June 30, 2017 and on June 30 of every fifth year thereafter.Holders of Series C Units have the right to reclassify all or any part of their units as Cumulative Floating Rate Preferred TrustUnits, Series D (the “Series D Units”), subject to certain conditions, on June 30, 2017 and on June 30 of every fifth yearthereafter. Holders of Series D Units will be entitled to receive a cumulative quarterly floating distribution at a rate equal tothe sum of the then 90-day Government of Canada Treasury Bill yield plus 3.18%, as and when declared by the Board ofTrustees of RioCan. Holders of Series D Units will have the right to reclassify all or part of their units as Series C Units onJune 30, 2022 and on June 30 of every fifth year thereafter.

The Series C Units and the Series D Units will rank equally with each other and with the outstanding Series A Units and theSeries B Units into which they may be reclassified.

(c) Accumulated other comprehensive income (loss)

Accumulated other comprehensive income (loss) consists of the following amounts:Unrealized income (loss)

Interestrate swap

agreements

Translationof foreign

operations

Available-for-sale

investmentPension

plan Total

As at December 31, 2010 $ (3) $ (10) $ – $ – $ (13)Other comprehensive income (loss) (10) 6 (18) 1 (21)Reclassification of pension – – – (1) (1)

As at December 31, 2011 $ (13) $ (4) $ (18) – $ (35)Other comprehensive income (loss) – (9) 20 (1) 10Reclassification of pension 1 (1)

As at December 31, 2012 $ (13) $ (13) $ 2 $ – $ (24)




12. Unit-based Compensation Plans(a) Incentive unit option plan

As at December 31, 2012, the Trust’s incentive unit option plan (the “plan”) provides for option grants to a maximum of29.2 million units. As at December 31, 2012, 14.3 million unit options have been granted and exercised, 8.4 million unit optionshave been granted and remain outstanding and 6.5 million unit options remain available for grant. The exercise price for eachoption is equal to the volume weighted average trading price of the Units on the Toronto Stock Exchange for the five tradingdays immediately preceding the date of grants except for those options granted prior to May 27, 2009 which have an exerciseprice equal to the closing price of the Trust’s Units on the date prior to the day the option was granted. An option’s maximumterm is 10 years. All options granted through December 31, 2003 vest at 20% per annum commencing on the grant date,becoming fully vested after four years. All options granted after December 31, 2003 vest at 25% per annum commencing onthe first anniversary of the grant, and become fully vested after four years.

A summary of unit options granted under the plan is as follows:


Options

Units(in

thousands)

Weightedaverageexercise

price

Units(in

thousands)

Weightedaverageexercise

price

Outstanding, beginning of year 7,700 $ 21.07 8,270 $ 19.56Granted 1,995 26.66 1,750 24.62Exercised (1,319) 18.28 (2,047) 17.84Forfeited – – (273) 22.28

Outstanding, end of year 8,376 $ 22.84 7,700 $ 21.07

Options exercisable at end of year 4,047 $ 21.98 3,890 $ 21.59

Weighted average fair value per unit of options granted during the year $ 3.50 $ 3.51

The Trust accounts for the plan using the fair value method, under which compensation expense for each tranche of an awardis measured at the grant date and recognized over the vesting period. Unit-based compensation expense and assumptionsutilized in the calculation thereof using the Black-Scholes option valuation model are as follows:

(units in thousands)For the year ended December 31, 2012 2011

Unit-based compensation expense $ 5 $ 4

Unit options granted 1,995 1,750Unit option holding period (years) 5.5 - 7 5.5 - 7Weighted average volatility rate 26.1% 25.7%Weighted average distribution yield 5.2% 5.6%Weighted average risk free interest rate 1.6% 2.8%

(b) Trustees’ restricted equity unit plan

The Trustees’ restricted equity unit plan provides for an allotment of restricted equity units (“REUs”) to each non-employeetrustee (“member”). The value of REUs allotted appreciates or depreciates with increases or decreases in the market price ofthe Trust’s units. Members are also entitled to be credited with REUs for distributions paid in respect of units of the Trustbased on an average market price of the units as defined by the plan. REUs vest and are settled three years from the date ofissue by a cash payment equal to the number of vested REUs credited to the member based on an average market price of theTrust’s units at the settlement date. As at December 31, 2012, accounts payable and other liabilities include accruedcompensation costs relating to the REUs of $1.9 million (December 31, 2011 – $1.8 million).




13. Distributions to UnitholdersRioCan currently qualifies as a mutual fund trust and REIT for income tax purposes. RioCan intends, but is not contractuallyobligated, to distribute all of the Trust’s taxable income to unitholders in each year, as calculated in accordance with the Act afterall permitted deductions under the Act have been taken.

Total distributions declared to unitholders are as follows:


TotalDistributions

Distributionsper unit

TotalDistributions

Distributionsper unit

Common Unitholders $ 401 $ 1.3800 $ 367 $ 1.3800Preferred Unitholders – Series A $ 7 $ 1.3125 $ 6 $ 1.2145Preferred Unitholders – Series C $ 7 $ 1.1750 $ 1 $ 0.10

14. Rental Revenue


Rental income $ 714 $ 623Straight-line rent 8 10

722 633

Common area maintenance recoveries 140 124Realty tax recoveries 210 185Percentage rent 6 4Lease cancellation fees 13 1

Rental revenue $ 1,091 $ 947

15. Property Operating Costs - Recoverable Under Tenant LeasesFor the year ended December 31, 2012 2011

Realty tax $ 221 $ 193Common area maintenance (i) 144 123

$ 365 $ 316

(i) Includes salaries and benefits of $45.4 million (December 31, 2011 – $41.8 million)

16. Fees and Other IncomeFor the year ended December 31, Note 2012 2011

Property and asset management fees earned from co-ownerships, partners and other 25 $ 15 $ 25Transaction gains 8 –Dividends received on Cedar shares 5 2 3

$ 25 $ 28




17. Interest ExpenseFor the year ended December 31, 2012, interest was capitalized to properties under development based on a weighted averageinterest rate of 5.2% (2011 – 5.6%) as follows:


Total interest $ 264 $ 255Capitalized to properties under development 18 15

$ 246 $ 240

During 2011 net earnings were negatively impacted by the early redemption of Series F, L and K debentures, which resulted in thepayment of one-time expenses totaling $31.3 million.

18. General and Administrative and OtherFor the year ended December 31, 2012 2011

Salaries and benefits 20 $ 18Public company costs 4 4Professional fees 6 7Unit based compensation expense 5 4Other general and administrative 6 5

General and administrative expense 41 38Other costs (i) 5 2

Total general and administrative and other costs $ 46 $ 40

(i) For the year ended December 31, 2012, other costs primarily consists of approximately $2.2 million of demolition costs, $1.3 million ofaborted deal costs and $1.8 million of acquisition costs as compared to $1.6 million of demolition costs, $0.4 million of aborted deal costs and$0.5 million of acquisition costs for the year ended December 31, 2011.

19. Segmented Disclosures and Additional InformationThe Trust operates in the shopping centre segment of the real estate industry in both Canada and the US.

As at December 31, 2012, the Trust’s portfolio is comprised of 346 retail properties, including 11 under development. The Trust’sportfolio of 52 grocery anchored and new format retail centres (December 31, 2011 – 45) located in the US are comprised of 28directly owned centres and 24 centres owned through joint venture arrangements with Sterling Organization LLC, Retail Propertiesof America Inc. (formerly Inland Western Retail REIT), Kimco Realty Corporation and Dunhill Partners, Inc.

On October 10, 2012, RioCan dissolved its joint venture agreement with Cedar and as a result, RioCan acquired Cedar’s 20%interest in 21 of the properties and sold its 80% interest in one property, Franklin Village, to Cedar for US$119.5 million,representing a capitalization rate of 6.5%. Under the terms of the transaction, RioCan assumed Cedar’s share of the existing inplace mortgage financing of US$54.4 million, which carries an average interest rate of 5.2% and has an average term to maturity of5.2 years. RioCan’s purchase price is to be reduced by US$750,000 to reflect a mark-to-market adjustment to the assumedfinancing. The gross sale price of the 80% interest in Franklin Village is US$60 million and Cedar assumed RioCan’s share of theexisting in place mortgage financing of US$34.7 million. The net cash paid to Cedar was US$39.0 million.

The Trust’s property investments with Sterling Organization LLC and Dunhill Partners, Inc. are consolidated at 100% with acorresponding non-controlling interest. The Trust’s US joint venture agreements with Retail Properties of America Inc. and KimcoRealty Corporation/Dunhill Partners, Inc. are proportionately consolidated. Effective January 1, 2013, RioCan will adopt IFRS 11,Joint Arrangements, and as a result, the Trust’s US joint venture agreements, which are currently proportionately consolidated, willbe consolidated under the equity method.

No single tenant accounts for 10% or more of the Trust’s consolidated rental revenue.




The following summary presents segmented financial information by geographic location:

Net earnings by reportable segment for the year ended December 31, 2012 is as follows:

Canada United States Eliminations (i) Total

Rental revenue $ 946 $ 145 $ – $ 1,091

Property operating costs

Recoverable under tenant leases 326 39 – 365

Non-recoverable from tenants 13 – – 13

339 39 – 378

Net operating income 607 106 – 713

Other income

Fees and other 23 2 – 25

Interest 48 – (36) 12

Fair value gains on investment property, net 810 103 – 913

881 105 (36) 950

Other expenses

Interest 210 72 (36) 246

General and administrative and other 43 3 – 46

Impairment of investment – 12 – 12

253 87 (36) 304

Earnings before income taxes 1,235 124 – 1,359

Current income tax expense 1 – – 1

Deferred income tax expense (1) – – (1)

Net earnings $ 1,235 $ 124 $ – $ 1,359

The net book value of real estate investments and capital expenditures as at December 31, 2012 is as follows:


Real estate investments

Income properties $ 10,148 $ 1,766 $ – $ 11,914

Properties under development 462 – – 462

Properties held for resale 25 – – 25

$ 10,635 $ 1,766 $ – $ 12,401

Total Assets $ 11,475 $ 1,876 $ (408) $ 12,943

Total Liabilities $ 5,210 $ 1,261 $ (408) $ 6,063

Capital expenditures $ 192 $ 5 $ – $ 197

(i) Intercompany loans of US$410 million and related interest between RioCan Holdings USA Inc. and RioCan REIT




Net earnings by reportable segment for the year ended December 31, 2011 is as follows:


Rental revenue $ 855 $ 92 $ – $ 947

Property operating costs

Recoverable under tenant leases 292 24 – 316Non-recoverable from tenants 9 – – 9

301 24 – 325

Net operating income 554 68 – 622

Other income

Fees and other 25 3 – 28Interest 37 – (24) 13Fair value gains on investment property, net 503 30 – 533

565 33 (24) 574

Other expenses

Interest 214 50 (24) 240General and administrative and other 38 2 – 40Expense for early redemption of debentures 31 – – 31

283 52 (24) 311

Earnings before income taxes 836 49 – 885Deferred income tax expense 1 – – 1

Net earnings $ 835 $ 49 $ – $ 884

The net book value of real estate investments and capital expenditures as at December 31, 2011 is as follows:


Real estate investments

Income properties $ 8,601 $ 1,423 $ – $ 10,024Properties under development 362 – – 362Properties held for resale 23 – – 23

$ 8,986 $ 1,423 $ – $ 10,409

Total Assets $ 9,552 $ 1,552 $ (337) $ 10,767Total Liabilities $ 4,563 $ 1,099 $ (337) $ 5,325Capital expenditures $ 187 $ 2 $ – $ 189

(i) Intercompany loan of US$311 million and related interest between RioCan Holdings USA Inc. and RioCan REIT




20. Earnings per UnitNet earnings per unit and weighted average units outstanding are calculated as follows:


Net earnings available to unitholders – basic and diluted $ 1,344 $ 873Distributions to preferred unitholders (Note 13) 14 7

Net earnings available to common unitholders – basic and diluted $ 1,330 $ 866

Weighted average common units outstanding – basic 289,950 265,583Unexercised dilutive unit options 1,348 1,434

Weighted average common units outstanding – diluted (i) 291,298 267,017

(i) The calculation of diluted weighted average units outstanding excludes options for 2.3 million units for the year ended December 31, 2012(December 31, 2011—2.8 million units) as their inclusion would be anti-dilutive.

21. Hedging ActivitiesFrom time to time, the Trust may enter into interest rate swap transactions to modify the interest rate profile of its current orfuture variable rate debts without an exchange of the underlying principal amount. The Trust applies hedge accounting to suchcash flow hedging relationships whereby the change in the fair value of the effective portion of the hedging derivative is recognizedin OCI. The ineffective portion for accounting purposes is recognized in net earnings.

Since 2009, the Trust has entered into interest rate swap agreements on floating interest rate first mortgages to hedge thevariability in cash flows attributed to fluctuating interest rates. Settlement on both the fixed and variable portion of the interest rateswaps occurs on a monthly basis. The following table summarizes the details of the interest rate swaps that are outstanding atDecember 31, 2012:

Transaction date Original principal amountEffective fixed

interest rate Maturity date

February 2009 $ 42 4.87% February 2014December 2010 16 5.03% December 2020April 2011 (i) 14 5.24% February 2016April 2011 (ii) 55 4.61% April 2016May 2011 2 4.89% May 2021July 2011 (iii) 50 4.20% July 2016September 2011 23 4.04% September 2021December 2011 (iv) 8 5.49% April 2014December 2011 33 3.36% December 2016December 2011 30 4.13% December 2021September 2012 23 3.78% December 2018September 2012 16 3.77% May 2018September 2012 27 3.74% May 2017September 2012 26 4.26% October 2018September 2012 45 4.08% November 2017September 2012 21 3.78% April 2017September 2012 64 4.04% November 2018November 2012 13 3.08% November 2017

$ 508

(i) US denominated $14 million mortgage assumed upon property acquisition(ii) US denominated $55 million mortgage(iii) US denominated $50 million mortgage(iv) $8 million mortgage assumed upon property acquisition




The Trust has assessed that there is no ineffectiveness in the hedge of its interest rate exposure. The effectiveness of the hedgingrelationships is reviewed on a quarterly basis. As an effective hedge, unrealized gains or losses on the interest rate swapagreements are recognized in OCI. As at December 31, 2012, the fair value of the interest rate swaps are, in aggregate, a netfinancial liability of $14.8 million (December 31, 2011 – $15 million). The associated unrealized gains or losses that are recognizedin OCI will be reclassified into net earnings in the same period or periods during which the interest payments on the hedged itemaffect net earnings.

22. Net Change in Non-Cash Operating Items and OtherCash flows provided by (used in)For the year ended December 31, 2012 2011

Accounts receivable $ (13) $ (2)Mortgage receivable interest (2) (1)Prepaid expenses and other assets (7) (11)Accounts payable and other liabilities 17 20Other (5) 6

$ (10) $ 12

23. Supplemental Cash Flow InformationFor the year ended December 31, 2012 2011

Interest received $ 9 $ 9Interest paid 263 288Acquisition of real estate investments through assumption of liabilities and mortgages given by vendors 188 203Acquisition of real estate investments through issuance of exchangeable units 1 90Cash equivalents, end of period 133 1

Term Deposits 33 1Bankers’ Acceptance 100 –

24. Operating Leases – Trust as LessorThe Trust as lessor has entered into leases on its property portfolio. The leases typically have lease terms between five and20 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 rentals receivable under non-cancellable operating leases as at December 31, 2012 are as follows:

December 31,2012

Within 1 year $ 717After 1 year, but not more than 5 years 2,122More than 5 years 1,684

Total $ 4,523




25. Investments in Jointly Controlled Entities and Assets(a) Jointly controlled entities

The Trust has investments in joint ventures that are jointly controlled entities. These joint ventures hold individual commercialproperties and related mortgage debt that the Trust owns together with co-owners.

The following are the Trust’s interests in jointly controlled property holding entities:

RioCan’s proportionate ownership interest

NameNumber of investment

propertiesDecember 31,

2012December 31,

2011

RC Inland Partnership LP 15 80% 80%Las Palmas Dunhill LP 1 32% 32%RioKim Montgomery LP 1 80% —RioTrin (Weston) LP 1 50% 50%RioTrin (Herongate) LP 1 75% 75%RioTrin (Bathurst) LP 1 60% 60%RioTrin (Okotoks) LP 1 67% 67%RioTrin (March Road) LP 1 50% 50%RioTrin (Langstaff) LP 2 63% 63%RioTrin (Jacksonport) LP 1 50% 50%RioTrin (East Hills I) LP 1 75% 75%RioTrin (Belcourt) LP 1 70% 70%RioTrin (Hazeldean) LP 1 70% 70%

The following amounts are included in the Trust’s consolidated financial statements related to investments in jointlycontrolled entities:

Balance SheetsDecember 31,

2012December 31,

2011

AssetsNon-current $ 876 $ 837Current 19 60

Total assets 895 897

LiabilitiesNon-current 355 373Current 42 39

Total liabilities 397 412

Net assets $ 498 $ 485




Statements of earnings For the year ended December 31, 2012 2011

Revenue $ 65 $ 33Expenses 35 18

Earnings before fair value gains 30 15Fair value gains on investment property 57 14

Net earnings $ 87 $ 29

(b) Jointly controlled assets

The Trust has interests in properties that are subject to joint control and accordingly, the Trust has recorded its proportionateshare of the related assets, liabilities, revenue and expenses of the properties. The following properties represent the Trust’ssignificant jointly controlled assets:

Proportionate ownership interest

Joint Venture Partner Province Property NameDecember 31,

2012December 31,

2011

ALLIED / DIAMOND ON Globe & Mail Lands 40% n/aBAYFIELD AB Millwoods Town Centre 40% 40%BAYFIELD ON Timmins Square 30% 30%BAYFIELD ON Niagara Square 30% 30%CMHC ON Millcroft Shopping Centre 50% 50%CPPIB AB RioCan Beacon Hill 50% 50%CPPIB BC Grandview Corners 50% 50%CPPIB ON RioCan Centre Burloak 50% 50%CPPIB AB RioCan Meadows 50% 50%DEVIMCO PQ Quartiers 10/30 50% 50%FIRST GULF ON Kennedy Commons 50% 50%FRUM NB Brookside Mall 50% 50%KIMCO BC Tillicum Centre 50% 50%KIMCO AB South Edmonton Common 50% 50%KIMCO ON RioCan Centre Sudbury 50% 50%KIMCO ON Albion Centre 50% 50%KIMCO BC Parkwood Place Shopping Centre 50% 50%KIMCO PQ RioCan Greenfield 50% 50%KIMCO ON RioCan Thickson Ridge 50% 50%KIMCO BC Strawberry Hill Shopping Centre 50% 50%KIMCO PEI Charlottetown Mall 50% 50%KIMCO ON Shoppers World Danforth 50% 50%KIMCO AB RioCan Shawnessy Town Centre 50% 50%KIMCO ON RioCan St. Laurent 50% 50%KIMCO ON Lincoln Fields Shopping Centre 50% 50%KIMCO PQ RioCan Gatineau 50% 50%KIMCO AB Brentwood Village 50% 50%KIMCO BC The Junction 50% 50%KIMCO ON 404 Town Centre 50% 50%KIMCO BC RioCan Langley Centre 50% 50%KIMCO BC Abbotsford Power Centre 50% 50%




Proportionate ownership interest

Joint Venture Partner Province Property NameDecember 31,

2012December 31,

2011

KIMCO PQ Centre Jacques Cartier 50% 50%KIMCO ON Clarkson Crossing Centre 50% 50%KIMCO PQ Centre Regional Chateauguay 50% 50%KINGSETT ON RioCan Sheppard Centre 50% 50%SUNLIFE AB Mayfield Common 30% 30%SUNLIFE AB Edmonton Walmart Centre 40% 40%TAWSE ON Keswick Walmart Centre 75% 75%TRINITY ON Trinity Common Brampton 80% 70%TRINITY ON RioCan Colossus Centre 80% 70%TRINITY ON Chapman Mills 75% 75%TRINITY ON Silver City Gloucester 80% 70%

(c) Jointly controlled entities and assets

As at December 31, 2012, mortgages and loans receivable include $129.9 million (December 31, 2011 - $109.2 million) receivablefrom joint arrangements and joint arrangement partners.

Generally, the Trust is only liable for its proportionate share of the obligations of the co-ownerships in which it participates, exceptin limited circumstances. Credit risk arises in the event that co-owners default on the payment of their proportionate share of suchobligations. Co-ownership agreements will typically provide for an option on the part of a non-defaulting co-owner to advance adefault loan on behalf of the defaulting co-owner. The credit risk is mitigated as the Trust has recourse under its co-ownershipagreements in the event of default by its co-owners, in which case the Trust’s claim would be against both the underlying realestate investments and the co-owners that are in default.

26. Capital ManagementThe Trust defines capital as the aggregate of unitholders’ equity and debt. The Trust’s capital management framework is designedto maintain a level of capital that: complies with investment and debt restrictions pursuant to RioCan’s Declaration, complies withexisting debt covenants, enables the Trust to achieve target credit ratings, funds its business strategies and builds long-termunitholder value. The key elements of RioCan’s capital management framework are approved by its unitholders as related to theTrust’s Declaration of Trust and by its Board of Trustees (“Board”) through their annual review of the Trust’s strategic plan andbudget, supplemented by periodic Board and Board Committee meetings. Capital adequacy is monitored by the Trust by assessingperformance against the approved annual plan throughout the year, which is updated accordingly, and by monitoring adherence toinvestment 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 (with Aggregate Assets defined in theDeclaration). 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, amongother items, the following:

• Direct and indirect investments (net of related mortgages payable) in non-income producing properties (including greenfielddevelopments and mortgages receivable to fund the Trust’s co-owners’ share of such developments) to no more than 15% of theAdjusted Unitholders’ Equity of the Trust (herein referred to as the “Basket Ratio” with Adjusted Unitholders’ Equity defined inthe Declaration). The Trust is in compliance with this restriction;

• Total investment by the Trust in mortgages receivable, other than mortgages taken back by the Trust on the sale of itsproperties, to no more than 30% of the Adjusted Unitholders’ Equity of the Trust. The Trust is in compliance with this restriction;

• Any property acquired by the Trust, directly or indirectly, if the cost to the Trust of such acquisition (net of the amount ofmortgages payable assumed) exceeds 10% of the Adjusted Unitholders’ Equity of the Trust. The Trust is in compliance with thisrestriction;

• Subject to the Basket Ratio, securities of an entity, other than to the extent that such securities would, for the purpose of theDeclaration, constitute an investment in real estate. The Trust is in compliance with this restriction; and

• The amount of space which can be leased or subleased to any tenant, with certain exceptions, to a maximum space having anaggregate gross leasable area of 20% of the aggregate gross leasable area of all real estate investments held by the Trust. TheTrust is in compliance with this restriction.




The Trust intends, but is not contractually obligated, to distribute to its unitholders in each year an amount not less than theTrust’s income for the year, as calculated in accordance with the Act after all permitted deductions under the Act have been taken.RioCan’s Trustees rely upon forward looking cash flow information, including forecasts and budgets and the future businessprospects 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 interestcoverage ratio of 1.65 (defined in the indenture) for a rolling twelve-month period.

December 31,2012

December 31,2011

Increase(decrease)

CapitalMortgages payable and lines of credit (Note 7) $ 4,446 $ 4,212 $ 234Debentures payable (Note 8) 1,292 822 470

Total Debt 5,738 5,034 704Unitholders’ equity 6,847 5,363 1,484

Total capital $ 12,585 $ 10,397 $ 2,188

Ratio of Debt, net of cash, to Total Assets, net of cash 43.5% 46.4% (2.9%)

Basket Ratio 4.4% 3.8% 0.6%

The period over period decrease in the Debt to Total Assets ratio primarily arises as a result of the relative increase in the value ofinvestment property.

For the twelve months endedDecember 31,

2012December 31,

2011 Change

Interest coverage ratio 2.69 2.46 0.23

27. Financial Instruments(a) Fair value of financial instruments

The Trust’s receivables and other assets, mortgages and loans receivable and accounts payable and other liabilities aresubstantially carried at amortized cost, which approximates fair value. Cash and equivalents and investments are measured atfair value. The fair value of other financial instruments is based upon discounted future cash flows using discount rates thatreflect current market conditions for instruments with similar terms and risks. Such fair value estimates are not necessarilyindicative of the amounts the Trust might pay or receive in actual market transactions. Potential transaction costs have alsonot been considered in estimating fair value.

Financial instruments carried at amortized cost on the consolidated balance sheets are as follows:

2012 2011

Carryingvalue

Fairvalue

Carryingvalue

Fairvalue

Mortgages payable and lines of credit $ 4,446 $ 4,683 $ 4,212 $ 4,570Debentures payable 1,292 1,345 822 850




The fair value hierarchy of financial instruments measured at fair value on the consolidated balance sheets is as follows:

2012 2011

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Financial Assets:Cash and equivalents $ 183 $ – $ – $ 77 $ – $ –

Investment 50 – – 41 – –Financial Liabilities:Interest rate swap liability (Note 21) $ – $ 15 $ – $ – $ 15 $ –

(b) Risk management

The main risks arising from the Trust’s financial instruments are credit, interest rate, liquidity and foreign exchange risks. TheTrust’s approach to managing these risks is summarized below:

(i) Credit risk

Credit risk arises from the possibility that:

• Tenants may experience financial difficulty and be unable to fulfill their lease commitments or tenants may fail to occupyand pay rent in accordance with existing lease agreements, some of which are conditional.

• Borrowers default on the repayment of their mortgages to the Trust.

• Third parties default on the repayment of debt to the Trust (for discussion on joint arrangements, see Note 25, and onguarantees, see Note 30).

As discussed in Note 26, RioCan’s Declaration contains provisions that have the effect of limiting the amount of space whichcan be leased to one tenant and its investment in mortgages receivable.

Additionally, 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 ensuringno individual tenant contributes a significant percentage of the Trust’s gross revenue and ensuring a considerable portionof the Trust’s revenue is earned from national and anchor tenants and conducting credit assessments for new tenants.

As at December 31, 2012:

• Minimum annualized rentals (exclusive of recoverable property operating costs and taxes) for tenant leases expiring ineach of the next five years ending December 31 are as follows: 2013 – $62 million; 2014 – $77 million; 2015 – $76 million;2016 - $89 million; and 2017 - $83 million.

The above aggregate rentals over the next five years represent annual lease payments of $387 million based on currentcontractual rental rates. For every such lease renewed upon maturity at an aggregate rental rate differential of 100 basispoints, the Trust’s net earnings would be impacted by approximately $3.9 million annually.

• No individual tenant comprise more than approximately 5% of the Trust’s annualized rental revenue for 2012 and 2011.

• Approximately 86% of the Trust’s annualized rental revenue for 2012 and 2011 was derived from national and anchortenants (which tenant covenants are expected to be of higher credit quality than other tenants).

(ii) Interest rate and liquidity risks

The Trust is exposed to interest rate risk on its borrowings. Liquidity risk arises from the possibility of not having sufficientdebt and equity capital available to the Trust to fund its growth program and refinance its debts as they mature. The Trust’sfinancial condition and results of operations would be adversely affected if it were unable to obtain financing, or obtain cost-effective financing.

As discussed in Note 26, RioCan’s Declaration establishes a Debt to Aggregate Assets ratio limit of 60%.

Additionally, the Trust mitigates interest rate and liquidity risks by staggering the maturity dates of its long-term debt (seeNotes 7 and 8 for Aggregate Debt), by entering into interest rate swap (option) agreements (see Note 21), and by limiting theuse of floating rate debt.




As at December 31, 2012:

• The Trust’s Aggregate Debt has a 4.7 year (December 31, 2011 – 4.7 year) weighted average term to maturity bearinginterest at a weighted average contractual interest rate of 4.7% per annum (December 31, 2011 – 5.1%).

• 6.6% of the Trust’s Aggregate Debt is at floating interest rates at December 31, 2012 compared to 7.2% at December 31,2011.

• The Trust’s undrawn lines of credit are $331 million (see Note 7).

• The ratio of Debt, net of cash, to Total Assets, net of cash is 43.5% (See Note 26) compared to 46.4% at December 31,2011.

• As at December 31, 2012, the Trust had cash and equivalents of $183 million as compared to $ 77 million as atDecember 31, 2011.

As at December 31, 2012, the Trust has aggregate contractual debt principal maturities through to December 31, 2015 ofapproximately $1.9 billion (33.5% of RioCan’s Aggregate Debt) with a weighted average contractual interest rate of 4.9%.For every such amount refinanced upon maturity at an aggregate interest rate differential of 100 basis points, the Trust’snet earnings would be impacted by approximately $19.2 million annually.

(iii) Foreign exchange risk

The Trust operates in Canada and in the US. The functional currency of the Trust is the Canadian dollar as is the reportingcurrency. The functional currency of the Trust’s US operations is the US dollar. The Trust also holds interest bearing debtand common shares of Cedar denominated in US dollars. The Trust is exposed to both transaction and translation risk dueto the volatility of foreign currency exchange rates, primarily arising from its US dollar denominated investments and, to alesser extent, its monetary assets and liabilities denominated in this currency. The carrying values of these assets andliabilities, as well as the comprehensive income and earnings derived from them, are subject to foreign exchange ratefluctuation.

Foreign exchange risk arises because the US dollar denominated financial statements of the US operations may vary onconsolidation into Canadian dollars and the value of the Trust’s investment in the common shares of Cedar will fluctuatewith changes in the US dollar. Exchange gains and losses from the translation of the US operations and the foreignexchange gains or losses on the common shares of Cedar are included in OCI. As a result, the Trust may experiencetranslation exposures because of volatility in the exchange rate between the Canadian and US dollar.

As at December 31, 2012, the Trust’s US denominated net assets are $557 million such that a 1% change in the value of theUS dollar will result in a gain or loss to the Trust of approximately $5.6 million.

28. Related Party Transactions

(a) Compensation of key management

The Trust’s key management personnel are the Trustees; the Chief Executive Officer, Edward Sonshine; President and ChiefOperating Officer, Frederic Waks; and Executive Vice President and Chief Financial Officer, Raghunath Davloor.

Remuneration of Trustees and the Trust’s key management during the period was as follows:

Trustees Key Management

For the year ended December 31, 2012 2011 2012 2011

Compensation and benefits $ 0.7 $ 0.7 $ 7.2 $ 5.7Share-based payments 1.4 1.4 2.4 1.7Post-employment benefits – – 0.7 0.8

$ 2.1 $ 2.1 $ 10.3 $ 8.2

(b) Subsidiaries of the Trust

The consolidated financial statements include the financial statements of RioCan Real Estate Investment Trust, the Trust’sproportionate share of the jointly controlled entities described in Note 25, and the subsidiaries listed in the following table:




Percentage of equity interest

NameDecember 31,

2012December 31,

2011

RioCan Management Inc. (BC) 100% 100%RioCan Management Inc. 100% 100%RioCan (KS) Management LP 100% 100%RioCan Yonge Eglinton LP 100% 100%RioCan (Festival Hall) Trust 100% 100%Timmins Square Limited Partnership 100% 100%Shoppers World Brampton Investment Trust 100% 100%RioCan Realty Investments Partnership Three LP 100% 100%RioCan Realty Investments Partnership Eight LP 100% 100%RioCan Realty Investments Partnership One LP 100% 100%RioCan Realty Investments Partnership Two LP 100% 100%RioCan Realty Investments Partnership Four LP 100% 100%RioCan Realty Investments Partnership Seven LP 100% 100%RioCan (GH) Limited Partnership 100% 100%RioCan Property Services Trust 100% 100%RioCan White Shield Limited Partnership 60% 60%RioCan (GTA Marketplace) LP 100% 100%RioCan Holdings USA Inc. 100% 100%RC Cedar Partnership LP 100% 80%RC/Dunhill Timber Creek Holdings LP 80% 80%RioCan/Dunhill LP 82% 82%RC Sterling LP 100% 100%RC Sterling II LP 90% –RC/Dunhill LCV Arbor Holdings LP 85% –RioCan (America) Management Inc. 100% –RioCan USA Subsidiary Inc. 100% –

29. Employee BenefitsThe Trust maintains several pension plans for its employees.

a) A defined contribution pension plan incurred current service costs in the amount of $0.6 million for the year endedDecember 31, 2012 and $0.4 million for the year ended December 31, 2011.

b) There are three defined benefit pension plans, of which one is a registered plan and two are unregistered plans. Theplans’ benefits are based on a specified length of service, up to a stated maximum. The fair value of the plan assets as atDecember 31, 2012 was $2.5 million (December 31, 2011 - $2.1 million). The recognized pension obligation, net of planassets as at December 31, 2012 was $9.7 million (December 31, 2011 - $7.4 million). Pension costs of $1.2 million wererecorded in net earnings for the year ended December 31, 2012 (year ended December 31, 2011 - $1.3 million). Actuarialgains and losses for the defined benefit plans are recognized in full in the period in which they occur in OCI. Suchactuarial gains and losses are also immediately recognized in retained earnings and are not reclassified to earnings insubsequent periods.




30. Contingencies and Commitments(a) Guarantees

As at December 31, 2012, the estimated amount of third-party debt subject to RioCan guarantees, and therefore the maximumexposure to credit risk, was approximately $299 million consisting of guarantees totalling $235 million to partners and co-owners and $64 million on the assumption of mortgages by purchasers on property dispositions (December 31, 2011 -$360 million) with expiry dates between 2013 and 2034. There have been no defaults by the primary obligors for debts on whichthe Trust has provided its guarantees, and as a result, no provision for these guarantees has been recognized in theseconsolidated financial statements

(b) Contractual obligations on real estate

RioCan currently has two income properties under firm contract (one in Canada and one in the US) where conditions havebeen waived that, if completed, represents $61 million of acquisitions at RioCan’s interest, at a weighted average capitalizationrate of 5.5%. It is expected that these transactions will close during the first and second quarters of 2013.

RioCan currently has two development sites in Canada under contract where conditions have been waived that, if completed,represent $29 million of acquisitions at RioCan’s interest. It is expected that these transactions will close in the first and thirdquarters of 2013.

(c) Litigation

The Trust is involved with litigation and claims which arise from time to time in the normal course of business. In the opinionof management, any liability that may arise from such contingencies will not have a significant adverse effect on the Trust’sconsolidated financial statements.

(d) Lease commitments – Trust as Lessee

The Trust as Lessee is committed under long-term operating leases with various expiry dates to 2029. Minimum annualrentals are as follows:

December 31, 2012

LandLeases

OperatingLeases

TotalCommitments

Within 1 year $ 3 $ 2 $ 5After 1 year, but not more than 5 years 10 1 11More than 5 years 20 - 20Total $ 33 $ 3 $ 36

Included in the above are land lease commitments of $24 million which have been accounted for as finance leases andinvestment property. The corresponding lease obligation of $17.2 million has been recognized in accounts payable and otherliabilities as at December 31, 2012.

31. Events After the Balance Sheet DateOn February 5, 2013, RioCan announced that it has a conditional agreement with Primaris Retail REIT (“Primaris”) to purchasea 50% interest in Burlington Mall in Burlington, Ontario, and a 100% interest in Oakville Place in Oakville, Ontario. Thepurchase is conditional on the successful completion of the H&R REIT and KingSett Consortium acquisition of Primaris.RioCan will purchase the assets as part of the KingSett Capital-led Consortium.

The aggregate gross purchase price for these two properties is approximately $362 million (at RioCan’s interest). Inconnection with the purchase, RioCan will assume, at its interest, the in place first mortgage financing of approximately$165 million in aggregate. The purchase price will be reduced by a mark-to-market adjustment on closing in consideration ofthe debt’s above market interest rate, which is currently estimated at approximately $8 million. RioCan will fund thisacquisition through cash on hand and existing operating facilities.

On February 7, 2013, RioCan sold all 9.4 million shares of Cedar for total proceeds of approximately US$48 million.

Subsequent to year end, RioCan acquired a 50% interest in Sage Hill Crossing, a 34 acre greenfield development site locatedin Northwest Calgary, Alberta, at a purchase price of $32 million ($16 million at RioCan interest) with KingSett on a jointventure basis.


SENIOR MANAGEMENTEdward Sonshine, O.Ont., Q.C.Chief Executive OfficerFrederic A. WaksPresident & Chief Operating OfficerRaghunath DavloorExecutive Vice President & Chief Financial OfficerHoward RosenSenior Vice President, Chief Accounting OfficerJohn BallantyneSenior Vice President, Asset ManagementMichael ConnollySenior Vice President, ConstructionJonathan GitlinSenior Vice President, InvestmentsDanny KissoonSenior Vice President, OperationsJordan RobinsSenior Vice President, Planning & DevelopmentJeff RossSenior Vice President, LeasingStuart CraigVice President, Planning and DevelopmentRoberto DeBarrosVice President, ConstructionLyle GoodisVice President, Corporate MarketingOliver HarrisonVice President, Asset ManagementSuzanne MarineauVice President, Human ResourcesJane PlettVice President, Operations – Western CanadaBarbara RodgersVice President, OperationsMaria RicoVice President, Financial Processes and SystemsKenneth SiegelVice President, LeasingJeffrey StephensonVice President, LeasingNaftali SturmVice President, FinanceMark SwalwellVice President, Financial Reporting & ControlsRenato VaninVice President, Information Technology

BOARD OF TRUSTEESPaul Godfrey, C.M., O.Ont. 1,2,3,4

(Chairman of Board of Trustees)President and Chief Executive Officer,Postmedia Network Inc.Clare R. Copeland 1,2,4

Chair and Director of Toronto Hydro CorporationRaymond M. GelgootPartner, Fogler, Rubinoff LLP

Frank W. King, O.C. 1,2

President and Chief Executive Officer,Metropolitan Investment CorporationDale H. LastmanCo-Chair and Partner, Goodmans LLPRonald W. Osborne 1

Chair of Postmedia Network Canada Corp.and Postmedia Network Inc.Sharon Sallows 3,4

Director of Ontario Teachers’ Pension Plan BoardEdward Sonshine, O.Ont., Q.C .Chief Executive Officer,RioCan Real Estate Investment TrustCharles M. Winograd 3,4

President, Winograd Capital Inc.1 member of the Audit Committee2 member of the Human Resources & Compensation Committee3 member of the Nominating & Governance Committee4 member of the Investment Committee

UNITHOLDER INFORMATIONHead OfficeRioCan Real Estate Investment TrustRioCan Yonge Eglinton Centre,2300 Yonge Street, Suite 500P.O. Box 2386, Toronto, Ontario M4P 1E4Tel: 416-866-3033 or 1-800-465-2733Fax: 416-866-3020Website: www.riocan.comEmail: [email protected]

UNITHOLDER AND INVESTOR CONTACTChristian GreenDirector, Investor RelationsTel: 416-864-6483Email: [email protected]

AUDITORSErnst & Young LLP

TRANSFER AGENT AND REGISTRARCanada Stock TransferP.O. Box 7010, Adelaide Street Postal Station,Toronto, Ontario M5C 2W9Answerline: 1-800-387-0825 or 416-643-5500Fax: 416-643-5501Website: www.canstockta.comEmail: [email protected]

STOCK EXCHANGE LISTINGThe Toronto Stock ExchangeTrading Symbols:Common Units – REI.UNPreferred Units – Series A REI.PR.A

Series C REI.PR.C

ANNUAL MEETINGThe 2013 Annual Meeting of RioCan REIT will be held onWednesday, June 5, 2013 at 10:00 a.m. at SilverCity Theatreslocated at RioCan Yonge Eglinton Centre, 2300 Yonge Street,Toronto, Ontario. All unitholders are invited and encouragedto attend in person or via webcast at www.riocan.com. On peutobtenir une version française du présent rapport annuel sur lesite web de RioCan: www.riocan.com.A French language version of this annual report is available onRioCan’s website: www.riocan.com

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rioCan yongE EgLinTon CEnTrE2300 Yonge StreetSuite 500 P.O. Box 2386Toronto, Ontario M4P IE4

T 416 866 3033 TF 1 800 465 2733F 416 866 3020W www.riocan.com

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