Mr. Edward Sonshine of RioCan reports

RIOCAN AND ALLIED ANNOUNCE SHIFT IN RESIDENTIAL STRATEGY AT KING PORTLAND CENTRE

RioCan Real Estate Investment Trust and Allied Properties Real Estate Investment Trust have finalized plans that will allow the co-owners to improve the return on the development of King Portland Centre. The co-owners had originally intended to develop the residential portion of the project as rental apartments and now intend to sell the residential portion as condominium units.

King Portland Centre is located at the northwest corner of King Street West and Portland Avenue in Toronto's downtown neighbourhood of King West. In addition to the strength of its location, the site is unique, in that it will incorporate the restored heritage structure of 602, 604 King West into the property. The project includes four components at 100 per cent as follows:

• Approximately 59,000 square feet of office and retail gross leasable area that is currently income producing from the heritage structure, which is fully occupied;
• Approximately 256,000 square feet of incremental office GLA, which is under development and is 93 per cent preleased to Shopify and Indigo;
• Approximately 13,000 square feet of incremental retail GLA fronting on King West;
• Approximately 133 residential condominium units fronting on Adelaide West at the north side of the project.

The condominium portion is in the early stages of marketing with the units expected to be offered for sale in the fourth quarter of this year and residents taking possession in early 2019. The timing is subject to completion of registration with Tarion Warranty Corp.

"Our overall investment strategy into rental residential mixed-use developments has not changed. However, in certain circumstances, based on the project's relative size and the strength of the surrounding market for condominium units, we will, as in this case, review our options and shift course if needed to pursue the option that we believe is in the best interest of our partners and unitholders," said Edward Sonshine, chief executive officer of RioCan. "The decision to sell the residential portion as condominium accelerated following the recent regulatory changes to the rental residential market in Ontario. We fully expect that the sale of these units, that are already under construction, will be very well received in the market and generate significant gains for the venture."

Each of Allied and RioCan owns an undivided 50-per-cent interest in King Portland Centre, and on completion Allied will manage the office component and RioCan will manage the retail component.

Construction on the project is under way with completion expected in the third quarter 2018.

About Allied Properties Real Estate Investment Trust

Allied Properties is a leading owner, manager and developer of distinctive urban workspace in Canada's major cities.

About RioCan Real Estate Investment Trust

RioCan is Canada's largest real estate investment trust with a total enterprise value of approximately $13.9-billion as at June 30, 2017. RioCan owns and manages Canada's largest portfolio of retail-focused and mixed-use properties with ownership interests in a portfolio of 299 Canadian properties, including 15 properties under development, containing an aggregate net leasable area of 45 million square feet.

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