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SECOND QUARTER 2020Q2

REAL ESTATE PORTFOLIO KEY FACTS as at June 30, 2020 (all metrics stated at RioCan's interest unless otherwise noted)

Net Leasable Area (NLA) (thousands of sq.ft.): Retail Office Total CommercialIncome Producing Properties (i) 33,659 2,318 35,977Properties Under Development (ii) 773 520 1,293Total NLA 34,432 2,838 37,270

(i) Includes NLA which has a rent commencement date on or before June 30, 2020. (ii) Includes the NLA only for active projects with detailed costs estimates, but excludes NLA for air rights sales, condominium/townhouse developments (residential inventory), and

residential rental properties. Includes completed commercial Properties Under Development NLA that have a rent commencement date after June 30, 2020.

Average Net Rent (commercial only) Retail Office Total CommercialAverage Net Rent per Occupied Square Foot $ 19.89 $ 17.63 $ 19.75

Occupancy (commercial only) Retail Office Total Commercial

Total Portfolio Committed Occupancy 96.4% 96.4% 96.4%In-Place Occupancy 96.0% 95.3% 96.0%

Six Major Markets (i)

Committed Occupancy 96.9% 96.0% 96.8%In-Place Occupancy 96.6% 95.0% 96.5%% of total annualized rental revenue 82.5% 7.6% 90.1%% of total NLA 81.3% 5.8% 87.1%

Greater Toronto Area (ii)

Committed Occupancy 97.3% 96.6% 97.3%In-Place Occupancy 96.9% 95.5% 96.8%% of total annualized rental revenue 45.0% 7.1% 52.1%% of total NLA 40.6% 5.3% 45.9%

(i) The six Canadian major markets include Calgary, AB; Edmonton, AB; Montreal, QC; Ottawa, ON (includes Gatineau region); Greater Toronto Area (GTA), ON; and Vancouver, BC.(ii) GTA extends north to Barrie, ON; west to Hamilton, ON; and east to Oshawa, ON.

Geographic DiversificationIncome producing properties (commercial only) Number of properties (total portfolio)

NLA at RioCan's Interest(thousands of sq.ft.)

Percentage ofannualized rental

revenueIncome producing

propertiesProperties underdevelopment (i) Total

Greater Toronto Area 16,516 52.1% 87 13 100Ottawa 4,702 12.9% 35 1 36Calgary 3,528 10.3% 16 1 17Montreal 2,577 4.8% 19 — 19Edmonton 2,227 6.0% 12 — 12Vancouver 1,790 4.0% 7 — 7Total Six Major Markets 31,340 90.1% 176 15 191Total Secondary Markets 4,637 9.9% 30 — 30Total Portfolio 35,977 100.0% 206 15 221

(i) Given the multi-phase nature of certain development projects, a single investment property could have more than one project, as discussed in the Properties Under Development section of this MD&A. Therefore, the number of projects should not be viewed as equivalent to number of properties under development.

Top Ten Sources of Revenue by Property Tenant (commercial only)

Rank TenantPercentage of

annualized rental revenueWeighted average remaining

lease term (yrs)1 Canadian Tire Corporation (i) 5.3% 6.82 Loblaws/Shoppers Drug Mart (i) 5.0% 8.43 The TJX Companies, Inc. (i) 4.9% 6.14 Cineplex (i) 3.9% 7.05 Metro/Jean Coutu (i) 2.9% 8.16 Walmart 2.8% 8.37 Montana's, Harvey's, Swiss Chalet, Kelseys (i) 1.7% 6.88 Dollarama 1.7% 7.09 Sobeys/Safeway 1.7% 9.0

10 GoodLife Fitness 1.5% 10.631.4% 7.5

(i) Includes various operating banners and key brands as indicated in the Tenant Profile section of this MD&A.

Property Lease Expiries and Contractual Rent Increases (commercial only) Total 2020 (i) 2021 2022 2023 2024

NLA (thousands of sq.ft.) 35,977 1,344 4,171 3,683 4,105 4,667Average expiring rent per square foot $ 19.75 $ 22.46 $ 19.38 $ 21.26 $ 21.05 $ 21.59Contractual rent increases (in thousands of dollars) (ii) $ 4,363 $ 7,337 $ 6,188 $ 5,746 $ 4,306

(i) Lease expiries for the remaining six months of 2020.(ii) Contractual rent increases are based on existing leases as of June 30, 2020 and are on a year-over-year incremental basis.

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Dear Unitholders,

Without question, the COVID-19 pandemic took center stage in the second quarter of 2020. Its impact has been felt across large sections of the globe, resulting in a shift to remote work and markets shutting down seemingly overnight. Throughout these difficult times, as always, RioCan’s top priority remained the health and safety of all our stakeholders, including our tenants, their customers and our employees. At the same time, with ample liquidity and a portfolio that we have continually fine-tuned to be increasingly resilient, we maintained our steadfast commitment to create long-term unitholder value. To that end, RioCan’s strategies over the last decade, including our focus on major markets and consumer relevant tenancies, are proving invaluable as we navigate through this unprecedented and unexpected storm.

With non-essential businesses mandated to close in Canada mid-March, the quarter proved to be the most challenging quarter ever for many of our tenants. Fortunately, RioCan entered this operating environment from a position of strength. Given our scale, strong liquidity and long-standing relationships, we took the time necessary to work with our tenants, and made significant progress on collecting our monthly rents despite the wide swath of shutdowns during the quarter. Businesses have started to re-open and as we continue to work with our tenants, our rent collections are trending positively. Based on these trends and cautious optimism for a steady and gradual recovery, we see rent collection starting to stabilize for the balance of the year.

While the current health crisis was unexpected, its effected changes to the retail landscape did not come as a surprise and some are potentially lasting. Actually, the pandemic has accelerated trends that have long been in the making. For example, the adoption of multichannel merchandising has been fast-tracked as physical

distancing has compelled more consumers to shop online, and given the pandemic related and immediate drop in customer traffic, the orderly reconfiguration of certain declining retail concepts has literally been shown the door. These overarching trends are not new news to RioCan. In fact, our core strategies have been purposely designed to address these trends.

We have concentrated our portfolio in the fastest growing regions in Canada. We have shifted towards the convenience of open-air shopping centres. And, we have continuously curated our tenant base optimizing our merchandising mix to drive repeat visits to our centres and attract strong tenants. Staying a step ahead, we have also been redeveloping existing properties into mixed-use sites, increasing our exposure to and diversifying our income with office and residential rents. In the last two years, RioCan Living has successfully completed and launched three purpose built rental buildings. Looking forward, our staggered development program will provide a steady stream of residential rental to come online over the near- to mid-term. Exciting launches include Pivot at Yonge and Sheppard in Toronto later this year and next year will see the introduction of Litho. on DupontStreet, also in Toronto and Latitude in Ottawa, followed by our flagship development, The Well, the year after that.

As for E-commerce, it will definitely remain a key component of retailers’ go forward strategy with consumers drawn by the convenience of shopping at home. However, there are still the matters of the high cost of delivery, particularly for the “last mile” in dense urban areas with traffic congestion, and the human desire for personal interaction. Our conveniently located properties not only address these issues but are positioned to elevate consumers’ E-commerce experience. Case in point, our recently launched RioCan Curbside Collect program provides designated areas to facilitate Buy Online Pick-up In Store. And, there is more to come from RioCan, we’re not standing still.

We are actively exploring various opportunities to further participate in the logistics of omni-channel retailing and to redevelop our sites for better and more efficient uses, which will not only provide consumers a more fulsome community centre but also serve to re-lease vacancies with even more

attractive tenants. We look forward to unveiling our new programs and initiatives in the coming months.

At RioCan, we believe in human nature. Human nature craves social interaction and craves getting out and about; that’s why marketplaces have been centers of gathering for thousands of years. While marketplaces have been interrupted due to valid health-related concerns, we will get pass this. People will return to their favorite community gathering hubs such as our shopping centres. It will take time, patience and persistence – it won’t be easy and not all of our tenants will come through unscathed. With our healthy balance sheet and strong portfolio, we are well-positioned to ride out this storm, capitalize on emerging opportunities and continue to provide unitholder value. That said, the pandemic has brought a unique set of circumstances that will impact our 2020 results. Given recent trends in Canada and barring unforeseen circumstances, we remain comfortable with our current distributions.

To conclude, I would like to thank the entire RioCan team, every one has remained highly engaged and has worked diligently to deliver meaningful progress during these turbulent and uncertain times. And, of course, thank you to all of our unitholders for your continued confidence and support in RioCan.

Edward Sonshine O.Ont., Q.C.

Chief Executive OfficerRioCan Real Estate Investment TrustJuly 28, 2020

MANAGEMENT'S DISCUSSION AND ANALYSIS(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)

TABLE OF CONTENTSABOUT THIS MANAGEMENT'S DISCUSSION ANDANALYSIS Annual Development Spending

FORWARD-LOOKING INFORMATION Residential Inventory

BUSINESS OVERVIEW Mortgages and Loans Receivable

OUTLOOK AND STRATEGY CAPITAL RESOURCES AND LIQUIDITY

PRESENTATION OF FINANCIAL INFORMATION AND NON-GAAP MEASURES Capital Management Framework

RESULTS OF OPERATIONS Credit Ratings

Second Quarter 2020 Financial Highlights Capital Structure

Operating Income Liquidity

Net Operating Income (NOI) Debt Metrics

Other Income (Loss) Total Debt Profile

Other Expenses Debentures Payable

Funds from Operations (FFO) Mortgages Payable

Adjusted Cashflow from Operations (ACFO) Lines of Credit and Other Bank Loans

OPERATIONS Guarantees

Property Mix Hedging Activities

Commercial (Retail and Office) Trust Units

Residential Rental Distributions to Unitholders

ASSET PROFILE QUARTERLY RESULTS AND TREND ANALYSIS

Investment Properties SIGNIFICANT ACCOUNTING POLICIES ANDESTIMATES

Income Property Acquisitions During 2020 FUTURE CHANGES IN ACCOUNTING POLICIES

Income Property Dispositions During 2020 DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Co-ownership Arrangements RELATED PARTY TRANSACTIONS

Capital Expenditures on Income Properties RISKS AND UNCERTAINTIES

Properties Under Development

2 46

2 54

3 56

8 56

11 56

16 56

17 57

18 57

19 59

21 61

22 62

24 63

26 63

29 64

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MANAGEMENT’S DISCUSSION AND ANALYSIS

2RIOCAN REAL ESTATE INVESTMENT TRUST SECOND QUARTER 2020

ABOUT THIS MANAGEMENT'S DISCUSSION AND ANALYSISThis Management’s Discussion and Analysis (MD&A) is provided to enable a reader to assess our results of operations and financial condition for the three and six months ended June 30, 2020 (Q2 2020). This MD&A is dated July 28, 2020 and should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes for the three and six months ended June 30, 2020 (Condensed Consolidated Financial Statements) and our 2019 Annual Report. Unless the context indicates otherwise, references to "RioCan", "the Trust", "we", "us" and "our" in this MD&A refer to RioCan Real Estate Investment Trust and its consolidated operations. Unless otherwise specified, all amounts are based on financial statements prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). These documents, as well as additional information relating to RioCan, including our most recently filed Annual Information Form (AIF), have been filed electronically with Canadian securities regulators through the System for Electronic Document Analysis and Retrieval (SEDAR) and may be accessed through the SEDAR website at www.sedar.com or RioCan's website at www.riocan.com.

Unless otherwise specified, amounts are in thousands of Canadian dollars, and percentage changes are calculated using whole numbers.

FORWARD-LOOKING INFORMATION Certain information included in this MD&A contains forward-looking information within the meaning of applicable Canadian securities laws. This information includes, but is not limited to, statements made in the Business Overview, Outlook and Strategy, Second Quarter 2020 Financial Highlights, Operations, Asset Profile, Properties Under Development, and the Capital Resources and Liquidity sections, and other statements concerning RioCan’s objectives, its strategies to achieve those objectives, as well as statements with respect to management’s beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcomes or events. Such forward-looking information reflects management’s current beliefs and is based on information currently available to management. All forward-looking information in this MD&A is qualified by the following cautionary statements.

Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCan’s current estimates and assumptions, which are subject to numerous risks and uncertainties, including those described under the Risks and Uncertainties section in this MD&A, which could cause actual events or results to differ materially from the forward-looking information contained in this MD&A. Those risks and uncertainties include, but are not limited to, those related to: financial and liquidity risks; tenant concentrations and related risk of bankruptcy or restructuring (and the terms of any bankruptcy or restructuring proceeding); occupancy levels and defaults, including the failure to fulfill contractual obligations by the tenant or a related party thereof; lease renewals and rental increases; the ability to re-lease and find new tenants for vacant space; retailer competition; the relative illiquidity of real property; changes to rent control legislation; development risk associated with construction commitments, project costs and related zoning and other permit approvals; risks related to the residential rental business; access to debt and equity capital; interest rate and financing risk; credit ratings; joint ventures and partnerships; the timing and ability of RioCan to sell certain properties; the valuations to be realized on property sales relative to current IFRS values; the Trust's ability to utilize the capital gain refund mechanism; unexpected costs or liabilities related to acquisitions and dispositions; environmental matters, including climate change; litigation; uninsured losses; reliance on key personnel; Unitholder liability; income, sales and land transfer taxes; and cyber security.

Given the current level of uncertainties arising from the COVID-19 pandemic, there can be no assurance regarding the impact of COVID-19 on the business, operations, and financial performance of RioCan and its tenants, as well as on consumer behaviors and the economy in general. General risks and uncertainties related to the COVID-19 pandemic also include, but are not limited to, the length, spread and severity of the pandemic; the nature and length of the restrictive measures, implemented or to be implemented by the various levels of government in Canada; RioCan's tenants' ability to pay rents as required under their leases; the availability of various support programs that are or may be offered by the various levels of government in Canada; domestic and global supply chains; timelines and costs related to the Trust’s development projects; the pace of property lease-up and rents and yields achieved upon development completion; potential changes in leasing activities, market rents and property valuations; the capitalization rates that arm's length buyers and sellers are willing to transact on properties; the availability and extent of rent deferrals offered or to be offered by the Trust; domestic and global credit and capital markets, and the Trust's ability to access capital on favourable terms or at all and its ability to maintain its credit ratings; the total return and dividend yield of RioCan's Units; and the health and safety of our employees, tenants and people in the communities that our properties serve. For further details on the risks related to COVID-19 and its potential impact on the Trust, refer to the Risks and Uncertainties - COVID-19 Health Crisis section of this MD&A.

Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information may include, but are not limited to: a gradual recovery and growth of the retail environment and the general economy over the remainder of 2020 and 2021; relatively historically low interest costs; a continuing trend toward land use intensification at reasonable costs and development yields, including residential development in urban markets; access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable our refinancing of debts as they mature; the



availability of investment opportunities for growth in Canada; the timing and ability for RioCan to sell certain properties; the valuations to be realized on property sales relative to current IFRS values; and the Trust's ability to utilize the capital gain refund mechanism.

For a description of additional risks that could cause actual results to materially differ from management’s current expectations, refer to the Risks and Uncertainties section in this MD&A and the Risks and Uncertainties section in RioCan’s AIF. Although the forward-looking information contained in this MD&A is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with this forward-looking information. Certain statements included in this MD&A may be considered “financial outlook” for purposes of applicable Canadian securities laws, and as such the financial outlook may not be appropriate for purposes other than this MD&A. The forward-looking information contained in this MD&A is made as of the date of this MD&A, and should not be relied upon as representing RioCan’s views as of any date subsequent to the date of this MD&A. Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

BUSINESS OVERVIEW RioCan is an unincorporated “closed-end” trust governed by the laws of the Province of Ontario constituted pursuant to the Declaration of Trust. RioCan's trust units (Units) are listed on the Toronto Stock Exchange (TSX) under the symbol REI.UN. RioCan is one of Canada’s largest real estate investment trusts, with a total enterprise value of approximately $11.7 billion as at June 30, 2020. RioCan owns, manages and develops retail-focused, increasingly mixed-use properties located in prime, high-density transit-oriented areas where Canadians want to shop, live and work. RioCan's portfolio is comprised of 221 retail and mixed-use properties with an aggregate net leasable area (NLA) of 38,647,000 square feet, including office, residential rental and 15 properties under development as at June 30, 2020 (at RioCan's interest). The decrease in the Trust's enterprise value since the beginning of the year was primarily due to the sharp decline in the capital markets as a result of the COVID-19 pandemic.

RioCan's property portfolio includes Mixed-Use / Urban, Grocery Anchored centres, Open Air centres and Enclosed centres, comprised of 182 properties which are 100% owned (178 income properties and 4 properties under development) and 39 properties which are co-owned and governed by co-ownership agreements (including 11 properties under development). RioCan’s primary co-ownership arrangements are with Allied Properties REIT (Allied); Canada Pension Plan Investment Board (CPPIB); KingSett Capital (KingSett); Boardwalk REIT (Boardwalk); Killam Apartment REIT (Killam); Concert Properties (Concert); Woodbourne Canada Partners (Woodbourne); and Tanger Factory Outlet Centres, Inc. (Tanger). In addition, the Trust also owns partial interests in 13 properties through joint ventures with Hudson's Bay Company (HBC) and Marketvest Corporation/Dale-Vest Corporation which are included in our equity-accounted investments in the Condensed Consolidated Financial Statements.

COVID-19 Pandemic and Its Impact on RioCan Property OperationsFollowing the World Health Organization's declaration of COVID-19 as a global pandemic in March 2020 and subsequent restrictive measures introduced by various levels of governments in Canada, many businesses had to close or reduce their hours of operations during the second quarter of 2020. These events have impacted RioCan's operations, financial performance, and property valuations for the quarter, while the long-term effect of the pandemic is difficult to predict.

RioCan has strategically managed its rent collection process during the pandemic as many businesses closed operations of their own volition or to comply with government mandates. The Trust has tailored its approach in recognition of the challenges that some of its tenants faced or continue to face even though provinces have recently started to ease their mandated closures using a phased approach.

Throughout the pandemic, RioCan’s top priority has been the well-being of its employees, tenants and the communities the Trust serves, ensuring their shopping centres remained open to continue to provide access to essential goods and services where possible. For the quarter, in continuous support of its small and independent tenants, RioCan is actively participating in the federal government’s Canada Emergency Commercial Rent Assistance (CECRA) program for all eligible tenants at all of its properties. This program covers more than the traditional small and independent businesses and the government has expanded it to include corporate franchisees and sub-lessees. Based on the government criteria for CECRA eligibility (e.g., annual consolidated gross revenues of no more than $20 million per tenant and monthly gross rent per tenant lease location of no more than $50,000), the Trust estimated that approximately 19.4% of its tenants, as measured by gross revenue for Q2 2020, could be eligible for the program, subject to tenants meeting the criteria requiring a revenue drop of no less than 70% relative to pre-COVID levels during the quarter. Based on actual tenant attestations of their Q2 2020 revenue decline that the Trust has received, the Trust determined that only approximately 14.4% of the Trust's tenants, as measured on billed gross rents for the quarter, are eligible for the CECRA program.

The CECRA program provides eligible tenants the benefit of a 75% gross rent reduction whereby the federal government funds 50% and landlords effectively incur a 25% rent abatement. For eligible tenants in Quebec, the provincial government offers another 12.5% funding, which reduces landlord's net rent abatement to 12.5%. For RioCan, the overall net CECRA rent abatement is estimated at $9.9 million for the quarter. In addition, the Trust has accrued an additional $9.2 million provision for rent abatements for other tenants and bad debts. In total, a $19.1 million provision for rent abatements and bad debts was accrued in the second quarter of 2020, representing approximately 6.8% of the billed gross rents for the quarter.



As of July 28, 2020, the Trust's collections of billed gross rents for the second quarter are as follows:

Cash collection (i) 73.3%

CECRA government funding (ii) 5.8%

Deferred rents with definitive payment schedule 7.7%

Provision for rent abatements and bad debts 6.8%

Remaining to be collected 6.4%

Total 100.0%

(i) April, May and June cash collections were 73%, 71% and 76%, respectively.(ii) Net of $4.2 million CECRA tenant over-payments for the quarter.

The Trust has been working with its tenants to find sensible solutions, tailoring its approach on a case-by-case basis to support their businesses while protecting its own rights and financial position. RioCan is confident in the collectability of the 7.7% in deferred rents and 6.4% in remaining rents to be collected. Furthermore, RioCan holds approximately $29.0 million of security deposits and approximately $5.3 million letters of credit from a number of tenants which can serve to offset rents owed on a tenant-by-tenant basis in the unfortunate event of unresolved tenant defaults.

As of July 28, 2020, the Trust has collected to date, 85.0% of the billed July gross rents in cash. Rent collections are expected to further improve as more businesses resume operations and the economy gradually recovers. Approximately 85% of the Trust's tenants are currently open, based on occupied net leaseable area.

The federal government has extended the CECRA program to July 2020. RioCan is going to participate in the program based on tenant attestations of their July revenues on a case by case basis. Therefore, the extent of tenant eligibility for July CECRA program is uncertain at the current stage but expected to be lower than that of Q2 2020.

Efficient Operations - Containing Costs and Enhancing LiquidityRioCan continues to identify areas of operations to reduce costs and offset the expected negative cash flow impact of the pandemic. Expense management and operations efficiency improvements identified and implemented include, but are not limited to the following: municipal tax deferrals, energy reductions, certain maintenance and revenue enhancing capital expenditure reductions, staffing level adjustments, hiring and salary increase freeze, and further streamlining of national procurement and operating costs management. For the quarter, RioCan deferred $43.0 million in municipal realty taxes payments based on available government programs. Further, the Trust achieved $17.3 million savings in recoverable operating costs from Q1 2020 to the current quarter. Such payment deferrals and cost savings, together with lower maintenance capital expenditures, offset a significant portion of the second quarter gross rents outstanding in the quarter from a cash flow perspective.

Operating Results - Q2 2020FFO and Net Income

RioCan reported FFO of $109.9 million, a decrease of $34.8 million over the same period in 2019. A significant factor contributing to the decrease was the aforementioned $19.1 million pandemic related provision. Refer to the Funds from Operations section of this MDA for further variance analysis.

FFO per unit on fully diluted basis was $0.35 for the quarter, a decrease of $0.11 or 24.0% from Q1 2020. This was mainly due to the $19.1 million pandemic related provision, no gains on sales of marketable securities (Q1 2020 - $11.1 million), and no material negative mark to market adjustment for trustee costs (Q1 2020 - $4.3 million).

The Trust reported fair value losses of $451.7 million in the quarter, representing a 3.1% write-down to the IFRS value of investment properties as of the beginning of the quarter, including assets held for sale. These fair value losses reflect the estimated effect of the pandemic on property cash flows and capitalization rates, as well as the estimated effect of the depressed oil and gas market in Alberta. More specifically, the Trust wrote down the IFRS values of its enclosed centres by 10.6% and those of its Alberta assets by 4.8% during the quarter. For further details on the valuation of investment properties, see the Investment Properties section of this MD&A.

Due to the fair value write-downs and the FFO variances as noted above, the Trust reported a net loss of $350.8 million for the quarter.

Operations - Commercial

As a result of the pandemic, committed and in-place occupancy for the overall commercial portfolio decreased by 40 and 30 basis points from Q1 2020 to of 96.4% and 96.0%, respectively, as of June 30, 2020. Committed and in-place occupancy for major market retail remained high at 96.9% and 96.6%, while retail committed and in-place occupancy in the GTA were even stronger at 97.3% and 96.9%, respectively.



Despite the pandemic, the Trust achieved approximately 109,000 square feet of new leases during the quarter across a variety of tenants ranging from grocers, specialty retailers to essential and regular personal services. Average net rent per square foot for the new leases was $25.83, well above the Trust's commercial portfolio average net rent of $19.75 per square foot.

For the quarter, the renewal retention ratio increased to 89.4%, 630 basis points increase from Q1 2020 despite the COVID-19 pandemic. The blended leasing spread for major markets trended higher at 7.3%, improving 80 basis points from Q1 2020.

As a result of the pandemic related provision for rent abatements and bad debts, same property NOI decreased by 10.8% for the commercial portfolio when compared to the same period in 2019.

Operations - Residential

During the quarter, the Trust generated net operating income of $2.0 million, from its RioCan LivingTM residential rental towers at eCentralTM, FrontierTM and BrioTM, an increase of $1.8 million over the comparable period as the properties are being leased up.

As of July 28, 2020, 98.7% (224 units) at Frontier are leased at an average monthly rent of $2.50 per square foot, while 94.2% (439 units) at eCentral have been leased at averaging $3.92 rent per square foot per month for the market rent units. Brio has leased 31.5% (51 units) of its 163 units at an average monthly rent of $2.51 per square foot, despite being launched in the midst of the COVID-19 pandemic and a prolonged oil crisis. This highlights the resilience of well-located and well-designed buildings, as well as the management expertise of RioCan and its partner Boardwalk REIT.

Despite eCentral's lease-up being slowed by the current COVID-19 pandemic, it is still expected to be stabilized in the summer to fall of 2020. Other than a small number of rental replacement units, none of RioCan's residential rental units are rent controlled. As a temporary measure during COVID-19, residential rent increases have been suspended until October 2020.

For the second quarter of 2020, RioCan has received approximately 99.3% of the residential rents at eCentral in Toronto and Frontier in Ottawa as of July 28, 2020.

Operating Results - YTD 2020For the six months ended June 30, 2020, RioCan reported FFO of $254.5 million, a decrease of $32.4 million in FFO over the comparable period in 2019 primarily due to the low FFO in Q2 2020 in connection with the ongoing pandemic. FFO per unit was $0.80 per unit for the period. Refer to the Funds from Operations section of this MD&A for further details.

The net loss of $247.9 million for the period was primarily driven by the fair value losses on investment properties in Q2 2020 as a result of the pandemic as discussed earlier in this MD&A.

Same property NOI for the six months ended June 30, 2020 decreased by 4.3% for the commercial portfolio, caused by lower same property NOI in Q2 2020 as a result of the pandemic, partially offset by the strong 3.0% same property NOI growth in Q1 2020.

For the six months ended June 30, 2020, the Trust signed 481,000 square feet of new leases at average net rent per square foot of $29.90, an increase of $6.95 when compared to the same period last year primarily due to new leases achieved on development projects.

The Trust's major market commercial portfolio achieved renewal and blended leasing spreads of 5.9% and 6.8%, respectively, for the six months ended June 30, 2020.

Well-positioned Portfolio - Concentrated in Canada's Major MarketsSystematically evolved, RioCan's preeminent portfolio of properties is primarily located in the transit corridors of the fastest growing urban centres of Canada's six major markets. As of June 30, 2020, the Trust generated 90.1% and 52.1% of its total annualized rental revenue from the six major markets and the Greater Toronto Area, respectively. The 110 basis point increase in the GTA presence from the prior quarter was primarily due to the timing of certain revenues and its impact on annualized revenues as of each quarter end.

RioCan's portfolio focuses on Grocery Anchored, Mixed-Use / Urban and Open Air centres combining national retailers with diverse independent businesses that provide communities essential services with a local perspective and neighbourhood experience. These centres represent 90.8% of annualized rental revenue as of June 30, 2020, an increase of 0.2% from the prior quarter end. During the second quarter of 2020, Grocery Anchored centres increased to 42.3% of annualized rental revenue, with Enclosed centres decreasing to 9.2%. As a result, RioCan's portfolio is becoming increasingly attractive from a tenanting perspective, more resilient to changes in economic cycles and evolving retail trends, and forms a solid foundation for organic growth post the pandemic.

As of June 30, 2020, retail accounts for 90.5% of the Trust's annualized rental revenues, followed by office at 7.8% and residential at 1.7%. As more RioCan Living residential rental buildings currently underway are completed and stabilized, the residential proportion of the Trust's portfolio will grow and the Trust's portfolio is becoming increasingly mixed-use.

Acquisitions and DispositionsThere were no acquisitions completed during the quarter. During the six months ended June 30, 2020, the Trust acquired interests in six investment properties for an aggregate purchase price of $102.7 million including transaction costs, comprised of $68.7 million of income producing properties and $34.0 million of properties under development. The properties acquired are all



located in prime locations in the GTA, including along the Yonge Street corridor close to Yonge Eglinton Centre and eCentral, Bloor Street West, Lawrence Avenue and Dufferin Street.

During the three months ended June 30, 2020, the Trust completed the sale of its 75% interest in The Shops at Summerhill in Toronto for sales proceeds of $33.0 million. In addition, during the six months ended June 30, 2020, the Trust disposed of its interests in two properties under development for sales proceeds of $21.7 million, including the pre-agreed sale of RioCan's interest in one-third of the residential air rights relating to the 5th & THIRDTM project in Calgary, Alberta and the sale of one small development property in Laval, Quebec.

As of July 28, 2020, the Trust has entered into a number of firm or conditional agreements to dispose 100% or a partial interest in a number of properties, most of which are located in the major markets, for aggregate sales proceeds of $302.2 million. These dispositions consist of $220.2 million income producing properties and $82.0 million development properties. The income producing properties have a weighted average in-place capitalization rate of 4.2% based on firm or conditional deal prices and the development properties do not have material in-place NOI. These dispositions are in addition to the proceeds from firm deals to sell the remaining two-thirds of the residential air rights strata parcel at 5th & THIRD and a portion of the air rights at The WellTM in Toronto, Ontario, which are netted against gross development spend for 2020 to arrive at the net 2020 development spend guidance in the Annual Development Spending section of this MD&A.

DevelopmentDevelopment pipeline

The Trust's development pipeline consists of 42.7 million square feet (at RioCan's interest), of which 21.5 million square feet or 50.4% have zoning approvals or zoning applications submitted. Virtually all of RioCan's development projects are located in the six major markets, with 73.0% located in the GTA. Residential components represent 35.6 million square feet (at RioCan's interest) or 83.4% of the Trust's current estimated development pipeline.Purpose-built RioCan Living properties are key components of our mixed-use developments with approximately 2,700 rental units, including the 857 units at eCentral, Frontier and Brio, completed or under construction. The Trust has completed and sold over 900 condominium and townhouse units at eCondos, KinglyTM and U.C. TownsTM in the prior year and currently has another 2,600 condominium and townhouse units at various stages of development. These projects remain the cornerstone of RioCan's development and growth strategy. RioCan is confident in the asset diversification and unitholder net asset value growth prospects of such developments. The Trust will continue to self fund development through continuous asset pruning, quicker capital recycling through condominium or townhouse projects, air rights sales, strategic partnerships and retained earnings.

Development Completions and Progress

During the six months ended June 30, 2020, 137,000 square feet of developments were completed, including the 163-unit Brio residential rental tower and a portion of the commercial component of the 5th & THIRD project. At the same time, construction at The Well continued to progress with the office component now reaching 23 of 36 storeys and 84% of the office space is pre-leased and on track for initial office tenants to take possession in 2021. A portion of the air rights sales at The Well is expected to close in 2020 with the remainder in 2021. Furthermore, the Trust is in advanced discussions with a number of retail tenants that would add to the overall character of The Well as envisioned.

At 11 YV condominiums, the prestigious Yorkville project in Toronto, Ontario, 98.0% (574 units) of the 586 units (at 100%) were pre-sold as of July 28, 2020. The average price achieved of over $1,700 per square foot is above initial expectations. Demolition has commenced at the site with project completion expected in the fall of 2024. This project is expected to generate estimated inventory gains of $65.0 million to $71.0 million, at RioCan's interest.

Sales of the 503 condominium units (at 100%) at U.C. TowerTM and the 153 townhouses (at 100%) at U.C. UptownsTM at RioCan's Windfields Farm development in Oshawa, Ontario also continued to progress well. The Trust and its partner Tribute Communities have entered into agreements to sell 87.1% (438 units) and 81.7% (125 units), respectively, of all units as of July 28, 2020. Sales at U.C. Uptowns commenced late in the first quarter and increased by 28.1% (43 units) over the last three months amid the pandemic.

U.C. Tower construction commenced during the quarter and is expected to be complete by Q1 2023 with estimated inventory gains in the $14.0 million to $16.0 million range at RioCan's interest. U.C. Uptowns is expected to start construction in September 2020 and be completed in Q2 2022 with estimated inventory gains of $5.0 million to $5.5 million.

As of June 30, 2020, properties under development and residential inventory accounted for 10.7% of the Trust's consolidated gross book value of assets, well under the 15% limit permitted under the Trust's revolving line of credit agreement. The increase in this metric from the previous quarter was driven by development progress and completion timing, as well as the fair value write-downs this quarter as a result of the pandemic. RioCan’s development spend for 2020 is estimated to be in the $400 million range, net of expected cost recoveries and air rights sales.



Ample LiquidityAs of June 30, 2020, RioCan had $1.0 billion of liquidity, on a proportionate share basis, in the form of cash and cash equivalents and undrawn lines of credit. The Trust has a large unencumbered asset pool of $8.7 billion, which generated 62.0% of RioCan's annualized NOI and provided 221% coverage over its unsecured debt, all on a proportionate share basis. This large unencumbered asset pool offers RioCan the potential to obtain additional mortgages to bolster liquidity, if required, and preserve the revolving unsecured line of credit essentially undrawn or minimally drawn, while maintaining debt metrics.

On June 1, 2020, RioCan redeemed, in full, its $150.0 million 3.62% Series U unsecured debentures in accordance with their terms. RioCan's remaining 2020 debenture maturity of $250 million, due in August 2020, has been effectively refinanced with the $350.0 million, 7-year inaugural Green Bond issuance on March 10, 2020 at an annual coupon rate of 2.361%. This green bond is the first green bond issued by a real estate investment trust (REIT) in Canada and is currently included in the Bloomberg Barclays MSCI Green Bond Index.

As of July 28, 2020, only $81.8 million of RioCan's mortgage maturities for the remainder of 2020 have yet to be refinanced or have refinancing commitments in place. They are all due in the last quarter of 2020 and are expected to be refinanced in due course.

As at June 30, 2020, the Trust further reduced its floating interest rate debt exposure to 2.8% (December 31, 2019 - 6.4%). It has also lowered its weighted average effective interest rates to 3.29% (December 31, 2019 - 3.44%). Debt to Adjusted EBITDA was at 8.80x and debt to total assets was at 44.4% as of June 30, 2020, both on proportionate share basis. The increases in the two metrics from the previous quarter were as a result of the impacts of the pandemic on the Trust's property operations and valuations. RioCan is committed to sound capital management and a strong balance sheet.

Additional Capital RecyclingFor the three and six months ended June 30, 2020, realized cash gains on marketable securities sold were nil and $11.1 million (three and six months ended June 30, 2019 - $5.7 million and $15.7 million).

Environmental, Social and Governance (ESG) Updates RioCan continues to embed sustainability throughout its business to help deliver on its vision for sustainable growth. Key initiatives during the quarter included, but were not limited to, the following:

• Earned recognition as the top ranked real estate firm on the Best 50 Corporate Citizens in Canada in 2020 by Corporate Knights. Every year, Corporate Knights ranks Canadian companies with annual revenues that exceed $1 billion on approximately 20 environmental, social and governance indicators including clean revenue (measures a company’s revenue derived from sources with a clear environmental benefit, such as properties that have measurable improvements in energy, water and waste efficiency) using publicly available information. The Best 50 companies set a reputable standard for sustainability leadership in Canada;

• Achieved an ESG rating upgrade by Morgan Stanley Capital International (MSCI), driven by improvement in green building certifications and employee management programs. MSCI ESG Ratings aim to measure a company’s resilience to long-term, financially relevant ESG risks;

• Increased overall FTSE Russell ESG score by 26%, ranking RioCan above the industry peer average. FTSE Russell ESG ratings measure ESG risk and performance on 7,200 securities across 47 developed and emerging markets;

• Improved data quality across its portfolio and conducted training on its ISO 14001-aligned utility and data management systems to better understand its energy profile and carbon emissions to help it achieve long-term GHG reduction targets;

• Implemented a Sustainability Policy and Plan for RioCan’s Development department; and

• Continued to assess climate change-related opportunities and risks on RioCan’s portfolio with the intent of embedding the process into its business planning and risk management processes.

RioCan values a diverse and inclusive workplace and has committed to assembling a RioCan Diversity and Inclusivity Council. Aligned with this value, RioCan has also signed the BlackNorth CEO Pledge, which was initiated by the Canadian Council of Leaders Against Anti-Black Systemic Racism. Through these and other multiple community-focused initiatives, including a program called RioCan Cares, we maintain our ongoing commitment to the communities we serve.

For a detailed discussion of RioCan's sustainability program and initiatives, refer to the 2019 Annual Report, which may be accessed through the SEDAR website at www.sedar.com or RioCan's website at www.riocan.com. In addition, for RioCan's sustainability policy and additional information about its sustainability strategy and plan, visit RioCan's website under Sustainability.



OUTLOOK AND STRATEGY OutlookSince the COVID-19 outbreak and the related imposition of restrictive measures on businesses and the general public, various levels of government and the Bank of Canada have been working proactively to respond to the widespread impact of the unprecedented health crisis on the Canadian economy. In its July interest rate announcement, the Bank of Canada held its overnight interest rate at 0.25% and continues to deploy various quantitative easing measures to support financial markets liquidity and lower borrowing costs for businesses and provincial governments. Different levels of governments also introduced or extended various fiscal stimulus measures and programs to support businesses and the general economy. The effect of COVID-19 on the Canadian economy was further compounded by a sharp decline in the demand for oil, leading supply to significantly outpacing demand and oil prices falling to record lows.

As the pace of new COVID-19 cases slowed, the Canadian economy began to reopen recently. GDP experienced a significant decline from April to June but with phased reopening in progress, economic indicators have begun to move in the positive direction, including a rise in the price of oil from very low levels and a decline in the unemployment rate.

Despite the gradual resumption in economic activity in the second half of 2020, the Canadian economy is expected to contract in 2020 as the recovery is expected to be slow. The Trust expects 2020 to be impacted negatively by the pandemic and estimates FFO per unit to be in the $1.60 range for the year. Similarly, the Trust expects same property NOI growth to be negative for 2020.

Consistent with RioCan's longstanding culture of resilience and adaptability, management has adapted its strategy to address the economic, social and health care impact of this pandemic. It is difficult to predict the length and severity of the impact of the pandemic on RioCan's business and the general economy, both in the short and long term. Based on the current situation in Canada as it unfolds today, the Trust is hopeful to achieve significant growth in 2021 from the estimated FFO base of 2020. It also expects same property NOI growth to resume in 2021 and will provide guidance in future quarters.

Market Trends Canadian Retail Environment and E-Commerce

In order to manage the health, social and economic impact of the COVID-19 pandemic, a number of retail stores closed or reduced their hours of operations for most or a significant part of Q2 2020 out of their own volition or to comply with government mandated closures. As the rate of new COVID-19 infections have slowed, Canada has begun to ease lock-down and retail has begun to reopen in a phased approach. During this period of shut-down and physical distancing, a survey by the International Council of Shopping Centers (ICSC) indicated that shopping centres and physical stores rank second and third as the most missed venues following restaurants, bars and other eating places, which ranked first. Despite the desire to shop in-person, the current conditions, have altered Canadians' consumption habits in the near term. While there is undoubtedly a surge in the reliance on on-line shopping, this crisis has also reinforced the critical nature of the retail outlet in the consumer ecosystem. The Trust has seen retailers, necessity-based or otherwise, alter infrastructure to accommodate click-and-collect models. It has also seen increased in-person visits to necessity-based retailers such as grocery stores and pharmacies demonstrating that in any circumstances, these outlets prove critical to the communities they serve. Even during this crisis, with mobility restricted, e-commerce has not fully accommodated providing goods and services to Canadian consumers, validating the importance of an integrated and robust omni-channel model.

RioCan believes that many retailers recognize the vital necessity of offering customers increased flexibility in their shopping choices while also adapting store sizes, layout and product mixes to better meet consumer demands in urban, more densely populated settings. Responsible and forward thinking commercial landlords like RioCan will continue to seek ways to help retailers adapt their stores to provide their customers with this type of flexibility and through this process, will continue to provide relevant and resilient shopping environments. RioCan is of the view that in the medium and long-term, shopping centres will continue to provide retailers with a cost-effective way of distributing goods and services given Canada’s geographic dispersion, the high cost of “last mile” deliveries and high barriers to establishing distribution centres in urban settings. One such program is RioCan Curbside CollectTM, a permanent initiative that offers designated areas for customers to access their pre-ordered items making it easier for RioCan tenants to coordinate transactions with their customers, mitigate the cost of delivery, and drive consumer traffic and repeat visits.

RioCan’s management does not believe these current conditions to be entirely indicative of the retail landscape to come. This is an unprecedented crisis that will undoubtedly cause significant temporary disruption to the landscape. There will certainly be fallout and vacancy - but these conditions are by no means terminal in nature. The attributes attached to the Canadian retail environment will, in RioCan's view, allow these conditions to be short lived. Relative to other countries, Canada benefits from low retail space per capita, a limited number of retailers within each retail category and tight building controls that keep supply in check. In spite of the current slowdown in travel, Canada's population is expected to continue to increase particularly in its six major markets. These factors contribute to a resilient base of strong retail centres. Consequently, upon the resumption of regular commercial activity in the Canadian markets, RioCan believes that there will be demand for well-positioned retail space. It believes that it is too simplistic to view the current extraordinary and temporary state of commercial activities as the normal course. Strong, well positioned retail assets, such as those owned by RioCan, will prove resilient both during this crisis and



certainly, once the pandemic has subsided. The attributes that its portfolio possesses, such as proximity to transit, high demographic profile and high visibility will not lose their prominence.

Over its 26-year history, RioCan's experienced management team, recognized for its visionary leadership and adaptability within an ever-changing real estate environment, has successfully managed through various economic cycles and challenging circumstances. RioCan's management team continually assesses and adapts its strategies to address market dynamics and even more so through the extremely fluid COVID-19 pandemic. The Trust maintains its strategy to expand and enhance the mixed-use characteristics of its portfolio to address trends. It will continue to adapt and re-purpose its existing retail portfolio and grow its residential portfolio, which is designed with amenities suited for e-commerce such as concierge services, dedicated space for receipt and storage of packages and, in some cases, cold storage.

Development Environment

With population growth and a limited supply of land available for development, Canada’s six major markets, particularly the GTA and Vancouver areas, have experienced a significant boom in housing development and construction over the last number of years. The increasing and persistently high level of development and construction activities over the last few years, as well as the projected sustained bullish tone on future development by many industry players, have led to rising construction costs, increasing development charges by municipalities, and a shortage of experienced labour, which tend to increase development risks. While the COVID-19 pandemic has slowed development activities in general and is impacting supply and labour availability, pace of residential or commercial property lease-up or sale of condominium or townhouse units, among other factors, its longer term impact is difficult to predict.

Despite the current circumstances, RioCan is confident in its development program and net asset value (NAV) growth potential that such development will bring to its Unitholders. The Trust's 14.8 million square feet of zoned density, which is primarily located in the GTA, remains a significant competitive advantage for RioCan. However, the Trust will remain vigilant in monitoring the market trends and will continue to prudently manage development risks and adapt its development program to the changing market conditions including challenges imposed by the current pandemic. Refer to the Properties Under Development section of this MD&A for a further discussion on how the Trust prudently manages its development risks.

Alberta Economy

The Alberta economy has suffered another significant economic setback since March 2020 given the sharp and sudden decline in the demand for oil as the global economy largely shut down to contain the COVID-19 pandemic, coupled with a similar sharp drop in oil prices resulting from an international price war and dispute over oil production levels.

In July 2020, the government of Alberta launched the Alberta Recovery Plan which builds on strategic investments already underway, including the Keystone XL pipeline, and also includes, but is not limited to, a $10 billion infrastructure program, a cut in business taxes and incentives to attract investment in the technology and innovation sectors. Such initiatives, together with recent reopening of businesses and ease of restrictive measures under the pandemic, could alleviate the challenges facing the province but its road to recovery and growth will take time and the effects of such government initiatives are difficult to predict.

Notwithstanding the challenges the Alberta economy is facing, the committed occupancy rate in our Alberta portfolio remained high at 96.0% as of June 30, 2020, stable from the pre-COVID Q1 2020. Our first residential building, Brio in Calgary, is also leasing reasonably well amid the pandemic while being launched right at the outset of the pandemic. In addition, in the first quarter of 2020 we completed the sale of a 100% interest in one-third of the air rights related to the 5th & THIRD project in Calgary, Alberta as planned. Nonetheless, the regional economy is sensitive to potential further volatility in oil prices and the uncertainties surrounding the timing of the economic recovery from the pandemic. As a result, the Trust wrote down the fair value of its Alberta assets by 4.8% or $124.9 million during the second quarter of 2020.



Strategy Despite the current pandemic environment, the Trust remains focused on its longer-term growth strategy.

Canadian Major Market FocusThe major market strategy is a key initiative that has strengthened and will further enhance the quality, growth profile and resilience of the Trust's portfolio. The Trust embarked on this strategy over a decade ago and has evolved the Trust's assets into a more urban and mixed-use portfolio of properties located in prime, high density, transit-oriented areas where Canadians want to shop, live and work. Its tenant base has also been adapted to become more diversified and necessity and service-oriented. While the COVID-19 pandemic further validates the relevance of this strategy, management will proactively adapt its strategy to address the various impacts of this health crisis as businesses reassess and adapt their business models post the pandemic.

Driving Organic GrowthRioCan drives strong organic growth by strategically curating and evolving the tenant mix of its properties and improving the operating efficiency and cost structure of its portfolio as well as leveraging its existing strengths, such as its strong relationships with high quality tenants and partners, economies of scale and experience. In addition, RioCan continually searches for ways to create new sources of income from ancillary revenues, fee income from joint venture arrangements and incremental growth through new pads and redevelopments. At the same time, to better serve changing consumer habits and spending patterns, the Trust consistently looks to innovate and actively explores opportunities to improve its properties for better and more efficient uses including greater participation in the logistics of retailers' E-commerce channel.

Unlocking Intrinsic Value through Development Over the past 26 years, the Trust has accumulated a robust portfolio of income producing properties with significant redevelopment potential that are strategically situated on or near existing or government approved transit line expansions. Despite the pandemic, the Trust remains focused on optimizing the value of its existing properties through its development program. The program allows the Trust to diversify its portfolio with residential real estate. The Trust's RioCan Living program combines great retail experiences with residential and creates a premium residential tenant experience that will in turn drive traffic for retail tenants. The Trust believes this will ultimately drive future rent growth and deliver FFO and NAV growth to its Unitholders. The development program will also decrease the average age of the portfolio and over time, the Trust is expected to benefit from lower capital expenditure requirements. The Trust will continue to pursue a disciplined approach to its development program in major markets with a heavy focus on the GTA and to meet the evolving needs of the communities it serves.

RioCan's development program has distinct competitive advantages given its head start with zoning approvals achieved and zoning applications submitted, recent completion or near substantial completion of a number of large mixed-use projects as well as the experience and scale of its development team.

Strategic AcquisitionsGiven the competitive nature of the real estate market prior to the pandemic, limited market transactions during the pandemic, and limited supply of assets that meet RioCan's criteria in the major markets, acquisition of income producing properties is not a significant growth driver for RioCan in the near term. However, post the pandemic when normal market activities resume, RioCan is expected to continue to seize opportunities to acquire partners' interests in existing co-owned properties that are unavailable on the open market or acquire desirable assets from financially distressed owners. In addition, the Trust will evaluate and pursue opportunities to acquire selective sites suitable for development such as property acquisitions completed for the Yorkville condominium project, or to assemble adjacent properties surrounding existing development properties such as its property assembly along the Yonge Street corridor close to the Trust's flagship Yonge Eglinton Centre and eCentral.

Strong Balance SheetRioCan prudently manages its balance sheet and capital structure. The Trust maintains low leverage, staggers its debt maturities and limits its variable rate debt to reduce interest rate and refinancing risk, maintains an optimal mix of unsecured and secured debt to provide continued financial flexibility and liquidity, balances between line of credit utilization and unsecured debenture issuance, builds on established lender relationships and continues to utilize multiple sources of capital. Even though the ongoing pandemic may increase RioCan's leverage and debt to adjusted EBITDA to an extent in the short term, this disciplined approach allows RioCan to maintain the strong liquidity and financial strength needed to drive growth and thrive in the ever changing marketplace including the current pandemic environment.



PRESENTATION OF FINANCIAL INFORMATION AND NON-GAAP MEASURESPresentation of Financial Information Unless otherwise specified herein, financial results, including related historical comparatives, contained in this MD&A are based on RioCan’s Condensed Consolidated Financial Statements.

Non-GAAP Measures In addition to reported IFRS measures, industry practice is to evaluate real estate entities giving consideration, in part, to certain non-IFRS performance measures described below, such as funds from operations, net operating income and same property net operating income growth. Management believes that these measures are helpful to investors because they are widely recognized measures of a REIT's performance and provide a relevant basis for comparison among real estate entities. In addition to the IFRS results, we also use these measures internally to measure the operating performance of our investment property portfolio. These measures are not in accordance with IFRS generally accepted accounting principles (GAAP) and have no standardized definition prescribed by IFRS and, as such, our computation of these non-GAAP performance measures might not be comparable to similar measures reported by other issuers. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of RioCan’s performance, liquidity, cash flows and profitability. We supplement our IFRS measures with these non-GAAP measures to aid in assessing our core performance and we report these additional measures so that investors may do the same. Management believes that the supplementary non-GAAP measures described below provide readers with a more comprehensive understanding of management's perspective on its operating performance.

The following discussion describes the non-GAAP measures RioCan management currently uses in evaluating its operating results.

Funds From Operations (FFO) FFO is a non-GAAP financial measure of operating performance widely used by the Canadian real estate industry based on the definition set forth by REALPAC. It is RioCan's view that IFRS net income does not necessarily provide a complete measure of RioCan's recurring operating performance. This is primarily because IFRS net income includes items such as fair value changes of investment property that are subject to market conditions and capitalization rate fluctuations, and gains and losses on the disposal of investment properties, including associated transaction costs and taxes, which are not representative of recurring operating performance.

FFO is computed as IFRS consolidated net income attributable to RioCan Unitholders adjusted for items such as, but not limited to, unrealized changes in the fair value of investment properties and transaction gains and losses on the acquisition or disposal of investment properties (including related transaction costs and income taxes) calculated on a basis consistent with IFRS.

RioCan regards FFO as a key measure of operating performance and as a key measure for determining the level of employee incentive based compensation. RioCan also uses FFO in assessing its distribution paying capacity.

FFO should not be construed as an alternative to net income or cash flows provided by or used in operating activities determined in accordance with IFRS.

As noted in the 2018 Annual Report, the Trust adopted the new accounting standard IFRS 9 - Financial Instruments (IFRS 9) on the required effective date of January 1, 2018. One impact of adopting IFRS 9 is that the unrealized gains or losses on marketable securities are included in IFRS net income, whereas they were recorded in other comprehensive income in 2017 and prior years' consolidated financial statements. Based on the FFO definition currently set forth by REALPAC, the unrealized gains or losses on marketable securities would be included in FFO, as a result of adopting IFRS 9. However, the Trust believes that including such unrealized gains or losses on marketable securities in FFO does not represent the recurring operating performance of the Trust. As a result, effective January 1, 2018 upon adoption of IFRS 9, RioCan’s method of calculating FFO is in compliance with REALPAC’s definition of FFO except that RioCan excludes these unrealized gains or losses on marketable securities in its calculation of FFO. For further clarity, RioCan continues to include realized gains or losses on marketable securities in its calculation of FFO.

In February 2019, REALPAC issued a revision to the February 2018 definition of FFO, effective January 1, 2019, to include adjustments relating to operational revenues and expenses from right-of-use (ROU) assets as a result of certain subleases and leases that were classified as operating leases under IAS 17, Leases (IAS 17) and are classified as finance leases under IFRS 16, Leases (IFRS 16), such that the entire relevant lease receipt and/or lease payment continues to be reflected in FFO upon the adoption of IFRS 16 on January 1, 2019. RioCan has adopted this additional REALPAC FFO adjustment on the effective date of January 1, 2019.

RioCan’s method of calculating FFO may differ from other issuers' methods and, accordingly, may not be comparable to FFO reported by other issuers. A reconciliation of IFRS net income to FFO can be found under the Results of Operations section in this MD&A.



Adjusted Cashflow From Operations (ACFO) ACFO is a non-GAAP financial measure of sustainable economic cash flow available for distributions based on the definition set forth by REALPAC. RioCan adopted the REALPAC definition of ACFO effective January 1, 2017 and uses it as an input, together with FFO, in assessing RioCan's distribution payout ratios. The adoption of the IFRS 9 effective January 1, 2018 did not have an impact on ACFO with respect to unrealized gains or losses on marketable securities. As a result, the Trust’s calculation of ACFO continues to be in accordance with REALPAC’s ACFO recommendations with the adoption of IFRS 9 on January 1, 2018.

In February 2019 REALPAC issued a revision to the February 2018 definition of ACFO, effective January 1, 2019, to include adjustments relating to operational revenues and expenses from ROU assets as a result of certain subleases and leases that were classified as operating leases under IAS 17 and are classified as finance leases under IFRS 16, such that the entire relevant lease receipt and/or lease payment continues to be reflected in ACFO upon the adoption of IFRS 16 on January 1, 2019. RioCan has adopted this additional REALPAC ACFO adjustment on the effective date of January 1, 2019.

ACFO is computed as cash provided by (used in) operating activities per the IFRS consolidated statement of cash flows plus, but not limited to, the following adjustments:

• includes adjustments for certain working capital items that are not considered indicative of sustainable economic cash flow available for distribution. Examples include, but are not limited to, working capital changes relating to the following: residential inventory and developments, prepaid realty taxes and insurance, interest payable and receivable, sales and other indirect taxes payable to or receivable from applicable governments, income taxes payable and receivable and transaction cost accruals relating to acquisitions and dispositions;

• includes cash distributions from equity accounted for investments;

• adds back transaction-related income statement expenses associated with dispositions and acquisitions;

• includes realized gains or losses on marketable securities;

• adds back taxes relating to non-operating activities;

• deducts normalized capital expenditures, which include both third-party leasing commissions and capital spending related to maintaining the physical condition and the existing earnings capacity of the Trust's income property portfolio (see below for a further description of normalized capital expenditures);

• adds back internal leasing costs relating to development projects; and

• includes adjustments relating to operational revenues and expenses from ROU assets as a result of certain subleases or leases that are classified as finance leases under IFRS 16, effective January 1, 2019.

The REALPAC ACFO definition effectively includes working capital fluctuations relating to recurring operating activities in ACFO, such as working capital changes relating to trade accounts receivable and trade accounts payable and accrued liabilities. This, in management's view, introduces greater fluctuations in quarterly and twelve-month trailing ACFO. As a result, RioCan uses ACFO, together with FFO, in assessing its distribution payout ratios.

ACFO should not be construed as an alternative to cash flows provided by or used in operating activities determined in accordance with IFRS. RioCan’s method of calculating ACFO is in accordance with REALPAC’s recommendations, but may differ from other issuers' methods and, accordingly, may not be comparable to ACFO reported by other issuers. A reconciliation of IFRS cash flow from operating activities to ACFO is found in the Results of Operations section in this MD&A.

RioCan does not report on the earnings metric, adjusted funds from operations (New AFFO), as introduced by REALPAC in February 2017. RioCan management does not use the New AFFO as a measure of its recurring operating performance and believes that the disclosure in the subsections "FFO", "ACFO" and "Net Operating Income (NOI)" included in the Results of Operations section in this MD&A provide sufficient information for readers to compute the New AFFO. Management has, therefore, opted not to report the New AFFO in order to reduce the number of non-GAAP measures reported in our MD&A.

Normalized Capital ExpendituresNormalized capital expenditures are an estimate made by management of the amount of ongoing capital investment required to maintain the condition of the physical property and current rental revenues. Management considers a number of items in estimating normalized capital expenditures relative to the growth in the age and size of the Trust's property portfolio. Such factors include, but are not limited to, review and analysis of historical capital spending, comparison of each quarter's annualized actual spending activity to the annual budgeted capital expenditures as approved by our Board of Trustees at the beginning of each year and management's expectations and/or plans for the properties. Property capital expenditures that are generally expected to add to the overall earnings capacity of the property are considered revenue enhancing capital expenditures by management and are also excluded in determining the normalized capital expenditures estimate.

RioCan does not obtain support from independent sources for its normalized capital expenditures but relies on internal diligence and expertise in arriving at this management estimate. RioCan’s long tenured management team has extensive experience in commercial real estate and in-depth knowledge of the property portfolio. As a result, RioCan believes that management is best suited to make the assessment of normalized capital expenditures without independent third party sources.



Since actual capital expenditures can vary widely from quarter to quarter depending on a number of factors, management believes that normalized capital expenditures are a more relevant input than actual capital expenditures in assessing a REIT's distribution payout ratio and for determining an appropriate level of sustainable distributions over the long run. The number of factors affecting the quarterly variations in actual capital expenditures include, but are not limited to, lease expiry profile, tenant vacancies, age and location of the properties, general economic and market conditions, which impact the level of tenant bankruptcies and acquisitions and dispositions.

Prior to 2018, the Trust formulated its normalized capital expenditures estimate based on analyzing historic average spending and reviewing its actual capital spending levels based on property performance and type of spend (e.g. HVAC, elevator, roof, parking lot, electrical, etc.) to determine the amount of ongoing capital investment required to maintain the condition of the physical property and current rental revenues. This review was done with representation and input from RioCan's cross-functional teams. Short-term fluctuations in actual capital expenditures were analyzed to remove any expenditures that did not represent the level of ongoing maintenance capital expenditures, such as increased capital expenditures incurred during adverse market conditions.

Given the Trust's announcement on October 2, 2017 to sell secondary market properties pursuant to its major market focus, the Trust expected its normalized capital expenditures to decrease as the Trust's remaining properties, predominantly located in Canada's six major markets, tend to have higher tenant retention and lower average age. These two attributes result in lower average leasing and maintenance capital expenditures on a per square foot basis relative to the Trust's secondary markets properties. The Trust also expected its income producing NLA to decrease as secondary market properties were sold.

As a result, the Trust determined that it was no longer reasonable to use its historical average approach in estimating its normalized capital expenditures since 2018. Instead, the Trust adopted a more forward looking approach and used its annual maintenance capital expenditure budget as its normalized capital expenditures since 2018.

For both 2019 and 2020, the Trust determined that $40.0 million was a reasonable estimate for its normalized capital expenditures, although quarterly fluctuations between the $10 million quarterly normalized capital expenditures and actual spend are expected. This normalized capital expenditures estimate for 2020 does not include capital expenditures for mixed-use residential projects given these are newly constructed buildings or any reduction in maintenance capital expenditures in 2020 in response to the COVID-19 pandemic. IFRS capital expenditures are further discussed and analyzed in the Capital Expenditures on Income Properties section in this MD&A.

FFO and ACFO Payout RatiosFFO and ACFO payout ratios are supplementary non-GAAP measures of a REIT's distribution paying capacity. FFO and ACFO payout ratios are computed on a rolling twelve month basis by dividing total Unitholder distributions paid (including distributions paid under RioCan's distribution reinvestment program) by FFO and ACFO, respectively, over the same period. RioCan’s method of calculating FFO and ACFO payout ratios may differ from other issuers’ methods and, accordingly, may not be comparable to payout ratios reported by other issuers.

As previously discussed, the REALPAC ACFO definition includes net working capital increases and decreases relating to operating activities, which tend to fluctuate period over period in the normal course of business. In management's view, this tends to introduce greater fluctuations in ACFO calculations. As a result, RioCan management uses the FFO payout ratio in addition to the ACFO payout ratio in assessing its distribution paying capacity, as FFO is not subject to such working capital fluctuations.

Net Operating Income (NOI) NOI is a non-GAAP measure and is defined by RioCan as rental revenue from income properties less property operating costs.

For the calculation of NOI, rental revenue includes all amounts earned from tenants related to lease agreements, including property tax and operating cost recoveries, to the extent recoverable under tenant leases. Amounts payable by tenants to terminate their lease prior to the contractual expiry date (lease cancellation fees) are included in rental revenue for the calculation of NOI. The amount of property taxes and operating costs that can be recovered from tenants is impacted by property vacancy and fixed cost recovery tenancies.

Management has included adjustments to NOI for certain subleases or leases that are classified as finance leases under IFRS 16 effective January 1, 2019, based on rationales similar to the adjustments in the REALPAC definitions of FFO and ACFO that were released in February 2019. These adjustments relate to operational revenue and expenses from ROU assets as a result of certain subleases and leases that were classified as operating leases under IAS 17 and are classified as finance leases under IFRS 16, such that the entire relevant lease receipt and/or lease payment continues to be reflected in NOI upon the adoption of IFRS 16, on January 1, 2019.

Management believes that NOI is a meaningful supplementary measure of operating performance of the Trust's income producing properties in addition to the most comparable IFRS measure, which we believe is operating income. The IFRS measure of operating income also includes residential inventory gains and losses as well as property and asset management fees earned from co-owners. While management considers its residential inventory and portfolio management activities part of its business operations, and thus operating income, such revenues are not part of how we evaluate the operating performance of



our income producing properties. As such, we report NOI as a useful supplementary non-GAAP measure to report the operating performance of our income producing properties.

NOI is an important measure of the income generated from the income producing properties and is used by the Trust in evaluating the performance of the portfolio, as well as a key input in determining the value of the income producing portfolio. RioCan’s method of calculating NOI may differ from other issuers’ methods and, accordingly, may not be comparable to NOI reported by other issuers.

Same Property NOI Same property NOI is a non-GAAP financial measure used by RioCan to assess the period over period performance of those properties owned and operated by RioCan in both periods. In calculating same property NOI growth, NOI for the period is adjusted to remove the impact of lease cancellation fees and straight-line rent revenue in order to highlight the 'cash impact' of contractual rent increases embedded in the underlying lease agreements. Same property NOI also excludes NOI from a limited number of properties undergoing significant de-leasing in preparation for redevelopment or intensification. As a result of the above noted adjustments to NOI, same property NOI has included the similar adjustments to NOI for operational revenue and expenses from ROU assets as a result of certain subleases or leases that are classified as finance leases under IFRS 16, effective January 1, 2019. Same property performance is a meaningful measure of operating performance because it allows management to assess rent growth and leasing activity of its portfolio on a same property basis and the impact of capital investments.

Enterprise Value Enterprise value is a non-GAAP measure calculated at the reporting period date as the sum of RioCan's total debt measured on a proportionate basis, Unit market capitalization and preferred unit market capitalization. This non-GAAP measure is used by RioCan management and the industry as a measure of total value of the REIT based on book value of debt and market price of equity instead of IFRS total assets.

RioCan’s Proportionate ShareDebt metrics, such as those described below, are shown on both an IFRS and a RioCan proportionate basis (as defined below). Unless otherwise indicated, comparative financial information has been updated to reflect the current year's presentation.

All references to “RioCan’s proportionate share” refer to a non-GAAP financial measure representing RioCan’s proportionate interest in the financial position and results of operations of its entire portfolio, taking into account the difference in accounting for joint ventures using proportionate consolidation versus equity accounting. Management considers certain results presented on a proportionate basis to be a meaningful measure because it is consistent with how RioCan and its partners manage the net assets and assess the operating performance of each of its co-owned properties. The Trust currently accounts for its investments in joint ventures and associates using the equity method of accounting.

The remaining definitions outlined below pertain to measures and/or inputs to our financial leverage, coverage ratios and other key metrics that we use to manage capital and to assess our liquidity, borrowing capacity and cost of capital. In our opinion, the following ratios calculated on the basis of the combined continuing and discontinued operations provide a more meaningful measure of financial performance with respect to the periods reported.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) Adjusted EBITDA is a non-GAAP measure that is used by management as an input in several of our debt metrics, providing information with respect to certain financial ratios that we use in measuring our debt profile and assessing our ability to satisfy obligations, including servicing our debt. Adjusted EBITDA is used as an alternative to IFRS net income because it excludes major non-cash items (including, but not limited to, depreciation and amortization expense, unit-based compensation costs, fair value gains and losses on investment properties, and unrealized gains or losses on marketable securities (upon adoption of IFRS 9 which was effective January 1, 2018)), interest costs, current and deferred tax expenses (recoveries), transaction gains and losses on the disposition of investment properties and equity accounted investments, transaction costs and other items that management considers either non-operating in nature or related to the capital cost of our investment properties. For greater clarity, realized gains and losses on the disposition of marketable securities have been and will continue to be included in Adjusted EBITDA for purposes of management assessing the Trust's ongoing ability to satisfy its obligations and service its debt upon adoption of IFRS 9, which was effective January 1, 2018.

Management has also included adjustments for certain subleases or leases that are classified as finance leases under IFRS 16, effective January 1, 2019, consistent with the adjustments in the REALPAC definitions of FFO and ACFO that were recently released in February 2019. The adjustment relates to operational revenue and expenses from ROU assets as a result of certain subleases and leases that were classified as operating leases under IAS 17 and are classified as finance leases under IFRS 16, such that the principal portion of the relevant lease receipt and/or lease payment continues to be reflected in Adjusted EBITDA upon the adoption of IFRS 16, on January 1, 2019.

A reconciliation of IFRS net income to Adjusted EBITDA and the debt metrics that utilize Adjusted EBITDA are presented in the Capital Resources and Liquidity - Debt Metrics section of this MD&A.



Debt to Adjusted EBITDA Debt to Adjusted EBITDA is a non-GAAP measure of our financial leverage calculated on a trailing twelve month basis and is defined as our quarterly average total debt (net of cash and cash equivalents) divided by Adjusted EBITDA. Debt to Adjusted EBITDA is calculated and presented in the Debt Metrics section of this MD&A on both a RioCan's proportionate share basis and using IFRS reported amounts.

Debt Service CoverageDebt service coverage is a non-GAAP measure calculated on a trailing twelve month basis and is defined as Adjusted EBITDA divided by the sum of total interest costs (including interest that has been capitalized) and scheduled mortgage principal amortization. It measures our ability to meet our debt service obligations on a trailing twelve month basis. Debt service coverage is calculated and presented in the Debt Metrics section of this MD&A on both a RioCan's proportionate share basis and using IFRS reported amounts.

Interest Coverage Interest coverage is a non-GAAP measure calculated on a trailing twelve month basis and is defined as Adjusted EBITDA divided by total interest costs (including interest that has been capitalized). It measures our ability to meet our interest cost obligations on a trailing twelve month basis. Interest coverage is calculated and presented in the Debt Metrics section of this MD&A on both a RioCan's proportionate share basis and using IFRS reported amounts.

Fixed Charge Coverage Fixed charge coverage is a non-GAAP measure calculated on a trailing twelve month basis and is defined as Adjusted EBITDA divided by total interest costs (including interest that has been capitalized) and distributions declared and/or paid to Unitholders and preferred unitholders. It measures our ability to meet our interest, Unitholder and preferred unitholder distribution obligations on a trailing twelve month basis. Fixed charge coverage is calculated and presented in the Debt Metrics section of this MD&A on both a RioCan's proportionate share basis and using IFRS reported amounts.

Percentage of NOI Generated from Unencumbered Assets Percentage of NOI generated from unencumbered assets is a non-GAAP measure defined as the annualized in-place NOI from unencumbered assets as of the end of a reporting period divided by total annualized NOI as of the end of the same reporting period and is calculated and presented in the Liquidity section of this MD&A on both a RioCan's proportionate share basis and using IFRS reported amounts. Unencumbered assets are investment properties that have not been pledged as security for debt.

Unencumbered Assets to Unsecured DebtThe unencumbered asset to unsecured indebtedness ratio is a non-GAAP measure calculated as the carrying value of all investment properties that have not been pledged as security for debt divided by total unsecured indebtedness and is calculated and presented in the Liquidity section of this MD&A on both a RioCan's proportionate share basis and using IFRS reported amounts.



RESULTS OF OPERATIONS

Selected Financial and Operational Information

(thousands of dollars, except where otherwisenoted)

Three months ended June 30 Six months ended June 302020 2019 2020 2019

Revenue 269,893 327,574 556,149 651,716Net income (loss) (350,770) 252,972 (247,948) 447,494FFO (i) 109,903 144,704 254,491 286,926ACFO (i) 78,256 139,485 186,688 247,000Weighted average Units outstanding – diluted (in thousands) 317,721 304,636 317,717 304,829

Per unit basis (diluted)Net income (loss) $ (1.10) $ 0.83 $ (0.78) $ 1.47FFO (i) $ 0.35 $ 0.48 $ 0.80 $ 0.94Unitholder distributions $ 0.36 $ 0.36 $ 0.72 $ 0.72

Key RatiosSame property NOI (decline) growth % - overallportfolio (i) (10.8)% 2.2% (4.3)% 1.9%

Payout ratios for the twelve months ended June 30:FFO (i) (iv) 83.2% 77.2% 83.2% 77.2%ACFO (i) (iv) 97.2% 86.7% 97.2% 86.7%

As at June 30, 2020 December 31, 2019 June 30, 2019Total assets 15,070,648 15,188,326 14,579,795Total debt (ii) 6,669,558 6,390,818 6,223,572Debt to total assets (i) (iii) 44.0% 41.7% 42.5%Debt to total assets (RioCan's proportionate share) (i) (iii) 44.4% 42.1% 42.9%Interest coverage (RioCan's proportionate share) (i) (v) 3.30 3.50 3.52Debt to Adjusted EBITDA (RioCan's proportionate share) (i) (v) 8.80 8.06 7.92Weighted average contractual interest rate 3.21% 3.34% 3.44%Unencumbered assets to unsecured debt (RioCan's proportionate

share) (i) 221% 227% 225%% NOI generated from unencumbered assets (RioCan's

proportionate share) (i) 62.0% 58.5% 58.5%

(i) Represents a non-GAAP measure. RioCan's method of calculating non-GAAP measures may differ from other reporting issuers' methods and accordingly may not be comparable. For definitions and the basis of presentation of RioCan's non-GAAP measures, refer to the Non-GAAP Measures section in this MD&A.

(ii) Total debt is defined as the sum of mortgages payable, lines of credit and other bank loans, mortgages on properties held for sale and debentures payable.

(iii) Debt to total assets is a non-GAAP measure and is calculated as total debt less cash and cash equivalents, divided by total assets, excluding cash and cash equivalents.

(iv) Calculated on a trailing twelve month basis. For further discussion of the Trust's FFO and ACFO payout ratios, refer to the FFO and ACFO sections in this MD&A.

(v) Calculated on a trailing twelve month basis. Refer to the Debt Metrics section of this MD&A for further details.



Second Quarter 2020 Financial Highlights Net Income (Loss) Attributable to Unitholders

Three months ended June 30 Six months ended June 30(thousands of dollars, except per unit amounts) 2020 2019 2020 2019Net income (loss) attributable to Unitholders $ (350,770) $ 252,972 $ (247,948) $ 447,494Net income (loss) per unit attributable to Unitholders

(basic) $ (1.10) $ 0.83 $ (0.78) $ 1.47Net income (loss) per unit attributable to Unitholders

(diluted) $ (1.10) $ 0.83 $ (0.78) $ 1.47

Q2 2020Net loss attributable to Unitholders for the three months ended June 30, 2020 was $350.8 million compared to net income of $253.0 million during the same period in 2019, representing a decrease of $603.7 million. Excluding $572.5 million of higher net fair value losses over the comparable period as a result of the pandemic and a $7.8 million higher unrealized fair value increase for marketable securities, net income from operations attributable to Unitholders for the three months ended June 30, 2020 was $100.9 million compared to $140.0 million in the same period in 2019, representing a decrease of $39.0 million or 27.9%.

The decrease of $39.0 million was largely the net effect of the following:

• $19.1 million provision for rent abatements for CECRA-eligible tenants and certain other tenants, as well as estimated bad debts, as a result of the COVID-19 pandemic;

• $9.5 million lower lease cancellation, property management and other fee income;

• $7.6 million lower residential inventory gains due to timing of condominium unit closings;

• $6.0 million in lower realized gains and dividend income on marketable securities; and

• $2.5 million in lower income from our equity-accounted investments primarily from net fair value losses in Q2 2020; partially offset by,

• $2.1 million in lower income tax expense primarily from deferred income tax expense;

• $1.8 million increase in net operating income from residential operations lease up of the Trust's first three residential rental towers; and

• $1.4 million in higher other income primarily from a fee received from the termination of a property forward purchase agreement.

YTD 2020 Net loss attributable to Unitholders for the six months ended June 30, 2020 was $247.9 million compared to net income of $447.5 million in 2019, representing a decrease of $695.4 million. Excluding $660.8 million lower net fair value losses on investment properties over the comparable period and a $0.8 million higher unrealized fair value increase for marketable securities, net income attributable to Unitholders for the six months ended June 30, 2020 was $238.2 million compared to $273.7 million in the same period in 2019, representing a decrease of $35.4 million or 12.9%.

The decrease of $35.4 million was largely the net effect of the following:

• $19.1 million provision in Q2 2020 for rent abatements for CECRA-eligible tenants and certain other tenants, as well as estimated bad debts, as a result of the COVID-19 pandemic;

• $13.4 million lower lease cancellation, property management and other fee income;


• $9.7 million in lower income from our equity-accounted investments primarily due to a transaction gain in Q1 2019;

• $5.2 million in lower realized gains and dividend income on marketable securities; partially offset by,

• $6.9 million increase in commercial NOI in Q1 2020 as a result of same property NOI growth, acquisitions and development completions;

• $6.2 million in higher other income primarily from an investment in e2, a development adjacent to ePlace, and from a fee received upon the termination of a property forward purchase agreement;

• $5.2 million in lower general and administrative expenses primarily due to mark-to-market adjustments for cash-settled unit-based trustee costs and lower consulting and travel and entertainment costs;

• $4.2 million increase in net operating income from residential operations lease up of the Trust's first three residential rental towers; and



• $2.9 million in lower transaction and other costs due to lower volume of dispositions and $0.7 million lower condominium marketing costs.

Operating Income The IFRS operating income for the three and six months ended June 30, 2020 and 2019 is as follows:

Three months ended June 30 Six months ended June 30(thousands of dollars) 2020 2019 2020 2019RevenueRental revenue $ 264,463 $ 272,374 $ 547,908 $ 542,534Residential inventory sales 2,736 47,011 3,145 96,558Property management and other service fees 2,694 8,189 5,096 12,624

$ 269,893 $ 327,574 $ 556,149 $ 651,716Operating costsRental operating costs

Recoverable under tenant leases $ 87,739 $ 93,154 $ 192,809 $ 192,445Non-recoverable costs 24,050 4,862 29,882 9,389

Residential inventory cost of sales 2,565 39,241 2,601 83,618114,354 137,257 225,292 285,452

Operating income $ 155,539 $ 190,317 $ 330,857 $ 366,264

Breakdown of operating income:Commercial $ 153,360 $ 182,382 $ 326,453 $ 353,680Residential 2,179 7,935 4,404 12,584

Operating income $ 155,539 $ 190,317 $ 330,857 $ 366,264

Q2 2020 Operating income for the three months ended June 30, 2020 decreased $34.8 million or 18.3% when compared to the same period in 2019. This decrease consisted of a $29.0 million decrease in operating income from commercial operations and a $5.8 million decrease in operating income from residential operations.

The decrease of $29.0 million from the commercial operations was largely the net effect of the following:


• $5.5 million lower property management and other service fee revenue; and

• $4.0 million lower lease cancellation fees.

The decrease of $5.8 million from residential operations was due to the following:

• $7.6 million lower residential inventory gains due to timing of condominium unit closings; partially offset by,

• $1.8 million increase in net operating income from eCentral, Frontier and Brio as they are being leased up.

YTD 2020Operating income for the six months ended June 30, 2020 decreased $35.4 million or 9.7% when compared to the same period in 2019. This decrease consists of a $27.2 million decrease in operating income from commercial operations and an $8.2 million decrease in operating income from residential operations.

The decrease of $27.2 million from the commercial operations is largely the net effect of the following:



• $5.9 million lower lease cancellation fees; partially offset by,

• $6.9 million increase in total NOI in Q1 2020 as a result of same property NOI growth, acquisitions and development completions.



The decrease of $8.2 million from residential operations is due to the following:

• $12.4 million lower residential inventory gains due to timing of condominium unit closings; partially offset by,

• $4.2 million increase in net operating income from eCentral, Frontier and Brio as they are being leased up.

Net Operating Income (NOI) This NOI section is a sub-section of the MD&A related to IFRS operating income. The NOI for the three and six months ended June 30, 2020 and 2019 is as follows:

Three months ended June 30 Six months ended June 30(thousands of dollars) 2020 2019 2020 2019Operating income (i) $ 155,539 $ 190,317 $ 330,857 $ 366,264Adjusted for the following:

Property management and other service fees (2,694) (8,189) (5,096) (12,624)Residential inventory

Sales (2,736) (47,011) (3,145) (96,558)Cost of sales 2,565 39,241 2,601 83,618

Operational lease revenue and (expenses) from ROUassets (iii) 963 671 2,000 1,267

NOI $ 153,637 $ 175,029 $ 327,217 $ 341,967NOI as a percentage of rental revenue (excluding the

impact of lease cancellation fees) 57.7% 63.4% 59.4% 62.4%

Add: NOI of proportionate share of equity-accounted investmentsRioCan-HBC JV: 3,747 3,253 3,747 3,253

Rental income (excluding straight-line rent) 3,759 3,781 7,597 7,714Straight-line rent 372 429 752 916Property operating costs (674) (674) (1,357) (1,347)Operational lease revenue and (expenses) from ROU

assets (iii) (127) (127) (253) (253)Other (ii) 106 165 55 306

NOI of proportionate share of equity-accountedinvestments $ 3,436 $ 3,574 $ 6,794 $ 7,336

NOI - RioCan's proportionate share $ 157,073 $ 178,603 $ 334,011 $ 349,303

(i) In accordance with IFRS.(ii) Includes NOI from RioCan's equity-accounted investments in Dawson Yonge LP, WhiteCastle New Urban Fund, LP, WhiteCastle New Urban Fund

2, LP, WhiteCastle New Urban Fund 3, LP and WhiteCastle New Urban Fund 4, LP.(iii) The Trust has included adjustments to NOI and same property NOI for certain subleases or leases that are classified as finance leases under

IFRS 16 effective January 1, 2019. Refer to the Non-GAAP Measures section of this MD&A for further details.

NOI as a percentage of rental revenue (excluding the impact of lease cancellation fees) was lower for the three and six months ended June 30, 2020 over the comparable periods primarily due to the $19.1 million provision for rent abatements and bad debts during Q2 2020 as a result of the COVID-19 pandemic. Refer to the Same Property NOI section of this MD&A below for a more detailed breakdown and analysis of NOI.

The following table provides a breakdown of NOI by the commercial and residential portfolios.

Three months ended June 30 Six months ended June 30(thousands of dollars) 2020 2019 2020 2019NOICommercial $ 151,629 $ 174,864 $ 323,357 $ 342,324Residential (i) 2,008 165 3,860 (357)Total NOI $ 153,637 $ 175,029 $ 327,217 $ 341,967

(i) NOI during lease-up period.



Q2 2020Total NOI for the three months ended June 30, 2020 decreased $21.4 million or 12.2% when compared to the same period in 2019. This decrease consisted of a $23.2 million decrease in NOI from commercial operations and a $1.8 million increase in residential NOI from eCentral, Frontier and Brio, which are in lease-up during the comparable periods.

The $23.2 million decrease in NOI from commercial operations was primarily due to a $19.1 million provision for rent abatements and bad debts as a result of the pandemic which led to lower same property NOI, and $4.0 million in lower lease cancellation fees.

YTD 2020Total NOI for the six months ended June 30, 2020 decreased $14.8 million or 4.3% when compared to the same period in 2019. This decrease consisted of a $19.0 million decrease in NOI from commercial operations and a $4.2 million increase in residential NOI from eCentral, Frontier and Brio, which were in lease-up during the comparable periods.

The $19.0 million decrease in NOI from commercial operations was primarily due to a $19.1 million provision for rent abatements and bad debts in Q2 2020 as a result of the pandemic and $5.9 million in lower lease cancellation fees, partially offset by $6.9 million increase in total NOI in Q1 2020 as a result of same property NOI growth, acquisitions and development completions.

Same Property NOISame property NOI for the three and six months ended June 30, 2020 and 2019 is as follows:

Three months ended June 30 Six months ended June 30(thousands of dollars) 2020 2019 2020 2019Same property (i) (iii) $ 139,264 $ 156,170 $ 290,045 $ 303,126NOI from income producing properties:

Acquired (ii) 6,602 1,710 17,348 4,395Disposed (ii) 261 6,449 1,361 13,780

6,863 8,159 18,709 18,175NOI from completed properties under development 1,960 1,675 6,048 4,608Properties under de-leasing for development 1,229 2,443 3,182 4,833Lease cancellation fees 497 4,500 854 6,749Straight-line rent adjustment 1,816 1,917 4,519 4,833NOI from residential rental 2,008 165 3,860 (357)NOI (iii) $ 153,637 $ 175,029 $ 327,217 $ 341,967

Add: NOI of proportionate share of equity-accounted investmentsRioCan-HBC JV: 3,747 3,253

Rental income (excluding straight-line rent) 3,759 3,781 7,597 7,714Straight-line rent 372 429 752 916Property operating costs (674) (674) (1,357) (1,347)Operational lease revenue and (expenses) from ROU assets

(iii) (127) (127) (253) (253)Other (iv) 106 165 55 306

NOI of proportionate share of equity-accounted investments $ 3,436 $ 3,574 $ 6,794 $ 7,336NOI - RioCan's proportionate share $ 157,073 $ 178,603 $ 334,011 $ 349,303

Total straight-line rent - RioCan's proportionate share $ 2,188 $ 2,346 $ 5,271 $ 5,749

(i) Represents a non-GAAP measure. Refer to the same property NOI in the Presentation of Financial Information and Non-GAAP Measures section of this MD&A.

(ii) Includes properties acquired or disposed during the periods being compared. (iii) The Trust has included adjustments to NOI and same property NOI for certain subleases or leases that are classified as finance leases under

IFRS 16 effective January 1, 2019. Refer to the Non-GAAP Measures section of this MD&A for further details.(iv) Includes NOI from RioCan's Canadian equity-accounted investments in Dawson Yonge LP, WhiteCastle New Urban Fund, LP, WhiteCastle New

Urban Fund 2, LP, WhiteCastle New Urban Fund 3, LP and WhiteCastle New Urban Fund 4, LP.



Q2 2020 Same property NOI for the three months ended June 30, 2020 decreased by 10.8% or $16.9 million compared to the same period in 2019 primarily due to the provision for rent abatements and bad debts relating to CECRA eligible tenants and other tenants. Effective this quarter, the Trust will no longer provide the same property NOI split between major market and secondary market assets given that secondary market assets are a small portion of the Trust's overall portfolio.

Including completed properties under development, primarily Bathurst College Centre in Toronto, same property NOI decreased by 10.5% for the Trust's overall commercial portfolio as a result of the pandemic.

YTD 2020Same property NOI for the six months ended June 30, 2020 decreased by 4.3% or $13.1 million compared to the same period in 2019, primarily due to the provisions for rent abatements and bad debts in Q2 2020 as a result of the pandemic.

Including completed properties under development, primarily Bathurst College Centre in Toronto, same property NOI decreased by 3.8% for the Trust's overall commercial portfolio.

Other Income (Loss) The components of other income (loss) are as follows:

Three months ended June 30 Six months ended June 30(thousands of dollars) 2020 2019 2020 2019Interest income $ 3,569 $ 4,163 $ 7,536 $ 7,794Income from equity-accounted investments (755) 1,786 1,131 10,855Fair value (losses) gains on investment properties, net (451,707) 120,824 (475,960) 184,875Investment and other income (loss) 1,470 (1,757) 6,514 4,691Other income (loss) $ (447,423) $ 125,016 $ (460,779) $ 208,215

Q2 2020The lower interest income over the same period in 2019 was mainly due to a $0.6 million decrease in interest related condominium interim occupancy fees.

Income from equity-accounted investments includes our share of the income from the RioCan-HBC joint venture and other equity-accounted investments. For this quarter, RioCan's share of FFO from equity-accounted investments was $5.4 million or $2.9 million higher than the comparative period in 2019, primarily due to a transaction gain from other equity-accounted investments in the quarter. RioCan's share of FFO from the RioCan-HBC joint venture was stable over the comparable periods. For further details on the results of operations of the RioCan-HBC joint venture, refer to the Co-ownership Arrangements section of this MD&A.

As a result of the negative impact of the pandemic on cash flows and capitalization rates, the Trust recognized a fair value losses of $451.7 million on investment properties, representing 3.1% of the Trust's total investment properties valuation at the beginning of the quarter, including assets held for sale. Refer to the Investment Properties section of this MD&A for further discussions on investment property valuations and inherent risks as a result of the pandemic.

Investment and other income primarily includes realized gains on the sale of marketable securities as well as related dividend income, transaction gains (losses) on the sale of investment properties, and changes in unrealized fair value gains (losses) on marketable securities. During the quarter, investment and other income increased $3.2 million over the comparable period in 2019 primarily due to a $7.8 million unrealized fair loss on marketable securities in Q2 2019 and $1.4 million in higher other income primarily from a fee received on the termination of a property forward purchase agreement, offset by $6.0 million in lower realized gains on the sale of marketable securities and dividend income.

YTD 2020The interest income was relatively stable over the comparable period on year to date basis.

RioCan's share of FFO from equity-accounted investments was $8.0 million or $4.8 million lower than the comparative period in 2019, primarily due to lower transaction gains recognized in the the first half of 2020 compared to the same period in 2019. RioCan's share of FFO from the RioCan-HBC joint venture was relatively stable. For further details on the results of operations of the RioCan-HBC joint venture, refer to the Co-ownership Arrangements section of this MD&A.

As a result of the negative impact of the pandemic on cash flows and capitalization rates, the Trust recognized fair value losses of $476.0 million on investment properties, representing 3.3% of the Trust's total investment properties valuation at the beginning of 2020, including assets held for sale. Refer to the Investment Properties section of this MD&A for further details.

Investment and other income increased $1.8 million over the comparable period in 2019 due to $6.2 million in higher other income primarily from an investment in e2, a development adjacent to ePlace, and a fee received from the termination of a property forward purchase agreement, $0.8 million in unrealized fair value loss on marketable securities in 2019, offset by $5.2



million in lower realized gains on the sale of marketable securities and dividend income.

Other Expenses Interest CostsThe components of interest costs are as follows:

Three months ended June 30 Six months ended June 30(thousands of dollars, except where otherwise noted) 2020 2019 2020 2019Total interest $ 55,598 $ 54,033 $ 110,795 $ 107,059Interest costs capitalized (i) (10,028) (7,831) (19,822) (16,068)Net interest $ 45,570 $ 46,202 $ 90,973 $ 90,991

Percentage capitalized 18.0% 14.5% 17.9% 15.0%

(i) Includes amounts capitalized to properties under development and residential inventory.

Total interest costs increased by $1.6 million for the three months ended June 30, 2020 compared to the same period in 2019 primarily due to higher average debt balances, partially offset by a lower average cost of debt. Total interest costs increased by $3.7 million for the six months ended June 30, 2020 compared to the same period in 2019. This was primarily due to higher average debt balances, partially offset by a lower average cost of debt and a $0.9 million IFRS debt modification cost associated with a debt maturity extension in the comparative period in 2019. As at June 30, 2020, the weighted average effective interest rate of our total debt is 3.29% (June 30, 2019 - 3.53%).

Interest capitalized to property under development for the three and six months ended June 30, 2020 increased by $2.2 million and $3.8 million, respectively, from the same periods in 2019 primarily due to continuing progress on existing and new active developments. Interest was capitalized to properties under development and residential inventory at a weighted average effective interest rate of 3.35% and 3.39% for the three and six months ended June 30, 2020 (three and six months ended June 30, 2019 – 3.52% and 3.56%).

As a result of the changes in total interest costs and interest costs capitalized, net interest costs decreased by $0.6 million for the three months ended June 30, 2020 and were stable for the six months ended June 30, 2020 compared to the same periods in 2019.

General and Administrative (G&A)The components of general and administrative expenses are as follows:

Three months ended June 30 Six months ended June 30(thousands of dollars, except where otherwise noted) 2020 2019 2020 2019Non-recoverable salaries and benefits $ 8,808 $ 9,597 $ 19,658 $ 20,141

Capitalized to development and residential inventory (i) (2,171) (2,350) (4,944) (4,860)Internal leasing salaries and benefits (1,648) (1,967) (4,130) (4,377)

Non-recoverable salaries and benefits, net 4,989 5,280 10,584 10,904Unit-based compensation expense 2,076 1,245 3,526 2,743Depreciation and amortization 1,106 1,087 2,202 2,152Other general and administrative expense (ii) 3,146 3,718 2,410 8,128Total general and administrative expense $ 11,317 $ 11,330 $ 18,722 $ 23,927

Total general and administrative expense as a percentageof rental revenue 4.3% 4.2% 3.4% 4.4%

(i) Include salaries and benefits related to properties under development and residential inventory, as well as landlord work. (ii) Primarily includes information technology costs, public company costs, travel, marketing, legal and professional fees, as well as trustee costs.



Q2 2020In response to the COVID-19 pandemic, the Canadian federal government introduced the Canada Emergency Wage Subsidy (CEWS) program which is designed to subsidize 75% of eligible employee wages on a retroactive basis from March 15, 2020 to August 29, 2020.

During the three months ended June 30, 2020 RioCan determined that it qualified for the CEWS program for May 2020 based on prescribed program rules on a cash revenue basis and therefore was deemed to be qualified for June 2020 under the program. As a result, the Trust accrued $3.7 million of CEWS funding due from the federal government as a reduction to gross G&A costs. Approximately 63% of the wage subsidy pertained to recoverable operational salaries and benefits, and as such, the majority of this wage subsidy will be passed back to the tenants through lower recoverable operating costs. The remaining 37% pertained to non-recoverable salaries related to wages for development and internal leasing staff, and general and administrative functions. The net benefit of the CEWS funding to the Trust was $0.6 million in net G&A costs, which benefited the FFO for the quarter.

For three months ended June 30, 2020, G&A expenses were relatively consistent with the prior year comparable period primarily due to:

• $0.6 million decrease in other general and administration expenses mainly from lower travel and entertainment, and professional costs; and

• $0.3 million decrease in net non-recoverable salaries and benefits mainly as a result of the CEWS program; offset by

• $0.8 million increase in unit-based compensation expenses due to a change in the expensing schedule of CEO unit-based compensation.

YTD 2020For the six months ended June 30, 2020, G&A expenses decreased $5.2 million or 21.8% over the comparable period in 2019 primarily due to:

• $5.7 million decrease in other general and administrative expenses mainly as a result of $4.6 million mark-to-market adjustments for cash-settled unit-based trustee costs given the recent market drop as a result of the pandemic, $1.0 million in lower travel and entertainment costs and lower professional fees; and

• $0.3 million decrease in non-recoverable salaries and benefits mainly as a result of CEWS; partially offset by,

• $0.8 million increase in unit-based compensation expense due to a change in the expensing schedule of CEO compensation.

Internal Leasing CostsInternal leasing costs are comprised of the payroll costs of our internal leasing department and related administration costs. For the three and six months ended June 30, 2020, the small changes in internal leasing costs were related to accruals for the CEWS funding for part of Q2 2020 as discussed earlier in this MD&A.

Transaction and Other Costs Transaction and other costs decreased by $0.5 million and $2.9 million for the three and six months ended June 30, 2020, respectively, over the comparable periods. The decreases in both respective periods are primarily due to lower volume of dispositions in 2020. During the three and six months ended June 30, 2020, the Trust incurred $0.5 million of marketing costs in each period (three and six months ended June 30, 2019 - $0.6 million and $1.4 million, respectively). Such marketing costs were primarily related to condominium and townhouse projects and are expensed as incurred before condominium sales revenues are recognized into income.



Funds from Operations (FFO) RioCan’s method of calculating FFO is in compliance with the REALPAC whitepaper issued in February 2019 except that effective January 1, 2018, upon the adoption of IFRS 9, RioCan excludes unrealized fair value gains or losses on marketable securities in its calculation of FFO and continues to include realized gains or losses on marketable securities in FFO. Refer to the Non-GAAP Measures section of this MD&A for a more detailed discussion.

The following table presents a reconciliation of IFRS net income (loss) attributable to Unitholders to FFO from operations:

Three months ended June 30 Six months ended June 30(thousands of dollars, except per unit amounts) 2020 2019 2020 2019Net income (loss) attributable to Unitholders $ (350,770) $ 252,972 $ (247,948) $ 447,494Add back/(Deduct):

Fair value losses (gains), net 451,707 (120,824) 475,960 (184,875)Fair value losses included in equity-accounted investments 5,953 785 6,423 1,956Deferred income tax expense (recovery) (800) 1,000 200 2,280Internal leasing costs 2,219 2,491 5,262 5,396Transaction losses (gains) on investment properties, net (i) 980 (35) 1,002 551Transaction costs on sale of investment properties 323 367 903 2,834Change in unrealized fair value on marketable securities — 7,816 10,219 11,045Current income tax expense (recovery) (548) (295) 736 (593)Operational lease revenue (expenses) from ROU assets (ii) 612 423 1,295 850Operational lease revenue (expenses) from ROU assets in equity-accounted investments (ii) (8) 4 (14) (12)Capitalized interest on equity-accounted investments (iii) 235 — 453 —

FFO $ 109,903 $ 144,704 $ 254,491 $ 286,926

FFO per unit - basic $ 0.35 $ 0.48 $ 0.80 $ 0.94FFO per unit - diluted $ 0.35 $ 0.48 $ 0.80 $ 0.94Weighted average number of Units - basic (in thousands) 317,721 304,512 317,717 304,743Weighted average number of Units - diluted (in thousands) 317,721 304,636 317,717 304,829FFO payout ratio (iv) 83.2% 77.2%

(i) Represents net transaction gains or losses connected to certain investment properties during the period. (ii) In February 2019, REALPAC issued a revision to the February 2018 definition of FFO, effective January 1, 2019, to include adjustments relating to

operational revenue and expenses from ROU assets as a result of certain subleases and leases that were classified as operating leases under IAS 17 and are classified as finance leases under IFRS 16, such that the entire relevant lease receipt and/or lease payment continues to be reflected in FFO upon the adoption of IFRS 16 on January 1, 2019.

(iii) This amount represents the interest capitalized to RioCan's equity-accounted investment in WhiteCastle New Urban Fund, LP, WhiteCastle New Urban Fund 2, LP, WhiteCastle New Urban Fund 3, LP and WhiteCastle New Urban Fund 4, LP. This amount is not capitalized to properties under development under IFRS, but is allowed as an adjustment under REALPAC’s definition of FFO.

(iv) Calculated on a twelve month trailing basis. For a definition of the Trust's Unitholder distributions as a percentage of FFO, refer to the Non-GAAP Measures section of this MD&A.

FFO Highlights

Q2 2020FFO decreased $34.8 million or 24.0% during the quarter when compared to the same period in 2019. On a diluted per unit basis, FFO of $0.35 decreased $0.13 per unit or 27.2% when compared to $0.48 in the same period in 2019.

This decrease was primarily due to the net effect of the following:



• $6.0 million in lower realized gains and dividend income on marketable securities;


• $4.0 million lower lease cancellation fees; partially offset by

• $2.9 million in higher FFO from equity-accounted investments, excluding fair value gains (losses);

• $2.5 million in higher other income primarily from a fee received on the termination of a property forward purchase



agreement; and

• $1.8 million increase in net operating income from residential operations lease up of the Trust's first three residential rental towers.

YTD 2020FFO for the six months ended June 30, 2020 decreased $32.4 million or 11.3% when compared to the same period in 2019. On a diluted per unit basis, FFO of $0.80 decreased $0.14 per unit or 14.9% when compared to $0.94 in the same period in 2019.

This decrease was primarily due to the net effect of the following:



• $7.5 million in lower property management and other service fee revenue;

• $5.9 million lower lease cancellation fees;

• $5.2 million in lower realized gains and dividend income on marketable securities; and

• $4.8 million in lower FFO from equity-accounted investments, excluding fair value gains (losses), primarily due to a transaction gain in Q1 2019; partially offset by,

• $6.9 million increase in total NOI in Q1 2020 as a result of same property NOI growth, acquisitions and development completions;

• $6.6 million in higher other income primarily from an investment in e2, a development adjacent to ePlace and from a fee received from the termination of a property forward purchase agreement;

• $5.2 million in lower general and administrative expenses primarily due to $4.6 million mark-to-market adjustments for cash-settled unit-based trustee costs given the recent market drop as a result of the pandemic, and $1.0 million in lower travel and entertainment expenses; and


FFO Payout RatioPrimarily as a result of the impact of COVID-19, the FFO payout ratio increased by 6.0% to 83.2% for the twelve month period ended June 30, 2020.



Adjusted Cashflow from Operations (ACFO) RioCan’s method of calculating ACFO is in accordance with the REALPAC whitepaper issued in February 2019. The following table presents a reconciliation of cash provided by operating activities to ACFO:

Three months ended June 30 Six months ended June 30(thousands of dollars) 2020 2019 2020 2019Cash provided by operating activities $ 122,015 $ 84,756 $ 238,817 $ 163,992Add back/(Deduct):

Adjustments to working capital changes for ACFO (i) (37,002) 56,310 (51,353) 71,004Distributions received from equity-accounted investments 2,447 1,783 4,222 12,184Transaction costs on sale of investment properties 323 367 903 2,834Normalized capital expenditures (ii):

Leasing commissions and tenant improvements (4,000) (4,000) (8,000) (8,000)Maintenance capital expenditures recoverable from tenants (4,500) (4,500) (9,000) (9,000)Maintenance capital expenditures not recoverable from tenants (1,500) (1,500) (3,000) (3,000)

Realized gain on disposition of marketable securities — 5,681 11,097 15,733Internal leasing costs related to development properties 409 460 971 996Taxes related to non-operating activities (iii) (548) (295) 736 (593)Operational lease revenue and expenses from ROU assets (iv) 612 423 1,295 850

ACFO $ 78,256 $ 139,485 $ 186,688 $ 247,000

(i) Includes working capital changes that, in management’s view and based on the REALPAC February 2019 whitepaper, are not indicative of sustainable cash flow available for distribution. Examples include, but are not limited to, working capital changes relating to residential inventory and developments, prepaid realty taxes and insurance, interest payable and interest receivable, sales and other indirect taxes payable to or receivable from applicable governments, income taxes and transaction cost accruals relating to acquisitions and dispositions of investment properties. Working capital changes related to payment deferrals that are implemented during COVID-19 pandemic are not excluded from ACFO as they are intended to offset the short-term increase in net contractual rent receivables, which are not excluded in the ACFO either.

(ii) Normalized capital expenditures are management's estimate of ongoing capital investment required to maintain the condition of the physical property and current rental revenues. Refer to the Non-GAAP Measures section of this MD&A for further discussion.

(iii) Includes income tax expenses (recoveries) associated with the sale of our U.S. portfolio, which have been deducted in determining cash provided by (used in) operating activities from operations. This adjustment effectively excludes this item's impact in ACFO based on the REALPAC February 2019 whitepaper.

(iv) In February 2019, REALPAC issued a revision to the February 2018 definition of ACFO, effective January 1, 2019, to include adjustments relating to operational revenue and expenses from ROU assets from certain subleases and leases that were classified as operating leases under IAS 17, and are classified as finance leases under IFRS 16, such that the entire relevant lease receipt and/or lease payment continues to be reflected in ACFO upon the adoption of IFRS 16 on January 1, 2019.

The following table represents a breakdown of adjustments for working capital changes used in the calculation of ACFO. These are working capital changes that, in management’s view and based on the REALPAC February 2019 whitepaper, are not indicative of sustainable cash flow available for distribution:

Three months ended June 30 Six months ended June 30(thousands of dollars) 2020 2019 2020 2019Working capital changes related to:

Residential inventory $ (49,619) $ 25,210 $ (59,917) $ 44,617Interest expense, net of interest income (991) 8,615 (10,430) 1,954Realty taxes and insurance 19,326 19,172 23,810 23,560Transaction related costs (i) (1,337) 706 (2,051) 4,158Other (ii) (4,381) 2,607 (2,765) (3,285)

Adjustments to working capital changes for ACFO $ (37,002) $ 56,310 $ (51,353) $ 71,004

(i) Represents costs associated with dispositions and acquisitions. (ii) Includes working capital changes related to sales and other indirect taxes payable to or receivable from applicable governments, other

investments, and income tax payments (accruals) relating to the sale of our U.S portfolio in May 2016.



As ACFO starts with cash provided by operating activities, the adjustments outlined neutralize the above working capital changes to ACFO. The net impact to ACFO of working capital changes is determined as follows:

Three months ended June 30 Six months ended June 30(thousands of dollars) 2020 2019 2020 2019Adjustments for other changes in working capital items asreported on the consolidated statements of cash flows $ 18,211 $ (49,463) $ 9,580 $ (86,331)Add: Adjustments to working capital changes for ACFO (37,002) 56,310 (51,353) 71,004Net working capital increase (decrease) included inACFO $ (18,791) $ 6,847 $ (41,773) $ (15,327)

ACFO HighlightsQ2 2020 ACFO for the three months ended June 30, 2020 decreased by $61.2 million or 43.9% primarily due to the following factors:

• $25.6 million higher net working capital decrease relating to property operations as a result of the pandemic;

• $19.1 million provision in Q2 2020 for pandemic-related rent abatements for CECRA-eligible tenants and certain other tenants, as well as estimated bad debts;


• $6.0 million in lower realized gains and dividend income on marketable securities;


• $4.0 million lower lease cancellation fees; partially offset by

• $2.5 million in higher other income primarily from a fee received from the termination of a property forward purchase agreement;

• $1.8 million increase in net operating income from residential operations lease up of the Trust's first three residential rental towers;

• $1.0 million in lower general and administrative expenses (excluding non-cash depreciation and amortization, and non-cash compensation costs) primarily from lower travel and entertainment costs and professional fees;

• $0.7 million increase in cash distributions received from equity accounted investments; and

• $0.5 million in lower marketing costs for new residential inventory projects.

YTD 2020ACFO for the six months ended June 30, 2020 was $186.7 million, decreased $60.3 million or 24.4% compared to the same period in 2019 primarily due to the following factors:

• $26.4 million in higher net working capital decrease relating to property operations as a result of the pandemic;

• $19.1 million pandemic related provision in Q2 2020 for rent abatements for CECRA-eligible tenants and certain other tenants, as well as estimated bad debts;


• $8.0 million decrease in cash distributions received from equity-accounted investments primarily due to a transaction gain in Q1 2019;

• $7.5 million in lower property management and other service fee revenue;

• $5.9 million lower lease cancellation fees; and

• $5.2 million in lower realized gains and dividends on marketable securities; partially offset by,

• $6.9 million increase in total NOI in Q1 2020 as a result of same property NOI growth, acquisitions and development completions;

• $6.6 million in lower general and administrative expenses (excluding non-cash depreciation and amortization, and non-cash compensation costs) primarily due to mark-to-market adjustments for cash-settled unit-based trustee costs given the recent market drop as a result of the pandemic, lower travel and entertainment costs and lower professional fees;

• $6.6 million in higher other income primarily from an investment in e2, a development adjacent to ePlace and from the termination of a purchase agreement; and




The following tables present RioCan's ACFO payout ratio for the twelve months ended June 30, 2020 and 2019:

(thousands of dollars)Twelve months ended

June 30, 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019ACFO $ 465,103 $ 78,256 $ 108,430 $ 133,553 $ 144,864Distributions paid 452,267 114,387 114,371 113,285 110,224ACFO payout ratio 97.2%Net working capital increase (decrease)included in ACFO $ (27,376) $ (18,791) $ (22,982) $ (187) $ 14,584

(thousands of dollars)Twelve months ended

June 30, 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018ACFO $ 510,077 $ 139,485 $ 107,515 $ 135,089 $ 127,988Distributions paid 442,180 109,598 109,846 110,366 112,370ACFO payout ratio 86.7%Net working capital increase (decrease)included in ACFO $ (9,097) $ 6,808 $ (22,214) $ 11,720 $ (5,411)

The ACFO payout ratio for the twelve month period ended June 30, 2020 is 97.2%, 12.2% higher than prior quarter primarily as a result of the pandemic and its impact on cash from operating activities.

As previously discussed, the REALPAC ACFO definition includes net working capital fluctuations relating to recurring operating activities. In RioCan management's view, this tends to introduce greater volatility in the ACFO payout ratio. Management, therefore, also uses the FFO payout ratio in addition to the ACFO payout ratio in assessing its distribution paying capacity because FFO is not subject to such working capital fluctuations.



OPERATIONS Property Mix The Trust operates a variety of income producing property formats or classes to best serve the communities in which they operate. The Trust has identified the following four major categories of property classes:

Category Description

Mixed-Use / UrbanAssets with more than one type of use (retail, office, residential mixed-use assets) located in majormarkets and non mixed-use assets located in high density urban areas. Examples of these propertiesinclude: Yonge Eglinton Centre and Yonge Sheppard Centre.

Grocery Anchored Centre Assets with a grocery anchor tenant or sites adjacent to shadow grocery anchors (i). Examples of theseproperties include: Sage Hills Crossing and RioCan Scarborough Centre.

Open Air Centre Assets with little or no enclosed component and do not have a grocery store anchor. Examples of theseproperties include: Grandview Corners and RioCan Colossus Centre.

Enclosed Assets with large enclosed shopping and common areas. Examples of these properties include:Burlington Centre and Oakville Place.

(i) A shadow anchor is a retail store that generates a great deal of traffic and attracts business to a property of the Trust but the underlying property / land for this retail store is not owned by the Trust.

RioCan's portfolio of properties as at June 30, 2020 consisted of the following:

At RioCan's Interest Number ofincome

producingproperties

Incomeproducing

properties NLA % of NLA% of annualized

rental revenue(thousands of sq. ft., except where otherwisenoted)Mixed-Use / Urban (i) 31 5,380 14.7% 22.0%Grocery Anchored Centre 95 16,848 46.2% 42.3%Open Air Centre 69 10,935 30.0% 26.5%Enclosed 11 3,315 9.1% 9.2%Total Portfolio (i) 206 36,478 100.0% 100.0%

(i) Mixed-Use / Urban includes approximately 0.5 million square feet of residential rental NLA and the corresponding annualized residential rental revenue.

As of June 30, 2020, 90.9% of RioCan's total NLA and 90.8% of annualized rental revenue is from Grocery Anchored, Mixed-Use / Urban and Open Air centres while Enclosed centres represent 9.1% and 9.2% of its total portfolio for each metric, respectively. In comparison to the prior quarter, Mixed-Use / Urban centres and Grocery Anchored centres each increased their weightings by 0.6% to 22.0% and 42.3%, respectively, based on annualized rental revenue as of June 30, 2020. The Trust's Enclosed centres dropped further to 9.2% as of the current quarter end.

Overall, the majority of the Trust's portfolio is comprised of formats that are attractive from a tenanting perspective, more resilient to changes in economic cycles and evolving retail trends. The shift in the Trust's portfolio to become more urban, mixed-use, and necessity based and fewer enclosed centres forms a solid foundation for organic growth post the pandemic.

Commercial (Retail and Office)Annualized Rental Revenue from Six Major Markets and GTA

As at June 30, 2020 June 30, 2019Six Major Markets (i)

% of total annualized rental revenue 90.1% 87.8%% of total NLA 87.1% 83.8%

GTA (ii)% of total annualized rental revenue 52.1% 48.6%% of total NLA 45.9% 43.2%

(i) The six Canadian major markets include the following: Calgary, AB; Edmonton, AB; Montreal, QC; Ottawa, ON (includes Gatineau region); Greater Toronto Area (GTA), ON; and Vancouver, BC.

(ii) The GTA extends north to Barrie, ON; west to Hamilton, ON; and east to Oshawa, ON.



As of June 30, 2020, the Trust generated 90.1% and 52.1% of total annualized rental revenue from the six major markets and the GTA, respectively. Since Q4 2019, the Trust has achieved its strategic milestones of greater than 90% and 50% for the two metrics, respectively. The 110 basis point increase in the GTA presence from the prior quarter was primarily due to the timing of certain revenues and its impact on annualized revenues as of each quarter end.

The percentage of annualized rental revenue from the six major markets and the GTA increased 230 and 350 basis points, respectively, as of June 30, 2020 when compared to June 30, 2019. These increases were primarily due to $310.8 million of secondary market asset dispositions, 306,000 square feet of development completions and $571.0 million of strategic acquisitions of income producing properties since June 30, 2019.

NLA and Occupancy by Markets

The NLA for income producing properties, committed (tenants that have signed leases) and in-place (tenants that are in possession of their space) occupancy rates for our commercial property portfolio at RioCan’s interest are as follows:

At RioCan’s Interest

NLA for Income Producing Properties

(thousands of sq.ft.)Committed Occupancy In-Place Occupancy

As at June 30 2020 2019 2020 2019 2020 2019Commercial Six Major Markets: Greater Toronto Area (i) 16,516 15,949 97.3% 97.9% 96.8% 96.8% Ottawa (ii) 4,702 4,817 97.9% 98.8% 97.7% 98.4% Calgary 3,528 3,422 96.2% 98.8% 96.1% 97.9% Montreal 2,577 2,951 91.9% 93.3% 91.8% 93.3% Edmonton 2,227 2,010 95.8% 97.3% 95.7% 96.8% Vancouver (iii) 1,790 1,790 99.6% 99.6% 99.6% 98.0%Total Commercial Six Major Markets 31,340 30,939 96.8% 97.8% 96.5% 96.9%Total Commercial Secondary Markets 4,637 5,992 93.4% 93.9% 92.6% 92.3%Total Commercial 35,977 36,931 96.4% 97.1% 96.0% 96.1%

(i) Area extends north to Barrie, Ontario; west to Hamilton, Ontario; and east to Oshawa, Ontario.(ii) Area extends from Nepean and Vanier to Gatineau, Quebec.(iii) Area extends east to Abbotsford, British Columbia.

As at June 30, 2020, NLA at RioCan's interest was 35,977,000 square feet compared to 36,931,000 square feet as at June 30, 2019. This decrease of 954,000 square feet of NLA from the prior year same quarter was primarily due to dispositions net of strategic acquisitions and development completions since Q2 2019.

As at June 30, 2020, the gap between committed and in-place occupancies narrowed to 40 basis points. When compared to the previous quarter, committed and in-place occupancy for the overall portfolio decreased by 40 and 30 basis points, respectively, primarily as a result of the pandemic.



Future Lease Commencements (Commercial Only)Subsequent to Q2 2020, we expect to generate approximately $5.0 million of annualized net incremental rent under IFRS from tenants that have signed leases but have not taken possession of the space as of June 30, 2020. This includes base rent, operating cost recoveries and straight-line rent, but excludes operating costs capitalized while a property is under redevelopment.

An IFRS rent commencement timeline for the NLA on our properties (at RioCan's interest) that have been leased but are not currently in possession as at June 30, 2020 is as follows:

(in thousands, except percentage amounts)

At RioCan's Interest Annualized Total Q3 2020 Q4 2020 Q1 2021 Q2 2021+Square feet:

NLA commencing (i) 137 85 31 20 1Cumulative NLA commencing (i) 137 85 116 136 137% of NLA commencing 62.0% 22.6% 14.7% 0.7%Cumulative % total 62.0% 84.6% 99.3% 100.0%

Average net incremental IFRS rent:Monthly net incremental IFRS rent commencing (ii) $ 416 $ 249 $ 89 $ 72 $ 6Cumulative monthly net incremental IFRS rent commencing $ 4,992 $ 416 $ 249 $ 338 $ 410 $ 416% of net incremental IFRS rent for NLA commencing 59.9% 21.4% 17.3% 1.4%Cumulative % total net incremental IFRS rent commencing 59.9% 81.3% 98.6% 100.0%

(i) Includes NLA expected to be completed from expansion and redevelopment projects.(ii) Based on monthly IFRS rental revenue.

Average Net Rent (Commercial Only)The portfolio weighted average net rent per occupied square foot for our income producing properties is as follows:

As at June 30 2020 2019Average net rent per occupied square foot (i) $ 19.75 $ 19.26

(i) Net rent is primarily contractual base rent pursuant to tenant leases.

The 2.5% increase in average net rent per occupied square foot from $19.26 as of June 30, 2019 to $19.75 as of June 30, 2020 reflects the improvement in the quality of the Trust's portfolio from the disposition of secondary market assets and strong NOI from completed developments.

New Leasing Activity (Commercial Only)

Three months ended June 30 Six months ended June 30(in thousands, except per sqft amounts) 2020 2019 2020 2019New Leasing NLA at 100% 109 369 481 809Average net rent per square foot (i) $ 25.83 $ 24.11 $ 29.90 $ 22.95

(i) Net rent is primarily contractual base rent pursuant to tenant leases. Includes new square footage that has not previously been tenanted and existing square footage leased to a new tenant.

Average net rent per square foot on new leasing activity over a period is impacted by the types, sizes and locations of the spaces available for new leasing over the comparable periods. New leasing NLA declined over the same period in the prior year as a result of the COVID-19 pandemic. However, the 109,000 square feet of new leases during the quarter amid the pandemic are encouraging as they are comprised of across a variety of tenants ranging from grocers, specialty retailers to essential and regular personal services. Also, the average net rent per square foot trended higher when compared to the same period last year. The $1.72 and $6.95 increases in average net rent per square foot for the three and six months ended June 30, 2020, respectively over the comparable period were primarily because of new leases signed on our development projects, which tend to have higher rents given their urban major market locations.



Renewal Leasing Activity (Commercial Only)A summary of our 2020 and 2019 commercial renewal leasing activity is as follows:

Three months ended June 30 Six months ended June 30(in thousands, except percentage and per sqft amounts) 2020 2019 2020 2019Square feet renewed at market rental rates (at 100%) 448 890 900 1,603Square feet renewed at fixed rental rates (at 100%) 316 270 568 818Total square feet renewed (at 100%) 765 1,160 1,467 2,421Average net rent per square foot (i) $ 17.35 $ 19.44 $ 19.95 $ 19.79Renewal leasing spread in average net rent (ii) $ 0.77 $ 1.91 $ 0.95 $ 1.71Renewal leasing spread percentage (iii) 4.6% 10.9% 5.0% 9.4%Retention ratio 89.4% 94.2% 86.3% 89.9%

(i) Net rent is primarily contractual base rent pursuant to tenant leases.(ii) Represents increase in average net rent per square foot for renewal leasing.(iii) Represents percentage increase in average net rent per square foot for renewal leasing.

During the three months ended June 30, 2020 the retention ratio of 89.4% increased by 630 basis points from Q1 2020 notwithstanding the pandemic. Major market retention ratio was 87.9% for the quarter. For the six months ended June 30, 2020, total portfolio retention ratio was 86.3%with major market retention ratio at 85.0%.

During the three months ended June 30, 2020, the renewal leasing spread of $0.77 per square foot or 4.6% was primarily driven by a 5.9% renewal spread increase in major markets. The major market renewal spread remained on pace with the first quarter of 2020 despite the pandemic. During the six months ended June 30, 2020, the renewal leasing spread of $0.95 or 5.0% was also primarily driven by a 5.9% renewal spread increase in major markets.

Blended Leasing Spread (Commercial Only)


Blended leasing spread for both new and renewal leasing (i) 5.8% 11.3% 5.7% 11.0%

(i) The blended leasing spread is the weighted average net rent leasing spread for both renewal leasing as discussed in the previous section of this MD&A and new leasing.

For new leasing, the spread is calculated based on the percentage change in net rent between new leases and the respective previous leases for units that have been vacant for two years or less as of the respective comparable period end dates. In other words, the new leasing spread excludes any space that has not previously been tenanted (such as a newly completed development) or has been vacant for longer than two years. The quarterly new leasing spread is calculated for properties owned by the Trust as of each quarter end date. The annual leasing spread is the weighted average of quarterly new leasing spreads as reported over the four quarters of a year.

The blended leasing spread in Q2 2020 exceeded the renewal leasing spread in the quarter as a result of strong new leasing, particularly in the major markets, and improved from the previous quarter despite the pandemic. For major market properties, the blended leasing spread was 7.3% and 6.8% for the three and six months ended June 30, 2020.



Retailer Restructuring FilingsSince the Trust's Q1 2020 report, the number of retail filings for protection under the Companies' Creditors Arrangement Act (CCAA) in Canada or Chapter 11 in the U.S., have been accelerated by the pandemic. Protection under these filings allows companies to restructure their affairs during a stay period and therefore, does not necessarily result in the closure of store locations. RioCan is entitled to gross rents during the stay period until a lease is disclaimed or terminated.

As of July 28, 2020, RioCan's exposure to tenants with restructuring filings since March 31, 2020 is summarized in the table below, as well as RioCan's exposure based on confirmed closures by tenants:

TenantPercentage of annualized total

rental revenueConfirmed Closures as % of

Annualized RevenueGlobo Shoes (i) 0.2% —%L' Aubainerie 0.1% —%Reitmans (ii) 0.9% 0.3%Stern Group (iii) 0.2% 0.1%GNC 0.1% —%Others (iv) 0.2% 0.1%Total tenant restructuring filings since March 31, 2020 (as of July 28, 2020) 1.7% 0.5%

(i) Globo Shoes includes Aldo, Call It Spring and Globo.(ii) Reitmans includes Penningtons, RW&CO., Addition Elle and Thyme Maternity.(iii) Stern Group includes RICKI'S, Cleo and Bootlegger. (iv) Others include Anna Bella, Ascena Group Inc., Brooks Brothers, Chuck E. Cheese, Davids Tea, Dr. Bernstein Health and Diet Clinic, Henry's,

Infinity Dental, Jack & Jones, J. Crew, Lucky Brand, Mendocino and Swimco.

For any other retailers that have filed for CCAA or Chapter 11 since March 31, 2020 but are not included in the above table, the Trust has no exposure to them.

Lease Expiries (Commercial Only)Lease expiries for the next five years are as follows:

(in thousands, except per sqft and percentage amounts) For the years ending

At RioCan's interestTotal

IPP NLA 2020(i) 2021 2022 2023 2024Square feet 35,977 1,344 4,171 3,683 4,105 4,667Square feet expiring/Portfolio NLA 3.7% 11.6% 10.2% 11.4% 13.0%Average net rent per occupied square foot $ 22.46 $ 19.38 $ 21.26 $ 21.05 $ 21.59

(i) Lease expiries for the remaining six months of 2020.

Contractual Rent Increases (Commercial Only)Certain of our leases provide periodic increases in rates during the lease terms which contribute to growth in same property NOI. Contractual rent increases in each year for the next five years for our properties are as follows:

(thousands of dollars) For the years endingAt RioCan's interest 2020 (i) 2021 2022 2023 2024Contractual rent increases $ 4,363 $ 7,337 $ 6,188 $ 5,746 $ 4,306

(i) Increase for the remaining six months of 2020.

Above contractual rent increases are based on existing leases as of June 30, 2020 and are on a year-over-year incremental increase basis. The contractual rent increases are higher in the remainder of 2020 and 2021 as they reflect more market rent changes as a result of new leasing and renewals completed in 2020. The above schedule is on a cash rent basis and takes into account the timing of contractual rent increases year-over-year (in other words, not on an annualized basis but based on a year-over-year cash rent change basis).



Tenant Profile (Retail Only)

As discussed under the Outlook section of this MD&A, RioCan is well aware that the Canadian retail environment has been evolving. The Trust is adapting to the ever changing retail landscape and incorporates future trends and growth patterns in its strategy and operations. The Trust has been increasing its major market focus while evolving its tenant mix to better suit community needs, make its tenant mix more resilient to the impact of e-commerce and increase the growth profile of its portfolio. It has been reducing its tenant mix in department stores, apparel, entertainment and hobby retailers, and increasing its tenant mix in the sectors that have demonstrated growth and resilience such as grocery, pharmacy, personal services, specialty retailers and value retailers. RioCan will continue evaluating its tenant mix post the COVID-19 health crisis and adapting its tenant mix to the ever changing consumer trends while continue to increase its necessity-based retail and diversifying more into residential and office real estate.

As of June 30, 2020, 75.2% of the Trust's annualized net rental revenue was derived from necessity-based and service-oriented tenants as illustrated in the chart below, which represented a 120 basis point increase over the comparable 2019 quarter and a 70 basis point increase over the 2019 year end.

(i) Excludes Home Outfitters (included in Home and Furniture), Saks Off 5th (included in Value Retailers) and Lawrence Allen Centre's HBC office. (ii) All trademarks and registered trademarks in the chart above are the property of their respective owners.



Top 30 Commercial TenantsWe strive to reduce our exposure to rental revenue risk in our portfolio through geographical diversification, staggered lease maturities, growing our major market portfolio, diversifying revenue sources, avoiding dependence on any single tenant by ensuring no individual tenant contributes a significant percentage of our gross revenue and ensuring a considerable portion of rental revenue is earned from national and anchor tenants, as well as investments in residential developments.

At June 30, 2020, RioCan’s 30 largest tenants measured by annualized gross rental revenue have the following profile:

Rank Tenant name

Percentage ofannualizedtotal rental

revenue

Number of

locations

NLA(thousands of

sq. ft.)

Percentageof total

IPP NLA

Weightedaverage

remaining lease term (years) (i)

1 Canadian Tire Corporation (ii) 5.3% 75 2,073 5.8% 6.82 Loblaws/Shoppers Drug Mart (iii) 5.0% 66 1,794 5.0% 8.43 The TJX Companies, Inc.(iv) 4.9% 70 2,010 5.6% 6.14 Cineplex (v) 3.9% 23 1,265 3.5% 7.05 Metro/Jean Coutu (vi) 2.9% 38 1,431 4.0% 8.16 Walmart 2.8% 16 2,069 5.8% 8.37 Montana's, Harvey's, Swiss Chalet, Kelseys (vii) 1.7% 85 393 1.1% 6.88 Dollarama 1.7% 65 619 1.7% 7.09 Sobeys/Safeway 1.7% 20 727 2.0% 9.010 GoodLife Fitness 1.5% 26 565 1.6% 10.611 Michaels 1.5% 24 519 1.4% 6.112 Bank Of Montreal 1.5% 35 344 1.0% 4.813 Lowe's 1.5% 9 1,154 3.2% 8.914 Staples/Business Depot 1.4% 27 596 1.7% 5.515 TD Bank 1.4% 47 261 0.7% 9.116 Petsmart 1.3% 26 409 1.1% 5.417 Chapters/Indigo 1.0% 17 288 0.8% 8.918 Reitmans (viii) 0.9% 42 228 0.6% 3.219 LA Fitness 0.8% 8 318 0.9% 12.720 Bed Bath & Beyond 0.8% 13 301 0.8% 6.821 Best Buy 0.8% 12 262 0.7% 3.322 DSW/The Shoe Company 0.7% 29 222 0.6% 5.323 Leon's/The Brick 0.7% 11 269 0.7% 4.524 The Bank Of Nova Scotia 0.7% 27 135 0.4% 5.225 Tim Hortons/Burger King/Popeyes 0.7% 58 144 0.4% 7.326 The Bay/Home Outfitters (ix) 0.7% 8 441 1.2% 12.027 Liquor Control Board of Ontario (LCBO) 0.7% 18 171 0.5% 9.728 Old Navy 0.7% 21 203 0.6% 5.229 Value Village 0.7% 12 287 0.8% 7.530 Canadian Imperial Bank of Commerce 0.6% 19 108 0.3% 5.4

50.5% 947 19,606 54.5% 7.3

(i) Weighted average remaining lease term based on annualized gross rental revenue.(ii) Canadian Tire Corporation includes Canadian Tire, PartSource, Mark’s, Sport Chek, Sports Experts, National Sports, Atmosphere and Party City. (iii) Loblaws/Shoppers Drug Mart includes No Frills, Fortinos, Zehrs Markets, Joe Fresh, Dominion and Maxi.(iv) The TJX Companies, Inc. includes Winners, HomeSense and Marshalls.(v) Cineplex includes Galaxy Cinemas.(vi) Metro/Jean Coutu includes Super C, Loeb, and Food Basics.(vii) Recipe Unlimited (formerly Cara Operations Limited) includes Montana's, Harvey's, Swiss Chalet, Kelseys, The Keg, Milestones, East Side

Mario's among others. (viii) Reitmans includes Penningtons, RW&CO., Addition Elle and Thyme Maternity. The latter two banners (Addition Elle and Thyme Maternity)

account for 0.3% of annualized revenues.(ix) Excludes RioCan's proportionate share of the equity-accounted investment in the RioCan-HBC Joint Venture which owns ten HBC wholly-owned

properties and HBC's 50% interest in the two properties that are 50/50 owned by RioCan and HBC. Includes Home Outfitters, Saks Off 5th and Lawrence Allen Centre's HBC office.



Residential Rental RioCan Living is RioCan's residential brand which includes purpose-built residential rental buildings developed by RioCan near or on Canada’s prominent transit corridors. The locations, designs, amenities, community-focused event programming, professional management and access to strong retail offerings are all key strengths of RioCan Living. While it is difficult to project the longer term impact of the current worldwide pandemic on immigration to Canada and its corresponding impact on Canadian population growth, the economy and housing market, RioCan believes in the long-term value creation and risk mitigation benefits of its residential strategy.

The Trust currently has three completed projects and seven projects under active development, which will deliver a total of 2,700 rental units (at 100%). None of the Trust's residential units (other than the rental replacement units, which are rented at prescribed rents) are subject to rent controls under the current rent control legislation. For the three and six months ended June 30, 2020, the total residential rental portfolio generated $2.0 million and $3.9 million, respectively, in net operating income. For the second quarter of 2020, RioCan has received approximately 99.3% of the residential rents at eCentral in Toronto and Frontier in Ottawa as of July 28, 2020. As a temporary measure during COVID-19, rent increases have been suspended until October 2020.

• eCentral (Yonge Eglinton Northeast Corner, Toronto) - As of July 28, 2020, 439 units (94.2%) at the 466-unit eCentral have been leased, including 377 market rent units and 62 rental replacement units, averaging $3.92 rent per square foot per month for the market rent units. As of June 30, 2020, 425 units (91.2%) were occupied including 366 market rent units leased at an average monthly rent of $3.93 per square foot and 59 rental replacement units leased at an average monthly rent of $2.24 per square foot. eCentral lease-up has been slowed by the current COVID-19 pandemic but is still expected to be stabilized in the summer to fall of 2020.

• Frontier (Gloucester, Ottawa) - This property has been stabilized since Q1 2020. As of July 28, 2020, 224 units (98.7%) of the property are leased at an average monthly rent of $2.50 per square foot. As of June 30, 2020, 221 units (97.4%) were occupied at an average monthly rent of $2.49 per square foot. Total units at this Phase One building include one guest suite which is excluded in the occupancy percentage calculation for the property.

• Brio (Brentwood Village, Calgary) - The Brio residential tower is a 163-unit, 12-storey building located on a discrete portion of RioCan's Brentwood Village Shopping Centre in Calgary, Alberta. Since leasing commenced on April 1, 2020, 51 units (31.5%) have been leased at an average monthly rent of $2.51 per square foot as of July 28, 2020. Despite being launched in the midst of the COVID-19 pandemic and a prolonged oil crisis, the leasing progress at Brio highlights the resilience of well-located and well-designed buildings, as well as the management expertise of RioCan and its partner Boardwalk REIT. As of June 30, 2020, 19 units (11.7%) were occupied at an average monthly rent of $2.52 per square foot. Total units include one guest suite which is excluded in the occupancy percentage calculation for the property.

Average monthly rent per square foot is calculated as monthly gross rents (excluding utilities which are paid by tenants) from leased residential units divided by the total number of net leasable square feet for these leased residential units. It does not include revenue from parking or other sources. RioCan Living tenants generally pay their own utility bills.

Refer to the Business Overview, Outlook and Strategy, and Risks and Uncertainties sections of this MD&A for further discussions on the impact of the pandemic on the Trust's business.



ASSET PROFILE Investment PropertiesRefer to Note 3 of the Condensed Consolidated Financial Statements for the change in consolidated IFRS carrying values of our income properties.

Valuation Processes Internal valuations

RioCan measures the vast majority of its investment properties, including co-owned properties, using valuations prepared by its internal valuation team. This team consists of individuals who are knowledgeable and have specialized industry experience in real estate valuations and report directly to a senior member of the Trust's management. The internal valuation team's processes and results are reviewed and approved by the Valuations Committee on a quarterly basis.

The Trust's Valuations Committee is responsible for approving any fair value changes to the investment properties and consists of senior management of the Trust including the President & Chief Operating Officer, the Senior Vice President & Chief Financial Officer, and other executive members.

External valuations

Depending on the property asset type and location, management may opt to obtain independent third party valuations from firms that employ experienced valuation professionals having the required qualifications in property appraisals for purposes of adopting such appraised values in the case of land parcels or assessing the reasonableness of its internal investment property valuations.

During the six months ended June 30, 2020, the Trust obtained a total of 12 external property appraisals (without any appraisals for vacant land parcels), which supported an IFRS fair value of approximately $1.1 billion, or 8.0% of the Trust's investment property portfolio as of June 30, 2020. Our mandate is to conduct an average of six external appraisals on investment properties on a quarterly basis or 24 investment properties a year, plus a selection of external land valuations, which is done every fourth quarter on our excess land and greenfield sites.

Capitalization RatesThe capitalization rate is based on the location and quality of the properties and takes into account market data at the valuation date. The table below provides details of the average capitalization rate (weighted on stabilized NOI) by market category:

Weighted average capitalization rateAs at June 30, 2020 December 31, 2019Major markets (i) 5.23% 5.09%Secondary markets 7.61% 7.23%Total average portfolio capitalization rate 5.45% 5.28%

(i) Includes properties located in the six major Canadian markets of Calgary, Edmonton, Montreal, Ottawa, Vancouver and the Greater Toronto Area.

At June 30, 2020, the weighted average capitalization rate of the Trust's investment portfolio was 5.45%, an increase of 17 basis points when compared to both March 31, 2020 and December 31, 2019 mainly as a result of the impact of COVID-19 and depressed oil & gas markets on the investment property valuations.

COVID-19 Pandemic and Its Impact on Investment Property ValuationThe Trust recorded $451.7 million net fair value losses for its investment properties for the three months ended June 30, 2020, representing a 3.1% write-down to the IFRS value of investment properties as of the beginning of the quarter, including assets held for sale.

Although the short and long term impact of the pandemic on RioCan investment property valuation is difficult to assess and predict particularly given the relatively low volume of market transactions, the fair value losses and capitalization rate increases in the quarter reflect the estimated effect of the pandemic on property cash flows and capitalization rates, as well as the estimated effect of the depressed oil and gas markets. Factors that were considered in estimating the underlying cash flows and capitalization rates include but are not limited to, geographic location, property type, the strength of the underlying tenant covenants, the proportion of tenants within the property subject to discretionary consumer spending, discounted cash flow impact of the rent deferral and abatement arrangements, estimated vacancy allowances and resulting re-tenanting costs.



The following tables present the net fair value losses for the three months ended June 30, 2020 by geographic market and by property mix:

(thousands of dollars, except where otherwise noted) For the three months ended June 30, 2020

Fair Value (Loss)Percentage of Q2 2020

Fair Value (Loss)Loss as a percentage of IFRS

value as of March 31, 2020Total Six Major Markets

Greater Toronto Area (i) $ (242,056) 53.0% (3.0)%

Ottawa (ii) (29,737) 7.0% (1.8)%

Calgary (68,925) 15.0% (4.2)%

Montreal (18,044) 4.0% (3.9)%

Edmonton (49,096) 11.0% (5.9)%

Vancouver (iii) 1,160 —% 0.1 %

Total Six Major Markets (406,698) 90.0% (2.7)%

Total Secondary Markets (45,009) 10.0% (4.9)%

Total Portfolio $ (451,707) 100.0% (3.1)%

(i) Area extends north to Barrie, Ontario; west to Hamilton, Ontario; and east to Oshawa, Ontario.(ii) Area extends from Nepean and Vanier to Gatineau, Quebec.(iii) Area extends east to Abbotsford, British Columbia.

(thousands of dollars, except where otherwise noted) For the three months ended June 30, 2020

Property Mix (i) Fair Value (Loss)Percentage of Q2 2020

Fair Value (Loss)Loss as a percentage of IFRS

value as of March 31, 2020Mixed-Use / Urban $ (105,992) 23.0% (2.4)%

Grocery Anchored Centre (111,740) 25.0% (2.1)%

Open Air Centre (129,925) 29.0% (3.5)%

Enclosed (104,050) 23.0% (10.6)%

Total Portfolio $ (451,707) 100.0% (3.1)%

(i) Refer to the Property Mix section of this MD&A for the definitions of each property class.

Net fair value losses for the six months ended June 30, 2020 were $476.0 million, representing 3.3% of the IFRS value of investment properties as of December 31, 2019, including assets held for sale.

Refer to the Risks and Uncertainties - COVID-19 Health Crisis section of this MD&A for discussions on the risks and uncertainties associated with the COVID-19 pandemic. Property valuation is one such risk and uncertainty, together with factors or inputs that tend to impact property valuations, such as the effects of the pandemic on the operations and financial performances of RioCan's tenants, as well as on consumer behaviors and the Canadian and world economies in general; RioCan’s tenants' ability to payrent as required under their leases or the extent of rent collection on unpaid rents by RioCan; the availability, duration and effectiveness of various support programs that are or may be offered by the various levels of government in Canada; timelines and costs related to the Trust’s development projects; the pace of property lease-up and rents and yields achieved upon development completion; potential changes in leasing activities and market rents; the availability and extent of rent deferrals offered or other support programs to be offered by the Trust; the capitalization rates that arm's length buyers and sellers are willing to transact on properties, and so on.

Further, refer to Note 3 of the Condensed Consolidated Financial Statements for a sensitivity analysis of investment property valuations to changes in the three key inputs to the property valuation - stabilized net operating income (SNOI), capitalization rates and costs to complete.



Income Property Acquisitions During 2020 There were no acquisitions completed during the quarter. The acquisitions during the six months ended June 30, 2020 are summarized as follows:

Property name and location

Interestacquired by

RioCanCapitalization

rate

Gross Purchaseprice incl.

TransactionCosts (i)

(thousands ofdollars)

Debt andother

liabilitiesassumed

(thousandsof dollars)

(iii)

NLAacquired

(thousandsof sq. ft.)

RioCan’sendinginterest

Q1 20202345 Yonge Street, Toronto, ON 50.0% 5.00% $ 37,053 $ — 71 50.0%2329 Yonge Street, Toronto, ON (ii) 50.0% 2.26% 7,909 4,250 5 50.0%2947-2951 Bloor Street West, Toronto, ON (ii) 100.0% 4.02% 4,767 — 4 100.0%RioCan Marketplace, Toronto, ON 33.3% 5.85% 18,971 11,451 57 100.0%Total Q1 2020 Acquisitions 4.85% $ 68,700 $ 15,701 137Total 2020 Acquisitions 4.85% $ 68,700 $ 15,701 137

(i) Purchase price includes transaction costs of $3.4 million in aggregate. (ii) Lower capitalization rate is due to the fact that these assets were acquired for their buildable density given their prime urban locations in Toronto.(iii) Debt and other liabilities assumed of $15.7 million is at a weighted average interest rate of 3.30% and includes a $4.3 million vendor-take-back

mortgage payable to the vendor.

The two Yonge Street acquisitions included a 50% interest in each of a nearly fully leased, Class B 10-storey 142,000-square-foot (at 100%) office building with retail at grade level and a 50% interest in a 14,000 square foot (at 100%) commercial building. These two properties, together with 2323 Yonge Street, which the Trust acquired in 2019, further strengthen the Trust's commanding presence in the high demand Yonge and Eglinton area and leverages the sites' close proximity to Yonge Eglinton Centre and ePlace through cost efficiencies and economies of scale. All three properties have significant residential intensification potential which could further expand the RioCan Living portfolio to drive income and NAV growth for our Unitholders. The Bloor Street West property adds to a prospective development assembly that RioCan had commenced in the transit-oriented, urban Bloor Street West corridor.

Income Property Dispositions During 2020 On June 23, 2020, the Trust sold a 75% interest in The Shops at Summerhill in Toronto, Ontario, for sales proceeds of $33.0 million. Upon disposition, the purchaser assumed $12.1 million of debt. RioCan provided a vendor take-back mortgage of $14.1 million related to this transaction, of which $4.1 million was repaid on July 2, 2020 and the remainder will be repaid later in 2020.

Co-ownership ArrangementsCo-ownership activities represent real estate investments in which RioCan has joint control and either owns an undivided interest in the assets and liabilities with its co-owners (joint operations) or ownership rights to the residual equity of the co-ownership (joint ventures).

The Trust’s co-ownership arrangements are governed by co-ownership agreements with its various co-owners. RioCan’s standard co-ownership agreement provides exit and transfer provisions, including, but not limited to, buy/sell and/or right of first offers or refusals that allow for the unwinding of these 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, except in limited circumstances. Credit risk arises in the event that co-owners default on the payment of their proportionate share of such obligations. Co-ownership agreements will typically provide RioCan with an option to remedy any non-performance by a defaulting co-owner. These credit risks are mitigated as the Trust has recourse against the asset under its co-ownership agreements in the event of default by its co-owners, in which case the Trust’s claim would be against both the underlying real estate investments and the co-owners that are in default. In addition to the matter noted above, RioCan has provided guarantees on debt totaling $129.6 million as at June 30, 2020 on behalf of co-owners (December 31, 2019 - $106.6 million).



Selected Financial Information of Joint Operations (at RioCan's interest)

(thousands of dollars) RioCan'sownership

interest

Number ofinvestment

properties (i) Assets (ii) Liabilities (ii)

Three months endedJune 30, 2020

Six months ended June 30, 2020

As at June 30, 2020 NOI (iii) NOI (iii)Allied (vi) 50% 4 $ 183,332 $ 13,385 $ 1,895 $ 3,792Allied/Diamond (The Well) (iv) 50% 1 535,780 49,174 136 166Boardwalk 50% 2 56,958 21,383 (11) (88)CMHC Pension Fund 50% 1 55,449 29,242 652 1,411CPPIB 40% 1 105,937 13,638 811 1,640First Gulf 50% 1 85,303 44,612 1,128 2,263Killam 50% 2 117,058 33,378 976 1,891KingSett 50% 1 120,272 81,694 1,124 2,475Metropia/CD (v) 50% 1 109,420 39,709 (3) 59Sun Life 40% 1 27,593 1,155 384 787Tanger 50% 3 142,051 4,553 1,804 3,869Trinity 75% 1 23,174 12,532 293 605Woodbourne 50% 3 86,234 15,195 42 42Other 30% - 75% 17 360,773 134,229 5,715 12,044

39 $2,009,334 $ 493,879 $ 14,946 $ 30,956

(i) Includes both income properties and properties under development and is based on the number of proportionately owned properties as of June 30, 2020.

(ii) Assets and liabilities are stated at RioCan's interest. (iii) Represents RioCan's interest of NOI related to all properties for which we owned a proportionate interest during the period. (iv) The Trust has a 50% interest in the commercial component (RioCan/Allied) and a 40% interest in the residential component (RioCan/Allied/

Diamond) of The Well project. The Well Residential Building 6 which the Trust owns 50/50 with another partner, Woodbourne, is included in the Woodbourne category in the table above.

(v) RioCan also has a 15.6% interest in e2 Condos, a development adjacent to ePlace (northeast corner of Yonge Street and Eglinton Avenue) together with Metropia and four other partners, which is carried at fair value and included in Other Assets and is therefore excluded from the table above.

(vi) The decrease in assets from the previous quarter for Allied co-owned properties was primarily due to receipt of Kingly condominium sales proceeds upon final condominium units ownership transfers.

Selected Financial Information of Joint Operations and Joint Ventures Total Assets

(thousands of dollars) Incomeproperties PUD (i)

Residentialinventory (ii) Other (iii) Total assets

Total assets asat December

31, 2019As at June 30, 2020Total assets of proportionatelyconsolidated joint operations $ 1,035,778 $ 783,338 $ 100,969 $ 89,249 $ 2,009,334 $ 1,956,774

Equity-accounted joint ventures (iv):HBC (RioCan-HBC JV) $ 235,260 $ — $ — $ 19,824 $ 255,084 $ 260,255Marketvest Corporation/Dale-Vest Corporation (Dawson-Yonge LP) 9,419 — — 179 9,598 9,779

Total assets of equity-accounted joint ventures 244,679 — — 20,003 264,682 270,034

Total joint arrangements $ 1,280,457 $ 783,338 $ 100,969 $ 109,252 $ 2,274,016 $ 2,226,808

(i) The value of properties under development includes active development projects as well as the value of development lands where development is currently non-active.

(ii) Residential inventory is comprised of the 11 YV development in the prestigious Yorkville area of Toronto, Ontario with Metropia and CD, the Windfields Farm condominium and townhouse projects in Oshawa, Ontario with Tribute and the Queensway development at the corner of Islington Avenue and the Queensway in Toronto, Ontario with Talisker.

(iii) Primarily includes finance lease receivable, cash and cash equivalents, rents receivable and other operating expenditures recoverable from tenants.

(iv) Includes the Trust's equity-accounted joint arrangements only and excludes the equity-accounted investments in the WhiteCastle Funds.



Total NOI

Three months ended June 30 Six months ended June 30(thousands of dollars) 2020 2019 2020 2019Total NOI of proportionately consolidated joint operations $ 14,946 $ 18,194 $ 30,956 $ 34,675Equity-accounted joint ventures (i):

HBC (RioCan-HBC JV) $ 3,330 $ 3,409 $ 6,739 $ 7,030Marketvest Corporation/Dale-Vest Corporation (Dawson-Yonge LP) 128 126 256 249

Total NOI of equity-accounted joint ventures 3,458 3,535 6,995 7,279Total joint arrangements $ 18,404 $ 21,729 $ 37,951 $ 41,954

(i) Includes the Trust's equity-accounted joint arrangements only and excludes our equity-accounted investment in the WhiteCastle Funds.

RioCan-HBC JV

As at June 30, 2020, the Trust's ownership interest in RioCan-HBC JV was 12.6% (December 31, 2019 - 12.6%). The following tables present the financial results of RioCan-HBC JV on a 100% basis:

Condensed Statements of Financial Position

(thousands of dollars)As at June 30, 2020 December 31, 2019Current assets $ 4,509 $ 4,679Non-current assets 1,996,714 2,037,539Current liabilities 12,012 10,006Non-current liabilities (i) 807,250 812,093Net assets $ 1,181,961 $ 1,220,119RioCan's share of net assets in RioCan-HBC JV (ii) $ 151,741 $ 156,554

(i) Includes mortgages payable and lines of credit with maturities beyond twelve months. (ii) Represents RioCan's proportionate share of net assets and other acquisition-related costs.

Condensed Statements of Income (Loss)

Three months ended June 30 Six months ended June 30(thousands of dollars) 2020 2019 2020 2019Rental revenue $ 35,490 $ 36,076 $ 71,669 $ 73,922Operating expenses 5,388 5,340 10,888 10,753Fair value losses (45,968) (6,260) (49,729) (15,594)Interest expense 8,905 10,135 18,644 19,434Net income (loss) $ (24,771) $ 14,341 $ (7,592) $ 28,141RioCan's share of net income (loss) in RioCan-HBC JV $ (3,124) $ 1,800 $ (963) $ 3,531

RioCan's share of FFO in RioCan-HBC JV $ 2,666 $ 2,594 $ 5,296 $ 5,486

The changes in RioCan's share of net income (loss) in this JV over the comparable periods were primarily due to fair value changes. RioCan's share of FFO in the JV has been relatively stable quarter to quarter.



Capital Expenditures on Income Properties Maintenance Capital ExpendituresMaintenance capital expenditures refer to investments that are necessary to maintain the existing earnings capacity of our property portfolio and are dependent upon many factors. These include, but are not limited to, lease expiry profile, tenant vacancies, the age and location of the income properties and general economic and market conditions, which impact the level of tenant bankruptcies. As at June 30, 2020, the estimated weighted average age of our income property portfolio is approximately 25 years (December 31, 2019 - approximately 25 years). Maintenance capital expenditures consist primarily of tenant improvements, third-party leasing commissions and certain recoverable and non-recoverable capital expenditures. Actual maintenance capital expenditures can vary widely from period to period depending on a number of factors as noted above, as well as the level of acquisition and disposition activity.

As a result, management believes that for the purpose of determining ACFO which, as discussed in the Non-GAAP Measures section of this MD&A, is used as an input in assessing a REIT's distribution payout ratio, normalized capital expenditures are more relevant than using actual capital expenditures. Refer to the Non-GAAP Measures section of this MD&A for details on how management estimates its normalized capital expenditures used in the determination of ACFO.

Tenant improvements and external leasing commissions

Our portfolio requires ongoing investments of capital for costs related to tenant improvements, broker commissions on new and renewal tenant leases and other third-party leasing costs. The amount and timing of capital outlays to fund tenant improvements on our income property portfolio depend on several factors, which may include the lease maturity profile, unforeseen tenant bankruptcies and the location of the income property.

Recoverable and non-recoverable capital expenditures

We also invest capital on a regular basis to physically maintain our income properties. Typical costs incurred are for expenditures such as roof replacement programs and the resurfacing of parking lots. Tenant leases generally provide for the ability to recover a significant portion of such costs from tenants over time as property operating costs. We expense or capitalize these amounts to income properties, as appropriate.

The majority of such activities occur when weather conditions are favourable. As a result, these expenditures are generally not consistent throughout the year.

Revenue Enhancing Capital ExpendituresCapital spending for new or existing income properties that is expected to create, improve and/or add to the overall earnings capacity of the property portfolio are considered revenue enhancing. RioCan considers such amounts to be investing activities. As a result, we do not expect such expenditures to be funded from cash flows from operating activities and do not consider such amounts as a key determinant in setting the amount that is distributed to our Unitholders. Revenue enhancing capital expenditures are not included in the determination of ACFO.

Summary of Capital Expenditures Expenditures for third-party leasing commissions and tenant improvements, recoverable and non-recoverable, and revenue enhancing capital expenditures pertaining to our income properties are as follows:

Three months ended June 30 Six months ended June 30Normalized capital

expenditures (i)(thousands of dollars) 2020 2019 2020 2019 YTD Q2 2020Maintenance capital expenditures:

Tenant improvements and externalleasing commissions $ 4,334 $ 8,700 $ 14,328 $ 11,597 $ 8,000

Recoverable from tenants 764 2,201 3,675 2,798 9,000Non-recoverable 751 119 2,399 863 3,000

$ 5,849 $ 11,020 $ 20,402 $ 15,258 $ 20,000Revenue enhancing capital expenditures 6,539 4,454 10,410 11,432

$ 12,388 $ 15,474 $ 30,812 $ 26,690

(i) Refer to the Non-GAAP Measures section in this MD&A for details on how management estimates its normalized capital expenditures.

For the three months ended June 30, 2020, the Trust's total capital expenditures on income properties decreased by $3.1 million compared to the same quarter last year, primarily due to $4.4 million in lower tenant improvements, and $0.8 million in lower recoverable and non-recoverable capital expenditures, partially offset by $2.1 million in higher revenue enhancing capital expenditures. Quarterly variations from the previous quarter were primarily due to timing of expenditures and the reduction in capital spending as a result of the pandemic.



For the six months ended June 30, 2020, our total capital expenditures on income properties were largely in line with the $20.0 million normalized capital expenditures but increased by $4.1 million over the same period last year primarily due to higher expenditures in Q1 2020 pre-pandemic as a result of expenditure timing.

For 2020, we currently maintain the $40.0 million normalized maintenance capital expenditure guidance and will reassess it in the future quarters. Refer to the Non-GAAP Measures section of this MD&A for details on how estimates of normalized capital expenditures are determined for 2019 and 2020.

Properties Under DevelopmentRioCan’s development program is an important component of its long-term growth strategy and is focused on well-located properties in the six major markets in Canada. Often, these are properties that RioCan already owns and are located directly on, or in proximity to, major transit lines such as the existing Toronto Transit Commission's subway lines or the Eglinton LRT line, which is currently under construction. Development opportunities also arise from the fact that retail centres are generally built with lot coverages of approximately 25% of the underlying lands and municipalities are supporting additional density particularly near major infrastructure investments. Considering that RioCan already owns the land for its portfolio of mixed-use redevelopment opportunities, these projects are expected to generate strong incremental returns and increase the Trust's net asset value.

The overall development environment in Canada is undergoing changes and development risks are becoming more prevalent. Refer to the Business Overview, Outlook and Strategy, and Risks and Uncertainties sections of this MD&A for discussions about the development environment and associated risks. Development risk management is essential to the Trust's successful implementation of its strategy. The Trust strategically and prudently manages its development risks as follows:

• RioCan undertakes developments selectively based on opportunities in its portfolio and within the major markets it focuses on.

• Development projects must be expected to generate appropriate risk-adjusted returns. The Trust will not commence construction until it has third-party market studies of the rental markets in the development areas and, where a large portion of the development has commercial space, the requisite leasing commitments pertaining to the commercial portion of the mixed-use developments are required.

• RioCan’s well established and robust internal control framework ensures proper oversight over development approvals and construction management.

• RioCan uses a staggered approach in its development program to avoid unnecessary concentration of development projects in a single period of time to allocate risks and manage the Trust's capital. The staggered development approach also enables proper allocation of personnel resources and ensures that the Trust’s experienced development team is at the appropriate scale, resulting in no overhead pressure for RioCan to take on development activities.

• RioCan utilizes strategic co-ownerships to reduce capital requirements and mitigate risks.

• RioCan often already owns the assets with development potential which are income producing. This allows the Trust to manage the timing of development starts, and if required, these assets can continue to generate income until the appropriate time to commence development is reached.

• RioCan's development team utilizes a variety of cost mitigation strategies, such as working with experienced construction managers early in the project design stage to validate that a project's constructability and efficiency is maximized, ensuring that soil and geotechnic conditions are known before breaking ground, that construction drawings are finalized to the furthest extent possible prior to commencing construction, and structuring construction management contracts such that the contracts are converted to fixed price contracts as soon as all of the scope is defined thus limiting cost escalations.

• The Trust's mixed-use residential development allows the Trust to access CMHC insured mortgages, which diversifies the Trust's funding sources and provides lower cost of debt.

• RioCan's developments are across numerous geographic markets, thus permitting diversification of market dynamics.

The Trust categorizes the projects within its development program as follows:

Category DescriptionGreenfield Development Projects on vacant land typically located in suburban markets that are being constructed or developed

from the ground-up for future use as income producing properties (IPP or IPPs).

Urban Intensification Projects at existing IPPs located in urban markets, which typically involve increasing the density orsquare footage of the properties and are often mixed-use projects.

Expansion andRedevelopment

Existing IPPs, or components thereof, that are being repositioned through redevelopment, whichtypically increases NOI by adding to the rentable area of the properties.



In addition to the above development categories, the Trust also owns vacant lands and other properties that could be used for future developments. Such vacant land and other properties are reported as “Development Lands and Other” under properties under development (PUD) in the Estimated PUD Project Costs section of this MD&A.

Management's current estimates and assumptions, as discussed throughout this Properties Under Development section of this MD&A, are subject to change. Such changes may be material to the Trust. RioCan’s estimated NLA, estimated future project timing including estimated time to completion, estimated future development costs and estimated proceeds from disposition are based on assumptions which are updated regularly based on revised site plans, the cost tendering process and continuing tenant negotiations.

These assumptions, among other items, include the following: active construction and development projects permitted by various authorities under the current COVID-19 pandemic, access to job sites, the availability of labour and supplies, ability to attract anchor tenants, estimated NLA and tenant mix among rental, air rights sale, and condominiums/townhouses, the likelihood, timing and amount of future sales of air rights and land dispositions, tenant rents, building sizes, project completion timelines, availability and cost of construction financing and zoning approvals. Although the estimated development expenditures are based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these projections particularly under the current health crisis and development expenditures may, therefore, materially differ from management's current estimates. In addition, there is no assurance that all of these developments will be undertaken, and if they are, there is no assurance as to the mix of commercial and residential developments, the costs, the phasing of the projects, or the development yields to be achieved.

Declaration of Trust and Financial CovenantsThe provisions of the Trust’s Declaration have the effect of limiting direct and indirect investments in greenfield developments and development properties held for resale (each net of related mortgage debt and mezzanine financing which funds the co-owners’ share of such developments) to no more than 15% of total consolidated Unitholders’ equity of the Trust, as determined under IFRS. As at June 30, 2020, RioCan's investments in greenfield development and residential inventory as a percentage of consolidated Unitholders' equity is 5.5% and, therefore, the Trust is in compliance with this restriction.

In addition, RioCan's revolving unsecured operating line of credit and non-revolving unsecured credit facilities agreements require the Trust to maintain certain financial covenants, one of which includes a more restrictive covenant as it pertains to the Trust's development activities. As of June 30, 2020, the Trust is in compliance with all financial covenants pursuant to the operating line of credit and credit facilities agreements including the one relating to the Trust's development activities. Refer to Note 24 of the Condensed Consolidated Financial Statements for further details.

Development Pipeline RioCan's development pipeline as at June 30, 2020 is estimated as follows:

Estimated Density (NLA) at RioCan's interest (i)Number

ofProjects

(ii) TotalPUD(iii)

ResidentialInventory

(iv)

Components of PUD

(thousands of sq. ft.) CommercialResidential

RentalAir RightsSale (x)

A. Active projects with detailed cost estimatesGreenfield Development (v) 2 430 430 — 430 — —

Urban Intensification (vi) 11 3,260 3,049 211 1,023 996 1,030

13 3,690 3,479 211 1,453 996 1,030Expansion & Redevelopment (vii) 10 133 133 — 133 — —

Subtotal 23 3,823 3,612 211 1,586 996 1,030B. Active projects with cost estimates in progress(viii) 21 17,695 16,063 1,632 3,281 12,782 —

Total Active Projects 44 21,518 19,675 1,843 4,867 13,778 1,030C. Future estimated density(ix) 17 21,144 20,964 180 2,194 18,770 —

Total development pipeline 61 42,662 40,639 2,023 7,061 32,548 1,030

(i) Estimated density across the various components of the development pipeline is expressed as NLA, which represents approximately 90% of Gross Floor Area (GFA) for residential rental and inventory developments. This conversion factor is an estimate, which is based on a number of assumptions including but not limited to, site plan approval, final building design and floor plans as well as the mix of commercial and residential space in a multi-use development project.

(ii) Given the range of development activities and the multi-phase nature of the development projects included in the total development pipeline, a single investment property could have more than one project. Therefore, the number of projects shall not be viewed as equivalent to number of properties under development.

(iii) PUD NLA includes NLA for air right sales in addition to commercial and residential rental NLA, but excludes NLA for condominiums and townhouse projects which are reported separately as Residential Inventory.

(iv) Represents the density associated with the development of our residential condominiums and townhouse projects that are to be sold in the normal course of business upon project completion, not to be held for long-term capital appreciation or rental income. As such, the costs associated with



this NLA are treated as residential inventory under IFRS and are thus not reported as PUD, even though this NLA forms part of RioCan’s development program and is included in the above estimated development pipeline. Condominium and townhouse developments are discussed under the Residential Inventory section of this MD&A.

(v) Greenfield Development projects include approximately 0.2 million square feet that are currently IPP.(vi) Urban Intensification projects include approximately 0.2 million square feet that are currently IPP. (vii) Expansion and Redevelopment projects include approximately 48 thousand square feet of vacant NLA which was primarily former Sears space

prior to its redevelopment. (viii) Active projects with cost estimates in progress include approximately 2.6 million square feet that are currently IPP. (ix) Future estimated density includes approximately 2.6 million square feet that are currently IPP. (x) Under IFRS, costs associated with air rights sales, which include, but are not limited to, the costs of underlying structure and infrastructure

required for the closing of the air rights sales, are part of the costs of the properties under development. As a result, density related to air rights sales is included as part of the PUD square footage.

Approximately 5.6 million square feet of NLA out of the total estimated 42.7 million square feet development pipeline as of June 30, 2020 is existing NLA which is currently income producing, resulting in net incremental density estimated at 37.1 million square feet as of June 30, 2020. When compared to the Trust's development pipeline as of December 31, 2019, the development pipeline has increased by 13.6 million square feet despite development completions, primarily in the future estimated density category. The increases were mainly due to the inclusion of all future phases of several existing projects including an additional 6.9 million square feet at RioCan Colossus Centre in Vaughan, Ontario, 1.7 million square feet at Millcroft Shopping Centre in Burlington, Ontario, 0.8 million square feet at RioCan Scarborough Centre in Scarborough, Ontario, and nearly 1.0 million square feet at Strawberry Hill in Surrey, British Columbia. In addition, five properties, namely 2323 Yonge Street, 2345 Yonge Street, 2990 Eglinton Avenue East, and 3180 Dufferin Street, all in Toronto, Ontario and RioCan Centre Kirkland, in Montreal, Quebec were added to the development pipeline. ePlace, King Portland Centre and Frontier were removed from the pipeline during the period as they are completed.A key milestone of the development process is obtaining zoning approval. The following table details the Trust's development pipeline (at RioCan's interest) by zoning status. As of the date of this MD&A, of the total estimated NLA in the Trust's current development pipeline, 14.8 million square feet or 34.7% have zoning approvals and an additional 6.7 million square feet or 15.7% have zoning applications submitted. Zoned NLA increased by 0.2 million square feet when compared to the year ended December 31, 2019 primarily due to the increase in density at Strawberry Hill in Surrey, British Columbia and RioCan Durham Centre in Ajax, Ontario, partially offset by the exclusion of ePlace, King Portland Centre and Frontier from the development pipeline.

Estimated Density (NLA) at RioCan's interest (i)

Number ofProjects

% of squarefootagezoned Total PUD (ii)


(iii)

Components of PUD

(thousands of sq. ft., unlessotherwise noted) Commercial

ResidentialRental

Air RightsSale

Zoning approved 38 34.7% 14,800 13,403 1,397 4,249 8,124 1,030

Zoning applications submitted 6 15.7% 6,718 6,272 446 618 5,654 —

Future estimated density 17 49.6% 21,144 20,964 180 2,194 18,770 —

Total development pipeline 61 100.0% 42,662 40,639 2,023 7,061 32,548 1,030

(i) Estimated density across the various components of the development pipeline is expressed as NLA, which represents approximately 90% of GFA for residential rental and inventory developments. This conversion factor is an estimate, which is based on a number of assumptions including but not limited to, site plan approval, final building design and floor plans as well as the mix of commercial and residential space in a multi-use development project.

(ii) PUD NLA includes NLA for air right sales in addition to commercial and residential rental NLA, but excludes NLA for condominiums and townhouse projects which are reported separately as Residential Inventory.

(iii) Represents the density associated with the development of our residential condominiums and townhouse projects that are to be sold in the normal course of business upon project completion, not to be held for long-term capital appreciation or rental income. As such, the costs associated with this NLA are treated as residential inventory under IFRS and are thus not reported as PUD, even though this NLA forms part of RioCan’s development program and is included in the above estimated development pipeline. Condominium and townhouse developments are discussed under the Residential Inventory section of this MD&A.



With the exception of one small redevelopment project, all of the mixed-use residential projects are located in the six major markets and are typically located in the vicinity of existing or planned substantive transit infrastructure with 73.0% of the development pipeline located in the GTA.

Estimated Density (NLA) at RioCan's Interest

(thousands of sq. ft., unless otherwise noted) Number of projects NLA % of total NLA

Six Major Markets

Greater Toronto Area 39 31,141 73.0%

Ottawa 8 2,584 6.0%

Calgary 5 3,042 7.1%

Montreal 2 1,353 3.2%

Edmonton 2 3,074 7.2%

Vancouver 2 1,431 3.4%

Total Six Major Markets 58 42,625 99.9%

Other (i) 3 37 0.1%

Total development pipeline 61 42,662 100.0%

(i) Relates to other smaller redevelopment projects.

Annual Development SpendingRioCan’s staggered development program provides the flexibility to adjust development starts to conserve capital and enhance the Trust’s liquidity under unprecedented circumstances such as the current health pandemic. In Q1 2020, the Trust put a temporary hold on development spend related to some new or early stage projects. While the Trust remains on course with its long-term development strategy, RioCan’s development spend for 2020 is estimated to be reduced by $100 million to the $400 million range, net of expected cost recoveries and air rights sales. Where there are underlying existing retail assets, we are not hurt by adjusting a start date as the retail tenants in place will continue to pay rent, albeit diminished. Refer to Properties under Development Continuity section of this MD&A for a discussion on the higher development spending guidance for the year relative to last quarter's guidance.

This annual development expenditure estimate includes costs applicable to both active PUD projects with detailed cost estimates and residential inventory projects. This represents management’s best estimates as of June 30, 2020 and is subject to change due to potential changes in various underlying factors as noted earlier in this MD&A. Overall, the Trust targets to keep the total IFRS value of PUD and residential inventory on the consolidated balance sheet as a percentage of consolidated gross book value of assets to be around 10% (except for short-term fluctuations as shown in the current quarter as large projects are being completed), despite the maximum of 15% permitted under the Trust's revolving unsecured operating line of credit and non-revolving unsecured credit facilities agreements. As of June 30, 2020, this metric was 10.7%. Refer to Note 24 of the Condensed Consolidated Financial Statements for additional details. The increase in this metric from the previous quarter was driven by development progress and completion timing and the $451.7 million fair value loss this quarter as a result of the pandemic.

The Trust has been funding and will continue to fund its development pipeline primarily through proceeds from asset pruning (dispositions), sales proceeds from residential inventory developments or air rights sales, strategic development partnerships as well as retained earnings or excess cash flows after maintenance capital expenditures and distributions have been paid.

Estimated PUD Project Costs RioCan's share of estimated PUD project costs as of June 30, 2020 are summarized in the following table, which includes estimated costs for the 23 active PUD projects with detailed cost estimates (Category A as shown in the Development Pipeline table earlier), plus the current carrying costs of the development lands and other, net of projected proceeds from dispositions including air rights sales. Costs relating to condominiums and townhouse developments are excluded in the following table as they are included in Residential Inventory in the Condensed Consolidated Financial Statements and in this MD&A.



At RioCan's Interest

(thousands of dollars orthousands of sq. ft.)

Number ofProjects

Total PUDNLA (i)

TotalEstimated

Costs

Costs Incurred to Date EstimatedPUD Coststo Complete

Completed(IPP) PUD Total

Greenfield Development 2 430 $ 184,535 $ 53,177 $ 77,941 $ 131,118 $ 53,417

Urban Intensification 11 3,049 1,820,874 103,866 873,025 976,891 843,983

13 3,479 2,005,409 157,043 950,966 1,108,009 897,400

Expansion & Redevelopment (iv) 10 133 87,953 — 61,753 61,753 26,200

Active projects with detailed cost estimates 23 3,612 $ 2,093,362 $ 157,043 $ 1,012,719 $ 1,169,762 $ 923,600Development Lands and Other (ii) — 343,612 — 343,612 343,612 —

Projected proceeds from dispositions (iii) — (152,220) — — — (152,220)

Total $ 2,284,754 $ 157,043 $ 1,356,331 $ 1,513,374 $ 771,380Fair Value to Date $ 174,616 $ 1,435,622 $ 1,610,238

(i) Total PUD NLA includes NLA from commercial, residential rental and air rights sales and excludes NLA from residential inventory.(ii) Development lands and other includes excess land and other properties that could be used for future developments.(iii) Represents conditional land and air right sales that the Trust intends to sell instead of holding for long-term income, which management considers

to be reductions to its overall development costs. (iv) Expansion and Redevelopment projects tend to be shorter in duration and smaller in size compared to Greenfield and Urban Intensification

projects, and generally pertain to the redevelopment of individual unit(s) at a property. Once the redevelopment of the individual unit(s) has/have been completed, the NLA and associated costs are transferred to IPP and no longer included in the development pipeline or development costs, resulting in nil completed IPP in this table.

Total estimated project costs include the current carrying costs of development lands and other, net of estimated proceeds from land and air rights dispositions. Total estimated project costs include land costs measured at fair value of the land or existing IPP upon transfer to PUD, soft and hard construction costs, external leasing costs, tenant inducements, construction and development management fees, and capitalized interest and other carrying costs, as well as capitalized development staff compensation and other expenses.

Total estimated costs for active projects with detailed cost estimates as of June 30, 2020 decreased by $293.9 million when compared to December 31, 2019. This decrease was primarily due to the removal of ePlace, King Portland Centre and Frontier from total PUD costs as they are completed, partially offset by the addition of the retail and rent replacement units portion of the Yorkville Project.

The above total estimated development costs as at June 30, 2020 are further broken down by committed and non-committed spending as follows:


(thousands of dollars)

Costs Incurred to DateTotal Estimated

CostsCompleted

(IPP) PUD TotalEstimated PUD

Costs to CompleteCommitted (i) $ 1,941,142 $ 157,043 $ 1,012,719 $ 1,169,762 $ 771,380Non-committed 343,612 — 343,612 343,612 —Total $ 2,284,754 $ 157,043 $ 1,356,331 $ 1,513,374 $ 771,380

(i) A project is considered to be committed when all major planning issues have been resolved, anchor tenant(s) for the commercial components has/have been secured, and/or construction is about to commence or has commenced. Although a non-committed project may have a completed portion, the Trust is not committed to completing the remaining phase(s) of the project if it so decides in due course. Development Lands and Other are included in non-committed projects.

Mixed-Use Residential DevelopmentRioCan is committed to its residential development program despite the current COVID-19 health crisis, even though the longer-term impact of the pandemic is difficult to predict. Refer to the Business Overview, Outlook and Strategy and Risks and Uncertainties sections of this MD&A for more details.

RioCan targets to develop approximately 10,000 residential rental units over the next decade. RioCan has currently identified a number of properties, as summarized in the following table, some of which are actively being developed and others that are considered to be strong possible intensification opportunities. This summary does not include Greenfield Development and Urban Intensification projects that have commercial components only.



Estimated Density (NLA) at RioCan's interest (i)

PUD Components

(thousands of sq. ft.) LocationsRioCan Ownership

% (Partner)

TotalNLA at100% Total PUD (ii)


(iii) CommercialResidential

Rental

AirRights

Sale

A Active mixed-use residential projects withdetailed cost estimates (v)Urban Intensification

Brentwood Village (Brio) (iv) Calgary, AB 50% (Boardwalk) 144 72 72 — 5 67 —

Dupont Street (Litho) (iv) Toronto, ON 50% (Woodbourne) 185 93 93 — 16 77 —

Fifth and Third East Village (5th & THIRD) (iv) Calgary, AB 100% 756 756 756 — 159 — 597

Yorkville (11 YV) (iv) Toronto, ON 50% (CD Capital/Metropia) 502 251 40 211 17 23 —

The Well (iv) Toronto, ON50% commercial

(Allied),40% residential

(Allied/Diamond)2,612 1,198 1,198 — 765 — 433

Yonge Sheppard Centre Residential (Pivot)(iv) Toronto, ON 100% 258 258 258 — — 258 —

College & Manning (Strada) (iv) Toronto, ON 50% (Allied) 108 54 54 — 30 24 —

Gloucester - Phase Two (Latitude) (iv) Gloucester, ON 50% (Killam) 160 80 80 — — 80 —

Elmvale Acres - Phase One (Luma) (iv) (ix) Ottawa, ON 100% 137 137 137 — 11 126 —

Westgate - Phase One (Rhythm) (iv) Ottawa, ON 100% 165 165 165 — 20 145 —

The Well - (FourFifty The Well) (iv) Toronto, ON 50% (Woodbourne) 393 196 196 — — 196 —

Total active mixed-use residential projects with detailed costestimates - 11 projects (v) 5,420 3,260 3,049 211 1,023 996 1,030

B Active mixed-use residential projects withcost estimates in progress (vi)Approved Zoning

Sunnybrook Plaza (iv) Toronto, ON 50% (Concert) 313 156 156 — 20 136 —

Clarkson Village (iv) Mississauga, ON 100% 412 412 412 — 19 393 —

Gloucester Future Phases (iv) Gloucester, ON 50% (Killam) 482 241 241 — 10 231 —

Brentwood Village - Phase Two (iv) Calgary, AB 100% 955 955 955 — 435 520 —

Millwoods Town Centre (iv) Edmonton, AB 100% 2,010 2,010 2,010 — 750 1,260 —

Elmvale Acres Future Phases (iv) Ottawa, ON 100% 423 423 423 — 113 310 —

Westgate Future Phases (iv) Ottawa, ON 100% 538 538 538 — 67 471 —

Southland Crossing (iv) Calgary, AB 100% 968 968 968 — 187 781 —

Windfields Farm (iv) (viii) Oshawa, ON100% of

commercial, 50% ofresidential (Tribute)

1,791 1,235 679 556 679 — —

Markington Square (iv) Toronto, ON 100% 893 893 893 — 79 814 —

RioCan Durham Centre (iv) Ajax, ON 100% 292 292 292 — 8 284 —

Queensway (iv) Toronto, ON 50% (Talisker) 475 238 25 213 20 5 —

Dufferin Plaza (iv) Toronto, ON 100% 449 449 32 417 32 — —

Strawberry Hill Shopping Centre (iv) Surrey, BC 100% 1,103 1,103 1,103 — — 1,103 —

Jasper Gates Shopping Centre (iv) Edmonton, AB 100% 1,064 1,064 1,064 — 244 820 —

12,168 10,977 9,791 1,186 2,663 7,128 —

Zoning applications submitted RioCan Grand Park Mississauga, ON 100% 217 217 217 — 18 199 —

RioCan Scarborough Centre Toronto, ON 100% 3,844 3,844 3,844 — — 3,844 —

RioCan Leaside Centre Toronto, ON 100% 1,344 1,344 898 446 240 658 —

RioCan Hall Toronto, ON 100% 797 797 797 — 320 477 —

Sandalwood Square Mississauga, ON 50% (Boardwalk) 376 188 188 — 6 182 —

Impact Plaza Surrey, BC 100% 328 328 328 — 34 294 —

6,906 6,718 6,272 446 618 5,654 —

Total active mixed-use residential projects with cost estimatesin progress - 21 projects (vi) 19,074 17,695 16,063 1,632 3,281 12,782 —

Total active mixed-use residential projects - 32 projects 24,494 20,955 19,112 1,843 4,304 13,778 1,030

C Future estimated density - 17 projects (vii) 23,683 21,144 20,964 180 2,194 18,770 —

Total mixed-use residential developments - 49 projects 48,177 42,099 40,076 2,023 6,498 32,548 1,030

Mixed-use residential developments as a percentage of totaldevelopment pipeline 98.7% 98.6% 100.0% 92.0% 100.0% 100.0%



(i) Estimated density across the various components of the development pipeline is expressed as NLA, which represents approximately 90% of GFA for residential rental and inventory developments. This conversion factor is an estimate, which is based on a number of assumptions including but not limited to, site plan approval, final building design and floor plans as well as the mix of commercial and residential space in a multi-use development project.

(ii) PUD NLA includes NLA for air right sales in addition to commercial and residential rental NLA, but excludes NLA for condominiums and townhouse projects which are reported separately as Residential Inventory.

(iii) Represents the density associated with the development of residential condominiums and townhouse projects.(iv) As at the date of this MD&A, RioCan has obtained final zoning approvals for the development of these properties. The above table includes only

mixed-use residential development projects and thus does not include Greenfield Development and Expansion and Redevelopment projects that do not have residential components. As a result, the Trust has more projects with zoning approvals than what is included in this table.

(v) Active mixed-use residential projects with detailed cost estimates include approximately 0.2 million square feet that are currently IPP. (vi) Active mixed-use projects with cost estimates in progress include approximately 2.6 million square feet that are currently IPP. (vii) Future estimated density includes approximately 2.6 million square feet that is currently IPP. (viii) Excludes Phase One of Windfields Farm Commercial which includes 0.1 million square feet of commercial space. Refer to the Greenfield

Development section of this MD&A for further details.(ix) During Q3 2019, RioCan entered into a firm agreement to sell to Killam a 50% interest in an approximately 1.45 acre discrete portion of Elmvale

Acres which is expected to close early in the third quarter of 2020 as severance of the land was obtained.

Mixed-use residential projects account for approximately 98.7% or 42.1 million square feet of NLA of the Trust’s total estimated development pipeline, of which 14.2 million square feet currently have zoning approvals, 6.7 million square feet currently have zoning applications submitted and 21.1 million square feet represent sites with future density. In comparison to Q4 2019 mixed-use residential projects increased by 13.7 million square feet due to similar factors as explained earlier for the increase in the entire development pipeline.

Residential developments including rental, air rights sales, and residential inventory account for 83.4% or 35.6 million square feet of the Trust's current development pipeline.

Properties under Development Continuity The change in the IFRS consolidated net carrying amount is as follows. The development expenditures during the quarter increased relative to Q2 last year because of the changes in the number of active construction projects. Development expenditures during the quarter was higher than the previous quarter because all the active construction projects continued during the quarter despite the pandemic based on government regulations. The Trust was able to regain productivity on its projects following a short slow down at the beginning of the pandemic. Such productivity gains are expected to reduce the risk of future costs escalations resulting from longer construction periods. In some cases, our tenants with committed leases want the Trust to proceed with the projects despite the pandemic as in the case of Windfields Farm Commercial. These reasons led to the higher annual development spending guidance than the last quarter's guidance. Refer to Annual Development Spend section of this MD&A.

Three months ended June 30 Six months ended June 30(thousands of dollars) 2020 2019 2020 2019Balance, beginning of period $ 1,317,583 $ 1,027,470 $ 1,260,382 $ 1,036,495Acquisitions — 6,239 34,039 6,532Dispositions — — (21,715) (22,977)Development expenditures 108,457 93,186 200,546 169,300Transfers PUD to IPP - cost (6,891) (104,991) (54,563) (206,762)Transfers PUD to IPP - fair value (gains) losses 130 (17,557) (12,120) (13,778)Transfers IPP to PUD 102,592 — 112,337 4,900Transfers to residential inventory (48,155) — (52,674) —Fair value (loss) gain, net (38,094) 42,901 (30,610) 73,538Balance, end of period $ 1,435,622 $ 1,047,248 $ 1,435,622 $ 1,047,248

Development Property Acquisitions There were no development property acquisitions during Q2 2020.

On March 19, 2020, RioCan acquired a 100% ownership interest in 2290 Lawrence Avenue East in Scarborough, Ontario for a purchase price of $5.6 million, including transaction costs.

On March 5, 2020, RioCan acquired a 50% co-ownership interest in 3180 Dufferin Street in Toronto, Ontario for a purchase price of $28.5 million, including transaction costs. This property is earmarked as a mixed-use redevelopment site with a potential 440,000 square feet (at 100%) of gross floor area and is adjacent to RioCan's 100% owned Dufferin Plaza which also has significant redevelopment potential. The redevelopments of the two sites will be coordinated in order to achieve efficiencies and potentially unlock Dufferin Plaza’s redevelopment potential sooner.



Development Property Dispositions There were no development property dispositions during Q2 2020.

On March 31, 2020, RioCan completed the pre-agreed sale of a 100% interest in one-third of the air rights relating to the 5th & THIRD project in Calgary, Alberta, for sales proceeds of $11.7 million as planned. The firm deal to sell the remaining two-thirds of the residential air rights strata parcel at 5th & THIRD is expected to close by the end of the year.

On February 19, 2020, RioCan sold one development property located in Laval, Quebec, for sales proceeds of $10.0 million.

Completed Developments in 2020 During the six months ended June 30, 2020, RioCan transferred $54.6 million in costs to income producing properties pertaining to 137,000 square feet of completed development projects. A summary of RioCan’s NLA completed during the period is as follows:

NLA at RioCan's Interest(thousands of sq. ft.) 2020

TenantsProperty location RioCan’s %

ownership Total NLA Q2 Q1

Urban Intensification

Brentwood Village (Brio) 50 % 72 4 68 Residential Tower, Papa's Grill, Cora's Breakfast, Denim & Smith

Fifth and Third East Village (5th & THIRD) 100 % 23 — 23 Olympia LiquorTotal Urban Intensification 95 4 91

Expansion and Redevelopment

Garden City Shopping Centre 100 % 26 — 26 Michaels, Popeyes Louisiana Chicken, Qdoba Mexican Eats

Kennedy Commons 50 % 10 — 10 QuanU FurnitureRioCan West Ridge Place 100 % 4 — 4 State & Main1910 Bank Street 100 % 2 — 2 Starbucks

Total Expansion and Redevelopment 42 — 42

Total Development Completion 137 4 133

For 2020, the Trust estimates to complete 447,034 square feet of developments, which will lead to $350.7 million in cost transfers from PUD to IPP and $14.6 million of incremental NOI upon project stabilization. For 2021, the Trust estimates to complete 334,424 square feet of developments, which will lead to $221.9 million in cost transfers from PUD to IPP and $9.9 million of incremental NOI upon project stabilization.The above project completion estimates have taken into account the effect of the current pandemic based on management's best estimate from information currently available. The cost transfers estimated above reflect gross IFRS costs net of proceeds from sales of air rights. They are not net of applicable interim or fee income during the development period to arrive at net project costs, which RioCan uses in estimating a project's development yield.



Greenfield DevelopmentAs at June 30, 2020, RioCan currently has two active commercial greenfield development projects with detailed cost estimates as follows:


RioCan's%

Ownership

Total NLA Upon ProjectCompletion

TotalEstimated

Costs

Costs incurred to date Estimated PUD

Costs to Complete

%Commercial

Leased (i)

AnticipatedDate of

DevelopmentCompletion

(thousands of dollars orthousands of sq. ft.) Completed PUD Total Completed PUD Total

East Hills, Calgary, AB 40% 169 121 290 $ 110,783 $ 53,177 $ 38,170 $ 91,347 $ 19,436 60% 2022

Windfields FarmCommercial Phase One,Oshawa, ON

100% — 140 140 73,752 — 39,771 39,771 33,981 68% 2021

Total Estimated PUDCosts 169 261 430 $ 184,535 $ 53,177 $ 77,941 $ 131,118 $ 53,417

Fair Value to date $ 53,523 $ 62,494 $ 116,017

(i) Leasing activity includes leasing that is conditional on receiving municipal approvals and meeting construction deadlines. The percentage of commercial leasing activity is as at July 28, 2020.

Windfields Farm is a multi-phase, mixed-use project that includes commercial and residential uses. Phase One of the commercial component of the project has detailed cost estimates approved and is therefore included in the above table. Further details of the remaining components of the Windfields Farm project are included in the Mixed-Use Residential Development and Residential Inventory sections of this MD&A.

As of the release date of this MD&A, approximately 270,000 square feet of the above greenfield development NLA has committed leases, which includes tenants that have taken possession of the space, at a weighted average net rental rate of approximately $22.33 per square foot.

Urban IntensificationA focus within our development growth strategy is urban intensification, which is the category for our residential mixed-use and commercial development program. The Trust currently has 11 active urban intensification projects with detailed cost estimates that will generate approximately 3.0 million square feet of NLA at RioCan’s interest upon completion over the next five years, including air rights that have been or are expected to be sold. Excluding such air rights, these 11 active urban intensification projects are expected to generate approximately 2.0 million square feet of estimated NLA. Our urban intensification program currently is focused on properties located in densely populated areas in the urban cores of Toronto, Ottawa and Calgary.



A summary of our urban intensification projects with detailed cost estimates as at June 30, 2020 is as follows:


Total PUD NLA UponProject Completion Costs incurred to date

(thousands of dollars or thousands of sq. ft.)

RioCan’s%

OwnershipCompleted PUD Total

TotalEstimated

CostsCompleted PUD Total

Estimated PUD

Costs to Complete

%Commercial

Leased (i)

AnticipatedDate of

DevelopmentCompletion

Brentwood Village (Brio),Calgary, AB (iv) 50 % 72 — 72 $ 38,500 $ 36,891 $ — $ 36,891 $ 1,609 66% 2020

Dupont Street (Litho),Toronto, ON (iv) 50 % — 93 93 76,394 — 42,649 42,649 33,745 100% 2021

Fifth and Third EastVillage (5th & THIRD),Calgary, AB (iv)

100 % 348 409 757 117,150 57,852 55,111 112,963 4,187 88% 2021

Yorkville (11 YV),Toronto, ON (iv) (vii) 50 % — 40 40 48,923 — 14,757 14,757 34,166 n/a 2024

Gloucester - Phase Two(Latitude), Ottawa, ON(iv)

50 % — 80 80 47,042 — 19,045 19,045 27,997 n/a 2021

College & Manning(Strada),Toronto, ON (iv) 50 % 27 27 54 42,129 9,123 18,248 27,371 14,758 91% 2021

The Well, Toronto, ON(iii) (iv) (v)

50% ofcommercial

40% ofresidential

air rights

— 1,198 1,198 887,019 — 460,246 460,246 426,773 84% 2021-2023

The Well - (FourFifty TheWell), Toronto, ON (iv) 50 % — 196 196 142,591 — 9,784 9,784 132,807 n/a 2023

Yonge Sheppard CentreResidential (Pivot),Toronto, ON (iv)

100 % — 258 258 237,279 — 210,202 210,202 27,077 n/a 2020

Elmvale Acres - PhaseOne (Luma), Ottawa, ON(iv) (vi)

100 % — 136 136 86,372 — 25,490 25,490 60,882 n/a 2022

Westgate - Phase One(Rhythm), Ottawa, ON(iv)

100 % — 165 165 97,475 — 17,493 17,493 79,982 n/a 2023

Total Estimated Costs(ii) 447 2,602 3,049 $1,820,874 $ 103,866 $873,025 $ 976,891 $ 843,983

Fair Value to date $ 121,093 $942,163 $1,063,256

(i) Leasing activity includes leasing that is conditional on receiving municipal approvals and meeting construction deadlines. Leasing shown in this table is calculated as a percentage of commercial square footage only as there is typically no pre-leasing for residential rental square footage. The percentage of commercial leasing activity is as at July 28, 2020.

(ii) Total Estimated Costs exclude fair value gains of $69.1 million for properties under development.(iii) The total estimated PUD costs for The Well are net of approximately $61.0 million of recoverable costs at RioCan's interest relating to matters

such as parking, parkland dedication, and an Enwave thermal energy tank based on the air rights sale agreement and other agreements in place. However, the estimated PUD costs have not deducted approximately $75.6 million (at RioCan's interest) of estimated proceeds from the sale of residential air rights at the project. Net of the estimated proceeds from the sale of residential air rights, the total estimated PUD costs for The Well (at RioCan's interest) would be $811.4 million. As of July 28, 2020, over 94% of the hard costs have been tendered and 93% awarded.

(iv) These projects are committed, representing projects where all planning issues have been resolved, anchor tenant(s) has or have been secured, and/or construction is about to commence or has commenced.

(v) The 84% leased at The Well is based on committed leases, including extension rights, for office space only. The Well project will be completed in phases with the first office possession occurring in 2021, the majority of the phases completing in 2022 and the final building completing in Q1 2023.

(vi) During Q3 2019, RioCan entered into a firm agreement to sell to Killam a 50% interest in an approximately 1.45 acre discrete portion of Elmvale Acres which is expected to close early in the third quarter of 2020 as severance of the land was obtained.

(vii) The Yorkville project (11 YV) consists of three components; the condominium tower, rental replacement units and retail. The NLA noted above represents only the rental replacement units and retail components of the project representing approximately 15% of the total area. For information on the condominium component refer to the Residential Inventory section in the MD&A.

As of the release date of this MD&A, approximately 642,000 square feet of the above urban intensification NLA under development has committed or in-place leases at a weighted average net rent rate of approximately $34.56 per square foot. In comparison to the previous quarter, the committed or in-place lease square footage decreased by 135,000 square feet due to the exclusion of the completed project at King Portland Centre offset by additional leasing at the others sites.



Expansion & RedevelopmentA summary of RioCan’s expansion and redevelopment projects as at June 30, 2020 is as follows:


RioCan's%

Ownership

Total PUDNLA Upon

ProjectCompletion

TotalEstimated

Costs

Costs Incurred to Date

(thousands of dollars or thousands of sq. ft.)Costs

Incurred toDate

HistoricalIPP Costs

(iii)Total

Estimated PUDCost to

Complete

Burlington Centre, Burlington, ON 50% 17 $ 5,444 $ 2,336 $ 3,000 $ 5,336 $ 108

Five Points, Oshawa, ON 100% 10 6,969 1 2,680 2,681 4,288

RioCan West Ridge Place, Orillia, ON 100% 2 926 471 — 471 455

Place St Jean, Saint-Jean-sur-Richelieu, QC 100% 2 1,457 150 — 150 1,307

Tanger Outlets - Kanata, Kanata, ON 50% 18 10,304 4,039 3,626 7,665 2,639

Yonge Sheppard Centre Commercial, Toronto, ON 100% 33 44,289 33,326 — 33,326 10,963

1208 1216 Dundas Street East, Whitby, ON 100% 8 7,447 3,279 1,551 4,830 2,617

Properties with former Sears units (ii) - 3 projects 43 11,117 4,228 3,066 7,294 3,823

Total Estimated PUD Costs (i) 133 $ 87,953 $ 47,830 $ 13,923 $ 61,753 $ 26,200

PUD Fair Value to date $ 43,805

(i) Total estimated PUD costs include carrying amounts transferred from IPP for redevelopment and exclude historical fair value losses of $17.9 million.

(ii) RioCan transferred carrying value associated with the spaces formerly occupied by Sears from IPP to PUD. The estimated PUD costs to complete are based upon various scenarios with the objective of developing these assets, such that RioCan can attract new tenants, achieve higher rents and improve the overall shopping centres.

(iii) Historical costs were costs of IPP prior to the transfer to PUD.

The 28,000 square foot decrease in NLA during the six months ended June 30, 2020 from the prior year end was primarily due to the transfer of certain projects from PUD to IPP upon project completions.



Residential InventoryResidential inventory is comprised of properties acquired or developed which RioCan intends to dispose all or part of in the ordinary course of business, rather than hold on a long-term basis for capital appreciation or for rental income purposes. It is expected that the Trust will earn a return on these assets through a combination of (i) property operating income earned during the relatively short interim occupancy period, which will be included in net income, and (ii) sales proceeds.


(thousands ofdollars or

thousands of sq.ft., except whereotherwise noted)

RioCan'sOwnership

%(Partner)

Condominium/TownhouseUnits Upon Project Completion

(at 100%)Total

EstimatedCosts (ii)

Costs incurred to date

EstimatedCosts to

Complete(ii)

Inventory gain($ millions)

AnticipatedDate of

CompletionCompleted InventoryCommissions

(ii) TotalCompleted

(i) Inventory Total

A. Active mixed-use residential inventory projects with detailed cost estimates

Yorkville (11YV), Toronto,ON (iii)

50% (CDCapital /

Metropia) — 586 586 $ 258,639 $ — $ 77,931 $ 5,683 $ 83,614 $ 175,025 $65.0 - $71.0 2024

WindfieldsFarm U.C.Towns,Oshawa, ON

50%(Tribute) 160 10 170 35,067 32,861 1,162 — 34,023 1,044 $12.9 2020

WindfieldsFarm U.C.Uptowns,Oshawa, ON(iii)

50%(Tribute) — 153 153 30,229 — 445 — 445 29,784 $5.0 - $5.5 2022

WindfieldsFarm U.C.Tower,Oshawa, ON(iii)

50%(Tribute) — 503 503 72,633 — 9,986 1,085 11,071 61,562 $14.0 - $16.0 2023

Subtotal 160 1,252 1,412 $ 396,568 $ 32,861 $ 89,524 $ 6,768 $129,153 $ 267,415 $96.9 - $105.4

B. Active mixed-use residential inventory projects with detailed cost estimates in progressWindfieldsFarm FuturePhases,Oshawa, ON(iv)

50%(Tribute) — 190 190 TBD $ — $ 1,208 $ — $ 1,208 TBD TBD 2023+

DufferinPlaza,Toronto, ON(iii) 100% — 608 608 TBD — 32,052 — 32,052 TBD TBD 2023+

ShoppersWorldBramptonPhase One,Brampton, ON(iii) 100% — 247 247 TBD — 2,122 — 2,122 TBD TBD 2025

RioCanLeasideCentre,Toronto, ON 100% — 637 637 TBD — 37,932 — 37,932 TBD TBD 2027

Queensway,Toronto, ON(iii)

50%(Talisker) — 525 525 TBD — 10,222 — 10,222 TBD TBD 2025

GTA Property,Toronto, ON 100% — TBD TBD TBD — 4,588 — 4,588 TBD TBD TBD

Subtotal — TBD TBD TBD $ — $ 88,124 $ — $ 88,124 TBD TBD

Total 160 TBD TBD TBD $ 32,861 $177,648 $ 6,768 $217,277 TBD TBD

(i) Excludes a total of 755 condominium units at eCondos and Kingly for which all final closings have occurred. (ii) Selling commissions paid are included in prepaid and other assets and will be transferred to costs of sales upon buyer possession of the units.

Such selling commissions are included in the total estimated costs and estimated costs to complete in the above table.(iii) These projects are included in the 2,600 condominium and townhouse units that are at various stages of active development referred to in the

Business Overview section of this MD&A. (iv) Windfields Farm Future Phases represents the additional townhomes expected to be completed at the site.

The table above summarizes the key condominium projects that are currently under active development.

• Yorkville (11 YV) - This is a 50/25/25 joint venture project amongst RioCan, Metropia and Capital Development in the prestigious Toronto neighborhood of Yorkville, which consists of 586 luxury condominium units, retail uses and up to 81 residential rental replacement units. Demolition has commenced at the site during the quarter and the project is expected to be completed by fall of 2024. The property is 98.0% (574 units) pre-sold as of July 28, 2020 at an average price of over $1,700 per square foot, exceeding initial expectations.



• Windfields Farm - This is a 50/50 joint venture project with Tribute Communities to develop a 31-acre residential component of lands at the Windfields Farm site located in Oshawa, Ontario, which includes 513 townhouses to be constructed in four phases and two phases of high rise condominiums.

U.C. Tower is a 503-unit high rise condominium tower project. As of July 28, 2020, the Trust and its partner Tribute Communities have entered into agreements to sell 87.1% (438 units) of all units, at an average sale price of approximately $590 per square foot.

Sales at the 153-unit three storey townhouse development at U.C. Uptowns commenced late in the first quarter and agreements to sell 81.7% (125 units) of all units have been entered into as of July 28, 2020, up 28.1% since early May despite the pandemic. This project is selling at approximately $309 per square foot.

• Dufferin Plaza - The current retail property is situated on 3.8 acres of land at the intersection of Dufferin Street and Apex Road in Toronto, Ontario in close proximity to Yorkdale Shopping Centre as well as major arterial roads, highways and public transit. The Trust plans to redevelop the property as a mixed-use property with approximately 608 units or a 417,000 square feet condominium tower and 32,000 square feet of retail. The project already has Official Plan approval.

• Shoppers World Brampton Phase One - Shoppers World Brampton is a large shopping centre on a 53-acre site located in Brampton, Ontario. It is located on Brampton’s regional intensification corridor just outside of downtown Brampton. It currently has a large bus terminal and is designated as the end terminal for the new LRT line. The City of Brampton has identified it as the city's uptown western anchor suitable for large scale mixed-used development. RioCan has estimated the property to have 4.5 million square feet of future excess density, which will be developed through multiple phases. Phase One of the development is located on two acres of vacant land at the southwest corner of the property, consisting of an estimated 247 condominium units and 248 rental residential units across two 25-storey towers and a 20,000 square foot retail podium.

• RioCan Leaside Centre - Leaside Centre is located at the corner of Eglinton Avenue East and Laird Drive in Toronto, Ontario. It is situated in the affluent Leaside area of Toronto and is adjacent to a new station along the new Eglinton Crosstown LRT. The property will have a direct secondary station entrance for the LRT. RioCan is in the process of rezoning the site to include residential rental, condominium, retail and office. The project will have five buildings with a total estimated GFA of 1.5 million square feet. Building D of the project site, which represents approximately 33% of the total GFA, is anticipated to be residential condominium with 637 units and 9,795 square feet of retail.

• Queensway - This property is located at the corner of Islington Avenue and the Queensway in Toronto, Ontario and is minutes away from the TTC Bloor Line and Mimico GO station, as well as close to major highways. This project is envisioned to consist of two towers with 525 condominium units, 10,120 square feet of residential rental units and 40,000 square feet of retail.

The following table shows changes in the aggregate carrying value of RioCan's residential inventory:

Three months ended June 30

Six months ended June 30

(thousands of dollars) 2020 2019 2020 2019

Balance, beginning of period $ 124,421 $ 180,561 $ 108,956 $ 206,123Dispositions (1,000) (37,632) (1,000) (79,625)Development expenditures 6,072 9,262 17,018 25,693Transfers from investment properties 48,155 — 52,674 —Balance, end of period $ 177,648 $ 152,191 $ 177,648 $ 152,191

For the three and six months ended June 30, 2020, the Trust recognized residential inventory gains of $0.2 million and $0.5 million, respectively, from the closing of additional units at Windfields Farm U.C. Towns and the eCondos condominium corporation taking possession of their guest suites during the first quarter, partially offset by cost adjustments for Kingly.

Incremental Value CreationAs of June 30, 2020, the Trust has recognized $96.9 million of cumulative fair value gains for properties under development, including completed components. Most of the recognized cumulative fair value gains are related to the present value of the expected air rights sales at The Well and 5th & THIRD projects based on firm agreements or fair value gains upon sales of co-ownership interests to partners such as in the case of Sunnybrook Plaza. When compared to the prior quarter, cumulative fair value gains decreased by $68.3 million mainly due to the transfer of King Portland Centre out of the development pipeline and the $38.1 million of fair value losses recognized in the three months ended June 30, 2020 as a result of the pandemic.

The Trust anticipates realizing substantial net value creation from its additional 17.7 million square feet of excess density that are either zoned or with zoning application submitted as well as 21.1 million square feet of future density. As of June 30, 2020, nominal fair value gains or inventory gains have been recognized relating to these 38.8 million square feet of densities.



Mortgages and Loans Receivable Contractual mortgages and loans receivable as at June 30, 2020 and December 31, 2019 are comprised of the following:

(thousands of dollars)Contractual interest rates Weighted

averageinterest rate June 30, 2020 December 31, 2019Low High

Mezzanine financing to co-owners 4.20% 6.35% 5.73% $ 169,558 $ 155,399Vendor-take-back and other 5.00% 6.35% 5.52% 29,303 20,552Total 4.20% 6.35% 5.70% $ 198,861 $ 175,951

All of the $198.9 million of mortgages and loans receivable as at June 30, 2020 are carried at amortized cost.

RioCan’s Declaration of Trust contains provisions that have the effect of limiting the aggregate value of the investment by the Trust in mortgages, other than mortgages taken back on the sale of RioCan’s properties, to a maximum of 30% of consolidated Unitholders’ equity. Additionally, RioCan is limited in the amount of capital that can be invested in greenfield developments and development properties held for resale to no more than 15% of the book value of RioCan's total consolidated Unitholders’ equity, and this limitation also applies to any mortgages receivable to fund the co-owners’ share of such developments referred to as mezzanine financing. At June 30, 2020, RioCan was in compliance with these restrictions.

CAPITAL RESOURCES AND LIQUIDITY Capital Management Framework RioCan defines capital as the aggregate of Unitholder and preferred unitholders’ equity and debt. The Trust’s capital management framework is designed to maintain a level of capital that:

• complies with investment and debt restrictions pursuant to 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 the Declaration of Trust, and/or approved by the Trust’s Board, through the Board’s annual review of the strategic plan and budget, supplemented by periodic Board and related committee meetings. Capital adequacy is monitored by management of the Trust by assessing performance against the approved annual plan throughout the year, which is updated accordingly, and by monitoring adherence to investment and debt restrictions contained in the Declaration of Trust and debt covenants (refer to Note 24 of RioCan's Condensed Consolidated Financial Statements). In selecting appropriate funding choices, RioCan’s objective is to manage its capital structure such that it diversifies its funding sources while minimizing its funding costs and risks. RioCan expects to be able to satisfy all of its financing requirements through the use of some or all of the following: cash on hand, cash generated by operations, refinancing of maturing debt, utilization of its operating line of credit, credit facilities, construction financing facilities, sale of non-core properties and secondary markets properties, and through public offerings of unsecured debentures and common equity. In challenging market conditions, the Trust could finance certain assets currently unencumbered by debt or issue preferred units.

Credit RatingsRioCan intends to maintain strong debt service coverage and fixed charge coverage ratios as part of its commitment to maintaining its investment-grade debt ratings from Standard and Poor’s (S&P) and from DBRS Morningstar (DBRS). A credit rating generally provides an indication of the risk that the borrower will not fulfill its obligations in a timely manner with respect to both interest and principal commitments. Rating categories range from the highest credit quality (generally AAA) to default payment (generally D). The addition of a rating outlook modifier, such as "Positive", "Negative", "Stable" or "Developing" assesses the potential direction of a long-term credit rating over the intermediate term (typically six months to two years).

The following table summarizes RioCan’s credit ratings as at June 30, 2020:

S&P DBRSCredit Rating Outlook Credit Rating Trend

Issuer Credit Rating BBB Stable BBB (high) StableSenior Unsecured Debentures BBB N/A (i) BBB (high) Stable

(i) S&P does not provide an Outlook on the Debentures.

An obligor with a credit rating of BBB by S&P exhibits adequate capacity to meet its financial obligations, however, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. A credit rating of BBB- or higher is an investment grade rating.



A credit rating of BBB by DBRS is generally an indication of adequate credit quality, the capacity for the payment of financial obligations is considered acceptable but the entity may be vulnerable to future events.

Capital Structure RioCan’s capital structure is as follows:

(thousands of dollars) IFRS RioCan's proportionate shareAs at June 30, 2020 December 31, 2019 June 30, 2020 December 31, 2019Capital:

Debentures payable $ 3,091,273 $ 2,891,648 $ 3,091,273 $ 2,891,648Mortgages payable 2,721,930 2,412,451 2,829,167 2,514,178Lines of credit and other bank loans 856,355 1,086,719 878,000 1,106,105

Total debt $ 6,669,558 $ 6,390,818 $ 6,798,440 $ 6,511,931Total equity 7,768,842 8,305,211 7,768,842 8,305,211Total capital $ 14,438,400 $ 14,696,029 $ 14,567,282 $ 14,817,142Total assets $ 15,070,648 $ 15,188,326 $ 15,211,142 $ 15,317,298Cash and cash equivalents $ 80,458 $ 93,516 $ 81,609 $ 96,564Ratio of total debt to total assets (net of cash and cash equivalents) 44.0% 41.7% 44.4% 42.1%

Ratio of floating rate debt to total debt 2.4% 6.1% 2.8% 6.4%

The Trust's leverage ratio at RioCan's proportionate share increased from December 31, 2019, mainly due to the impacts of the pandemic on the Trust's property operations and valuations. The Trust remains committed to maintaining a strong balance sheet.

The Trust reduced its floating interest rate debt exposure to 2.8% as at June 30, 2020 (December 31, 2019 - 6.4%) mainly through the issuance of a $350.0 million unsecured senior debenture green bond at a fixed rate in March 2020 and obtaining additional fixed rate mortgages with a significant portion of the net proceeds used to pay down floating rate debt such as the Trust's unsecured revolving line of credit. Refer to the Debentures Payable and Mortgages Payable sections of this MD&A for further details.

Liquidity Liquidity refers to the Trust having credit availability under committed credit facilities and/or generating sufficient amounts of cash and cash equivalents to fund the ongoing operational commitments, distributions to Unitholders and planned growth in the business. RioCan retains a portion of its operating cash flows to help fund ongoing maintenance capital expenditures including tenant improvements costs and long-term contractual obligations, among other items.

Cash on hand, borrowings under the revolving unsecured operating line of credit, non-revolving unsecured credit facilities, construction financing facilities, debt and equity capital markets, secured financing and the potential sale of assets also provide the necessary liquidity to fund ongoing and future capital expenditures and obligations.



As at June 30, 2020, RioCan had approximately $1.0 billion of liquidity as summarized in the following table:

(thousands of dollars, except whereotherwise noted) IFRS RioCan's proportionate share

As at June 30, 2020 December 31, 2019 June 30, 2020 December 31, 2019Cash and cash equivalents $ 80,458 $ 93,516 $ 81,609 $ 96,564Undrawn revolving unsecuredoperating line of credit 872,000 658,000 872,000 658,000Undrawn construction lines of creditand other bank loans 41,237 58,327 91,000 110,339Liquidity $ 993,695 $ 809,843 $ 1,044,609 $ 864,903Contractual debt:

Debentures payable $ 3,100,000 $ 2,900,000 $ 3,100,000 $ 2,900,000Mortgages payable 2,721,748 2,409,917 2,829,248 2,511,930Lines of credit and other bank loans 859,263 1,090,172 880,940 1,109,600

Total contractual debt $ 6,681,011 $ 6,400,089 $ 6,810,188 $ 6,521,530

Percentage of total contractual debt:Liquidity 14.9% 12.7% 15.3% 13.3%Unsecured debt 58.8% 61.6% 57.7% 60.4%Secured debt 41.2% 38.4% 42.3% 39.6%

In addition, RioCan has unencumbered investment properties with a fair value of $8.7 billion on a proportionate share basis, which give RioCan the potential to obtain additional mortgages to bolster liquidity, if needed, and preserve the revolving unsecured line of credit, which is essentially undrawn or little drawn, while maintaining debt metrics. Refer to the Business Overview section of this MD&A for various initiatives the Trust is undertaking to conserve cash and enhance liquidity under the current COVID-19 pandemic.

Our liquidity is impacted by contractual debt commitments and committed expenditures on active development projects. Our contractual debt commitments and committed development expenditures for the next five years are as follows:

(thousands of dollars) 2020 (i) 2021 2022 2023 2024 Thereafter TotalContractual obligations:

Lines of credit and other bank loans $ — $ 31,263 $ — $ 200,000 $ 628,000 $ — $ 859,263Mortgages payable 167,841 448,524 189,549 304,858 258,195 1,352,781 2,721,748Unsecured debentures 250,000 550,000 550,000 500,000 300,000 950,000 3,100,000Lease liabilities (ii) 864 1,549 1,621 1,668 1,669 27,912 35,283Other lease obligations 338 306 206 80 23 4 957

Total $ 419,043 $ 1,031,642 $ 741,376 $ 1,006,606 $ 1,187,887 $ 2,330,697 $ 6,717,251

Active committed developments (iii) 126,573 443,859 222,852 136,165 109,066 — 1,038,515Total $ 545,616 $ 1,475,501 $ 964,228 $ 1,142,771 $ 1,296,953 $ 2,330,697 $ 7,755,766

(i) Amounts pertain to the remaining six months of 2020. (ii) Represents the discounted minimum lease payments of lease liabilities under IFRS 16.(iii) Represents estimated development costs to complete committed properties under active development and active residential inventory projects. A

project is committed only when all major planning issues have been resolved, anchor tenant(s) for the commercial components has/have been secured, and/or construction is about to commence or has commenced. The costs of additional projects will be added to this schedule once a project becomes committed. The amounts are presented net of projected proceeds from dispositions including air rights sale proceeds related to its 5th & THIRD project in Calgary, Alberta and a portion of The Well in Toronto, Ontario, which currently remain on plan to close in 2020.

The Trust's contractual debt obligations and projected development expenditures can be funded by net proceeds from the sale of non-core and secondary market assets (including, but not limited to, sale of excess land and potential air rights), existing cash on hand, our revolving unsecured operating line of credit, proceeds from mortgage refinancing and proceeds from the issuance of unsecured debentures or issuance of equity Units.

As of July 28, 2020, only approximately $81.8 million of RioCan’s mortgage maturities for the remainder of 2020 have yet to be refinanced or have refinancing commitments in place. They are all due in the last quarter of 2020 and are expected to be refinanced in due course. On June 1, 2020, RioCan redeemed, in full, its $150.0 million 3.62% Series U unsecured debentures in accordance with their terms. RioCan's remaining 2020 debenture maturity of $250 million, due in August 2020, has been effectively refinanced with the $350.0 million, 7-year inaugural Green Bond issuance on March 10, 2020 at an annual coupon rate of 2.361%.



RioCan has also entered into purchase obligations to acquire certain interests from its partners as further described in Note 3 in the Condensed Consolidated Financial Statements.

RioCan, as a mutual fund trust, expects to make monthly distributions to Unitholders with the cash generated from ongoing operating activities. Our Unitholder dividend reinvestment plan (“DRIP”) allows us to conserve liquidity by issuing additional Units, as opposed to paying cash distributions. Although RioCan suspended its DRIP effective November 1, 2017, RioCan can elect to reinstate the DRIP in the future, should we decide that it is beneficial to do so.

Unencumbered AssetsAt RioCan's proportionate share, the fair value of the unencumbered investment property assets as at June 30, 2020 is estimated at $8.7 billion or 60.7% of total fair value of investment properties compared to fair value of $8.9 billion as at December 31, 2019. This has resulted in approximately 62.0% of NOI at RioCan's proportionate share being generated by unencumbered assets (December 31, 2019 - 58.5%). The decrease in the unencumbered assets from the previous quarter was due to mortgages obtained during the quarter on certain formerly unencumbered assets, as well as fair value write-down this quarter as a result of the pandemic. The increase in NOI generated from unencumbered assets was due to changes in the composition of the unencumbered assets pool relative to the composition of the encumbered assets pool.

The table below presents RioCan's unencumbered assets and unsecured debt:

IFRS RioCan's proportionate share(thousands of dollars, except where otherwise noted) Targeted

RatiosJune 30, December 31, June 30, December 31,

As at 2020 2019 2020 2019Unencumbered assets $ 8,656,602 $ 8,895,777 $ 8,696,843 $ 8,936,721Unsecured debt:

Debentures $ 3,100,000 $ 2,900,000 $ 3,100,000 $ 2,900,000Amounts drawn on revolving unsecuredoperating line of credit 128,000 342,000 128,000 342,000

Amounts drawn on non-revolving unsecuredcredit facilities 700,000 700,000 700,000 700,000

Total unsecured debt outstanding $ 3,928,000 $ 3,942,000 $ 3,928,000 $ 3,942,000Unsecured debt to total debt 60.0% 58.8% 61.6% 57.7% 60.4%Unencumbered assets to unsecured debt > 200% 220% 226% 221% 227%NOI generated from unencumbered assets (i) > 50.0% 61.6% 58.2% 62.0% 58.5%

(i) Refer to the Non-GAAP Measures section of this MD&A for further details.

Debt Metrics RioCan’s debt metrics are tracked and disclosed on a quarterly basis to help facilitate financial statement users’ and stakeholders’ understanding of RioCan’s ability to service its debt and fixed charges. Presented below are the Trust's key debt metrics presented on both an IFRS and RioCan's proportionate share basis in comparison to our targeted ratios:

Rolling 12 months endedIFRS RioCan's proportionate share

TargetedRatios

June 30, December 31, June 30, December 31,2020 2019 2020 2019

Debt to Adjusted EBITDA (i) <8.0x 8.85 8.05 8.80 8.06

Interest coverage (i) >3.00x 3.30 3.52 3.30 3.50Debt service coverage (i) >2.25x 2.78 2.98 2.78 2.96Fixed charge coverage (i) >1.10x 1.08 1.15 1.09 1.16

(i) Refer to the Non-GAAP Measures section of this MD&A for further details. See tables below for the calculation of Adjusted EBITDA for the respective periods.

The Trust's Debt to Adjusted EBITDA at RioCan's proportionate share increased to 8.80x for the rolling twelve months ended June 30, 2020 compared to the same period ended December 31, 2019. The increase was primarily due to lower Adjusted EBITDA as a result of the COVID-19 pandemic related provision for rent abatements and bad debts, lower residential inventory gains due to timing of inventory sales, lower fee income and higher average debt.

The interest coverage ratio at RioCan's proportionate share for the rolling twelve months ended June 30, 2020 remained well above the RioCan target of 3.0x but declined compared to December 31, 2019, mainly due to lower Adjusted EBITDA as noted earlier and higher interest costs from higher debt balances.



For similar reasons, debt service coverage at RioCan's proportionate share for the rolling twelve months ended June 30, 2020 declined to an extent but remained well above the RioCan target of 2.25x when compared to December 31, 2019.

The fixed charge coverage ratio at RioCan's proportionate share for the rolling twelve months ended June 30, 2020 is lower compared to December 31, 2019, primarily as a result of lower Adjusted EBITDA, higher interest costs and higher distributions as a result of a private placement of Units in August 2019 and a public Unit offering completed in October 2019.

The following tables present a reconciliation of consolidated net income attributable to Unitholders to Adjusted EBITDA:

12 months endedIFRS RioCan's proportionate share

(thousands of dollars)June 30, December 31, June 30, December 31,

2020 2019 2020 2019Net income attributable to Unitholders $ 80,392 $ 775,834 $ 80,392 $ 775,834Add (deduct) the following items:Income tax expense (recovery):Current 630 (699) 630 (699)Deferred (16) 2,064 (16) 2,064Fair value losses (gains) on investment properties, net 413,211 (247,624) 426,008 (239,294)Change in unrealized fair value on marketable securities (i) 14,811 15,637 14,811 15,637Internal leasing costs 11,175 11,309 11,175 11,309Non-cash unit based compensation expense 7,800 6,478 7,800 6,478Interest costs 182,762 182,780 187,754 187,871Depreciation and amortization 4,431 4,381 4,431 4,381Transaction losses on the sale of investment properties, net(ii) 1,517 1,066 1,517 1,066Transaction costs on investment properties 6,058 7,989 6,058 7,989Operational lease revenue and expenses fromROU assets (iii) 2,408 1,963 2,382 1,939Adjusted EBITDA $ 725,179 $ 761,178 $ 742,942 $ 774,575

Debt, net of cash and cash equivalents iscalculated as follows:

Average debt outstanding $ 6,500,468 $ 6,206,562 $ 6,620,409 $ 6,324,391Less: average cash and cash equivalents (83,896) (75,705) (86,099) (78,599)Debt, net of cash and cash equivalents $ 6,416,572 $ 6,130,857 $ 6,534,310 $ 6,245,792Debt to Adjusted EBITDA 8.85 8.05 8.80 8.06

(i) Adjustment is a result of adopting IFRS 9 on January 1, 2018 without prior period restatement. The fair value gains on marketable securities under IFRS 9 include both the change in unrealized fair value and realized gains on sale of marketable securities. By adding back the change in unrealized fair value on marketable securities, RioCan effectively continues to include realized gains or losses on the sale of marketable securities in Adjusted EBITDA and excludes unrealized fair value gains (losses) on marketable securities in Adjusted EBITDA. Refer to the Non-GAAP Measures section of this MD&A for more detailed discussion on Adjusted EBITDA and IFRS 9's impact on Adjusted EBITDA.

(ii) Includes transaction gains and losses realized on the disposal of investment properties.

(iii) The Trust has also included adjustments for certain subleases or leases that are classified as finance leases under IFRS 16 effective January 1, 2019, consistent with the adjustments in the REALPAC definitions of FFO and ACFO that were recently released in February 2019. The adjustment relates to operational revenue and expenses from ROU assets as a result of certain subleases and leases that were classified as operating leases under IAS 17 and are classified as finance leases under IFRS 16, such that the principal portion of the relevant lease receipt and/or lease payment continues to be reflected in Adjusted EBITDA upon the adoption of IFRS 16 on January 1, 2019.



Total Debt Profile RioCan's fixed and floating rate debt as a percentage of total debt, and term to maturity are as follows:


As at June 30, 2020 Total debt

Percentage oftotal RioCan's

aggregate debt

Weighted averageterm to maturity in

years

Weighted averagecontractual

interest rate

Weighted average effective

interest rateTotal debt at:

Fixed rate $ 6,512,405 97.6% 3.87 3.25% 3.33%Floating rate 157,153 2.4% 3.33 1.69% 1.71%

Total debt $ 6,669,558 100.0% 3.86 3.21% 3.29%


As at December 31, 2019 Total debt

Percentage oftotal RioCan's

aggregate debt

Weighted averageterm to maturity in

years

Weighted averagecontractual

interest rate

Weighted average effective

interest rateTotal debt at:

Fixed rate $ 6,003,200 93.9% 3.67 3.35% 3.46%Floating rate 387,618 6.1% 3.95 3.14% 3.16%

Total debt $ 6,390,818 100.0% 3.69 3.34% 3.44%

The following table summarizes the activity in total debt, for the six months ended June 30, 2020:


Six months ended June 30, 2020 DebenturesMortgages

Payable

Lines of Creditand Other Bank

Loans TotalContractual obligations, beginning of period $ 2,900,000 $ 2,409,917 $ 1,090,172 $ 6,400,089Borrowings 350,000 562,946 13,211 926,157Scheduled amortization — (20,249) — (20,249)Repayments (150,000) (234,455) (244,120) (628,575)Disposed on the sale of properties — (12,112) — (12,112)Assumed on the acquisition of properties — 15,701 — 15,701Contractual obligations, end of period $ 3,100,000 $ 2,721,748 $ 859,263 $ 6,681,011Unamortized differential between contractual andmarket interest rates on liabilities assumed at theacquisition of properties and unamortized debtmodification losses

— 5,347 546 5,893

Unamortized debt financing costs, net of premiumsand discounts (8,727) (5,165) (3,454) (17,346)

Balance, end of period $ 3,091,273 $ 2,721,930 $ 856,355 $ 6,669,558



RioCan’s debt maturity profile and future repayments are as outlined below:

Contractual principal maturities and interest rates

(thousands of dollars)Debentures

payable

Weightedaverageinterest

rateMortgages

payable


rate

Lines ofcredit

and otherbank loans


rate

Totalaggregate

debt


rateYear of debt maturity

2020 (i) $ 250,000 2.19% $ 167,841 3.57% $ — —% $ 417,841 2.74%2021 550,000 2.89% 448,524 3.94% 31,263 1.58% 1,029,787 3.30%2022 550,000 3.25% 189,549 3.29% — —% 739,549 3.26%2023 500,000 3.42% 304,858 3.47% 200,000 3.28% 1,004,858 3.41%2024 300,000 3.29% 258,195 3.45% 628,000 3.03% 1,186,195 3.19%Thereafter 950,000 2.85% 1,352,781 3.39% — —% 2,302,781 3.17%

$ 3,100,000 3.01% $ 2,721,748 3.50% $ 859,263 3.04% $ 6,681,011 3.21%Unamortized differential between contractual and market interest rates on liabilities assumed at the acquisition of properties and unamortized debt modification losses

— 5,347 546 5,893

Unamortized debt financing costs, net ofpremiums and discounts (8,727) (5,165) (3,454) (17,346)

Balance, end of period $ 3,091,273 $ 2,721,930 $ 856,355 $ 6,669,558

(i) Amounts pertain to the remaining six months of 2020.

Debentures Payable RioCan’s debentures maturity profile and future repayments are as outlined below:

Year of debenture maturityWeighted average

contractual interest ratePrincipal

maturities2020 (i) 2.19% $ 250,0002021 2.89% 550,0002022 3.25% 550,0002023 3.42% 500,0002024 3.29% 300,000Thereafter 2.85% 950,000Contractual obligations $ 3,100,000Unamortized debt financing costs (8,727)

$ 3,091,273

(i) Amounts pertain to the remaining six months of 2020.

The unsecured debentures have covenants similar to our 60% debt to Aggregate Assets limit as set out in RioCan’s Declaration of Trust, the maintenance of at least $1.0 billion in consolidated Unitholders' equity and maintenance of an interest coverage ratio of 1.65 times or better. There are no requirements under the unsecured debenture covenants that require RioCan to maintain unencumbered assets. The Series I debentures, which are due in 2026 and are $100 million in aggregate, have an additional provision that provides RioCan with the right, at any time, to convert these debentures to mortgage debt, subject to the acceptability of the security given to the debenture holders. In such an event, the covenants relating to the 60% leverage limit, minimum consolidated Unitholders' equity and interest coverage ratio would be eliminated for this series of debentures.

Issuance

On March 10, 2020, RioCan issued $350.0 million of Series AC senior unsecured debentures. These debentures were issued at par, carry a coupon rate of 2.361% per annum and will mature on March 10, 2027. These Series AC debentures are RioCan’s inaugural Green Bond issuance and the first Green Bond issued by a REIT in Canada.

Redemption

On June 1, 2020, RioCan redeemed, in full, its $150.0 million 3.62% Series U unsecured debentures in accordance with their terms.



Mortgages Payable Mortgages payable and mortgages on properties held for sale consist of the following:

(thousands of dollars)As at June 30, 2020 December 31, 2019Mortgages payable (ii) $ 2,721,930 $ 2,412,451

Fixed rate mortgages (i) (ii) $ 2,721,930 $ 2,412,451

(i) Includes hedged floating rate mortgages.(ii) Amount outstanding includes total of $0.2 million in unamortized differential between contractual and market interest rates on liabilities assumed at

the acquisition of properties and unamortized debt modification losses, net of unamortized financing costs.

At the outset of 2020, RioCan had $503.9 million of mortgage principal maturing in 2020 at a weighted average contractual interest rate of 3.64%. For the six months ended June 30, 2020, RioCan completed new term mortgage borrowings of $562.9 million and renewals at maturity balance of $88.0 million at a weighted average interest rate of 3.02% and a weighted average term of six years, repaid $254.7 million of mortgage balances and scheduled amortization and assumed $15.7 million of mortgage financing pursuant to the completion of acquisitions at a weighted average interest rate of 3.30%.

During the six months ended June 30, 2020, the Trust closed on its first CMHC insured mortgage, a $28.6 million loan (at RioCan's interest) at its Frontier property in Ottawa, bearing interest at an annual rate of 2.63%, with a 10-year term. In addition, the Trust also had $150.0 million of financing for eCentral and the retail component of ePlace in Toronto, Ontario, at a fixed contractual interest rate of 2.58% for an 11-year term. It is anticipated that the loan will become CMHC insured in Q3 2020, at which time the contractual interest rate of such advance will be reduced to 2.33%. Furthermore, a second tranche of funding will be advanced for the property at an interest rate to be determined at such time. Maximizing CMHC insured mortgages is a key component of the Trust’s debt strategy as it provides access to a new source of financing and lowers its overall cost of debt.

The majority of our mortgage debt provides recourse to the assets of the Trust, as opposed to only having recourse to the specific property charged. We follow this policy as it generally results in lower interest rates for the Trust.

Lines of Credit and Other Bank Loans Lines of credit and other bank loans consist of the following:

(thousands of dollars)As at June 30, 2020 December 31, 2019Revolving unsecured operating line of credit (i) $ 125,890 $ 339,446Non-revolving unsecured credit facilities (i) 699,202 699,101Construction lines and other bank loans 31,263 48,172

$ 856,355 $ 1,086,719

(i) Amount outstanding is net of a total of $2.9 million in unamortized financing costs and unamortized differential between contractual and market interest rates on liabilities assumed at the acquisition of properties and unamortized debt modification losses.

Revolving Unsecured Operating Line of Credit RioCan had a drawn balance of $128.0 million and $872.0 million of credit availability to be drawn from its revolving unsecured operating line of credit at June 30, 2020. The weighted average contractual interest rate on amounts drawn under this facility was 1.72% (December 31, 2019 - 3.19%).

Non-revolving Unsecured Credit Facilities The Trust has a $200 million non-revolving unsecured credit facility with two financial institutions (consisting of a Schedule I and a Schedule III bank), with a maturity date of January 31, 2023 and a weighted average annual all-in fixed interest rate of 3.28% through interest rate swaps.

In addition, the Trust has a $150 million non-revolving unsecured credit facility with two financial institutions (consisting of a Schedule I and a Schedule III bank), with a maturity date of June 27, 2024 and fixed annual all-in interest rate of 3.43% through an interest rate swap.

The Trust also has a $350.0 million five-year non-revolving unsecured credit facility with three financial institutions (consisting of two Schedule I banks and one Schedule III bank). This credit facility matures on February 7, 2024 and, through an interest rate swap, bears an annual all-in fixed interest rate of 3.34%.

As of June 30, 2020, all of the Trust's non-revolving unsecured credit facilities are fully drawn.



Construction Lines of Credit and Other Bank LoansIn addition to the revolving unsecured operating line of credit and non-revolving unsecured credit facilities, the Trust has secured credit facilities and other bank loans, which include variable rate non-revolving secured construction facilities for the funding of certain development properties. At June 30, 2020, these secured facilities and other bank loans have an aggregate maximum borrowing capacity of $72.5 million (December 31, 2019 - $106.5 million) and mature in 2021, of which the Trust had drawn $31.3 million (December 31, 2019 - $48.2 million). The weighted average contractual interest rate on the aggregate amounts outstanding is 1.58% (December 31, 2019 - 2.93%).

Letter of Credit FacilitiesThe Trust has aggregate letter of credit facilities with certain Schedule I banks totaling $91.2 million (December 31, 2019 - $76.4 million). As at June 30, 2020, the Trust’s outstanding letters of credit under these facilities was $75.2 million (December 31, 2019 - $54.8 million).

Guarantees As at June 30, 2020, the maximum exposure to loss resulting from the Trust's debt guarantees, on behalf of certain of our co-owners' interests and mortgages assumed by purchasers on property dispositions, is $185.5 million (December 31, 2019 - $163.2 million), with expiries between 2020 and 2025. The maximum exposure to credit risk relating to a guarantee is the maximum risk of loss if there was a total default, without consideration of recoveries under recourse provisions against the aforementioned parties or the properties secured.

As at and for the six months ended June 30, 2020, there have been no defaults by the primary obligors for debts on which we have provided guarantees and no provision for expected losses on these guarantees has been recognized in our Condensed Consolidated Financial Statements.

The parties on behalf of which RioCan has outstanding guarantees are as follows:

(thousands of dollars)As at June 30, 2020 December 31, 2019Partners and co-owners

HBC (RioCan-HBC JV) $ 41,775 $ 42,349Bayfield 26,709 26,709Other 61,089 37,497

$ 129,573 $ 106,555

Assumption of mortgages by purchasers on property dispositions 55,932 56,644$ 185,505 $ 163,199

Hedging Activities Interest Rate Risk As at June 30, 2020, the outstanding notional amount of floating-to-fixed interest rate swaps was $1.3 billion (December 31, 2019 – $1.3 billion) and the term to maturity of these agreements ranges from September 2020 to November 2028. We assess the effectiveness of the hedging relationship on a quarterly basis and have determined there is no ineffectiveness in the hedging of interest rate exposures as at June 30, 2020. Refer to Note 23 of the Condensed Consolidated Financial Statements for further details.



Trust UnitsAs at June 30, 2020, there are 317.7 million Units outstanding, including exchangeable limited partnership units. All Units outstanding have equal rights and privileges and entitle the holder to one vote for each Unit at all meetings of Unitholders. During the three and six months ended June 30, 2020 and 2019, we issued Units as follows:

Three months ended June 30 Six months ended June 30(in thousands) 2020 2019 2020 2019Units outstanding, beginning of period (i) 317,715 304,220 317,710 305,097Units issued:

Unit-based compensation exercises, net of Units repurchasedfor settlement of Unit exercises — 686 — 784Direct purchase plan 8 3 13 8Units repurchased and cancelled — — — (980)

Units outstanding, end of period (i) 317,723 304,909 317,723 304,909

(i) Included in Units outstanding are exchangeable limited partnership units of three limited partnerships that are subsidiaries of the Trust (the LP units) which were issued to vendors, as partial consideration for income properties acquired by RioCan (June 30, 2020 – 481,769 LP units, June 30, 2019 – 481,769 LP units).

As of July 28, 2020, there are 317.7 million Units issued and 6.4 million Unit options issued and outstanding under the Trust’s incentive Unit option plan.

Distribution Reinvestment Plan ("DRIP")Effective November 1, 2017, RioCan suspended its DRIP, and Unitholders that were enrolled in the DRIP receive cash distributions commencing with any distribution declared in November 2017.

Senior Executive Restricted Equity Plan (Senior Executive REU Plan)As at June 30, 2020, 242,341 Senior Executive REUs are outstanding (December 31, 2019 - 178,800), of which 54,488 are vested (December 31, 2019 - 56,833).

On March 2, 2020, the Trust granted 119,621 REUs under its Senior Executive REU Plan. The grant date price was $26.19 per unit based on the five-day volume weighted average market price of RioCan's Units traded on the TSX prior to the grant date, resulting in an aggregate fair value of $3.1 million.

The number of REUs granted shall vest one-third on each of the first, second and third anniversary of the grant date, provided however that all vested REUs are only eligible for settlement upon the third anniversary of the grant date (Settlement Date). Settlement of vested REUs is generally made within 30 days after the Settlement Date by the delivery of an equivalent number of Units purchased on the secondary market, net of applicable withholding taxes.

Employee Restricted Equity Plan (Employee REU Plan)As at June 30, 2020, 289,586 Employee REUs are unvested and outstanding (December 31, 2019 - 232,926).

On March 2, 2020, the Trust granted 101,979 REUs under its Employee REU Plan. The grant date price was $26.19 per unit based on the five-day volume weighted average market price of RioCan's Units traded on the TSX prior to the grant date, resulting in an aggregate fair value of $2.7 million.

The number of REUs granted shall vest fully on the Settlement Date, including distribution equivalents that have accumulated during the vesting period. Settlement of vested REUs is generally made within 30 days after the Settlement Date by way of the delivery of an equivalent number of Units purchased on the secondary market, net of applicable withholding taxes.

Performance Equity Unit Plan (PEU Plan)As at June 30, 2020, 428,293 PEUs are unvested and outstanding (December 31, 2019 - 416,737).

On March 2, 2020, the Trust granted 119,621 PEUs under its PEU Plan at a fair value of $23.95 per unit resulting in an aggregate fair value of $2.9 million on the grant date. These PEUs will fully vest in February 2023.

PEUs issued contain a multiplier factor and the final payout will vary based on certain performance targets over a three-year period from the year of the award. The 2020 PEU grant has two performance metrics for its PEU Plan, being a FFO per unit target over the 2020 to 2022 three-year period and a relative total unitholder return (TUR) over the three-year period against its peer group with a 75% and 25% weighting for its retail peers and other peers, respectively. Its peer group includes S&P/TSX Capped REIT companies with a market capitalization above $1.0 billion (excluding RioCan) plus First Capital Real Estate Investment Trust.



Incentive Unit Option PlanDuring 2020, there were no Unit options granted to senior management (December 31, 2019 - 0.4 million). A Unit option's maximum term is 10 years. All Unit options granted vest at 25% per annum commencing on the first anniversary of the grant date, and become fully vested after four years.

As at June 30, 2020, 12.5 million Unit options remain available for grant under the Plan (December 31, 2019 – 12.5 million Unit options).

Trustee Deferred Unit Plan (DU Plan)As at June 30, 2020, there are 407,474 deferred units vested and outstanding (December 31, 2019 - 319,506). During the three months ended June 30, 2020, 68,334 deferred units were granted and no deferred units were exercised (three months ended June 30, 2019 - 38,824 deferred units granted and 26,892 deferred units exercised). During the six months ended June 30, 2020, 75,726 deferred units were granted and no deferred units were exercised (six months ended June 30, 2019 - 44,792 deferred units granted and 26,892 deferred units exercised).

Normal Course Issuer BidOn October 15, 2019, RioCan received TSX approval of its notice of intention to renew its NCIB (2019/2020 NCIB), to acquire up to a maximum of 30,724,496 of its Units, or approximately 10% of its outstanding Units as at September 30, 2019, for cancellation over the next 12 months, effective October 22, 2019.

The number of Units that can be purchased pursuant to the 2019/2020 NCIB is subject to a current daily maximum of 145,737 Units (which is equal to 25% of 582,948, being the average daily trading volume from April 1, 2019 to September 30, 2019, excluding RioCan's purchases on the TSX under its former NCIB), subject to RioCan’s ability to make one block purchase of Units per calendar week that exceeds such limits. RioCan intends to fund the purchases primarily out of net proceeds from its asset dispositions, available cash and undrawn credit facilities.

Units acquired and cancelled prior to October 22, 2019, were pursuant to the NCIB in effect for the 12 months ended October 21, 2019.

During the three and six months ended June 30, 2020, the Trust did not purchase and cancel any Units.

Distributions to Unitholders RioCan qualifies as a mutual fund trust and a “real estate investment trust” (“REIT Exemption”) for Canadian income tax purposes. We expect to distribute all of our taxable income to Unitholders and are entitled to deduct such distributions for Canadian income tax purposes. From time to time, RioCan may retain some taxable income and net capital gains, when appropriate, in order to utilize the capital gains refund available to mutual fund trusts without incurring any income taxes. Accordingly, no provision for current income taxes payable is required, except for amounts incurred in our incorporated Canadian subsidiaries.

We consolidate certain wholly owned incorporated entities that are subject to tax. The tax disclosures, expense and deferred tax balances relate only to these entities.

If we were to cease to qualify for the REIT Exemption for Canadian income tax purposes, certain distributions ("taxable distributions") would not be deductible in computing income for Canadian income tax purposes and we would be subject to tax on such distributions at a rate substantially equivalent to the general corporate income tax rate. Any remaining distributions, other than taxable distributions, would generally continue to be treated as returns of capital to Unitholders. From year to year, the taxability of the Trust's distributions may fluctuate depending upon the timing of recognition of certain gains and losses based on the activities of the Trust.

Our monthly distribution in 2020 is $0.12 per unit, same as in 2019. Distributions declared to Unitholders are as follows:

Three months ended June 30 Six months ended June 30(thousands of dollars) 2020 2019 2020 2019Distributions declared to Unitholders $ 114,388 $ 109,681 $ 228,760 $ 219,417

RioCan suspended its DRIP effective November 1, 2017. If RioCan elects to reinstate the DRIP in the future, Unitholders who were enrolled in the DRIP at the time of its suspension and remain enrolled at the time of its reinstatement will automatically resume participation in the DRIP. Total distributions declared increased for the three and six months ended June 30, 2020 when compared to the same periods in the prior year as RioCan issued 3.8 million Units on a private placement basis on August 31, 2019 and 8.9 million Units in a public offering on October 28, 2019.



Difference between cash flows provided by operating activities and distributions to Unitholders

A comparison of distributions to Unitholders with cash flows provided by operating activities and distributions is as follows:

Three months ended June 30 Twelve months ended June 30(thousands of dollars) 2020 2019 2020 2019Cash flows provided by operating activities $ 122,015 $ 84,756 $ 643,632 $ 393,683Add / (deduct) the (increase) / decrease in non-cash

working capital items (18,211) 49,463 (149,759) 95,099Cash flows provided by operating activities, excluding non-

cash working capital items 103,804 134,219 493,873 488,782Less: Distributions declared to Unitholders (114,388) (109,681) (453,805) (441,237)Excess / (Deficit) $ (10,584) $ 24,538 $ 40,068 $ 47,545

For the three months ended June 30, 2020, cash flows provided by operating activities, excluding non-cash working capital items, were lower than distributions declared to Unitholders during the period by $10.6 million primarily as a result of the impact of the pandemic on RioCan's operations including rent collections. This shortfall was financed through the use of the Trust's proceeds from investing activities and revolving unsecured operating line of credit. For the twelve months ended June 30, 2020, cash flows provided by operating activities, excluding non-cash working capital items, were higher than distributions declared to Unitholders during the period by $40.1 million.

Accordingly, the Trust expects to maintain adequate cash flows to fund future Unitholder distributions. As always, the Trust will continuously assess the sustainability of future cash distributions based on various factors including RioCan operations and the economy in general.

The Trust does not use net income in accordance with IFRS as the basis to establish the level of Unitholders’ distributions as net income includes, among other items, non-cash fair value adjustments related to its investment property portfolio and deferred income taxes. In establishing the level of annual distributions to Unitholders, consideration is given by RioCan to the level of cash flow from operating activities, capital expenditures for the property portfolio and preferred unitholder distributions (if any).

In determining the annual level of distributions to Unitholders, The Trust considers, among other factors, cash flow from operating activities, forward-looking cash flow information including forecasts and budgets and the future business prospects of the Trust including the impact of the pandemic, the interest rate environment and cost of capital, estimated development completions and development spending, impact of future acquisitions and dispositions, and maintenance capital expenditures and leasing expenditures related to our income producing portfolio. Furthermore, RioCan does not consider periodic cash flow fluctuations resulting from working capital items such as the timing of property operating costs and tax installments, and semi-annual debenture and mortgages payable interest payments in determining the level of distributions to Unitholders in any particular period. In determining the annual level of distributions to Unitholders, RioCan also considers the impact of its distribution reinvestment plan, if reinstated, when assessing its ability to sustain current distribution levels during the current period and on a rolling twelve month basis.



QUARTERLY RESULTS AND TREND ANALYSIS

(millions of dollars, except per unit amounts) 2020 2019 2018As at and for the quarter ended (i) Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3Revenue $ 270 $ 286 $ 321 $ 354 $ 328 $ 324 $ 301 $ 279

Net income (loss) attributable to Unitholders $ (351) $ 103 $ 151 $ 178 $ 253 $ 195 $ 149 $ 130

Net income (loss) from continuing operationsattributable to Unitholders (vi) $ (351) $ 103 $ 151 $ 178 $ 253 $ 195 $ 150 $ 129

NOI (v) $ 154 $ 174 $ 176 $ 173 $ 175 $ 167 $ 174 $ 177

FFO (v) $ 110 $ 145 $ 146 $ 143 $ 145 $ 142 $ 138 $ 147

ACFO (v) $ 78 $ 108 $ 134 $ 145 $ 139 $ 107 $ 135 $ 128

Total assets $ 15,071 $ 15,393 $ 15,188 $ 15,169 $ 14,580 $ 14,119 $ 14,004 $ 14,146

Total debt (ii) $ 6,670 $ 6,606 $ 6,391 $ 6,613 $ 6,224 $ 5,932 $ 5,874 $ 6,019

Unitholder distributions $ 114 $ 114 $ 114 $ 111 $ 110 $ 110 $ 110 $ 112

DRIP participation rate —% —% —% —% —% —% —% —%

Weighted average Units outstanding – diluted(in thousands) 317,721 317,725 315,080 306,280 304,636 305,046 306,295 311,687

Per unit basis (diluted)Net income (loss) attributable to Unitholders $ (1.10) $ 0.32 $ 0.48 $ 0.58 $ 0.83 $ 0.64 $ 0.49 $ 0.41

FFO (v) $ 0.35 $ 0.46 $ 0.46 $ 0.47 $ 0.48 $ 0.47 $ 0.45 $ 0.47

Unitholder distributions $ 0.36 $ 0.36 $ 0.36 $ 0.36 $ 0.36 $ 0.36 $ 0.36 $ 0.36

Net book value per unit (iii) $ 24.45 $ 25.92 $ 26.14 $ 26.01 $ 25.78 $ 25.34 $ 25.13 $ 25.02

Closing market price per unit $ 15.36 $ 16.13 $ 26.76 $ 26.38 $ 25.99 $ 26.47 $ 23.80 $ 24.68

Key Performance Indicator RatiosSame Property NOI growth (decline) % (v) (10.8%) 3.0% 2.3% 2.1% 2.2% 1.4% 2.1% 1.6%

FFO payout ratio (v) 83.2% 77.4% 76.9% 77.4% 77.2% 77.9% 77.9% 78.0%

ACFO payout ratio (v) 97.2% 85.0% 84.3% 83.5% 86.7% 87.5% 85.7% 79.0%

Debt to total assets (v) 44.0% 42.6% 41.7% 43.2% 42.5% 41.8% 41.6% 42.0%

Debt to total assets (RioCan's proportionate share) (v) 44.4% 43.0% 42.1% 43.6% 42.9% 42.2% 42.1% 42.4%

Interest coverage (RioCan's proportionate share) (v) 3.30 3.48 3.50 3.48 3.52 3.55 3.63 3.72

Debt to Adjusted EBITDA (RioCan's proportionate share) (v) 8.80 8.22 8.06 8.07 7.92 7.94 7.88 7.79

Weighted average contractual interest rate 3.21% 3.27% 3.34% 3.36% 3.44% 3.50% 3.51% 3.46%

Unencumbered assets to unsecured debt(RioCan's proportionate share) (v) 221% 222% 227% 216% 225% 229% 231% 218%

% NOI generated from unencumbered assets (RioCan's proportionate share) (v) 62.0% 60.9% 58.5% 58.9% 58.5% 59.6% 59.1% 56.9%

OtherNumber of employees 587 605 605 605 597 585 597 627

Residency of Unitholders (iv)– Canadian 73.1% 66.3% 67.6% 66.3% 75.6% 70.6% 67.1% 65.7%

– Non-resident 26.9% 33.7% 32.4% 33.7% 24.4% 29.4% 32.9% 34.3%

(i) Refer to RioCan’s respective annual and interim MD&As issued for a discussion and analysis relating to those periods. (ii) Total debt is defined as the sum of mortgages payable, lines of credit and other bank loans, mortgages on properties held for sale and debentures

payable.(iii) A non-GAAP measurement. Calculated by RioCan as Unitholders’ equity divided by the number of Units outstanding at the end of the reporting

period. RioCan’s method of calculating net book value per unit may differ from other issuers’ methods and, accordingly, may not be comparable to net book value per unit reported by other issuers.

(iv) Estimates based on Unitholder mailing addresses on record at the end of each reporting period. (v) For definitions and the basis of presentation of RioCan's non-GAAP measures, refer to the Non-GAAP Measures section of this MD&A. Debt to

total assets is a non-GAAP measure and is calculated as total debt less cash and cash equivalents, divided by total assets, excluding cash and cash equivalents.

(vi) Effective Q1 2019, the Trust ceased separately reporting discontinued operations from the 2016 sale of its U.S. portfolio due to minimal activity and insignificant remaining assets and liabilities.



Our revenue and operating results are not materially impacted by seasonal factors. However, macroeconomic and market trends, as described under the Outlook section of this MD&A, do have an influence on the demand for space, occupancy levels and, consequently, our revenue and operating performance.

RioCan accelerated its portfolio focus in Canada’s six major markets since October 2017 through the sale of properties located primarily in secondary markets across Canada and completed the program by the end of 2019. The sales proceeds were primarily used to repay debt, to fund the repurchase and cancellation of the Trust’s Units through the Trust’s NCIB program while maintaining its strong credit fundamentals, and to fund developments.

Since the World Health Organization's declaration of COVID-19 as a global pandemic in March 2020 and subsequent restrictive measures introduced by the various levels of government in Canada many businesses closed or reduced their hours of operations during Q2 2020 out of their own volition or to comply with government mandated closures. The impact of the pandemic on RioCan's operations, financial performance and property operations for Q2 2020 included a $19.1 million provision for rent abatements and estimated bad debts and a $451.7 million fair value loss on investment properties. This provision impacted net income attributable to Unitholders, FFO and FFO payout ratio, ACFO and ACFO payout ratio, Adjusted EBITDA, debt to Adjusted EBITDA, interest coverage, and percentage of NOI from unencumbered assets. The $451.7 million fair value loss on investment properties impacted net income (loss), total assets, net book value per unit, debt to total assets, and unencumbered assets to unsecured debt.

In addition to the impact of secondary market property dispositions and the ongoing pandemic, overall quarterly fluctuations in our revenue and operating results are also attributable to occupancy and same property NOI growth, acquisitions and other dispositions, the sale of marketable securities, tenant backfill progress, and so on.

Revenue in Q1 2019 increased from Q4 2018 and Q3 2018 primarily due to increasing residential inventory sales revenue. Revenue in Q2 2019 increased from Q1 2019 primarily from higher base rent and fee revenue, offset by lower common area maintenance recoveries due to timing and lower residential inventory sales revenue. Revenue in Q3 2019 increased from Q2 2019 primarily from higher residential inventory sales revenue and higher base rent and common area maintenance recoveries, offset by lower lease termination fees. Revenue decreased from Q3 2019 to Q2 2020 primarily from lower residential inventory sales revenue, lower property management and other service fees and common area maintenance recoveries, partially offset by higher base rent. The above factors for quarterly revenue variations also affect the quarterly variations in net income, FFO, ACFO, and also NOI except for the effect of residential inventory sales revenue and property management and other service fees.

Net income increased from Q3 2018 to Q4 2018 mainly as a result of fair market gains on investment properties, partially offset by severance costs and unrealized fair value losses on marketable securities. Net income increased from Q4 2018 to Q1 2019 mainly as a result of higher fair market adjustments on investment properties. Net income increased from Q1 2019 to Q2 2019 mainly from higher fee revenue, gains from residential inventory sales and higher fair market adjustments on investment properties, partially offset by lower income from equity-accounted investments. Net income decreased from Q2 2019 to Q3 2019 mainly from lower fair market value gains on investment properties, partially offset by higher gains from residential inventory sales and higher fair value gains on marketable securities. Net income decreased from Q3 2019 to Q4 2019 mainly from lower fair market value gains on investment properties, lower gains from residential inventory sales, lower property management and service fees, and lower fair value gains on marketable securities, partially offset by higher NOI. Net income decreased from Q4 2019 to Q1 2020 mainly from lower fair market value gains on investment properties, lower gains from residential inventory sales, lower percentage rent and property management and other service fees, partially offset by higher common area maintenance and realty tax recoveries and fair value gains on other investments. Net income decreased from Q1 2020 to Q2 2020 mainly from higher fair market value losses on investment properties and the provision for rent abatements and bad debts as noted above, both related to the ongoing COVID-19 pandemic.

The decrease in Q4 2018 FFO from Q3 2018 was primarily due to lower realized gains on the sale of marketable securities, higher severance costs, and lower NOI from continued dispositions of assets. The increase in Q1 2019 FFO from Q4 2018 was primarily due to higher residential inventory gains, higher income from our equity-accounted investments and same property NOI growth, partially offset by lower operating income from continued dispositions of assets. The increase in Q2 2019 FFO from Q1 2019 was primarily due to higher fee revenue and gains from residential inventory sales, partially offset by lower income from equity-accounted investments and lower realized gains from the sale of marketable securities. The decrease in Q3 2019 FFO from Q2 2019 was primarily due to lower realized gains from the sale of marketable securities and lower lease cancellation fees, partially offset by higher gains from residential inventory sales. The increase in Q4 2019 FFO from Q3 2019 was primarily due to higher realized gains from the sale of marketable securities, partially offset by lower property management and other fee income and lower gains from residential inventory sales. FFO was largely stable from Q4 2019 to Q1 2020 primarily due to lower gains from residential inventory sales which were largely offset by higher realized gains from the sale of marketable securities, higher other income, same property NOI growth and lower G&A expense. The decrease in Q2 2020 FFO from Q1 2020 was primarily due to the aforementioned provision for rent abatements and bad debts, lower realized gains from the sale of marketable securities, and higher G&A expense due to no negative mark-to-market adjustments for cash-settled unit-based trustee costs (in Q1 2020 such adjustment benefited from a sharp decline in the Trust's Unit price as a result of the pandemic).

Quarterly changes in ACFO were driven by similar factors as for FFO, except for the quarterly net working capital changes included in ACFO. Q4 2018 ACFO increased when compared to Q3 2018 mainly due to working capital increases of $11.7



million, partially offset by lower gains on the sale of marketable securities and higher severance costs. Q1 2019 ACFO decreased when compared to Q4 2018 mainly due to a net working capital decrease of $22.2 million in the quarter while Q4 2018 had a net working capital increase of $11.7 million. Q2 2019 ACFO increased when compared to Q1 2019 mainly due to higher operating income and a net working capital increase of $6.8 million in the quarter, offset by lower distributions from equity-accounted investments. Q3 2019 ACFO increased when compared to Q2 2019 mainly due to a higher net working capital increase in the quarter. Q4 2019 ACFO decreased when compared to Q3 2019 mainly due to a lower net working capital increase in the quarter. Q1 2020 ACFO decreased when compared to Q4 2019 mainly due to a lower net working capital decrease in the quarter. Q2 2020 ACFO decreased when compared to Q1 2020 primarily as a result of the pandemic's impact on RioCan property operations including rent collections and the provision for rent abatements and bad debts, as well as no sales of marketable securities.

The increase in Debt to Adjusted EBITDA from Q3 2018 to Q1 2019 was a result of the combination of a decline in Adjusted EBITDA primarily due to dispositions (net of acquisitions) and the growth in average debt due to NCIB and dispositions timing. The decrease in Debt to Adjusted EBITDA from Q1 2019 to Q2 2019 was primarily due to higher Adjusted EBITDA. The increase in Debt to Adjusted EBITDA from Q2 2019 to Q3 2019 was primarily due to lower Adjusted EBITDA and higher average debt. The decrease in Debt to Adjusted EBITDA from Q3 2019 to Q4 2019 was primarily due to higher Adjusted EBITDA, partially offset by higher average debt. The increase in Debt to Adjusted EBITDA from Q4 2019 to Q2 2020 was due to lower Adjusted EBITDA and higher average debt primarily as a result of the pandemic.

Interest coverage declined from Q3 2018 to Q1 2019, primarily from lower Adjusted EBITDA as the Trust continued to execute on its strategic disposition program despite strong same property NOI growth. Interest coverage declined from Q1 2019 to Q3 2019, primarily from higher gross interest costs, partially offset by higher Adjusted EBITDA from higher fees and gains from residential inventory sales. Interest coverage increased from Q3 2019 to Q4 2019 primarily from higher Adjusted EBITDA, partially offset by higher gross interest costs. Interest coverage declined from Q4 2019 to Q1 2020, primarily from higher gross interest costs, partially offset by higher Adjusted EBITDA. Interest coverage declined from Q1 2020 to Q2 2020 primarily from lower Adjusted EBITDA as a result of the pandemic and higher gross interest costs.

Unencumbered assets to unsecured debt ratio declined modestly during Q3 2018, but remained well ahead of our 200% target. This was mainly as a result of an increase in our unsecured debt outpacing the increase in our unencumbered assets on a relative percentage basis. This trend was reversed in Q4 2018 and the ratio was back above the Q3 2018 level as the Trust increased its unencumbered asset pool without increasing its unsecured debt during the quarter. The ratio gradually declined from Q4 2018 to Q3 2019 as the rate of the increase in unsecured debt exceeded the rate of the increase in unencumbered assets. The ratio increased in Q4 2019 from Q3 2019 as unencumbered assets increased and unsecured debt decreased. The ratio decreased from Q4 2019 to Q1 2020 as the increase in unencumbered assets was more than offset by the impact of the increase in unsecured debt. The ratio remained largely stable in Q2 2020 from Q1 2020 as the decrease in unencumbered assets was offset by the decrease in unsecured debt as the Trust reduced its utilization of its revolving line of credit to enhance liquidity.

The FFO payout ratio has decreased since Q3 2018 to Q1 2020 due to growth in FFO from same property NOI growth, development completions and realized gains from the sale of marketable securities despite substantial dispositions completed over the period, as well as a decrease in total distributions to Unitholders as a result of a lower number of Units outstanding because of the Trust's NCIB program. The increase in FFO payout ratio in Q2 2020 was related to the pandemic.

The increase in the ACFO payout ratio from Q3 2018 to Q4 2018 was mainly because a one-time special distribution of $29.2 million received during Q4 2017 was no longer included in the payout ratio calculation for Q4 2018 given that the ratio was calculated on a twelve month trailing basis. Excluding the $29.2 million one-time special distribution in Q4 2017, the ACFO payout ratio would have been 83.2% for Q3 2018. The 1.8% increase in the ACFO payout ratio from Q4 2018 to Q1 2019 was primarily due to an $8.9 million net working capital decrease over the comparable period. The 0.8% decrease in the ACFO payout ratio from Q1 2019 to Q2 2019 was primarily due to a $0.5 million net working capital increase and $4.5 million in lower distributions over the comparable period as a result of the Trust's NCIB program. The 3.2% decrease in the ACFO payout ratio from Q2 2019 to Q3 2019 was primarily due to a $20.0 million net working capital increase and $2.1 million in lower distributions over the comparable period as a result of the Trust's NCIB program. The 0.8% increase in the ACFO payout ratio from Q3 2019 to Q4 2019 was primarily due to lower ACFO. The 0.7% increase in the ACFO payout ratio from Q4 2019 to Q1 2020 was primarily due to higher distributions as a result of the equity issues in August and October 2019. The 12.2% increase in the ACFO payout ratio from Q1 2020 to Q2 2020 was primarily due to the impact of the pandemic on RioCan operations.



SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATESRioCan’s Condensed Consolidated Financial Statements for the three and six months ended June 30, 2020 and 2019 are prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (IAS 34), as issued by the International Accounting Standards Board (IASB). The significant accounting policies used in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those reported in the audited consolidated financial statements for the years ended December 31, 2019 and 2018, with the exception of changes as disclosed in Note 2 of our Condensed Consolidated Financial Statements.

The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates under different assumptions and conditions.

The MD&A for the years ended December 31, 2019 and 2018 contains a discussion of the significant accounting policies most affected by estimates and judgment used in the preparation of the financial statements, being the accounting policies relating to fair value, net realizable value of residential inventory, capitalization of costs to investment property, leases, income taxes, classification of assets and liabilities held for sale, and significant influence.

Estimation Uncertainty as a Result of COVID-19In the preparation of RioCan’s Condensed Consolidated Financial Statements, the Trust has incorporated the potential impact of COVID-19 into its significant estimates and assumptions that affect the reported amounts of its assets, liabilities, net income and related disclosures using available information as at June 30, 2020. For the significant estimates and assumptions that have been impacted by COVID-19 underlying the valuation of investment properties and the estimates of expected credit losses on net contractual rents receivable, refer to Note 3 and Note 6 of the Condensed Consolidated Financial Statements. Due to the continuing risks and uncertainties arising from the COVID-19 health crisis, actual results may differ from these estimates and assumptions.

Adoption of New Accounting StandardsEffective January 1, 2020, the Trust adopted the following amended standards as issued by the International Accounting Standards Board (IASB). As a result, significant accounting policies, estimates and judgments most affected by the adoption of the new pronouncements have been updated as indicated in Note 2 of the Condensed Consolidated Financial Statements and further described below.

Amendments to IFRS 7, Financial Instruments: Disclosure, IFRS 9 and IAS 39, Financial Instruments: Recognition and Measurement - Interbank Offered Rate (IBOR) Reform Amendments to IFRS 9 and IAS 39 provide relief from the potential effects of the uncertainty arising from Interbank Offered Rate (IBOR) reform, in particular during the period prior to replacement of interbank offered rates. These amendments modify hedge accounting requirements, allowing the Trust to assume that the interest rate benchmark on which the cash flows of the hedged item and the hedging instrument are based are not altered as a result of IBOR reform, thereby allowing hedge accounting to continue. These amendments did not impact the Trust's consolidated financial statements upon adoption.

Amendments to IFRS 3, Business Combinations - Definition of a Business

The amendments to the definition of a business in IFRS 3 help entities determine whether an acquired set of activities and assets is a business or not. The amendments clarify the minimum requirements for a business, removed the assessment of whether market participants are capable of replacing any missing elements, added guidance to help entities assess whether an acquired process is substantive, narrowed the definitions of a business and of outputs, and introduced an optional fair value concentration test. The amendments are applied prospectively to transactions or other events that occur on or after the date of first application, and did not have a significant impact on the Trust's consolidated financial statements.

Amendments to IAS 1, Presentation of Financial Statements and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors - Definition of Material Amendments to IAS 1 and IAS 8 align the definition of "material" across the standards and clarify certain aspects of the definition. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. The adoption of the amendments to the definition of material did not have a significant impact on the Trust's consolidated financial statements.



FUTURE CHANGES IN ACCOUNTING POLICIES RioCan monitors the potential changes proposed by the IASB and analyzes the effect that changes in the standards may have on RioCan’s operations. Standards issued, but not yet effective, up to the date of issuance of the Condensed Consolidated Financial Statements for the three and six months ended June 30, 2020, are described below. This description is of standards and interpretations issued, which we reasonably expect to be applicable at a future date. We intend to adopt these standards when they become effective.

Amendment to IAS 1, Presentation of Financial Statements - Classification of Liabilities as Current or Non-CurrentIn January 2020, the IASB issued amendments to paragraphs 69-76 of IAS 1 to clarify the requirements for classifying liabilities as current or non-current. The amendments specify that the conditions which exist at the end of a reporting period are those which will be used to determine if a right to defer settlement of a liability exists. The amendments also clarify the situations that are considered a settlement of a liability. The amendments are effective January 1, 2023, with early adoption permitted. The amendments are to be applied retrospectively. Management is currently assessing the impact of this amendment.

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING Disclosure Controls and Procedures (DCP)The CEO and CFO of the Trust have designed or caused to be designed under their direct supervision the Trust’s DCP to provide reasonable assurance that: (i) material information relating to the Trust is made known to management by others, particularly during the period in which the annual and interim filings are being prepared; and (ii) information required to be disclosed by the Trust in its annual and interim fillings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time period specified in securities legislation. The CEO and CFO are assisted in this responsibility by a Disclosure Committee, which is composed of RioCan senior management. The Disclosure Committee has established disclosure controls and procedures so that it becomes aware of any material information affecting RioCan in order to evaluate and communicate this information to management of the Trust, including the CEO and CFO, as appropriate and determine the appropriateness and timing of any required disclosure.

Internal Controls over Financial Reporting (ICFR)The CEO and CFO of the Trust have designed or caused to be designed under their direct supervision the Trust’s ICFR which has been effected by RioCan’s Board of Trustees, management and other personnel in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with IFRS.

There were no changes in the Trust’s ICFR during the three and six months ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Trust’s ICFR.

Inherent LimitationsIt 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. Due to inherent limitations in all such systems, no evaluation of controls can provide absolute assurance that all control issues, including instances of fraud, if any, have been detected. Accordingly, RioCan's DCP are designed to provide reasonable, not absolute assurance, that the objectives of the Trust's disclosure control system are met. These inherent limitations include, among other items: (i) that management’s assumptions and judgments could ultimately prove to be incorrect under varying conditions and circumstances; (ii) the impact of any undetected errors; and (iii) controls may be circumvented by the unauthorized acts of individuals, by collusion of two or more people, or by management override.

Canadian REIT Status and MonitoringRioCan currently qualifies for the REIT Exemption for purposes of the Income Tax Act (Canada). Accordingly, RioCan continues to be able to flow taxable income through to Unitholders on a tax effective basis. Generally, to qualify for the REIT Exemption, RioCan's Canadian assets must be comprised primarily of real estate and substantially all of our Canadian source revenues must be derived from rental revenue, capital gains and fee income from properties in which we have an interest.

RioCan monitors its REIT Exemption status to ensure that we continue to qualify as a Canadian REIT. From time to time, the members of the Board of Trustees, Audit Committee and senior management are updated on RioCan's continued REIT Exemption qualification, including any significant legislation updates.



RELATED PARTY TRANSACTIONS In the ordinary course of business, we may enter into transactions with entities whose directors or trustees are also RioCan trustees and/or part of RioCan's senior management. All such transactions are in the normal course of operations and are measured at market-based exchange amounts.

RioCan's related parties include the following persons and/or entities:

(a) associates, joint ventures, or entities which are controlled or significantly influenced by the Trust; and

(b) key management personnel including the Trustees and those persons having the authority and responsibility for planning, directing and controlling the activities of RioCan, directly or indirectly.

The Trust’s key management personnel include each of the Trustees and the following individuals: Chief Executive Officer, Edward Sonshine; President and Chief Operating Officer, Jonathan Gitlin; and Senior Vice President and Chief Financial Officer, Qi Tang (collectively, the "Key Executives").

Remuneration of the Trust’s Trustees and Key Executives for the three and six months ended June 30, 2020 and 2019 is as follows:

Three months ended June 30 Six months ended June 30Trustees Key Executives Trustees Key Executives

(thousands of dollars) 2020 2019 2020 2019 2020 2019 2020 2019Compensation and benefits $ 44 $ 50 $ 1,516 $ 1,317 $ 87 $ 117 $ 3,065 $ 2,744Unit-based compensation 889 1,057 1,413 726 (2,374) 2,078 2,336 1,926Post-employment benefit costs — — 31 11 — — 63 23

$ 933 $ 1,107 $ 2,960 $ 2,054 $ (2,287) $ 2,195 $ 5,464 $ 4,693

The negative amount in unit-based compensation costs for the Trustees for the six months ended June 30, 2020 was due to a mark-to-market adjustment resulting from a substantial decrease in the Trust's unit price from December 31, 2019 to June 30, 2020, among the broad equity market drop in connection with the COVID-19 health crisis and sharp decline in oil prices. For further details on related party transactions, refer to Note 26 of the Condensed Consolidated Financial Statements.

RISKS AND UNCERTAINTIES The achievement of RioCan’s objectives is, in part, dependent on the successful mitigation of business risks identified. Real estate investments are subject to a degree of risk. They are affected by various factors including changes in general economic and local market conditions, equity and credit markets, fluctuations in interest costs, the attractiveness of the properties to tenants, competition from other available space, the stability and creditworthiness of tenants, and various other factors.

On June 17, 2015, Unitholders authorized and approved amendments made to the Trust’s Declaration of Trust to further align it with evolving governance best practices. The rights granted in the amended Declaration of Trust are granted as contractual rights afforded to Unitholders (rather than as statutory rights). Similar to other existing rights contained in the Declaration of Trust (i.e. the take-over bid provisions and conflict of interest provisions), making these rights and remedies and certain procedures available by contract is structurally different from the manner in which the equivalent rights and remedies or procedures (including the procedure for enforcing such remedies) are made available to shareholders of a corporation, who benefit from those rights and remedies or procedures by the corporate statute that governs the corporation, such as the CBCA. As such, there is no certainty how these rights, remedies or procedures may be treated by the courts in the non-corporate context or that a Unitholder will be able to enforce the rights and remedies in the manner contemplated by the proposed amendments. Furthermore, how the courts will treat these rights, remedies and procedures will be in the discretion of the court, and the courts may choose to not accept jurisdiction to consider any claim contemplated in the proposed provisions.

For a detailed discussion of risk factors that have been identified by RioCan, refer to the 2019 Annual Report and RioCan's AIF, which can be found on SEDAR at www.sedar.com or RioCan's website at www.riocan.com, together with the below risk factor.

COVID-19 Health Crisis The World Health Organization declared COVID-19 a global pandemic on March 11, 2020. Since then, numerous restrictive measures were introduced by various authorities in Canada and internationally to curb the spread of the pandemic. Such restrictive measures resulted in a general slowdown of the economy as many businesses closed or reduced their hours of operation for a significant portion of Q2 2020 out of their own volition or to comply with government mandated closures. The supply and demand of certain RioCan tenants' goods and services were disrupted, which in turn, impacted such tenants' businesses and financial performance. This further impacted RioCan's business, operations and financial performance during Q2 2020 as discussed throughout this MD&A.



The various levels of government in Canada have recently gradually eased the restrictions and many businesses began to reopen with certain restrictive measures still in effect. The Trust has implemented additional safety measures at all of its properties, including increased frequency in cleaning and disinfecting as well as physical distancing practices. As the COVID-19 pandemic evolves, the Trust will continue to act according to direction provided by the Federal, Provincial and Municipal governments. At the current stage, the longevity and extent of the pandemic, the duration and intensity of resulting business disruptions and related financial, social and public health impacts continue to be uncertain. Such effects could be adverse and material, including their potential effects on RioCan's tenants, and the Trust's business, operations and financial performance, both in the short-term and long-term.

Such continuing risks and uncertainties arising from the COVID-19 health crisis include, but are not limited to, consumer demands for tenant's products or services; consumer foot traffic to tenant stores and RioCan shopping centres; changing consumer habits; tenants' ability to adequately staff their businesses; tenants' ability to pay rent as required under their leases; the extent of tenant business closures and changes in tenant business strategies that may impact retail real estate occupancy; leasing activities; market rents; the availability, duration and effectiveness of various support programs that are or may be offered by the various levels of government in Canada; the availability and extent of support programs that the Trust may offer its tenants; domestic and global supply chains; labour supply and demand; and the capitalization rates that arm's length buyers and sellers are willing to transact on properties.

Many of these factors could not only impact RioCan's operations and financial performance but could also have a material adverse impact on RioCan's investment property valuations because such factors could have a direct or indirect impact on stabilized NOI, cash flows or capitalization rates, among others, that are inputs to investment property valuations. In the second quarter, the Trust wrote down 3.1% of the IFRS value of its investment properties as of the beginning of the quarter including assets held for sale, reflecting the Trust's current estimate of the effect of the pandemic on property valuation, as well as the estimated effect of the depressed oil and gas market in Alberta. As the events unfold in association with the pandemic, further adjustments to the Trust's IFRS value of investment properties, which could be negative or positive, may be required. Refer to Note 3 of the Condensed Consolidated Financial Statements for a sensitivity analysis of investment property valuations.

The ongoing pandemic could also impact the timelines and costs related to the Trust’s development projects, the progress of its development program and annual development spend, the pace of property lease-up or rents and yields achieved upon development completion, as well as the pace of maintenance capital expenditures. The current pandemic could also increase risks associated with cyber security, information technology systems and networks, which in turn could impact the Trust's business and operations.

The spread, duration and severity of COVID-19 could adversely affect global economies, including credit and capital markets, resulting in a short-term or long-term economic downturn, which could potentially increase the difficulty and cost of accessing capital. It could also potentially impact RioCan’s current credit ratings, total return and dividend yield of the Trust’s Units.

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)

TABLE OF CONTENTSUNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. General Information

2. Basis of Preparation and Statement of Compliance

3. Investment Properties

4. Equity-accounted Investments

5. Residential Inventory

6. Receivables and Other Assets

7. Leases

8. Lines of Credit and Other Bank Loans

9. Mortgages Payable

10. Debentures Payable

11. Accounts Payable and Other Liabilities

12. Unitholders' Equity

13. Unit-based Compensation Plans

14. Distributions to Unitholders

15. Revenue

16. Investment and Other Income (Loss)

17. Interest Income

18. Interest Costs

19. General and Administrative

20. Transaction and Other Costs

21. Net Income (Loss) per Unit

22. Fair Value Measurement

23. Risk Management

24. Capital Management

25. Supplemental Cash Flow Information

26. Related Party Transactions

27. Segmented Information

28. Contingencies and Other Commitments

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RIOCAN REAL ESTATE INVESTMENT TRUST UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of Canadian dollars)

76RIOCAN REAL ESTATE INVESTMENT TRUST SECOND QUARTER REPORT 2020

(Audited)As at Note June 30, 2020 December 31, 2019

AssetsInvestment properties 3, 7 $ 14,092,668 $ 14,359,127Deferred tax assets 11,845 12,045Equity-accounted investments 4 192,187 190,508Mortgages and loans receivable 198,861 175,951Residential inventory 5 177,648 108,956Assets held for sale 3 37,639 21,800Receivables and other assets 6 279,342 226,423Cash and cash equivalents 80,458 93,516Total assets $ 15,070,648 $ 15,188,326

LiabilitiesDebentures payable 10 $ 3,091,273 $ 2,891,648Mortgages payable 9 2,721,930 2,412,451Lines of credit and other bank loans 8 856,355 1,086,719Accounts payable and other liabilities 7, 11 632,248 492,297Total liabilities $ 7,301,806 $ 6,883,115

EquityUnitholders' equity 7,768,842 8,305,211Total liabilities and equity $ 15,070,648 $ 15,188,326

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

Approved on behalf of the Board of Trustees

(signed) Siim A. Vanaselja (signed) Edward SonshineSiim A. Vanaselja Edward Sonshine, O. Ont., Q.C.Chair of Audit Committee Chief Executive OfficerTrustee Trustee

RIOCAN REAL ESTATE INVESTMENT TRUST UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)(In thousands of Canadian dollars, except per unit amounts)


Three months ended June 30 Six months ended June 30Note 2020 2019 2020 2019

RevenueRental revenue 15 $ 264,463 $ 272,374 $ 547,908 $ 542,534Residential inventory sales 15 2,736 47,011 3,145 96,558Property management and other service fees 15 2,694 8,189 5,096 12,624

269,893 327,574 556,149 651,716Operating costsRental operating costs

Recoverable under tenant leases 87,739 93,154 192,809 192,445Non-recoverable costs 24,050 4,862 29,882 9,389

Residential inventory cost of sales 2,565 39,241 2,601 83,618114,354 137,257 225,292 285,452

Operating income 155,539 190,317 330,857 366,264Other income (loss)Interest income 17 3,569 4,163 7,536 7,794Income from equity-accounted investments 4 (755) 1,786 1,131 10,855Fair value (losses) gains on investment properties, net 3 (451,707) 120,824 (475,960) 184,875Investment and other income (loss), net 16 1,470 (1,757) 6,514 4,691

(447,423) 125,016 (460,779) 208,215Other expensesInterest costs 18 45,570 46,202 90,973 90,991General and administrative 19 11,317 11,330 18,722 23,927Internal leasing costs 2,219 2,491 5,262 5,396Transaction and other costs 20 1,128 1,633 2,133 4,984

60,234 61,656 117,090 125,298Income (loss) before taxes (352,118) 253,677 (247,012) 449,181Current income tax expense (recovery) (548) (295) 736 (593)Deferred income tax expense (recovery) (800) 1,000 200 2,280Net income (loss) $ (350,770) $ 252,972 $ (247,948) $ 447,494

Net income (loss)Unitholders $ (350,770) $ 252,972 $ (247,948) $ 447,494

$ (350,770) $ 252,972 $ (247,948) $ 447,494

Net income (loss) per unitBasic 21 $ (1.10) $ 0.83 $ (0.78) $ 1.47Diluted 21 $ (1.10) $ 0.83 $ (0.78) $ 1.47


RIOCAN REAL ESTATE INVESTMENT TRUST UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)(In thousands of Canadian dollars)


Three months ended June 30 Six months ended June 30Note 2020 2019 2020 2019

Net income (loss) $ (350,770) $ 252,972 $ (247,948) $ 447,494Other comprehensive income (loss):Items that may be reclassified subsequently to income, net of tax:

Interest rate swap agreements:Unrealized loss during the period 12 (9,561) (9,097) (63,202) (31,729)Reclassified during the period to income 12 4,502 779 5,431 1,323

Other comprehensive loss from equity-accountedinvestments 12 (33) (60) (414) (209)

Other comprehensive loss, net of tax (5,092) (8,378) (58,185) (30,615)Comprehensive (loss) income, net of tax $ (355,862) $ 244,594 $ (306,133) $ 416,879Comprehensive (loss) income, net of tax attributable to:

Unitholders $ (355,862) $ 244,594 $ (306,133) $ 416,879


RIOCAN REAL ESTATE INVESTMENT TRUST UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(In thousands of Canadian dollars)


Note Trust units Contributed surplus Retained earningsAccumulated other

comprehensive loss Total equityBalance, December 31, 2018 $ 4,484,827 $ 33,449 $ 3,152,383 $ (4,269) $ 7,666,390

Adjustment on adoption of IFRS 16 — — (835) — (835)

Balance, January 1, 2019 $ 4,484,827 $ 33,449 $ 3,151,548 $ (4,269) $ 7,665,555Changes during the period:

Net income — — 447,494 — 447,494Other comprehensive loss 12 — — — (30,615) (30,615)Unit-based compensation exercises, net of units repurchased for settlement of unit exercises 12 20,656 (1,995) — — 18,661Units issued, net of issuance costs 12 205 — — — 205Units purchased and cancelled 12 (14,400) — (10,596) — (24,996)Unit-based compensation awards 12 — 3,297 — — 3,297Distributions to unitholders 14 — — (219,417) — (219,417)

Balance, June 30, 2019 $ 4,491,288 $ 34,751 $ 3,369,029 $ (34,884) $ 7,860,184

Note Trust units Contributed surplus Retained earningsAccumulated other

comprehensive loss Total equityBalance, December 31, 2019 2 $ 4,814,097 $ 36,068 $ 3,472,324 $ (17,278) $ 8,305,211

Changes during the period:Net loss — — (247,948) — (247,948)Other comprehensive loss 12 — — — (58,185) (58,185)Unit-based compensation exercises, net of units repurchased for settlement of unit exercises 12 440 (6,585) — — (6,145)Units issued, net of issuance costs 12 250 — — — 250Unit-based compensation awards 12 — 4,419 — — 4,419Distributions to unitholders 14 — — (228,760) — (228,760)

Balance, June 30, 2020 $ 4,814,787 $ 33,902 $ 2,995,616 $ (75,463) $ 7,768,842


RIOCAN REAL ESTATE INVESTMENT TRUSTUNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands of Canadian dollars)


Three months ended June 30 Six months ended June 30

Note 2020 2019 2020 2019Operating activitiesNet income (loss) $ (350,770) $ 252,972 $ (247,948) $ 447,494

Items not affecting cash:Depreciation and amortization 19 1,106 1,087 2,202 2,152Amortization of straight-line rent 15 (1,816) (1,917) (4,519) (4,833)Unit-based compensation expense 12 2,570 1,587 4,419 3,097Income from equity-accounted investments 4 755 (1,786) (1,131) (10,855)Fair value losses (gains) on investment properties, net 3 451,707 (120,824) 475,960 (184,875)Deferred income tax expense (800) 1,000 200 2,280Fair value gains losses (gains) on marketable securities 16 — 2,135 (878) (4,688)Transaction (gains) losses, net on disposition of investment properties 16 1,052 (35) 932 551

Adjustments for changes in other working capital items 18,211 (49,463) 9,580 (86,331)Cash provided by operating activities 122,015 84,756 238,817 163,992Investing activitiesAcquisitions of investment properties — (152,686) (80,039) (200,135)Construction expenditures on properties under development (95,441) (81,277) (194,283) (186,948)Capital expenditures on income properties:

Recoverable and non-recoverable costs (3,504) (4,104) (11,362) (9,438)Tenant improvements and external leasing commissions (8,884) (11,370) (19,450) (17,252)

Proceeds from sale of investment properties 18,431 27,381 24,791 195,024Earn-outs on investment properties (727) (613) (1,288) (613)Contributions to equity-accounted investments 4 — (3,020) (5,165) (5,518)Distributions received from equity-accounted investments 4 2,447 1,783 4,222 12,184Advances of mortgages and loans receivable (4,514) (2,151) (37,620) (4,377)Repayments of mortgages and loans receivable 5,113 1,080 10,852 1,655Proceeds from sale of marketable securities, net of selling costs 16 — 10,735 19,001 30,399Lease payments received from finance lease 665 523 1,335 932Cash used in investing activities (86,414) (213,719) (289,006) (184,087)Financing activitiesProceeds from mortgage financing, net of issue costs 352,490 190,000 561,393 270,000Repayments of mortgage principal (77,434) (96,160) (254,704) (238,318)Advances from bank credit lines, net of issue costs 5,000 482,319 11,881 856,484Repayment of bank credit lines (55,000) — (244,120) (312,874)Proceeds from issuance of debentures, net of issue costs 10 — — 348,399 —Repayment of unsecured debentures 10 (150,000) (350,000) (150,000) (350,000)Distributions paid to Unitholders, net of distributions reinvested 25 (114,387) (109,598) (228,758) (219,444)Units repurchased under normal course issuer bid — — — (24,996)Units repurchased for settlement of Unit compensation exercises and proceeds received from issuance of Units, net of issue costs 24 16,259 (5,898) 18,722Repayment of lease liabilities (911) (566) (1,062) (1,005)Cash (used in) provided by financing activities (40,218) 132,254 37,131 (1,431)Net change in cash and cash equivalents (4,617) 3,291 (13,058) (21,526)Cash and cash equivalents, beginning of period 85,075 49,881 93,516 74,698Cash and cash equivalents, end of period $ 80,458 $ 53,172 $ 80,458 $ 53,172Supplemental cash flow information 25


RIOCAN REAL ESTATE INVESTMENT TRUSTNOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 and 2019(In thousands of Canadian dollars, tabular amounts in thousands, except per unit amounts or unless otherwise noted)


1. GENERAL INFORMATION RioCan Real Estate Investment Trust and its consolidated subsidiaries (collectively, the Trust or RioCan) own, develop and operate one of Canada's largest portfolio of retail and increasingly mixed-use properties. The parent trust, RioCan Real Estate Investment Trust, is an unincorporated closed-end trust governed under the laws of the Province of Ontario, Canada, and constituted pursuant to a Declaration of Trust (Declaration) dated November 30, 1993, as most recently amended and restated on June 17, 2015. The Trust’s corporate headquarters and registered head office are located at the RioCan Yonge Eglinton Centre, 2300 Yonge Street, Toronto, Ontario, Canada.

RioCan's trust units (Units) are listed on the Toronto Stock Exchange (TSX) under the ticker symbol REI.UN.

These unaudited interim condensed consolidated financial statements were authorized for issue by RioCan's Audit Committee on July 28, 2020.

2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE RioCan’s unaudited interim condensed consolidated financial statements (Condensed Consolidated Financial Statements) have been prepared by management in accordance with International Accounting Standard 34, Interim Financial Reporting (IAS 34), as issued by the International Accounting Standards Board (IASB). Under International Financial Reporting Standards (IFRS), additional disclosures are required in annual financial statements and, therefore, these Condensed Consolidated Financial Statements and accompanying notes should be read in conjunction with the notes to the Trust’s audited annual consolidated financial statements for the years ended December 31, 2019 and 2018 (2019 Annual Financial Statements) as set out on pages 102 to 154 of the 2019 Annual Report.

Certain comparative information has been reclassified to conform to the current period's presentation.

Changes in accounting policies and disclosures The accounting policies adopted in the preparation of the Condensed Consolidated Financial Statements are consistent with those followed in the preparation of the Trust's 2019 Annual Financial Statements, except for the adoption of new standards and interpretations effective as of January 1, 2020 as follows.

Amendments to IFRS 7, Financial Instruments: Disclosure, IFRS 9 and IAS 39, Financial Instruments: Recognition and Measurement - Interbank Offered Rate (IBOR) Reform

Amendments to IFRS 9 and IAS 39 provide relief from the potential effects of the uncertainty arising from Interbank Offered Rate (IBOR) reform, in particular during the period prior to replacement of interbank offered rates. These amendments modify hedge accounting requirements, allowing the Trust to assume that the interest rate benchmark on which the cash flows of the hedged item and the hedging instrument are based are not altered as a result of IBOR reform, thereby allowing hedge accounting to continue. These amendments did not impact the Trust's consolidated financial statements upon adoption.

Amendments to IFRS 3, Business Combinations - Definition of a Business

The amendments to the definition of a business in IFRS 3 help entities determine whether an acquired set of activities and assets is a business or not. The amendments clarify the minimum requirements for a business, removed the assessment of whether market participants are capable of replacing any missing elements, added guidance to help entities assess whether an acquired process is substantive, narrowed the definitions of a business and of outputs, and introduced an optional fair value concentration test. The amendments are applied prospectively to transactions or other events that occur on or after the date of first application, and did not have a significant impact on the Trust's consolidated financial statements.

Amendments to IAS 1, Presentation of Financial Statements and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors - Definition of Material

Amendments to IAS 1 and IAS 8 align the definition of "material" across the standards and clarify certain aspects of the definition. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. The adoption of the amendments to the definition of material did not have a significant impact on the Trust's consolidated financial statements.



3. INVESTMENT PROPERTIES

As at June 30, 2020 December 31, 2019Income properties $ 12,691,065 $ 13,120,545Properties under development 1,401,603 1,238,582

$ 14,092,668 $ 14,359,127

Six months ended June 30, 2020Year ended

December 31, 2019

Incomeproperties

Propertiesunder

development Total (v) Total (v)Balance, beginning of period $ 13,120,545 $ 1,260,382 $ 14,380,927 $ 13,203,648Impact of change in accounting policy (iv) — — — (16,465)Restated balance, beginning of period 13,120,545 1,260,382 14,380,927 13,187,183Acquisitions 68,700 34,039 102,739 941,212Dispositions (33,000) (21,715) (54,715) (489,331)Development expenditures — 200,546 200,546 438,820Capital expenditures:

Recoverable and non-recoverable expenditures 5,612 — 5,612 39,460Leasing commissions and tenant improvements 21,604 — 21,604 50,691

Transfers, net (i) (45,654) 45,654 — —Transfers to residential inventory (ii) — (52,674) (52,674) (32,301)Fair value (loss) gain, net (445,350) (30,610) (475,960) 247,624Straight-line rent (iii) 4,519 — 4,519 8,880Transfers to finance lease receivables (2,797) — (2,797) (8,481)Other changes 506 — 506 (3,511)Earn-out consideration — — — 681Balance, end of period $ 12,694,685 $ 1,435,622 $ 14,130,307 $ 14,380,927

Investment properties $ 12,691,065 $ 1,401,603 $ 14,092,668 $ 14,359,127Properties held for sale 3,620 34,019 37,639 21,800

$ 12,694,685 $ 1,435,622 $ 14,130,307 $ 14,380,927

(i) During the six months ended June 30, 2020, transfers to income properties from properties under development totalled $66.7 million reflecting completed developments. Transfers from income properties to properties under development totalled $112.3 million reflecting the commencement of active development on certain income properties during the year.

(ii) During the six months ended June 30, 2020, a portion of RioCan Leaside Centre and portion of Queensway, in addition to a property located in the Greater Toronto Area, were transferred to residential inventory from investment property as appropriate evidence of a change in use was established. During the year ended December 31, 2019, a portion of Dufferin Plaza and Shopper's World Brampton were transferred to residential inventory from investment property as appropriate evidence of a change in use was established.

(iii) Included in investment properties is $114.5 million of net rents receivable arising from the recognition of rental revenue on a straight-line basis over the lease term (December 31, 2019 - $111.1 million).

(iv) Upon adoption of IFRS 16, certain tenant subleases were reclassified as finance lease receivables effective January 1, 2019. A portion of the investment properties was derecognized and finance lease receivables were recognized in its place for $32.7 million. In addition, $17.0 million of ROU assets were recognized as part of investment properties.

(v) Included in investment properties are 12 properties held as ROU assets as at June 30, 2020 (December 31, 2019 - 11 properties). Refer to Note 7.



AcquisitionsThe following table summarizes the Trust's acquisitions of properties:

Income propertiesProperties under development

and Residential inventorySix months ended June 30 2020 2019 2020 2019Properties acquired during the period:

Investment properties $ 68,700 $ 320,419 $ 34,039 $ 6,532Total consideration 68,700 320,419 34,039 6,532

Debt assumed (15,701) (126,652) — —Total consideration, net of liabilities assumed $ 52,999 $ 193,767 $ 34,039 $ 6,532Total consideration, net of liabilities assumed allocated to:

Investment properties 52,999 193,767 34,039 6,532Total $ 52,999 $ 193,767 $ 34,039 $ 6,532

Investment properties acquisitions

Property name and locationDate

acquiredInterest

acquired

IPPPurchase

price (i)

PUDPurchase

price (i)

Debt and other liabilities

assumed

Q1 20202290 Lawrence Avenue East, Scarborough, ON March 19, 2020 100.0% $ — $ 5,587 $ —3180 Dufferin Street, Toronto, ON March 5, 2020 50.0% — 28,452 —2345 Yonge Street, Toronto, ON March 2, 2020 50.0% 37,053 — —2329 Yonge Street, Toronto, ON (ii) February 20, 2020 50.0% 7,909 — 4,2502947-2951 Bloor Street West, Toronto, ON January 31, 2020 100.0% 4,767 — —RioCan Marketplace, Toronto, ON January 9, 2020 33.3% 18,971 — 11,451Total acquisitions for the three months ended March 31, 2020 $ 68,700 $ 34,039 $ 15,701

Total acquisitions for the six months ended June 30, 2020 $ 68,700 $ 34,039 $ 15,701

(i) Purchase price includes transaction costs.(ii) Debt and other liabilities assumed includes a $4.3 million vendor-take-back mortgage payable to the vendor.

Purchase obligations

The Trust has agreed to purchase its partners' interest in the retail portion of the Yorkville project upon completion, currently estimated to be during 2024, at a 6.0% capitalization rate.

DispositionsThe following table summarizes the Trust's dispositions of investment property:

Income properties Properties under developmentSix months ended June 30 2020 2019 2020 2019Total consideration $ 33,000 $ 173,425 $ 21,715 $ 22,977Mortgages associated with investment property dispositions (12,112) — — —Vendor take-back mortgages receivable on dispositions (10,000) — — —Other accounts receivable (i) (4,056) — — —Total consideration, net of related debt $ 6,832 $ 173,425 $ 21,715 $ 22,977

(i) Repaid on July 2, 2020.

Income properties dispositions

On June 23, 2020, the Trust sold a 75% interest in one property located in Toronto, Ontario, for sales proceeds of $33.0 million. Upon disposition, the purchaser assumed $12.1 million of debt. RioCan provided a vendor take-back mortgage of $14.1 million related to this transaction, of which $4.1 million was repaid on July 2, 2020 and the remainder will be repaid later in 2020.



Properties under development dispositions

On March 31, 2020, RioCan completed the pre-agreed sale of 100% interest in one-third of the air rights relating to 5th & THIRD

project in Calgary, Alberta, for sales proceeds of $11.7 million as planned. The firm deal to sell the remaining two-thirds of the residential air rights strata parcel at 5th & THIRD is expected to close by the end of the year.

On February 19, 2020, RioCan sold one development property located in Laval, Quebec, for sales proceeds of $10.0 million.

Properties held for sale Presented below are details of the Trust's properties held for sale:

As at June 30, 2020 December 31, 2019AssetsIncome properties $ 3,620 $ —Properties under development 34,019 21,800Total assets held for sale $ 37,639 $ 21,800

As at June 30, 2020, RioCan has five investment properties held for sale with a carrying value of $37.6 million.

Valuation methodologyFair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). Expectations about future improvements or modifications to be made to the investment property to reflect its highest and best use may be considered in the valuation.

Investment properties and properties held for sale are carried at fair value, and the Trust uses significant unobservable inputs to estimate fair value of these assets at each reporting date. See below for further description of inputs used by the Trust in estimating the fair value of its properties. Significant unobservable inputs are classified as Level 3 inputs under IFRS. See Note 22 for further details.

Quoted market prices in active markets are the best evidence of fair value and are used as the basis for fair value measurement, when available. When quoted market prices are not available, judgment is required to estimate fair value based on the best information available, including prices for similar assets and the use of other valuation techniques. These valuation techniques are consistent with the objective of measuring fair value and involve a degree of estimation depending on the availability of market-based information.

Valuation processes

Internal valuations

The Trust's Valuations Committee is responsible for approving any fair value changes to the investment properties and consists of senior management of the Trust including the President & Chief Operating Officer, the Senior Vice President & Chief Financial Officer, and other executive members.

RioCan measures the vast majority of its investment properties, including co-owned properties, using valuations prepared by its internal valuation team. This team consists of individuals who are knowledgeable and have specialized industry experience in real estate valuations and report directly to a senior member of the Trust's management. The internal valuation team's processes and results are reviewed and approved by the Valuations Committee on a quarterly basis, in line with the Trust's quarterly reporting dates.

External valuations

Depending on the property asset type and location, management may opt to obtain independent third-party valuations from firms that employ experienced valuation professionals having the required qualifications in property appraisals for purposes of adopting such appraised values in the case of land parcels or assessing the reasonableness of its internal investment property valuations. The internal valuation team also verifies all major inputs used by the external valuator in preparing the valuation report, assesses changes to fair value by comparing the current year fair value against the fair value determined in the prior year valuation report, and holds discussions with the external valuator.

During the six months ended June 30, 2020, the Trust obtained a total of 12 external property appraisals (without any appraisals for vacant land parcels), which supported an IFRS fair value of approximately $1.1 billion, or 8.0% of the Trust's investment property portfolio as of June 30, 2020. In 2020, the Trust intends to select approximately six income properties for external appraisal on a quarterly basis.



Valuation techniques

Income properties

The internal valuation team estimates the fair value of each income property based on a valuation technique known as the direct capitalization income approach. The fair value is determined by applying a capitalization rate to stabilized net operating income (SNOI). The significant unobservable inputs are based on the following:

• SNOI is based on budgeted rents and expenses and is supported by the terms of any existing lease, other contracts or external evidence such as current market rents for similar properties, adjusted to incorporate allowances for estimated vacancy rates, management fees and structural reserves for capital expenditures based on current and expected future market conditions after expiry of any current lease and expected maintenance costs. The resulting capitalized value is then adjusted for non-recoverable capital expenditures as well as other costs, including leasing costs, inherent in achieving and maintaining SNOI.

• The capitalization rate is based on the location and quality of the properties and takes into account market data at the valuation date.

Properties under development

Management uses an internal valuation process to estimate the fair value of properties under development that consist of undeveloped land on a land value per acre basis using the particular attributes of the project with respect to zoning and pre-development work performed on the site. Where a site is partially developed and meets certain thresholds, the direct capitalization method is applied to capitalize the pro forma net operating income (NOI), stabilized with market allowances, from which the costs to complete the development are deducted. The significant unobservable inputs are based on the following:

• Pro forma SNOI is based on the location, type and quality of the properties and supported by the terms of actual or anticipated future leases, other contracts or external evidence such as current market rents for similar properties, adjusted for estimated vacancy rates based on expected future market conditions and estimated maintenance costs, which are consistent with internal budgets, based on management's experience and knowledge of the market conditions.

• Costs to complete are derived from internal budgets based on management's experience and knowledge of the market conditions.

• The capitalization rate is based on the location and quality of the properties and takes into account market data at the valuation date.

The primary method of valuation for land acquired for development is the comparable sales approach, which considers recent sales activity for similar land parcels in the same or similar markets. Land values are estimated using either a per acre or per buildable square foot basis based on highest and best use. Such values are applied to RioCan's properties after adjusting for factors specific to the site, including its location, intended use, zoning, servicing and configuration.

The table below summarizes the classification, valuation approach and inter-relationship between the Level 3 key unobservable inputs and fair value measurements for the Trust's investment properties:

ClassificationValuationapproach

Key unobservable input

Relationship between key unobservable inputsand fair value measurement

Income - producing properties/Properties under development

Direct capitalizationincome approach

Capitalization rateThere is an inverse relationship between thecapitalization rate and the fair value; in other words,the higher the capitalization rate, the lower theestimated value.

SNOI Generally, an increase in SNOI will result in anincrease in the estimated fair value of the properties.

Costs to completeThere is an inverse relationship between costs tocomplete and fair value; in other words, the higher thecosts to complete, the lower the estimated value.

Properties under development -undeveloped land

Comparable salesapproach

Marketcomparison

Land value is in line with market trends.

As at June 30, 2020, the weighted average capitalization rate for the Trust's investment properties and properties held for sale is 5.45% (December 31, 2019 - 5.28%).

For the three months and six months ended June 30, 2020, the Trust reported fair value losses of $451.7 million and $476.0 million, respectively, which reflects the estimated effect of the COVID-19 pandemic on property cash flows and capitalization rates, as well as the estimated effect of the depressed oil and gas markets. The carrying value for the Trust's investment properties reflects its best estimate for the highest and best use as at June 30, 2020.



The longevity and extent of the pandemic, the duration and intensity of resulting business disruptions and related financial, social and public health impacts continue to be uncertain. Such effects could be adverse and material, including their potential effects on RioCan's tenants and the Trust's business, operations and financial performance both in the short-term and long-term, which in turn, could further impact RioCan investment property valuations. As the events unfold in association with the pandemic, further adjustments to the Trust's IFRS value of investment properties, which could be negative or positive, may be required. Refer to below for a sensitivity analysis of investment property valuations.

Sensitivity analysis of changes in stabilized net operating income (SNOI), capitalization rates and costs to complete The following table is a sensitivity analysis applied to the portion of the Trust's investment properties and properties held for sale carrying value that is measured using the direct capitalization approach and, therefore, is sensitive to changes in capitalization rates:

Capitalization rate sensitivity increase (decrease)Weighted averagecapitalization rate Fair value variance

(1.00%) 4.45% $ 3,245,813(0.75%) 4.70% 2,278,401(0.50%) 4.95% 1,422,193(0.25%) 5.20% 712,127June 30, 2020 5.45% —0.25% 5.70% (633,801)0.50% 5.95% (1,202,912)0.75% 6.20% (1,722,239)1.00% 6.45% (2,196,497)

A 0.25% increase in capitalization rate would result in a lower portfolio fair value of $633.8 million. A 0.25% decrease in capitalization rate would result in a higher portfolio fair value of $712.1 million. In addition, a 1% increase in SNOI would result in a higher portfolio fair value of $131.1 million. A 1% decrease in SNOI would result in a lower portfolio fair value of $136.3 million. A 1% increase in SNOI coupled with a 0.25% decrease in capitalization rates would result in a higher portfolio fair value of $854.1 million. A 1% decrease in SNOI coupled with a 0.25% increase in capitalization rates would result in a lower portfolio fair value of $760.7 million. A 1% increase in costs to complete for the development properties would result in a lower portfolio fair value of $3.2 million, and a 1% decrease in costs to complete for the development properties would result in a higher portfolio fair value of $3.2 million.

4. EQUITY-ACCOUNTED INVESTMENTS The Trust has certain equity-method-accounted investments in associates and joint ventures. The following table details the Trust's ownership interest in each equity investee:

Equity Investee Principal activity June 30, 2020 December 31, 2019Dawson-Yonge LP Owns and operates an income property 40.0% 40.0%RioCan-HBC JV Owns and operates income properties 12.6% 12.6%WhiteCastle New Urban Fund, LP (WNUF 1)

Development and sale of residentialinventory

14.2% 14.2%WhiteCastle New Urban Fund 2, LP (WNUF 2) 19.3% 19.3%WhiteCastle New Urban Fund 3, LP (WNUF 3) 20.0% 20.0%WhiteCastle New Urban Fund 4, LP (WNUF 4) 18.4% 18.4%

The following table shows the changes in the aggregate carrying value of RioCan's investment in associates and joint ventures for the six months ended June 30, 2020:

Balance, January 1, 2020 $ 190,508Contributions 5,165Share of net income 1,131Distributions (4,222)Other comprehensive loss from equity-accounted investments (414)Other 19Balance, June 30, 2020 $ 192,187



5. RESIDENTIAL INVENTORY Residential inventory consists of assets that are developed by RioCan for sale in the ordinary course of business.

The following table shows the changes in the aggregate carrying value of RioCan's residential inventory:

As at June 30, 2020 December 31, 2019Balance, beginning of period $ 108,956 $ 206,123Dispositions (1,000) (164,378)Development expenditures 17,018 34,910Transfers from investment properties (i) 52,674 32,301Balance, end of period $ 177,648 $ 108,956

(i) During the six months ended June 30, 2020, a portion of RioCan Leaside Centre and portion of Queensway, in addition to a property located in the Greater Toronto Area, were transferred to residential inventory from investment property as appropriate evidence of a change in use was established. During the year ended December 31, 2019, a portion of Dufferin Plaza and Shopper's World Brampton were transferred to residential inventory from investment property as appropriate evidence of a change in use was established.

6. RECEIVABLES AND OTHER ASSETS The following table details the Trust's receivables and other assets as at June 30, 2020 and December 31, 2019:

As at June 30, 2020 December 31, 2019

CurrentNon-

current Total CurrentNon-

current TotalPrepaid expenses and other assets (i) $ 65,798 $ 34,825 $ 100,623 $ 51,006 $ 25,218 $ 76,224Net contractual rents receivable 117,527 — 117,527 33,048 — 33,048Finance lease receivable 3,019 37,563 40,582 2,717 36,402 39,119Amounts due on condominium final closings 3,775 — 3,775 45,405 — 45,405Funds held in trust 461 16,374 16,835 8,816 20,872 29,688Interest rate swaps agreements — — — 328 2,611 2,939

$ 190,580 $ 88,762 $ 279,342 $ 141,320 $ 85,103 $ 226,423

(i) Prepaid expenses and other assets primarily include marketable securities, prepaid property taxes and office furniture and equipment.

Contractual rents receivableContractual rents receivable, including common area maintenance, realty tax, and insurance recoveries, are presented net of an allowance for doubtful accounts of $20.6 million as at June 30, 2020 (December 31, 2019 - $1.4 million).

RioCan determines its allowance for doubtful accounts using the simplified lifetime expected credit loss (ECL) model for contractual rents receivable. The Trust uses an accounts receivable aging provision matrix to assess the ECL and applies loss factors based on historical loss experience calibrated with forward looking information to its aging buckets.

As a result of COVID-19, RioCan has calibrated its model for estimating lifetime ECLs by performing a tenant-by-tenant assessment of contractual rents receivable of major national tenants and by incorporating a provision matrix by category of tenant.

On May 25, 2020, the Government of Canada announced the Canada Emergency Commercial Rent Assistance (CECRA) program which provides relief for eligible small and medium-sized businesses experiencing financial hardship due to COVID-19. Under the CECRA program, the Trust effectively abates 25% of gross rents due for April to June 2020 for CECRA-eligible tenants. This net CECRA rent abatement is estimated at $9.9 million for the quarter. In addition, the Trust has accrued an additional $9.2 million provision for rent abatements for other tenants and bad debts. In total, a $19.1 million provision for rent abatements and bad debts was accrued for the three months ended June 30, 2020 as a result of the COVID-19 pandemic.

The following table summarizes the Trust's movement in allowance for doubtful accounts:

Six months ended June 302020 2019

Allowance for doubtful accounts, beginning of period $ 1,360 $ 1,068Provision for (recovery of) credit losses 19,059 (786)Write-offs (425) (497)Recoveries of previous write-offs and other 567 1,302Allowance for doubtful accounts, end of period $ 20,561 $ 1,087



7. LEASES A. As LesseeReal estate leases Included in investment properties are 12 properties held as ROU assets arising from land and/or building leases where RioCan is the lessee as at June 30, 2020 (December 31, 2019 - 11 properties). These ROU assets are initially measured at an amount equal to the lease liability and subsequently measured at fair value.

The real estate lease may be a lease for a portion of a property (including access roads and parking lots) or the entire property (including land and building). The carrying value of total investment properties related to these leases, including the portions relating to RioCan's leasehold building interests, and certain other property or related property interests, and excluding sublease finance lease receivables (refer to Note 6) is $273.6 million (December 31, 2019 - $308.0 million). The corresponding lease liability in accounts payable and other liabilities is $35.3 million (December 31, 2019 - $35.4 million).

8. LINES OF CREDIT AND OTHER BANK LOANS The Trust's revolving unsecured operating line of credit and secured construction lines and other bank loans, net of deferred financing costs, are as follows:

As at June 30, 2020 December 31, 2019Revolving unsecured operating line of credit $ 125,890 $ 339,446Non-revolving unsecured credit facilities 699,202 699,101Construction lines and other bank loans 31,263 48,172

$ 856,355 $ 1,086,719

Current $ 20,973 $ 30,120Non-current 835,382 1,056,599

$ 856,355 $ 1,086,719

Revolving unsecured operating line of creditRioCan had a drawn balance of $128.0 million and $872.0 million of credit availability to be drawn from this revolving unsecured operating line of credit at June 30, 2020. The weighted average contractual interest rate on amounts drawn under this facility was 1.72% (December 31, 2019 - 3.19%).

Non-revolving unsecured credit facilities The Trust has a $200 million non-revolving unsecured credit facility with two financial institutions (consisting of a Schedule I and a Schedule III bank), with a maturity date of January 31, 2023 and a weighted average annual all-in fixed interest rate of 3.28% through interest rate swaps.

In addition, the Trust has a $150 million non-revolving unsecured credit facility with two financial institutions (consisting of a Schedule I and a Schedule III bank), with a maturity date of June 27, 2024 and an annual all-in fixed interest rate of 3.43% through an interest rate swap.

The Trust also has a $350.0 million five-year non-revolving unsecured credit facility with three financial institutions (consisting of two Schedule I banks and one Schedule III bank). This credit facility matures on February 7, 2024 and, through an interest rate swap, bears an annual all-in fixed interest rate of 3.34%.

As of June 30, 2020, all of the Trust's non-revolving unsecured credit facilities are fully drawn.

The non-revolving unsecured credit facility agreements require the Trust to maintain certain financial covenants similar to those of RioCan's $1 billion revolving unsecured operating line of credit. Refer to Note 24 for additional details.

Construction lines of credit and other bank loansIn addition to the revolving unsecured operating line of credit and non-revolving unsecured credit facilities, the Trust has secured credit facilities and other bank loans, which include variable rate non-revolving secured construction facilities for the funding of certain development properties. As at June 30, 2020, these secured facilities and other bank loans have an aggregate maximum borrowing capacity of $72.5 million (December 31, 2019 - $106.5 million) and mature in 2021, of which the Trust had drawn $31.3 million (December 31, 2019 - $48.2 million). The weighted average contractual interest rate on amounts outstanding is 1.58% (December 31, 2019 - 2.93%).



9. MORTGAGES PAYABLE Mortgages payable, net of deferred financing costs, consist of the following:

As at June 30, 2020 December 31, 2019Current $ 497,505 $ 503,891Non-current 2,224,425 1,908,560

$ 2,721,930 $ 2,412,451

As at June 30, 2020, total mortgages payable bear interest at weighted average contractual interest rate of 3.50% and a weighted average effective interest rate of 3.53% (December 31, 2019 - 3.63% and 3.67%, respectively), and mature between 2020 and 2034.

During the six months ended June 30, 2020, RioCan completed new term mortgage borrowings $562.9 million and renewals at maturity balance of $88.0 million at a combined weighted average interest rate of 3.02% and a weighted average term of six years. During the six months ended June 30, 2020, repayments of mortgage balances and scheduled amortization amounted to $254.7 million, and $15.7 million of mortgage financing was assumed pursuant to completed acquisitions at a weighted average interest rate of 3.30%.

Pledged propertiesAs at June 30, 2020, $5.7 billion of the aggregate carrying value of investment properties, properties held for sale, residential inventory and certain other assets serves as security for RioCan's mortgages payable (December 31, 2019 - $5.6 billion).

10. DEBENTURES PAYABLE

As at June 30, 2020 December 31, 2019Current $ 550,000 $ 400,000Non-current 2,541,273 2,491,648

$ 3,091,273 $ 2,891,648

As at June 30, 2020, total debentures payable bear interest at weighted average contractual interest rates of 3.01% and a weighted average effective interest rate of 3.15% (December 31, 2019 - 3.12% and 3.31%, respectively).

Issuance and redemption activity On March 10, 2020, RioCan issued $350.0 million of Series AC senior unsecured debentures. These debentures were issued at par, carry a coupon rate of 2.361% per annum and will mature on March 10, 2027.

On June 1, 2020, RioCan redeemed, in full, its $150.0 million 3.62% Series U unsecured debentures in accordance with their terms.

Covenant complianceAs at and during the six months ended June 30, 2020, the Trust was in compliance with its covenants pursuant to the Trust's Declaration and debenture indentures.



11. ACCOUNTS PAYABLE AND OTHER LIABILITIES

As at June 30, 2020 December 31, 2019

CurrentNon-

current Total CurrentNon-

current TotalProperty operating costs (i) $ 120,219 $ 32,542 $ 152,761 $ 57,754 $ 30,734 $ 88,488Capital expenditures and leasing commissions:

Properties under development 137,317 — 137,317 132,876 — 132,876Income properties 34,039 — 34,039 36,160 — 36,160

Deferred revenue 30,487 47,268 77,755 30,609 21,897 52,506Unitholder distributions payable 38,123 — 38,123 38,121 — 38,121Interest payable 32,296 — 32,296 28,902 — 28,902Lease liability (ii) 1,620 33,663 35,283 1,740 33,640 35,380Income taxes payable 14,574 — 14,574 13,838 — 13,838Unfunded employee future benefits — 15,263 15,263 — 14,969 14,969Unit-based compensation payable — 6,185 6,185 — 8,560 8,560Contingent consideration 3,233 — 3,233 4,521 — 4,521Interest rate swap agreements 576 72,674 73,250 285 18,134 18,419Other trade payables and accruals 12,169 — 12,169 19,557 — 19,557

$ 424,653 $ 207,595 $ 632,248 $ 364,363 $ 127,934 $ 492,297

(i) Includes amounts billed in advance for common area maintenance, realty taxes and insurance recoveries. (ii) Refer to Note 7 for further details.

12. UNITHOLDERS' EQUITY Trust UnitsThe Trust is authorized to issue an unlimited number of Units. The Units are entitled to distributions, as and when declared by the Board (and upon liquidation), and to a pro rata share of the residual net assets remaining after the preferential claims, thereon, of debt holders and preferred Unitholders. As the Trust is a closed-end trust, the Units are not puttable. The following represents the number of Units issued and outstanding, and the related carrying value of Unitholder's equity, for the six months ended June 30, 2020 and 2019:

Six months ended June 30 2020 2019Units $ Units $

Balance, beginning of period 317,710 $ 4,814,097 305,097 $ 4,484,827Units issued:

Unit-based compensation exercises, net of Unitsrepurchased for settlement of Unit exercises — 440 784 20,656Direct purchase plan 13 250 8 205Units repurchased and cancelled — — (980) (14,400)

Balance, end of period 317,723 $ 4,814,787 304,909 $ 4,491,288

Included in Units outstanding as at June 30, 2020 are exchangeable limited partnership units totalling 0.5 million Units (June 30, 2019 - 0.5 million Units) of three limited partnerships that are subsidiaries of the Trust (the LP Units), which were issued to vendors as partial consideration for income properties acquired by RioCan. RioCan is the general partner of the limited partnerships. The LP Units are entitled to distributions equivalent to distributions on RioCan Units and are exchangeable for RioCan Units on a one-for-one basis at any time at the option of the holder.



Normal course issuer bid (NCIB) On October 15, 2019, RioCan received TSX approval of its notice of intention to renew its NCIB (the "2019/2020 NCIB"), to acquire up to a maximum of 30,724,496 of its Units, or approximately 10% of its outstanding Units as at September 30, 2019, for cancellation over the next 12 months, effective October 22, 2019.

The number of Units that can be purchased pursuant to the 2019/2020 NCIB is subject to a current daily maximum of 145,737 Units (which is equal to 25% of 582,948, being the average daily trading volume from April 1, 2019 to September 30, 2019, excluding RioCan's purchases on the TSX under its former NCIB), subject to RioCan’s ability to make one block purchase of Units per calendar week that exceeds such limits. RioCan intends to fund the purchases primarily out of net proceeds from its asset dispositions, available cash and undrawn credit facilities.

Units acquired and cancelled prior to October 22, 2019, were pursuant to the NCIB in effect for the 12 months ended October 21, 2019.

During the three and six months ended June 30, 2020, the Trust did not acquire and cancel any Units.

Contributed surplus RioCan and its consolidated subsidiaries introduced restricted equity plans (REU Plans) and a performance equity plan (PEU Plan) in 2017 as described in Note 13. The awards issued under these plans are settled by the delivery of Units purchased on the secondary market, net of applicable withholdings. The fair values of these equity-settled awards are recognized as an expense over the vesting period with a corresponding increase to contributed surplus, which is presented as a separate component of total Unitholders' equity.

For the six months ended June 30, 2020, RioCan recorded $4.4 million in unit-based compensation costs and no deferred tax recovery, respectively (June 30, 2019 - $3.1 million and $0.2 million, respectively).

Accumulated other comprehensive income (loss) Accumulated other comprehensive income (loss) as at and for the six months ended June 30, 2020 consists of the following amounts:

Actuarial loss onpension plan (i)

Interest rate swap agreements

(hedge reserve)Equity-accounted

investments TotalAs at December 31, 2019 $ (2,089) $ (14,989) $ (200) $ (17,278)Other comprehensive loss — (57,771) (414) (58,185)As at June 30, 2020 $ (2,089) $ (72,760) $ (614) $ (75,463)

(i) Amounts presented are net of deferred taxes of $0.7 million (June 30, 2019 - $0.4 million).

13. UNIT-BASED COMPENSATION PLANS Restricted Equity Unit Plans (REU Plans)Senior Executive REU PlanAs at June 30, 2020, 242,341 Senior Executive REUs are outstanding (December 31, 2019 - 178,800), of which 54,488 are vested (December 31, 2019 - 56,833).

On March 2, 2020, the Trust granted 119,621 REUs under its Senior Executive REU Plan. The grant date price was $26.19 per unit based on the five-day volume weighted average market price of RioCan's Units traded on the TSX prior to the grant date, resulting in an aggregate fair value of $3.1 million.

Employee REU PlanAs at June 30, 2020, 289,586 Employee REUs are unvested and outstanding (December 31, 2019 - 232,926).

On March 2, 2020, the Trust granted 101,979 REUs under its Employee REU Plan. The grant date price was $26.19 per unit based on the five-day volume weighted average market price of RioCan's Units traded on the TSX prior to the grant date, resulting in an aggregate fair value of $2.7 million.



Performance Equity Unit Plan (PEU Plan)As at June 30, 2020, 428,293 PEUs are unvested and outstanding (December 31, 2019 - 416,737).

On March 2, 2020, the Trust granted 119,621 PEUs under its PEU Plan at a fair value of $2.9 million. The grant date fair value assumptions using the Monte-Carlo valuation model are as follows:

As at June 30, 2020Fair value of PEUs granted $ 2,865PEUs granted (in thousands) 120Grant date fair value per unit $ 23.95Expected risk-free interest rate (i) 1.2%Expected unit price volatility (ii) 11.0%Initial total unitholder return (iii) (3.2%)

(i) Derived using the yield on Government of Canada benchmark bonds with an average term similar to the PEU vesting period.(ii) Expected unit price volatility is calculated based on the average of the actual daily closing price of RioCan's trust units measured over a three-year

historical period up to the grant date.(iii) PEUs are subject to certain internal and external measures of performance. The PEUs will vest based on the following performance metrics: half

are subject to an internal cumulative funds from operations (FFO) growth performance hurdle and half are subject to a relative TUR performance hurdle where vesting is dependent upon RioCan's total unitholder return (TUR) performance relative to a comparative group of peer companies. The initial TUR performance has incorporated actual historical TUR performance for RioCan and each entity in the comparator group over the period from January 1, 2020 to March 2, 2020.

Incentive Unit Option Plan The Trust provides long-term incentives to certain employees by granting options through the incentive unit option plan (Plan). RioCan is authorized to issue up to a maximum of 22 million Unit options under the Plan. As at June 30, 2020, 12.5 million Unit options remain available to be granted under the Plan.

For the six months ended June 30, 2020, there were no Unit options granted to senior management (year ended December 31, 2019 - 0.4 million).

Unvested Unit options granted prior to January 1, 2020, which remain outstanding under the existing plan, will continue to be expensed over the vesting period over which all specified vesting conditions are satisfied. No Unit options were exercised during the period.

The following summarizes the changes in Unit options outstanding during the three and six months ended June 30, 2020:

OptionsUnits

(in thousands)Weighted average

exercise priceOutstanding, beginning of period and end of period 6,367 $ 26.71Options exercisable at end of period 5,787 $ 26.85

Trustee Unit Plan Deferred Unit PlanAs at June 30, 2020, there are 407,474 deferred units vested and outstanding (December 31, 2019 - 319,506). During the three months ended June 30, 2020, 68,334 deferred units were granted and no deferred units were exercised (three months ended June 30, 2019 - 38,824 deferred units granted and 26,892 deferred units exercised). During six months ended June 30, 2020, 75,726 deferred units were granted and no deferred units were exercised (six months ended June 30, 2019 - 44,792 deferred units granted and 26,892 deferred units exercised).

14. DISTRIBUTIONS TO UNITHOLDERS Total distributions declared to Unitholders are as follows:


Total distributions $ 114,388 $ 109,681 $ 228,760 $ 219,417Distributions per unit $ 0.3600 $ 0.3600 $ 0.7200 $ 0.7200

On July 15, 2020, RioCan declared a distribution payable of 12.00 cents per unit for the month of July 2020, which will be paid on August 10, 2020 to Unitholders of record as at July 31, 2020.



15. REVENUERental revenue


Base rent $ 174,480 $ 170,635 $ 349,182 $ 336,207Realty tax and insurance recoveries 53,985 55,345 111,674 110,138Common area maintenance recoveries 34,027 38,190 80,063 80,709Percentage rent (143) 1,186 773 2,581Straight-line rent 1,816 1,917 4,519 4,833Lease cancellation fees 497 4,500 854 6,749Parking revenue (199) 601 843 1,317Rental revenue $ 264,463 $ 272,374 $ 547,908 $ 542,534

The following tables provide additional disclosure of the Trust`s various revenue streams.

Revenue from contracts with customersRevenue from contracts with customers includes common area maintenance recoveries and parking revenue that are included in rental revenue:


Residential inventory sales $ 2,736 $ 47,011 $ 3,145 $ 96,558Common area maintenance recoveries 34,027 38,190 80,063 80,709Property management and other service fees 2,694 8,189 5,096 12,624Parking revenue (199) 601 843 1,317Revenue from contracts with customers $ 39,258 $ 93,991 $ 89,147 $ 191,208

Property management and other service fees Property management and other service fees consist of the following:


Property management fees (i) $ 613 $ 960 $ 1,352 $ 2,083Construction and development fees (i) 1,061 2,549 2,243 4,067Leasing fees (ii) 148 148 259 350Financing arrangement fees (ii) 99 4,160 160 5,239Other (iii) 773 372 1,082 885Property management and other service fees $ 2,694 $ 8,189 $ 5,096 $ 12,624

(i) Recognized over time. (ii) Recognized at a point in time.(iii) During three months ended June 30, 2020, $0.8 million is recognized over time and nil is recognized at a point in time (three months ended

June 30, 2019- nil and $0.3 million, respectively). During six months ended June 30, 2020, $1.1 million is recognized over time and nil is recognized at a point in time (six months ended June 30, 2019 - $0.2 million and $0.7 million, respectively).



16. INVESTMENT AND OTHER INCOME (LOSS)


Income earned on marketable securities $ — $ 343 $ — $ 554Fair value gains (losses) on marketable securities — (2,135) 878 4,688Transaction gains (losses) and other income (losses) 1,470 35 5,636 (551)

$ 1,470 $ (1,757) $ 6,514 $ 4,691

The following table breaks down the fair value gains on marketable securities for the three and six months ended June 30, 2020 and 2019:


Realized gains on sale of marketable securities duringthe period $ — $ 5,681 $ 11,097 $ 15,733Change in unrealized fair value on marketable securitiesduring the period — (7,816) (10,219) (11,045)Fair value gains (losses) on marketable securitiesduring the period $ — $ (2,135) $ 878 $ 4,688

17. INTEREST INCOME


Interest income measured at amortized cost $ 2,735 $ 2,769 $ 5,462 $ 5,462Other interest income (i) 834 1,394 2,074 2,332

$ 3,569 $ 4,163 $ 7,536 $ 7,794

(i) Includes interest from finance subleases of $0.6 million and $1.2 million for the three and six months ended June 30, 2020 (three and six months ended June 30, 2019 - $0.5 million an $0.9 million).

18. INTEREST COSTS


Total interest (i) $ 55,598 $ 54,033 $ 110,795 $ 107,059Less: Interest capitalized (10,028) (7,831) (19,822) (16,068)

$ 45,570 $ 46,202 $ 90,973 $ 90,991

(i) Includes interest from lease liabilities of $0.5 million and $0.9 million for the three and six months ended June 30, 2020 (three and six months ended June 30, 2019 - $0.6 million and $1.1 million).

For the three and six months ended June 30, 2020, interest was capitalized to properties under development and residential inventory at a weighted average effective interest rate of 3.35% and 3.39% (three and six months ended June 30, 2019 - 3.52% and 3.56%).

19. GENERAL AND ADMINISTRATIVE


Salaries and benefits $ 4,989 $ 5,280 $ 10,584 $ 10,904Unit-based compensation expense 2,076 1,245 3,526 2,743Depreciation and amortization 1,106 1,087 2,202 2,152Other general and administrative expense 3,146 3,718 2,410 8,128

$ 11,317 $ 11,330 $ 18,722 $ 23,927

Other general and administrative costs include information technology costs, public company costs, professional fees, travel expenses, occupancy costs, donations, advertising, promotion and marketing costs.



20. TRANSACTION AND OTHER COSTS For the three and six months ended June 30, 2020, transaction and other costs primarily include property acquisition and disposition costs totalling $1.1 million and $2.1 million (three and six months ended June 30, 2019 - $1.6 million and $5.0 million).

21. NET INCOME (LOSS) PER UNIT Net income (loss) per basic and diluted unit is calculated based on net income (loss) available to Unitholders divided by the weighted average number of Units outstanding taking into account the dilution effect of Unit options.


Net income (loss) attributable to Unitholders $ (350,770) $ 252,972 $ (247,948) $ 447,494

Weighted average number of Units outstanding (in thousands):Basic 317,721 304,512 317,717 304,743Dilutive effect of Unit options (i) — 124 — 86Diluted 317,721 304,636 317,717 304,829

Net income (loss) per unit (basic) $ (1.10) $ 0.83 $ (0.78) $ 1.47Net income (loss) per unit (diluted) $ (1.10) $ 0.83 $ (0.78) $ 1.47

(i) The calculation of diluted weighted average number of Units outstanding excludes 6.4 million Unit options for the three months ended June 30, 2020 (June 30, 2019 - 4.9 million Unit options) and 6.4 million Unit options for six months ended June 30, 2020 (June 30, 2019 - 6.2 million Unit options), as the exercise price of these Unit options was greater than the average market price of Units.

22. FAIR VALUE MEASUREMENT The fair value hierarchy of assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets is as follows:

June 30, 2020 December 31, 2019As at Level 1 Level 2 Level 3 Level 1 Level 2 Level 3Assets measured at fair value:

Marketable securities $ — $ — $ — $ 18,123 $ — $ —Other investments — 4,675 6,607 — 5,693 2,236Investment properties:

Income properties — — 12,691,065 — — 13,120,545Properties under development — — 1,401,603 — — 1,238,582

Properties held for sale — — 37,639 — — 21,800Interest rate swaps — — — — 2,939 —

Total assets measured at fair value $ — $ 4,675 $ 14,136,914 $ 18,123 $ 8,632 $ 14,383,163Liabilities measured at fair value:

Interest rate swaps — 73,250 — — 18,419 —Total liabilities measured at fair value $ — $ 73,250 $ — $ — $ 18,419 $ —

For assets and liabilities measured at fair value as at June 30, 2020, there were no transfers between Level 1, Level 2 and Level 3 during the year. For changes in fair value measurements of investment properties and properties held for sale included in Level 3 of the fair value hierarchy, refer to Note 3 for details on the changes in beginning and ending balances.



Fair value of financial instrumentsThe following presents the carrying values and fair values of the Trust's financial instruments, excluding those classified as at amortized cost whose carrying value reasonably approximates their fair value and lease liabilities. Financial instruments that are classified as at amortized cost whose carrying value reasonably approximates their fair value include net contractual rents receivable, amounts due on condominium final closings and funds held in trust, accounts payable related to property operating costs, and capital expenditures and leasing commissions, trade payables and accruals, and deposits received from customers on residential inventory.

June 30, 2020 December 31, 2019As at Carrying value Fair value Carrying value Fair valueFinancial assets:

Marketable securities $ — $ — $ 18,123 $ 18,123Other investments 11,282 11,282 7,929 7,929Finance lease receivables 40,582 40,582 39,119 39,119Mortgages and loans receivable 198,861 200,276 175,951 175,635Interest rate swap assets — — 2,939 2,939

Financial liabilities:Mortgages payable $ 2,721,930 $ 2,791,119 $ 2,412,451 $ 2,450,273Debentures payable 3,091,273 3,134,595 2,891,648 2,943,585Lines of credit and other bank loans 856,355 856,355 1,086,719 1,086,719Interest rate swap liabilities 73,250 73,250 18,419 18,419

The fair values of the Trust's financial instruments were determined as follows:

Finance lease receivables

The fair value of finance lease receivables is determined by the discounted cash flow method using applicable inputs such as prevailing discount rates. Fair value measurements of these instruments were estimated using Level 3 inputs.

Mortgages and loans receivable

The fair value of mortgages and loans receivable is determined by the discounted cash flow method using applicable inputs such as prevailing interest rates, contractual rates and discounts and considers the fair value of the underlying collateral. Fair value measurements of these instruments were estimated using Level 3 inputs. The carrying values of short-term and variable rate loans generally approximate their fair values.

Mortgages payable, lines of credit and other bank loans, mortgages on properties held for sale, debentures payable

The fair values of these instruments are estimates made at a specific point in time, based on relevant market information. These estimates are based on quoted market prices for the same or similar issues or on the current rates offered to the Trust for similar financial instruments subject to similar risk and maturities. Fair value measurements of these instruments were estimated using Level 2 inputs. The carrying values of short-term and variable rate debt generally approximate their fair values.

Interest rate swaps

The fair values of the interest rate swaps reported in receivables and other assets and accounts payable and other liabilities on the consolidated balance sheet represent estimates at a specific point in time using financial models, based on interest rates that reflect current market conditions, the credit quality of counterparties and interest rate curves.

23. RISK MANAGEMENT The main risks arising from the Trust's financial instruments are interest rate risk, liquidity risk and credit risk. The Trust's approach to managing these risks is summarized below.

Interest rate riskThe Trust is exposed to interest rate risk on its borrowings and could be adversely affected if it were unable to obtain cost-effective financing. The majority of the Trust's debt is financed at fixed rates with maturities staggered over a number of years, thereby mitigating its exposure to changes in interest rates and financing risks. As at June 30, 2020, approximately 2.4%(December 31, 2019 - 6.1%) of the Trust's debt is financed at variable rates (including mortgage debt related to properties held for sale, if applicable, and excluding debt that has been hedged to fixed rates), exposing the Trust to interest rate risk.



From time to time, the Trust may enter into floating-for-fixed interest rate swaps as part of its strategy for managing interest rate risk. Hedge effectiveness is determined at the inception of the hedge relationship, and through quarterly effectiveness assessments to ensure that an economic relationship exists between hedged item and hedging instrument. The hedge ratio is set at a ratio of 1:1 for the specific portions of floating rate debt that have been designated as the hedged item. The Trust enters into hedge relationships where the critical terms of the hedging instrument match with the terms of the hedged item; as a result, the Trust does not expect any sources of hedge ineffectiveness, except from changes in credit risk of the Trust and the counterparty.

The Trust has applied hedge accounting and recorded the changes in fair value for the effective portion of these derivatives in OCI accumulated in the cash flow hedge reserve in equity from the date of hedge designation. Accumulated amounts are reclassified from OCI to net income in the periods where the forecasted cash flows impact net income. For any interest rate swaps for which the Trust does not apply hedge accounting, the change in fair value of the swap contracts is recognized in net income.

As at June 30, 2020, the outstanding notional amount of the floating-for-fixed interest rate swaps is $1.3 billion (December 31, 2019 - $1.3 billion) and the term to maturity of these agreements ranges from September 2020 to November 2028.

The Trust assessed the effectiveness of its hedging relationships and determined all such designated hedging relationships were effective as at June 30, 2020. As at June 30, 2020, the fair value of the interest rate swaps is, in aggregate, a net financial liability of approximately $73.3 million (December 31, 2019 - net financial liability of approximately $15.5 million).

As at June 30, 2020, the carrying value of the Trust's floating rate debt that is not subject to a hedging strategy is $157.2 million and a 50 basis point increase in market interest rates would result in an annualized decrease of $0.8 million in the Trust's net income.

Liquidity riskLiquidity risk is the risk that the Trust will not meet its financial obligations as they become due. The Trust mitigates its liquidity risk by staggering the maturity dates of its long-term debt, actively renewing expiring credit arrangements, utilizing undrawn operating lines of credit, maintaining a large number of assets unencumbered by debt and issuing equity when considered appropriate.

• For the current and non-current scheduled repayments of mortgages, and funds drawn against the Trust's lines of credit and other bank loans, refer to Notes 8 and 9 for details.

• For current and non-current scheduled repayments of debentures, refer to Note 10 for details.

The Trust expects to continue financing future acquisitions, development, debt obligations and other financing requirements through existing cash balances, internally generated cash flows, refinancing maturing debt, utilization of its operating line of credit, credit facilities, construction financing facilities, mortgaging unencumbered assets, issuance of unsecured debentures, the sale of non-core assets, sales proceeds from residential inventory or air rights sales, strategic development partnerships and the issuance of equity when considered appropriate.

Credit risk Credit risk is the risk of financial loss to RioCan which arises from the possibility that:

• Tenants may experience financial difficulty and are unable to fulfill their lease commitments or tenants fail to occupy and pay rent in accordance with existing lease agreements, some of which are conditional.

• Borrowers, typically through co-ownership arrangements, default on the repayment of their mortgages or loans receivable to the Trust.

• Third-parties default on the repayment of debt whereby RioCan has provided guarantees, including guarantees by RioCan on behalf of its co-owners and on behalf of purchasers who assumed mortgages on property dispositions.

The Trust mitigates tenant credit risk through geographical diversification, staggered lease maturities, diversification of revenue sources resulting from a large tenant base, avoiding dependence on any single tenant by ensuring no individual tenant contributes a significant percentage of the Trust’s gross revenue, ensuring a considerable portion of the Trust’s revenue is earned from national and anchor tenants and conducting credit assessments for new tenants. Furthermore, RioCan holds security deposits and letters of credit from a number of tenants which can serve to offset rents owed on a tenant-by-tenant basis in the unfortunate event of unresolved tenant defaults.

Management reviews contractual rent receivables on a regular basis and reduces carrying amounts through the use of an allowance for doubtful accounts recognizing the amount of any loss in the consolidated statements of income within non-recoverable property operating costs. During the COVID-19 pandemic, the Trust has strategically managed its rent collection process as many businesses closed operations of their own volition or to comply with government mandates. The Trust supported small and medium sized businesses by actively participating in the federal government's CECRA program for eligible tenants at its properties. For a further description of the CECRA program see Note 6. The Trust continues to work with its national tenants on a case-by-case basis while protecting its rights and financial position. As at June 30, 2020, and December 31, 2019, the allowance for doubtful accounts totals $20.6 million and $1.4 million, respectively.



Credit risk relating to mortgages and loans receivable and third-party guarantees is mitigated through recourse against such parties and/or the underlying real estate. These financial instruments are considered to have low credit risk. The Trust monitors the debt service ability and the fair value of the properties underlying the mortgages and loans receivable and third-party guarantees to assess for changes in credit risk. Credit risk relating to finance lease receivables is mitigated through recourse against such parties and/or re-recognition of the forfeited leased unit as investment property.

RioCan’s Declaration of Trust contains provisions that have the effect of limiting the amount of space that can be leased to one tenant and its investment in mortgages and loans receivable.

The maximum exposure to credit risk on financial assets on the consolidated balance sheet is their carrying values. For the maximum exposure to credit risk on third-party guarantees, refer to Note 28.

24. CAPITAL MANAGEMENTThe Trust defines capital as the aggregate of unitholders’ equity and debt. The Trust’s capital management framework is designed to maintain a level of capital that complies with investment and debt restrictions pursuant to RioCan’s Declaration, complies with existing debt covenants, and enables the Trust to achieve target credit ratings, implement its business strategies and build long-term unitholder value. The key elements of RioCan’s capital management framework are approved by its unitholders via the Trust’s Declaration of Trust and by its Board through their annual review of the Trust’s strategic plan and budget, supplemented by periodic Board and Board Committee meetings. Capital adequacy is monitored by the Trust by assessing performance against the approved annual plan throughout the year, which is updated accordingly, and by monitoring adherence to investment and debt restrictions contained in the Declaration and debt covenants.

As at and during the six months ended June 30, 2020, the Trust was in compliance with its investment and debt restrictions pursuant to RioCan's Declaration of Trust and the financial covenants as outlined in the Trust Indenture with respect to RioCan's senior unsecured debentures.

Revolving unsecured operating line of credit and non-revolving unsecured credit facilities The Trust is subject to certain key financial covenants pursuant to the agreement governing its unsecured operating credit facilities, which are calculated on a rolling twelve-month basis. As at and for the twelve months ended June 30, 2020, the Trust is in compliance with all applicable financial covenants.

The following table summarizes the Trust's performance relative to these key financial covenants:

Key covenant June 30, 2020Total indebtedness (i) (vi) < 60% 46.3%Secured indebtedness (ii) (vi) < 40% 19.2%Debt service coverage (iii) (vi) > 1.5x 2.5xMinimum unitholders' equity (in millions) > $5,000 $7,769Ratio of unencumbered property assets to unsecured indebtedness (iv) (v) (vi) > 1.5x 1.9xProperties held for development as a percentage of consolidated gross book value of assets < 15% 10.7%

(i) Total indebtedness consists of the contractual amounts outstanding on mortgages payable, lines of credit and other bank loans, debentures payable, lease liabilities, contingent liabilities and the maximum exposure to loss for all third-party debt where RioCan has provided a financial guarantee.

(ii) Secured indebtedness includes mortgages payable, secured construction lines and other bank loans and lease liabilities, which are secured against investment properties.

(iii) Debt service coverage includes regular mortgage principal and interest payments, including interest capitalized on properties under development.(iv) Unsecured indebtedness includes the contractual amounts outstanding of the revolving unsecured operating line of credit, non-revolving

unsecured credit facilities, debentures, contingent liabilities and any third-party debt amounts guaranteed by RioCan.(v) Unencumbered property assets consist of properties that have not been pledged as security for debt. The unencumbered property assets to

unsecured indebtedness ratio is calculated as unencumbered assets divided by unsecured indebtedness.(vi) These ratios include inputs from proportionately consolidated equity-accounted investments.



25. SUPPLEMENTAL CASH FLOW INFORMATION


Interest received $ 2,173 $ 1,364 $ 13,497 $ 2,600Interest paid 53,536 61,232 107,401 106,667

Distributions paid:Distributions declared during the period $ (114,388) $ (109,681) $ (228,760) $ (219,417)Distributions declared in the prior period paid in thecurrent period (38,122) (36,502) (38,121) (36,612)Distributions declared in current period paid in the next period 38,123 36,585 38,123 36,585

Distributions paid $ (114,387) $ (109,598) $ (228,758) $ (219,444)

The following provides a reconciliation of liabilities arising from financing activities:

Six months ended June 30, 2020 Mortgages payableLines of credit and

other bank loans DebenturesBalance, beginning of period $ 2,412,451 $ 1,086,719 $ 2,891,648Proceeds/advances, net 561,393 11,881 348,399Repayments (254,704) (244,120) (150,000)Non-cash changes:

Deferred financing costs and premiums and discounts (799) 1,875 1,226Contractual principal assumed (disposed) on acquisition/disposition, net 3,589 — —

Balance, end of period $ 2,721,930 $ 856,355 $ 3,091,273

26. RELATED PARTY TRANSACTIONS RioCan's related parties include the following persons and/or entities:

(a) associates, joint ventures, or entities that are controlled or significantly influenced by the Trust; and

(b) key management personnel including the Trustees and those persons having the authority and responsibility for planning,directing and controlling the activities of RioCan.

Activity and transactions with associates and joint ventures are disclosed in Note 4.

Key management personnel are defined by the Trust as those individuals that have the authority and responsibility for planning, directing and controlling the Trust's activities, directly or indirectly.

The Trust’s key management personnel include each of the Trustees and the following individuals: Chief Executive Officer, Edward Sonshine; President and Chief Operating Officer, Jonathan Gitlin; and Senior Vice President and Chief Financial Officer, Qi Tang (collectively, the "Key Executives").

Remuneration of the Trust’s Trustees and Key Executives during the three and six months ended June 30, 2020 and 2019 is as follows:

Three months ended June 30 Six months ended June 30Trustees Key Executives Trustees Key Executives

2020 2019 2020 2019 2020 2019 2020 2019Compensation and benefits $ 44 $ 50 $ 1,516 $ 1,317 $ 87 $ 117 $ 3,065 $ 2,744Unit-based compensation 889 1,057 1,413 726 (2,374) 2,078 2,336 1,926Post-employment benefit costs — — 31 11 — — 63 23

$ 933 $ 1,107 $ 2,960 $ 2,054 $ (2,287) $ 2,195 $ 5,464 $ 4,693



27. SEGMENTED INFORMATION RioCan primarily owns, develops, manages and operates grocery-anchored retail centres and mixed-use developments located in Canada. In measuring the performance of its retail centres, the Trust does not distinguish or group its operations on a geographical or any other basis and, accordingly, has a single reportable segment. Management has applied judgment by aggregating its operating segments into one reportable segment for disclosure purposes. Such judgment considers the nature of property operations, tenant mix and an expectation that operating segments within a reportable segment have similar long-term economic characteristics. The Trust's Chief Executive Officer is the chief operating decision-maker and regularly reviews RioCan's operations and performance on an individual property basis. RioCan does not have any single major tenant or a significant group of tenants.

28. CONTINGENCIES AND OTHER COMMITMENTS Third-party guarantees The maximum exposure to credit risk relating to a guarantee is the maximum risk of loss if there was a total default by the co-owner, without consideration of recoveries under recourse provisions against such co-owner's equity in the property or other assets of the co-owner.

As at June 30, 2020, the maximum exposure to credit loss as a result of debt guaranteed by RioCan is $185.5 million (December 31, 2019 - $163.2 million), which expires between 2020 and 2025, and which includes guarantees of $129.6 million (December 31, 2019 - $106.6 million) on behalf of co-owners. Debt guaranteed by RioCan that relates to the assumption of mortgages on property dispositions is $55.9 million (December 31, 2019 - $56.6 million). There have been no defaults by the primary obligors for debts on which the Trust has provided its guarantees and no provision for expected losses on these guarantees has been recognized in the Condensed Consolidated Financial Statements.

Letters of creditThe Trust has aggregate letter of credit facilities with certain Schedule I banks totalling $91.2 million (December 31, 2019 - $76.4 million). As at June 30, 2020, the Trust’s outstanding letters of credit under these facilities were $75.2 million (December 31, 2019 - $54.8 million).

Investment commitments RioCan-HBC Joint VentureAs at June 30, 2020, RioCan has approximately $140.5 million of remaining unfunded investment commitments related to the RioCan-HBC JV (December 31, 2019 - $140.5 million). The remaining contribution commitments are expected to be completed by November 25, 2020.

WhiteCastle New Urban Funds (WNUF)As at June 30, 2020, the Trust has total unfunded investment commitments of $69.6 million relating to WNUF 1, WNUF 2, WNUF 3 and WNUF 4 (December 31, 2019 - $74.8 million). Amounts to be funded are callable by the general partner at any point prior to the expiration of the limited partnership agreements, subject to certain extension term provisions, which are June 17, 2021 for WNUF 1; February 28, 2022 for WNUF 2; May 1, 2025 for WNUF 3; and September 15, 2027 for WNUF 4.

Litigation The Trust is involved with litigation and claims that arise from time to time in the normal course of business. In the opinion of management, any liability that may arise from such contingencies will not have a significant adverse effect on the Trust’s Condensed Consolidated Financial Statements.

Corporate

INFORMATIONSenior Management

Edward Sonshine O.Ont., Q.C.Chief Executive OfficerJonathan GitlinPresident & Chief Operating OfficerQi TangSenior Vice President & Chief Financial OfficerJohn BallantyneSenior Vice President, Asset ManagementAndrew DuncanSenior Vice President, DevelopmentOliver HarrisonSenior Vice President, OperationsJeff RossSenior Vice President, Leasing & Tenant ConstructionJennifer SuessSenior Vice President, General Counsel & Corporate SecretaryTerri AndrianopoulosVice President, Marketing & CommunicationsDavid BainVice President, Tenant ConstructionMoshe BatalionVice President, Leasing Stuart CraigVice President, DevelopmentRoberto DeBarrosVice President, ConstructionRyan DonkersVice President, InvestmentsAnushka GrantVice President, Innovation & SustainabilityGeorge HoVice President, Information TechnologyKim LeeVice President, Investor RelationsSandra LevyVice President, Human ResourcesPradeepa NadarajahVice President, Property AccountingParan NamasivayamVice President, Recovery AccountingStephen RobertsVice President, Analytics Tim RoosVice President, Operations -Eastern Canada & Northern Ontario Renee SimmsVice President, InsuranceFranca SmithVice President, FinanceJonathan SonshineVice President, Asset ManagementJeffery StephensonVice President, Operations - GTA & Central OntarioNaftali SturmVice President, Real Estate FinanceKimberly ValliereVice President, Development ConstructionKim WingerakVice President, Operations - Western CanadaJason WongVice President, Corporate TaxAshtar ZubairVice President, Enclosed Leasing

Board of Trustees

Paul Godfrey, C.M., O.Ont.3,4

Chairman of Board of Trustees Executive ChairmanPostmedia Network Canada Corp.

Bonnie R. Brooks, C.M.3,4

Executive Chair of the Board of Directors of Chico’s FAS (CHS: NYSE) Board Member, Rogers Communications Inc. Former CEO & President, Hudson’s Bay Company and Chico’s FAS

Richard Dansereau1,2*

Managing Director, Stonehenge Partners

Dale H. Lastman, C.M. Chair & Partner, Goodmans LLP

Jane Marshall2,3,4*

Trustee, Plaza Retail REITFormer COO, Choice Properties REIT

Sharon Sallows1,2,4

Trustee, Chartwell Retirement Residences REIT Director, Home Capital Group Inc.

Edward Sonshine O.Ont., Q.C.Chief Executive OfficerRioCan Real Estate Investment Trust

Siim A. Vanaselja1*,2

Director & Chair of the Board of TC Energy CorporationDirector & Chair of the Audit Committee of Great-West Lifeco Inc.Director & Chair of the Audit Committee of Power Financial Corporation

Charles M. Winograd3*,4

President, Winograd Capital Inc.

Unitholder Information

Head OfficeRioCan Real Estate Investment Trust RioCan Yonge Eglinton Centre,2300 Yonge Street, Suite 500P.O. Box 2386, Toronto, Ontario M4P 1E4 Tel: (416) 866-3033 or 1 (800) 465-2733 Fax: (416) 866-3020Website: www.riocan.com Email: [email protected]

Investor Contact

Kim LeeVice President, Investor Relations Tel: (416) 646-8326Email: [email protected]

Auditors

Ernst & Young LLP

Transfer Agent and Registrar

AST Trust Company (Canada)P.O. Box 700, Station B Montreal, Quebec H3B 3K3 Answerline: 1 (800) 387-0825Fax: 1 (888) 249-6189 or (514) 985-8843Website: www.astfinancial.com/ca-en Email: [email protected]

Stock Exchange Listing

The Toronto Stock ExchangeTrading Symbol: Trust Units – REI.UN

1 Member of the Audit Committee

2 Member of the Human Resources & Compensation Committee

3 Member of the Nominating & Governance Committee

4 Member of the Investment Committee

* Committee Chair

RIOCAN YONGE EGLINTON CENTRE2300 Yonge Street | Suite 500 | P.O. Box 2386 | Toronto, Ontario | M4P 1E4

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