TORONTO, ONTARIO--(MARKET WIRE)--Nov 4, 2008 -- RioCan Real Estate Investment Trust ("RioCan") (Toronto:REI-UN.TO - News) today announced its financial results for the three and nine months ended September 30, 2008.

Financial Highlights

RioCan reported net earnings for the quarter ended September 30, 2008 of $41.6 million (19 cents per unit), compared to $35.9 million (17 cents per unit) for the same period of 2007. The difference between net earnings (loss) and funds from operations ("FFO") is amortization expense and future income taxes. FFO for the quarter ended September 30, 2008 is $81.3 million (37 cents per unit), compared to $76 million (36 cents per unit) for the same period of 2007. The $5.3 million (1 cent per unit) increase in FFO is primarily comprised of an increase in property net operating income of $8.9 million, an increase in disposition-dependent performance and other fees of $2.6 million; offset by a decrease in gains on properties held for resale of $2.9 million, and an increase in interest expense of $3.2 million.

Net earnings for the nine months ended September 30, 2008 are $116.8 million (54 cents per unit) compared to a net loss of $32.8 million (a loss of 16 cents per unit) for the same period of 2007. FFO for the first three quarters of 2008 is $235.4 million ($1.09 per unit) compared to $227.1 million ($1.09 per unit) for the same period of 2007. The $8.3 million increase in FFO is primarily comprised of an increase in property net operating income (before certain adjustments, including lease cancellation fees) of $24.3 million, offset by higher lease cancellation fees of $7.9 million during the same period of 2007; an increase in fee revenue of $3.8 million; offset by an increase in interest expense of $8.6 million, and an increase in general and administrative expense of $3.7 million arising primarily from head office moving related costs.

"We saw dramatic turmoil in the global financial and real estate markets during the quarter, which have led to a great deal of uncertainty in the marketplace," said Ed Sonshine, Q.C., President & CEO. "RioCan is in a unique position to weather this uncertainty, as we have an excellent portfolio with solid tenancies that are diversified to hedge our risk in any one segment. In addition, we have a conservative debt profile and low leverage, as well as adequate sources of financing, which allows us to act upon any opportunities that may arise."

RioCan's capital management framework limits maximum indebtedness to less than 60% of its Aggregate Assets on a book value basis. RioCan believes that based on the fair market value of its portfolio, its leverage is substantially lower.

In April 2008, RioCan issued 7.1 million units at $21.05 per unit, for gross proceeds of $150 million. At September 30, 2008, its Debt to Aggregate Assets ratio is 54.6%, as compared to 54.5% at June 30, 2008. On this basis RioCan could therefore incur additional indebtedness of approximately $800 million (this calculation assumes that additional amounts borrowed will be added to the asset base) and still not exceed the 60% leverage limit. This provides RioCan with additional financial liquidity and flexibility and allows it to continue its greenfield development program, as well as seek out opportunistic acquisitions of income properties.

RioCan's conservative debt policy has also resulted in approximately 15% of its properties being unencumbered by debt on a net leasable area basis, providing it with access to a pool of assets for obtaining additional secured debt. At the end of the third quarter, RioCan's interest coverage ratio remained consistent at a strong 2.6 times. Further, its leverage level provides it with the ability to access debt markets even when these markets are tight and difficult, as they have been for the past year. For the current year, RioCan had approximately $330 million of debt maturities at an average contractual rate of 5.3%. To date, it has refinanced or entered into commitments for new financing aggregating approximately $543 million, at an average rate of 5.58% on amounts funded.

While having relatively low debt leverage exposure is important in current economic conditions, the quality of RioCan's rental revenue available to service its debt and pay distributions to unitholders is equally important. RioCan reduces exposure to rental revenue risk in its shopping centre portfolio through geographical diversification, staggered lease maturities, diversification of revenue sources resulting from a large tenant base, avoiding dependence on any single tenant by ensuring no individual tenant contributes to a significant percentage of gross revenue, and ensuring a considerable portion of its rental revenue is earned from national and anchor tenants.

At September 30, 2008, 83.6% of annualized rental revenue is derived from national and anchor tenants, with RioCan's largest exposure to any single tenant comprising only 5.4% of annualized rental revenue.

RioCan's Unaudited Interim Consolidated Financial Statements, Management's Discussion and Analysis and a Supplemental Information Package as at and for the three and nine months ended September 30, 2008 are available on RioCan's website at www.riocan.com.

FFO is a widely accepted supplemental measure of a Canadian real estate investment trust's performance and should not be construed as an alternative to net earnings or cash flow from operating activities determined in accordance with Canadian generally accepted accounting principles. RioCan's method of calculating FFO may differ from certain other issuers' methods and accordingly may not be comparable to measures reported by other issuers.

Portfolio Stability

As at September 30, 2008:

- Portfolio occupancy was 97%;

- Renewed 93.9% of lease expiries in Q3 and 84.1% for the year-to-date;

- Rent increase of 10.9% in Q3 and 10.5% for the year-to-date on lease renewals;

- Net operating income on a same property basis increased 3.0% compared with the same quarter in the prior year and increased 2.4% for the year-to-date compared with the same period in the prior year;

- 66.4% of rental revenue was derived from properties located in Canada's six high growth markets (including and surrounding Calgary, Edmonton, Montreal, Ottawa, Toronto and Vancouver);

- 83.6% of annualized rental revenue was derived from, and 82.9% of space was leased to, national and anchor tenants; and

- No individual tenant comprised more than 5.4% of annualized rental revenue.

Portfolio Activity

The global financial and real estate markets have recently experienced dramatic changes. Despite the uncertainty in the marketplace, RioCan closed a number of acquisitions during and subsequent to quarter end.

On July 29, 2008, RioCan announced the acquisition of 1650-1660 Carling Avenue, in Ottawa, Ontario from CTREL for a purchase price of $40 million and capitalization rate of 6.4%. 1650-1660 Carling Avenue features a newly constructed 142,200 square foot two-storey urban retail concept. The property is anchored by a Canadian Tire that is located on the second level, a Mark's Work Wearhouse that is located on the first level, as well as two additional tenancies. It is located in the west end of Ottawa, with excellent frontage on Carling Avenue and Clyde Avenue. The entire facility is subject to a headlease by CTREL, which provides for a lease term of fifteen years and the net rental rate is subject to a 10% increase every five years. The property was acquired for cash and is free of debt.

During the quarter, RioCan also acquired a portfolio of twelve properties located primarily in central and eastern Canada and one in western Canada aggregating approximately 67,000 square feet for a purchase price of $21 million and capitalization rate of 7.5%. Two additional properties located in Cambridge, Ontario and Edmonton, Alberta will be acquired in January 2009 at a cost of $8 million at the same capitalization rate. The overall leasable area of the fourteen property portfolio is approximately 97,200 square feet. The tenancies include existing Harvey's, Swiss Chalet, Montana's and Milestone's with a lease term of 15 years with the exception of Harvey's locations, which are for 10 years. All leases feature 10% rental increases every five years. The portfolio was acquired unencumbered, providing RioCan with the opportunity to generate capital through mortgage financings as and when required.

As part of this acquisition, RioCan has the option of building out additional density of approximately 3,000 square feet in Whitby, Ontario, approximately 7,000 square feet in Ottawa, Ontario and approximately 5,000 square feet in Edmonton, Alberta.

Development Activity

RioCan's development program remained robust throughout the third quarter. Approximately 8.8 million square feet was under development, of which RioCan's interest upon completion will be approximately 3.5 million square feet. In addition to the 8.8 million square feet of current developments, an additional 3.3 million square feet is in the development pipeline.

Highlights for some of these projects include:

- CPPIB Joint Venture - On October 23, 2008, RioCan and Trinity Development Group Inc. ("Trinity") sold a 37.5% non-managing ownership interest in East Hills, phases I and III, a development featuring approximately 115 acres in Calgary, Alberta, to CPPIB. The sale price is $28.5 million subject to holdback conditions.

This agreement regarding the East Hills development follows an announcement made in June 2008 that RioCan and Trinity had sold a 50% non-managing ownership interest in two developments to CPPIB. The two developments are Jacksonport located in Calgary, Alberta and St. Clair Avenue and Weston Road located in Toronto, Ontario. Jacksonport is a 100-acre development that will consist predominately of new format retail. The St. Clair and Weston development features over 19 acres and will ultimately feature approximately 570,000 square feet of retail space. Under the agreement, RioCan and Trinity will each retain a 25% ownership interest in these two developments.

- Corbett Centre - Located in Fredericton, New Brunswick, Corbett Centre is a 26-acre site, acquired by way of a long-term land lease. It is currently being developed into a 471,000 square foot new format retail centre, anchored by Home Depot, which owns its own store and operates as part of the overall site. Other retailers include Michaels, Winners, Dollarama and Petcetera. A Costco, which will also own its own store, will be developed in 2009. RioCan's ownership interest in the property is 62.5%. The site is being developed in conjunction with a partner, Trinity, and is expected to be substantially complete by the end of the second quarter of 2009.

- Queen and Portland - RioCan is developing a site at Queen and Portland, which is situated on a one acre site in downtown Toronto, Ontario located in an area bound by Richmond Street to the south, Portland Street to the east, and Queen Street to the north. This site will be developed into a mixed-use building featuring a four-storey residential component as well as approximately 91,000 square feet of retail space on three storeys. The property will be anchored by a 75,000 square foot Home Depot. The site will be developed with Tribute Communities, which owns the residential component. RioCan will own and manage the retail component of the development. The retail component is expected to be substantially complete by the end of the second quarter of 2010. A total of 90 residential units are available, of which, 53 (59%) are sold.

- Avenue Road - Construction has commenced on a development located at the northeast corner of Avenue Road and Fairlawn Avenue in one of the busiest nodes in the City of Toronto, the Avenue Road development comprises over 1.5 acres. The existing retail facility will be redeveloped to accommodate a mixed-use building featuring a 5.5 storey residential component, along with 25,000 square feet of single storey retail street-front space. The residential component, which is owned, developed and marketed by Tribute Communities, has a total of 80 units, of which, 63 (79%) are sold. RioCan will manage all aspects of the retail component of the development. The retail component of the project is expected to be completed by the fourth quarter of 2010.

Other Activities

Distribution Increase

During the quarter, RioCan announced that its Board of Trustees approved an increase to monthly distribution to unitholders from $0.1125 to $0.1150 per unit commencing with the September 2008 distribution, payable in October 2008. This increase of $0.03 per unit on an annualized basis will increase RioCan's annualized distribution to $1.38 per unit.

Normal Course Issuer Bid

On October 28, 2008, RioCan announced its intention to file a notice with the Toronto Stock Exchange to make a normal course issuer bid for up to 11,000,000 of its trust units, or approximately 5% of its 220,425,075 units outstanding. RioCan's normal course issuer bid will be made in accordance with the by-laws, rules and policies of the Toronto Stock Exchange. Subject to the approval of the Toronto Stock Exchange, the Trust may begin to purchase units at prevailing market prices over a twelve-month period commencing on or about November 7, 2008. Purchases under the bid can be made from time to time over a twelve-month period, as appropriate opportunities arise.

RioCan believes that, from time to time, the market price of its units may not reflect their underlying value and that the purchase of units may represent an appropriate and desirable use of the Trust's funds. RioCan intends to fund the purchases out of available cash.

Repurchase of Debentures

At September 30, 2008, RioCan had seven series of debentures outstanding totalling $880 million. At December 31, 2007, it had eight series of debentures outstanding totalling $990 million.

In January 2008, RioCan repaid $110 million Series E debentures at maturity. During the first nine months of 2007, it issued $120 million Series K debentures, maturing September 11, 2012, bearing interest at 5.7% per annum, payable semi-annually.

In October 2008, RioCan repurchased approximately $26 million of its $110 million Series D debentures maturing September 21, 2009 and $5 million of its $100 million Series J debentures maturing March 24, 2010 for a total purchase price of $31 million.

Conference Call and Webcast

Interested parties are invited to participate in a conference call with management on Wednesday, November 5, 2008 at 9:00 a.m. eastern time. You will be required to identify yourself and the organization on whose behalf you are participating.

In order to participate, please dial 416-641-6120 or 1-866-303-7746. If you cannot participate in the live mode, a replay will be available until November 19, 2008. To access the replay, please dial 416-695-5800 or 1-800-408-3053 and enter passcode 3271746#.

Scheduled speakers include Edward Sonshine, Q.C., President and Chief Executive Officer, Fred Waks, Executive Vice President and Chief Operating Officer, and Rags Davloor, Senior Vice President and Chief Financial Officer. Management's presentation will be followed by a question and answer period. To ask a question, press "star 1" on a touch-tone phone. The conference call operator will be notified of all requests in the order in which they are made, and will introduce each questioner.

Alternatively, to access the simultaneous webcast, go to the following link on RioCan's website https://riocan.com/_bin/presentations/webcast.cfm and click on the link for the webcast. The webcast will be archived 24 hours after the end of the conference call and can be accessed for 120 days.

About RioCan

RioCan is Canada's largest real estate investment trust with a total capitalization of approximately $7.1 billion. It owns and manages Canada's largest portfolio of shopping centres with ownership interests in a portfolio of 238 retail properties, including 14 under development, containing an aggregate of over 58 million square feet. For further information, please refer to RioCan's website at www.riocan.com.

Forward-Looking Information

This news release contains forward-looking statements within the meaning of applicable securities laws. These statements include, but are not limited to, statements concerning our objectives, our strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue", or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management.

These statements are not guarantees of future performance and are based on our estimates and assumptions that are subject to risks and uncertainties, including those described under Risks and Uncertainties in the MD&A available on www.sedar.com, which could cause our actual results to differ materially from the forward-looking statements contained herein. Those risks and uncertainties include risks associated with real property ownership, financing and interest rates, environmental matters, construction, unitholder liability, and income taxes. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information include: an increasing divergence in the general economy between eastern and western Canada; a less robust retail environment than we have seen for the last few years; interest costs to us remain relatively stable; acquisition capitalization rates increase and land costs for greenfield development decrease; a continuing and accelerating trend towards land use intensification in high growth markets; and equity and debt capital markets will continue to provide access to capital to fund at acceptable costs our future growth program and refinance our debts as they mature. Although the forward-looking information contained herein is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. All forward-looking statements in this press release are qualified by these cautionary statements. Except as required by applicable law, RioCan undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

     Contacts:
     RioCan Real Estate Investment Trust
     Rags Davloor
     Senior Vice President & CFO
     (416) 642-3554
     Website: http://www.riocan.com