Q3 2025 RioCan REIT Earnings Call

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I would now like to turn the conference over to MS. Jennifer <unk> Senior Vice President General Counsel, ESG and corporate Secretary Mrs. <unk> you may begin.

Thank you and good morning, everyone I am Jennifer <unk> Senior Vice President General Counsel, ESG and corporate Secretary of Rio can.

<unk>, we begin I am required to read the following cautionary statement in talking about our financial and operating performance and in responding to your questions. We may make forward looking statements, including statements concerning <unk> objectives, its strategies to achieve those objectives as well as statements with respect to management's beliefs.

<unk> estimates intentions and similar statements concerning anticipated future events results circumstances performance or expectations that are not historical fact these statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from the conclusions in these four.

<unk> looking statements in discussing our financial and operating performance and in responding to your questions. We will also be referencing certain financial measures that are not generally accepted accounting principle measures GAAP under IRS. These measures do not have any standardized definition prescribed by IRS and are therefore unlikely to be <unk>.

Comparable to similar measures presented by other reporting issuers.

non-GAAP measures should not be considered as alternatives to net earnings were comparable metrics determined in accordance with IRS as indicators of REO cans performance liquidity cash flows and profitability Rio Can's management uses these measures to aid in assessing the trust underlying core performance and provides these additional measures so that investors may do that.

Same.

Additional information on the material risks that could impact our actual results and the estimates and assumptions we applied in making these forward looking statements together with details on our use of non-GAAP financial measures can be found in the financial statements filed yesterday and management's discussion and analysis related thereto as applicable together with Rio.

<unk> most recent annual information form that are all available on our website and at Www Dot SEDAR plus dot Com I will now turn the call over to <unk>, President and CEO Jonathan <unk>.

Thank you Jennifer and good morning to everyone. Joining us today, we're pleased to share our Q3 2025 results.

Real cans operating momentum accelerated this quarter, our trio of high retention rates strong leasing spreads and quality tenants represents a sustainable long term outcome, we've strategically built toward.

Key performance indicators reflect consistent sustainable growth underscoring the strength and resilience of our platform.

Permanent occupancy of 97, 8% retail occupancy of 98, 4% and our Q3 retention ratio of 92, 7% highlights the value tenants placed on space and Rio can assets.

This demand translated into strong performance with commercial same property NOI up four 6%.

Rio can resolve leading from a position of strength.

Our performance was driven by a number of factors, but relies heavily on our focus on tenant quality and disciplined asset management.

Premium retail space remains scarce and exceptionally high barriers to entry and make meaningful new supply unlikely.

At the same time demand continues to be strong from top tier necessity based retailers. These.

These retailers are not just getting bought.

They are focusing on growth they are proving out their strength and ability to thrive.

Economic backdrop.

These tenants exemplify the caliber of retailers that comprise Rio cam's portfolio.

This supply demand imbalance is most acute where rio cans assets are concentrated.

Our properties are in Canada's major markets with an average of 277000 people and a $155000 household income within five kilometers.

Our strategy is straightforward, we optimize our portfolio by selling assets that don't align with our strategic vision on the flip side, we invest in those that do.

Over the past decade, we have diligently executed this approach and its yielding measurable success.

We are keeping our centers full and generating strong leasing spreads and were doing so with high quality tenants.

We're in our third quarter of operating under the current tariff environment and were pleased though not at all surprised to see our portfolio and tenants performing exceptionally well.

This is the benefit of a tenant mix that features necessity based retailers with strong balance sheets that provide everyday needs.

Canada remains an attractive market for our tenants in our centers are ideally located to support their growth.

Rio Cams leasing spreads remain at record highs.

We captured market rent growth across the portfolio, achieving blended leasing spreads of 28% this quarter, including 44, 1% on new leases.

Year to date, the average net rent for new leases was $29 58 per square foot nearly 30% above the average for occupied space.

Renewal spreads were also strong at 15, 2%.

This is especially noteworthy given that an outsized proportion 48% were fixed at lower growth rates this quarter.

Speaker #1: Is $0.39 per unit , compared with $0.38 in the prior year . This increase was driven by a 4.6% growth in same property income in our core commercial portfolio , and the benefit of unit buybacks , partially offset by higher interest expense .

Same property NOI will continue to benefit from this mark to market gap.

Specifically, there are $10 7 million square feet of leases coming up for renewal at a relatively consistent pace over the next three years.

Speaker #1: Total FFO was also impacted by the following items that are non-core to our business FFO for the quarter contained $17.5 million of gains related to residential inventory , an increase of $4.8 million , or approximately $0.02 per unit , compared with Q3 2020 .

Combined with our success in embedding annual growth in new leases and unlocking fixed options in existing leases. This trajectory is sustainable.

We are striking an extremely healthy balance between replacement and retention.

We're enhancing tenant quality and rental rates by replacing certain transitional tenants at the same time, we are retaining strong established tenants to reduce downtime and capital requirements.

Speaker #1: For lower fee and interest income due to residential inventory , completions had an impact of $0.01 . Reduced NOI and fee income related to the former HPC locations had a combined FFO impact of $0.02 per unit when compared with Q3 2020 .

When opportunities emerge, we secure high quality tenants for our properties. Alternatively, we also like to help our reliable established tenants expand their existing footprints within our assets.

Speaker #1: For net income for the quarter was impacted by valuation losses of $242.8 million , driven by factors that are not reflective of our core retail portfolio .

We put our platform to work and we help those tenants by seeking out opportunities in adjacent and surrounding space and help them execute on the enhancement and expansion of existing space.

Speaker #1: This amount includes $148 million of net fair value losses on investment properties comprised predominantly of three categories . The largest component was a $95 million related to excess density , driven by properties that have been reprioritized .

We're excited to share a number of examples to demonstrate this strategy at work later this month at our Investor day.

Our strong quarterly performance goes beyond the numbers.

Speaker #1: We have a significant amount of long term density potential in our portfolio . However , given the stagnant land and development market , it is important to ensure that we are maximizing income from the existing retail on our properties .

Flex the quality of our portfolio and the discipline behind our strategy.

We've previously indicated our plan to repatriate one three to $1 $4 billion of capital, which will be infused back into the business over 2025 and 2026.

Speaker #1: As such , we determined that the redevelopment of properties such as Colossus , Scarborough Center and Ryokan Hall will not proceed for a number of years .

And we remain firmly on track.

Progress continues on monetizing our residential rental portfolio, we sold our interest in fixed Rio can living properties five of which closed in 2025.

Speaker #1: This determination and commitment to focus on the core retail aspect of these properties removes any ambiguity related to these sites , freeing up our leasing team to maximize retail rents by offering longer lease term to our tenants .

These five transactions have contributed to the almost $500 million of capital repatriated since the start of this year.

Speaker #1: The second category , totaling $25 million , relates to assets that are high quality but with lower growth potential attributable to the significant proportion of fixed renewals associated with anchor tenants , such as Walmart .

Based on the quality and desirability of our REO can living assets, we're highly confident in our ability to continue to monetize these assets and to put the capital to work Accretively and then numerous capital allocation opportunities we have at our disposal.

Speaker #1: These are similar to assets that we have sold over the last couple of years , and represent a minimal proportion of our portfolio .

Our business is rooted in our strong portfolio of favorable retail environment and strong operators.

Speaker #1: The final category , totaling $28 million , relates to three large Toronto based residential rental buildings . We have seen weakness in rent growth and occupancy in submarkets where there is high competition from condo delivery .

This lends itself to the simplification of our business around our retail core leveraging our decades of experience to deliver reliable durable income and growth.

Focusing our resources human and capital on this core is a logical conclusion that will serve our unit holders well into the future.

Speaker #1: So we have reduced the stabilized NOI assumption for these buildings . As noted , the valuation losses relate to three categories that are not reflective of our core commercial real estate portfolio .

I'll wrap up in a moment, but before I do I'd be remiss, if I didn't mention that our commitment to excellence was further validated by our impressive performance in the 2025 grads via assessments.

Speaker #1: Our Nav per unit at the end of the quarter was $24.19 , which is approximately 29% above the current unit price . Going forward , we will focus on compounding Nav by growing income from our core portfolio , along with the accretive allocation of the substantial capital we expect to repatriate over the next couple of years .

Among other recognitions, we maintain regional sector leader status in the Americas under the retail sector and the first rank among north American retail peers in the standing investment assessments.

So as we look ahead, our outlook remains aligned with the guidance we provided in the first quarter.

Speaker #1: We are rapidly advancing toward a conclusion for the former HBC locations with asset plans for 12 of the 13 locations . As previously stated , we will only participate in assets where we would expect strong return on capital and we will not participate in mixed use redevelopments .

<unk> per unit of $1 85 to $1 88, <unk> payout ratio of approximately 62% and commercial same property NOI growth of approximately three 5%.

We continue to see strong demand for high quality necessity based retail space in Canada's major markets.

Speaker #1: The impairment in the quarter writes off a remaining equity in the HBC . JV . We have also taken provisions related to our loan and guarantee exposures .

Our leasing strategies are fueling organic growth and our disciplined capital management is amplifying that growth now and for the future.

Speaker #1: We have taken a conservative approach to the accounting for these assets while continuing to pursue all avenues to recover value with the asset plans in place and the financial provisions recorded .

We are excited to share more at our Investor Day on November 18, our team is energized our strategy is clear and our portfolio is positioned for continued success.

Speaker #1: This chapter is substantially behind us . As we focus on our core business , we are winding down our mixed use construction . Year to date , the spending on mixed use IP construction was $40 million , with 186,000ft² delivered with approximately $70 million remaining to be spent for the balance of the year .

Thank you for your time today I look forward to your questions and to sharing more about our progress in the coming weeks.

Thank you Jonathan and good morning to everyone on the call.

Our core real estate portfolio continues to deliver strong results and we continue to simplify our business to focus on this core.

<unk>, excluding carload gains and excluding HBC related income was 39 cents per unit compared with 38 in the prior year.

Speaker #1: And are committed capital for development . Construction . In 2026 of only $15 million . We will have significant flexibility going forward to invest capital where it is most accretive .

This increase was driven by a four 6% growth in same property income in our core commercial portfolio and the benefit of unit buybacks, partially offset by higher interest expense.

Speaker #1: In addition , we have delivered 61,000ft² of retail infill development . This is an area where we invest in our core portfolio to drive attractive returns through growth .

Total <unk> was also impacted by the following items that are noncore to our business.

Speaker #1: In NOI and Nav growth , and will be a continued area of focus . We are repatriating a significant amount of capital to our balance sheet .

<unk> for the quarter contained $17 5 million.

Of gains related to residential inventory, an increase of $4 8 million.

Speaker #1: We expect approximately $1.3 to $1.4 billion of capital from the sales of residential rental buildings and pre-sold condos over the course of 2025 and 2026.

Or approximately <unk> <unk> per unit compared with Q3 2024.

Lower fee and interest income due to residential inventory completions had an impact of <unk>.

Speaker #1: So far this year , we have brought in nearly $500 million of capital , $314 million in total asset sales , of which $250 million has been from the sale of five residential assets sold so far this year , bringing the total sold to six buildings with a sale of a number of others in process .

Reduced NOI and fee income related to the former HBC locations had a combined <unk> impact of <unk> <unk> per unit when compared with Q3 2024.

Net income for the quarter was impacted by valuation losses of $242 8 million driven by factors that are not reflective of our core retail portfolio.

Speaker #1: $163 million is from condo closings , resulting in the repayment of 128 million of construction loans and the removal of 323 million of guarantees .

Operator: As a reminder, this conference call is being recorded. I would now like to turn the conference over to Ms. Jennifer Suess, Senior Vice President, General Counsel, ESG, and Corporate Secretary. Ms. Suess, you may begin.

This amount includes $148 million of net fair value losses on investment properties comprised predominantly of three categories.

Speaker #1: We expect the remaining condo units at the end of the year to be valued at approximately $130 million , which is an insignificant amount in the context of RioCan REIT balance sheet .

The largest component was a $95 million related to excess density driven by properties that have been re prioritize.

Jennifer Suess: Thank you, and good morning, everyone. I am Jennifer Suess, Senior Vice President, General Counsel, ESG, and Corporate Secretary of RioCan. Before we begin, I am required to read the following cautionary statement. In talking about our financial and operating performance and in responding to your questions, we may make forward-looking statements, including statements concerning 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. These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from the conclusions in these forward-looking statements.

Speaker #1: Putting this program materially behind us . As a result of this and other initiatives , our credit metrics have continued to improve . Our adjusted net debt to adjusted EBITDA , improved to 8.8 times , solidly within our target range of 8 to 9 times our unencumbered asset pool grew to $9.3 billion .

We have a significant amount of long term desert potential in our portfolio. However, given the stagnant land and development market. It is important to ensure that we're maximizing income from the existing retail on our properties.

As such we determined that the redevelopment of properties such as Colossus Scarborough Centre in Rio Ken Hall will not proceed for a number of years.

Speaker #1: Our ratio of unsecured debt to total debt was 64% , and our liquidity was $1.1 billion . Our balance sheet provides us with financial flexibility to take advantage of opportunities as they arise .

This determination and commitment to focus on the core retail aspect of these properties removes any ambiguity related to these sites freeing up our leasing team to maximize retail rates by offering longer lease term to our tenants.

Speaker #1: As I conclude my remarks , it is important to mention that our results are driven by our best in class platform . This includes our team of very talented and hard working people .

The second category totaling $25 million.

It relates to assets that are high quality, but with lower growth potential attributable to a significant proportion of fixed renewals associated with anchor tenants such as Walmart.

Jennifer Suess: In discussing our financial and operating performance, in responding to your questions, we will also be referencing certain financial measures that are not generally accepted accounting principle measures, GAAP, under IFRS. These measures do not have any standardized definition prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other reporting issuers. Non-GAAP measures should not be considered as alternatives to net earnings or comparable metrics determined in accordance with IFRS as indicators of RioCan's performance, liquidity, cash flows, and profitability. RioCan's management uses these measures to aid in assessing the trust underlying core performance, and provides these additional measures so that investors may do the same.

Speaker #1: Our team has always utilized data that we collect from our vast portfolio to make decisions . Over the past few years , we have been upgrading our ability to leverage this data through the implementation of a new ERP system , migrating our systems to the cloud and employing analytical reporting and tools .

These are similar to assets that we have sold over the last couple of years and represent a minimal proportion of our portfolio.

The final category totaling $28 million relates.

Speaker #1: This ensures that our teams have the best information and analysis available as they execute our strategy , whether it be negotiating a lease , investing in a retail infill project , or buying and selling assets .

It relates to three large Toronto based residential rental buildings.

We have seen weakness in rent growth and occupancy and Submarkets, where there's high competition from Carlo delivery. So we have reduced the stabilized NOI assumption for these buildings.

Speaker #1: We ensure that the relevant data is available and the collective knowledge of our organization is brought to bear . We apply a continuous improvement mindset to ensure that we optimize the tools available to our people .

As noted the valuation losses relate to three categories that are not reflective of our core commercial real estate portfolio.

Jennifer Suess: Additional information on the material risks that could impact our actual results and the estimates and assumptions we applied in making these forward-looking statements, together with details on our use of non-GAAP financial measures, can be found in the financial statements filed yesterday and management's discussion and analysis related thereto, as applicable, together with RioCan's most recent annual information form that are all available on our website and at www.cdarplus.com. I will now turn the call over to RioCan's President and CEO, Jonathan Gitlin.

Speaker #1: Driving efficient processes and effective decision making . With that , I will turn the call over to the moderator for questions .

Our NAV per unit at the end of the quarter was $24 19.

Which is approximately 29% above the current unit price.

Going forward, we will focus on compiling NAV by growing income from our core portfolio along with the accretive allocation of the substantial capital we expect to repatriate over the next couple of years.

Speaker #2: Of course , we will now begin the question and answer session . If you would like to ask a question , please press star followed by one on your telephone keypad .

Speaker #2: If for any reason you would like to remove that question , please press star followed by two . Again , to ask a question , press star one .

We are rapidly advancing toward a conclusion for the former HBC locations with asset plans for 12 or 13 locations.

Speaker #2: As a reminder , if you are using a speakerphone , please remember to pick up your handset before asking a question . Our first question comes from the line of Sam Damani with TD securities .

Jonathan Gitlin: Thank you, Jennifer, and good morning to everyone joining us today. We're pleased to share our Q3 2025 results. RioCan's operating momentum accelerated this quarter. Our trio of high retention rates, strong leasing spreads, and quality tenants represent the sustainable, long-term outcome we've strategically built toward. Key performance indicators reflect consistent, sustainable growth, underscoring the strength and resilience of our platform. Committed occupancy of 97.8%, retail occupancy of 98.4%, and our Q3 retention ratio of 92.7% highlight the value tenants place on space in RioCan assets. This demand translated into strong performance, with commercial same property NOI up 4.6%. RioCan is operating from a position of strength. Our performance is driven by a number of factors but relies heavily on our focus on tenant quality and disciplined asset management. Premium retail space remains scarce, and exceptionally high barriers to entry make meaningful new supply unlikely.

As previously stated we will only participate in assets, where we would expect strong return on capital.

And we will not participate in mixed use redevelopment.

Speaker #2: Sam , your line is now open .

The impairment in the quarter write off our remaining equity in the Hec JV we.

Speaker #3: Thank you and good morning , everyone . Lots going on here at RioCan REIT . And it's exciting to see the next , next couple of years .

We have also taken provisions related to our loan and guarantee exposures.

Speaker #3: I just wanted to start off , I think Jonathan or Dennis , one of you mentioned sort of numerous capital allocation opportunities in front of you right now .

We have taken a conservative approach to the accounting for these assets, while continuing to pursue all avenues to recover value.

With the asset plans in place and the financial provisions recorded this chapter is substantially behind us.

Speaker #3: I wonder if you could be a little bit more specific in terms of terms of what you're seeing and , and I guess how much capital could be , could be allocated .

As we focus on our core business, we are winding down our mixed use construction.

Speaker #4: Thanks , Sam . Good morning to you and thanks for joining the call . We are going to elaborate quite a bit more on that at our Investor Day .

Year to date spending on mixed use ITT construction was $40 million with 186000 square feet delivered.

Speaker #4: So I don't want to put too much emphasis on it today . Just leaving something to talk about when we see you next in two weeks from now .

With approximately $70 million remaining to be spent for the balance of the year and are committed capital for development construction in 2026 of only $15 million, we will have significant flexibility going forward to invest capital where it's most accretive.

Speaker #4: But I'll give you the most obvious ones right now . The opportunities that are highly accretive and also beneficial are infill development in our retail scope .

Speaker #4: So really looking at properties that we own , where there is existing retail and we can make it better through the creation of additional retail pads and strips .

In addition, we have delivered 61000 square feet of retail infill development.

Speaker #4: And we're now at a position where the rents justify the , the expense of building out those , those additional square footage . And then the other is obviously NIB , which we've participated in the past , given where our stock or where our units are trading relative to Nav .

This is an area, where we invest in our core portfolio to drive attractive returns through growth in NOI and NAV growth and will be a continued area of focus.

Jonathan Gitlin: At the same time, demand continues to be strong from top-tier necessity-based retailers. These retailers are not just getting by, they're focusing on growth. They're proving out their strength and ability to thrive in any economic backdrop. These tenants exemplify the caliber of retailers that comprise RioCan's portfolio. This supply-demand imbalance is most acute where RioCan's assets are concentrated. Our properties are in Canada's major markets with an average of 277,000 people and a CAD 155,000 household income within five kilometers. Our strategy is straightforward. We optimize our portfolio by selling assets that don't align with our strategic vision. On the flip side, we invest in those that do. Over the past decade, we've diligently executed this approach, and it's yielding measurable success. We are keeping our centers full and generating strong leasing spreads, and we're doing so with high-quality tenants.

We are repatriating, a significant amount of capital to our balance sheet. We expect approximately one three to $1 $4 billion of capital from the sales of residential rental buildings are pre sold condos over the course of 2025 and 2026.

Speaker #4: And you know what we feel is an immediate FFO return on on on FFO , we feel it's a it's a pretty obvious place to to place money .

Speaker #4: In addition , of course , there's paying down debt . Those are the three pillars . I'd say that we're focused on most .

So far this year, we have brought in nearly $500 million of capital.

Speaker #4: But there are many ancillary ones that we're also focused on , and we're going to elaborate on at the Investor Day . Dennis , do you have anything to add to that ?

$314 million in total asset sales of which $250 million has been from the sale of five residential assets sold so far this year.

Speaker #1: No , I think that's right . And I think what's also important is to just note what what Jonathan didn't mention , which is , you know , we are we're winding up our mixed use development program .

Bringing the total sold to six buildings with a sale of a number of others in process.

$163 million is from condo closings, resulting in the repayment of $128 million of construction loans and the removal of $323 million of guarantees.

Speaker #1: That's just not a priority for us right now in terms of any large construction at scale . So yeah , I would agree .

Speaker #1: Putting money back into our own portfolio , retail portfolio is a is a great use of capital right now . And it's hard to ignore the stock price .

We expect the remaining common units at the end of the year to be valued at approximately $130 million, which is an insignificant amount in the context of REO cash balance sheet, putting this program materially behind us.

Speaker #3: Okay . Great . And I look forward to November 18th . Next , my second question is on . I guess the fair valuing the fair value changes you detailed on the quarter .

Jonathan Gitlin: We're in our third quarter of operating under the current tariff environment, and we're pleased, though not at all surprised, to see our portfolio and tenants performing exceptionally well. This is the benefit of a tenant mix that features necessity-based retailers with strong balance sheets that provide everyday needs. Canada remains an attractive market for our tenants, and our centers are ideally located to support their growth. RioCan's leasing spreads remain at record highs. We captured market rent growth across the portfolio, achieving blended leasing spreads of 20.8% this quarter, including 44.1% on new leases. Year-to-date, the average net rent for new leases was CAD 29.58 per sq ft, nearly 30% above the average for occupied space. Renewal spreads were also strong at 15.2%. This is especially noteworthy given that an outsized proportion, 48%, were fixed at lower growth rates this quarter.

As a result of this and other initiatives our credit metrics have continued to improve.

Speaker #3: Just wanted to be clear . The 90 odd million dollars taken on on the density assets . Like what does that leave on the balance sheet for ?

Our adjusted spot debt to adjusted EBITDA improved to eight eight times solidly within our target range of eight to nine times.

Our unencumbered asset pool grew to $9 $3 billion, our ratio of unsecured debt to total debt was 64%.

Speaker #3: For sort of excess density value ? Recognizing in your fair value .

And our liquidity was $1 $1 billion.

Speaker #1: Yeah . So I'm just trying to look up the number here . There is still value on a , you know , for some of the zoned square footage .

Our balance sheet provides us with financial flexibility to take advantage of opportunities as they arise.

As I conclude my remarks, it is important to mention that our results were driven by our best in class platform.

Speaker #1: I'm just kind of go into it here . We have , you know , our , our value in pod is about 700 million .

This includes our team of very talented and hard working people.

Our team is always utilized data that we collect from our vast portfolio to make decisions.

Speaker #1: About 180 of that is under construction sites . So if I kind of do the math quick here , it's just call it a little over $500 million of total density value still on the balance sheet .

Over the past few years, we have been upgrading our ability to leverage this data through the implementation of a new ERP system migrating our systems to the cloud and employing analytical reporting tools.

Speaker #1: When you kind of put that against , you know , almost 20,000,000ft² of of zoned density , it's a pretty low value on a per square foot basis .

This ensures that our teams have the best information and analysis available as they execute our strategy.

Jonathan Gitlin: Same property NOI will continue to benefit from this mark-to-market gap. Specifically, there are 10.7 million sq ft of leases coming up for renewal at a relatively consistent pace over the next three years. Combined with our success in embedding annual growth in new leases, and unlocking fixed options in existing leases, this trajectory is sustainable. We are striking an extremely healthy balance between replacement and retention. We're enhancing tenant quality and rental rates by replacing certain transitional tenants. At the same time, we are retaining strong, established tenants to reduce downtime and capital requirements. When opportunities emerge, we secure high-quality tenants for our properties. Alternatively, we also like to help our reliable, established tenants expand their existing footprints within our assets.

Whether it be negotiating a lease investing in our retail infill project.

Speaker #3: That's great . Thank you . And I'll turn it back .

Speaker #4: Thanks , Sam .

We're buying and selling assets, we ensure that the relevant data is available and the collective knowledge of our organization is brought to bear.

Speaker #2: Thank you . Thank you for your question , Sam . Our next question comes from the line of Brad Sturgis with Raymond James .

We apply a continuous improvement mindset to ensure that we optimize the tools available to our people driving efficient processes and effective decision making.

Speaker #2: Your line is now open .

Speaker #5: Hey . Good morning . Just focused on the core commercial portfolio . Obviously pretty strong results . You continue to see there . Just curious .

With that I will turn the call over to the moderator for questions.

Speaker #5: The renewal rent spreads continue to improve even with a higher proportion of fixed rate options . Just do you think you've kind of hit a peak at that point , or how do you expect your rent spreads to trend over the next few quarters ?

Of course, we will now begin the question and answer session. If you'd like to ask a question. Please press star followed by one on your telephone keypad.

Any reason you would like to remove that question. Please press star followed by two again to ask a question press Star one.

Speaker #4: You know , we preached in the in the prepared remarks about the sustainability of the conditions . I can't predict precisely where our renewal spreads will be , but we do think it's going to be a strong market for landlords like Riocan , given the strength of our portfolio going forward .

As a reminder, if youre using a speakerphone. Please remember to pick up your handset before asking a question.

Jonathan Gitlin: We put our platform to work, and we help those tenants by seeking out opportunities in adjacent and surrounding space, and help them execute on the enhancement and expansion of existing space. We're excited to share a number of examples to demonstrate this strategy at work later this month at our Investor Day. Our strong quarterly performance goes beyond the numbers. It reflects the quality of our portfolio, and the discipline behind our strategy. We previously indicated our plan to repatriate CAD 1.3 to 1.4 billion of capital, which will be infused back into the business over 2025 and 2026, and we remain firmly on track. Progress continues on monetizing our residential rental portfolio. We've sold our interest in six RioCan Living properties, five of which closed in 2025. These five transactions have contributed to the almost CAD 500 million of capital repatriated since the start of this year.

Speaker #4: I don't see a catalyst to change these conditions in the near or medium term simply because there is no new supply and we recognize that the tenancies that we're dealing with are typically very much in in growth mode .

Our first question comes from the line of Sam Damiani with TD Securities.

Sam Your line is now open.

Thank you and good morning, everyone let's.

What's going on here at <unk> and it's exciting to see the next the next couple of years.

Speaker #4: So we really do see the ability to continue achieving solid rent spreads. We're not providing specific guidance at this point, but we have said in the past mid-teens, and that's again a pretty comfortable spot.

I was just wanted to start off I think Jonathan or Dennis you mentioned sort of numerous capital allocation opportunities in front of you right now I Wonder if you could give a little bit more specific in terms of in terms of what youre seeing and and I guess, how much capital it could be it could be allocated.

Speaker #4: And so I think it's it's , you know , if you look at also the opportunity set , as I mentioned in my prepared remarks , we've got over 10,000,000ft² .

Speaker #4: That will be up for renewal over the next three years on a pretty consistent basis. And there's a significant mark-to-market.

Thanks, Sam Good morning to you and thanks for joining the call we are going to elaborate quite a bit more on that at our investor day. So I don't want to put too much emphasis on it today, just leaving something to talk about it when we see you next two weeks from now, but I'll give you. The most obvious ones right now the opportunities that are highly accretive and also beneficial.

Speaker #4: I mean , if you look at the rents that we wrote in Q3 , there were over $29 , and that compares favorably to the average rents we have across our portfolio , which is in the 2250 range .

Speaker #4: So that's about a 30% range that we feel very capable of bringing in through a strong renewal process .

Our infill development.

Our retail scope, so really looking at properties that we own where there is existing retail and we can make them better through the creation of additional retail pad some strips and we're now in a position where the rents justify the expense of building out those those additional square footage.

Jonathan Gitlin: Based on the quality and desirability of our RioCan Living assets, we're highly confident in our ability to continue to monetize these assets and to put the capital to work accretively in the numerous capital allocation opportunities we have at our disposal. Our business is rooted in a strong portfolio, a favorable retail environment, and strong operators. This lends itself to the simplification of our business around our retail core, leveraging our decades of experience to deliver reliable, durable income, and growth. Focusing our resources, human, and capital on this core is a logical conclusion that will serve our unit holders well into the future. I'll wrap up in a moment, but before I do, I'd be remiss if I didn't mention that our commitment to excellence was further validated by our impressive performance in the 2025 GRESB assessment.

Speaker #5: Sounds good . And just a follow up to that , just with respect to next year's expires , is there anything that stands out in terms of anomalous or would be unique or would be pretty similar to what you experienced in 2025 ?

Speaker #5: And and , you know , kind of see that consistent results going forward for next year .

And then the other is obviously on CIB, which we participated in the past given where our stock or where our units are trading relative to NAV and what.

Speaker #4: Yeah , I mean , the beauty of scale , Brad , is that we really we have so many properties with so many tenancies .

What we feel is in the media.

Speaker #4: And even if there is 1 or 2 larger renewals coming up that might be like a Walmart renewal with flat with a flat provision .

Turn on.

On <unk>, we feel it's a pretty obvious places to place money. In addition of course, there is paying down debt. Those are the three pillars I'd say that we're focused on most but there are many ancillary ones that we're also focused on and we're going to elaborate on at the Investor Day Dennis.

Speaker #4: It's offset by so many other renewals that don't have flat provisions , or they go to market . So there might be 1 or 2 larger or 3 or 4 larger tenants that will come up for renewal .

Speaker #4: That might be a little bit flat. But again, in the scheme of things, they won't change our guidance or outlook.

Dennis do you have anything to add to that.

No I think that's right and I think what's also important is to just know what Jonathan didn't mentioned, which is we are.

Speaker #4: I'll look to John Ballantyne just to see if I've missed anything . There .

Speaker #6: No , you haven't , Jonathan and I would also add , you know , again , we're going to sound like a broken record , but we are going to unpack this a little more in our Investor Day in two weeks .

Our.

We're winding up our mixed use development program, that's just not a priority for us.

Jonathan Gitlin: Among other recognitions, we maintain regional sector leader status in the Americas under the retail sector, and the first rank among North American retail peers in the standing investment assessment. As we look ahead, our outlook remains aligned with the guidance we provided in Q1: FFO per unit of CAD 1.85 to 1.88, FFO payout ratio of approximately 62%, and commercial same property NOI growth of approximately 3.5%. We continue to see strong demand for high-quality, necessity-based retail space in Canada's major markets. Our leasing strategies are fueling organic growth, and our disciplined capital management is amplifying that growth now and for the future. We're excited to share more at our Investor Day on 18 November 2024. Our team is energized, our strategy is clear, and our portfolio is positioned for continued success. Thank you for your time today.

Right now in terms of any large construction of scale. So.

Speaker #6: Namely , you know , where we think the market , what the actual mark to market spread is in our existing leases and how that's going to unfold in the same property revenue over the next three years .

Yeah, I would agree putting money back into our own portfolio retail portfolio is a great use of capital right now and it's hard to ignore the stock price.

Speaker #5: Okay . That's great . I'll turn it back . Appreciate it .

Okay, Great and I look forward to November 18th next my second.

Speaker #4: Thanks , Brad .

<unk> is on the I guess, the fair valuing of the fair value changes you detailed on the quarter.

Speaker #2: Thank you for your questions . Our next question comes from the line of Mario Saric with Scotiabank . Your line is now open .

To be clear the 90 odd million dollars.

Speaker #7: Hi . Good morning . Just a really quick one on HPC . And specifically the Ottawa location . Seems like it's the one asset where plans are still forthcoming .

<unk> taken on the on the density assets.

Like what does that leave on the balance sheet for for sort of excess density.

Speaker #7: Do you have a sense of the timing of clarity on that asset ?

Are you recognizing any near Philadelphia.

Yes.

Speaker #4: Thanks , Mario . Good morning . There there is no defined timeline at this point . We've got a few different options that we are exploring , and we endeavour to keep everyone apprised of how those unfold .

So I'm just trying to.

Look at the number here there is still value on a for some of those zoned square footage just kind of go into it here.

We have.

Jonathan Gitlin: I look forward to your questions and to sharing more about our progress in the coming weeks.

Speaker #4: But , you know , again , as we've always committed , we're not going to put any significant capital into these assets unless there is a logical return that competes with our other capital allocation opportunities .

Our value in pod is about $700 million.

Dennis Blasutti: Thank you, Jonathan, and good morning to everyone on the call. Our core real estate portfolio continues to deliver strong results, and we continue to simplify our business to focus on this core. FFO, excluding condo gains and excluding HBC-related income, was $0.39 per unit, compared with $0.38 in the prior year. This increase was driven by 4.6% growth in same property income in our core commercial portfolio, and the benefit of unit buybacks, partially offset by higher interest expense. Total FFO was also impacted by the following items that are non-core to our business. FFO for the quarter contained CAD 17.5 million of gains related to residential inventory, an increase of CAD 4.8 million, or approximately $0.02 per unit, compared with Q3 2024. Lower fee and interest income due to residential inventory completions had an impact of $0.01.

<unk>.

180 of that is under construction site. So if I kind of do the math quick here.

Call it a little over $500 million of.

Speaker #7: Okay . And then shifting gears just to , again , really quickly to real living . Any notable quarter over quarter change in terms of asset buyer sentiment ?

Total density value still on the balance sheet.

When you kind of put that against.

Almost 20 million square feet of zone density, it's a pretty low value on a per square foot basis.

Speaker #7: We've heard from some peers in terms of , you know , the beginning of some institutional interest coming into the multifamily space . So as it pertains to real can living , are you sensing any incremental demand and how does that change the timeline in terms of selling off the assets ?

That's great. Thank you and I'll turn it back thanks.

Thanks Sam.

Thank you for your question Sam.

Our next question comes from the line of Brad Sturges with Raymond James.

Speaker #4: Timeline is still intact . I would say that the demand for our new builds no rent control , limited CapEx , residential portfolio has been consistent throughout .

Your line is now open.

Hey, good morning.

Just focus on the.

Core commercial portfolio, obviously pretty strong results.

Speaker #4: I don't think there has been significant inflows in the in the demand for them in terms of the profile of buyers . Again , we haven't really seen much of a change .

We continue to see there.

I'm curious are the renewal rent spreads.

We continue to improve even with a higher proportion of fixed rate auctions.

Speaker #4: We've had a pretty wide spectrum of buyers or interested parties thus far , and that hasn't changed . So the timeline hasn't changed , nor has the outlook , which is favorable and positive for the disposition of the remaining assets .

Dennis Blasutti: Reduced NOI and fee income related to the former HBC locations had a combined FFO impact of $0.02 per unit when compared with Q3 2024. Net income for the quarter was impacted by valuation losses of $242.8 million, driven by factors that are not reflective of our core retail portfolio. This amount includes $148 million of net fair value losses on investment properties, comprised predominantly of three categories. The largest component was $95 million related to excess density, driven by properties that have been reprioritized. We have a significant amount of long-term density potential in our portfolio. However, given the stagnant land and development market, it is important to ensure that we are maximizing income from the existing retail on our properties. As such, we determined that the redevelopment of properties such as Colossus, Scarborough Centre, and RioCan Hall will not proceed for a number of years.

Do you think you've kind of hit a peak at that point or how do you expect.

Your rent spreads to trend over the next few quarters.

We preached in the in the prepared remarks about the sustainability of the conditions I can't predict precisely where our renewal spreads will be but we do think it's gonna be a strong market for landlords like Rio can given the strength of our portfolio going forward I don't see a catalyst to change these conditions in the near or medium term simply because there is no new.

Speaker #4: Andrew , any any other ?

Speaker #8: No , I think you captured it as you said . We've got we've got bid depth . Both institutional and private , and we remain confident in our goal .

Speaker #8: Great .

Speaker #7: So just last question as it pertains to the Investor Day , I'm not asking what you may disclose , but is the retail environment today in your confidence level in the portfolio today is such that you feel comfortable disclosing one year , three year targets .

Supply and we recognize that the tenancies that we're dealing with are typically very much in.

And in growth mode. So, we really do see the ability to continue achieving a solid rent spreads were not providing specific guidance at this point, but we have said in the past mid teens and that's again, a pretty comfortable spot and so I think it's.

Speaker #7: On some of the key metrics , such as FFO and Y , etc. .

Speaker #4: Yeah, we're going to give some pretty thorough outlooks. I think it would be a letdown at Investor Day if we didn't.

If you look at also the opportunity set as I mentioned in my prepared remarks, we've got over 10 million square feet that will be up for renewal over the next three years on a pretty consistent basis, and there's a significant mark to market. I mean, if you look at the rents that we wrote in Q3, they were over $29 and that compares favorably to the average rents we have across our portfolio, which is in the <unk>.

Speaker #4: So we will certainly leave you with a good outlook on the next three years. Okay. Promise not to disappoint.

Dennis Blasutti: This determination and commitment to focus on the core retail aspect of these properties removes any ambiguity related to these sites, freeing up our leasing team to maximize retail rents by offering longer lease terms to our tenants. The second category, totaling CAD 25 million, relates to assets that are high quality but with lower growth potential attributable to a significant proportion of fixed renewals associated with anchor tenants such as Walmart. These are similar to assets that we have sold over the last couple of years, and represent a minimal proportion of our portfolio. The final category, totaling CAD 28 million, relates to three large Toronto-based residential rental buildings. We have seen weakness in rent growth and occupancy in submarkets where there is high competition from condo delivery, so we have reduced the stabilized NOI assumption for these buildings.

Speaker #7: You . .

Speaker #4: All right . Thanks , Mario .

Speaker #2: Thank you for your questions . Our next question comes from the line of Michael Marcus with BMO . Your line is now open .

$2 50 range. So that's about a 30% range that we feel very capable of bringing through our strong renewal process.

Speaker #7: Thanks, Operator. Good morning, guys. Congrats on the strong core portfolio results.

Sounds good and just a follow up to that.

Speaker #8: Thanks .

With respect to next year's expires. It is there anything that stands out in terms of anomalous or would be unique or would be pretty similar to what you experienced in 2025 and.

Speaker #7: I'm just wondering .

Speaker #4: If you could help .

Speaker #7: Us think about, you know, property management and other service fees and interest income have been a fairly significant contributor to your business and the earnings side over the last couple of years.

And.

See that consistent results going forward for next year.

Speaker #7: And it is starting to moderate . How should we think about the trajectory of those two line items going forward with the continue to moderate ?

I mean, the beauty of scale, Brad is that we really we have so many properties with so many tenancies and even if there is one or two larger renewals coming up that might be like a walmart renewal with flat with flat provision, it's offset by so many other renewals that don't have flat.

Speaker #7: Is development winds down the interest income ? I imagine there's a bit of a rate component there , probably a little bit of less capital invested .

Speaker #7: Just anything you can do to help us with those line items would be helpful . Thank you .

Flat provisions or they go to market. So there might be one or two larger or three or four larger tenants that will come up for renewal that might be a little bit flat for the game in the scheme of things they won't change our guidance or outlook I'll look to John Ballantine just to see if I've missed anything there.

Speaker #4: Sure . I'll start and I'll turn it over to maybe Dennis . I think they will continue to moderate just in the sense that we have slowed down development and a large component of those fees came from development management .

Dennis Blasutti: As noted, the valuation losses relate to three categories that are not reflective of our core commercial real estate portfolio. Our NAV per unit at the end of the quarter was CAD 24.19, which is approximately 29% above the current unit price. Going forward, we will focus on compounding NAV by growing income from our core portfolio, along with the accretive allocation of the substantial capital we expect to repatriate over the next couple of years. We are rapidly advancing toward a conclusion for the former HBC locations, with asset plans for 12 of the 13 locations. As previously stated, we will only participate in assets where we would expect strong return on capital, and we will not participate in mixed-use redevelopments. The impairment in the quarter writes off our remaining equity in the HBC JV. We have also taken provisions related to our loan and guarantee exposures.

Speaker #4: On behalf of others . In terms of property management fees , we have a a set of of properties that are co-owned , and we are always the manager for those , whether the number of properties increases or decreases , I think it will be a marginal a marginal component of those fees going up or down .

No you haven't Jonathan.

I would also add again, we're going to sound like a broken record, but we are going to unpack. This a little more in our investor day in two weeks.

Namely, where we think the market what's the actual mark to market spread is in our existing leases and how thats going to unfold in the same property revenue over the next three years.

Speaker #4: So I don't think there'll be much , much to add there . But we are an entrepreneurial organization . We are always looking at ways to continue to use the strengths that we have .

Okay, that's great I'll turn it back I appreciate it thanks Brad.

Right.

Thank you for your questions.

Speaker #4: And one of those strengths is a very strong platform here at RioCan. So, we'll look at opportunities to utilize that to create fee income.

Our next question comes from the line of Mario <unk> with Scotiabank.

Your line is now open.

Hi, Good morning, just a really quick one on HBC and specifically the Ottawa location. It seems like it's the one asset where.

Speaker #4: But it's it's hard to predict at this point what exactly those will be and how much they will be for . So I think I think you would be appropriately suited just to , to keep things sort of on a , on a level trajectory going forward .

Yeah.

Plans are still forthcoming do you have a sense of.

The timing of clarity on that asset.

Dennis Blasutti: We have taken a conservative approach to the accounting for these assets while continuing to pursue all avenues to recover value. With the asset plans in place and the financial provisions recorded, this chapter is substantially behind us. As we focus on our core business, we are winding down our mixed-use construction. Year-to-date, the spending on mixed-use IPP construction was CAD 40 million, with 186,000sq ft delivered. With approximately CAD 70 million remaining to be spent for the balance of the year, and our committed capital for development construction in 2026 of only CAD 15 million, we will have significant flexibility going forward to invest capital where it is most accretive. In addition, we have delivered 61,000sq ft of retail infill development.

Speaker #4: Dennis , I don't know if you have any further comments on that .

Thanks, Mario Good morning, there there is no defined timeline at this point, we've got a few different options that we're exploring and we endeavor to keep everyone apprised of how those unfold, but again as we've always committed we're not going to put any significant capital into these assets.

Speaker #1: Yeah . No , I would agree with that . I think the and I had mentioned , I think in my prepared remarks , there was a decline related to development management fees and interest income associated with some VBS on on condo properties .

Speaker #1: So I think that that is going to to moderate in sort of level out the property management fee should should be be pretty level on that one .

Yes, there is a logical return that competes with our other capital allocation opportunities.

Okay.

Speaker #7: Okay . And one of the other components , I guess , has been a strong contributor over the past couple of years , has been the financing arrangement , fees , how do we think about that going forward ?

And then shifting gears just real quickly to real can living any notable quarter over quarter change in terms of asset buyer sentiment we've heard.

Speaker #7: Is that similar to the development pipeline , or is that related to other activities ?

From some peers in terms of.

Speaker #4: I would say .

Speaker #1: It would level off a little bit as well , because it was it was related somewhat to development . We do occasionally do mortgages on behalf of properties that are co-owned , which will add a bit of fees here and there , but not I don't see that as a meaningful contributor going forward .

The beginning of some institutional interest coming into the multifamily space. So as it pertains to really kind of living or do something any incremental demand and how does that change the timeline in terms of.

Dennis Blasutti: This is an area where we invest in our core portfolio to drive attractive returns through growth in NOI and NAV growth, and will be a continued area of focus. We are repatriating a significant amount of capital to our balance sheet. We expect approximately CAD 1.3 to 1.4 billion of capital from the sales of residential rental buildings and pre-sold condos over the course of 2025 and 2026. So far this year, we have brought in nearly CAD 500 million of capital. CAD 314 million in total asset sales, of which CAD 250 million has been from the sale of five residential assets sold so far this year, bringing the total sold to six buildings, with the sale of a number of others in process. CAD 163 million is from condo closings, resulting in the repayment of CAD 128 million of construction loans and the removal of CAD 323 million of guarantees.

Yes.

Timeline still intact I would say that the demand for our new builds no rent control limited capex. Our residential portfolio has been consistent throughout I don't think there has been significant inflows in the in the demand for them in terms of the profile of buyers. The game, we haven't really seen much of a change.

Speaker #7: Okay . That's helpful . Thanks so much guys .

Speaker #4: Thanks , Mike .

Speaker #2: Thank you for your questions . Our next question comes from the line of Matt Cornock with National Bank of Canada . Your line is now open .

Had a pretty wide spectrum of buyers or interested parties, thus far and that hasnt changed.

Speaker #9: Hey good morning . Good morning guys . I was wondering if you could just help a little bit on bridging kind of the current quarter to future quarters in terms of HBC .

The timeline Hasnt changed nor has the outlook, which is favorable and positive for the disposition of the remaining assets.

Andrew any.

No John I think you captured it.

Speaker #9: More in line with kind of any incremental capital deployment related to the , I guess , three assets that you own and the NOI generation .

As you said, we've got we got bit depth both.

Both institutional and private and we remain confident in our goal great.

Speaker #9: What would maybe be in this quarter versus what will be in future quarters , considering your own more of those income producing assets ?

So just last question.

Dennis Blasutti: We expect the remaining condo units at the end of the year to be valued at approximately CAD 130 million, which is an insignificant amount in the context of RioCan's balance sheet, putting this program materially behind us. As a result of this and other initiatives, our credit metrics have continued to improve. Our adjusted spot debt to adjusted EBITDA improved to 8.8x, solidly within our target range of 8x to 9x. Our unencumbered asset pool grew to CAD 9.3 billion. Our ratio of unsecured debt to total debt was 64%, and our liquidity was CAD 1.1 billion. Our balance sheet provides us with financial flexibility to take advantage of opportunities as they arise. As I conclude my remarks, it is important to mention that our results are driven by our best-in-class platform. This includes our team of very talented, hardworking people.

As it pertains to the Investor day I'm asking.

What you may disclose but the retail environment today and your confidence level in the portfolio today is such that you feel comfortable.

Speaker #4: Dennis .

Speaker #1: Yeah , sure . So on the three assets that we're backfilling , we had given a guidance range of about 100 to $125 per square foot equates to approximately $25 million in total for capital outlay on those .

Schools in one year three year targets.

The key metrics such as off a full internal etc.

We're going to have some pretty thorough outlooks I think it would be I'll, let down at Investor day, If we didn't so we will certainly leave you with a good outlook on the next.

Speaker #1: So that's that's the number there . You know , we had messaged that we would see , you know , we had about $0.08 of FFO coming in , you know , from , from HBC for , you know , in total that that was going to go away .

Two years.

Okay.

Okay promise not to be thank you.

Thanks Mario.

Thank you for your questions.

Speaker #1: We'll claw back some of that with the acquisition of Georgian and Oakville and the Backfills probably about a penny in , in 2026 .

Our next question comes from the line of Michael <unk> with BMO.

Your line is now open.

Thanks, operator, good morning, guys congrats on the strong.

Speaker #1: And then about two pennies in 2027 as the tendencies ramp up .

Core portfolio results.

Dennis Blasutti: Our team has always utilized data that we collect from our vast portfolio to make decisions. Over the past few years, we have been upgrading our ability to leverage this data through the implementation of a new ERP system, migrating our systems to the cloud, and employing analytical reporting and tools. This ensures that our teams have the best information and analysis available as they execute our strategy. Whether it be negotiating a lease, investing in a retail infill project, or buying and selling assets, we ensure that the relevant data is available and the collective knowledge of our organization is brought to bear. We apply a continuous improvement mindset to ensure that we optimize the tools available to our people, driving efficient processes and effective decision-making. With that, I will turn the call over to the moderator for questions.

Thanks.

Just wondering if you could help us think about.

Speaker #9: Okay . That's helpful . And then just on the non-recoverable operating costs , they've been a little elevated this year , starting in I guess Q4 of 24 is that one time in nature or is that the change in kind of the portfolio composition , just trying to understand where those should head over the next year ?

Property management and other service fees and interest income had been a fairly significant contributor to your.

Your business on the earnings side over the last couple of years and it is starting to moderate how should we think about the trajectory of those two line items going forward, we're going to continue to moderate as <unk>.

Development winds down the interest income I imagine, there's a bit of a rate component there are probably a little bit of less capital invested just anything you can do to help us with those line items would be helpful. Thank you.

Speaker #4: John , do you have a thought on that ?

Speaker #6: Yeah , I actually don't . Matt . We'll we'll take a better look at that . And get back to you with an answer .

Sure I'll start and I'll turn it over to Dennis.

I think they will continue to moderate just in the sense that we have slowed down developments and a large component of those fees came from development management on behalf of others.

Speaker #9: Okay. Fair enough. That's it for me. Thanks.

Speaker #4: Thanks , Matt .

Speaker #2: Thank you for your questions. There are no questions registered at this time. So, as a reminder, it is star one to ask a question.

In terms of property management fees, we have a.

Set of properties that are co owned and we are always the manager for those whether the number of Cowen properties increases or decreases I think it'll be a marginal.

Operator: Of course. We will now begin the question-and-answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. Our first question comes from the line of Sam Damiani with TD Securities. Sam, your line is now open.

Our marginal component of those fees going up or down so I don't think there'll be much much to add there, but we are an entrepreneurial organization. We are always looking at ways to.

Speaker #2: All right . I am showing no further questions at this time . I would now like to pass the conference back to president and CEO Jonathan Gitlin .

Continue to use the strengths that we have in one of those strengths as a very strong platform here at Rio Cam and so we'll look at opportunities to utilize that to create fee income, but it's it's hard to predict at this point, what exactly those will be and how much they will be for so I think I think you would be appropriately so.

Speaker #4: Thank you everyone for dialing in . We will look forward to seeing you at our Investor Day coming up in two weeks .

Sam Damiani: Thank you. Good morning, everyone. Lots going on here at RioCan, and it's exciting to see you the next couple of years. I just wanted to start off, I think Jonathan or Dennis, one of you mentioned sort of numerous capital allocation opportunities in front of you right now. I wonder if you could be a little bit more specific in terms of what you're seeing and, I guess, how much capital could be allocated.

Just to keep things sort of on a on a level of trajectory going forward. Just wondering if you have any further comments on that.

Yes, I would.

I agree with that I think.

And I had mentioned I think in my prepared remarks.

There was a decline related to.

Development management fees and interest income associated with some <unk>.

Jonathan Gitlin: Thanks, Sam. Good morning to you, and thanks for joining the call. We are going to elaborate quite a bit more on that at our Investor Day, so I don't want to put too much emphasis on it today, just leaving something to talk about when we see you next in two weeks from now. I'll give you the most obvious ones. Right now, the opportunities that are highly accretive and also beneficial are infill development in our retail scope, really looking at properties that we own where there is existing retail and we can make it better through the creation of additional retail pads and strips. We're now at a position where the rents justify the expense of building out those additional square footage. The other is obviously NTIB, which we participated in the past.

On condo property, so I think that.

That is going to moderate and sort of level out the property management fees should speak pretty.

Pretty level.

On the island.

Okay, and one of the other fee components I guess, it's been a strong contributor over the past couple years within the financing arrangement fees, but how do we think about that going forward is that similar to the development pipeline or is that related to other activities.

I wouldn't say it would level off a little bit as well.

Because it was.

There was really somewhat to development, we do occasionally do.

Mortgages on the.

Properties that are co loans, which will add a bit of fees here and there but.

Jonathan Gitlin: Given where our stock or where our units are trading relative to NAV, and what we feel is an immediate FFO return on FFO, we feel it's a pretty obvious place to place money. In addition, of course, there's paying down debt. Those are the three pillars I'd say that we're focused on most, but there are many ancillary ones that we're also focused on, and we're going to elaborate on at the Investor Day. Dennis, do you have anything to add to that?

I don't see that as a meaningful contributor going forward.

Okay.

Okay. That's helpful. Thanks, so much guys.

Thanks, Mike.

Thank you for your questions.

Our next question comes from the line of Matt <unk> with National Bank of Canada.

Your line is now open and good morning.

Good morning, guys.

I was wondering if you could just.

Helped a little bit on bridging kind of the current quarter to future quarters in terms of H B C.

Dennis Blasutti: No, I think that's right. I think what's also important is to just note what Jonathan didn't mention, which is we're winding up our mixed-use development program. That's just not a priority for us right now in terms of any large construction at scale. Yeah, I would agree. Putting money back into our own portfolio, retail portfolio, is a great use of capital right now, and it's hard to ignore the stock price.

More in line with kind of any incremental capital deployment related to the three outlets.

You own and the NOI generation, what would maybe be in this quarter versus what will be in future quarters, considering more of those income producing assets.

Yeah.

Dennis Yes sure so.

Sam Damiani: Okay, great. I look forward to 18 November. My second question is on, I guess, the fair value changes you detailed on the quarter. I just wanted to be clear, the $90 million taken on the density assets, what does that leave on the balance sheet for sort of excess density of value recognized in your fair value?

On the three assets that were back filling.

We had given a guidance range of about 100 to $125 per square foot equates to approximately $25 million.

In total for capital outlay on those.

So that's that's the number there.

We had message that we would see you'll get about eight cents of <unk> coming in.

You know from from HBC.

Dennis Blasutti: Yep. I'm just trying to look up the number here. There is still value for some of the zoned square footage. I'm just kind of going to it here. Our value in pot is about CAD 700 million. About CAD 180 million of that is on our construction site. If I kind of do the math quick here, it's just a little over CAD 500 million of total density value still on the balance sheet. When you kind of put that against almost 20 million sq ft of zoned density, it's a pretty low value on a per sq ft basis.

For in <unk>.

Total that that was going to go away.

We'll claw back some of that with the acquisition of George in Oakville and the backfill.

Probably about a penny in 2026, and then about two pennies in two.

2027 has the tendency to ramp up.

Okay. That's helpful.

And then just on the non recoverable operating costs and they've been a little elevated this year starting in I guess Q4 24.

Is that onetime in nature or is that a change in kind of the.

The portfolio composition, just trying to understand where those should that over.

The next year.

Sam Damiani: That's great. Thank you. I'll turn it back.

John difficult on them.

Jonathan Gitlin: Thanks, Sam.

Actually Joe Matt, we'll take a better look at that and get back to you with an answer.

Operator: Thank you for your question, Sam. Our next question comes from the line of Brad Sturgis with Raymond James. Your line is now open.

Okay fair enough.

That's it for me thanks, guys.

Brad Sturgis: Hey, good morning. Just focused on the core commercial portfolio, obviously pretty strong results you continue to see there. Just curious, the renewal rent spreads continue to improve even with a higher proportion of fixed-rate options. Do you think you've kind of hit a peak at that point, or how do you expect your rent spreads to trend over the next few quarters?

Excellent.

Thank you for your questions.

There are no questions registered at this time so as a reminder, it is star one to ask a question.

Okay.

Yeah.

Jonathan Gitlin: We preached in the prepared remarks about the sustainability of the conditions. I can't predict precisely where our renewal spreads will be, but we do think it's going to be a strong market for landlords like RioCan, given the strength of our portfolio going forward. I don't see a catalyst to change these conditions in the near or medium term simply because there is no new supply, and we recognize that the tendencies that we're dealing with are typically very much in growth mode. We really do see the ability to continue achieving solid rent spreads. We're not providing specific guidance at this point, but we have said in the past mid-teens, and that's, again, a pretty comfortable spot.

Alright, I am showing no further questions at this time I would now like to pass the conference back to President and CEO, Jonathan get one.

Thank you everyone for dialing in we will look forward to seeing you at our Investor day coming up in two weeks.

Okay.

Thank you for your participation you may now disconnect your line.

Jonathan Gitlin: I think if you look at also the opportunity set, as I mentioned in my prepared remarks, we've got over 10 million sq ft that will be up for renewal over the next three years on a pretty consistent basis. There's a significant mark-to-market. I mean, if you look at the rents that we wrote in Q3, they were over $29, and that compares favorably to the average rents we have across our portfolio, which is in the $22.50 range. That's about a 30% range that we feel very capable of bringing in through a strong renewal process.

Brad Sturgis: Sounds good. Just to follow up to that, just with respect to next year's expires, is there anything that stands out in terms of anomalous or would be unique, or would it be pretty similar to what you experienced in 2025 and kind of see that consistent results going forward for next year?

Jonathan Gitlin: Yeah. I mean, the beauty of scale, Brad, is that we have so many properties with so many tenancies. Even if there is one or two larger renewals coming up that might be like a Walmart renewal with a flat provision, it's offset by so many other renewals that don't have flat provisions or they go to market. There might be one or two larger or three or four larger tenants that will come up for renewal that might be a little bit flat. Again, in the scheme of things, they won't change our guidance or outlook. I'll look to John Valentine just to see if I've missed anything there.

Dennis Blasutti: No, you haven't, Jonathan. I would also add, again, we're going to sound like a broken record, but we are going to unpack this a little more in our Investor Day in two weeks, namely where we think the market, what the actual mark-to-market spread is in our existing leases, and how that's going to unfold in the same property revenue over the next three years.

Brad Sturgis: Okay, that's great. I'll turn it back. Appreciate it.

Jonathan Gitlin: Thanks, Brad.

Operator: Thank you for your questions. Our next question comes from the line of Mario Seric with Scotiabank. Your line is now open.

Mario Saric: Hi, good morning. Just a really quick one on HBC, and specifically the Ottawa location. Seems like it's the one asset where plans are still forthcoming. Do you have a sense of the timing of clarity on that asset?

Jonathan Gitlin: Thanks, Mario. Good morning. There is no defined timeline at this point. We've got a few different options that we are exploring, and we endeavor to keep everyone apprised of how those unfold. As we've always committed, we're not going to put any significant capital into these assets unless there is a logical return that competes with our other capital allocation opportunities.

Mario Saric: Okay. Shifting gears just to, again, really quickly to RioCan Living, any notable quarter-over-quarter change in terms of asset buyer sentiment that we've heard from some peers in terms of the beginning of some institutional interest coming into the multifamily space? As it pertains to RioCan Living, are you sensing any incremental demand, and how does that change the timeline in terms of selling off the asset?

Jonathan Gitlin: Timeline's still intact. I would say that the demand for our new-built, no-rent-control, limited-CapEx residential portfolio has been consistent throughout. I don't think there's been significant ebbs and flows in the demand for them. In terms of the profile of buyers, again, we haven't really seen much of a change. We've had a pretty wide spectrum of buyers or interested parties thus far, and that hasn't changed. The timeline hasn't changed, nor has the outlook, which is favorable and positive for the disposition of the remaining assets. Andrew, anything to add there? No, John, I think you captured it. As you said, we've got bid depth, both institutional and private, and we remain confident in our goal. Great.

Mario Saric: Just last question, as it pertains to the Investor Day, I'm not asking what you may disclose, but is the retail environment today, your confidence level in the portfolio today such that you feel comfortable disclosing one-year, three-year targets on some of the key metrics such as FFO, Sam's Turn ONLY, etc.?

Jonathan Gitlin: Yeah, we're going to give some pretty thorough outlooks. I think it would be a letdown at Investor Day if we didn't. We will certainly leave you with a good outlook on the next few years.

Mario Saric: Okay.

Jonathan Gitlin: I promise not to disclose.

Mario Saric: Thank you.

Jonathan Gitlin: All right, thanks, Mario.

Operator: Thank you for your questions. Our next question comes from the line of Michael Markidis with BMO. Your line is now open.

Mario Saric: Thanks, operator. Good morning, guys. Congrats on the strong core portfolio results.

Jonathan Gitlin: Thanks, Mario.

Mario Saric: I'm just wondering if you'd help us think about property management, other service fees, and interest income have been a fairly significant contributor to your business on the earnings side over the last couple of years, and it is starting to moderate. How should we think about the trajectory of those two line items going forward? Whether they continue to moderate as development winds down, the interest income, I imagine there's a bit of a rate component there, probably a little bit of less capital invested. Just anything you can do to help us with those line items would be helpful. Thank you.

Jonathan Gitlin: Sure. I'll start, and I'll turn it over to maybe Dennis. I think they will continue to moderate just in the sense that we have slowed down development, and a large component of those fees came from development management on behalf of others. In terms of property management fees, we have a set of properties that are co-owned, and we are always the manager for those. Whether the number of co-owned properties increases or decreases, I think it'll be a marginal component of those fees going up or down. I don't think there'll be much to add there. We are an entrepreneurial organization. We are always looking at ways to continue to use the strengths that we have. One of those strengths is a very strong platform here at RioCan. We'll look at opportunities to utilize that to create fee income.

Jonathan Gitlin: It's hard to predict at this point what exactly those will be and how much they will be for. I think you would be appropriately suited just to keep things sort of on a level trajectory going forward. Dennis, I don't know if you have any further comments on that.

Dennis Blasutti: Yeah, no, I would agree with that. I think, and I had mentioned, I think in my prepared remarks, there was a decline related to development management fees and interest income associated with some VTBs on condo properties. I think that is going to moderate and sort of level out. The property management fees should be pretty level on that one.

Mario Saric: Okay. One of the other fee components, I guess, that's been a strong contributor over the past couple of years has been the financing arrangement fees. How do we think about that going forward? Is that similar to the development pipeline, or is that related to other activities?

Dennis Blasutti: I would say it would level off a little bit as well because it was related somewhat to development. We do occasionally do mortgages on behalf of properties that are co-owned, which will add a bit of fees here and there, but I don't see that as a meaningful contributor going forward.

Mario Saric: Okay, that's helpful. Thanks so much, guys.

Jonathan Gitlin: Thanks, Mike.

Operator: Thank you for your questions. Our next question comes from the line of Matt Cornack with National Bank of Canada. Your line is now open.

Mario Saric: Hey, good morning. Good morning, guys. I was wondering if you could just help a little bit on bridging kind of the current quarter to future quarters in terms of HBC, more in line with kind of any incremental capital deployment related to the, I guess, three assets that you own and the NOI generation. What would maybe be in this quarter versus what will be in future quarters considering you're going to own more of those income-producing assets?

Jonathan Gitlin: Dennis?

Dennis Blasutti: Yeah, sure. On the three assets that we're backfilling, we had given a guidance range of about CAD 100 to 125 per sq ft, which equates to approximately CAD 25 million in total for capital outlay on those. That's the number there. We had messaged that we would see we had about $0.08 of FFO coming in from HBC in total that was going to go away. We'll claw back some of that with the acquisition of Georgia and Oakville and the backfills, probably about $0.01 in 2026 and then about $0.02 in 2027 as the tenancies ramp up.

Mario Saric: Okay, that's helpful. Just on the non-recoverable operating costs, they've been a little elevated this year starting in, I guess, Q4 2024. Is that one-time in nature, or is that a change in kind of the portfolio composition? Just trying to understand where those should head over the next year.

Jonathan Gitlin: John, do you have a thought on that?

Dennis Blasutti: Yeah, I actually don't, Matt. We'll take a better look at that and get back to you with an answer.

Mario Saric: Okay. Fair enough. That's it for me. Thanks, guys.

Jonathan Gitlin: Thanks, Matt.

Operator: Thank you for your questions. There are no questions registered at this time. As a reminder, it is star one to ask a question. All right, I am showing no further questions at this time. I would now like to pass the conference back to President and CEO, Jonathan Gitlin.

Jonathan Gitlin: Thank you, everyone, for dialing in. We will look forward to seeing you at our Investor Day coming up in two weeks.

Operator: Thank you for your participation. You may now disconnect your line.