Edward Sonshine - CEO Cynthia Devine - Senior Vice President, Chief Financial Officer Rags Davloor - President, COO & Interim CFO

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

Thank you and thank you all for dialing in today, and let me start with a good morning and an apology for my voice, which is a little more ragged than usual. After making it through most of the winter without a cold, it seems I am unable to get through the spring.

But enough about me, we have presenting today our new Chief Financial Officer, Cynthia Devine, and not so new President and Chief Operating Officer, Rags Davloor. Cynthia has been with RioCan for a long time, almost seven weeks, but I think you will agree she is a very quick study.

Rags settled into having only one job here at the same short time ago, but is already well into the joys and grind of leasing and development and he will bring you up to date on that. Before I turn the call over to them I’m required to read you – to tell you that in talking about our financial and operating performance and in responding to your questions, we may make forward-looking statements including statements concerning RioCan’s objectives, its strategies to achieve those objectives, as well as statements with respect to management’s beliefs, plans, estimates, and intentions and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts.

These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from the conclusions in these forward-looking statements. In discussing our financial and operating performance and in responding to your questions, we will also be referencing certain financial measures that are not Generally Accepted Accounting Principles measures, GAAP, 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 applied in making these forward-looking statements, together with details on our use of non-GAAP financial measures can be found in the financial statements for the period ending March 31, 2015, and in management’s discussion and analysis related thereto as applicable, together with RioCan’s current Annual Information Form are of which are available on our website and at www.sedar.com.

With that mouthful, I will happily turn it over to Cynthia Devine.

Thanks, Ed and good morning everyone. We’re pleased to review RioCan’s results that were released earlier this morning for the first quarter of 2015.

Overall we feel that the trust has been able to deliver solid results despite a challenging operating environment. RioCan has been able to generate consistent operating FFO growth again this quarter.

At the same time the trust is investing capital into the development pipeline, which may not provide cash flow today, but we believe this development activity will be an important contributed to support RioCan’s long-term earnings and cash flow growth. In the first quarter of 2015, operating FFO was $138 million compared to $127 million for the same period in 2014, representing an increase of $11 million or 8.8%.

On a per unit basis, operating FFO increased by 4.8% or $0.02 per unit from $0.42 to $0.44. The $11 million increase in operating FFO for the first quarter of 2015 is primarily due to an increase in NOI from rental properties of $14 million as a result of same property growth, acquisitions, completed developments, and $4.9 million of foreign currency gain from our US operations.

Also higher fees and other income of $2.5 million contributed to the growth this quarter. Now these gains were partly offset by lower interest income of $2.4 million due primarily to the impact of settlement of certain mezzanine loans at the end of Q1 2014, an increase in interest expense of $0.2 million, due to an unfavorable foreign exchange impact on US dollar denominated debt.

Now this was offset almost entirely by interest savings from the refinancing of maturing mortgages and debentures at lower interest rates. General and admin expenses were up $2.8 million primarily due to the timing of recognition of variable compensation and certain public company costs.

In addition there was higher annualized depreciation and amortization, and merit based salary increases. RioCan expects the timing impact to reverse in the second half of 2015, primarily in the fourth quarter.

On a full-year basis, we expect G&A cost to be up modestly in the range of 3% to 4% compared to 2014. Moving now to acquisitions, RioCan completed four acquisitions of interests in 21 income properties aggregating $169 million at a weighted average capitalization rate of 5.5% during the quarter.

RioCan is currently negotiating regarding income property acquisitions in Canada and the US, including with respect to potential joint venture arrangements that if completed would represent approximately $147 million of additional acquisitions. In February, we announced that RioCan has entered into an agreement to form a joint-venture relationship with Hudson's Bay.

This joint venture will enable RioCan and HBC to build on the strength of existing real estate assets through potential future redevelopments, as well as identify new real estate acquisitions and redevelopment opportunities. Under the terms of the agreement, RioCan has committed to contribute up to $325 million into the Canadian joint-venture entity.

This agreement is expected to close at the end of June this year. Under IFRS, at March 31, 2015 RioCan’s investment properties were valued at $13.9 billion.

Overall, the total fair value of RioCan’s investment properties increased $159 million or $87 million at RioCan’s interest during the quarter. This increase reflects net growth from acquisition and disposition activities and includes a net fair value loss of $8 million recorded for accounting purposes under IFRS, of which $7.3 million is at RioCan’s interest.

This adjustment includes management’s preliminary assumptions as to the potential impact of Target’s departure from the Canadian market. The weighted-average cap rate used to value RioCan’s investment property portfolio at March 31, 2015 was 5.82%, 1 basis point lower than December 31, 2014.

The decrease was the result of a 1 basis point decline in the weighted average cap rate used to value the Canadian portfolio, reflecting the acquisition and disposition activities completed during the quarter in Canada. There was a 4 basis point decline in cap rates used in the US, reflecting increased valuations in the US property market.

At March 31, 2015 RioCan’s US portfolio represents approximately 20% of the total investment property assets by value. RioCan has raised $475 million in the first four months of 2015 through two debenture offerings at a weighted average effective interest rate of 2.8%.

RioCan used these proceeds in part to redeem two previously outstanding Series of debentures of $225 million and $100 million in US dollars. These debentures carried an interest rate of 4.5% and 4.1% respectively.

As a result of these redemptions, RioCan incurred a prepayment penalty of $9.9 million in the quarter, but going forward the trust will realize interest expense savings from the new lower rate debentures. RioCan has successfully reduced its overall contractual interest rate on outstanding debt to 3.96% at March 31, 2015 from 4.12% at December 31, 2014.

This represents approximately $10.7 million of potential annual interest savings on RioCan’s $6.7 million of outstanding debt as of March 31, 2015. This activity also helped the trust to improve the debt ladder by staggering maturities out over future years.

For the remainder of the year, RioCan has maturing mortgages of $444 million at a weighted average interest rate of 4.73%, which we expect to be able to refinance at much lower rates throughout the year. At March 31 the aggregate capacity of RioCan’s operating lines was $726 million, of which $283 million was drawn with an additional $27 million used to support outstanding letters of credit on our development activities.

The majority of the amounts drawn at March 31, 2015 were repaid with the proceeds from the Series Q debenture reopening and the trust currently has $568 million available under its lines. In the first quarter, on a proportionate consolidation basis and excluding capitalized interest, some of RioCan’s key leverage metrics were as follows: interest coverage of 3.41 times for the quarter, debt service coverage of 2.54 times and fixed charge coverage, which includes preferred and common distributions of 1.16 times.

RioCan’s debt to total asset ratio on a proportionate consolidation basis was 44.3%, an increase of 50 basis points from year-end, but only slightly above the 44.2% ratio at the same period in the prior year. Net operating debt to operating EBITDA was 7.72 times on a rolling 12 month basis.

As we have stated previously, we expect these ratios will improve over time through organic growth, the completion of development projects, dispositions and the issuance of equity through our DRIP program. The DRIP participation rate during the first quarter was 30.6% generating approximately $140 million of capital on an annualized basis.

Our payout ratio on an AFFO basis was 90.4% for the quarter. We are pleased with the progress that the trust has made on reducing this payout ratio, and lowering this will continue to be an area of focus going forward.

As at March 31, 2015 RioCan had 118 properties that are unencumbered with a fair value of approximately 2.9 billion, representing 161% of RioCan’s unsecured debentures as compared to 149% at year-end 2014. RioCan’s committed occupancy was 96.7% and its economic occupancy was 95.5% as of March 31 representing a difference of $1.5 million of rental revenue per month or $17.6 million on an annualized basis to come online as these tenants begin to pay rent.

Our expectation is that RioCan’s committed occupancy rate will decline over the next couple of quarters after taking into account the announced closures as a result of the ongoing CCAA proceedings concerning Target Canada. The Target situation continues to evolve and the full outcome will remain uncertain until the restructuring process is complete, which is not expected to occur until the end of June.

We will be in a better position to discuss occupancy rates once the process is completed. Same store growth in Canada was slightly negative, down 10 basis points in the first quarter, as compared to the same period in 2013.

It is worthwhile to note that RioCan’s same-store NOI in 2014 is being compared to a strong quarter in 2014, where same-store growth was 3.1%. Looking ahead, we expect to see some volatility in same-store growth quarter-to-quarter in Canada.

However, on a full-year basis, we believe that the same-store growth will be relatively flat compared to 2014, excluding the impact of Target as we are not in a position to fully assess the impact until the CCAA process is completed. Same property NOI in Canada, which includes completed developments, was up 10 basis points in the first quarter, again rolling over a strong quarter in 2014, where same property growth was up 2.6%.

In the US same-store growth was solid up 1.9% for the quarter. For the year, we expect to see continued same-store growth of slightly above 1%.

It has been a challenging start to the year in some retail segments, but we remain confident that RioCan is well positioned to deal with these types of challenges. The trust foundation of diversification and prudent balance sheet management provides it with the resilience necessary to be successful in a variety of economic conditions.

Current year NOI growth is fueled by new properties coming online, where we continue investing for future growth through our development pipeline. With that I would like to turn the call over to Rags for an update on RioCan’s operations.

Thank you, Cynthia and welcome aboard. Thank you and good morning everyone.

I am pleased to provide operational highlights for the first quarter 2015. The fundamental metrics of our Canadian portfolio remained strong for Q1 ’15.

Our presence in Canada’s six primary markets increased as a result of our capital recycling program through selected dispositions with 73.6% of annual revenue generated within these high growth markets, up from 73.3% at year-end. 86.4% of our annualized Canadian revenue was generated from national and anchor tenants, and our largest tenant continues to be Loblaws, who contributes 4.1% of our total annualized rental revenue.

While our Canadian portfolio metrics continue to be strong, the overall Canadian retail market remains challenging. Certain segments of the retail world have been struggling, electronics and office supplies, for instance.

In our opinion, this is due to a variety of factors, including a larger number of existing tenants offering these types of goods, Cosco, Wal-Mart and even larger food stores now provide convenient options to the consumers to pick up these products. The mid-level fashion segment has also been under pressure as their margins has been squeezed by the stronger US dollar and increasing competition from foreign fashion retailers.

With this backdrop, it is not surprising that the first quarter – in the first quarter of 2015 we experienced vacancies in the Canada and the US of 536,000 square feet as compared to 394,000 square feet that came back to us in the same period last year. The largest single tenant failure was Dutch clothing brand, Mexx, who filed for credit protection on December 2014, and subsequently declared bankruptcy and closed all of its 95 stores in February.

RioCan had 18 Mexx locations, comprising 107,000 square feet paying an average rent of 24.90 per square foot. To date, we have released seven locations comprising 42,000 square feet or 40% of the space at an average rent of $27 per square foot.

These first quarter vacancies impacted our Canadian headline occupancy by 30 basis points, decreasing it from 97% at Q4 ’14 to 96.7% at the end of Q1 ’15. While this occupancy decrease is slightly higher than that experienced in the first quarter, previous year’s tenant demand for new space at RioCan shopping centers in Canada remained solid during the first quarter.

Our leasing department completed 144 new deals comprising 613,000 square feet at an average rental rate of $18.81 per square foot. This was double the amount of new leasing completed in the first quarter of 2014, when RioCan completed 74 new deals representing 305,000 square feet at $18.30 per square foot.

With regards to renewal leasing in our Canadian portfolio, RioCan retained 90% of the 1.26 million square feet of tenants that expired in the first quarter of 2015 at an average rental rate increase of 9.8%. Approximately 65% of the space renewed in the first quarter was non-fixed options where RioCan achieved average rental rate growth of $2.20 per square foot or 11.1%.

Rental rate growth from renewals completed on what we consider to be non-anchor space, namely any premises under 20,000 square feet was $2.34 per square foot or 10.1%. In looking at the various retail classes within our portfolio, the highest renewal rate growth came out of the grocery anchored in the portfolio with renewal rents increasing by 14.8.

On a geographic basis, the primary markets continued to spur growth with non-fixed renewal rates increasing by $2.81 per square foot or 12.7%. The strongest region continued to be Western Canada where non-fixed rental renewal in Calgary and Edmonton increased by 23% and 19% respectively.

We are seeing several retail segments like theatres, food and beverage, fitness, sporting goods, groceries, home improvement and service oriented retail have been performing well and showing good demand for space in our properties. Forever 21, H&M, and the TJX brands, which includes Winners, HomeSense and Marshalls, are more than holding their own and each of these banners have continued to grow and are looking for opportunities across the country.

Fast food restaurants and mid-level fashion dining, [Indiscernible] Sport Chek and Martz brands, and entertainment concepts, [Indiscernible] continued to have an appetite for new locations. We believe that these retailers and segments of the market will help offset and absorb at least some of the space that will be coming back to us from recently announced store closures.

With respect to Target, the tenant continues to pay rent in accordance with the CCAA order. Target conducted liquidation sales throughout the first quarter of 2015 and ultimately closed the last of its Canadian locations on April 12.

Between April 28 and April 30 RioCan received notice from Target disclaiming 15 of our existing 26 leases. The disclaimed locations represent 1.5% of total annualized revenue at an average lease rate of $6.42 per square foot.

All but one of the 15 disclaimed leases are guaranteed through an indemnity agreement with Target for the remaining term of each lease, but one disclaimed lease not covered by the Target indemnity is guaranteed by Wal-Mart Canada. RioCan has commenced negotiations with potential retailers in order to back fill the vacant premises and mitigate damages to be pursued from Target pursuant to the terms of the indemnity agreements.

The 11 remaining locations that have not been disclaimed remain protected under the CCAA order. These locations comprise 1,282,000 square feet at an average lease rate of $6.88 per square foot.

On March 28, Best Buy Canada closed futureshop locations with approximately half of the locations now operating under the Best Buy banner. The tenant will continue to honor rental obligations on the closed locations, while it seeks replacement retailers to sublet the respective stores.

At the time of the announcement, RioCan had 10 futureshop locations comprising 249,000 square feet. Best Buy will permanently close 5 of these stores comprising 129,000 square feet.

These stores are well located and we are confident that the stores will be back filled long before the 2.3 year average remaining lease term expires. There are no expiries in the current year.

With regards to our US portfolio, RioCan continues to see good results from both our Northeast and Texas properties. The US portfolio headline occupancy decreased from 97.1% at Q4 ’14 to 96.6% at Q1 ’15 due entirely to the departure of a Best Buy store from one of our Texas properties in January.

RioCan had advance notice that the tenant would be vacating upon the natural lease expiry and has already completed a conditional deal with a replacement tenant that upon finalization of the lease will be transformative to the center in question, and is expected to return our US occupancy to over 97%. Leasing in the US remained strong.

RioCan completed 41,000 square feet of new leasing in the first quarter. In addition to these completed deals, we finalized 16 letters of intent, totaling approximately 71,000 square feet and are currently in negotiations with perspective tenants for another 66,000 square feet of vacant space.

With regard to expiring leases, RioCan completed 64,000 square feet of renewals over the quarter at an average rental rate increase of $1.61% per square foot or 8.3%. The geographic diversification of the portfolio remains unchanged with 53% of our revenues being generated in Texas and 47% in the Northeastern US.

National anchor tenants account for 85.8% of our annualized revenues and the single largest tenant Royal Ahold, who operates a giant food and stop and shop banners accounted for 10.1% of our annualized US revenues. Circling back to Canada, we continue to make good progress on our development pipeline.

Of note, 100% of the condominium units at our joint-venture development project in Toronto with [Indiscernible] at the north-east corner of the [Indiscernible] have been sold. RioCan’s development program is expected to be a key driver of future operating FFO growth.

Strong economic and demographic fundamentals arising from the growth in certain urban markets were the drivers supporting RioCan’s development and intensification investments. The markets of Toronto, Calgary and Ottawa are the principal focus of our development and intensification efforts.

RioCan’s joint-venture with Tanger for the development of outlet shopping centers in Canada continues to move forward with the construction of phase 2 of our Tanger outlet center. RioCan’s urban focused joint-venture with Allied for mixed use projects in the GTA market, including [Indiscernible] project are progressing well with the zoning process on schedule.

In addition to RioCan’s development program, we will continue to seek ways to add growth through the intensification of existing properties. Within its portfolio, RioCan has identified 46 strategic opportunities to increase density or add to existing assets, particularly residential intensification at the trust transit oriented developers.

We outlined a number of these initiatives recently at our investor day and are excited about this opportunity to build this new segment to RioCan’s platform to diversify its revenue base and provide an additional avenue for future growth through an efficient manner while leveraging RioCan’s existing asset base. While the development activities represent an investment of capital for future earnings of valued growth we will see the benefit in 2015 from several projects that came on-stream in the second half of last year, such as the two Tanger projects and the re-development of [Indiscernible] Kennedy Comments due in 2015.

You will see the completion of the Yonge & Eglinton Center expansion. The delivery of subsequent phases of Sage Hill and East Hills development and the completion of [Indiscernible] in Ottawa and Edmonton.

Looking past the current year, our development pipeline will be a significant contributor to cash flow growth. Those are the operational highlights.

I will now turn the call back to Ed.

Thank you Rags and thank you Cynthia. Those were really excellent and fulsome presentations.

I’m not sure I have anything left to say, but – so I apologize in advance for any repetition, but I will do my best not to do so. Anyway less than three months ago, in our year end conference call I used the opening lines of Dickens’ Tale of Two Cities to give you my opinion of what 2015 would probably be like.

So far this year, I haven’t seen anything to cause me to alter that view. The matters falling into the worst of times are obvious, some of which have been touched on by both Rags and Cynthia.

Target departing Canada, electronic retailers like Sony and futureshop closing up, fashion retailers struggling with Mexx and Comark doing a disappearing act. In fact, it reminds me a bit in a very small way of what happened in the United States just over five years ago, when Circuit City, Linens ' n Things, and Borders together with several less well-known retailers simply closed up and vacated all of their stores within a few months.

They created over 150 million square feet of vacant retail space and literally within a few months. Yet within a short few years, this massive overhang of space was absorbed and retail space was achieving valuations and occupancy rates higher than the pre-crisis levels seen in 2007.

I certainly will not compare the bumps in the Canadian retail landscape to what occurred in the US five or six years ago. Much of the vacant Target space that we are currently looking at will be taken over by other retailers, with the remainder being repurposed by landlords within the next 18 months to 2 years and it will then seem like it never happened.

Best Buy has reflagged half of the futureshop stores and Rags brought you a flavor of the success of our releasing efforts with some of the retail space that has now been turned back to us. The prime reason for my making the imperfect comparison between Canada today and the United States six years ago is to emphasize that disruption and adversity create opportunity.

Just as the disruption in the United States gave RioCan the opportunity to create an American footprint of over 10 million square feet at bargain prices that would be unthinkable today, I have no doubt that the retail disruptions we are currently living through in Canada will do the same for us here. The key is being positioned to take advantage of those opportunities rather than suffering from the disruption.

I think we have been ahead of the curve in being so positioned as evidenced by our first quarter results. Let me just mention few of a drivers that I believe will powers through this period and keep our OFFO and FFO per unit going as per projected.

First our development pipeline has been established over a period of many years and as Rags has mentioned is consistently yielding finished product and will continue to do so over many years in the future. Our diversification into mixed use developments and that can remain on writing including retail residential is proven to be outstanding.

While we were on the near future provide you with more detailed update on that segment of our business and as was mentioned we provided a pretty detailed update on our residential intensification program couple of weeks ago on our investors day. It is interesting to look at the north east corner of [Indiscernible] as I do so outside my office window.

We’re well into construction on the 625 unit condo building and the 450 unit rental building on the north side of the side. And the retail component is pretty well fully leased.

When this project towards the end of 2017, it will be a significant contributor not only of transaction gains to the sale of condominiums, but also to our FFO to the rental residential building as well as the retail which we’ve contracted to acquire 100% off from the joint venture. Three, our operations in the U.S.

are moving into even better shape as the economy in our southern neighbor [Indiscernible] at a better phase than ours. Some of the re-leasing and re-positioning efforts are crossing the finish line and we expect to see good growth, part of our portfolio in 2016.

Fourth, our joint ventures with great retailers like HBC, our joint ventures with great retailers like HBC is just beginning to yield opportunities that frankly I would not afford seeing only first out of talking with them last year. These are all still at very early stages so I’m quite sure exactly where will all come together, but this joint venture has to be yet another significant growth driver for RioCan.

Five, our many other joint venture partners like [indiscernible] all continue to explore new opportunities with us, while working together on our existing projects. Many of those existing JV projects will start contributing to income later this year and that contribution will accelerate over the next few years.

With those unique to RioCan growth overlaid on a solid balance sheet a superb team and willingness and in fact the determination to stay ahead of the curve I can continue to remain confident of our ongoing ability to grow our OFFO and generate reliable and growing income for our unit holders. Thank you very much for dialing in and listening and now I would like to throw the floor open for questions.

Thank you. Good morning.

Just on the Target situation, for the 15 properties that headed back is that square footage 100% owned by RioCan or is there a different square footage at your interest?

Yes, there is a difference Rags got it.

Yes the gross is 1.6 million square feet the net is 1.3 million square feet.

Thanks. Just on the – for those sites, you have got guarantee you are anticipating a fee to be collected from Target US and one of the prospects from other retailers for those spaces that you are seeing right now?

That's question that the first part of it I think we have to be very careful about. We are quite happy with the indemnity we have.

I am not sure there is any lawyers in Toronto -- timed on how tight it is but there are I am sure there will be the same opinion but we have not commenced any discussions. We hired corporations it’s a little bit premature and where that's all going to go vis-à-vis RioCan Target Corporation is something I really can't speculate on because there is the CCAA before the courts and I don't know where the conversations Target Corp will go.

We hope there will be amicable and quickly settle but one can't count on that. As far as interest from retailers it’s been an interesting process that Target is setup, Target Canada mostly the retailers they are dealing with directly I have been very, very quiet.

We have been opposed by a couple looking for changes in some of the leases so we know what those are on the stores that have not been turned back to us as far as the stores that have been turned back to us as of last week we have got lots of it pressed. There are in all different shapes and forms and sizes some of them will be woken up, some of them won’t and it’s really just too early to give you anything definite on that Sam.

I think by the time we roll through the second quarter and the second quarter that will probably be at the beginning of August. We should be able to give you some pretty good detailed information on it but not at this point.

And you are not disclosing which locations are at the 15? Sure to do that.

[Cross Talking] I know. Okay.

Just to confirm you have got the full rent from the Target in the first quarter.

That's correct. We have to pay for 30 days so it still continues to actually collect rental – basically the end of May.

Of course two months we will still have full from Target Canada after that we’ll see what happens.

Okay. Just last one before I turn up back you said there was $7 million IFRS loss in total for the Reid how much of that was due to the Target situation?

It was around $40 million associated with the Target. Our evaluations looking at each of the sites.

Yes, just to clarify that Sam they don't let me in the room when they do this but I think we have approached these evaluations very prudently and for this quarter and in many cases we took a bit of worse scenario. So certainly the reality is Target is no longer there that has an impact on the GAAP rate bear in mind that the cash flow stays the same.

So that's sort of the approach I think the evaluation group here took and it resulted as simply as said and about $40 million negative values then there were some positive of course current in the rest of the portfolio then ended up in $7 million overall negative. Is that give you the color there?

That does. I guess just that $40 million adjustment include the benefit of those indemnities?

No we have not given any weight to those indemnities yet. It’s really – it’s not looking at the cash flow per say it’s looking we now have an empty department store as of April 12, and does that impact what you could sell it for clearly it does, now withstanding the value in the indemnity.

Okay that's helpful. Well thank you.

More of a changing cap rate.

Great. Thank you very much.

Thank you Sam.

Noted in your disclosure that you got another development potential with [indiscernible] in your can you just provide some color on exactly what that project is?

Actually no. I wasn't aware it was disclosed there.

We have nothing under from contract we are working on a project with [indiscernible] the area but for competitive reasons I don't think we want to go into any of those details. All I can tell you is that if it does come vision it will be primarily rental.

Okay. In terms of the US there has certainly been a lot of M&A activity and I am just wondering how you are thinking about whether you would want to bulk up at the part of that servicing or whether that creates an opportunity for spending off assets.

There is no pressure. You are correct Heather.

There is a lot of M&A talk and even some transactions happening in the United States needless to say we are a very steady stop on investment bankers routes as they try to get that kind of conversations going. We entertain many investment bankers up here and I would say that while we are sitting here sticking to our plan of we like the assets we have got and they are an important part of our growth plans and income plans for the future as evaluations in the United States seem to climb ever higher I think we would be less than doing our job if we didn't at least keep an open mind to the various opportunities that present themselves – down there whether when I say both ways it’s to acquire something in bulk or to maybe acquired.

So certainly we are looking at all kinds of scenarios there constantly but certainly there also nothing that's been decided in any way at this time.

And just the final question. In terms of the shift that we are seeing in the market fairly Target is having a big impact I’d would be curious to get your sense both on leasing activity and evaluation perspective on sort of the primary versus secondary market then whether that would make more aggressive in terms of some of the disposition activities?

That's a good question Heather. I think that we have seen it’s something that's been going on for the last few years where we have seen a larger digression between evaluations and the major markets the primary markets if you will and the secondary markets and tertiary markets and of course we have been on that type of program disposing in those markets for few years now.

That program will continue notwithstanding the digression of cap rates, it has to be measured because you can only go so long by selling it and reinvesting at six so much of that in the given year without hurting your forward progressing and your income. But it is interesting though on the Target stores that we did – they didn't give back just the stuff in the secondary markets there are some what you and I would call secondary markets that we haven't seen back.

Now maybe that will still happen in the future but I think they had given back is something they are actively negotiating with other retailers that would be my guess. I don't have any knowledge of that.

So I think I gave you a very long answer to your question which I apologize but it’s not a simple program but we are continuing the program of divesting in the secondary markets and reinvesting in the primary markets.

And just one point Heather when I talk about digression it’s not like secondary market cap rate of backing up its just the primary market cap rate just keep compressing to almost compressing levels is very little product available to buy but the secondary market cap rates are not backed up. So the digression is really just the severe compression in primary markets.

That's a very good added point.

So in terms of numbers how would you say that that shifted say over the last five or ten year in terms of what you would see in a primary versus –

Well you mean on the cap rates?

Yes, in terms of spreads.

Well, and again primary markets you really almost have the volume between urban and sub-urban. Urban cap rates today are in the five or lower area on really good product that has growth potential.

It’s very hard to find secondary markets that are under 6, secondary market assets that are under 6 sub-urban, good sub-urban assets and I have got the head of our evaluations here looking at me as I am coming up with these numbers so I deny validity to these numbers, but secondary I am sorry sub-urban properties in the primary markets are in the mid five range. So that sort of gives you a bit of an envelope.

And we are seeing new lows if you will in cap rates in urban market almost continuously I think if there were more things being traded you would see more but there is very little being transacted in Canada in these kind of markets. Anybody that owns the quality urban markets products just doesn't want to sell it.

Thanks it’s very helpful. I will pass it over.

Thank you.

Thank you. Cynthia, you mentioned that you expected Q2 and Q3 to be feel some of the impact of number of tenant issues that have come up.

Can you give us I guess a sense of what you are expecting in terms of same property NOI gross for the Canadian port?

We haven't really broken it out on a quarter by quarter basis. We talked about in a full year basis same store being relatively flat and as I did say in my prepared remarks we are going to see some volatility quarter to quarter as things unfold with regards to Target CCAA, process so I think it’s a little hard to get granular on the quarter by quarter outlook but again as we said on a full year basis we expect it to be relatively flat.

Okay and so in terms of what that might imply for 2016, does that I guess sort of contemplate having a number of leases sign that take effect in 2016 and present a more robust outlook for that year or this some of those leases likely to kick in this year, how are you thinking about –?

It's fairly earlier to comments specifically on 2016 but I think the team as Rags both pointed out is very focused on the sites that have been turned back to us and looking for tenants to go into those sites. Early days I think to give a real specific outlook on 2016 but it’s something as year progresses that we can get a little bit tighter and provide a more meaning outlook.

Just to add since the leasing side of it is a bit uncertain right now we are no – we are going to end up in a lot of those Target stores in some of these other stores that were turned back so far so good on the other stores has been turned back where we are actually releasing the increases. There is of course a light effect that's typically at least six months but between what we hope will be successful releasing efforts and the completion of development as Rags had described and some of the really good stuff we got going on in the United States right now and it is very early days we are quite optimistic about 2016.

Okay and then on the 11 stores that are subject to CCAA you said you have heard from tenants on that have you heard from 11 different tenants or 11 sites or –

What no, I can answer that simply no, we have heard from a few regarding the few sites but then again we only hear from those tenants who needed some changes in the lease and wanted some comfort if you will from us that we would be agreeable to those changes before they went from on their bed I guess firm on their bid I guess that Target because really I’m talking without being inside that tent we’re just below we’re quite outside that tent actually and we are doing our best to accommodate our retailers in the office they have very deep relationships with all of them to give them whatever comfort we are actually able to give them.

Okay and so are there specific retailers that you would expect wouldn’t be in touch if they were indeed interested because it seems like all 11 would be at lease likely to be taken up by another tenant.

Yes, there are specific retailers we were expect not to be in touch because of the simple reason that they have all signed nondisclosure and confidentiality agreements with Target Canada and any time they want to talk to us they need their specific commission there is also competitive reasons they wouldn’t want to talk to us because we’re like to say “oh! You guys are interested not – we just heard” so we’re being very cautious and careful as either retailers and I’d love to be able to give you more information on it but quite frankly and many ways – has more information I think than I do.

I leave that part alone then. In your commentary you talked about how the entrants of Target had a number of event benefits to different retailers like capital investments they are seeing good returns on that.

Presumably with Target exit there are also some other some other and so many benefit that comes in terms of other retailers that would have been sort of head to head competition with Target and have you seen notable change in their tone or strategy or behavior since Target’s announcement.

I think what again this is early days and lot of same retailers, I mean we have seen two impacts, number one impact is everybody is being very cautious about new commitments till they see where are the Target stores are going to end up and that’s something they will play itself right over quite frankly in next six weeks I suspect. At the same time we have seen some aggressiveness on some of our existing retailers with Target and these were range from people in the supermarket business, supermarkets are actually we finding quite aggressive on new locations and that’s all the major supermarket chains.

We are also seeing people like Costco be a little more forthcoming also seeing I don’t know if it’s related to Target although somebody like Target sells everything, so it has a wide impact. We are seeing quite a drive from I don’t really know how to, I don’t want to use specific names but how to characterize them I call it outdoor retailers who sell all kinds of outdoor goods active goods, people like [indiscernible] we are being actually quite aggressive so whether that is in doing Target retailer leaving I don't know.

But we are seeing some of the big guys being a little more aggressive in and it’s good.

And surprisingly we are also seeing mid level fashion as process for lack of a better term through the competitive force to sort of taking displays and the Target sort of exiting, we are starting to see some of this low to mid level fashion actually seeing this as an opportunity to open up new locations.

That's true and there I don't mind throwing a couple of names at you and that specifically people like [indiscernible] Forever21. We are certainly seeing a lot of new activity from.

Okay and then just last question on the potential opportunity in the future, and I didn’t ask at the investor day but –

Yes go ahead Alex.

The profile of that potential investments sort of suggest that RioCan would act as an institutional partner with some condo developers who already have a site stepping in on basically new land whereas your – is more about intensifying your existing land is that something that just I guess side effect being a partner already on other projects or –

That's exactly what it is. These are of course the same partners that we are with at the North East corner young in – I wouldn't call us an institutional investor, I would call more of an active participant and we made a very clear to them and this would that we are really interested in rental as opposed to condominium but sometimes their projects are big enough just like at the North East corner development where we are actually ending up building up 1075 units component of them are going to be condominium and component are going to be residential.

Our almost complete focus over the new few years will be on the trends oriented sites that we already own in our significant portfolio but once in a whole somebody will come to us like in this [indiscernible] project with a very interesting assembly that is an area we are quite frankly we don't know anything. So the opportunity to participate in a project in that kind of area is interesting.

Whether it’s all going to happen is a big question mark. So I wouldn't want to make too much of it.

Thanks guys.

Thank you, Alex.

Thanks good morning. Just going back to your comments regarding the joint venture with HBC, can you maybe expand on commentary regarding your opportunities and just curious whether that JV can consider international opportunities or maybe more specifically in Europe?

It’s hard for me to expand much the answer is the existing joint venture is dedicated to Canada but dealing with Mr. Baker which is I got to tell you quite frankly at the late because he has an idea a minute its I get tired trying to keep up with them but it’s a lot of fun doing so you don't know where this thing is going to more – has he talked to us about what he is trying to do in Europe, yes.

Have we agreed to do anything no. I don't know even know exactly what it is he is doing there, to tell you the truth other than what I have heard on TV and the our conversations with him but I would just sort of speak to on that I don't know where it’s going to go but he is such an interesting exciting guy that I think it just may go somewhere little more interesting than we have gone so far.

That helps. But do you have view on I guess it ultimately depend on the opportunity but do you have a view of RioCan expanding overseas?

Typically my view is no I don't want to I mean it took us few years of thinking and I think a tremendous opportunity before we expanded into United States I think the joint venture with HBC is something little bit different. Ultimately we only own 20% of what’s in Canada that's our deal there.

We are almost as much as investor as an activist and I think you have to keep in mind what is the ultimate goal of that joint venture is stay to goal which is really to create a larger public entity as opposed to just being to RioCan you can and we are the best persuader of that goal for digression of value for our unit holders will take us is where we will ultimately go.

Okay and then just maybe sum-up sort of the thoughts of the implications or the broader implications from Target, is it fair to say at this stage are you seeing much impact at all on market rents leasing velocity maybe on pause just this process unfolds but any comment on the market rents that you are seeing across the portfolio?

I think I have not seen any impact on market rents whatsoever from this. It’s a pretty contained situation and I just sort of business go on and all of our leasing – new leasing and renewals seems to be quite frankly unaffected from a rental revenue point of view by Target.

Yes, I would agree there is no questions things are taking little bit longer in some cases and tenants are pausing but as far as impact on rental rates we have not seen any impact.

And have you adjusted your I haven’t check it but your leasing cost assumptions for back selling that space or that something that maybe negotiated through the indemnity?

I would be surprised if we made any adjustment yet because we’ve got lot to talk to talk about Target Corp and we don’t know where actually go and I don’t want to get into details of it.

Okay and then lastly just going back to the outlook for it seems to NOI not sure if you mentioned but what is your outlook for the U.S. portfolio I believe it was 2%-3% last quarter but does that changed?

We have it slightly above 1% is the outlook at this time and I don’t know whether you want to comment.

We clearly follow we are just working through that one repositioning of one of the assets so we did sort of dial it back just lightly to take that into account.

And I think a lot of growth because of just the way the leasing is going so many existing vacant space will be fourth quarter loaded as far as this having an impact leading into the beginning of so this will be a bit of transition year for American portfolio and I think you will see more typical previous year’s growth in the U.S. reoccurred next year.

One of the things we have learned in the U.S. is getting deals over the finish line just take forever it legalistic and it takes absolutely forever to get deals over the finish line so we have to just adjust to that comparatively little bit more because it is a bit different and that’s just causing a lag effect.

Okay, Pammi?

That’s great. Thanks.

Operator we will take one more question I think it’s just about 11 o’clock and then we will close it all for the day.

Thank you and good morning. I guess I just made it.

You did. Under the finish line.

Just switching to Target again of the 15 stores that were given back as a group do you anticipate that you will be splitting most of them up and as a group I guess the average rental rate is about 642, as a group would you say that when it all said and done that you are going to have higher rent than before?

That's a delicate question considering that we haven't started our conversations with Target Corp yet, it’s possible but it’s considerable cost to get there if that's the case and I would not want to speculate as to how many will break up and how many will just be able to find a new tenant for. But certainly that makes --

Okay and what about for the five future shops?

Yes, we just got those back, I mean, the process is that they still are on the hook for the leases and they still some term left and basically jointly leasing up so they are actively seeking sub-tenants to mitigate their cost and at the same time or doing the same thing. So there is the benefit of time working in our favor and we are talking to some potential back fill tenants so not one where we can work through to little bit more methodically because there is no disruption of rent at this point.

Yes, and those will come out pretty good. I am optimistic.

Okay and as you noted at the beginning of the call for challenging operating environment so the next, for this year, next year are you still expecting kind of like double-digit rental spreads on renewals or its starting to slow down?

Yes Michael I am looking at Rags as I say this and I think the answer is yes. A lot will depend how difficult things get in Alberta because quite frankly if you look at the first quarter in this maybe counter intuitive I think our disclosure will indicate that the biggest rental growth we have got on our renewals were in the Alberta markets specifically Calgary and Edmonton so you tell me what the economy is going to be like out there I mean rolls back that $60 a barrel we will find out tomorrow what kind of government they have got in Alberta and it should be interesting out there but a lot of there is still a lot of catch up to do in the Alberta market from leases that we did find in ten years ago at because the rent growth in Alberta has been considerable, equally I think there is a lot of catch up and a lot of growth to do in the more urban markets here in Toronto and the sub-urban markets and I will talk about the urban growth but it’s not like the suburbs of the primary market so here in Toronto, [Ottawa] and so on have gone away they aren't just growing as quickly.

They are still growing. So I think it’s going to be pretty good particularly because we are starting to get into a point here in Canada and the comparison I made at the beginning of my little presentation between the United States six years ago and Canada is far from perfect but one of the outfalls we saw in the United States as a result of that big compulsion in retail what happens was that new development almost came to complete stop.

That was the big sort of bar for us always and looking at the American market that – good shopping center somebody is going to build right across the street because owning is lot easier down there. Well the amount of new space created in the United States in most of the markets we operate in has been very, very tiny, well below really a small fraction of historical.

I think you are going to start seeing that in Canada and the net result affect I think you already are seeing that is in Canada as far as Greenfield development we have a few going on I think I have said before that from power center point of view the two are constructing in Calgary right now [indiscernible] where listing is going actually surprisingly well and in a very good rates may be amongst the last of their breath. The nice thing about that happening is that it contributes to rent growth in the existing centers because the options become more limited for the tenants when they come up for renewal giving the landlord a little more power.

So I think that's what’s being happening in the United States and I think you are start seeing it happen here too so in many ways I think rent growth probably not this year necessarily but over the next few years will start to be accelerate because of the lack of new supply. It just above gone, Michael.

As you can tell it’s done in surprisingly well. I want to thank everybody for dialing in.

I want to thank Rags and Cynthia for their first presentations really in their new jobs. And thank you for your interest and we will talk to you next quarter.

Bye, bye.