Edward Sonshine - CEO Rags Davloor - President, COO & Interim CFO John Ballantyne - Senior Vice President of Asset Management

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

Thank you very much, Mark and welcome everybody. Thanks for dialing in on what I found to be just about the coldest morning I may have ever experienced driving into work, and on February 13, the right scheduling everything for today, Friday, the 13th is quite bold.

Anyway – with me here is of course Rags Davloor, our President, COO and Interim CFO, a title he will soon be shedding. This will be probably his last of a couple of quarterly calls filling two roles and talking places [ph] along as a result.

And also with me is John Ballantyne, our Senior Vice President of Asset Management who will talk about operations to fill in some of the things that Rags hasn’t got through yet. .

Anyway, before we start and talking -- I’m required to read this 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 be referencing 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 other reporting issuers. Non-GAAP measures should not be considered as alternatives to net earnings or comparable metrics determined in accordance with IFRS as indicators of RioCan's performance, liquidity, cash flows and profitability.

RioCan’s management uses these measures to aid in assessing the Trust’s underlying 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 December 31, 2014, and management’s discussion and analysis related thereto as applicable, together with RioCan’s Annual Information Form that are all available on our website and at www.sedar.com.

After reading that warning, I need a rest. So I am turning it over to Mr.

Davloor.

Thanks, Ed. Good morning everyone.

We’re pleased to review RioCan’s results that were released earlier this morning. For the year, operating FFO was $517 million or $1.67 per unit compared to $492 million or $1.63 per unit for the same period last year, representing an increase of $25 million or 5.1%.

On a per unit basis, operating FFO increased by $0.05 per unit or 3.1%. For the fourth quarter, RioCan reported operating FFO of $170 million, an increase of $6 million or 5% compared to operating FFO of $124 million in the fourth quarter of ’13.

On a per unit basis, operating FFO increased by 2% to $0.42 in Q4 ’14 compared to $0.41 per unit in Q4 ’13. The increase in the quarter was primarily due to the following: the 6 million increase in operating FFO – RioCan’s interest is due to the following: an increase in NOI for metro properties of 5.6 million which includes the impact of the following items: acquisitions net of dispositions completed over the last 12 months; additional completion of development projects, Canadian and US same property NOI growth and the $3 million higher foreign currency gain from US operations as compared to the same period in 2013.

Higher fees and other income of 2.3 million, lower interest expense of 1.6 million driven by lower interest rates net of 1.5 million unfavorable impact of the FX, partly offset by lower interest income of 2.9 million due primarily to the reduction of mezzanine loans due in the first quarter of ‘14 in connection with the acquisition of interests in three development projects and an increase in G&A costs of 1.8 million primarily due to increased information technology costs, depreciation and amortization associated with our ERP platform, as well as increased headcount. During the fourth quarter, RioCan completed three acquisitions of interests in income producing properties for total purchase price of $62 million in Canada with a weighted average interest capitalization rate of 5.7%.

For the year, RioCan completed 191 million in acquisitions of income properties at a 5.9% cap rate. Subsequent to year-end, RioCan completed the acquisitions of 19 income properties in Canada aggregating 82 million at a weighted-average cap rate of 5.5%.

RioCan did not complete any income property dispositions during the fourth quarter. Subsequent to year-end, RioCan completed the dispositions of five income properties located in Québec, totaling 120 million representing a weighted-average cap rate of 6.8%.

The trust mortgage obligations related to these properties was approximately 21 million bearing interest at a weighted average rate of 4.1%. RioCan is currently in negotiations regarding income property acquisitions and dispositions in Canada and the US, including with respect to potential joint venture arrangements that if completed would represent approximately $445 million of additional acquisitions and approximately $308 million of dispositions.

These transactions are in various stages of negotiations and are fluid and as such there's no assurance as to their completion. With regard to RioCan’s development portfolio.

During the fourth quarter, RioCan transferred from properties under development to income properties 33 million in costs pertaining to greenfield developments or expansions and redevelopment projects. For the year ended December 31, 2014, RioCan transferred 363 million in costs representing 1 million square feet, including among others, Tanger Outlet Ottawa, the Tanger Outlet’s expansion in Cookstown and the Stockyards project in Toronto.

Under IFRS, at December 31, 2014 RioCan’s investment properties were valued at $14.1 billion based on a weighted-average cap rate of 5.83% which is 2 basis points lower than September 30, 2014. The decrease was a result of a three basis point decrease in cap rates in the US portfolio during the quarter to 6.14% and a one basis point decrease from September 30 at 5.77% in Canada.

RioCan’s US assets represent approximately 18% of total investment property assets by value. With respect to financing, subsequent to year-end, RioCan issued $300 million Series W debentures which carry a coupon of 3.287% with the nine-year term and the maturity date of February 12, 2024.

RioCan also called in for redemption USD 100 million, 4.1% Series M debentures which were due September 21, 2015 and 225 million 4.499% Series O debentures which were due January 21, 2016. These debentures will be redeemed on March 9 and 11th respectively.

For 2015, RioCan has mortgages maturing and lines of credit of 721 million at an average rate of 4.1%. At year-end the aggregate capacity of RioCan’s operating lines was 718 million which is currently undrawn 129 million to support outstanding letters of credit on our development activities.

In the fourth quarter, on a proportionate consolidation basis and excluding capitalized interest, some of RioCan’s key leverage metrics were as follows: interest coverage of 3.21 times for the quarter, debt service coverage of 2.37 times for the quarter and fixed charge coverage which includes preferred and common distributions of 1.1 times for the quarter. RioCan’s debt to total asset ratio on a proportionate consolidation basis was 43.8%, a decrease of 20 basis points from 2013.

Net operating debt to operating EBITDA was 7.96 times for the quarter and 7.67 times on a rolling 12 month basis. We expect these ratios will improve over time through organic growth, the completion of our development project pipeline, dispositions and the issuance of equity through our DRIP program.

The DRIP participation rate during Q4 has increased to 29% which would generate approximately $140 million of capital on an annualized basis. Our payout ratio on an AFFO basis was 95% for the quarter and 93% for the year-end 2014.

It is our objective to bring this ratio to below 90% which we would expect to occur during the course of 2015. As at December 31, 2014 RioCan had 100 properties that are unencumbered with a fair value of approximately 2.8 billion, up from 2.1 billion at December 31, 2013 and represents 149% of RioCan’s unsecured debentures.

I will now ask John Ballantyne, our SVP of asset management to provide an operations report.

Thanks, Rags and good morning everyone. I am pleased to provide operational highlights for the fourth quarter and year ended December 31, 2014.

The fundamental metrics of our Canadian portfolio continued to be strong in Q4 2014. The committed occupancy remained stable at 97% and 86.5% of our annual Canadian revenue was generated from national and anchor tenants.

Our presence in Canada, six primary markets remained strong with 73.3% of annual revenue generated in these high growth markets. Our largest tenant continues to be Loblaws who contributes 4.9% of our annual Canadian revenue.

Tenant demand for new space in Canada remained solid in the fourth quarter. Our leasing department completed 90 deals comprising 420,000 square feet at an average rental rate of $22.24 per square foot.

For the year ended December 31, 2014 we completed approximately 1.3 million square feet of new leasing, a decrease from the 1.5 million square feet achieved in 2013. This decrease in volume is a result of the abnormally high amount of vacant anchor leasing, specifically the backfill of these Zeller’s boxes that was completed in 2013.

While the growth leasable area of new leasing decreased year-over-year, the average rental rate achieved on new deals increased. New leasing completed over 2014 achieved an average rental rate of $22.16 per square feet versus the $18.97 per square foot realized in 2013.

This 17% increase is reflective of the higher rent achieved on small shop space particularly that located within our enclosed centers as well as a relatively lower rent achieved on the anchor leasing in 2013. Leases completed with national tenants also exhibited excellent growth, with new deals completed over 2014 averaging $23.45 per square foot versus $19.56 per square foot over the same period in 2013, a 20% increase.

With regards to renewal leasing in our Canadian portfolio, RioCan retained 85% of the 790,000 square feet of tenants that expired in the fourth quarter 2014 at an average rental rate increase of 11.8%. For the year ended December 31, 2014, RioCan retained 90% of the 4.7 million square feet that expired over the year and achieved an average rental rate increase of $1.84 per square foot or 11.4% on these renewals.

Approximately 53% of the space renewed in 2014 was at non-fixed options with average rental rate growth on this space totaling $2.79 per square foot or 14%. Rental rate growth renewals completed on what we consider would be non-anchor space, namely any premises under 20,000 square feet was $3.30 per square foot over 15%.

In looking at the various retail classes within the portfolio, the highest renewal rate growth came out of our enclosed mall and urban retail centers with non-fixed renewal rent increasing by 14% and 22% respectively. On a geographic basis, the primary markets continued to spur growth with 2014 non-fixed renewal rate increasing by $3.44 per square foot or 16.4%.

The strongest region continues to be Western Canada where non-fixed renewal rates in Edmonton and Calgary increased by 25% and 27% respectively. With regard to tenant turnover in the Canadian portfolio, for the three months ended December 31, 2014 we experienced vacancies of 201,000 square feet at an average gross rent of $31.16.

Over the quarter we backfilled approximately 49,000 square feet of the space or 25% at an average gross rent of $35.89 per square foot. Total vacancies for 2014 comprised approximately 1.2 million square feet at an average gross rent of $30.08 per square foot and as at December 31st we released 492,000 square feet or 41% of the space at an average gross rent of $31.48 per square foot.

While the tenant turnover in ‘14 created a short term impact in FFO, the vacancies also provided an opportunity to strengthen tenant mix and ultimately growth in same store revenue. By way of example, RioCan took back 8 Jacob stores over the latter half of 2014, that are situated in excellent locations including RioCan Yonge & Eglinton Center, Georgian Mall, Oakville Place and South Edmonton Common.

RioCan subsequently released the majority of the space to a number of strong retailers that include, Sephora, Swarovski, Mastermind, and Shoppers Drug Mart. The net rental rate achieved on these replacement deals averaged $44 a square foot, a 45% increase over the $30 square foot previously paid by Jacob.

With regard to our outlet center initiative, in Q4 2014 RioCan and our partner Tanger finalized the expansion and renovation of revenue located on the northern edge of the GTA. The grand opening of the expanded center occurred on November 7 and featured 35 new outlet retailers including Polo, Calvin Klein, all three Gap banners, American Eagle Off Campus and Under Armour.

Subsequent to the opening, the partnership completed a deal with H&M for a 20,000 square foot store that’s projected to open in the third quarter of 2015. Tanger Cookstown and Tanger Ottawa which opened in October 14 and which discussed in our Q3 call continued to surpass performance expectations.

Tenant reported sales of an excellent, the parking fields consistently reached capacity through all the season and feedback from customers continues to be extremely positive. With regard to our US portfolio, RioCan continues to see strong results from our Northeast and Texas properties, by 40,000 square feet of new leasing completed in the fourth quarter of 2014, the US portfolio committed occupancy increased from 96.9% in Q3 2014 to 97.1% at year end.

In addition to these completed deals, we finalize 16 letters of intent totaling 132,000 square feet and are currently in negotiation with prospective tenants for another 216,000 square feet of vacant space. With regard to expiring leases, RioCan completed 62,000 square feet of renewals over the fourth quarter of 2014 at an average rental rate increase of $1.69% per square or 7%.

For the year ended December 31, 2014 RioCan renewed 396,000 square feet at an average rental rate increase of $1.60 per square foot or 8% and our retention rate on expiring leases was a healthy 91%. The geographic distribution of the portfolio remained unchanged with 57% of our US revenues being generated in Texas, 43% in the Northeastern US.

National anchor tenants accounted for 85.9% of our annualized revenues and the largest single tenant Royal Ahold which operates a giant food and stop and shop banners accounted for 9.9% of our annualized US revenues. Those are the operational highlights.

I will now turn it back to Rags.

Thanks, John. In some cases RioCan – sorry, as you are all aware, Target announced plans to discontinue its Canadian operations through its indirect wholly-owned subsidiary Target Canada and it would be utilizing CCAA protection to wind down its operations.

RioCan has 1026 locations under lease with Target that represent approximately 1.9% of our RioCans’ total annualized revenue. Also the one of these leases are guaranteed to an indemnity agreement with Target Parent, Target Corporation.

In most cases these guarantees extend to the lesser of the remaining term of each lease or 10 years. There is one reason it’s not covered by the Target indemnity, however in that case the lease is guaranteed by Walmart Canada.

We expect to know the common months with which locations will be returned to RioCan and are in discussions with potential tenants with respect to place and sort and also the NCAA process. In some cases RioCan’s lease agreements includes a cotenancy clause which would allow certain other tenants to pay reduced rent and in certain circumstances terminate their lease.

These situations have been evaluated on a case-by-case basis but are not anticipated to be material of any potential impact as approximately 0.6% of gross revenues under worst-case scenario. At December 31, RioCan’s committed occupancies stood at 97%.

RioCan’s economic occupancy was 96% representing a difference of 1.3 million of rental revenue per month or 16 million on an annualized basis. Same store growth in Canada was 0.6% for the fourth quarter and 2% for the year as compared to the same period in 2013.

In the US same-store growth was 4.4% for the quarter and 3% for the year. Looking forward to quarterly NOI run rate, as of December 31, 2014 adjusted to include acquisitions and dispositions that have closed to date is approximately 200 million which includes any potential lease buyouts and includes approximately 1.5 million in straight-line rent.

For Q1 we expect same store growth to be flat in Canada and for 2015 we expect same store growth in Canada to be between 0.5% and 1%. In the US we expect to see continued strong same-store growth 2% to 3%.

Property and asset management fees and other income are expected to be approximately 6 million for Q1. Interest income for the first quarter is expected to be approximately 1.2 million and G&A is expected to be approximately 52 million for 2015, unchanged from 2014.

For Q1 we expect G&A to be approximately 14 million. The current retail environment is challenging in some sectors.

At the end of December we started to see early signs of weakness from smaller tenants and then increased level of activity in abandonments and bankruptcy which has continued into the first quarter of 2015. The mid-level fashion sector has produced the most turnover and secondary markets remain a challenge.

Notwithstanding this higher than typical turnover, we are making significant progress in backfilling existing or upcoming vacancies and the resulting leasing to date is in line with our 2015 expectations. Rental rate increases on renewals are also in line with our expectations.

We expect it to stay at the whole double-digit numbers. Notwithstanding the issues surrounding midmarket fashion tenants we continue to see interest from various tenants, including fitness tenants, banks, representing fast food specialty and shipped out drugstores home-improvement and other fashion tenants such as Forever21, TJX and Designer Shoe Warehouse.

The US continues to perform well with positive absorption and the strength of the US dollar has been a big positive. On the development front we have been active.

We're pleased with the performance of our Tanger sites that were developed and expanded late last year, being Canada side, off-side Ottawa and Cookstown site, north of Toronto. Q4 sales were strong and exceeded expectations.

We recently signed a deal with Saks Off 5th with a Canadian location and are beginning development phase 2 at this site. The expansion at Yonge & Eglinton Center will be completed later this year and interior renovations are now complete.

Other developments that are underway include Sage Hill and East Hills, both in Calgary both of which have Walmarts that are now open. We expect construction on the CPA site in downtown Calgary to commence later this year.

We are well in our advanced in zoning applications of various site, including Sheppard Center redevelopment, and then name a few. Further on our development portfolio, we provided some insights on initial phase of residential rental development, first site on the northeast corner of Yonge & Eglinton Center is underway.

Zoning applications have been submitted for a variety of Toronto site, including Sunnybrook Plaza, Dupont Street, King & Portland and the Well development at Front and Spadina. This is a significant initiative for RioCan.

We will continue to provide details on the program as it evolves. This concludes my remarks on financial and operational matters.

Before turning the call back to Ed, I would like to welcome Cynthia Devine to RioCan as our incoming CFO. We’re all very excited to have been able to get such a highly respected financial professional to lead our finance group.

Since our announcement I've had numerous calls all of which praised our abilities and we’re very much looking forward to having her joined the team. With that, I'll turn the call back to Ed for his remarks.

Thank you Rags and thank you John. In some ways I expect 2015 to be a bit like Dickens’ novel Tale of Two Cities.

To remind you all of what you learned in high school, the famous opening line states, it was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it goes on from there. So while media and others focus on the fall-out from Target’s ill-fated expansion to Canada and the narrow focused growth of Internet retail.

We believe the numbers to really pay attention to are the ones set out by John a few minutes ago, stating that over 90% of all of our expiring leases, almost 5 million square feet were renewed at an average rental increase of 11.4%. A part of our portfolio designated as urban retail, that increase was over 22%.

While the challenges inherent in a changing retail environment are undeniable, what I believe to be the best leasing group in the country year-in, year out, gives RioCan occupancy rates within decimal points of 97% and that is a track record that I expect will be intact by the end of this year. And while we could certainly have done without Target’s sudden withdrawal from Canada which is tragic for many of their employees and small suppliers, for RioCan it is just a bump in the road generating a lot of work, and at the end of the day with no real impact.

As we work our way through the short-term challenges, we also benefit from the unexpected gifts we have been given. If I had a hair for every time I have been asked over the last four years how RioCan will be impacted by a rising interest rate environment, I would need haircuts a lot more often than I do.

And yet we just concluded a very successful $300 million bond offering yesterday with a nine year or a nine year term paying 3.28%, attracted bids from 37 institutions that amounted to more than double what we were prepared to take. While that is a tribute to the balance sheet we have created and our over $9 billion market cap, it also shows a widespread belief that rates aren’t going north anytime soon.

We've also been a beneficiary of the falling Canadian dollar due to our well-timed investments in the USA and the foreign-exchange gains continue to be of assistance as we pilot through this momentary turbulence. All of the above factors lead me to confidently assure you that we will achieve our target growth of 4% to 5% in FFO per unit in 2015.

And with our development program proceeding steadily not to mention RioCan’s exciting rental residential initiatives, I have no doubt that growth will commence to accelerate from this base in 2016 and ’17. Before opening it up for questions, I would like to address an issue that I know is important to our unitholders.

While I believe our distribution yield is currently generous, our actual distribution has not increased by much over the last few years. During that time we materially improved our the balance sheet and leverage metrics.

While we will continue to improve these metrics over the next few years as job number one, we will also find ways to increase our distributions. These may consist of modest based distribution increases or there may be a distribution of part of the transaction gains that we are certain to be enjoying over the next several years.

We've created a pipeline of these gains which we expect to start receiving this year. They will come from a variety of sources such as the sale of Townhouse units in Stouffville, a joint venture with Minto, the sale of condominium units in Yonge & Eglinton and/or the sale of air rights in Calgary.

And then we will continue from a variety of sources over at least the next several years. So having kept my remarks short will allow lots of time for questions.

I now would like to open it up to questions. And thanks again for attending.

With respect to the 50 sites for the apartment program, can you maybe provide an updated mix on the locations? And then secondly given the size of that potential investment how does that alter the expectations for development spending?

As far as the make up, what these 50, what we focus on and I think that that will be far from exhaustive list ultimately. What we focus on in those 50 sites is what we call transit oriented developments.

In other words, they are either on an existing transit line or a transit line in the process of being built or where approval has been given to a transit line. They are primarily focused on the greater Toronto area but they also include sites in Calgary, Ottawa, Vancouver and Edmonton.

So that's a very brief snapshot of the types of things we’re looking at. As far as the spend, the most uncertain part of these developments is what I will call the timing.

You have many factors zoning which is such a big factor in our other development portfolio program. It’s probably a lesser factor in these while building residential particularly towers in an urban environment can be controversial because of the transit orientation of the sites and because we’re really not pioneering, often there being condominiums already in these areas, we don't expect to be zoning or we don't expect zoning situation to be the biggest impediment, often it’s quite frankly moving around existing retail tenants and things like that.

From a dollar point of view on development spend, the latter part of your question, again because the timing is so uncertain, that's uncertain. It's also uncertain how we’re going to go above.

It may very well be that we will bring in institutional partners in a lot of these deals because they are sizable. If you will look at all 50 over the next 10 years you could be looking in the neighborhood of $5 billion to $6 billion.

But having put that on a year by year basis over a 10-year period, that’s 500,000 to 600,000 certainly something that’s within our capabilities as far as development spending but it may be smartest from a growth and FFO perspective to bring in an institutional partner on some of the program which will generate fees and lower cost of capital for the actual program, fees for us. And it may also work where some of the projects are quite large, the Well being a notable example, where we expect zoning to end up at something north of 1,400,000 square feet in the residential component, a part of those will be designated as condominiums and sold off so that, that will help us for the whatever we end up keeping us rental down there, whether it’s 400,000, 500,000 or 600,000 square feet in the financing.

So I don’t think it will – to sum up, I don't think the development spend on the residential initiative will impose any kind of financial strain on us at all.

I guess just, I am trying to maybe get a sense of – you will be competing in a different spectrum of the apartment market with this program. So what assumptions have you made for rents, lease-up periods and target stabilized occupancy rates for maybe just at least some of the first couple of projects?

Sure. Well, it’s all over the place depending on geography and specific location.

But let's take an example here, Yonge & Eglinton where it will be the first one we have completed and we’re looking at about 460 odd apartment units actually in that one building. If I remember correctly, and you are asking pretty detailed questions here and I am sure we can give you some more specific answers off-line.

But we’re looking at about a average rent of about $3.15 per square foot on day one, looking at a lease-up period of I believe about six months from commencement and --- does that answer your two questions?

Yes and just maybe I guess the stabilized occupancy?

Stabilized occupancy we’re looking at about 98% certainly in a location like that. I think it’s perhaps somewhat conservative but we are looking at the higher end of the market and you have to expect a certain amount of turnover and who we really compete with in sites like this one and like many of our sites that we will be developing, because there's so few new rental dedicated buildings, we’re really competing with condominium owners.

And at the end of the day they quite frankly have a higher cost base most cases than we do and the two advantages that we feel will bring to the table to perhaps allow us to charge even a premium rent to a condominium that's nearby is the fact that we offer security of tenure in a residential building which in a condominium for anybody who has lived in one, you don't have, basically 60 days notice your landlord can take back the premises. Secondly, you have professional management which again you don't have when you lease from an individual in an apartment.

When something goes wrong, RioCan has, easily obtainable phone number and we will be very responsive and we fully expect to spend a lot of time branding our residential initiative with amenities that are equal to or in some cases better because of professional management that we find in condominium. So we think we’re going to get some premium rents in most of these buildings but we haven’t counted on it.

Okay. Maybe just sticking to the Yonge & Eglinton project –

You don't get 92 questions, Pammi –

Sorry, it’s the last one. Just what was the cost you underwrote on a per unit for that site on the apartments?

We’re getting into – going too much detail that I really don’t want to tell people. Offline, give Rags a call, he will give you those numbers, maybe but you know what, now you’re getting into the question of our land price which happens to be ridiculously cheap there because of the assembly we started three years ago.

So I am not sure if they are necessarily even helpful.

Just turning to the balance sheet for a second. Your target debt to EBITDA metrics sort of have been trending in the opposite direction, I guess as – or the not the target has been trending in the opposite direction but your debt to EBITDA is actually rising.

I am just wondering what the thoughts are on how that trends down and whether some of the gains you have been referring to in terms of sales might be directed to that or what the outlook is for that metric?

No, we did anticipate that it would creep up during the course of ‘14 but we do expect this to turn in the latter half, I mean part of it is because we are increasing our development spend. We’re not looking at taking transaction gains, we will evaluate the situation as it arises but we’re also looking at recycling existing IPP which would not fall into the transaction gain categories.

So between that and the growth in earnings and the DRIP is where we start to see the same turn and then as these development projects come on stream we start to see the numbers turn. So we’ve run out models for the next few years just to satisfy ourselves but this won’t get away from us and that it will turn in the opposite direction, we’re comfortable that we can achieve those objectives.

Just add on to that, I think that's the right answer. But as you -- developments are finding part and that’s the number, they actually have an impact as you incur some measures of debt to undertake that development.

There's no income from the other side. So necessarily when you're in development, that one metric will creep up on you and Rags also has a great habit because it makes us a better company, not that one specifically but you'll notice in our MD&A, he manages to sneak through increases in our targets as far as making us better and whenever we meet a bar, he raises it.

So that’s part of the factor two, Heather.

So I guess in terms of – so you wouldn’t be looking to take the overall leverage down in order to sort of push closer to the 6.5 is basically I guess what I am asking?

No, that is still our goal over a period of years, it’s not going to happen this year but we will get better this year.

And just continuing on on the debt, clearly the unsured debenture market is offering up some pretty rates. Can you comment a little bit on what the mortgage market might be looking like in terms of spreads and pricing?

Sure. It’s pretty hot.

The US is insane – I think there is no other way to – insane in a good way, I mean you’ve got five years spreads of 135 over, although they tend to use floors a lot more but even those are starting to fall away and you get fairly aggressive terms as far as interest only and those start to bounce – now we are not leveraged hogs, so we typically finance in the mid to high 50s as far as leverage. So we can get those type of terms.

In Canada we did see spreads tightening a fair bit at the end of last year, what we are seeing is actually little bit of creep on the spread side as interest rates have dropped so low. So what lenders are doing are implicitly putting a floor in by sort of pulling around with the spread but it is still extremely attractive.

So five year money is in the range of 150 over which would be in the mid to low two handle and 10-year money is 180, 190 over. And there is lots of availability.

Rags, just on your outlook for same property growth in Canada for 2015, little bit low. I just wonder if you could give a little bit of color as to what’s driving it?

Clearly we have got some bankruptcies such as Max and some of the others that everybody is aware of and so it’s just a lag effect. I mean what we're seeing is we’re able to backfill these tenancies but it is going to create the lag effect between the vacancy and refilling the space.

So we are seeing the will push down the same store growth numbers a little bit and that’s why we sort of tell them back.

And is there a timing where it kind of bottoms out and starts to recover or is it sort of a steady –

We would expect to bottom out in Q2 and then start to improve.

And just looking at the capital allocation, you’ve got a fairly sizable acquisition pipeline and disposition in negotiation as well. How much of that on both sides is in the US?

Very little in the US if I recall. Most of the conversations we’re having which are almost all off market negotiations, the deals aren’t out there, so we can’t comment much on them, are in Canada.

It’s only one asset in the mid $30 million mark that’s in the US.

And just on the dispositions, I think you, it was described as joint venture dispositions.

Yes, these are not really the other disposition -- we would talk about capital recycling program, this isn’t part of that. This is really more of a JV type relationship where we’re sorted working on but the other programs to recycle properties, that’s after we get through our asset management review off-site in March, we will start to identify which assets we want to bring to market.

And I think the one you’re referring to Sam, we have one property out there in the market but that’s part of our Kemco [ph] JV. Maybe that’s what you are referring to, it’s small.

And just I guess stepping back big picture, how do you view the growth opportunities in the US market?

It’s tough to grow down there. The cap rates on properties of any quality at all -- going back to a literary reference, it really is a tale of two cities down there, in the property market as well.

Quality properties are heading down towards a five gap, I mean we will put in the odd bid at 5.75 on something that’s on the market and we didn’t get the second round. So if we do get there sometimes just because we’re re-again as opposed to while we price.

So things are going to – at 5.25 cap rates just almost – it’s almost become customary and then in some of the big cities anything that is very urban or even has a mixed use capabilities down the road, that is going sub-5.

But would that cost so cheap, I mean you can almost make the numbers work even at those low cap rates but you don’t see it as being a worthy endeavour?

Well, at those low cap rates, you can’t and you can’t. I mean we still have equity, something we do, because having in mind, we don’t want to have leverage free.

You can kick yourself and go out and get a five year mortgage at 2.5 or 2.25% and buy something that’s yielding 5, but there is an equity component. So we constantly calculate our cost of capital, total capital literally every Monday morning when we are having our investment committee meeting.

And we use a 60:40 formula with 60% equity. If our price would be where it should be in the lower 30s, then maybe we could afford it.

Just on the topic of the US, could you give us an update on I guess your overall strategic view of your platform there?

Yes, that’s a good question because it’s a question, quite frankly that we are wrestling with ourselves. So I don’t have a definitive answer.

We have our platform at the position where we are really comfortable with it, as John and Rags have noted, it’s performing tremendously. Our offices are in Dallas and New Jersey are stacked well, the people, sometimes when you start up new ones, you have some turnover, we had that turnover.

And now we have a good group people in both places and we are quite happy with it. We have no immediate plans certainly to exit notwithstanding that we have no end of people coming up to talk to us leaving those very strong America dollars at us, trying to convince us that we should sell all or part of it.

We have no intention of doing that. What we are wrestling with is figuring out how to grow it on economic and accretive basis.

And in the current environment down there, it’s difficult but we are working on it.

If you break it down, the last couple of years have been the best of all worlds. You've got a 20%-plus move in the currency.

Cap rates have compressed. Mortgage rates are at record lows.

When you think about that, you've had multiple different factors. That one area where you could lock in some gains would be simply to enter into a little bit more of a hedged position, and yet earlier this month you announced the early redemption of your US Series N debenture.

Are you -- is that a signal that you're wanting to take on more currency risk, or is that a short-term planning issue? Are there some property-level mortgages that you're entering into that we're not aware of?

I mean what happened here is we look at the maturity coming up in the back half of the year. We did not want to roll the dice that US debenture could or could not be done.

There’s lots of these FRNs to being thrown around but we are not keen on an FRN structure and we really did build up an encumbered pool in the US. So unlike in Canada where we are switching kind of build an encumbered pool and reweighting a little bit more to unsecured and building an encumbered pool in the US, we actually went the other way.

So we are in the process of refinancing the assets in the US bringing those US dollars home and then retiring the US piece. So we are not taking in more currency risks.

We are just swapping secured debt to unsecured.

Ed, in your prepared remarks you said that you're looking at 4% to 5% FFO growth in 2015, and higher in ‘16 and ‘17. These are really good numbers given what's going on in the retail industry.

Can you talk -- give us some color on where the growth is coming from? In the past you've said you're expecting double-digit rental bumps on renewals.

I think you said that again today. So I'm looking for some color.

Yes, it’s coming from what we have – this is a big operation we run here and we have a lot of levers and machines working all at the same time. So it will come from a variety of sources that growth this year, it will first and foremost, it will come from NOI growth in the existing portfolio because we do expect those double-digit renewal increases to continue.

Second of all, it will come from continued interest rate savings this year. The debenture we called in which had I guess less than a year or less ago in Canadian dollar debenture was at 4.49%.

The new one which has a nine-year run is a 3.28%. So that is one deal for our 1.25% increase – or decreased, sorry, in our cost on $300 million.

That alone over the course of this year will pick you up a penny. So there there's numerous little spots, if the Canadian dollar stays just where it is now as compared to last year, I don't know the exact number but it’s probably a couple of pennies growth over last year and you start adding up all these little things, development completions Yonge & Eglinton is finally being completed this year, that alone will give us a significant lift and other completions as they get going, Sage Hill and Calgary.

So there's no one answer, there’s five or six answers which quite frankly is the strength of RioCan.

Maybe we could just touch on the co-tenancy clauses. I think you said worst-case scenario, if everything was executed, it would be about 0.6%?

Yes. Now that, when Rags says worst case, he is taking into nuclear weapon case.

And that is that number one, there is no replacement tenants in those boxes in the target boxes within a varying period time but within a reasonable period of time. And number two, every single tenant which I gather numbers around 40 odd - low 40s in that cotenancy covenant bracket takes full advantage of their provision, this then actually terminates their lease and walks away.

So that really is sort of the nuclear thing as we want that to set out, even in an absolute worst-case which we certainly don't expect to happen is manageable numbers.

We just felt that I think in a lot of calls and people are quite frankly just making up numbers, they are quite bizarre. Similar numbers that are being thrown around on the speculation on the cotenancy, we just wanted to give people a sense of what the exposure was.

This really will be, Michael, a bump in the road.

I'm going to quote you on that. For the -- those co-tenancy clauses, are they typical more for the enclosed malls, or is that across all property types?

They are basically across all property types. I would say that they are more common to American tenants quite frankly than they are to Canadian.

This is sort of an American feature and really in malls in the traditional sense I am thinking that – I know we have Target in Burlington Mal but Target really isn’t there in too many malls of ours. It’s more in our power centers where other than perhaps Stockyards, these co-tenancy provisions don't exist that much.

So it’s more in the newer development where we have seen this.

Yes, unfortunately a lot of these American tenants brought this notion with them. End of Q&A

Okay. Well you know what, I thank you everybody for keeping your questions to the point.

We’re doing a timely finish, it’s five to 11. And again we will talk to you if not sooner in a few months.

Thanks for attending. Let’s all hope it will be warmer then.