Ed Sonshine - Chief Executive Officer Rags Davloor - President, Chief Operating Officer & Interim Chief Financial Officer John Ballantyne - Senior Vice President of Asset Management

Heather Kirk - BMO Capital Markets Sam Damiani - TD Securities Neil Wood - Private Investor Michael Smith - RBC Capital Markets Pammi Bir - Scotia Capital Alex Avery - CIBC World Markets

Thank you very much and good morning to everybody. Thank you for joining us for our third quarter conference call.

With me today amongst others is Rags Davloor, who is now our President, Chief Operating Officer and Interim Chief Financial Officer, as well as John Ballantyne, our Senior Vice President of Asset Management. Before I turning the call over to those two gentlemen, I’m required to read the following warning.

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 of these forward-looking statements.

In discussing our financial and operating performance and in responding to your questions, we will also be referring to certain financial measures that are not Generally Accepted Accounting Principles measures under IFRS. These measures do not have any standardized definitions prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by the reporting issuers.

Non-GAAP measures should not be considered as alternatives to net earnings or comparable metrics determined in accordance with IFRS as indicators of RioCan's performance, liquidity, cash flows and profitability. RioCan’s management uses these measures to aid in assessing the Trust’s underlying core performance and provides these additional measures so that investors may do the same.

Additional information on the material risks that could impact our actual results and the estimates and assumptions we apply in making these forward-looking statements, together with details on our use of non-GAAP financial measures can be found in the financial statements for the period ending September 30, 2014, management’s discussion and analysis related thereto as applicable, together with RioCan’s current Annual Information Form that are all available on our website and at www.sedar.com. And if the lawyers make this any longer that would ordinarily become the end of the conference call.

But its not, so I will call on Mr. Davloor to first present the financial performance.

Thanks Ed. Good morning everyone.

We are pleased to review RioCan’s third quarter 2014 results that were released earlier this morning. For the third quarter RioCan reported operating FFO of $134 million, an increase of $10 million or 8% compared to operating FFO of $124 million in Q3, 2013.

On a per unit basis, operating FFO also increased by 5% to $0.43 per unit in Q3 ’14, compared to $0.41 per unit in 2013. The increase in the quarter is primarily attributable to an increase in NOI from rental properties of $8.4 million, which includes the impact of the following items; acquisitions, net of dispositions completed over the last 12 months, additional income property NLA resulting from the completion of development projects, including the Tanger Cookstown expansion and the grand opening of Tanger Ottawa, Canadian and U.S.

same property NOI growth, and a $3 million favorable foreign currency gains from U.S. operations.

We had higher fees in other income of $4.5 million due to increased finance and service fees from partners and investment income, partially offset by lower interest income of $2.1 million, due primarily to the settlement of certain mezzanine loans during the first quarter of ’14, in connection with the acquisition of interests in three development projects. And we also had an increase in G&A cost of $1.7 million, primarily due to increased IT costs relating to the Trust's expanded ERP platform, as well as higher salaries and benefits costs due to the increase in employee headcount commensurate with the Trust's growth in portfolio, the completion of the internalization of the U.S.

operations in Texas, and the increased complexity of operations. During the third quarter RioCan completed two acquisitions of interest in income producing properties.

Our total purchase price of $52 million in Canada was a weighted average cap rate of 5.3%. RioCan completed the purchase of one income property in the U.S in the third quarter at a purchase price of $29 million and the cap rate of 6.1%.

RioCan has one income property acquisition under firm contract in Canada that would represent an acquisition of $32 million at a 5.5% cap rate. RioCan has income property acquisitions under contract in Canada and the U.S., where conditions have not been waived, but if completed would represent acquisitions of $49 million.

RioCan is currently in negotiations regarding income property acquisitions in Canada and the U.S. and if completed will represent approximately $58 million of additional acquisitions.

RioCan has dispositions of income properties under conditional contract, where conditions have not yet been waived of approximately $186 million at RioCan's interest. The Trust's mortgage obligation related to these properties is approximately $50 million.

With regards to our development portfolio, during the third quarter RioCan transferred from properties under development to IPP, a $188 million in costs pertaining to 520,000 square feet of completed Greenfield development or expansion to redevelopment projects. For the nine months ended September 30, 2014, RioCan transferred $330 million in costs pertaining to just under 1 million square feet.

Subsequent to the quarter end, RioCan completed the acquisition on a 50% interest in the site where TD Bank is currently located at the Northeast Corner of Yonge and Eglinton. The property was acquired free and clear of financing and forms part of the existing Northeast Yonge and Eglinton land assembly, which was acquired in 2011.

On the disposition side, RioCan has dispositions of land parcel under conditional contract where conditions have not yet been waved of approximately $14 million. These land parcels are free and clear of financing.

RioCan is also in the process of marketing for sale land parcels with an aggregate fair value at September 30, 2014 calculated under IFRS of approximately $25 million. These land parcels are free and clear of financing.

RioCan is under no obligation to proceed with these proposed dispositions, which if completed will be done to facilitate its objective of pairing its portfolio and focusing on major markets. Under IFRS, at September 30 RioCan’s investment properties were valued at $13.8 billion at RioCan interest, based on the weighted average cap rate of 5.85, which is one basis point lower than June 30 ‘14.

The decrease was a result of a seven basis point decrease in cap rates in the U.S. portfolio due in the quarter to 6.17%.

The cap rate on the Canadian portfolio was one basis point lower than June 30 at 5.78%. RioCan’s U.S.

assets represent approximately 17% of total investment property assets by value. With respect to financing, during the quarter RioCan completed the offering of an addition $100 million Series V debentures, which carry a coupon of 3.746% and a maturity date of May 30, 2022.

The debentures were issued out of the reopening of the series and generate gross proceeds of just over $101 million, and as such the additional debentures were issued an effective rate of 3.587%. For the balance of the year RioCan is maturing mortgages of $94 million at an average rate of 5.91%.

For 2015 RioCan has aggregate maturities of $730 million at an average rate of 4.45%. The aggregate capacity of RioCan’s operating lines at quarter end was $715 million.

Presently $170 million is drawn on these facilities, with another $29 million drawn to support outstanding letters of credit on development activities. Our current undrawn balance is approximately $500 million.

In the third quarter, on a proportionate consolidation basis and excluding capitalized interest, some of the key leverage ratios were as follows: Interest coverage of 3.3 times, debt serve coverage of $2.47 times, fixed charge coverage which includes preferred and common dividends of 1.15 times. RioCan’s debt to total asset ratio on a proportionate consolidation basis is 44.6%, an increase of 40 basis points from Q2.

Net operating debt to operating EBITDA was 7.56 times for the quarter and 7.61 times on a rolling 12-month basis. Part of the increase was due to the increased allocation of debt to development projects that came on the stream and were transferred into IPP during the quarter, but the deliveries occurred at the end of the quarter and the NOI has not currently been reflected in the EBITDA.

We expect these ratios will improve over time for organic growth, the completion of these development projects, dispositions and the issuance of equity through our drip program. The drip participation rate during Q3 was approximately 29%, generating approximately $100 million to $120 million of capital on an annualized basis.

Our payout ratio on an AFFO basis was 90% for the quarter and 93% for the nine months ended 2014. It is our objective to bring this ratio below 90%, which is expected to occur in 2015.

At September 30 RioCan had 100 properties that were unencumbered, with a fair value of approximately $2.7 billion, up from $2.1 billion at December 31, 2013 and represents 144% coverage over the unsecured debentures. We will continue to focus on growing the size of this unencumbered pool.

I will now ask John Ballantyne, our SVP of Asset Management to provide an operations overview.

Thanks you Rags and good morning everyone. I’m pleased to provide operational highlights for the third quarter and year-to-date 2014.

With regards to our Canadian portfolio, tenant demand for new space remains solid in the third quarter. Our leasing department completed 103 new deals comprising 327,000 square feet, at an average rental rate of $20.65 per square foot net.

Over the first three quarters of 2014 we completed 883,000 square feet of new leasing, a decrease from the 1.124 million square feet achieved over the same period in 2013. This decrease in volume is a result of the abnormally high amount of vacant anchor leasing, specifically the backflow of the Zeller boxes that was completed in 2013.

While the growth lease able area of new leasing has decreased year-over-year, the average rental rate achieved on new deals increased. New leasing completed over the first three quarters of 2014 achieved an average rental rate of $22.16 per square foot versus $19.13 per square foot over the same period in 2013.

This 15% rental rate increase is reflective of the higher rents achieved on small shops space, particularly that located within our enclosed centers. Leases completed with national tenants also exhibited excellent growth, with new deals completed over the first three quarters of 2014, averaging $24.36 per square foot versus $18.94 per square foot over the same period in 2013, a 29% increase.

Retention of expiring tenants and rental spreads achieved on renewals continues to be strong. RioCan retained 91.7% of the 3.9 million square feet that expired over the first nine months of 2014 versus a retention rate of 83.5% achieved over the same period in 2013.

We’ve achieved an average rental rate increase of $1.73 per square foot or 11.3% on those 2014 renewals. Approximately 49% of the space renewed to date this year was that not fixed options with average rental rate growth on this space totaling $2.80 per square foot or 15%.

Rental rate growth for renewals completed on what we consider be non-anchor space, namely any premises under 20,000 square feet was $3.47 per square foot or 16%. In looking at the various retail classes within our portfolio, the highest renewal rate growth came out of our enclosed mall and urban retail centers with non-fixed renewal rent increasing by 16% and 17% respectively.

On a geographic basis the primary markets continue to spur growth with year-to-date non-fixed renewal rates increasing by $3.48 per square foot or 17.2%. The strongest region continues to be Western Canada, where non-fixed renewal rate in Edmonton and Calgary increased by 26% and 28% respectively.

With regards to tenant turnover, for the three months ended September 2014, we experience vacancies of 301,000 square feet at an average gross rent of $36 per square foot. To-date we have backed filled 134,000 square feet or 45% of the space, at an average gross rent of $43 of square foot.

Total vacancies for the three quarters of 2014, have comprised approximately 1 million square feet. While this tenant turnover obviously creates a short-term impact on FFO, the vacancies provide an opportunity to strengthen tenant mix and ultimately grow same store revenue.

By way of example, RioCan took back eight Jacob stores late in the third quarter that are situated in excellent locations such as RioCan Yonge & Eglinton Center, Georgian Mall, Oakville Place and South Edmonton Common. RioCan is confident that we can more than double the $18 per square foot average rental rate formally paid by Jacob on these units.

With regards to our outlet center initiative, construction of the first phase of the 316,000 square foot Tanger Outlet Ottawa was completed in September, and the grand opening celebration was subsequently held on October 17. Located in the suburb of Kanata, the center is a first ground up development undertaken by the Tanger RioCan partnership and contains 80 brand name designer outlet stores, including Coach, Michael Kors, Brooks Brothers, Polo, Calvin Klein, J.

Crew and Banana Republic to name a few. Since the opening three weeks ago shopper traffic has been strong and retailer feedback has been extremely positive.

The partnership is also nearing completion of the major expansion and renovation of Tanger Outlet Cookstown located on the Northern edge of the GTA. The expansion will nearly double the size of the existing 155,000 square foot center, while creating an updated interior and exterior for the existing space, consistent with that of the expansion.

The grand opening of the expense center will occur on a Friday and will contain approximately 35 new outlet retailers including Polo, Calvin Klein, all three Gap Banana’s, American Eagle On-Campus and Under Armour. In addition to enhancing our existing portfolio with new vibrant centers, the outlet center initiative has provided a gateway for new retailers to enter the Canadian market.

Subsequent to completing deals at our outlook centers, a number of tenants including Famous Footwear from the U.S and Mountain Warehouse from England have commenced negotiations with RioCan for space situated throughout our Canadian enclosed and unclosed centers. After the earlier success of Kanata, we anticipate that many more of the retailers will be seeking space for conventional stores throughout our portfolio.

With regards to our U.S. portfolio, RioCan continues to see strong results from both our Northeast and Texas properties.

Buoyed by 18,000 square feet of new leasing completed in the third quarter, the U.S. portfolio occupancy increased from 96.7% at the end of the second quarter ’14 to 96.9%.

In addition to these completed deals we have finalized 15 NOIs totaling 57,000 square feet and are currently in the last stages of the negotiation for another 108,000 square feet of vacant space. In the third quarter RioCan completed 116,000 square feet of renewals at an average rental rate increase of the $1.71 per square foot or 9.3%.

Year-to-date RioCan has renewed 335,000 square feet at an average rental rate increase of $1.62 per square foot or 8% and a retention rate on expiring leases is an extremely healthy 93.4%. Those are the operational highlights.

I’ll now turn the call back to Rags.

Thank you John. As you have heard, operationally RioCan’s portfolio is performing well.

At September 30, RioCan’s committed occupancy stood at 97%. The economic occupancy was 96%, representing $1.3 million of rental revenue per month with almost half of that due to begin paying rent of Q4 of this year.

Same-store growth in Canada was 1.9% for the third quarter and 2.3% for the first nine months as compared to the same periods in 2013. In the U.S.

same-store growth was 3.7% for the first quarter and 2.6% for the first nine months as compared to 2013. Looking forward, the quarterly NOI run rate as of September 30, 2014 adjusted to include acquisitions and dispositions that have closed due in the quarter is approximately $200 million, which excludes any potential lease buyouts and includes approximately $2 million in straight-line rent.

For the fourth quarter of ’14 we expect same-store growth to be between 1.25% and 1.5%. For the year same-store growth is expected to be between 2% and 2.25%.

Property and asset management fees and other income are expected to be approximately $6.5 million to $7 million for Q4. Interest income in the fourth quarter is expected to be approximately $1.2 million.

G&A is expected to be approximately $52 million for the quarter. The increase is primarily due to the full year impact of the U.S.

platform, the internalization and higher IT cost. For Q4 we expect G&A to be approximately $18 million.

Finally, I would just like to say that I’m excited about the new challenges that I will face in my new role at RioCan and I’m looking forward to tapping these new opportunities with a very talented team, as we work together to further improve our operations and the continued growth of RioCan. With that, I would like to thank Ed for this opportunity and turn the call over to him for his remarks.

Okay, thank you. There is not a lot for me left to stay, but I’ll find some anyway.

As you’ve heard, our core business is performing extremely well and strong and I think that’s primarily due to the strategic shift that we started almost a decade ago. In fact, I’d say a decade ago, where we started moving into our assets more into the major markets of Canada.

As of September 30 I think we are well over 73% or just over 73% and I expect that by the end of 2017 we will be well over 80% of our assets in Canada in the major markets, and that will be due to development completions, intensification and continued disposition of smaller market properties. This will provide us with strong organic growth, while our development program comes to fruition.

In the U.S. we also expect to see strong growth, particularly in Texas as we continue to fill the vacancies that we purchased or inherited from some of our partners in our shopping centers down there.

A few words about our ongoing development program which is essentially concentrated in two cities. In Calgary we have three significant projects, the Sage Hill Power Center, in which we are partners with KingSett is under construction.

We expect the first anchor Wal-Mart to open in 2015, the remainder to open in 2016. The project itself which I believe is about 330,000 square feet in total is about 80% pre released at this early stage.

In East Hills another actually much larger power center, which on completion will approach 1 million square feet, the Wal-Mart Phase I is already opened. The remainder of Phase I should be opening early 2015.

The remainder will be built out and completed over the course of several years, probably being fully completed by the end of 2017. East Village, which we often refer to us a CPA site, the Calgary Police Association, we expect and hope to get started by spring of 2015.

It will be a 2.5-year completion we think. A lot of we think and we expects there, but that’s the development business, and the retail component is over two-thirds pre-leased at this point.

And it could be a 100% pre leased, but quiet frankly we are just holding off, because we already see strong demand, which will translate into even higher rents than we’ve already achieved. In Toronto, the Bayview and Broadway site which I get more questions about, because it’s being anchored by Whole Foods.

We’ll be opened before the end of 2015. In that two-storey project at Bayview and Broadway there is about 9,000 square feet left to lease and I’m sure that will be leased by the time the project opens next year.

Many of you will have driven by the intersection of Yonge and Eglinton; we have a lot going on here. At the Northwest corner, which is actually the Yonge Eglinton Center, the cube is fully leased; it has been for a while and we expect that it will be open fully before the end of next year.

The media contract that we entered into, which I believe was press released earlier with CBS is really quite astonishing and we are in the middle of developing a media program for many of our other properties, which we expect will provide substantial growth in our ancillary income over the next several years. At the Northeast Corner, construction has started.

It will basically – I’ll call it in three parts, that development. We have a 60-storey condominium tower going up right at the corner.

It is currently 97% pre sold. I’d be surprised if by early next year it wasn’t 100% sold.

The north component is a 458 suite rental building, which will be probably the first rental building completed under our – I’ll call it a multi-unit rental residential initiative, more about that later, and then there will be two-stories of retail and commercial, which will end up being 100% owned by RioCan, as well as an underground connection to Yonge Eglinton Center. We expect the Northeast Corner to be completed by the end of 2017 or more likely knowing the way to world works, by early in 2018.

Continuing on in Toronto, we are quite hopeful of commencing construct at Sheppard Center sometime in 2015, at least on the retail reconfiguration of it. Oakville Place, we are starting even sooner than that.

In fact, we expect the new tenant that was announced Pusateri's, which we think will contribute to changing the phase of that mall to be opened before the end of 2015. On the well-known Bathurst Street, South of College, we have our full zoning in place.

We are hopeful of starting that in 2015, with a completion prior to the end of 2017. It will consist of two floors of retail, much of which is already pre-leased and two floors of office.

In our joint venture with Allied REIT, the College Street property is fully zoned. King and Portland we expect and hope will be fully zoned by early next year and before the end of next year to start both of those projects.

The largest project that we had with Allied and together with our partners at Diamond Corp is The Well, which will we expect be – certainly hope, fully zoned by sometime next year for approximately 3 million square feet; about 1 million square feet of office, about a 600,000 square feet of retail and about 1.4 million or thereabouts in residential, part of which we intend to be condominium, part of which we expect to keep as rental property. While we are doing this really quite massive development program, which as you can tell from some of the years won’t be fully felt in our results until probably 2017, although some of it does sprinkle in as it did this year in to ‘15 and ‘16.

I think the great strength of RioCan is been displayed by the numbers you’ve heard today and so on our release this morning is that we are able because of our core portfolio and the way it’s being managed and leased, to have growth while we are building for the future. There are very few that can afford to do that building for the future, while still experiencing growth.

It’s a hard trick to manage, but because of what we’ve done – well, quite frankly over last 10 years, we are managing it. On intensification program; to-date we have identified 49 of our current sites that are either on transit, adjacent to transit that either exists already or is under construction, such as here in Eglinton.

It will be a seven to 10 year build out of that program. We are putting together as a ladder.

We expect to have that completed by the actual ladder, not the work itself, by the spring of 2015. Often the tendencies, that our existence and our ability to get control of the property will be one of our largest delaying factors or at least when I say delay, as to which years we slot the particular property into.

In almost every case we expect that the zoning part of it, which used to be often the most difficult, because of its location, there are locations close to transit, will not be the most difficult, as I said it will be tenants. Between the residential intensification program we are undertaking, and part of it will be retail intensification as well, and when one includes the Yonge Eglinton property that I mentioned earlier, the rental component of The Well, we expect that within the next seven to eight years or certainly by the end of seven to eight years we will have produced in the neighborhood of 6,000 to 7,000 brand new units, all located on transit, and I think it will be certainly as far as new build residential rental units in the Ontario market particularly, but also in Calgary, the largest portfolio of sales.

Finally, a word about our ongoing re-organization here. As all of you know we bid goodbye to Fred Waks.

He has been with us for 19 years, so it’s quite a bit of change, but it’s a change that we see as a very exciting opportunity. Over the last 19 years we basically grew like topsy, and that we just kept adding on functions, adding on functions as we went into different parts of the business, which has changed dramatically over that period of time.

What we are now taking the opportunity to do, is really to re-organize for what – I don’t want to call it the new RioCan, because I’m still here, but the fact is a lot of our focus is going to be on residential intensification, urban development and urban redevelopment, and quite frankly that’s not the way we were structured for the last while, but this gives us the ability to do that and we have actually an all day meeting scheduled next week, where we expect to put some of the finishing touches to that structuring and I think by the beginning of next year after we’ve taken it to our board, we’ll be able to share how that’s all going to look with all of you. So, that is the end of my discussion and we would now like to welcome any questions that any of you may have.

Good morning. Your assets held for sale increased pretty dramatically.

I think sort of in the 220 from about 60 some odd last quarter and I’m just wondering sort of what the timeline is for those dispositions and how that ties in to your balance sheet objective?

The time line, and they are all conditional transactions you have to appreciate right now. But assuming they go forward, the largest part of it is scheduled to close prior to the end of the year.

We won’t know for certain about that till early in December with conditional periods and then there the smaller part of it is scheduled to close in January. If the larger transaction, which is basically a portfolio of Quebec based properties closes when its suppose to, I think we’ll be certainly well within the balance sheet parameters that we set for ourselves.

So the expectation by Q2 would just be fully through the 225?

I’m sorry, say that again.

We would expect hopefully the large chunk of it to happen in Q4 and then the balance in Q1 and then what we will decide during the course of the balance of the year is what additional assets we may want to consider prudening out of the portfolio. So this isn’t just like a one-time shot.

It will be a continuing program and we’ll just decide based on the merits of the assets and our views of the market at the time.

And so how much more of that – you had a pretty active year in 2013. What’s the expectation for 2015?

We haven’t set ourselves any budget for dispositions. It’s really going to be – we have to manage an interesting line.

You want to time what these peripheral dispositions to your requirements for funds. So a lot of it depends on possible acquisition opportunities, which we don’t really expect too many of.

It also depends on the program or the speed of our development program, which is always a bit of a question mark, because this subject as I said is zoning approvals, both in permit issuances and sometimes existing tenants movements. So we have no firm plans for the quantity of dispositions in 2015.

Okay. And in terms of your reorganization as you called it and your comments with respect to the change in your business, should we understand that you are expecting to fill positions internally or was this thing being more of an external search.

No, the only external search as we’ve announced will be for a Chief Financial Officer, so that Rags can shed at least one title, but I fully expect that everything else will be internal and I think everybody here is quite excited about the opportunities that everybody is going to have as a result.

Certainly at the executive level that’s the thinking. Obviously as we think through this development program, whether we need to add additional capabilities within the development team is something that we are going to examine, but its not going to happen right away, because these projects are well staggered.

So should we read a modest increase in G&A or this is just a small…

I would not read any increase in G&A into that.

Yes, we would expect and we think that there has been a substantial increase obviously over the last few years, but we would expect next year to be under 2%, maybe only 1%.

Or less says Eddie.

Okay, thanks very much.

Thank you.

Thanks. Good morning.

Good morning Sam.

Good morning. Very strong operating results.

I was wondering if you could give a little more color on some specific retailers that you are doing business with. Specifically who is taking over some of these Jacob locations and some other examples?

On the Jacob locations it’s probably a mixed bag. I’ll ask Mr.

Ballantyne to address that.

Yes, it’s a little early yet, but depending on where they are and for the most part the Jacob locations were in great locations. The enclosed malls were dealing with the likes of the White House/Black Market, Justice, we’ve got Charming Charlie’s looking at a bunch.

It’s more I would say, we are pulling in U.S. retailers for the majority of those spaces.

Other locations that are in more strip type locations, we are looking at expanding existing tenants, even Shoppers Drug Mart we’ve got working on one. So it’s a bit of a mixed bag, but the response has been very good to-date.

On the general tenants, who we see is quite aggressive, is the various TJX brands, Winners Homesense, Marshalls, we have multiple transactions underway with them’ quite frankly all across the country. The second area that’s seeing considerable expansion is footwear.

DSW, I know we’ve got several deals underway with them. Famous Footwear as John mentioned is starting to make some moves in Canada.

We have the gym sector that is quite expensive. We’ve got two sort of – call it national powerhouses in that sector.

The Goodlife has the Canadian brand and the LA Fitness has the American source. They are both in expansion mode.

And last but not the least is the entire sort of restaurant and grocery sectors that are both quite expansive, so both in specialty and in the larger supermarket areas. So that’s where we are seeing a lot of growth.

The enclosed mall portfolio as John mentioned, it’s a little more specific and I would say that the expansioners, if I can make up that word, are what I’ll call the modestly priced, but very fashion oriented tenancies like Forever 21, H&M, Joe Fresh and I think that’s a pretty good rundown of where we are seeing expansion.

And updates on situations with Staples, Best Buy and others where you might see some downsizing coming in.

You know what, Staples is doing a very managed downsizing. Interestingly enough, we are working one new deal with them, so they are certainly far from disappearing.

The new deal is like a smaller store that’s replacing a larger store they have with another landlord in the market, and by the way, the other expansion we are seeing is with Bed, Bath and Beyond and Buy Buy Baby, which is an affiliated brand of theirs. So they are still quite aggressive.

But going back to Staples, over the next five years they are going to manage downsizing, both the number of stores and in their size of the stores and we are working with them to make that a pretty seamless and in our case, not painful transition. Best Buy, we haven’t seen a lot of action with Best Buy.

I mean we don’t know exactly what’s going on. I mean quite frankly we have one Best Buy in Long Island in New York.

That’s a 45,000 or 46,000 square foot location, which ever since we bought it about four years ago, we’ve been waiting for them to give us a call. They haven’t and we understand they do quite well.

On the other hand you’ve got one Best Buy location in Stock Yards where they have a firm lease. They are committed.

They’ve been paying rent since June, but they haven’t opened. I think those kind of things will sort themselves out over time.

Right, okay. And just on the multi family side, 6,000 to 7,000 units is consistent with what you talked about last quarter.

That is good.

That is very good. So what would be the average ownership of those suites, given the projects and partners that you have on some of those locations today.

Our aim – I mean, you are asking for a part of a strategy that we haven’t quite figured it all out yet. For example, are we going to build this?

Clearly on some of them for example, like Yonge and Eglinton we own 50% today and we have our original condominium partners at The Well. We own 40% today with Allied and Diamond Corp.

I would expect those percentages not to change. The key question and I think that maybe the one your addressing is, all of the other properties that we are intensifying, where we own today 100%, which is the case with most of them, will we continue to own 100% or will we take in a partner and the answer is, we haven’t come to a decision on that yet.

Okay, and just two other quick questions on that. Does the 6,000 to 7,000 units include condominium units like the North East Corner and The Well.

And secondly, what percentage of the 7,000 are in Toronto and Calgary?

The answer to your first question is no. It does not include condominium units, so that’s intended to be strictly a rental portfolio.

I would say percentage, I’m going to guess a little here Sam, so pardon me if I change the numbers in three months, but I would say its probably about 75% in the – no, maybe 70% in the Toronto area, about 10% in Ottawa, and about 20% in Calgary, with possibly one or two rental sites in Vancouver as well.

Thank you.

Thank you.

Hi, good morning. First I’d like to just briefly say congratulation on the building and success of really a great company.

I wonder if you would comment on how you see the impact of Internet shopping on the retail business in the years ahead.

Sure. That’s a big topic Mr.

Wood, but one that we talk about internally here a lot. There is no question it’s having an impact.

I think the impact is largely right now focused on certain sectors. I mean clearly books, music – there used to be a lot of music stores in our shopping centers.

There aren’t any anymore. There used to be a lot more bookstores and my hats off to Chapters Indigo.

They are reinventing the bookstore as we know it and I think much more successfully and much better than in the United States. So I expect them to continue and do well, but it’s a tough business competing with Amazon and eBooks.

There is no question that there is some impact on virtually every other sector. I think to a certain extent, and if you’ve heard some of the retailers that I mentioned, what we call the personal service or actual touch retailers, which include things like Goodlife, like Food Service.

When I say Goodlife I mean the gyms, medical clinics that we are starting to see more of, they are obviously unaffected by the Internet totally. Fashion is somewhat affected, but in a very little way.

There was an interesting number that over 50% of fashion goods purchased over the Internet are returned. Colors are never the same on your computer screen as they are in real life, just the way they aren’t inside as they are outside, and fit in two pairs of shoes that are made by different manufacturers are never the same, which is why we see terrific expansion from footwear retailers.

So all in all the overall penetration of e-commerce into the large retail market is still in the low single digit numbers. It’s probably around 5% here in Canada, a little bit higher than that in the United States.

I have no doubt that will grow and will affect the expansion of a lot of retailers. Target is to pick one example, leaving aside their Canadian operations, because that’s all a different issue.

As announced in the United States that a lot of their expansion will be online and they are slowing down the expansion of their physical department stores. That is a common theme amongst many retailers.

Its one of the reasons that we think that – and there’s a good side and a bad side to what I’m about to say, that the growth of power centers will definitely slow down dramatically both in Canada and the United States. It quite frankly already has.

I keep telling the guys, and its only half a joke that the two we are building out in Calgary that I mentioned, Sage Hill and East Hills, maybe the last two we’ll build for a while and maybe forever. But where the opportunities are, are in urban retail where almost all retailers, including some of the elect target who made that announcement that I mentioned, that they are going to slow down the department stores, are going to expand what they call their city express model, which is a much smaller unit, more in the neighborhood of 40,000 to 50,000 square feet rather than 130,000 square feet, which is totally focused on urban locations.

So it is having an impact, but its one that I think we’re well positioned to withstand and in fact thrive.

Well, that’s very thoughtful. Thanks very much Ed.

Thank you sir.

Thank you. I wonder if you could just talk about your U.S.

strategy. In Canada its very clear urbanization, a lot more development and in the U.S.

you’ve got slower growing North East, faster growing Texas. Would you consider redeploying capital out of the North East and into Texas, would you consider development?

Okay. You ask a very good question as always Michael and I would say our strategy in the United States is not fixed at this point.

When I say fixed, we are retaining all kinds of optionality, Rag’s favorite word. Development is not on the cards for us in the United States at the current time.

That isn’t to say that we wouldn’t entertain interesting urban mezzanine lending opportunities. We are being presented with those periodically.

None that we’ve taken up yet, because obviously we don’t have the infrastructure in the United States to take over a project and complete it ourselves as we do here in Canada. So we’ll proceed very cautiously on that.

As far as disposing of assets in the North East and trying to bulk up in Texas, that would be – that’s easier said than done. Not that it isn’t an extremely active and strong market in the North East, it is.

It’s the redeployment of that capital that becomes difficult, because the market in the United States is largely the same as here. It’s a very aggressive large group of buyers and not a lot of sellers of good assets.

Now it says nice things about the valuation of our portfolio, but I mean I was quite excited that we are able to make one acquisition in Texas supermarket anchor this past quarter, which quite frankly we are able to buy off market and it was not an easy transaction to complete, as most off market trends actions are. That’s the case with almost all of them.

So we don’t know where we are going to be in the United States a year or two from now. Right now we are loving the performance of the portfolio.

Quite frankly our entry point that’s starting almost five years ago with the benefit of hindsight was something we all pat ourselves on the back on. Quite frankly, both from the point of view of value and even currency.

The currency gains we’ve made there are actually significant and ask me a year from now, I’ll probably have a better answer Michael.

Okay, good. That was helpful.

Just switching gears, have you decided what will be the rental component of The Well yet?

No, not firmly. Certainly Mike Emory, myself and Steve Diamond have had many discussions about it.

The demand from condominium developers is really strong. I would say that there are very few developers of note that have not called us on that particular site and we are not through the zoning post as yet, although we are really in very good shape on it.

You know I’m not going to say anything more than that. I don’t want to prejudge where we are going to be.

Okay. And just last question, just more on the operation side, I wonder if you could just give us a little bit of color on your IT initiatives, your ERP platform, which stage are you at and what kind of benefits are you expecting to get out of it?

Sure. Rags will do it.

I’ll just say, we are already seeing wonderful benefits, more in the finance side and the balance sheet analytics that we’ve been provided with, which is really helping us in plan and managing that balance sheet on a go forward basis. I hope I didn’t steel your main thunder Rags.

No. So where we are at is, the core financial systems are running obviously.

We are getting a lot of analytics, business analytics coming out more driven by the finance side of the house. Where we want to cross it over is into the offside of the house and drive a lot of operational analytics and it really – there will be some process re-engineering as to how – as data how we process information.

What it allows us to do is it gives us more protective capabilities, it gives us the ability to model the portfolios, so that we can take a more proactive approach to asset management and a more strategic approach to how we want to manage the portfolio and mix it up and then it will ultimately roll and a big part of it will also be the lease management systems, the CRM systems that we can track where systems are, where deal flow is evolving. And the other capabilities that we are going to provide is sort of rolling forecast models where we’ll always have the like rolling forecast for the portfolio on an 18 month basis and also build simulation models at the corporate level where we can play with capital structures.

So all this stuff you can do today, its very painful. You go through excel spreadsheets and it’s a lot of brain damage, so we want to be able to drive these projects out of the system.

So where we’re at now is happening. Call it the asset management side of the business and try and really crank up the business intelligence on that side of the house.

If I could just add one thing to that, what it will really enable us to do is plan, so that we can deliver consistent FFO growth or FFO growth while still making very significant investments in our development portfolio. I have spoken in the past about a development ladder, a residential intensification ladder by having the predictive analytics that Rags was talking about.

Not only will it enable us to manage the balance sheet. It will also enable us a little better to manage the development side by timing our commitments and development, as well as keep in mind some of these residential intensifications, well the first result is a loss of income.

When you rip down some of the existing retail buildings to start digging a hole for underground parking. And it will enable us quite frankly to manage that process a little bit better, so that we don’t have any disappointing periods of time and without the significant investments that we have made over the last 18 months and continue to make happily at a much lower rate, I don’t think we could achieve that.

And besides the predictive capabilities and the business inelegance, it’s also a critical part of risk management, because it will create a lot of transparency within the organization and the risk management side of the house is a very important thing. Given our size and our profile in the community, that is something that we are very focused on.

I bet you didn’t expect such a long answer to that question.

No, no that was quite – actually I did. Thank you.

No, its very interesting and a brave new world we’ve entered into.

Great. Thanks.

Thank you Michael.

Thanks good morning. You certainly have some strong leasing spreads in both Canada and the U.S., but looking at the maturities through 2015 and 2016, do you see this as a sustainable pace when you look at the mix between fixed rate and market renewals, over the next couple of years.

The short answer to that is yes. Obviously its not going to be consistent from quarter to quarter, because one of the interesting – who know 10 and 15 years ago when we were doing these leases, that one of the biggest variables in any give quarter is what percentage of our leases are fixed renewal rates and what percentage are negotiable.

And obviously there is a direct correlation between the larger percentage that’s negotiable and a higher growth rate in that quarter. But on a year-over-year basis I think where we are today will be consistent.

Just looking forward, because I don’t think we’ve got this in the MD&A for the current quarter, but for 2014 the mix of fixed rate renewals versus not fixed was about 55% looking into – sorry that’s 2014. Looking into 2015, it’s about 45% as fixed and 55% non-fixed.

So we do believe – and that will grow over time, just how the portfolio has evolved and if the fixed renewal options start to burn off. So we still believe we can get double digit increases looking forward.

Which will translate back into a similar same store growth, at least to what we have this year.

Right and that’s I think where I was headed just with the 2% to 2.5% guidance for this year. And then looking ahead, if you have a similar mix between fixed and market rate renewals, the only difference being the occupancy has inched up and maybe there isn’t as much capacity to drive occupancy higher.

Yes, don’t tell my leasing guys that, because I told them by the end of next year we want that occupancy rate 50 basis points higher. And with some of the things we’ve got going on in Texas, I think it’s quite achievable.

A lot of hard work, but I think it can get done.

Okay. And then just looking at the 2015 and 2016 from a development standpoint, I think I can see the GLA completion schedule, but what’s your sense of the expected completions in the terms of cost transfers from developments to IPP over the next couple of years.

I don’t have that at hand. Its obviously significant although it really ‘17, you heard from some of my little ramblings there is going to be the big year, where we’ll be really significant, but the amounts over the next two years.

I don’t have a sense of …

There is an educated guess coming up here.

That would always be in the range of $200 million to $300 million a year.

Of completions being transferred right.

Yes correct.

Right. And then the actually spending on developments would be – is it sort of that similar target of about $200 million a year.

Yes, $200 million to $250 million.

Okay. And then just lastly, you know I think in the past there, earlier this year you have talked about a possible distribution hike under consideration, but any color on where those discussions sit as of today.

Yes, I doubt it will be one this year. Certainly it’s not in our plans and next year is next year.

If we continue to achieve the great internal growth, we will do it. Our goal as Rags mentioned is to get our AFFO percentage under 90; we are pretty well there.

I think that certainly opens the pathway to a distribution increase, but we are not quiet there were we want to be yet.

Okay. Thank you.

Thank you.

Okay Alex I think is going to get the last question, unless there is somebody that really wants to ask a question. Alex, go ahead.

I’m honored. Thank you.

The Well would seem to sit on the downtown relief line or what some of the proposals have suggested would be the downtown relief line and I’m just wondering, as you are planning for projects like The Well or Laird and Eglinton. How do you incorporate transit infrastructure into your planning process and does it pose the risk of really extending some of the development timelines?

That’s an excellent question, and first dealing with The Well. We are going ahead with our planning and development irrespective.

We are not going to wait for the downtown relief line to get settled one way or the other.

So we don’t see the transit initiatives of the problems in the city as critical to The Well’s success. Having also said that, I can now say Mayor elect Tory, his smart track plan has a station actually right across the street.

The south side of Front Street and Spadina and again, because its already there or if its across the street, its not a big deal for us to accommodate. At places like Laird in Eglinton, anything along Eglinton – actually MetroLinx is quite advanced in what they doing.

At Laird I think we’ve already spoken to them. I’m not quite sure if it’s the sort of ancillary stop or the main entrance to the Eglinton LRT to be at the corner of our property, which leads you to understand why we are so excited about that one.

At Sunnybrook Plaza which is at Bayview and Eglinton, I believe we have the ancillary entrance right at the corner of our property. So with those two, we are in fact already accommodating them in, because we know where they are.

In a couple of developments we are looking at Ottawa. It’s a similar situation where the LRTs in their case, they are already well either established or the planning is complete to the point where we know the stops are where they are going to be.

Same in Calgary. Actually our entire Board, as well as some of our senior executives were up in Calgary two weeks ago and met with Mayor Nenshi, Chief of Staff and a couple of the head planners and they are quite excited about our intensification programs out there, all of which are incorporating or accommodating transits, station stops, what have you, different in each case.

So we don’t see the uncertainty of some of the transit situations, particularly here in Toronto as delaying us in any way.

So we don’t see the transit initiatives of the problems in the city as critical to The Well’s success. Having also said that, I can now say Mayor elect Tory, his smart track plan has a station actually right across the street.

The south side of Front Street and Spadina and again, because its already there or if its across the street, its not a big deal for us to accommodate. At places like Laird in Eglinton, anything along Eglinton – actually MetroLinx is quite advanced in what they doing.

At Laird I think we’ve already spoken to them. I’m not quite sure if it’s the sort of ancillary stop or the main entrance to the Eglinton LRT to be at the corner of our property, which leads you to understand why we are so excited about that one.

At Sunnybrook Plaza which is at Bayview and Eglinton, I believe we have the ancillary entrance right at the corner of our property. So with those two, we are in fact already accommodating them in, because we know where they are.

In a couple of developments we are looking at Ottawa. It’s a similar situation where the LRTs in their case, they are already well either established or the planning is complete to the point where we know the stops are where they are going to be.

Same in Calgary. Actually our entire Board, as well as some of our senior executives were up in Calgary two weeks ago and met with Mayor Nenshi, Chief of Staff and a couple of the head planners and they are quite excited about our intensification programs out there, all of which are incorporating or accommodating transits, station stops, what have you, different in each case.

So we don’t see the uncertainty of some of the transit situations, particularly here in Toronto as delaying us in any way.

Okay. That’s great.

Thank you.

Thank you. Is there any other questions out there Bruce.

Perfect timing. Okay, well thank you very much everyone for joining us on our first conference call.

Sorry, our last conference call of 2014. And we will look forward to talking to you all at the beginning of next year.

Thank you again. Bye-bye.