RioCan Real Estate Investment Trust Completes Acquisition Of Interest In Festival Hall.

TORONTO--(BUSINESS WIRE)--Oct. 14, 1999--

RioCan Real Estate Investment Trust(TSE:REI.UN.)today announced that it has completed the acquisition of a 50% interest in the Festival Hall Retail & Entertainment Complex ("Festival Hall"). Located in Toronto's downtown west district, Festival Hall is situated at the intersection of Richmond and John Streets and comprises a 227,000 square foot urban retail and entertainment destination.

Festival Hall's largest tenant is a state-of-the-art Famous Players movie theatre consisting of fourteen screens, stadium seating and is at the forefront of movie exhibition technological advances. The Famous Players theatre also houses an IMAX 3D theatre, which is the first in Canada to be included within a larger movie exhibition complex.

Festival Hall is also the home of the first downtown location for a 52,000 square foot Sega/Playdium, opening November 12, 1999. This location will be Sega/Playdium's most advanced facility in Canada, which includes a variety of high tech sport simulators and amusement facilities. Other tenants include Chapters, Cyberplex, a leading North American Internet Professional Services firm, and Milestone, a fine dining Cara-owned restaurant, which is scheduled to open in the spring of 2000. In addition, Festival Hall includes more than 400 underground parking spaces.

Edward Sonshine, President & CEO of RioCan, said: "We are very excited to have acquired what is one of Toronto's premier urban entertainment destinations. This $70 million development dominates Toronto's downtown west district and, as such, represents a continuation of one component of RioCan's growth strategy, that of investing in entertainment-anchored, urban retail real estate. We are also very pleased that our financing strategy for this property has worked out so well. By using a conservative hedging strategy, we locked in a $46 million, 10 year mortgage for the building from a foreign lender at an effective interest rate of approximately 6.3%, which is well below rates available today. The result will be a return on equity in excess of 12% initially with strong growth due to contractual rent increases."

RioCan is by far Canada's largest real estate investment trust. RioCan has total assets of over $2 billion consisting of ownership interests in a portfolio of 127 mostly retail properties across Canada containing an aggregate of approximately 18.4 million square feet of gross leasable area. RioCan's primary objective is the long-term maximization of cash flow and capital appreciation of its portfolio. It achieves this by proactively managing its existing properties, seeking accretive acquisition and expansion opportunities and undertaking development activities on a selective basis. RioCan is listed on the Toronto Stock Exchange under the symbol REI.UN.