expanding our reach extending our capabilities …

700 Applewood Crescent Suite 200

Vaughan, Ontario L4K 5X3

Telephone 905-326-6400 Fax 905-326-0783www.smartreit.com

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2015

EXPANDING OUR REACH

EXTENDING OUR CAPABILITIES

EXPLORING NEW OPPORTUNITIES

THIRD QUARTER REPORT2015

TAbLe OF COnTenTS

1 President’s Message

3 Management’s Discussion and Analysis of Results of Operations and Financial Condition

4 Business Overview and Strategic Direction

5 Quarterly Financial and Operational Highlights

6 Investment Properties

9 Maintenance of Productive Capacity

9 Developments and Earnouts Completed on Existing Properties

9 Properties Under Development

11 Investment in Associates

12 Mortgages, Loans and Notes Receivable and Interest Income

14 Debt

16 Financial Covenants

17 Unitholders’ Equity

18 Capital Resources and Liquidity

19 Results of Operations

23 Leasing Activities and Lease Expiries

24 General and Administrative

25 Interest Expense

25 Other Measures of Performance

29 Quarterly Information

30 Related Party

31 Income Taxes and SIFT Compliance

31 Disclosure Controls and Procedures and Internal Controls Over Financial Reporting – National Instrument 52-109 Compliance

32 Critical Accounting Estimates

32 Future Changes in Accounting Policies

32 Risks and Uncertainties

35 The Transaction

37 Subsequent Events

37 Outlook

39 Condensed Consolidated Balance Sheets (Unaudited)

40 Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)

41 Condensed Consolidated Statements of Equity (Unaudited)

42 Condensed Consolidated Statements of Cash Flows (Unaudited)

43 Notes to Condensed Consolidated Financial Statements (Unaudited)

78 Corporate Information

SMART REAL ESTATE INVESTMENT TRUST | THIRD QUARTER REPORT 2015 1

President’s Message

The third quarter of 2015 has been a very busy quarter for everyone at SmartREIT as we continue the integration of our acquisition of the former SmartCentres platform and property portfolio and I continue to be exceptionally pleased with how well the announcement and the transaction have been received across the business community. Ultimately, I believe this transformative transaction positions SmartREIT extremely well for the short, medium and long term.

Effective October, we increased our distribution from $1.60 per Unit to $1.65 per Unit, a 3.125% increase. This increase reflects my and the Board of Trustees continued confidence in the business and our ability to deliver Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”) growth into the future.

Turning to operations, I am pleased to report another good set of results for the Trust for the quarter ended September 30, 2015. FFO per unit, our key measure of profitability increased by 10.2% over FFO per unit in the third quarter of 2014. This increase in FFO was the result of contributions from all of our internal growth drivers: rental increases from step rent provisions, lease renewals, earnouts, new development, refinancing, and also from acquisitions made in 2014 and so far in 2015.

Occupancy for the quarter was up marginally to 98.7%. Over the year to date, this reflects square footage becoming vacant across multiple sites with only certain of that square footage being able to be re-leased in the time frame available. 2015 has seen a number of retail bankruptcies, which reflects changing consumer trends, economic challenges, increased competition and poor retail execution. Ultimately, however, I believe the strength of our retail centres and in particular the presence of Walmart in 75% of our centres positions us very well to weather these changes. Our shopping centres are designed to provide everyday services to facilitate one stop shopping for the consumer. Nearly 100% of our shopping centres are anchored by either a Walmart Supercentre including a full service food store and/or another mainstream food retailer and further basic services such as pharmacy, beer and liquor stores, and fast food outlets are found in most of our centres. Year-to-date, we have already completed or are close to completing approximately 1,064,000 square feet of 2015 renewals (75%) at an increased rental rate of 6.2%. Ultimately, we continue to strive to balance our high level of occupancy and FFO stability with growth initiatives having lower risk.

During the quarter, we added a 227,000 square foot soon to be Walmart Supercentre anchored shopping centre in Maple Ridge, British Columbia at a total cost of approximately $59.3 million. As we near the end of the year, we are still actively searching for appropriate additional acquisition opportunities.

2 SMART REAL ESTATE INVESTMENT TRUST | THIRD QUARTER REPORT 2015

Sincerely,

Huw ThomasPresident, Chief Executive OfficerSmartREIT

We have continued to be active in managing our balance sheet and by the end of October, had refinanced all of our maturing secured debt in 2015. In total for the third quarter, we had obtained $108.8 million of new term financing, at an average cost of 2.76% versus $23.4 million of maturing term debt at an average cost of 5.93%, a very significant saving which will benefit years to come. Our unencumbered pool remains at $2.5 billion which will provide us with significant future flexibility, in addition to our $350 million unsecured operating facility which at the end of the third quarter remained unused other than incidental letters of credit. As at September 30, 2015, our debt to asset ratio has declined to 45.3% versus 45.4% at the end of Q2. Earnouts and developments resulted in 27,728 square feet of new tenanted space being added during the quarter at an average yield of 8.2%, and we currently have commitments for development and Earnout space for the balance of the year and 2016 totalling approximately 335,000 square feet at an average yield of 6.4%.

Construction of the first phase of the VMC continues to progress very well, with the main tower now fully complete and glazing also complete for the main tower. Handover to KPMG is still expected in the spring of 2016, with the opening targeted for the fall of 2016. We are continuing our discussions about a second office tower on the site with two lead tenants and are at the finalization of Letters of Intent and the lease negotiation stage for an approximately 200,000 square foot purpose built building which would be fully leased before construction commences. For the Studio Centre site, we have recently received planning approval for the project at Toronto City Council, subject only to the relevant appeals’ process. Overall, we are very excited about this innovative project and expect development to begin in 2016. The VMC and Studio Centre sites are just two of a number of mixed use opportunities SmartREIT holds and work is under way to develop a comprehensive analysis of these opportunities which we will be able to discuss in the coming months.

Our Toronto and Montreal Premium Outlets sites continue to perform very well, with the Toronto site full with quality long term tenants and the Montreal site now virtually full with tenants such as Gucci, Hugo Boss, and Under Armour having opened in the last few weeks. In addition, we continue to look for other sites to add to this portfolio.

As we look forward, I continue to be grateful to our Associates for their hard work and continued commitment to our values, our operating and financial partners for the continued support and our Board of Trustees for their leadership and guidance. And finally, thank you to all of our loyal tenants and customers for your business and our Unitholders for trusting us with your precious investment funds.


MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OFOPERATIONS AND FINANCIAL CONDITIONFOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015

This Management's Discussion and Analysis ("MD&A") sets out Smart Real Estate Investment Trust's ("SmartREIT" or the "Trust",formerly known as Calloway Real Estate Investment Trust) strategies and provides an analysis of the financial performance and financialcondition for the three and nine months ended September 30, 2015, the risks facing the business and management's outlook.

This MD&A should be read in conjunction with the Trust's audited consolidated financial statements for the years ended December 31,2014 and 2013 and the unaudited interim condensed consolidated financial statements (collectively the "consolidated financialstatements") for the three and nine months ended September 30, 2015 and the notes contained therein. Such consolidated financialstatements have been prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to the preparationof interim condensed consolidated financial statements, International Accounting Standard ("IAS") 34, "Interim Financial Reporting",as issued by the International Accounting Standards Board ("IASB"). The Canadian dollar is the functional and reporting currency forpurposes of preparing the consolidated financial statements.

This MD&A is dated November 4, 2015, which is the date of the press release announcing the Trust's results for the three and ninemonths ended September 30, 2015. Disclosure contained in this MD&A is current to that date, unless otherwise noted.

Readers are cautioned that certain terms used in this MD&A such as Funds From Operations ("FFO"), Adjusted Funds From Operations("AFFO"), Net Operating Income ("NOI"), "Interest Coverage", "Aggregate Assets", "Gross Book Value", "Debt to Service", AdjustedEarnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"), "Secured Indebtedness", "Payout Ratio", andany related per Variable Voting Unit of the Trust (a "Unit") amounts used by management to measure, compare and explain theoperating results and financial performance of the Trust do not have any standardized meaning prescribed under IFRS and, therefore,should not be construed as alternatives to net income or cash flow from operating activities calculated in accordance with IFRS. Theseterms are defined in this MD&A and reconciled to the consolidated financial statements of the Trust for the three and nine monthsended September 30, 2015. Such terms do not have a standardized meaning prescribed by IFRS and may not be comparable to similarlytitled measures presented by other publicly traded entities. See "Other Measures of Performance", "Net Operating Income", "Debt"and "Financial Covenants".

EBITDA is a non-IFRS measure that is comprised of net earnings less income taxes, interest expense, amortization expense anddepreciation expense. It is a metric that can be used to help determine the Trust's ability to service its debt, finance capital expendituresand provide for distributions to its unitholders ("Unitholders"). EBITDA is reconciled with net income, which is the closest IFRSmeasure (see "Financial Covenants").

Adjusted EBITDA, as defined by the Trust, is a non-IFRS measure that is comprised of net earnings less income taxes, interest expense,amortization expense and depreciation expense, as well as gains and losses on disposal of investment properties and the fair valuechanges associated with investment properties and financial instruments. It is a metric that can be used to help determine the Trust'sability to service its debt, finance capital expenditures and provide for distributions to its Unitholders. Additionally, Adjusted EBITDAremoves the non-cash impact of the fair value changes and gains and losses on investment property dispositions. Adjusted EBITDAis reconciled with net income, which is the closest IFRS measure (see "Financial Covenants").

The ratio of Total Debt to Adjusted EBITDA is included and calculated each period to provide information on the level of the Trust'sdebt versus the Trust's ability to service that debt. Adjusted EBITDA is used as part of this calculation as the fair value changes andgains and losses on investment property dispositions do not impact cash flow, which is a critical part of this measure. See "FinancialCovenants" for a reconciliation of this ratio.

Certain statements in this MD&A are "forward-looking statements" that reflect management's expectations regarding the Trust's futuregrowth, results of operations, performance and business prospects and opportunities as outlined under the headings "Business Overviewand Strategic Direction" and "Outlook". More specifically, certain statements contained in this MD&A, including statements relatedto the Trust's maintenance of productive capacity, estimated future development plans and costs, view of term mortgage renewalsincluding rates and upfinancing amounts, timing of future payments of obligations, intentions to secure additional financing andpotential financing sources, and vacancy and leasing assumptions, and statements that contain words such as "could", "should", "can","anticipate", "expect", "believe", "will", "may" and similar expressions and statements relating to matters that are not historical facts,constitute "forward-looking statements". These forward-looking statements are presented for the purpose of assisting the Trust'sUnitholders and financial analysts in understanding the Trust's operating environment, and may not be appropriate for other purposes.Such forward-looking statements reflect management's current beliefs and are based on information currently available to management.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

2 SMART REAL ESTATE INVESTMENT TRUST 2015 THIRD QUARTER REPORT



However, such forward-looking statements involve significant risks and uncertainties, including those discussed under the heading"Risks and Uncertainties" and elsewhere in this MD&A. A number of factors could cause actual results to differ materially from theresults discussed in the forward-looking statements. Although the forward-looking statements contained in this MD&A are based onwhat management believes to be reasonable assumptions, including those discussed under the heading "Outlook" and elsewhere inthis MD&A, the Trust cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. These forward-lookingstatements are made as at the date of this MD&A and the Trust assumes no obligation to update or revise them to reflect new eventsor circumstances unless otherwise required by applicable securities legislation.

All amounts in the MD&A are in thousands of Canadian dollars, except where otherwise stated. Per Unit amounts are on a dilutedbasis, except where otherwise stated.

Additional information relating to the Trust, including the Trust's Annual Information Form for the year ended December 31, 2014and Management Information Circular dated April 27, 2015, can be found at www.sedar.com.

Business Overview and Strategic Direction

The Trust is an unincorporated open-ended mutual fund trust governed by the laws of the Province of Alberta. The Units of theTrust are listed and publicly traded on the Toronto Stock Exchange ("TSX") under the symbol "SRU.UN", formerly "CWT.UN".

The Trust's vision is to create exceptional places to shop and work. The Trust's purpose is to develop, lease, construct, own and manageshopping centres that provide retailers with a platform to reach their customers through convenient locations, intelligent designs, anda desirable tenant mix, and more recently to provide high quality office space for tenants to locate effective work spaces.

The Trust's shopping centres focus on value oriented retailers and include the strongest national and regional names as well as strongneighbourhood merchants. It is expected that Walmart will continue to be the dominant anchor tenant in the portfolio and that itspresence will continue to attract other retailers and consumers. The Trust's first newly developed office tower is the KPMG Towerlocated at the Vaughan Metropolitan Centre ("VMC") in Vaughan, Ontario.

As at September 30, 2015, the Trust owned 138 shopping centres with total gross leasable area of 30.8 million square feet and elevendevelopment properties, located in communities across Canada. Generally, the Trust's centres are conveniently located close to majorhighways, which, along with the anchor stores, provide significant draws to the Trust portfolio, attracting both value oriented retailersand consumers. The Trust acquired the right from the Penguin Group of Companies (formerly referred to as the "SmartCentres Groupof Companies" and hereinafter referred to as "Penguin") for a term that renews perpetually, to use the "SmartCentres" brand, whichrepresents a family and value oriented shopping experience. In addition, the Trust acquired the "Smart Urban" brand which will in thefuture be used to describe mixed use developments in urban settings, usually including a mix of retail, office and residential space.

AcquisitionsSubject to the availability of acquisition opportunities, the Trust intends to grow distributions, in part through the accretive acquisitionof properties. The current environment for acquisitions is very competitive with limited supply of quality properties coming to themarket. The Trust explores acquisition opportunities as they arise but will only pursue acquisitions that management believes areaccretive relative to its long term cost of capital. See the "Transaction" and "Subsequent Events" sections for further information onthe Trust's latest acquisitions.

Developments, Earnouts and Mezzanine FinancingDevelopments, Earnouts and Mezzanine Financing continue to be a significant component of the Trust's strategic plan. As atSeptember 30, 2015, the Trust had approximately 5.7 million square feet of potential gross leasable area that could be developed (ofwhich 4.9 million square feet relates to future estimated development area and 0.8 million square feet relates to lands under mezzaninefinancing purchase options "Mezzanine Financing"), including 0.2 million of a total 3.0 million square feet (the Trust's 50% share) ofoffice, retail and residential space projected to be developed in the VMC. Assuming the Trust continues to successfully manage thedevelopment of leasable area and raise the capital required for such development, the Trust plans to develop approximately 3.8 millionsquare feet of this gross leasable area internally ("Developments" including VMC), approximately 1.1 million square feet of the spaceto be developed and leased to third parties on behalf of Penguin (controlled by Mitchell Goldhar, a trustee and significant Unitholderof the Trust) and other vendors ("Earnouts") and approximately 0.8 million square feet of the space to be developed under MezzanineFinancing. Pursuant to the Transaction, all leasing and development work on behalf of Penguin and other vendors is now contractedto, and will be completed by, the Trust. Earnouts occur where the vendors retain responsibility for certain developments on behalf ofthe Trust for additional proceeds calculated based on a predetermined, or formula based, capitalization rate, net of land and developmentcosts incurred by the Trust. Pursuant to the Transaction, the Trust is now responsible for managing the completion of Earnouts and


SMART REAL ESTATE INVESTMENT TRUST 2015 THIRD QUARTER REPORT 3



Developments. Mezzanine Financing purchase options are exercisable once a shopping centre is substantially complete and allows thelender to acquire 50% of the completed shopping centre.

Professional ManagementThrough professional management of the portfolio, the Trust intends to ensure its properties portray an image that will continue toattract consumers as well as provide preferred locations for its tenants. Well-managed properties enhance the shopping experience andensure customers continue to visit the centres. Professional management of the portfolio has contributed to a continuing high occupancylevel of 98.7% at September 30, 2015 (September 30, 2014 - 99%).

Quarterly Financial and Operational Highlights

The Trust continued its growth through Developments, Earnouts and Acquisitions in the third quarter of 2015. During the quarter,the Trust also focused on managing the operation and development of existing properties and raising the capital required for futuregrowth of the business. Highlights for the quarter include the following:

• Funds From Operations ("FFO") increased by 26.2% to $83.9 million and 10.2% to $0.54 on a per Unit basis comparedto the same period in 2014

• Adjusted Funds From Operations ("AFFO") payout ratio decreased by 7.0% to 76.9% compared to the same period in2014

• Annual distributions increased by $0.05 to $1.65 per Unit effective October 2015• Maintained high level occupancy of 98.7%. The Trust has two former Target store locations in the Trust's portfolio. As

a result of Target's decision to leave these locations, the Trust has identified both locations for redevelopment. Had thesetwo sites not been identified for redevelopment, the occupancy level would have been 98.1%

• Completed Developments and Earnouts of 27,728 square feet of leasable area for $8.2 million, providing an unleveragedyield of 8.2%

• Issued new secured debt totalling $108.8 million with an average term of 6.0 years and an average interest rate of 2.76%• As part of the overall Transaction (see also the 'Transaction' section), the Trust acquired an enclosed shopping centre

totalling 227,000 square feet in Maple Ridge, British Columbia, for a total purchase price of $59.3 million, which was funded by existing cash

• Acquired a 60% interest in a property in Orleans, Ontario, totalling 132,154 square feet of lands with potential for futuredevelopment for a total purchase price of $8.8 million, which was satisfied by the assumption of a mortgage of $8.7 million, adjusted for costs of acquisition and other working capital amounts

• Subsequent to quarter end, on October 16, 2015, $100.0 million aggregate principal amount of variable rate Series K senior unsecured debentures matured, which was settled by the Trust by existing cash and credit facilities

Selected Consolidated Information:The operational and financial consolidated information shown in the table below includes the Trust's share of investment in associates,which is disclosed in Note 6 of the consolidated financial statements.

(in thousands of dollars, except per Unit and other non-financial data) September 30, 2015 December 31, 2014 September 30, 2014Operational InformationNumber of properties 149 128 134Gross leasable area (in thousands of sq. ft.) 30,761 27,340 27,816Future estimated development area (in thousands of sq. ft.) 4,852 2,678 2,906Lands under Mezzanine Financing (in thousands of sq. ft.) 781 755 755Occupancy 98.7% 99.0% 99.0%Average lease term to maturity 7.1 years 6.8 years 7.0 yearsNet rental rate (per occupied sq. ft.) $15.09 $15.01 $14.93Net rental rate excluding anchors (per occupied sq. ft.) (1) $21.69 $21.43 $21.33

Financial InformationInvestment properties (2) 8,105,859 6,801,370 6,852,029Total assets 8,530,967 7,107,403 7,157,228Debt (2) 3,878,404 3,003,121 3,075,422Debt to gross book value (3) 52.8% 50.5% 51.3%Debt to aggregate assets 45.3% 42.8% 43.5%Interest coverage (4) 3.1X 2.7X 2.7XDebt to adjusted EBITDA (5) 8.4X 7.4X 7.6XEquity (book value) 4,440,215 3,906,424 3,892,318





(in thousands of dollars, except per Unit and other non-financial data)Three Months EndedSeptember 30, 2015

Three Months EndedSeptember 30, 2014

Financial Information (continued)Rentals from investment properties (2) 172,874 147,163NOI (2)(6) 116,230 99,074Net income excluding fair value adjustments 81,140 64,548Net income and comprehensive income 92,574 82,750Cash provided by operating activities 81,686 47,240FFO (7) 83,881 66,447AFFO (7) 79,655 63,026Distributions declared 61,761 52,732Units outstanding (8) 153,718,198 136,030,604Weighted average – basic 153,405,481 135,572,859Weighted average – diluted (9) 154,054,318 138,556,609

Per Unit Information (Basic/Diluted)Net income $0.60/$0.60 $0.61/$0.59Net income excluding fair value adjustments $0.53/$0.53 $0.47/$0.46FFO (7) $0.55/$0.54 $0.49/$0.49AFFO (7) $0.52/$0.52 $0.46/$0.46Distributions $0.40 $0.38Payout ratio (to AFFO) (10) 76.9% 83.9%

(1) Anchors are defined as tenants within a property with leasable area greater than 30,000 square feet.(2) Includes the Trust's share of investment in associates(3) Defined as debt (excluding convertible debentures) divided by total assets plus accumulated amortization less cumulative unrealized fair value gain or loss with respect to investment

property. (4) Defined as earnings before interest, income taxes, amortization, loss on sale of investment property, acquisition costs, fair value gain or loss with respect to investment property and

financial instruments and adjustments relating to the early redemption of unsecured debentures in 2015 and 2014 over interest expense, where interest expense excludes the distributionson deferred units and LP Units classified as liabilities and adjustments relating to the early redemption of unsecured debentures in 2015 and 2014.

(5) Defined as debt over earnings before interest, income taxes, amortization, loss on sale of investment property, acquisition costs, fair value gain or loss with respect to investment propertyand financial instruments and adjustments relating to the early redemption of unsecured debentures in 2015 and 2014.

(6) Defined as rentals from investment properties less property operating costs. (7) See "Other Measures of Performance" for a reconciliation of these measures to the nearest consolidated financial statement measure.(8) Total Units outstanding include Trust Units and LP Units including LP Units classified as liabilities. LP Units classified as equity in the consolidated financial statements are presented

as non-controlling interests.(9) The diluted weighted average includes the vested portion of the deferred unit plan and convertible debentures but does not include unvested Earnout options.(10) Payout ratio is calculated as distributions per Unit divided by Adjusted Funds From Operations per Unit.

Investment Properties

The portfolio consists of 30.8 million square feet of built gross leasable area and 4.9 million square feet of future potential grossleasable area in 149 properties and the option to acquire a 50.0% interest (0.8 million square feet) in six investment properties on theircompletion pursuant to the terms of Mezzanine Financing. The portfolio is located across Canada, with assets in each of the tenprovinces. The Trust targets major urban centres and shopping centres that are dominant in their trade area. By selecting well-locatedcentres, the Trust attracts quality tenants at market rental rates.

As at September 30, 2015, the fair value of investment properties, including the Trust's share of investment properties in associates,totalled $8,105.9 million, compared to $7,992.3 million at June 30, 2015, a net increase of $113.6 million during the quarter. The increaseis mainly due to net additions to investment properties of $106.1 million (including the Trust's share of investment in associates), whichincludes the acquisition of investment properties of $68.1 million, and net fair value gains of $7.5 million. The fair value of theinvestment properties is dependent on future cash flows over the holding period and capitalization rates applicable to those assets.





The following table summarizes the changes in values of investment properties:

Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015

(in thousands of dollars)Income

Properties

PropertiesUnder

Development

TotalInvestment Properties

Income Properties

PropertiesUnder

Development

TotalInvestment Properties

Balance before investment in associates –beginning of period 7,270,332 602,013 7,872,345 6,430,034 266,453 6,696,487

Acquisition of investment properties 59,270 8,849 68,119 969,116 240,326 1,209,442Transfer from properties under development

to income properties 5,232 (5,232) — 30,986 (30,986) —Earnout fees on the properties subject to

development management agreements 3,274 — 3,274 6,713 — 6,713Additions to investment properties 1,992 16,052 18,044 4,821 35,915 40,736Transfer from income properties to propertiesunder development (3,725) 3,725 — (108,109) 108,109 —Dispositions — — — — (876) (876)Net additions 66,043 23,394 89,437 903,527 352,488 1,256,015Fair value gain on revaluation of investment

properties 9,898 (2,414) 7,484 12,712 4,052 16,764Balance before investment in associates 7,346,273 622,993 7,969,266 7,346,273 622,993 7,969,266Share of investment properties classified as

investment in associates 21,600 114,993 136,593 21,600 114,993 136,593Balance – end of period 7,367,873 737,986 8,105,859 7,367,873 737,986 8,105,859

Valuation MethodologyFrom October 1, 2012 to the quarter ended September 30, 2015, the Trust has had approximately 80% (by value) or 69% (by numberof properties) of its operating portfolio appraised externally by independent national real estate appraisal firms with representationand expertise across Canada. The appraisals were prepared to comply with the requirements of IAS 40, "Investment Property", IFRS13, "Fair Value Measurement", and International Valuation Standards.

The determination of which properties are externally appraised and which are internally appraised by management is based on acombination of factors, including property size, property type, tenant mix, strength and type of retail node, age of property andgeographic location. The Trust, on an annual basis, has had external appraisals performed on 15–20% of the portfolio that commencedin the first quarter of 2014, rotating properties to ensure that at least 50% (by value) of the portfolio is valued externally over a three-year period.

The remaining portfolio is valued internally by management utilizing a valuation methodology that is consistent with the externalappraisals. Management performed these valuations by updating cash flow information reflecting current leases, renewal terms andmarket rents and applying updated capitalization rates determined in part, through consultation with the external appraisers and availablemarket data. The fair value of properties under development reflects the impact of development agreements (see Note 4(b) in theconsolidated financial statements for the period ended September 30, 2015 for further discussion).

Fair values were primarily determined through the income approach. For each property, the appraisers conducted and placed relianceupon: (a) a direct capitalization method, which is the appraiser's estimate of the relationship between value and stabilized income; and(b) a discounted cash flow method, which is the appraiser's estimate of the present value of future cash flows over a specified horizon,including the potential proceeds from a deemed disposition.

For the quarter ended September 30, 2015, investment properties (including properties under development) with a total carrying valueof $2,377.0 million (June 30, 2015 – $2,314.3 million) were valued externally with updated capitalization rates and occupancy, andinvestment properties with a total carrying value of $5,728.9 million (June 30, 2015 – $5,678.0 million) were valued internally by theTrust. Based on these valuations, the aggregate weighted average stabilized capitalization rates on the Trust's portfolio as at September 30,2015 and June 30, 2015 were 5.96% and 5.96%, respectively.





Acquisitions of Investment Properties2015 Acquisitions

Property Property Type Acquisition Date

AcquiredLeasable area

(sq. ft.)

AcquisitionCost

($millions)

OwnershipInterest

AcquiredBarrie, Ontario Shopping centre February 11, 2015 104,909 25.3 100%Alliston, Ontario Shopping centre May 28, 2015 170,770 42.8 100%Aurora (North), Ontario(1) Shopping centre May 28, 2015 248,958 76.2 50%Bracebridge, Ontario Shopping centre May 28, 2015 139,244 33.9 100%Bradford, Ontario Shopping centre May 28, 2015 239,274 68.4 100%Blainville, Quebec Shopping centre May 28, 2015 166,154 48.9 100%Brampton, Ontario Shopping centre May 28, 2015 174,665 54.3 100%Brampton (Bramport), Ontario Shopping centre May 28, 2015 37,857 10.7 100%Cornwall, Ontario Shopping centre May 28, 2015 163,726 43.1 100%Laval, Quebec Shopping centre May 28, 2015 159,779 59.1 100%Markham (Boxgrove), Ontario Shopping centre May 28, 2015 69,008 20.0 40%Mascouche, Quebec Shopping centre May 28, 2015 51,228 31.8 100%Mississauga (Go Lands), Ontario(1) Shopping centre May 28, 2015 56,499 20.9 50%

Montreal (Premium Outlets), Quebec(2) Premium Outletsshopping centre May 28, 2015 57,459 59.5 25%

Oakville (Leasehold), Ontario Shopping centre May 28, 2015 442,391 117.3 100%Oshawa (North II), Ontario Shopping centre May 28, 2015 149,622 49.6 100%Oshawa (South), Ontario(1) Shopping centre May 28, 2015 268,347 65.7 50%Port Elgin, Ontario Shopping centre May 28, 2015 115,524 22.3 100%Stoney Creek, Ontario Shopping centre May 28, 2015 247,399 85.9 100%Sylvan Lake, Alberta Shopping centre May 28, 2015 125,081 32.0 100%Vaudreuil, Quebec Shopping centre May 28, 2015 15,249 10.0 100%Vaughan, Ontario Shopping centre May 28, 2015 156,538 100.8 100%Waterloo, Ontario Shopping centre May 28, 2015 181,607 62.8 100%Maple Ridge, British Columbia Shopping centre July 30, 2015 227,000 59.3 100%Orleans, Ontario(3) Development land September 25, 2015 — 8.8 60%Total 3,768,288 1,209.4

(1) Prior to this acquisition, the Trust had a 50% interest and as such the property was recorded as a co-ownership interest. On May 28, 2015, the Trust acquired the other 50% interest inthe property effectively giving the Trust 100% interest.

(2) Prior to this acquisition, the Trust had a 25% interest in this property. On May 28, 2015, the Trust acquired an additional 25% in this property effectively giving the Trust a 50%interest.

(3) As part of the overall Transaction (see also the "Transaction" section), this acquisition reflects the purchase of 132,154 square feet of developable area.

2014 Acquisitions

Property Property Type Acquisition DateArea(sq. ft.)

AcquisitionCost($millions)

OwnershipInterestAcquired

Edmonton, Alberta Shopping centre September 10, 2014 169,217 34.7 50%Lachenaie, Quebec Shopping centre September 10, 2014 131,725 28.4 50%

300,942 63.1

Dispositions of Investment Properties2015 DispositionsThere were no dispositions during the quarter.

2014 Dispositions

Property Property Type Disposition DateArea(sq. ft.)

Proceeds($millions) Sold Interest

Richmond, British Columbia Industrial June 27, 2014 121,544 6.4 100%





Maintenance of Productive Capacity

The main focus in a discussion of capital expenditures is to differentiate between those costs incurred to achieve the Trust's longerterm goals to produce increased cash flows and Unit distributions, and those costs incurred to maintain the quality of the Trust'sexisting cash flows.

Acquisitions of investment properties and the development of existing investment properties (Earnouts and Developments) are thetwo main areas of capital expenditures that are associated with increasing the productive capacity of the Trust. In addition, there arecapital expenditures incurred on existing investment properties to maintain the productive capacity of the Trust ("sustaining capitalexpenditures").

Sustaining capital expenditures and leasing costs are funded from operating cash flow and, as such, normalized sustaining capitalexpenditures and leasing costs are deducted from AFFO in order to estimate a sustainable amount that can be distributed to Unitholders.Sustaining capital expenditures are those of a capital nature that are not considered to add to productive capacity and are not recoverablefrom tenants. These costs are incurred at irregular amounts over time. Leasing costs, which include tenant incentives and leasingcommissions, vary with the timing of renewals, vacancies, tenant mix and the health of the retail market. Leasing costs are generallylower for renewals of existing tenants compared to new leases. The sustaining capital expenditures and leasing costs are based onhistorical spend levels as well as anticipated spend levels over the next few years. The following is a discussion and analysis of capitalexpenditures of a maintenance nature (sustaining capital expenditures and leasing costs), as acquisitions and developments are discussedelsewhere in the MD&A.

Normalized sustaining capital expenditures totalling $2.9 million and normalized leasing costs of $1.1 million were included in thecalculations of AFFO compared to actual sustaining capital expenditures of $1.9 million and actual leasing costs of $0.1 million, whichwere included in investment properties and tenant incentives on existing properties during the three months ended September 30, 2015.For the nine months ended September 30, 2015, normalized sustaining capital expenditures totalling $8.6 million and normalized leasingcosts of $3.2 million were included in the calculations of AFFO compared to actual sustaining capital expenditures of $4.1 millionand actual leasing costs of $3.7 million, which were included in investment properties and tenant incentives on existing properties. TheTrust uses normalized sustaining capital expenditures and leasing costs to calculate AFFO on a quarterly basis and actual sustainingcapital expenditures and leasing costs to calculate AFFO on an annual basis. Since the Trust's investment properties are relatively newand in good condition – although management anticipates some increases for each of 2016 and 2017 – they are not expected to havean impact on the Trust's ability to pay distributions at its current level.

(in thousands of dollars, except per Unitamounts)

Three Months EndedSeptember 30, 2015 (1)

Nine Months EndedSeptember 30, 2015 (1) December 31, 2014 (2) December 31, 2013 (2)

Leasing commissions 303 909 1,180 2,163Tenant incentives 747 2,241 2,393 3,810Total leasing costs 1,050 3,150 3,573 5,973Sustaining capital expenditures 2,871 8,613 7,747 4,552

3,921 11,763 11,320 10,525Per Unit - diluted 0.025 0.080 0.082 0.077

(1) Actual sustaining capital expenditures and leasing costs were used to calculate AFFO for the years ended December 31, 2014 and December 31, 2013.(2) Normalized sustaining capital expenditures and leasing costs were used to calculated AFFO for the periods ended September 30, 2015 and September 30, 2014.

Developments and Earnouts Completed on Existing Properties

During the quarter ended September 30, 2015, $8.2 million of Developments and Earnouts were completed and transferred toinvestment properties, compared to $18.8 million in the same period of 2014, summarized as follows:

Three Months Ended September 30, 2015 Three Months Ended September 30, 2014

(in millions of dollars)Area

(sq. ft.)Investment

($)Yield

(%)Area

(sq. ft.)Investment

($)Yield

(%)Earnouts 14,593 5.5 6.5 17,225 5.0 6.6Developments 13,135 2.7 11.7 45,823 13.8 7.5

27,728 8.2 8.2 63,048 18.8 7.3

Properties Under Development

At September 30, 2015, the fair value of properties under development totalled $738.0 million, compared to $693.4 million at June 30,2015. The net increase of $44.6 million is primarily the result of acquisitions of properties under development of $8.8 million, additional





development costs of $39.6 million (including the Trust's share of investment in associates of $23.6 million), a transfer from investmentproperties to properties under development of $3.7 million, partially offset by a loss on revaluation of $2.4 million and Developmentsand Earnouts transferred to income properties totalling $5.2 million.

Properties under development as at September 30, 2015 and December 31, 2014 comprise the following:

(in thousands of dollars) September 30, 2015 December 31, 2014Earnouts subject to option agreements (1) 93,405 82,263Developments 529,588 184,190Investment in associates 114,993 76,300

737,986 342,753

(1) Earnout development costs during the development period are paid by the Trust and funded through interest bearing secured debt provided by the vendors to the Trust. On completionof the development and the commencement of lease payments by a tenant, the Earnouts will be acquired from the vendors based on predetermined or formula capitalization ratesranging from 5.71% to 8.23%, net of land and development costs incurred. Penguin has contractual options to acquire Trust and LP Units on completion of Earnout Developments asshown in Note 12(b) of the consolidated financial statements for the period ended September 30, 2015.

Potential Future PipelineTotal future Earnouts, Developments and options under Mezzanine Financing could increase the existing Trust portfolio by an additional5.6 million square feet. This includes 0.2 million square feet of a total of 3.0 million square feet of office, retail and residential space(representing the Trust's 50% share) ultimately projected to be developed in VMC pending finalization of the development plan withthe City of Vaughan. In addition to these initiatives, the Trust is currently assessing additional future potential intensification opportunitiesthat may exist in its portfolio.

Of the future pipeline, commitments have been negotiated on 335,000 square feet.

Income Producing(30.8 million sq. ft.)

Remaining Earnouts(1.1 million sq. ft.)

Remaining Developments(3.4 million sq. ft.)

Premium Outlets(0.2 million sq. ft.)

VMC (Phase 1)(0.2 million sq. ft.)

Mezzanine Financing(0.8 million sq. ft.)

Gross Leasable Area of Portfolio(36.5 million sq. ft. upon completion)

(in thousands of square feet) Committed Years 0–3 Beyond Year 3 Total (1)

Earnouts 35 294 736 1,065Developments 72 1,084 2,194 3,350Premium Outlets 165 18 65 248VMC (Phase 1) 63 100 26 189

335 1,496 3,021 4,852Mezzanine Financing — — 781 781

335 1,496 3,802 5,633





(1) The timing of development is based on management's best estimates and can be adjusted based on business conditions.

During the quarter ended September 30, 2015, the future properties under development pipeline increased by 172,000 square feet toa total of 4,852,000 square feet. The change is summarized as follows:

(in thousands of square feet) Total AreaFuture properties under development pipeline – June 30, 2015 4,680Add:

Acquisitions 132Net adjustment to project densities 68

Less:Completion of Earnouts and Developments during the period (28)

Net adjustment 172Future properties under development pipeline – September 30, 2015 4,852

Committed PipelineThe following table summarizes the committed investment by the Trust in properties under development as at September 30, 2015:

(in millions of dollars) Total Cost IncurredFuture Development

CostsEarnouts 12 5 7Developments 21 4 17Premium Outlets 85 81 4

118 90 28VMC (Phase 1) 37 16 21

155 106 49

The completion of these committed Earnouts and Developments as currently scheduled are expected to have an average estimatedyield of 5.8% in 2015 and 7.2% in 2016, which based on the committed lease arrangements with respect to such Earnouts andDevelopments should increase the FFO per Unit by $0.001 in 2015 (for the remaining three months) and an additional $0.009 in 2016(annualized) assuming annualized rents and a 55% debt to equity ratio.

Uncommitted PipelineThe following table summarizes the estimated future investment by the Trust in properties under development; it is expected the futuredevelopment costs will be spent over the next five years and beyond:

(in millions of dollars) Years 0–3 Beyond Year 3 Total Cost Incurred(1)

FutureDevelopment

CostsEarnouts 99 205 304 64 240Developments 320 713 1,033 445 588Premium Outlets 10 6 16 11 5

429 924 1,353 520 833VMC (Phase 1) 58 11 69 32 37

487 935 1,422 552 870

(1) Properties under development as recorded on the consolidated balance sheet totalled $738.0 million (including investment in associates of $115.0 million) which consists of costs of$552.8 million in the uncommitted pipeline, costs of $105.4 million in the committed pipeline, and costs of $120.4 million of future development land in VMC less $40.5 million ofnon-cash development costs relating to future land development and cumulative fair value loss on revaluation of properties under development.

Approximately 20.0% of the properties under development, representing 1.1 million square feet and a gross investment of $316.0million, are lands that are under contract by vendors to develop and lease to third parties for additional proceeds when developed. Incertain events, the developer may sell the portion of undeveloped land to accommodate the construction plan that provides the bestuse of the property. It is management's intention to finance the costs of construction through interim financing or operating facilitiesand, once rental revenue is realized, long-term financing will be negotiated. Of the remaining gross leasable area, it is expected that3.8 million square feet of future space will be developed as the Trust leases space and finances the construction costs except for thefirst phase of VMC which is approximately 40% leased to the anchor tenant.

Investment in Associates

In 2012, the Trust entered into a 50:50 partnership with Penguin to develop VMC, which is expected when fully developed to consistof approximately 6.0 million square feet in total on 53 acres of development land in Vaughan, Ontario. The Trust has determined it





has significant influence over the investment and, accordingly, has accounted for its investment using the equity method of accounting.Should there be any proposed activity that could cause the Trust to violate its real estate investment trust ("REIT") status as certaindevelopments may be prohibited under the specified investment flow-through ("SIFT") trust rules and other circumstances, the Trusthas an option to put certain portions of its interest in the arrangement at fair value and may be required to provide financing to Penguin.

Management considers VMC as part of its normal portfolio and does not distinguish it from its other operations. For the purpose ofthis MD&A, information about VMC has been included in the "Investment Properties", "Debt", "Results of Operations" and "OtherMeasures of Performance" sections, at the Trust's proportionate share.

The first new development by the joint venture is a 360,000 square foot office complex with KPMG as lead tenant, which commencedconstruction in the first quarter of 2014. The site will contain the terminus of the Spadina-York University subway extension. Thesubway station is expected to open in late 2017. On January 19, 2015, the Trust completed development financing of approximately$189.0 million, of which the Trust's share is 50%, which bears an interest rate of banker's acceptance rates plus 1.40%, is secured bya first charge over the property and matures on January 16, 2019. On February 27, 2015, the Trust entered into an agreement to fixthe banker's acceptance rate at 1.48%, which resulted in a fixed effective interest rate of 2.88% locked for the term and extended theloan maturity date to January 16, 2020. The financing comprises pre-development, construction and letters of credit facilities. Theobligations of the credit facilities are joint and several to each of the VMC general partners. As at September 30, 2015, the remainingunused development facility was $157.2 million, of which the Trust's share is 50%.

Mortgages, Loans and Notes Receivable and Interest Income(in thousands of dollars) September 30, 2015 December 31, 2014Mortgages, loans and notes receivable

Mortgages receivable (Mezzanine Financing) 125,432 137,110Loans receivable 51,814 51,814Notes receivable 2,928 2,928

180,174 191,852

Three Months Ended September 30 Nine Months Ended September 30(in thousands of dollars) 2015 2014 2015 2014Interest income

Mortgage and loan interest 2,718 2,331 8,310 7,259Note receivable interest 67 66 197 196Bank interest 91 336 640 854

2,876 2,733 9,147 8,309

Mortgages ReceivableIn addition to direct property acquisitions, the Trust provides mezzanine financing to developers on terms that include an option toacquire an interest in the mortgaged property on substantial completion. As at September 30, 2015, the Trust had total commitmentsof $287.3 million to fund mortgages receivable under this program. Six mortgages have an option entitling the Trust to acquire a 50%interest in the property on substantial completion at an agreed formula. The acquisition options on two of the previous mortgageshave already been exercised in prior years. The properties under the Mezzanine Financing have 0.8 million potential square feet available(discussed in "Potential Future Pipeline").





The details of the mortgages receivable are set out in the following table:

(in thousands of dollars) LoanOutstanding

($)Committed

($) Maturity Date Interest RateOption

(%)

PotentialArea UponExercisingPurchase

Option(sq. ft.)Project

Pitt Meadows, BC (1) 23,274 60,119 December 2017 7.43% 50% 225,303Salmon Arm, BC (2)(3) 15,502 23,264 October 2017 4.29% — —Aurora (South), ON (4) 13,682 34,807 June 2020 6.75% 50% 95,268Caledon (Mayfield), ON 7,908 10,372 December 2016 7.00% 50% 101,865Innisfil, ON (2)(5) 18,146 27,077 December 2020 2.74% — —Mirabel (Shopping Centre), QC (6) — 18,262 December 2022 7.50% — —Mirabel (Option Lands), QC (7) — 5,721 December 2022 7.50% — —Toronto (Eastern), ON (2) 22,859 36,102 December 2017 6.87% 50% 106,915Vaughan (7 & 427), ON(8) 24,061 63,173 December 2020 6.75% 50% 152,525Montreal (Saint-Michel), QC — 8,448 November 2015 6.87% 50% 98,806

125,432 287,345 6.03% 780,682

(1) Monthly variable rate based on a fixed rate of 7.25% on loans outstanding up to $15.0 million and a fixed rate of 7.75% on any additional loans above $15.0 million. (2) The Trust owns a 50% interest. The loan is secured against the remaining 50%. (3) Monthly variable rate based on a fixed rate of 6.35% on loans outstanding up to $7.2 million and the banker's acceptance rate plus 1.75% on any additional loans above $7.2 million. (4) On July 1, 2015, the rate for the outstanding loan balance reset to 6.75% based on the December 2012 agreement. Up to June 30, 2015, the interest rate was based on the 20 day average

Canada Bond Yield plus 4%. Further, the agreement requires the adjusted interest rate to be in the range of 6.75% to 7.75%, otherwise it will adjust up or down accordingly. (5) Monthly variable rate based on the banker's acceptance rate plus 2.00%. (6) The Trust owns a 33.3% interest. The loan is secured against a 33.3% interest owned by one of the joint venture partners. (7) The Trust owns a 25% interest. The loan is secured against a 25% interest owned by one of the joint venture partners. (8) On January 1, 2015, the rate for the outstanding loan balance reset to 6.75% based on the December 2012 agreement. Up to December 31, 2014, the interest rate was based on 7.25%

per annum. Starting January 1, 2015, the interest rate is based on a fixed rate equal to the four-year Canada Bond Yield plus 4% per annum, calculated based on the 20-day averageimmediately preceding December 31, 2014. Further, the agreement requires the adjusted interest rate to be in the range of 6.75% to 7.75%, otherwise it will be adjusted up or downaccordingly.

As at September 30, 2015, mortgages totalling $125.4 million had been advanced to Penguin at a weighted average interest rate of6.03% per annum. During the nine months ended September 30, 2015, including monthly interest accruals, $6.2 million was advancedand $17.9 million was repaid. The mortgages are interest only up to a predetermined maximum with rates ranging from a variable ratebased on the banker's acceptance rate plus 1.75% to 2.00% and at a fixed rate of 6.35% to 7.75%. The mortgages mature on variousdates between 2015 and 2022 with options to extend under certain conditions. The mortgage security includes a first or second chargeon properties, assignments of rents and leases and general security agreements. In addition, $105.6 million of the outstanding balanceis guaranteed by Penguin. The loans are subject to individual loan guarantee agreements that provide additional guarantees for all interestand principal advanced on the extension amounts as of September 30, 2015 for all 10 loans. The guarantees decrease upon achievementof certain specified value-enhancing events.

Assuming that developments are completed as anticipated, and assuming that borrowers repay their mortgages in accordance with theterms of the agreements governing such mortgages, expected repayments of the outstanding balances would be as follows:

(in thousands of dollars)Mortgages

(#)

PrincipalRepayments

($)2016 1 7,9082017 3 61,6352020 3 55,889

7 125,432

Loans ReceivableIncluded in loans receivable is a loan in the amount of $40.3 million, which has been provided pursuant to an agreement with OneREIT(previously known as Retrocom Real Estate Investment Trust). This loan matures on October 30, 2016, is secured by a subordinatecharge on several properties, bears interest at 5.75% during the first year and 6.75% during the second year, and is repayable beforethe maturity date without penalty.





Debt

As at September 30, 2015, indebtedness was $3,878.4 million compared to $3,793.4 million as at June 30, 2015.

(in thousands of dollars) September 30, 2015 June 30, 2015 December 31, 2014Secured debt 2,618,671 2,544,941 1,695,095Unsecured debentures 1,242,648 1,242,206 1,232,618Revolving operating facility — — 17,000Convertible debentures — — 56,987Total before investment in associates 3,861,319 3,787,147 3,001,700Share of debt classified as investment in associates 17,085 6,265 1,421

3,878,404 3,793,412 3,003,121

Secured Debt Secured debt consists of term mortgages, development loans, and conduit and other non-conduit loans. As at September 30, 2015,secured debt was $2,618.7 million, compared to $2,544.9 million as at June 30, 2015.

(in thousands of dollars)Three Months EndedSeptember 30, 2015

Three Months EndedJune 30, 2015

Nine Months EndedSeptember 30, 2015

Balance – beginning of period 2,544,941 1,774,238 1,695,095Borrowings 108,750 289,980 574,858Loans assumed 8,662 636,843 645,505Scheduled amortization (17,402) (15,930) (48,153)Repayments (25,021) (139,440) (245,099)Amortization of acquisition date fair value adjustments, net of

additions (970) (557) (1,877)Financing costs incurred relating to term mortgages, net of

amortization (289) (193) (1,658)Balance – end of period 2,618,671 2,544,941 2,618,671

Secured debt bears interest at a weighted average contractual interest rate of 3.85% (June 30, 2015 – 3.99%) and matures on variousdates from 2016 to 2031. Including acquisition date fair value adjustments, the effective weighted average interest rate on secured debtis 3.83% (June 30, 2015 – 3.97%). The weighted average years to maturity, including the timing for payments of principal amortizationand debt maturing, is 5.6 years (June 30, 2015 – 5.7 years).

During the quarter, the Trust obtained secured loans totalling $108.8 million, with an average term of 6.0 years and a weighted averageinterest rate of 2.76%.

The Trust continues to have access to secured debt due to its strong tenant base and high occupancy levels at mortgage loan levelsranging from 60% to 70% of loan to value. Secured debt maturities remain low for the next several years with no secured debt maturingin the remainder of 2015. If maturing mortgages in 2016 were refinanced at a 10-year rate of 3.35%, annualized FFO would increaseby $0.009 per Unit.

Future principal payments as a percentage of secured debt are as follows:

Payments ofPrincipal

Amortization($ thousands)

Debt MaturingDuring Year

($ thousands)Total

($ thousands)Total

(%)

WeightedAverage

Interest Rate ofMaturing Debt

(%)2015 17,919 — 17,919 0.68 —2016 73,518 154,165 227,683 8.71 4.262017 72,686 243,929 316,615 12.11 3.872018 60,295 334,841 395,136 15.11 4.122019 55,402 341,279 396,681 15.17 2.52Thereafter 250,755 1,010,056 1,260,811 48.22 4.14Total 530,575 2,084,270 2,614,845 100.00 3.85Acquisition date fair value adjustment 11,455Deferred financing costs (7,629)

2,618,671





The debt maturing by type of lender is as follows:

Banks and Other Non-Conduit Loans Conduit Loans Total(in thousands of dollars)

2016 96,818 57,346 154,1642017 199,042 44,888 243,9302018 334,841 — 334,8412019 341,279 — 341,279Thereafter 852,679 157,377 1,010,056

1,824,659 259,611 2,084,270

Unsecured DebenturesIssued and outstanding as at September 30, 2015:

Maturity DateAnnual

Interest Rate

Balance atSeptember 30, 2015

($ thousands)

Balance atDecember 31, 2014

($ thousands)Series B October 12, 2016 5.370% — 150,000Series F February 1, 2019 5.000% 100,000 100,000Series G August 22, 2018 4.700% 90,000 90,000Series H July 27, 2020 4.050% 150,000 150,000Series I May 30, 2023 3.985% 200,000 200,000Series J December 1, 2017 3.385% 150,000 150,000

Series K October 16, 20153-month CDOR (1)

plus 1.38% 100,000 100,000Series L February 11, 2021 3.749% 150,000 150,000Series M July 22, 2022 3.730% 150,000 150,000Series N February 6, 2025 3.556% 160,000 —

1,250,000 1,240,000Less: Deferred financing costs (7,352) (7,382)

1,242,648 1,232,618

(1) Canadian Dealer Offered Rate

On February 6, 2015, the Trust issued $160.0 million (net proceeds including issuance costs – $158.8 million) of 3.556% Series Nsenior unsecured debentures due on February 6, 2025, with semi-annual payments due on February 6 and August 6 each year. Theproceeds were used to redeem the outstanding principal on the 5.37% Series B senior unsecured debentures totalling $150.0 million.

On March 9, 2015, the Trust redeemed $150.0 million aggregate principal amount of 5.37% Series B senior unsecured debentures. Inaddition to paying accrued interest of $3.3 million, the Trust paid a yield maintenance fee of $10.8 million in connection with theredemption of the 5.37% Series B senior unsecured debentures and wrote off unamortized financing costs of $0.2 million.

Dominion Bond Rating Services provides credit ratings of debt securities for commercial issuers that indicate the risk associated witha borrower's capabilities to fulfill its obligations. An investment grade rating must exceed "BB," with the highest rating being "AAA".The Trust's debentures are rated "BBB" with a stable trend as at September 30, 2015.

Operating Facility

Revolving Operating FacilityTotal Facility

($ thousands)

Outstanding atSeptember 30, 2015

($ thousands) Interest Rate MaturityOperating facility(1) 350,000 — Bank's prime rate plus 0.45% or BA plus 1.45% September 30, 2017

(1) The operating facility includes an accordion feature of $150.0 million whereby the Trust can increase its facility amount with the lender to sustain future operations as required.

As at September 30, 2015, there was a total of $17,866 in letters of credit outstanding (December 31, 2014 – $29,749).

Convertible DebenturesOn January 5, 2010, the Trust issued $60.0 million of 5.75% convertible unsecured subordinated debentures ("the 5.75% convertibledebentures") due on June 30, 2017. The 5.75% convertible debentures were convertible at the holder's option at any time into TrustUnits at $25.75 per Unit and could not have been redeemed prior to June 30, 2013. On or after June 30, 2013, but prior to June 30,2015, the 5.75% convertible debentures were redeemable by the Trust, in whole or in part, at a price equal to the principal amount plusaccrued and unpaid interest, provided the weighted average trading price of the Trust's Units for the 20 consecutive trading days, ending





on the fifth trading day immediately preceding the date on which notice of redemption was given, was not less than 125% of theconversion price. After June 30, 2015, the 5.75% convertible debentures were redeemable by the Trust at any time. During the threemonths ended September 30, 2015, $nil of the face value of the 5.75% convertible debentures (three months ended September 30,2014 – $nil) was converted into Trust Units. During the nine months ended September 30, 2015, $56.5 million of the face value of the5.75% convertible debentures (nine months ended September 30, 2014 – $0.03 million) was converted into Trust Units. On May 27,2015, the Trust issued notice of redemption of the 5.75% convertible debentures with an aggregate principal amount outstanding of$55.6 million, to be redeemed on June 30, 2015. The debenture holders had options until June 29, 2015 to convert their debenturesinto Trust Units at a conversion price of $25.75 per Unit. On June 30, 2015, the Trust redeemed the balance of the 5.75% convertibledebentures for $3.3 million in cash. As a result, at September 30, 2015, $nil of the face value of the 5.75% convertible debentures wasoutstanding (December 31, 2014 – $59.8 million).

Financial Covenants

The unsecured operating facility as well as unsecured debentures contain numerous terms and covenants that limit the discretion ofmanagement with respect to certain business matters. These covenants could in certain circumstances place restrictions on, amongother things, the ability of the Trust to create liens or other encumbrances, to pay distributions on its Units or make certain otherpayments, investments, loans and guarantees and to sell or otherwise dispose of assets and merge or consolidate with another entity.

In addition, the operating facility and unsecured debentures contain a number of financial covenants that require the Trust to meetcertain financial ratios and financial condition tests. A failure to comply with the obligations in the operating facility and unsecureddebentures could result in a default, which, if not cured or waived, could result in a reduction or termination of distributions by theTrust and permit acceleration of the relevant indebtedness.

As stipulated by the declaration of trust governing the Trust (the "Declaration of Trust"), the Trust monitors its capital structure basedon the following ratios: interest coverage ratio, debt to gross book value, debt to aggregate assets, and debt to adjusted EBITDA. Theseratios are used by the Trust to manage an acceptable level of leverage and are not considered measures in accordance with IFRS, noris there an equivalent IFRS measure. Those ratios are as follows:

September 30, 2015 June 30, 2015 December 31, 2014Interest coverage ratio 3.1X 2.9X 2.7XDebt to aggregate assets 45.3% 45.4% 42.8%Debt to gross book value (excluding convertible debentures) 52.8% 53.0% 50.5%Debt to gross book value (including convertible debentures) 52.8% 53.0% 51.4%Debt to adjusted EBITDA 8.4X 8.5X 7.4X

The following are the significant financial covenants that the Trust is required by its operating line lenders to maintain: debt to aggregateassets of not more than 65%; secured debt to aggregate assets of not more than 40%; adjusted EBITDA to debt service of not lessthan 1.5 (fixed charge coverage ratio); unencumbered investment properties value to consolidated unsecured debt of not less than 1.4;and Unitholders' equity of not less than $2,000 million.

Those ratios are as follows:

Threshold September 30, 2015 June 30, 2015 December 31, 2014Debt to aggregate assets 65% 45.3% 45.4% 42.8%Secured debt to aggregate assets 40% 30.8% 30.3% 24.7%Fixed charge coverage ratio 1.5X 2.1X 2.0X 1.9XUnencumbered assets to unsecured debt 1.4X 2.0X 1.9X 1.9XUnitholders' equity (in thousands) $2,000,000 $4,440,215 $4,394,342 $3,906,424

The Trust's indentures require its unsecured debentures to maintain debt to gross book value excluding and including convertibledebentures not more than 60% and 65% respectively, interest coverage ratio not less than 1.65 and Unitholders' equity not less than$500 million.





Those ratios are as follows:

Threshold September 30, 2015 June 30, 2015 December 31, 2014Debt to gross book value (excluding convertibledebentures) 60% 52.8% 53.0% 50.5%Debt to gross book value (including convertibledebentures) 65% 52.8% 53.0% 51.4%Interest coverage ratio 1.65X 3.1X 2.9X 2.7XUnitholders' equity (in thousands) $500,000 $4,440,215 $4,394,342 $3,906,424

For the quarter ended September 30, 2015, the Trust was in compliance with the terms and covenants of its operating facility andunsecured debentures.

Unitholders' Equity(number of Units) September 30, 2015 December 31, 2014Trust Units 128,203,292 117,044,978Class B Series 1 LP Units 14,719,803 14,653,414Class B Series 2 LP Units 873,741 873,741Class B Series 3 LP Units 720,432 720,432Class B LP II Units 756,525 756,525Class B Series 4 LP III Units 644,755 611,467Class B Series 5 LP III Units 559,396 555,344Class B Series 6 LP III Units 421,795 421,795Class B Series 7 LP III Units 423,383 366,476Class B Series 8 LP III Units 1,698,018 —Class B Series 1 LP IV Units 3,035,756 —Class B Series 1 Oshawa South LP Units 688,336 —Class B Series 1 Oshawa Taunton LP Units 305,765 —Total Units classified as equity 153,050,997 136,004,172Class D Series 1 LP Units 311,022 311,022Class D Oshawa South LP Units 251,649 —Class D Oshawa Taunton LP Units 104,530 —Total Units classified as liabilities 667,201 311,022Total Units 153,718,198 136,315,194



Year EndedDecember 31, 2014

Unitholders' equity – beginning of the period 4,394,342 3,906,424 3,804,491Issuance of Trust Units, net of issuance cost 11,184 253,609 34,456Issuance of LP Units classified as equity 3,609 168,964 15,995Conversion of convertible debentures — 57,827 25Net income for the period 92,574 227,812 263,708Contributions by other non-controlling interest — — 10Distributions to other non-controlling interest — — (408)Distributions for the period (61,494) (174,421) (211,853)Unitholders' equity – end of the period 4,440,215 4,440,215 3,906,424

In the consolidated financial statements, LP Units classified as equity are presented separately from Trust Units as non-controllinginterests. However, as management views the LP Units (including those classified as a liability) as economically equivalent to the TrustUnits, they have been combined for the purpose of this MD&A.

As at September 30, 2015, equity totalled $4,440.2 million (June 30, 2015 – $4,394.3 million). Trust and LP Unit equity totalled $3,209.0million and Units outstanding, including Class B Series 1, Class B Series 2 and Class B Series 3 LP Units, Class B LP II Units and ClassB LP Series 4, Class B Series 5, Class B Series 6, Class B Series 7 LP III, Class B Series 8 LP IV, Class B Series 1 Oshawa South LPand Class B Series 1 Oshawa Taunton LP, Units of subsidiary partnerships, totalled 153,050,997 Units, which does not include 667,201of Class D Series 1 LP, Class D Series 1 Oshawa South LP and Class D Series 1 Oshawa Taunton LP, Units totalling $20.4 millionclassified as a liability in the consolidated financial statements.





During the quarter ended September 30, 2015, the Trust issued $14.8 million in Units as follows:

TrustUnits

LPUnits

Total Units

Three MonthsEnded

(#) (#) (#) ($ thousands)Options exercised — 124,281 124,281 3,609Distribution reinvestment plan (DRIP) 374,141 — 374,141 11,058Deferred units exchanged for Trust Units 10,000 — 10,000 296

384,141 124,281 508,422 14,963Unit issuance costs (170)Total change in Unit equity 14,793

Distributions declared by the Trust totalled $61.8 million (of which $0.3 million is treated as interest expense) during the three monthsended September 30, 2015 (three months ended September 30, 2014 – $52.7 million of which $0.1 million is treated as interest expense)or $0.400 per Unit (September 30, 2014 – $0.387 per Unit). For the three months ended September 30, 2015, the Trust paid $50.7million in cash and the balance of $11.1 million by issuing 374,141 Trust Units under the distribution reinvestment plan (three monthsended September 30, 2014 – $45.2 million and balance of $7.5 million represented by 284,771 Trust Units, respectively).

Distributions to Unitholders for the three and nine months ended September 30, 2015 compared to September 30, 2014 were asfollows:

Three Months Ended September 30 Nine Months Ended September 30

(in thousands of dollars) 2015 2014 2015 2014Distributions to Unitholders (1) 61,761 52,732 175,793 157,607Distributions reinvested through DRIP (11,058) (7,500) (27,799) (21,520)Net cash outflow from distributions to Unitholders 50,703 45,232 147,994 136,087DRIP as a percentage of distributions to Unitholders 17.9% 14.2% 15.8% 13.7%

(1) Includes distributions on Units classified as liabilities where distributions are treated as interest expense.

Capital Resources and Liquidity

As at September 30, 2015 and June 30, 2015, the Trust had the following capital resources available:

(in thousands of dollars) September 30, 2015 June 30, 2015Cash and cash equivalents 73,853 41,135Unused operating facilities 332,134 333,167

405,987 374,302

On the assumption that occupancy levels remain strong and that the Trust will be able to obtain financing on reasonable terms, theTrust anticipates meeting all current and future obligations. Management expects to finance future acquisitions, including committedEarnouts, Developments, Mezzanine Financing commitments and maturing debt from: (i) existing cash balances; (ii) a mix of mortgagedebt secured by investment properties, operating facilities, issuance of equity, and convertible and unsecured debentures; (iii) repaymentsof mortgages receivable; and (iv) the sale of non-core assets. Cash flow generated from operating activities is the source of liquidityto pay Unit distributions, sustaining capital expenditures and leasing costs.

As at September 30, 2015, the Trust increased its capital resources by $31.7 million, compared to June 30, 2015. The net increase incapital resources is mainly the result of the proceeds from issuance of secured debt of $108.8 million and the proceeds from repaymentsof mortgages and loans receivable of $11.9 million, partially offset by acquisitions and Earnouts of investment properties of $57.3million and repayments of secured debt and other debt of $42.4 million.

The Trust manages its cash flow from operating activities by maintaining a target debt level. The debt to gross book value, as definedin the Declaration of Trust, as at September 30, 2015, is 52.8%, excluding convertible debentures. Including the Trust's capital resourcesas at September 30, 2015, the Trust could invest an additional $811.5 million in new investments and remain at the midpoint of theTrust's target debt to gross book value range of 55% to 60% (excluding convertible debentures).

Future obligations, excluding the development pipeline, total $4,032.1 million, as identified in the following table. Other than contractualmaturity dates, the timing of payment of these obligations is management's best estimate based on assumptions with respect to thetiming of leasing, construction completion, occupancy and Earnout dates at September 30, 2015.





As at September 30, 2015, the timing of the Trust's future obligations is as follows:

(in thousands of dollars) Total 2015 2016 2017 2018 2019 ThereafterSecured debt 2,614,845 17,919 227,683 316,615 395,136 396,681 1,260,811Unsecured debentures 1,250,000 100,000 — 150,000 90,000 100,000 810,000Mortgage receivable advances (1) 161,914 23,613 37,108 21,442 5,498 5,865 68,388Development obligations 5,309 5,309 — — — — —

4,032,068 146,841 264,791 488,057 490,634 502,546 2,139,199

(1) Mortgages receivable of $125.4 million at September 30, 2015, and further forecasted commitments of $161.9 million, mature over a period extending to 2022 if the Trust does notexercise its option to acquire the investment properties. Refer to the "Mortgages, Loans and Notes Receivable" section for timing of principal repayments.

It is management's intention to either repay or refinance $154.2 million of maturing secured debt in 2016. Potential upfinancing onmaturing debt using a 65% loan to value and a 6.25% capitalization rate amounts to $84.7 million in 2016. In addition, the Trust hasan unencumbered asset pool, with an approximate fair value totalling $2,518.8 million (including undeveloped lands of $57.2 million),which can generate gross financing proceeds on income properties of approximately $1,600.0 million using a 65% loan to value. The unsecured debentures, construction loan repayments, mortgage receivable advances and development obligations will be fundedby additional term mortgages, net proceeds on the sale of non-core assets, existing cash or operating lines, the issuance of convertibleand unsecured debentures, and equity Units, if necessary.

The Trust's potential development pipeline of $1,577.0 million consists of $316.0 million in Earnouts and $1,261.0 million inDevelopments. Costs totalling $658.0 million have been incurred to date with a further $919.0 million still to be funded. The futurefunding includes $247.0 million for Earnouts that will be paid once a lease has been executed and construction of the space commenced.The remaining $672.0 million of development will proceed once the Trust has an executed lease and financing in place. Managementexpects this pipeline to be developed over the next three to five years.

Results of Operations

The Trust's real estate portfolio has grown through acquisitions, completed developments and Earnouts during the course of the pastyear resulting in increases in operating results for the quarter ended September 30, 2015, compared to the quarter ended September 30,2014.

Quarterly Comparison to Prior YearRentals from investment properties for the three months ended September 30, 2015 totalled $172.9 million, a $25.7 million or 17.5%increase over the three months ended September 30, 2014. Base rent increased by $16.0 million or 15.9%, primarily due to rent increasesfrom new and renewing tenants, acquisitions, Earnouts and completed developments that occurred during 2014 and 2015. Propertyoperating costs recovered increased by $8.7 million or 19.3% due to the related increases in recoverable costs with the growth in theportfolio.

The Trust recovered 99.9% of total recoverable expenses during the three months ended September 30, 2015, compared to 97.8% inthe same period last year. Non-recovery of most of the remaining costs results from fixed recovery rates for some tenants and restrictionscontained in certain anchor tenant leases. In comparison to the same period of 2014, NOI increased by $17.2 million or 17.4% in 2015,primarily as a result of the growth of the portfolio due to acquisitions, Earnouts and completed developments.



Base rent 116,290 100,308Property operating cost recoveries 54,018 45,296Miscellaneous revenue 2,566 1,902Rentals from investment properties (1) 172,874 147,506Service and other revenues 3,318 343Recoverable costs (54,071) (46,335)Other expenses (3,288) (344)Property management fees and costs (1,914) (1,256)Non-recoverable costs (689) (840)Total property specific costs (1) (56,644) (48,432)NOI 116,230 99,074

NOI as a percentage of base rent 99.9% 98.8%NOI as a percentage of rentals from investment properties 67.2% 67.2%Recovery ratio 99.9% 97.8%





(1) Includes the Trust's share of rentals from investment in associates of $0.4 million (three months ended September 30, 2014 - $0.4 million) and property specific costs from investmentin associates of $0.2 million (three months ended September 30, 2014 - $0.1 million).

Year-to-Date Comparison to Prior YearRentals from investment properties for the nine months ended September 30, 2015 totalled $492.2 million, a $38.0 million or 8.4%increase over the nine months ended September 30, 2014. Base rent increased by $23.3 million or 7.8%, primarily due to rent increasesfrom new and renewing tenants, acquisitions, Earnouts and completed developments that occurred during 2014 and 2015. Propertyoperating costs recovered increased by $12.8 million or 8.7% due to the related increases in recoverable costs with the growth in theportfolio.

The Trust recovered 98.8% of total recoverable expenses during the nine months ended September 30, 2015, compared to 97.7% inthe same period last year. Non-recovery of most of the remaining costs results from fixed recovery rates for some tenants and restrictionscontained in certain anchor tenant leases. In comparison to the same period of 2014, NOI increased by $25.8 million or 8.7% in 2015,primarily as a result of the growth of the portfolio due to acquisitions, Earnouts and completed developments.

(in thousands of dollars)Nine Months EndedSeptember 30, 2015


Base rent 323,145 299,836Property operating cost recoveries 159,889 147,058Miscellaneous revenue 9,204 7,343Rentals from investment properties (1) 492,238 454,237Service and other revenues 5,209 1,199Recoverable costs (161,863) (150,459)Other expenses (5,170) (1,200)Property management fees and costs (4,118) (3,215)Non-recoverable costs (2,429) (2,460)Total property specific costs (1) (168,371) (156,135)NOI 323,867 298,102

NOI as a percentage of base rent 100.2% 99.4%NOI as a percentage of rentals from investment properties 65.8% 65.6%Recovery ratio 98.8% 97.7%

(1) Includes the Trust's share of rentals from investment in associates of $1.3 million (nine months ended September 30, 2014 - $1.3 million) and property specific costs from investmentin associates of $0.5 million (nine months ended September 30, 2014 - $0.4 million).

The Trust's portfolio is located across Canada with properties in each of the provinces, with 74.4% of the gross revenue of the portfolioin Ontario and Quebec, primarily in the Greater Toronto and Montreal areas.





1 - Ontario - 60.8%

2 - Quebec - 13.6%

3 - British Columbia - 9.3%

4 - Manitoba - 3.8%

5 - Saskatchewan - 3.6%

6 - Alberta - 3.6%

7 - Newfoundland andLabrador - 3.0%

8 - Nova Scotia - 1.0%

9 - New Brunswick - 0.8%

10 - Prince EdwardIsland - 0.5%

Gross Revenue by Province

The 10 largest tenants (by gross rental revenue) account for 50.4% of portfolio revenue as follows:

TenantNumber of

StoresRental Revenue (1)

($ millions)

Percentage ofTotal Rental

RevenueArea

(sq. ft.)

Percentage ofTotal Gross

Leasable Area1 Walmart (2) 94 185.6 27.3% 13,242,079 43.0%2 Canadian Tire, Mark's and FGL Sports 69 32.6 4.8% 1,262,670 4.1%3 Winners, Homesense and Marshalls 42 24.8 3.7% 1,117,987 3.6%4 Reitmans 109 17.1 2.5% 580,664 1.9%5 Best Buy 28 16.7 2.5% 640,610 2.1%6 Loblaws and Shoppers Drug Mart 19 15.7 2.3% 710,484 2.3%7 Sobeys 15 15.2 2.2% 660,509 2.1%8 RONA 7 13.8 2.0% 734,668 2.4%9 Michaels 24 11.1 1.6% 459,589 1.5%10 Staples 23 10.0 1.5% 493,911 1.6%

430 343 50.4% 19,903,171 64.6%

(1) Annualized as at September 30, 2015.(2) The Trust has a total of 94 Walmarts under lease, of which 88 are Supercentres. The Trust has 14 centres with Walmart as shadow anchors, of which 11 are Supercentres.





Walmart - 27.3%

Top 2-10 Retailers - 23.1%

Top 11-25 Retailers - 14.7%

Other National Retailers -27.2%

Regional Retailers - 2.9%

Local Tenants - 4.8%

Gross Rental Revenue by Tenant

Net Operating Income (NOI)

NOI from continuing operations is defined as rentals from investment properties less property operating costs net of service and otherrevenues. Disclosing NOI contribution from each of same properties, acquisitions, dispositions, Earnouts and Development activitieshighlights the impact each component has on aggregate NOI. Straight-lining of rent and other adjustments have been excluded fromNOI attributed to same properties, acquisitions, dispositions, Earnouts and Development activities in the table below to highlight theimpact of growth in occupancy, rent, uplift and productivity.

The same properties' NOI for the three months ended September 30, 2015 increased by 1.2% or $1.1 million over the same periodlast year primarily due to net lease-up of vacant space, rent increases in renewing tenants and step-ups in existing leases offset by higherbad debt expense. In addition, NOI before adjustments increased by 16.7% or $16.7 million during the three months ended September 30,2015 from $99.8 million during the three months ended September 30, 2014. The increase was primarily due to same properties' NOIgrowth of $1.1 million, acquisitions net of dispositions of $14.0 million and Earnouts and Developments completed during the yearof $1.5 million.



Same properties 97,011 95,862Acquisitions 15,965 198Dispositions — 1,731Earnouts and Developments 3,537 2,038NOI before adjustments 116,513 99,829Amortization of tenant incentives (1,390) (1,162)Lease termination and other adjustments 805 52Straight-lining of rents 302 355NOI 116,230 99,074

The same properties' NOI for the nine months ended September 30, 2015 increased by 1.1% or $3.1 million over the same period lastyear primarily due to net lease-up of vacant space, rent increases in renewing tenants and step-ups in existing leases offset by higherbad debt expense. In addition, NOI before adjustments increased by 8.3% or $24.6 million to $321.2 million during the nine monthsended September 30, 2015 from $296.6 million during the nine months ended September 30, 2014. The increase was primarily due tosame properties NOI growth of $3.1 million, acquisitions net of dispositions of $17.6 million and Earnouts and Developmentscompleted during the year of $3.8 million. Management's estimate of the annual property run-rate NOI (excluding the impact of





straight-line rent and other adjustments) at September 30, 2015 is $462.6 million. Assuming a 1.2% same property NOI growth over2015 and 2016, FFO is forecasted to increase by $0.009 and $0.036 per Unit, respectively. "Same properties" in the table below referto those income properties that were owned by the Trust on October 1, 2014, and throughout 2014 to September 30, 2015.

(in thousands of dollars)Nine Months EndedSeptember 30, 2015


Same properties 286,250 283,126Acquisitions 23,647 199Dispositions — 5,827Earnouts and Developments 11,266 7,446NOI before adjustments 321,163 296,598Amortization of tenant incentives (4,065) (3,392)Lease termination and other adjustments 5,173 3,010Straight-lining of rents 1,596 1,886NOI 323,867 298,102

Leasing Activities and Lease Expiries

Leasing ActivitiesDespite the many challenges that face the retail industry, the Trust finished the third quarter with a slightly improved occupancy rateof 98.7% up from 98.6% in the second quarter. The demand for space was strong with approximately 104,000 square feet of spaceleased up during the quarter for occupancy in the latter half of the year. This solid performance is a reflection of the Trust’s highquality portfolio of shopping centres that is relatively new in age, conveniently located, and mostly anchored by Walmart. While somemoderate market turmoil can be expected to continue, the Trust will continue building on its strong relationships with tenants toproactively deal with leasing risk where it presents itself.

2015 Lease ExpiriesTenant retention continues to be a core objective for the Trust and leases maturing in 2015 were 75% renewed at quarter end. Oncompleted deals the increase in rent over the previous in place rents was 6.2%. Progress on 2016 lease maturities is also advancing wellwith 43% of such leases already being renewed.

Lease expiries for the total portfolio are as follows:

Area AreaAnnualized Base Rent

Average Base Rent psf (1)

Year of Expiry (sq. ft.) (%) ($000s) ($)Month-to-month and holdovers 247,848 0.8% 4,696 18.952015 180,925 0.6% 3,166 17.502016 1,367,456 4.4% 25,619 18.732017 1,849,357 6.0% 36,326 19.642018 2,302,521 7.5% 48,961 21.262019 3,058,446 9.9% 47,316 15.472020 3,054,879 9.9% 44,864 14.69Beyond 18,293,444 59.6% 247,070 13.51Vacant 406,517 1.3% — —Total 30,761,393 100.0% 458,018 15.09

(1) The total average base rent per square foot excludes vacant space of 406,517 square feet.





Lease expiries for the portfolio, excluding anchor tenants(1), are as follows:

Area AreaAnnualized Base Rent

Average Base Rent psf (2)

Year of Expiry (sq. ft.) (%) ($000s) ($)Month-to-month and holdovers 182,651 0.6% 3,522 19.292015 180,925 0.6% 3,166 17.502016 1,056,273 3.4% 21,682 20.532017 1,376,996 4.5% 29,864 21.692018 1,801,461 5.9% 41,362 22.962019 1,597,973 5.2% 35,071 21.952020 1,339,065 4.4% 28,652 21.40Beyond 4,276,455 13.9% 92,906 21.73Vacant 406,517 1.3% — —Total 12,218,316 39.8% 256,225 21.69

(1) An anchor tenant is defined as any tenant with leasable area greater than 30,000 square feet.(2) The total average base rent per square foot excludes vacant space of 406,517 square feet.

Anchor Non-Anchor

Lease Expiries(in millions of square feet)

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

MTMVaca

nt20

1520

1620

1720

1820

1920

2020

2120

2220

2320

2420

2520

2620

2720

2820

2920

30

Beyond

General and Administrative

For the quarter ended September 30, 2015, general and administrative costs totalled $5.7 million, which represents a $3.2 million increasefrom the same period in 2014. The increase of $3.2 million is primarily due to an increase in salaries and benefits of $6.4 million andan increase in Long Term Incentive Plan ("LTIP") expense of $0.5 million in part reflecting the performance of the Trust’s Unit pricerelative to the S&P/TSX Capped REIT index as part of the Trust’s "pay for performance" initiative, partially offset by an increase inexpenses allocated to property operating costs, capitalized to properties under development and charged back to Penguin and thirdparties of $4.5 million. General and administrative costs as a percentage of rental revenue for the three months ended September 30,2015 totalled 3.3% (three months ended September 30, 2014 – 1.8%).





Three Months Ended September 30 Nine Months Ended September 30(in thousands of dollars) 2015 2014 2015 2014Salaries and benefits 10,340 3,324 20,912 10,244Professional fees 418 603 1,374 1,721Public company costs 221 289 1,027 961Rent and occupancy 638 312 1,125 866Other 1,383 830 3,032 2,127

13,000 5,358 27,470 15,919Allocated to property operating costs (2,966) (2,430) (7,575) (6,760)Capitalized to properties under development (1,008) — (1,672) (98)Charged back to Penguin and third parties (3,288) (344) (5,170) (1,200)General and administrative costs 5,738 2,584 13,053 7,861As a percentage of rental revenue 3.3% 1.8% 2.7% 1.7%

Interest Expense

Interest expense incurred during the quarter ended September 30, 2015 totalled $32.2 million. Excluding distributions classified asliabilities, interest expense decreased by $2.6 million for the quarter ended September 30, 2015 compared to the same period in 2014.The decrease is primarily due both to the refinancing of term mortgages and the replacement of existing unsecured debentures atlower interest rates.

Three Months Ended September 30 Nine Months Ended September 30(in thousands of dollars) 2015 2014 2015 2014Interest at stated rate 37,911 36,663 109,009 110,570Yield maintenance on redemption of unsecured debentures — — 10,810 13,367Amortization of acquisition date fair value adjustments (973) (377) (1,880) (1,166)Accretion of convertible debentures — 182 354 536Amortization of deferred financing costs 798 964 3,544 3,389

37,736 37,432 121,837 126,696Less: Interest capitalized to properties under development (6,045) (3,145) (13,166) (9,098)Interest expense excluding distributions classified as liabilities 31,691 34,287 108,671 117,598Distributions on vested deferred units classified as liabilities 259 255 756 754Distributions relating to LP Units classified as liabilities 267 120 563 361Total interest expense 32,217 34,662 109,990 118,713Weighted average interest rate (inclusive of acquisition date fair

value adjustment) 4.17% 4.76% 4.21% 4.78%

Other Measures of Performance

The following are measures sometimes used by Canadian real estate income trusts ("REITs") as indicators of financial performance.Management uses these measures to analyze operating performance. Because one of the factors that may be considered relevant byprospective investors is the cash distributed by the Trust relative to the price of the Units, management believes these measures are auseful supplemental measure that may assist prospective investors in assessing an investment in Units. The Trust analyzes its cashdistributions against these measures to assess the stability of the monthly cash distributions to Unitholders. Because these measuresare not standardized as prescribed by IFRS, they may not be comparable to similar measures presented by other trusts. These measuresare not intended to represent operating profits for the period nor should they be viewed as an alternative to net income, cash flowfrom operating activities or other measures of financial performance calculated in accordance with IFRS. The calculations are derivedfrom the consolidated financial statements for the quarter ended September 30, 2015, unless otherwise stated, do not include anyassumptions, do not include any forward-looking information and are consistent with prior reporting periods.

Funds From Operations ("FFO")While FFO does not have a standardized meaning prescribed by IFRS, it is a non-IFRS financial measure of operating performancewidely used by the real estate industry. The Real Property Association of Canada ("REALpac") recommends that FFO be determinedby reconciling from net income.

For the three months ended September 30, 2015, FFO increased by $17.4 million or 26.2% to $83.9 million and by 10.2% to $0.54 ona per Unit basis compared to the same quarter of 2014 (three months ended September 30, 2014 – $66.4 million). The increase inFFO of $17.4 million was primarily due to an increase in NOI net of tenant incentive amortization of $17.6 million, a decrease ininterest expense net of yield maintenance on redemption of unsecured debentures and related write-off of unamortized financing





costs of $2.5 million, an increase in interest income of $0.2 million, and an increase in indirect interest with respect to the developmentportion of investment in associates of $0.2 million, partially offset by an increase in general and administrative expenses of $2.5 million.

Adjusted Funds From Operations ("AFFO")Since FFO does not consider capital transactions, AFFO is presented herein as an alternative measure of determining available cashflow. AFFO is not defined by IFRS. For the three months ended September 30, 2015, AFFO increased by $16.6 million or 26.4% to$79.7 million and by 13.0% to $0.52 on a per Unit basis compared to the same quarter of 2014 (three months ended September 30,2014 – $63.0 million). The increase in AFFO of $16.6 million was primarily due to an increase in NOI net of tenant incentive amortizationand straight-lining of rents of $17.6 million, a decrease in interest expense net of yield maintenance on redemption of unsecureddebentures and related write-off of unamortized financing costs of $2.5 million, an increase in interest income of $0.2 million, andan increase in indirect interest with respect to the development portion of investment in associates of $0.2 million, partially offset byan increase in general and administrative expenses of $2.5 million, and an increase in sustaining capital expenditures and leasing costsof $0.7 million.

Weighted Average Number of UnitsThe weighted average number of Trust and LP Units is included in calculating the Trust's FFO and AFFO per Unit. Diluted FFO andAFFO per Unit are adjusted for the dilutive effect of the convertible debentures, vested Earnout options and vested portion of deferredunits, unless they are anti-dilutive. To calculate diluted FFO and AFFO per Unit for the three and nine months ended September 30,2015, vested deferred units and convertible debentures are added back to the weighted average Units outstanding, because they aredilutive. There were no vested Earnout options outstanding as at September 30, 2015 and September 30, 2014.

The following table sets forth the weighted average number of Units outstanding for the purpose of FFO and AFFO per Unitcalculations in this MD&A:

Three Months Ended September 30 Nine Months Ended September 30(number of Units) 2015 2014 2015 2014Trust Units 128,009,885 116,633,395 122,019,667 116,281,092Class B LP Units 16,295,458 16,213,528 16,285,040 16,146,191Class D LP Units 311,022 311,022 311,022 311,022Class B LP II Units 756,525 756,525 756,525 756,525Class B LP III Units 3,661,382 1,658,389 2,741,603 1,598,231Class B LP IV Units 3,020,929 — 1,394,234 —Class B Oshawa South LP Units 688,336 — 317,694 —Class D Oshawa South LP Units 251,649 — 116,146 —Class B Oshawa Taunton LP Units 305,765 — 141,122 —Class D Oshawa Taunton LP Units 104,530 — 48,244 —Basic 153,405,481 135,572,859 144,131,297 135,093,061Vested deferred units 648,837 662,620 631,808 646,045Convertible debentures — 2,321,130 1,433,800 2,321,634Diluted 154,054,318 138,556,609 146,196,905 138,060,740





Reconciliation of FFO and AFFOThe analysis below shows a reconciliation of the Trust's net income to FFO and AFFO for the three months ended September 30,2015 and September 30, 2014:

(in thousands of dollars, except per Unit amounts)Three Months EndedSeptember 30, 2015


Increase/(Decrease)

Net income and comprehensive income 92,574 82,750 9,824Add (deduct):

Change in fair value of investment properties (7,484) (15,582) 8,098Change in fair value of financial instruments (1,922) (2,607) 685Tenant incentive amortization 1,390 1,162 228Distributions on LP Units and vested deferred units recorded as

interest expense 526 375 151Salaries and related costs attributed to leasing activities(1) 283 — 283Adjustments relating to investment in associates:

Indirect interest with respect to development portion(2) 541 360 181Change in fair value of investment properties (2,027) (11) (2,016)

FFO 83,881 66,447 17,434Add (deduct):

Accretion on convertible debentures — 182 (182)Straight-lining of rents (305) (353) 48Sustaining capital expenditures (2,871) (1,759) (1,112)Leasing costs (1,050) (1,491) 441

AFFO 79,655 63,026 16,629

Per Unit – basic/diluted(3):

FFO $0.55/$0.54 $0.49/$0.49 $0.06/$0.05AFFO $0.52/$0.52 $0.46/$0.46 $0.06/$0.06

Payout Ratio:FFO 74.1% 79.5% -5.4%AFFO 76.9% 83.9% -7.0%

(1) Internal expenses for leasing, primarily salaries, of $0.3 million were incurred in the three months ended September 30, 2015 and were eligible to be added back to FFO based on therevision to the definition of FFO, in the REALpac white paper published in April 2014 that provided for an adjustment to incremental leasing expenses for the cost of salaried staff.This adjustment to FFO made results more comparable between real estate entities that expensed their internal leasing departments and those that capitalized external leasing expenses.

(2) Indirect interest is not capitalized to properties under development of investment in associates under IFRS but is a permitted adjustment under REALpac's definition of FFO. Theamount is based on the total cost incurred with respect to development portion of investment in associates multiplied by the Trust's weighted average cost of capital.

(3) Diluted FFO and AFFO are adjusted for the dilutive effect of vested deferred units and convertible debentures, which are not dilutive for net income purposes. To calculate diluted FFOand FFO excluding adjustments for the three months ended September 30, 2015, convertible debenture interest of $0.0 million and accretion expense of $0.0 million are added back tonet income and 648,837 Units are added back to the weighted average Units outstanding (three months ended September 30, 2014 – convertible debenture interest of $0.9 million andaccretion expense of $0.2 million, and 2,983,750 Units, respectively). To calculate diluted AFFO for the three months ended September 30, 2015, convertible debenture interest of $0.0million is added back to net income and 648,837 Units are added back to the weighted average Units outstanding (three months ended September 30, 2014 – $0.9 million and 2,983,750Units, respectively).





The analysis below shows a reconciliation of the Trust's net income to FFO and AFFO for the nine months ended September 30,2015 and September 30, 2014:

(in thousands of dollars, except per Unit amounts)Nine Months EndedSeptember 30, 2015


Increase/(Decrease)

Net income and comprehensive income 227,812 202,530 25,282Add (deduct):

Change in fair value of investment properties (16,764) (24,098) 7,334Change in fair value of financial instruments (157) 3,405 (3,562)Loss on sale of investment properties 34 39 (5)Tenant incentive amortization 4,065 3,392 673Distributions on LP Units and vested deferred units recorded as

interest expense 1,319 1,115 204Salaries and related costs attributed to leasing activities(1) 583 — 583Adjustments relating to investment in associates:

Indirect interest with respect to development portion(2) 1,645 966 679Change in fair value of investment properties (2,004) (2,079) 75

Acquisition costs(3) 1,018 — 1,018FFO before adjustments 217,551 185,270 32,281Yield maintenance on redemption of unsecured debentures and

related write-off of unamortized financing costs(4) 11,023 13,824 (2,801)Write-off of unamortized financing costs on redemption of

convertible debentures 588 — 588FFO excluding adjustments 229,162 199,094 30,068Add (deduct):

Accretion on convertible debentures 354 536 (182)Straight-lining of rents (1,596) (1,880) 284Sustaining capital expenditures (8,613) (5,277) (3,336)Leasing costs (3,150) (4,473) 1,323

AFFO 216,157 188,000 28,157

Per Unit – basic/diluted (5):

FFO $1.51/$1.50 $1.37/$1.36 $0.14/$0.14FFO excluding adjustments $1.59/$1.58 $1.47/$1.46 $0.12/$0.12AFFO $1.50/$1.49 $1.39/$1.38 $0.11/$0.11

Payout Ratio:FFO 80.1% 85.1% -5.0%FFO excluding adjustments 76.0% 79.2% -3.2%AFFO 80.6% 84.1% -3.5%

(1) Internal expenses for leasing, primarily salaries, of $0.6 million were incurred in the nine months ended September 30, 2015 and were eligible to be added back to FFO based on therevision to the definition of FFO, in the Real Property Association of Canada white paper published in April 2014 that provided for an adjustment to incremental leasing expenses forthe cost of salaried staff. This adjustment to FFO made results more comparable between real estate entities that expensed their internal leasing departments and those that capitalizedthe expenses.

(2) Indirect interest is not capitalized to properties under development of investment in associates under IFRS but is a permitted adjustment under REALpac's definition of FFO. Theamount is based on the total cost incurred with respect to development portion of investment in associates multiplied by the Trust's weighted average cost of capital.

(3) Acquisition costs relate to the costs associated with the acquisition of the Penguin platform and brand acquisition (see the "Transaction" section).(4) September 30, 2015 includes $10.8 million of yield maintenance costs and $0.2 million of accelerated amortization of deferred financing costs (nine months ended September 30, 2014

includes $13.3 million of yield maintenance costs and $0.5 million of accelerated amortization of deferred financing costs).(5) Diluted FFO and AFFO are adjusted for the dilutive effect of vested deferred units and convertible debentures, which are not dilutive for net income purposes. To calculate diluted FFO

and FFO excluding adjustments for the nine months ended September 30, 2015, convertible debenture interest of $1.6 million and accretion expense of $0.4 million are added back tonet income and 2,065,608 Units are added back to the weighted average Units outstanding (nine months ended September 30, 2014 – convertible debenture interest of $2.6 million andaccretion expense of $0.5 million, and 2,967,679 Units, respectively). To calculate diluted AFFO for the nine months ended September 30, 2015, convertible debenture interest of $1.6million is added back to net income and 2,065,608 Units are added back to the weighted average Units outstanding (nine months ended September 30, 2014 – $2.6 million and 2,967,679Units, respectively).

In any given period, the distributions declared may differ from cash provided by operating activities, primarily due to seasonal fluctuationsin non-cash operating items (amounts receivable, prepaid expenses, deposits, accounts payable and accrued liabilities). These seasonalor short-term fluctuations are funded, if necessary, by the revolving operating facility. In addition, the distributions declared include acomponent funded by the DRIP. Management anticipates that distributions declared will, in the foreseeable future, continue to varyfrom net income because net income includes fair value adjustments to investment properties, fair value changes in financial instruments,and other adjustments, and also because distributions are determined based on non-IFRS cash flow measures, which includeconsideration of the maintenance of productive capacity. Management will continue to assess the sustainability of cash and non-cashdistributions in each financial reporting period.





For the nine months ended September 30, 2015, AFFO exceeded cash provided by operating activities by $31.1 million, which isprimarily due to the redemption of deferred units of $6.0 million, and the changes in other non-cash operating items of $31.4 million,partially offset by deferred unit compensation expense of $1.8 million and Long Term Incentive Plan expense of $1.9 million.

Management determines the Trust's Unit cash distribution rate by, among other considerations, its assessment of cash flow as determinedusing certain non-IFRS measures. As such, management feels the cash distributions are not an economic return of capital, but adistribution of sustainable cash flow from operations. Management targets a payout ratio of approximately 82% to 87% of AFFO,which allows for any unforeseen expenditures for the maintenance of productive capacity. Based on current facts and assumptions,management does not anticipate cash distributions will be reduced or suspended in the foreseeable future. The AFFO payout ratio forthe three and nine months ended September 30, 2015 was 76.9% and 80.6%, respectively (years ended December 31, 2014 – 84.7%;December 31, 2013 – 88.6%).





Cash provided by operating activities 81,686 185,051 237,636 238,452Net income and comprehensive income 92,574 227,812 263,708 316,623Distributions declared 61,761 175,793 212,339 207,108Distributions paid 50,638 145,675 183,084 180,217AFFO 79,655 216,157 251,474 234,226

Surplus of AFFO over distributions declared 17,894 40,364 39,135 27,118Surplus of AFFO over distributions paid 29,017 70,482 68,390 54,009

Surplus of cash provided by operatingactivities over distributions declared 19,925 9,258 25,297 31,344

Surplus of cash provided by operatingactivities over distributions paid 31,048 39,376 54,552 58,235

Surplus (shortfall) of cash provided byoperating activities over AFFO 2,031 (31,106) (13,838) 4,226

Surplus of net income and comprehensiveincome over distributions declared 30,813 52,019 51,369 109,515

Quarterly Information

(in thousands of dollars, except Unit and per Unit amounts)

Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q42015 2015 2015 2014 2014 2014 2014 2013

Rental from investment properties (1) 172,874 160,663 158,701 154,142 147,849 147,506 157,992 151,812NOI (1) 116,230 105,922 101,715 97,830 99,074 99,074 100,216 97,456

Net income and comprehensive income 92,574 79,991 55,247 61,178 82,750 62,888 56,892 31,783FFO 83,881 73,539 60,085 64,442 66,447 61,923 56,900 63,769Per Unit

Basic $0.55 $0.52 $0.44 $0.47 $0.49 $0.46 $0.42 $0.48Diluted (2) $0.54 $0.51 $0.44 $0.47 $0.49 $0.46 $0.42 $0.47

FFO excluding adjustments (3) 83,881 74,127 71,107 65,789 66,447 66,286 66,361 63,769Per Unit

Basic $0.55 $0.52 $0.52 $0.48 $0.49 $0.49 $0.49 $0.48Diluted (2) $0.54 $0.52 $0.52 $0.48 $0.49 $0.49 $0.49 $0.47

AFFO (4) 79,655 69,830 66,625 63,474 63,026 62,553 62,421 60,854Per Unit

Basic $0.52 $0.49 $0.49 $0.47 $0.47 $0.46 $0.46 $0.45Diluted (2) $0.52 $0.49 $0.48 $0.46 $0.46 $0.46 $0.46 $0.45

Cash provided by operating activities 81,686 53,881 49,484 88,764 47,240 55,251 46,381 57,794Distributions declared 61,761 59,124 54,908 54,732 52,732 52,514 52,361 52,153Units outstanding (5) 153,718,198 153,209,776 136,739,722 136,315,194 136,030,604 135,321,366 134,916,952 134,381,155Weighted average Units outstanding

Basic 153,405,481 142,266,459 136,536,536 135,363,993 135,572,859 135,124,748 134,570,559 134,073,020Diluted (2) 154,054,318 144,987,357 139,387,830 138,338,422 138,556,609 138,099,587 137,522,028 136,966,760

Total assets 8,530,967 8,409,460 7,197,619 7,107,403 7,157,228 7,049,956 7,017,315 7,069,889Total debt 3,878,404 3,793,412 3,072,520 3,003,121 3,075,422 2,998,426 2,999,902 3,068,705





(1) Includes the Trust's share of earnings from investment in associates.(2) Diluted AFFO and FFO are adjusted for the dilutive effect of the convertible debentures, vested Earnout options and vested portion of deferred units, unless they are anti-dilutive.(3) March 31, 2015 excludes the yield maintenance on redemption of unsecured debentures and related write-off of unamortized financing costs ($11.0 million). December 31, 2014 excludes

the adjustment for CFO transition costs ($0.9 million). June 30, 2014 excludes yield maintenance fee paid and write-off of unamortized transaction costs upon redemption of seniorunsecured debentures ($4.3 million). March 31, 2014 excludes the yield maintenance fee paid and write-off of unamortized transaction costs upon redemption of senior unsecureddebentures ($9.5 million). June 30, 2013 excludes the yield maintenance fee paid and write-off of unamortized transaction costs upon redemption of senior unsecured debentures ($4.3million) and legal and consulting costs paid as a result of the Trust's CEO transition ($0.1 million). March 31, 2013 excludes the adjustment for CEO transition costs ($0.6 million).

(4) A normalized level of sustaining capital expenditures and leasing costs is used in the first three quarters of 2015, and in the first three quarters of 2014, adjusted to actual in the fourthquarter.

(5) Total units outstanding include Trust Units and LP Units, including LP Units classified as financial liabilities.

Related Party (see also the "Transaction" section)

Pursuant to the Declaration of Trust in effect at the time of the Trust's last annual general and special meeting of the Unitholders heldon May 26, 2015 (the "Meeting"), Penguin was entitled to have a minimum of 25.0% of the votes eligible to be cast at such meeting(the "Voting Top Up Right"). As a result, the Trust issued 6,768,974 Special Voting Units of the Trust ("Special Voting Units") toincrease Penguin's voting rights to 25% in advance of the Meeting. These Special Voting Units are not entitled to any interest or sharein the distributions or net assets of the Trust, nor are they convertible into any securities of the Trust. Pursuant to the Voting Top UpRight, the total number of Special Voting Units is adjusted for each meeting of the Unitholders based on changes in Penguin's ownershipinterest. There is no value assigned to the Special Voting Units. In connection with the Transaction, the Voting Top Up Right wasextended for an additional five years provided that Penguin meets certain ownership thresholds in any given 365 day period duringsuch five years ("the Voting Top Up Right Extension"). The Voting Top Up Right Extension, together with related amendments tothe Declaration of Trust, was approved by a majority of minority Unitholders (i.e. Unitholders other than Penguin) at the Meeting. Asa result of the Voting Top Up Right Extension, and at the request of the TSX, the Trust also re-designated its trust units as “VariableVoting Units” effective July 8, 2015. Such designation will cease on the termination of the Voting Top Up Right in 2020. The VotingTop Up Right is more particularly described in the Trust’s management information circular dated April 27, 2015, which is filed onSEDAR, and is also summarized under "The Transaction". As at September 30, 2015, Penguin owned 22.7% of the aggregate issuedand outstanding Trust Units and 4,285,399 Special Voting Units. The 22.7% ownership would increase to 27.4% if Penguin exercisedall remaining options to purchase Units pursuant to existing development and exchange agreements. In addition, the Trust has enteredinto property management, leasing, development and exchange agreements, and co-ownership agreements with Penguin. Pursuant toits rights under the Declaration of Trust, at September 30, 2015, Penguin has appointed two Trustees out of seven.

The Trust has entered into contracts and other arrangements with Penguin on a cost-sharing basis for administrative services and onmarket terms for leasing and development services and premises rent. The Trust earns interest on funds advanced and opportunityfees related to prepaid land held for development at rates negotiated at the time the Trust acquires retail centres from Penguin.

In connection with the Transaction, previous contracts and other arrangements with Penguin have been replaced by the following asof May 28, 2015:

1) The Development and Services Agreement, under which the Trust and certain subsidiary limited partnerships of the Trusthave agreed to provide to Penguin the following services for a five-year term with automatic five-year renewal periods thereafter:

a. Construction management services and leasing services are provided, at the discretion of Penguin, with respect tocertain of Penguin's properties under development for a market based fee based on construction costs incurred.Fees for leasing services, requested at the discretion of Penguin, are based on various rates that approximate marketrates, depending on the term and nature of the lease. In addition, management fees are provided for a market basedfee based on rental revenue.

b. Transition services relate to activities necessary to become familiar with Penguin projects and establishing processesand systems to accommodate the needs of Penguin.

c. Support services are provided for a fee based on an allocation of the relevant costs of the support services incurredby the Trust. Such relevant costs include: office administration, human resources, information technology, insurance,legal and marketing. In addition, the Trust rents its office premises from Penguin for a term ending May 2025.

2) The Service Agreement under which Mitchell Goldhar, owner of Penguin, has agreed to provide to the Trust certain advisory,consulting, and strategic services, including but not limited to strategies dealing with development, municipal approvals, acquisitions, dispositions, and construction costs, as well as strategies for marketing new projects and leasing opportunities. The fees associated with this agreement are $875 per quarter for a five-year term.





The following amounts are included in the Trust's interim condensed consolidated financial statements for the periods endedSeptember 30:

Three Months Ended September 30 Nine Months Ended September 30(in thousands of dollars) 2015 2014 2015 2014Related party transactions and balances with

Penguin (see also the "Transaction" section)Acquisition of investment properties — 63,088 — 63,088Mortgages advanced to Penguin (including interest

accrued) during the period 2,010 2,187 6,184 6,778Proceeds from repayment of mortgages receivable

during the period 11,862 — 17,862 37,444Equity issued to Penguin during the period –

adjusted to fair value (including equity issued onacquisition of investment properties) 3,609 11,275 168,964 21,182

Amounts receivable, prepaid expenses anddeposits at period-end 4,597 2,121 4,597 2,121

Amounts payable at period-end 1,461 1,175 1,461 1,175Accrued development obligation at period-end 17,977 18,265 17,977 18,265Secured debt at period-end 4,774 4,989 4,774 4,989

Paid to / payable to PenguinFees:

Leasing / development 1,487 1,266 4,257 3,714Legal, marketing, consulting and other

administrative costs 144 464 1,444 1,135Premises rent and operating costs (five-yearlease) 536 269 1,023 807Interest expense — 6 11 98

Paid by / payable by PenguinOpportunity fees / head lease rents 1,564 866 3,043 2,685Interest income 2,076 2,253 6,381 6,976Management fees 1,394 327 2,326 977Services revenue 971 14 1,333 151

The financial implications of related party agreements are disclosed in the notes to the interim condensed consolidated financialstatements for the period ended September 30, 2015. See also the "Transaction" section.

Income Taxes and SIFT Compliance

The Trust is taxed as a mutual fund trust for Canadian income tax purposes. In accordance with the Declaration of Trust, distributionsto Unitholders are declared at the discretion of the Trustees. The Trust endeavours to declare distributions in each taxation year insuch an amount as is necessary to ensure the Trust will not be subject to taxes on its net income and net capital gains under Part I ofthe Income Tax Act (Canada) (the "Tax Act").

Pursuant to the amendments to the Tax Act, the taxation regime applicable to SIFTs and investors in SIFTs has been altered. If theTrust were to become subject to these new rules (the "SIFT Rules"), it generally would be taxed in a manner similar to corporationson income from business carried on in Canada by the Trust and on income (other than taxable dividends) or capital gains from non-portfolio properties (as defined in the Tax Act), at a combined federal and provincial tax rate similar to that of a corporation. In general,distributions paid as returns of capital will not be subject to this tax. The SIFT Rules apply commencing in the 2011 taxation year. TheSIFT Rules are not applicable to a real estate investment trust that meets certain specified criteria relating to the nature of its revenueand investments (the "REIT Exemption").

The Trust qualifies for the REIT Exemption under the SIFT rules as at September 30, 2015.

Disclosure Controls and Procedures and Internal Controls Over Financial Reporting – NationalInstrument 52-109 Compliance

Disclosure Controls and Procedures ("DCP")The Trust's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") have designed or caused to be designed, undertheir direct supervision, the Trust's DCP (as defined in National Instrument 52-109 – Certification of Disclosure in Issuers' Annualand Interim Filings ("NI 52-109"), adopted by the Canadian Securities Administrators) to provide reasonable assurance that: (i) material





information relating to the Trust, including its consolidated subsidiaries, is made known to them by others within those entities,particularly during the period in which the interim filings are being prepared; and (ii) material information required to be disclosed inthe annual filings is recorded, processed, summarized and reported on a timely basis. The Trust continues to evaluate the effectivenessof DCP and changes are implemented to adjust to the needs of new processes and enhancement required.

Internal Control Over Financial Reporting ("ICFR")The Trust's CEO and CFO have also designed, or caused to be designed under their direct supervision, the Trust's ICFR to providereasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for externalpurposes in accordance with IFRS.

Inherent LimitationsNotwithstanding the foregoing, because of its inherent limitations a control system can provide only reasonable assurance that theobjectives of the control system are met and may not prevent or detect misstatements. Management's estimates may be incorrect, orassumptions about future events may be incorrect, resulting in varying results. In addition, management has attempted to minimizethe likelihood of fraud. However, any control system can be circumvented through collusion and illegal acts.

Critical Accounting Estimates

In preparing the Trust's unaudited interim condensed consolidated financial statements and accompanying notes, it is necessary formanagement to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, the disclosureof contingent assets and liabilities, and the reported amounts of revenue and expenses during the period. The significant items requiringestimates are discussed in the Trust's interim condensed consolidated financial statements for the three and nine months endedSeptember 30, 2015 and the notes contained therein.

Future Changes in Accounting Policies

The future accounting policy changes as proposed by the International Accounting Standards Board (IASB) are discussed in the Trust'saudited consolidated financial statements for the year ended December 31, 2014 and the notes contained therein.

Risks and Uncertainties

In addition to the risks discussed below, further risks are discussed in the Trust's Annual Information Form for the year ended December31, 2014 under the heading "Risk Factors" and the Trust's Management Information Circular dated April 27, 2015 under the heading"Particulars of Matters to be Acted Upon - The Acquisition - Risk Factors Related to the Acquisition".

Real Property Ownership RiskAll real property investments are subject to elements of risk. Such investments are affected by general economic conditions, local realestate markets, supply and demand for leased premises, competition from other available premises and various other factors.

Real estate has a high fixed cost associated with ownership and income lost due to declining rental rates or increased vacancies cannoteasily be minimized through cost reduction. Through well-located, well-designed and professionally managed properties, managementseeks to reduce this risk. Management believes prime locations will attract high-quality retailers with excellent covenants and will enablethe Trust to maintain economic rents and high occupancy. By maintaining the property at the highest standard through professionalmanagement practices, management seeks to increase tenant loyalty.

The value of real property and any improvements thereto may also depend on the credit and financial stability of the tenants and onthe vacancy rates of the Trust's portfolio of income-producing properties. The Trust's Adjusted Funds From Operations would beadversely affected if a significant number of tenants were to become unable to meet their obligations under their leases or if a significantamount of available space in the properties in which the Trust has an interest were not able to be leased on economically favourablelease terms. In addition, the Adjusted Funds From Operations of the Trust would be adversely affected by increased vacancies in theTrust's portfolio of income-producing properties. On the expiry of any lease, there can be no assurance that the lease will be renewedor the tenant replaced. The terms of any subsequent lease may be less favourable to the Trust than the existing lease. In the event ofdefault by a tenant, delays or limitations in enforcing rights as lessor may be experienced and substantial costs in protecting the Trust'sinvestment may be incurred. Furthermore, at any time, a tenant of any of the Trust's properties may seek the protection of bankruptcy,insolvency or similar laws that could result in the rejection and termination of such tenant's lease and, thereby, cause a reduction in thecash flow available to the Trust. The ability to rent unleased space in the properties in which the Trust has an interest will be affected





by many factors. Costs may be incurred in making improvements or repairs to property. The failure to rent vacant space on a timelybasis or at all would likely have an adverse effect on the Trust's financial condition.

Certain significant expenditures, including property taxes, maintenance costs, mortgage payments, insurance costs and related chargesmust be made throughout the period of ownership of real property regardless of whether the property is producing any income. Ifthe Trust is unable to meet mortgage payments on any property, losses could be sustained as a result of the mortgagee's exercise ofits rights of foreclosure or sale.

Real property investments tend to be relatively illiquid with the degree of liquidity generally fluctuating in relation to demand for andthe perceived desirability of such investments. If the Trust were to be required to liquidate its real property investments, the proceedsto the Trust might be significantly less than the aggregate carrying value of its properties.

The Trust will be subject to the risks associated with debt financing on its properties and it may not be able to refinance its propertieson terms that are as favourable as the terms of existing indebtedness. In order to minimize this risk, the Trust attempts to appropriatelystructure the timing of the renewal of significant tenant leases on the properties in relation to the time at which mortgage indebtednesson such properties becomes due for refinancing.

Significant deterioration of the retail shopping centre market in general or the financial health of Walmart in particular could have anadverse effect on the Trust's business, financial condition or results of operations.

Development and Construction RiskDevelopment and construction risk arises from the possibility that developed space will not be leased or that costs of developmentand construction will exceed original estimates, resulting in an uneconomic return from the leasing of such developments. The Trustmitigates this risk by not commencing construction of any development until sufficient lease-up has occurred and by entering intofixed price contracts for development and construction costs.

Joint Venture RiskThe Trust is a co-owner in several properties including a joint venture with Penguin to develop VMC, which is classified as an investmentin associates. The Trust is subject to the risks associated with the conduct of joint ventures. Such risks include disagreements with itspartners to develop and operate the properties efficiently and inability of the partners to meet their obligations to the joint venturesor third parties. Any failure of the Trust or its partners to meet its obligations, or any disputes with respect to strategic decision makingor the parties’ respective rights and obligations, could have a material adverse effect on the joint ventures, which may have a materialadverse effect on the Trust. These risks are mitigated by the Trust’s existing relationships with its partners. The VMC site could includecondominium, hotel and/or other developments, which may be prohibited activities under the SIFT Rules that could cause the Trustto violate its REIT status. In such circumstances, the Trust has an option to put certain portions of its interest in the arrangement atfair value to Penguin and may be required to provide financing to Penguin. The Trust will monitor the developments in VMC and takeproactive action to protect its REIT status, and will only exercise its put option if necessary.

Interest and Financing RiskIn the low interest rate environment that the Canadian economy has experienced in recent years, leverage has enabled the Trust toenhance its return to Unitholders. A reversal of this trend, however, could significantly affect the business's ability to meet its financialobligations. In order to minimize this risk, the Trust's policy is to negotiate fixed rate secured debt with staggered maturities on theportfolio and seek to match average lease maturity to average debt maturity. Derivative financial instruments may be utilized by theTrust in the management of its interest rate exposure. The Trust's policy is not to utilize derivative financial instruments for tradingor speculative purposes. In addition, the Declaration of Trust restricts total indebtedness permitted on the portfolio.

Interest rate changes will also affect the Trust's development portfolio. The Trust has entered into development agreements that obligatethe Trust to acquire up to approximately 1.1 million square feet of additional income properties at a cost determined by capitalizingthe rental income at predetermined rates. Subject to the ability of the Trust to obtain financing on acceptable terms, the Trust willfinance these acquisitions by issuing additional debt and equity. Changes in interest rates will have an impact on the return from theseacquisitions, should the rate exceed the capitalization rate used and could result in a purchase being non-accretive. This risk is mitigatedas management has certain rights of approval over the developments and acquisitions.

Operating facilities and secured debt exist that are priced at a risk premium over short-term rates. Changes in short-term interest rateswill have an impact on the cost of financing. In addition, there is a risk the lenders will not refinance on maturity. By restricting theamount of variable interest rate debt and the short-term debt, the Trust has minimized the impact on financial performance.





The Canadian capital markets are competitively priced. In addition, the secured debt market remains strong with lenders seeking qualityproduct. Due to the quality and location of the Trust's real estate, management expects to meet its financial obligations.

Credit RiskCredit risk arises from cash and cash equivalents, as well as credit exposures with respect to tenant receivables and mortgages and loansreceivable. Tenants may experience financial difficulty and become unable to fulfill their lease commitments. The Trust mitigates thisrisk of credit loss by reviewing tenants' covenants, by ensuring its tenant mix is diversified and by limiting its exposure to any onetenant, except Walmart Canada because of its creditworthiness. Further risks arise in the event that borrowers may default on therepayment of amounts owing to the Trust. The Trust endeavours to ensure adequate security has been provided in support of mortgagesand loans receivable. The failure of the Trust's tenants or borrowers to pay the Trust amounts owing on a timely basis or at all wouldhave an adverse effect on the Trust's financial condition. The Trust deposits its surplus cash and cash equivalents in high credit qualityfinancial institutions only, in order to minimize any credit risk associated with cash and cash equivalents.

Environmental RiskAs an owner of real property, the Trust is subject to various federal, provincial, territorial and municipal laws relating to environmentalmatters. Such laws provide that the Trust could be liable for the costs of removal of certain hazardous substances and remediation ofcertain hazardous locations. The failure to remove or remediate such substances or locations, if any, could adversely affect the Trust'sability to sell such real estate or to borrow using such real estate as collateral and could potentially also result in claims against the Trust.The Trust is not aware of any material non-compliance with environmental laws at any of its properties. The Trust is also not awareof any pending or threatened investigations or actions by environmental regulatory authorities in connection with any of its propertiesor any pending or threatened claims relating to environmental conditions at its properties. The Trust has policies and procedures toreview and monitor environmental exposure. It is the Trust's operating policy to obtain a Phase I environmental assessment on allproperties prior to acquisition. Further investigation is conducted if the Phase I assessments indicate a problem. In addition, thestandard lease requires compliance with environmental laws and regulations and restricts tenants from carrying on environmentallyhazardous activities or having environmentally hazardous substances on site. The Trust has obtained environmental insurance on certainassets to further manage risk.

The Trust will make the necessary capital and operating expenditures to ensure compliance with environmental laws and regulations.Although there can be no assurances, the Trust does not believe that costs relating to environmental matters will have a material adverseeffect on the Trust's business, financial condition or results of operations. However, environmental laws and regulations can changeand the Trust may become subject to more stringent environmental laws and regulations in the future. Compliance with more stringentenvironmental laws and regulations could have an adverse effect on the Trust's business, financial condition or results of operations.

Capital RequirementsThe Trust accesses the capital markets from time to time through the issuance of debt, equity or equity related securities. If the Trustwas unable to raise additional funds or renew existing maturing debt on favourable terms, then acquisition or development activitiescould be curtailed, asset sales accelerated and property specific financing, purchase and development agreements renegotiated andmonthly cash distributions reduced or suspended. However, the Trust anticipates accessing the capital markets on favourable termsdue to its high occupancy levels and low lease maturities, combined with strong national tenants in prime retail locations.

Tax Rules for Income TrustsPursuant to the SIFT Rules, a SIFT is subject to taxes with respect to certain distributions at a rate that is substantially equivalent tothe general tax rate applicable to a Canadian corporation. The SIFT Rules apply to most trusts, other than REITs that qualify for theREIT Exemption. Accordingly, unless the REIT Exemption is applicable to the Trust, the SIFT Rules could have an impact on thelevel of cash distributions that would otherwise be made by the Trust and the taxation of such distributions to Unitholders.

As at September 30, 2015, the Trust qualifies for the REIT Exemption.

Income Tax RiskAlthough the Trust believes that all expenses claimed for income tax purposes are reasonable and deductible and that the cost amountsand capital cost allowance claims are correctly determined, there can be no assurance that the Canada Revenue Agency ("CRA") willagree or that the Tax Act or the interpretation of the Tax Act will not change. If the CRA successfully challenges the deductibility ofsuch expenses, the taxable income of the Trust and its Unitholders may be adversely affected. The extent to which distributions willbe tax-deferred in the future will depend in part on the extent to which entities owned by the Trust are able to deduct capital costallowance relating to the assets held by them.





The Transaction

On May 28, 2015, the Trust completed the previously announced acquisition (the “Transaction”) of the SmartCentres platform fromMitchell Goldhar as part of a $1,171.2 million transaction that transformed the Trust into a fully integrated real estate developer andoperator by adding the SmartCentres’ platform of development, leasing, planning, engineering, architecture, and construction capabilities(the “Platform”). The Transaction also included the acquisition of interests in a portfolio of 22 properties (the “Properties”) locatedprincipally in Ontario and Quebec, including 20 open format Walmart Supercentre anchored or shadow-anchored shopping centresowned by Mitchell Goldhar and joint venture partners, including Wal-Mart Canada Realty Inc., for $1,116.0 million. Following closingof the Transaction (the “Closing”) and to reflect its enhanced capabilities and the considerable brand recognition of SmartCentres andits trademark Penguins, the Trust changed its name to Smart Real Estate Investment Trust (or, in short form, SmartREIT) and theticker symbol for the Units on the TSX to SRU.UN, previously CWT.UN.

The Trust financed the Transaction by the assumption of existing mortgages and development loans totalling $645.5 million, theissuance of 8,015,500 subscription receipts at a price of $28.70 totalling $230.0 million, the issuance of approximately $174.2 millionin LP Units (exchangeable into Units on a one-for-one basis) to certain of the vendors at a price of $28.70 per LP Unit, being theprice per subscription receipt sold under the offering described above, and the balance paid in cash adjusted for other working capitalamounts.

Following Closing, the Trust’s portfolio includes 107 Walmart anchored or shadow anchored locations with 93 sites owned, representing13.1 million square feet, further enhancing the Trust’s position as Walmart Canada’s most significant landlord.

The properties acquired by the Trust as a result of the Transaction, at the Trust’s share collectively and as of the date of the Transaction,added 3.4 million square feet of leased retail area to the Trust’s previous 27.4 million square feet of largely open format shoppingcentre space, were 99.7% occupied, and had a weighted average lease term to maturity of 12.6 years. A further 1.8 million square feetis expected to be developed over time, represented by 1.6 million square feet through on-balance sheet development and just under0.2 million square feet through future Earnouts.

The Transaction brought the Trust’s total assets, as at the Closing, to in excess of $8.3 billion, representing approximately 30.8 millionsquare feet of retail area, and land on which 4.6 million square feet of retail area is proposed to be developed, along with the existingland for additional mixed use density previously noted.

Mitchell Goldhar’s role with the Trust and the Platform has evolved as a result of the Transaction. Mitchell Goldhar assumed the roleof Chair of the Board of Trustees and has been appointed as an observer to the Trust’s newly formed Real Estate Committee.





A summary of the various rights granted to companies controlled by Mr. Goldhar and other entities affiliated with certain of Mr.Goldhar’s relatives which will encourage and enhance Mr. Goldhar’s valued engagement with the Trust are set out below and aredescribed in more detail in the Trust’s Management Information Circular dated April 27, 2015:

Provision Description

Trustee Appointment

Pre-Transaction:

- Right to appoint trustees based on the following ownership levels: Ownership >=5%: appoint 1 trustee, max. trustees 8; Ownership >= 15%: appoint 2 trustees, max.trustees 8; and Ownership >= 25%: appoint 3 trustees, max. trustees 9

- Based on holdings of Mitchell Goldhar and affiliates

Post-Transaction:- Ownership thresholds extended to include holdings of Mitchell Goldhar, his family,heirs and executors and their affiliates (the "MG Entities"), not just Mitchell Goldharand affiliates

Voting Top-Up Right

Pre-Transaction:- Right to vote 25% of votes at a meeting of Unitholders to July 1, 2015, as longas Mitchell Goldhar and affiliates own the lesser of (i) 20 million Units and SpecialVoting Units or (ii) 20% of the aggregate outstanding Units and Special VotingUnits

Post-Transaction:

- Expiry extended to July 1, 2020

- Ownership threshold measurement extended from Mitchell Goldhar andaffiliates to include MG Entities if Mr. Goldhar dies within that period

- Ownership threshold requires Mr. Goldhar or the MG Entities to own the lesserof (1) 20 million Units and Special Voting Units (which must represent at least10% of the outstanding Units and Special Voting Units) and (2) 20% of theaggregate outstanding Units and Special Voting Units

Special Committee

Pre-Transaction: - N/A

Post-Transaction:

- So long as the MG Entities own 5% of the Units, until his death MitchellGoldhar will have the right to appoint 1 member of any special committeereviewing strategic transactions where MG Entities are not an interested party

Board of TrusteesChair


Post-Transaction:- Until the earlier of July 1, 2025 or the MG Entities no longer owning 10% ofthe Units, Mitchell Goldhar has the right to be the Chair- If Mitchell Goldhar is the Chair, the Board will elect a Lead IndependentTrustee

CorporateGovernance andCompensationCommittee

Pre-Transaction:- Mitchell Goldhar has the right to appoint 1 member as long as he owns 15% ofUnits

Post-Transaction:

- Committee has right to appoint and remove the COO and CDO

- From closing of the Proposed Transaction (“Closing”) until the earlier of (i) 5years post Closing; (ii) MG Entities owning less than 10% of the Units; or (iii)Mitchell Goldhar’s death: - Certain decisions related to the COO and CDO require unanimous approval - MG Entities have the right to appoint 1 member of the Committee

Registration & Pre-Emptive Rights


Post-Transaction:- As long as MG Entities own 10% or more they will have Demand Registration;Piggy-Back Registration; and Pre-Emptive Rights

Mr. Goldhar also entered into a non-competition arrangement for a five-year period in relation to investing in, acquiring, developingor managing retail properties. The restrictions are subject to a number of exceptions, including exceptions to recognize Mr. Goldhar’sretained real estate interests and the ability to participate with the Trust in two development opportunities and other customaryexceptions to allow him to pursue investments, whether real estate or otherwise, that do not have a significant open format shoppingcentre or development services component.

In connection with the Transaction, Penguin is providing master planning services under the direct supervision of Mr. Goldhar inrespect of developments in which the Trust has an interest for a five-year period for a fee of $3.5 million per year, payable quarterly,plus certain limited consulting services with respect to specific mixed use tenants for a maximum estimated aggregate fee of $0.475million. The Transaction was approved by Unitholders (excluding those Unitholders who had an interest in the Transaction) at theTrust’s annual general and special meeting of holders of Units and Special Voting Units on May 26, 2015.





Subsequent Events

On October 16, 2015, $100.0 million aggregate principal amount of variable rate Series K senior unsecured debentures matured, whichwas settled by the Trust by existing cash and credit facilities.

Outlook

During the second quarter of 2015 we completed a transformative transaction involving a very significant portfolio of real estate andthe SmartCentres' platform (see the "Transaction" section earlier), transforming SmartREIT into a fully integrated REIT. Over the last20 years, the SmartCentres’ platform has developed over 50 million square feet of retail space, including more than 170 Walmart storesas Canada’s largest developer of retail real estate. SmartREIT can now provide a full suite of capabilities from origination of developmentopportunities to planning, engineering, architecture and design, construction, leasing and operations. We are now in the process ofidentifying and strategically prioritizing our various growth-oriented opportunities that we expect will accrue immediate, medium-term,and long-term financial benefits for our Unitholders. This planning initiative will occupy a substantive amount of our time and attentionover the next several months. However we will continue to be attentive to the impacting economic and industry specific issues andtrends and their related effects on our existing shopping centre portfolio and future opportunities.

The Bank of Canada recently reaffirmed its belief that Canadian economic stimulus continues to be a priority. Accordingly, at least forthe near term, increases in short term interest rates are not expected. However, there continues to be volatility in the longer term marketwherein, since March of this year, overall rates for longer terms have been trending upwards, and it is expected that longer term ratesin the United States will continue to move higher. The Government of Canada’s 10-year bond rate has been capricious since thebeginning of the year (reaching high and low points of 1.9% and 1.2% respectively earlier in the year and then recently tapering backto just below 1.6% at the end of October, 2015).

We have also experienced widening spreads for both secured and unsecured debt in the long term market. Spreads over the Governmentof Canada’s 10-year bond rate for secured and unsecured debt have risen by over 30 and 50 basis points respectively from their lowestlevels experienced earlier in the year. “All in” interest rates on longer term secured debt are expected to parallel the upward movementin rates anticipated in the unsecured market, and we continue to see a reasonable supply of available long term secured funding in 10-year term financing. Currently however, the availability of longer term unsecured debt is believed to be less fulsome, as this market hasexperienced a tremendous level of demand from new issues over the last six months, and premiums for new issues have increasedsubstantively. The overriding trend is for longer term yields to continue to climb. Accordingly, we have continued to fervently pursuea “lock long” strategy when mortgage renewals and similar financing opportunities arise. This refinancing strategy has now pushed ouroverall weighted average term and interest rate to 5.6 years and 3.85% respectively for our secured debt.

Overall growth in Canadian retail sales continues to lag those levels experienced in 2014. For the nine months ended September 2015,Canadian retail sales levels were up approximately 2.0% year over year, with unusually strong gains in automotive sales and modestlyimproved sales levels in general merchandise, clothing and building materials. During these periods of economic uncertainty, ourshopping centres continue to demonstrate resilience, principally due to their convenient locations, presence of value-focused retailers,low operating costs and intelligent design. Accordingly, our overall occupancy levels are expected to remain at industry leading levelswith encouraging tenant renewal levels and reasonable rental increases. These levels are currently marginally lower than our historicallyexceptionally high levels to reflect space that has recently been vacated. We continue to be encouraged by the levels of interest in manyof these vacated locations by tenants (national and international in scope) that are expanding their reach to Canadian consumers.

Canada’s overall employment levels continue to show strong resilience, notwithstanding the challenges being experienced in WesternCanada as a result of the continued decline in the price of crude oil, resulting in moderately healthy consumer spending and relatedsales levels for many retailers. However, the impact of the closings of several well known retailers during 2015, coupled with the pendingclosings of 52 Loblaws stores has and will continue to leave a trail of vacant space for many Canadian landlords. We are not immuneto these pervading market forces. However, given the preponderance of Walmart stores in our portfolio, and Walmart’s distinctiveability to drive strong levels of traffic to these locations, we believe that we are very well insulated from some of these pervadingchallenges.

Given the addition of our new planning, development and construction platform, we have begun to focus on development orredevelopment opportunities in some of our existing centres. However, any such opportunity will only be pursued if it complies withour disciplined investment approach. These strategic growth oriented initiatives will become more prevalent as we continue to experiencea decline in the availability of higher quality, accretive acquisition opportunities in the Canadian marketplace. In addition, given theprodigious success of the first phase of the Toronto Premium Outlets, we are diligently pursuing a multi-phased plan to expand thecentre’s parking facility and its retail footprint. Concurrent with this expansion initiative, we are also continuing to search for otherprospective Premium Outlets’ sites in Canada.





The progress of construction of the 360,000 square foot VMC office complex continues steadfastly on time and both constructionand financing costs are under budget. KPMG will be commencing their ‘fit-out’ plan next spring and are expected to commenceoccupancy in the fall of 2016. Discussions with several other large prospective tenants are continuing, and we hope to have furthernews in this regard over the next several months.

And finally, as ‘e-commerce’ continues to play an ever-increasing role in the retail landscape in Canada, we are increasing our on-goingefforts to facilitate ‘best in class’ location and spatial solutions for the convergence of our tenants’ ‘omni-channel’ strategies. ‘PenguinPick-up’ and similar ‘click and collect’ concepts are excellent examples of ‘e-commerce’ convergence phenomenon. Coupled with our‘e-commerce’ focus, convenience, location, value, and the customized ‘shopping experience’ each continue to be critical factors thatare relevant to today’s shoppers and therefore necessary to ensure the long term success of our tenants. In this regard, our focus onenhancing the ‘customer experience’ continues to be a core objective for our team.




SMART REAL ESTATE INVESTMENT TRUSTINTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)(in thousands of Canadian dollars)

Note September 30, 2015 December 31, 2014AssetsNon-current assets

Investment properties 4 7,969,266 6,696,487Mortgages and loans receivable 5 180,174 184,151Investment in associates 6 108,689 100,179Other assets 7 80,756 76,542Intangible assets 8 53,918 —

8,392,803 7,057,359

Current assetsCurrent portion of mortgages and loans receivable 5 — 7,701Amounts receivable, prepaid expenses and deferred financing costs 9 64,311 22,091Cash and cash equivalents 18 73,853 20,252

138,164 50,044Total assets 8,530,967 7,107,403

LiabilitiesNon-current liabilities

Debt 10 3,602,588 2,574,012Other payables 11 23,022 17,049Other financial instruments 12 44,046 40,347

3,669,656 2,631,408

Current liabilitiesCurrent portion of debt 10 258,731 427,688Accounts and other payables 11 162,365 141,883

421,096 569,571Total liabilities 4,090,752 3,200,979

EquityTrust Unit equity 3,655,528 3,299,986Non-controlling interests 784,687 606,438

4,440,215 3,906,424Total liabilities and equity 8,530,967 7,107,403

Commitments and contingencies (Note 24)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Approved by the Board of Trustees.

Huw Thomas Garry FosterTrustee Trustee

SMART REAL ESTATE INVESTMENT TRUST 2015 THIRD QUARTER FINANCIAL STATEMENTS 1

SMART REAL ESTATE INVESTMENT TRUSTINTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)(in thousands of Canadian dollars)

Note September 30, 2015 December 31, 2014AssetsNon-current assets

Investment properties 4 7,969,266 6,696,487Mortgages and loans receivable 5 180,174 184,151Investment in associates 6 108,689 100,179Other assets 7 80,756 76,542Intangible assets 8 53,918 —

8,392,803 7,057,359

Current assetsCurrent portion of mortgages and loans receivable 5 — 7,701Amounts receivable, prepaid expenses and deferred financing costs 9 64,311 22,091Cash and cash equivalents 18 73,853 20,252

138,164 50,044Total assets 8,530,967 7,107,403

LiabilitiesNon-current liabilities

Debt 10 3,602,588 2,574,012Other payables 11 23,022 17,049Other financial instruments 12 44,046 40,347

3,669,656 2,631,408

Current liabilitiesCurrent portion of debt 10 258,731 427,688Accounts and other payables 11 162,365 141,883

421,096 569,571Total liabilities 4,090,752 3,200,979

EquityTrust Unit equity 3,655,528 3,299,986Non-controlling interests 784,687 606,438

4,440,215 3,906,424Total liabilities and equity 8,530,967 7,107,403

Commitments and contingencies (Note 24)


Approved by the Board of Trustees.

Huw Thomas Garry FosterTrustee Trustee



SMART REAL ESTATE INVESTMENT TRUSTINTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)(in thousands of Canadian dollars)

Three Months Ended September 30 Nine Months Ended September 30

Note 2015 2014 2015 2014

Net rental incomeRentals from investment properties 16 172,428 147,106 490,946 452,926Property operating costs (56,493) (48,319) (167,921) (155,688)Net rental income 115,935 98,787 323,025 297,238

Other income and expensesService and other revenues 3,318 343 5,209 1,199General and administrative expense 17 (5,738) (2,584) (13,053) (7,861)Other expenses (3,288) (344) (5,170) (1,200)Earnings from associates 6 2,282 288 2,775 2,904Fair value gain on revaluation of investment

properties 22 7,484 15,582 16,764 24,098Loss on sale of investment properties — — (34) (39)Interest expense 10(e) (32,217) (34,662) (109,990) (118,713)Interest income 2,876 2,733 9,147 8,309Fair value gain (loss) on financial instruments 22 1,922 2,607 157 (3,405)Acquisition costs 8 — — (1,018) —Net income and comprehensive income 92,574 82,750 227,812 202,530

Net income and comprehensive incomeattributable to:

Trust Units 77,384 71,123 192,645 174,100Non-controlling interests 15,190 11,627 35,167 28,430

92,574 82,750 227,812 202,530


2 SMART REAL ESTATE INVESTMENT TRUST 2015 THIRD QUARTER FINANCIAL STATEMENTS


SMART REAL ESTATE INVESTMENT TRUSTINTERIM CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)For the nine months ended September 30, 2015 and 2014 (in thousands of Canadian dollars)

Attributable to Unitholders

Attributable to LP Unitsclassified as non-controlling

interests

TrustUnits

(Note 14)RetainedEarnings

UnitEquity

LP Units(Note

14)RetainedEarnings Total

Other Non-Controlling

InterestTotal

EquityEquity – January 1, 2014 2,239,123 982,588 3,221,711 438,995 140,947 579,942 2,838 3,804,491Issuance of Units 27,187 — 27,187 15,630 — 15,630 — 42,817Net income for the period — 174,100 174,100 — 28,167 28,167 263 202,530Distributions for the period (Note 15) — (135,724) (135,724) — (21,522) (21,522) (274) (157,520)Equity – September 30, 2014 2,266,310 1,020,964 3,287,274 454,625 147,592 602,217 2,827 3,892,318

Equity – January 1, 2015 2,273,604 1,026,382 3,299,986 454,990 148,661 603,651 2,787 3,906,424Issuance of Units 311,436 — 311,436 168,964 — 168,964 — 480,400Net income for the period — 192,645 192,645 — 34,908 34,908 259 227,812Distributions for the period (Note 15) — (148,539) (148,539) — (25,882) (25,882) — (174,421)Equity – September 30, 2015 2,585,040 1,070,488 3,655,528 623,954 157,687 781,641 3,046 4,440,215




SMART REAL ESTATE INVESTMENT TRUSTINTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)(in thousands of Canadian dollars)

Three Months Ended September 30 Nine Months Ended September 30Note 2015 2014 2015 2014

Cash provided by (used in)

Operating activitiesNet income for the period 92,574 82,750 227,812 202,530Add (deduct): Items not affecting cash

Fair value gain on revaluation of investment properties 22 (7,484) (15,582) (16,764) (24,098)Fair value (gain) loss on financial instruments 22 (1,922) (2,607) (157) 3,405Loss on sale of investment properties — — 34 39Earnings from associates, net of distributions 6 (2,267) (238) (2,425) (2,449)Amortization of equipment 7 179 111 403 334Amortization of acquisition date fair value adjustments

on assumed debt 10(e) (973) (377) (1,880) (1,166)Accretion of convertible debentures 10(e) — 182 354 536Amortization of deferred financing costs 10(e) 798 964 3,544 3,389Amortization of tenant incentives 16 1,390 1,162 4,065 3,392Distributions relating to vested deferred units classified

as liabilities 12(d) 259 255 756 754Distributions relating to LP Units classified as liabilities 15 267 120 563 361Capital lease obligation interest 124 25 326 73Straight-line rent adjustments (304) (353) (1,596) (1,880)Deferred unit compensation expense 12(d) 169 144 1,838 620Long term incentive plan expense 11 1,199 (128) 1,860 131

Yield maintenance on redemption of unsecureddebentures 10(e) — — 10,810 13,367Redemption of deferred units 12(d) — — (6,015) (104)Expenditures on direct leasing costs (112) (896) (3,703) (2,681)Expenditures on tenant incentives for properties under

development (344) (178) (3,373) (1,864)Changes in other non-cash operating items 18 (1,867) (18,114) (31,401) (59,184)

81,686 47,240 185,051 135,505Financing activitiesProceeds from issuance of unsecured debentures – net of

issuance costs 10(c) — 199,156 158,800 348,181Repayment of unsecured debentures including yield

maintenance on redemption of unsecured debentures 10(c) — (50,000) (160,810) (200,000)Redemption of convertible debentures 10(d) — — (3,312) —Repayment of revolving operating facility 10(b) — — (17,000) —Proceeds from issuance of Trust Units – net of issue costs 14 (170) — 225,274 (87)Proceeds from issuance of secured debt 108,750 — 544,300 57,500Secured debt and other debt repayments (42,424) (72,236) (262,695) (189,653)Distributions paid on Trust Units (40,478) (37,843) (119,254) (114,068)Distributions paid on non-controlling interests and LP

Units classified as liabilities (10,160) (7,428) (26,421) (22,080)Expenditures on financing costs (642) (1,404) (3,078) (1,919)

14,876 30,245 335,804 (122,126)Investing activitiesAcquisitions and Earnouts of investment properties 3 (57,290) (54,770) (384,332) (64,117)Acquisition of Penguin platform 3 — — (55,679) —Additions to investment properties 4 (18,117) (24,852) (39,706) (49,817)Additions to investment in associates 6 (280) (5,091) (6,085) (11,590)Additions to equipment 7 (19) (28) (155) (28)Repayments of mortgages and loans receivable 5 11,862 2,953 17,862 40,457Net proceeds from sale of investment property — — 841 6,433

(63,844) (81,788) (467,254) (78,662)Increase (decrease) in cash and cash equivalents during

the period 32,718 (4,303) 53,601 (65,283)Cash and cash equivalents – beginning of period 41,135 39,243 20,252 100,223Cash and cash equivalents – end of period 73,853 34,940 73,853 34,940

Supplemental cash flow information (Note 18) The accompanying notes are an integral part of these interim condensedconsolidated financial statements.





















SMART REAL ESTATE INVESTMENT TRUSTNOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)For the periods ended September 30, 2015 and 2014 (in thousands of Canadian dollars, except Unit, square foot and per Unit amounts)

1. Organization Smart Real Estate Investment Trust and its subsidiaries ("the Trust"), previously known as Calloway Real Estate Investment Trust, isan unincorporated open-ended mutual fund trust governed by the laws of the Province of Alberta created under a declaration of trust,dated December 4, 2001, subsequently amended and last restated on May 28, 2015 ("the Declaration of Trust"). The Trust develops,leases, constructs, owns and manages shopping centres in Canada, both directly and through its subsidiaries, Smart Limited Partnership,Smart Limited Partnership II and Smart Limited Partnership III, and includes the following additional subsidiaries that arose from theacquisition of both the Penguin platform and 22 properties from Penguin and other vendors on May 28, 2015 (see Notes 3 and 8):Smart Limited Partnership IV, Smart Oshawa South Limited Partnership, Smart Oshawa Taunton Limited Partnership and SmartBoxgrove Limited Partnership. The exchangeable securities of these subsidiaries, which are presented as non-controlling interests oras a liability as appropriate, are economically equivalent to Trust Units as a result of voting, exchange and distribution rights as morefully described in Note 14(a). The address of the Trust's registered office is 700 Applewood Crescent, Suite 200, Vaughan, Ontario,L4K 5X3. The Units of the Trust are listed on the Toronto Stock Exchange ("TSX") under the ticker symbol "SRU.UN" (previously"CWT.UN").

These interim condensed consolidated financial statements have been approved for issue by the Board of Trustees on November 4,2015. The Board of Trustees has the power to amend the interim condensed consolidated financial statements after issue.

At September 30, 2015, the Penguin Group of Companies (formerly referred to as the "SmartCentres Group of Companies" andhereafter referred to as "Penguin"), owned by Mitchell Goldhar, owned approximately 22.7% (December 31, 2014 – 21.3%) of theissued and outstanding Units of the Trust and Limited Partnerships (see Note 19).

2. Summary of significant accounting policies2.1 Basis of presentation

These interim condensed consolidated financial statements of the Trust have been prepared in accordance with InternationalFinancial Reporting Standards ("IFRS") applicable to the preparation of interim condensed consolidated financial statements,International Accounting Standard ("IAS") 34, "Interim Financial Reporting", as issued by the International AccountingStandards Board. The interim condensed consolidated financial statements contain disclosures, which are supplemental tothe Trust's annual consolidated financial statements. They do not include all the information and disclosures required by IFRSapplicable for annual consolidated financial statements and, therefore, they should be read in conjunction with the annualaudited consolidated financial statements.

2.2 Critical accounting estimates and judgementsThe preparation of the interim condensed consolidated financial statements in conformity with IFRS requires managementto make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingentassets and liabilities at the date of the interim condensed consolidated financial statements and the reported amounts ofrevenues and expenses during the reporting period. It also requires management to exercise judgement in applying the Trust'saccounting policies. The critical accounting estimates and judgements applied during the quarter are consistent with those setout in Note 2 to the Trust's audited consolidated financial statements for the year ended December 31, 2014, except for thefollowing: judgments relating to determining if an acquisition should be accounted for as a business combination or an assetacquisition, estimates relating to purchase price allocations and estimates relating to impairment of intangibles assets.

2.3 Accounting policiesThe accounting policies followed in these interim condensed consolidated financial statements are consistent with the policiesand methods of their application used in the preparation of the audited consolidated financial statements as at and for theyear ended December 31, 2014, except as noted below:

a) Intangible Assets and GoodwillThe Trust’s intangible assets comprise key joint venture relationships, trademarks and goodwill. The joint venture relationshipsand trademarks have finite useful lives, and as such are amortized over a period of 40 years and reviewed when an indicationof impairment exists. Goodwill is the excess of the purchase price over the acquired identifiable net assets in a business


NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


combination. Goodwill is not amortized but tested for impairment at least annually or more frequently, if there are indicatorsof impairment.

b) Revenue recognitionIn connection with the acquisition of the Penguin platform (see Note 8) and the 22 income properties from Penguin (seeNote 3) the Trust's revenues now include development and services fees, which are recognized in the period they are earned.

c) Business combinationThe Trust has applied business combination accounting to account for the acquisition of the Penguin platform (see Note 8)whereby identifiable assets acquired and liabilities assumed are measured at their acquisition date fair values. Any differencebetween the purchase price and the fair value of identifiable net assets acquired is considered goodwill. The Trust expensesany transaction costs associated with a business combination in the period incurred. When an acquisition does not meet thecriteria for a business, it is accounted for as an asset acquisition. Any transaction costs associated with an asset acquisition areallocated to the assets and liabilities acquired. No goodwill is recognized for asset acquisitions.

3. Acquisitions and EarnoutsAcquisitions and Earnouts completed during the nine months ended September 30, 2015 a) On February 11, 2015, the Trust completed the acquisition of a property in Barrie, Ontario, from an unrelated party, totalling

104,909 square feet of leasable area. The total purchase price of this acquisition was $25,300, which included $18,691 paid in cash,the assumption of a ground lease accounted for as a finance lease obligation with a net present value of $6,362, adjusted for costsof acquisition and other working capital amounts.

b) On May 28, 2015, the Trust completed a transaction to acquire the Penguin platform from Penguin for a total of $55,131 (seeNote 8).

c) Also on May 28, 2015, the Trust completed a transaction to acquire a group of freehold interests in 21 properties and a leaseholdinterest in another property from Penguin and other vendors for a total of $1,116,023. The property interests include:• 100% interest in 13 properties co-owned by Penguin and Wal-Mart Canada Realty Inc.• A 40% interest in one additional property owned by Penguin• Three properties where the Trust acquired a 100% interest in properties co-owned by Penguin and other vendors• Three properties where the Trust acquired a 50% interest in properties previously co-owned by the Trust and Penguin,

effectively giving the Trust 100% ownership in these properties• An additional 25% interest in the Montreal Premium Outlets owned by Penguin, which will increase the interest of the Trust

to 50% in that property• A 100% leasehold interest in a property co-owned by Penguin and another vendor.

The 22 properties comprise 3,436,379 net square feet of leasable area and include land with potential future development of1,635,132 square feet at the Trust's share. In connection with the acquisition, the Trust entered into long-term developmentmanagement agreements with Penguin on six of the properties with total development area of 213,799 square feet at the Trust'sshare. The remaining properties are either fully developed (two properties), or will be developed by the Trust (13 properties) andthe Montreal Premium Outlet, which will have future development that will be completed by the Trust's partner Simon PropertiesGroup.

The purchase price including both the Penguin platform (see (b) above) and the group of properties totalled $1,171,154, adjustedfor costs of acquisition and working capital amounts. The purchase price was satisfied by the assumption of existing mortgagesand development loans of $636,843, the issuance of 8,015,500 subscription receipts at a price of $28.70 totalling $230,045 (notincluding a fair value adjustment at closing of $240), the issuance of 6,068,898 Class B and D LP units with a value of $174,177(see Note 14(a)(ii) for a description of the Class B and D LP units) to Penguin and other vendors at a unit price of $28.70, theissuance of 1,170,000 new Earnout options (see Note 12(b)) to Penguin and other vendors, and the balance in cash, adjusted forother working capital amounts. The Class B and D LP Units were valued at a price of $28.70 per Unit, consistent with the marketprice of the subscription receipts. The Earnout options were valued at their estimated fair market value of $nil based on an exerciseprice that is equivalent to the market price of the Trust Units at the time of the Earnout event.

d) On July 30, 2015, the Trust completed the acquisition of a 100% interest in a property in Maple Ridge, British Columbia, from athird party, totalling 227,000 square feet of leasable area. The total purchase price of this acquisition including adjustments onclosing was $59,270, which was funded by existing cash.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS




e) As part of the overall Transaction noted in c) above, on September 25, 2015, the Trust completed the acquisition of a 60% interestin a property in Orleans, Ontario, from Wal-Mart Canada Realty Inc., totalling 132,154 square feet of lands with potential forfuture development. The remaining 40% is owned by Penguin. The total purchase price of this acquisition was $8,849, which wassatisfied by the assumption of a mortgage of $8,660, adjusted for costs of acquisition and other working capital amounts.

f) During the nine months ended September 30, 2015, pursuant to development management agreements referred to in Note 4(b)(i), the Trust completed the purchase of Earnouts totalling 37,523 square feet of development space from Penguin for $12,421.The purchase price was satisfied through the issuance of 175,792 Class B LP Units, Class B LP III Units and Class B LP IV Unitstotalling $4,518 and the balance paid in cash, adjusted for other working capital amounts.

Consideration for the acquisitions and Earnouts completed during the nine months ended September 30, 2015 is summarized asfollows:

Property Acquisitions

Penguin PlatformAcquisition

(Note 8) Earnouts TotalCash(1) 381,291 55,679 3,041 440,011LP Units issued(2) 174,177 — 4,518 178,695Finance lease obligation 6,362 — — 6,362Mortgages assumed 645,503 — — 645,503Adjustment for other working capital amounts(1) 2,109 (548) 4,862 6,423

1,209,442 55,131 12,421 1,276,994

(1) Included in cash under the column "Property Acquisitions" is $305,297 in connection with the acquisition of 22 properties from Penguin and other vendors (see Note 4).(2) The Units issued of $174,177 relate to part of the consideration of the purchase of 22 properties from Penguin and other vendors.

The Earnouts in the above table do not include the cost of previously acquired freehold land in the amount of $347.

Acquisitions and Earnouts completed during the nine months ended September 30, 2014 a) On September 10, 2014, the Trust completed the acquisition of two properties in Edmonton, Alberta and Lachenaie, Quebec

from a joint venture between Penguin and Walmart Canada Realty Inc., totalling 601,884 square feet of leased area and includedlands with potential of future development of approximately 112,000 square feet. The properties are held as a 50:50 co-ownershipwith a third party partner. The total purchase price of this acquisition was $126,176. In connection with the acquisitions, theTrust and co-owner entered into long-term development management agreements with Penguin.

The Trust's share of the purchase price of $63,088 was satisfied by the issuance of 354,000 Class B Series 7 LP III Units with avalue of $9,285 (see Note 14(a)(iv) for a description of Class B LP III Units) to Penguin, the issuance of 450,000 new Earnoutoptions (see Note 12(b)) to Penguin, and the balance in cash, adjusted for other working capital amounts. The Class B Series 7 LPIII Units were valued at a price of $26.23 per Unit, which approximates the market value of Trust Units on the date of closing.The Earnout options were valued at their estimated fair market value of $nil based on an exercise price that is equivalent to themarket price of the Trust Units at the time of the Earnout event.

b) During the nine months ended September 30, 2014, pursuant to development management agreements referred to in Note 4(b)(i), the Trust completed the purchase of Earnouts totalling 78,089 square feet of development space from Penguin for $19,120.The purchase price was satisfied through the issuance of 216,533 Trust Units, 101,484 Class B LP Units and 28,502 Class B LPIII Units for a combined consideration of $6,614 and the balance paid in cash, adjusted for other working capital amounts.

Consideration for the acquisitions and Earnouts completed during the nine months ended September 30, 2014 is summarized asfollows:

Acquisitions Earnouts TotalCash 53,674 10,443 64,117Trust Units issued — 3,475 3,475LP Units issued 9,285 3,139 12,424Adjustment for other working capital amounts 129 2,063 2,192

63,088 19,120 82,208

The Earnouts in the above table do not include the cost of previously acquired freehold land in the amount of $1,764.





4. Investment properties

September 30, 2015 December 31, 2014

IncomeProperties

PropertiesUnder

Development TotalIncome

Properties

PropertiesUnder

Development TotalBalance – beginning of period 6,430,034 266,453 6,696,487 6,333,668 282,172 6,615,840Additions:

Acquisition of investment properties 969,116 240,326 1,209,442 80,820 100 80,920Transfer to income properties from

properties under development 30,986 (30,986) — 60,580 (60,580) —Earnout Fees on the properties subject to

development management agreements(Note 4(b)) 6,713 — 6,713 7,173 — 7,173

Additions to investment properties 4,821 35,915 40,736 9,095 72,337 81,432Transfer from income properties toproperties under development (108,109) 108,109 — (17,674) 17,674 —

Dispositions — (876) (876) (107,889) (6,447) (114,336)Fair value gains (losses) 12,712 4,052 16,764 64,261 (38,803) 25,458Balance – end of period 7,346,273 622,993 7,969,266 6,430,034 266,453 6,696,487

The cost of income properties and properties under development as at September 30, 2015 totalled $6,087,362 (December 31, 2014– $5,178,094) and $679,882 (December 31, 2014 – $342,130), respectively.

Secured debt with a carrying value of $2,618,671 (December 31, 2014 – $1,695,095) is secured by investment properties with a fairvalue of $5,450,466 (December 31, 2014 – $4,253,387).

Presented separately from investment properties is $78,156 (December 31, 2014 – $74,907) of net straight-line rent receivables andtenant incentives (these amounts are included in Other Assets - see Note 7) arising from the recognition of rental revenues on a straight-line basis over the respective lease terms. The fair value of investment properties has been reduced by these amounts presented separately.

Valuation methodology and processesInvestment properties carried at fair value are categorized by level according to the significance of the inputs used in making themeasurements. As the fair value of investment properties is determined with significant unobservable inputs, all investment propertiesare classified as Level 3 assets.

The Trust’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as of the date of the event or change incircumstances that caused the transfer. There were no transfers (December 31, 2014 – nil) in or out of Level 3 fair value measurementsfor investment properties during the period.

The Trust’s internal valuation team consists of individuals who are knowledgeable and have recent experience in the fair value techniquesfor investment properties. The Trust’s valuation team is responsible for determining the fair value of investment properties everyquarter, which includes co-owned properties and a property classified as investment in associates. The team reports directly to a seniorexecutive and the internal valuation team's valuation processes and results are reviewed by management at least once every quarter, inline with the Trust’s quarterly reporting dates.

The Trust has also engaged leading independent national real estate appraisal firms with representation and expertise across Canadato provide appraisals on approximately 15-20% of its portfolio by value annually starting in the first quarter of 2014. Properties arerotated annually to ensure that at least 50% of the portfolio by value is appraised externally over a three-year period. These externalvaluations take place as of either June 30 or December 31 and are prepared to comply with the requirements of IAS 40, “InvestmentProperty”, IFRS 13, "Fair Value Measurement", and International Valuation Standards. On a quarterly basis, for properties that are notvalued externally, the appraisals are updated by the Trust’s internal valuation team for current leasing and market assumptions, utilizingmarket capitalization rates as provided by the independent valuations firms. The externally appraised properties reflect a representativesample of the Trust's portfolio and such appraisals and valuation metrics are then applied to the entire portfolio by the Trust’s internalvaluation team.

From October 1, 2012 to September 30, 2015, the Trust has had approximately 80% (by value) or 69% (by number of properties) ofits operating portfolio appraised externally. For all investment properties, their current use equates to the highest and best use.

At each external valuation date, the internal valuation team:• verifies all major inputs to the independent valuation report;





• assesses property valuation movements when compared to the prior year valuation report; and• holds discussions with the independent appraiser.

Changes in fair values are analyzed at each reporting date during the quarterly valuation discussions between the senior managementteam and the internal valuation team. As part of this discussion, the internal valuation team presents a report that explains the reasonsfor the fair value movements.

Valuation techniques underlying management’s estimation of fair valueIncome properties that are freehold properties, with a total carrying amount of $6,300,365, were valued using the direct incomecapitalization method. In applying the direct income capitalization method, the stabilized net operating income (“NOI”) of eachproperty is divided by an overall capitalization rate. The significant unobservable inputs include:

Stabilized net operating income: based on the location, type and quality of the properties and supported by the terms of any existing lease, other contracts orexternal evidence such as current market rents for similar properties, adjusted for estimated vacancy rates based on currentand expected future market conditions after expiry of any current lease and expected maintenance costs.

Capitalization rate: based on location, size and quality of the properties and taking into account market data at the valuation date.

Income properties that are leasehold interests with purchase options, with a total carrying value of $802,940, were valued using thedirect income capitalization method as described above, adjusted for the present value of the purchase options. The significantunobservable inputs, in addition to stabilized net operating income and capitalization rate described above, include the discount rateused to present value the contractual purchase option, which is based on the location, type and quality of each property.

Income properties that are leasehold interests with no purchase options, with a total carrying value of $242,968, were valued by presentvaluing the remaining income stream of the properties. The significant unobservable inputs include:

Remaining income stream: based on the location, type and quality of the properties and supported by the terms of any existing lease, other contracts orexternal evidence such as current market rents for similar properties, adjusted for estimated vacancy rates based on currentand expected future market conditions and expected maintenance costs.

Discount rate:based on market data at the valuation date, adjusted for property-specific risks dependent on the location, size and quality ofthe properties.

Properties under development with a total carrying amount of $558,747 were valued using the direct income capitalization methodless any construction costs to complete development and Earnout fees, if any. The significant unobservable inputs include:

Forecasted net operating income: based on the location, type and quality of the properties and supported by the terms of actual or anticipated future leases,other contracts or external evidence such as current market rents for similar properties, adjusted for estimated vacancy ratesbased on expected future market conditions and estimated maintenance costs, which are consistent with internal budgets,based on management’s experience and knowledge of market conditions.

Earnout fee: based on estimated net operating rents divided by predetermined negotiated capitalization rates, less associated land anddevelopment costs incurred by the Trust.

Costs to complete: these are derived from internal budgets, based on management’s experience and knowledge of market conditions.

Completion date: properties under development require approval or permits from oversight bodies at various points in the development process,including approval or permits with respect to initial design, zoning, commissioning and compliance with environmentalregulations. Based on management’s experience with similar developments, all relevant permits and approvals are expected





to be obtained. However, the completion date of the development may vary depending on, among other factors, the timelinessof obtaining approvals, construction delays, weather and any remedial action required by the Trust.

Properties under development with a total carrying amount of $64,246 were valued by comparing to recent sales of properties ofsimilar types, locations and quality. The significant unobservable input is adjustments due to characteristics specific to each propertythat could cause the fair value to differ from the property to which it is being compared.

There were no changes to the valuation techniques during the period.

Significant unobservable inputs in Level 3 valuations are as follows:


Class Valuation Technique

TotalStabilized

NOI

Range ofCapitalization

or DiscountRates

WeightedAverage

Capitalizationor Discount

Rate

TotalStabilized

NOI

Range ofCapitalization

or DiscountRates

WeightedAverage

Capitalizationor Discount

RateIncomeproperties

Direct incomecapitalization 375,502 5.25-7.75% 5.96% 330,665 5.50-7.60% 5.98%Direct incomecapitalization lesspresent value ofpurchase option 52,111 6.25-7.00% 6.49% 42,704 6.25-7.00% 6.53%Discounted cash flow N/A 6.25-6.63% 6.36% N/A 6.25-6.63% 6.36%

Propertiesunderdevelopment

Direct incomecapitalization 39,056 5.60%-8.23% 6.99% 15,062 5.60%-8.23% 7.00%Sales comparison N/A N/A N/A N/A N/A N/A

Fair values are most sensitive to changes in capitalization rates and stabilized or forecasted NOI, among other inputs as describedabove. Generally, an increase in NOI will result in an increase in the fair value of investment properties and an increase in capitalizationrates will result in a decrease in the fair value of investment properties. The capitalization rate magnifies the effect of a change in NOI,with a lower capitalization rate resulting in a greater impact of a change in NOI than a higher capitalization rate.

The analysis below shows the maximum impact on fair values of possible changes in capitalization rates, assuming no changes in NOI:

Change in capitalization rate of -0.50% -0.25% +0.25% +0.50%Increase (decrease) in fair value

Income properties 650,486 311,003 (285,962) (549,791)Properties under development (1) 43,047 20,725 (19,294) (37,300)

(1) Excludes properties that are valued by comparing to recent sales of similar properties because these properties are not affected by capitalization rates.

a) Leasehold property interestsAt September 30, 2015, 16 (December 31, 2014 – 14) investment properties with a fair value of $1,045,908 (December 31, 2014– $900,522) are leasehold property interests accounted for as finance leases.

i) Leasehold property interests without bargain purchase optionsThree of the leasehold interests commenced in 2005 under the terms of 35-year leases with Penguin. Penguin has the rightto terminate the leases after 10 years on payment to the Trust of the fair value of a 35-year leasehold interest in the propertiesat that time and also has the right to terminate the leases at any time in the event any third party acquires 20% of the aggregateof the Trust Units and special voting units by payment to the Trust of the unamortized balance of any prepaid lease cost.The Trust does not have a purchase option under these three leases. Ten of the leasehold interests commenced in 2006 through 2009, of which four are under the terms of 80-year leases withPenguin and six are under the terms of 49-year leases with Penguin. The Trust has separate options to purchase each of these10 leasehold interests at the end of the respective leases at prices that are not considered to be bargain prices.

A new leasehold interest commenced in 2015, which was part of the acquisition of one of the 22 properties discussed in Note 3, under the terms of a 49-year lease with Penguin. The Trust has an option to purchase this leasehold interest at the end of the lease term at a price that is not considered to be a bargain price.

The Trust prepaid its entire lease obligations for these 14 leasehold interests in the amount of $875,909 (December 31, 2014– $756,764), including prepaid land rent of $227,400 (December 31, 2014 – $186,596). On the completion and rental of





additional space during the nine months ended September 30, 2015, the Trust prepaid its entire lease obligations relating tobuild-out costs of $119,145 (December 31, 2014 – $1,748).

ii) Leasehold property interests with bargain purchase optionsOne leasehold interest commenced in 2003 under the terms of a 35-year lease with Penguin. The lease requires a $10,000payment at the end of the lease term in 2038 to exercise a purchase option, which is considered to be a bargain purchaseoption. The Trust prepaid its entire lease obligation for this property of $57,994 (December 31, 2014 – $57,924). On thecompletion and rental of additional space during the nine months ended September 30, 2015, the Trust prepaid its entirelease obligations relating to build-out costs of $70 (December 31, 2014 – $7,663). The purchase option price has been includedin accounts payable, net of imputed interest at 9.18% of $8,789 (December 31, 2014 – $8,869), in the amount of $1,211(December 31, 2014 – $1,131) (see Note 11).

A second leasehold interest was acquired on February 11, 2015 from a third party and includes a land lease that expires onSeptember 1, 2054. The land lease requires monthly payments ranging from $400 to $600 annually until September 1, 2054,and a $6,000 payment between September 1, 2023 and September 1, 2025 to exercise a purchase option that is considered tobe a bargain purchase option. As the Trust intends to exercise the purchase option on September 1, 2023, the purchase optionprice and the monthly payments up to September 1, 2023 have been included in accounts payable, net of imputed interest at6.25% of $3,051, in the amount of $6,353 (see Note 11).

b) Properties under developmentProperties under development consist of the following:

September 30, 2015 December 31, 2014Properties under development subject to development management agreements (i) 93,405 82,263Properties under development not subject to development management agreements (ii) 529,588 184,190

622,993 266,453

For the three months ended September 30, 2015, the Trust capitalized a total of $6,045 (three months ended September 30, 2014– $3,145) of borrowing costs related to properties under development. For the nine months ended September 30, 2015, the Trustcapitalized a total of $13,166 (nine months ended September 30, 2014 – $9,098) of borrowing costs related to properties underdevelopment.

i) Properties under development subject to development management agreementsThese properties under development (including certain leasehold property interests) are subject to various developmentmanagement agreements with Penguin, Walmart Canada Realty Inc. and Hopewell Development Corporation (Hopewell)– a company in which a Trustee is an officer.

In certain events, the developer may sell a portion of undeveloped land to accommodate the construction plan that providesthe best use of the property, reimbursing the Trust its costs related to such portion and, in some cases, a profit based ona pre-negotiated formula. Pursuant to the development management agreements, the vendors assume responsibility formanaging the development of the land on behalf of the Trust and are granted the right for a period of up to 10 years toearn an Earnout Fee. On completion and rental of additional space on these properties, the Trust is obligated to pay theEarnout Fee and to purchase the additional developments, at a total price calculated by a formula using the net operatingrents and predetermined negotiated capitalization rates, on the date rent becomes payable on the additional space (GrossCost). The Earnout Fee is calculated as the Gross Cost less the associated land and development costs incurred by theTrust.

For additional space completed on land with a fair value of $33,570 (December 31, 2014 – $26,282), the fixed predeterminednegotiated capitalization rates range from 5.71% to 8.23% during the five-year period of the respective developmentmanagement agreements. For additional space completed on land with a fair value of $59,835 (December 31, 2014 –$55,981), the predetermined negotiated capitalization rates are fixed for each contract for either the first one, two, three,four or five years, ranging from 5.60% to 8.00%, and then are determined by reference to the 10-year Government ofCanada bond rate at the time of completion plus a fixed predetermined negotiated spread ranging from 2.00% to 3.90%for the remaining term of the 10-year period of the respective development management agreements subject to a maximumcapitalization rate ranging from 6.60% to 9.50% and a minimum capitalization rate ranging from 5.75% to 7.50%.

For certain of these properties under development, Penguin and other unrelated parties have been granted Earnout optionsthat give them the right, at their option, to invest up to 40% of the Earnout Fee for one of the agreements and up to 30%to 40% of the Gross Cost for the remaining agreements in Trust Units, Class B and D LP Units, Class B and D LP III





Units, Class B LP IV Units, Class B and D Oshawa South LP Units, and Class B and D Oshawa Taunton LP Units, atpredetermined option strike prices subject to a maximum number of units (Note 12(b)).

For the nine months ended September 30, 2015, the Trust completed 37,523 square feet (nine months ended September 30,2014 – 78,089 square feet) of retail space.

The Earnout options that Penguin elected to exercise during the three and nine months ended September 30, 2015 andSeptember 30, 2014 resulted in proceeds as follows:

Three Months Ended September 30 Nine Months Ended September 302015 2014 2015 2014

Trust Units (Note 12(b)) — — — 3,475Class B LP Units (Note 12(b)) 380 1,431 1,334 2,406Class B LP III Units (Note 12(b)) 2,626 458 2,744 733Class B LP IV Units (Note 12(b)) 440 — 440 —

3,446 1,889 4,518 6,614

The development costs incurred (exclusive of cost of land previously acquired) and Earnout Fees paid to vendors relatingto the completed retail spaces that have been reclassified to income properties during the three and nine months endedSeptember 30, 2015 and September 30, 2014 are as follows:


Development costs incurred 2,391 2,365 6,601 16,361Earnout Fees 3,274 3,010 6,713 6,646

5,665 5,375 13,314 23,007

Certain vendors have provided interest bearing loans to finance additional costs of development and non-interest bearingloans for the initial land acquisition costs.

ii) Properties under development not subject to development management agreementsThese properties under development are being developed directly by the Trust. Penguin and the other vendors had beengranted Earnout options that gave them the right, at their option, to acquire Class B Series 1 LP Units, at predeterminedoption strike prices, on the completion and rental by the Trust of additional space on certain of these properties underdevelopment, subject to a maximum number of units (Note 12(b)). These Earnout options expired effective July 1, 2015.

During the three and nine months ended September 30, 2015, the Trust completed the development and leasing of certainincome properties on properties under development not subject to development management agreements. The followingpresents the carrying value of properties, which has been reclassified from properties under development to incomeproperties and the Earnout options exercised on the completion and rental of additional space.


Land and development costs incurred 2,728 14,453 24,038 29,475Issuance of Class B Series 1 LP Units (Note 12(b)) — — — 2,307

For the three and nine months ended September 30, 2015, nil (September 30, 2014 – 114,786) Class B Series 1 LP Unitswere issued on exercise of Earnout options relating to the completion and rental of additional space.

5. Mortgages and loans receivableMortgages and loans receivable consist of the following:

September 30, 2015 December 31, 2014Mortgages receivable (a) 125,432 137,110Loans receivable (b) 54,742 54,742

180,174 191,852

Current — 7,701Non-current 180,174 184,151

180,174 191,852





a) Mortgages receivable of $125,432 (December 31, 2014 – $137,110) have been provided pursuant to agreements with Penguin inwhich the Trust will lend up to $287,345 (December 31, 2014 – $316,435) for use in acquiring and/or developing 10 (December 31,2014 – 11) properties across Ontario, Quebec and British Columbia.

Interest on these mortgages accrues monthly at a variable rate based on the banker's acceptance rate plus 1.75% to 2.00%(December 31, 2014 – 1.75% to 2.00%) on mortgages receivable of $26,412 (December 31, 2014 – $25,508) and at a fixed rateof 6.35% to 7.75% (December 31, 2014 – 6.35% to 7.75%) on mortgages receivable of $99,020 (December 31, 2014 – $111,602)and is added to the outstanding principal up to a predetermined maximum accrual after which it is payable in cash monthly orquarterly. The interest rate on mortgages receivable of $41,420 resets at various dates between 2015 and 2018 to the four-yearGovernment of Canada bond rate plus 4%, subject to an upper limit (ranging from 7.75% to 8.25%) and lower limit (ranging from6.75% to 7.25%). As at September 30, 2015, the interest rate on four mortgages receivable of $68,510 has been reset to interestrates ranging from 6.75% to 7.75%. There are three mortgages receivable with an outstanding balance of $15,502 where the interestrate does not reset. A further $76,603 (December 31, 2014 – $87,116) may be accrued on certain of the various mortgages receivablebefore cash interest must be paid. The principal and unpaid interest amounts are due at the maturity of the mortgages at variousdates between 2015 and 2022. The mortgage security includes a first or second charge on properties, assignments of rents andleases, and general security agreements. In addition, $105,572 (December 31, 2014 – $111,188) of the outstanding balance isguaranteed by Penguin Properties Inc., one of Penguin's companies. The loans are subject to individual loan guarantee agreementsthat provide additional guarantees for all interest and principal advanced on extension amounts as described below for all 10 loans.The guarantees reduce on achievement of certain specified value-enhancing events. All mortgages receivable are considered bymanagement to be fully collectible.

The following provides the total interest accrued and repayments for the three and nine months ended September 30:


Interest accrued 2,010 2,187 6,184 6,778Repayments (11,862) — (17,862) (37,444)

(9,852) 2,187 (11,678) (30,666)

The following provides further details on these mortgages receivable:

• For mortgages totalling $91,784 (December 31, 2014 – $104,366), the Trust has an option to acquire a 50% interest in the sixproperties (December 31, 2014 – six) on substantial completion at an agreed upon formula using the net operating rents anda capitalization rate based on the ten-year Government of Canada bond rate at the time of completion plus a fixedpredetermined negotiated spread ranging from 2.55% to 3.25% (December 31, 2014 – 2.55% to 3.25%) within a specifiedrange as follows: should the capitalization rate exceed the upper limit ranging from 7.75% to 8.50%, the owner is not obligatedto sell, with one exception, where the owner is obligated to sell, as there is no upper limit; should the capitalization rate beless than the lower limit, then the lower limit ranging from 6.50% to 7.00% is deemed to be the capitalization rate, with oneexception, where no lower limit exists.

• The Trust has two (December 31, 2014 – two) agreements to loan Penguin up to $23,264 and $27,077 (December 31, 2014– $23,264 and $27,077), maturing in October 2017 and December 2020, respectively, for Penguin to use in acquiring anddeveloping two properties in which the Trust has the other 50% co-ownership interest. The Trust has advanced $15,502 and$18,146, respectively, on these mortgages as at September 30, 2015 (December 31, 2014 – $14,996 and $17,748, respectively).

• The Trust has two (December 31, 2014 – three) agreements to loan Penguin its share of future investments in two projectsof $18,262 (December 31, 2014 – $18,262) and $5,721 (December 31, 2014 – $5,721) at an interest rate of 7.50% for a ten-year term maturing in December 2022 and a nine-year term maturing in December 2022, respectively, secured by a first chargeon Penguin's interest in the property and a guarantee by Penguin. Based on the two agreements (December 31, 2014 – three),$11,689 (December 31, 2014 – $20,495) is available as advances in cash and $12,294 (December 31, 2014 – $14,716) inadditional accrued interest. No amounts have been drawn on these two agreements as at September 30, 2015 (December 31,2014 – $nil).

• On February 27, 2015, the Trust received a partial payment of $6,000 on one mortgage receivable with existing commitmentsof $10,310.

• During the quarter, the Trust received partial payments of $10,000 on four mortgages receivable with existing commitmentsof $169,766, and full repayment of $1,862 on one mortgage receivable with no further commitments.





b) Loans receivable as at September 30, 2015 of $54,742 (December 31, 2014 - $54,742) comprise the following:

• Notes receivable of $2,928 (December 31, 2014 – $2,928) have been granted to Penguin. These secured demand notes bearinterest at 9.00% per annum. During the three and nine months ended September 30, 2015, $nil (three and nine months endedSeptember 30, 2014 – $nil) was advanced or repaid.

• Loan receivable of $11,500 (December 31, 2014 – $11,500) has been provided pursuant to an agreement with an unrelatedparty. The loan bears interest at 4.50%, matures in 2018 and is secured by either a first or second charge on properties,assignments of rents and leases and general security agreements. During the three and nine months ended September 30,2015, $nil (three and nine months ended September 30, 2014 – $nil) was advanced or repaid.

• Loan receivable of $40,314 (December 31, 2014 – $40,314) has been provided pursuant to an agreement with OneREIT(formerly known as Retrocom Real Estate Investment Trust). The loan matures at October 30, 2016, is secured by a subordinatecharge on seven properties, bears interest at 5.75% during the first year and 6.75% during the second year, and is repayablebefore the maturity date without penalty.

The estimated fair values of the mortgages, loans and notes receivable based on current market rates for mortgages, loans and notesreceivable with similar terms and risks are disclosed in Note 13.

6. Investment in associatesIn 2012, the Trust entered into the Penguin-Calloway Vaughan Partnership ("PCV Partnership") with Penguin to develop the VaughanMetropolitan Centre ("VMC"), which is expected to consist of approximately 6.0 million square feet in total on 53 acres of developmentland in Vaughan, Ontario. The Trust has determined it has significant influence over the investment and, accordingly, has accountedfor its investment using the equity method of accounting. Should there be any proposed activity that could cause the Trust to violateits REIT status as certain developments may be prohibited under the SIFT Rules and other circumstances, the Trust has an option toput certain portions of its interest in the arrangement at fair value to Penguin and may be required to provide financing to Penguin.

The following summarizes information about the Trust's investment in associates:

September 30, 2015 December 31, 2014Investment – beginning of period 100,179 77,538Contributions 6,085 18,180Earnings 2,775 5,226Distributions received (350) (765)Investment – end of period 108,689 100,179

September 30, 2015 December 31, 2014Non-current assets 273,223 209,800Cash and cash equivalents 1,040 1,982Other current assets 589 61Total assets 274,852 211,843

Non-current liabilities 34,171 2,842Current liabilities 23,304 8,643Total liabilities 57,475 11,485

Net assets 217,377 200,358

Trust's share of net assets (50%) 108,689 100,179






Net rental incomeRentals from investment properties 894 800 2,586 2,622Property operating costs (364) (220) (978) (890)

Net rental income 530 580 1,608 1,732

Other income and expensesFair value gain on revaluation of investment properties 4,054 22 4,008 4,158Interest expense (21) (26) (69) (84)Interest income — — 2 2

Net income and comprehensive income 4,563 576 5,549 5,808

Trust's share of earnings (50%) 2,282 288 2,775 2,904

The PCV Partnership has entered into various development construction contracts with existing commitments totalling $104,462, ofwhich the Trust's share is $52,231.

On January 19, 2015, the PCV Partnership completed development financing of $189,000, of which the Trust's share is 50%, whichbears an interest rate of banker's acceptance rates plus 1.40%, is secured by a first charge over the property and matures on January16, 2019. On February 27, 2015, the Trust entered into an agreement to fix the banker's acceptance rate at 1.48%, which resulted ina fixed effective interest rate of 2.88% locked for the term and extended the loan maturity date to January 16, 2020. The financingcomprises pre-development, construction and letters of credit facilities. The obligations of the credit facilities are joint and several toeach of the VMC general partners.

September 30, 2015Development facility 189,000Amount drawn on development facility (31,800)Remaining unused development facility 157,200

Trust's share of amount drawn on development facility (50%) (15,900)

7. Other assetsThe components of other assets are as follows:

September 30, 2015 December 31, 2014Straight-line rent receivables 44,262 42,666Tenant incentives 33,894 32,241Equipment (a) 2,600 1,635

80,756 76,542

(a) Equipment


CostAccumulatedAmortization Net Cost

AccumulatedAmortization Net

Office furniture and fixtures 1,239 77 1,162 119 110 9Computer hardware 182 59 123 81 31 50Computer software 2,773 1,458 1,315 2,735 1,159 1,576

4,194 1,594 2,600 2,935 1,300 1,635

During the three months ended September 30, 2015, the total additions to equipment amounted to $19 (three months endedSeptember 30, 2014 – $28). During the nine months ended September 30, 2015, the total additions to equipment amounted to $1,368(nine months ended September 30, 2014 – $28), $1,213 of which related to the acquisition of the Penguin platform (see Note 8) (ninemonths ended September 30, 2014 – $nil). The total amortization expense recognized in the three months ended September 30, 2015amounted to $179 (three months ended September 30, 2014 – $111). The total amortization expense recognized in the nine monthsended September 30, 2015 amounted to $403 (nine months ended September 30, 2014 – $334).





8. Intangible assetsThe components of intangible assets are as follows:

September 30, 2015Key joint venture relationships 36,944Trademarks 2,995Goodwill 13,979Total intangible assets 53,918

On May 28, 2015, the Trust completed the acquisition of the Penguin platform (Note 3) which includes substantially all Penguinemployees that are involved in the acquisition, development, design, construction and leasing of current and future shopping centres for a purchase price of $55,131, which includes $53,918 of intangible assets noted above and $1,213 of office furniture and fixture(Note 7).

The transaction costs related to the platform and brand acquisition in the amount of $1,018 are recorded as acquisition costs in theinterim condensed consolidated statements of income and comprehensive income for the three and nine months ended September 30,2015.

9. Amounts receivable, prepaid expenses and deferred financing costsThe components of amounts receivable, prepaid expenses and deferred financing costs are as follows:

September 30, 2015 December 31, 2014Amounts receivable

Tenant receivables – net of allowance 14,247 5,250Other tenant receivables 7,933 8,672Other receivables 4,762 1,251

26,942 15,173Prepaid expenses and deposits 36,677 6,025Deferred financing costs 692 893

64,311 22,091

Tenant receivablesThe reconciliation of changes in the allowance for bad debts on tenant receivables is as follows:



Balance – beginning of period 2,949 2,669

Additional allowance recognized as expense 1,801 770Reversal of previous allowances (433) (303)Net additional allowance 1,368 467

Tenant receivables written off during the period (260) (337)Balance – end of period 4,057 2,799

The total additional allowance of $1,368 (September 30, 2014 – increase in allowance of $467) net of reversals of previous allowancesof $433 (September 30, 2014 – $303) relates to allowances for specific tenant receivable impairments. Amounts written off totalling$260 (September 30, 2014 – $337) relate to uncollectible amounts from specific tenants that have vacated their premises or where thereis a settlement of a specific amount.

Tenant receivables representing contractual rental payments from tenants are due at the beginning of each month. Annual commonarea maintenance ("CAM") and property taxes are considered past due 60 days after billing. Tenant receivables less than 90 days oldtotal $9,579 (December 31, 2014 – $1,476). The tenant receivable amounts older than 90 days totalling $4,668 (December 31, 2014 –$3,774), net of bad debt allowances of $4,057 (December 31, 2014 – $2,949), primarily pertain to CAM and property tax queries. Thenet amounts over 90 days old are at various stages of the collection process and are considered by management to be collectible.

Other tenant receivablesOther tenant receivables totalling $7,933 (December 31, 2014 – $8,672) pertain to unbilled CAM and property tax recoveries andcharge-backs, property taxes receivable from municipalities and insurance claims. These amounts are considered current and/orcollectible and are at various stages of the billing and collection process, as applicable.























Other receivablesOther receivables consist primarily of related party receivables. At September 30, 2015, other receivables are neither past due norimpaired and there are no indications as at September 30, 2015 that the debtors will not meet their payment obligations.

Prepaid expenses and depositsPrepaid expenses and deposits consist primarily of prepaid property operating expenses and deposits relating to acquisitions andEarnouts.

Deferred financing costsDeferred financing costs that relate to the revolving operating facility consist of the following:


CostAccumulatedAmortization Net Cost

AccumulatedAmortization Net

Deferred financing costs 1,016 324 692 971 78 893

Amortization of deferred financing costs is included in interest expense (Note 10(e)).

10. DebtDebt consists of the following:

September 30, 2015 December 31, 2014Secured debt (a) 2,618,671 1,695,095Revolving operating facility (b) — 17,000Unsecured debentures (c) 1,242,648 1,232,618Convertible debentures (d) — 56,987

3,861,319 3,001,700

Current 258,731 427,688Non-current 3,602,588 2,574,012

3,861,319 3,001,700

a) Secured debtSecured debt bears interest at a weighted average stated interest rate of 3.85% at September 30, 2015 (December 31, 2014 – 5.03%).The total includes $2,116,697 (December 31, 2014 – $1,612,987) at fixed rates and $501,974 (December 31, 2014 – $82,108) atvariable interest rates based on banker's acceptance rates plus a margin. Secured debt matures at various dates between 2016 and2031 and is secured by first or second registered mortgages over specific investment properties and properties under developmentand first general assignments of leases, insurance and registered chattel mortgages.

Principal repayment requirements for secured debt are as follows:

InstalmentPayments

Lump Sum Paymentsat Maturity Total

2015 17,919 — 17,9192016 73,518 154,165 227,6832017 72,686 243,929 316,6152018 60,295 334,841 395,1362019 55,402 341,279 396,681Thereafter 250,755 1,010,056 1,260,811

530,575 2,084,270 2,614,845Acquisition date fair value adjustment 11,455Unamortized financing costs (7,629)

2,618,671

b) Revolving operating facilityAs at September 30, 2015, the Trust had $nil (December 31, 2014 – $17,000) outstanding on its operating facility of $350,000(December 31, 2014 – $350,000). The operating facility bears interest at a variable interest rate based on bank prime rate plus0.45% or banker's acceptance rates plus 1.45%, and expires on September 30, 2017.





September 30, 2015 December 31, 2014Revolving operating facility 350,000 350,000Lines of credit – outstanding — (17,000)Letters of credit – outstanding (17,866) (29,749)Remaining unused operating facility 332,134 303,251

c) Unsecured debentures

Maturity Date Annual Interest Rate Interest Payable Dates September 30, 2015 December 31, 2014Series B October 12, 2016 5.370% October 12 and April 12 — 150,000Series F February 1, 2019 5.000% February 1 and August 1 100,000 100,000Series G August 22, 2018 4.700% February 22 and August 22 90,000 90,000Series H July 27, 2020 4.050% January 27 and July 27 150,000 150,000Series I May 30, 2023 3.985% November 30 and May 30 200,000 200,000Series J December 1, 2017 3.385% June 1 and December 1 150,000 150,000

Series K October 16, 2015 Variable rate (1)January 16, April 16, July 16

and October 16 100,000 100,000Series L February 11, 2021 3.749% February 11 and August 11 150,000 150,000Series M July 22, 2022 3.730% January 22 and June 22 150,000 150,000Series N February 6, 2025 3.556% February 6 and August 6 160,000 —

1,250,000 1,240,000Less: Unamortized financing costs (7,352) (7,382)

1,242,648 1,232,618

(1) Variable rate based on the three-month Canadian Dealer Offered Rate plus 1.38% per annum.

IssuancesOn February 6, 2015, the Trust issued $160,000 (net proceeds including issuance costs - $158,800) of 3.556% Series N seniorunsecured debentures due on February 6, 2025, with semi-annual payments due on February 6 and August 6 each year. Theproceeds were used to redeem the outstanding principal on the 5.37% Series B senior unsecured debentures totalling $150,000.

RedemptionsOn March 9, 2015, the Trust redeemed $150,000 aggregate principal amount of 5.37% Series B senior unsecured debentures. Inaddition to paying accrued interest of $3,266, the Trust paid a yield maintenance fee of $10,810 in connection with the redemptionof the 5.37% Series B senior unsecured debentures and wrote off unamortized financing costs of $212.

Dominion Bond Rating Services (DBRS) provides credit ratings of debt securities for commercial issuers that indicate the riskassociated with a borrower's capabilities to fulfill its obligations. An investment grade rating must exceed "BB", with the highestrating being "AAA". The Trust's debentures are rated "BBB" with a stable trend at September 30, 2015.

d) Convertible debentures

September 30, 2015 December 31, 20145.75% convertible unsecured subordinated debentures — 57,723Less: Unamortized financing costs — (736)

— 56,987

On January 5, 2010, the Trust issued $60,000 of 5.75% convertible unsecured subordinated debentures ("the 5.75% convertibledebentures") due on June 30, 2017. The 5.75% convertible debentures were convertible at the holder's option at any time intoTrust Units at $25.75 per Unit and could not have been redeemed prior to June 30, 2013. On or after June 30, 2013, but prior toJune 30, 2015, the 5.75% convertible debentures were redeemable by the Trust, in whole or in part, at a price equal to the principalamount plus accrued and unpaid interest, provided the weighted average trading price of the Trust's Units for the 20 consecutivetrading days, ending on the fifth trading day immediately preceding the date on which notice of redemption was given, was notless than 125% of the conversion price. On or after June 30, 2015, the 5.75% convertible debentures were redeemable by the Trustat any time. During the three months ended September 30, 2015, $nil of the face value of the 5.75% convertible debentures (threemonths ended September 30, 2014 – $nil) was converted into Trust Units ((Note 14(c)). During the nine months endedSeptember 30, 2015, $56,457 of the face value of the 5.75% convertible debentures (nine months ended September 30, 2014 –$25) was converted into Trust Units ((Note 14(c)). On May 27, 2015, the Trust issued notice of redemption of the 5.75% convertibledebentures with an aggregate principal amount outstanding of $55,600, to be redeemed on June 30, 2015. The debenture holdershad options until June 29, 2015 to convert their debentures into Trust Units at a conversion price of $25.75 per Unit. On





June 30, 2015, the Trust redeemed the balance of the 5.75% convertible debentures for $3,312 in cash. As a result, at September 30,2015, $nil of the face value of the 5.75% convertible debentures was outstanding (December 31, 2014 – $59,769).

e) Interest expenseInterest expense consists of the following:


Interest at stated rate 37,911 36,663 109,009 110,570Yield maintenance on redemption of unsecured debentures

(Note 10(c)) — — 10,810 13,367Amortization of acquisition date fair value adjustments on

assumed debt (973) (377) (1,880) (1,166)Accretion of convertible debentures — 182 354 536Amortization of deferred financing costs 798 964 3,544 3,389Distributions on vested deferred units classified as liabilities

(Note 12(d)) 259 255 756 754Distributions on LP Units classified as liabilities (Note 15) 267 120 563 361

38,262 37,807 123,156 127,811Less: Interest capitalized to properties under development (6,045) (3,145) (13,166) (9,098)

32,217 34,662 109,990 118,713

11. Accounts and other payablesAccounts and other payables (current) consist of the following:

September 30, 2015 December 31, 2014Accounts payable – operations and development (i) 67,353 60,263Tenant prepaid rent, deposits and other payables 46,455 32,551Accrued interest payable 17,842 21,549Distributions payable 20,506 18,185Realty taxes payable 7,690 6,741Current portion of future land obligations (ii) 2,519 2,594

162,365 141,883

Other payables (non-current) consist of the following:

September 30, 2015 December 31, 2014Non-current portion of future land obligations (ii) 15,458 15,918Finance lease obligations (Note 4(a)(ii)) 7,564 1,131

23,022 17,049

(i) The Trust has a long term incentive plan ("LTIP") that awards officers of the Trust with performance units that are linked to thelong term performance of Trust Units relative to REITs comprising the S&P/TSX Capped REIT Index (the peer group).Performance units vest over a performance period of three years and are settled for cash based on the market value of Trust Unitsat the end of the performance period. As at September 30, 2015, the Trust has accrued $2,119 (December 31, 2014 – $259) relatedto the LTIP in accounts payable.

(ii) The future land development obligations represent payments required to be made to Penguin for certain undeveloped landsacquired in December 2006, July 2007, September 2010 and August 2011, either on completion and rental of additional space onthe undeveloped lands or, if no additional space is completed on the undeveloped lands, at the expiry of the 10-year developmentmanagement agreement periods ending in 2016, 2017, 2020 and 2021. The accrued future land development obligations wereinitially measured at their estimated fair values using an imputed interest rate of 5.50%. For the three months ended September 30,2015, imputed interest of $247 (three months ended September 30, 2014 – $251) was capitalized to properties under development.For the nine months ended September 30, 2015, imputed interest of $759 (nine months ended September 30, 2014 – $764) wascapitalized to properties under development.





12. Other financial instrumentsThe components of other financial instruments are as follows:

September 30, 2015 December 31, 2014LP Class D Units (a) 20,403 8,491Earnout options (b) 3,231 9,749Conversion feature of convertible debentures (c) — 1,783Deferred unit plan (d) 20,412 20,324

44,046 40,347

a) LP Units The following presents the number of LP Units issued and outstanding classified as other financial instruments. The LP Unitsare described in Note 13.

Total number of LP Units

Class DSeries 1 LP

Units

Class D Series 1Oshawa South

LP Units

Class D Series 1Oshawa Taunton

LP Units TotalBalance – January 1, 2014 311,022 — — 311,022Balance – September 30, 2014 311,022 — — 311,022

Balance – January 1, 2015 311,022 — — 311,022Units issued for properties acquired (Note 3) — 251,649 104,530 356,179Balance – September 30, 2015 311,022 251,649 104,530 667,201

Carrying value of LP Units

Class DSeries 1 LP

Units

Class D Series 1Oshawa South

LP Units

Class D Series 1Oshawa Taunton

LP Units TotalBalance – January 1, 2014 7,825 — — 7,825Change in carrying value 174 — — 174Balance – September 30, 2014 7,999 — — 7,999

Balance – January 1, 2015 8,491 — — 8,491Change in carrying value 1,020 473 197 1,690Units issued for properties acquired (Note 3) — 7,222 3,000 10,222Balance – September 30, 2015 9,511 7,695 3,197 20,403

b) Earnout options As part of the consideration paid for certain income property acquisitions, the Trust has granted options in connection with thedevelopment management agreements (Note 4(b)(i)) and in connection with properties under development not subject todevelopment management agreements (Note 4(b)(ii)). On completion and rental of additional space on specific properties, theEarnout options vest and the holder may elect to exercise the options and receive Trust Units, Class B LP Units, Class D LP Units,Class B LP III Units, Class B LP IV Units, Class B Oshawa South LP Units, Class D Oshawa South LP Units, Class B OshawaTaunton LP Units, Class D Oshawa Taunton LP Units and Class B Boxgrove LP Units, as applicable. Earnout options that havenot vested expire at the end of the term of the corresponding development management agreement. In certain circumstances,the Trust may be required to issue additional Earnout options to Penguin. The option strike prices were based on the market priceof Trust Units on the date the substantive terms were agreed and announced. In the case of Class B LP III Units, Class B LP IVUnits, Class B Oshawa South LP Units, Class D Oshawa South LP Units, Class B Oshawa Taunton LP Units, Class D OshawaTaunton LP Units and Class B Boxgrove LP Units, the strike price is the market price of the Trust Units at the date of exchange.





The following presents the number of Units granted, expired/cancelled, exercised and outstanding and proceeds for the ninemonths ended September 30, 2015:

Strike Price$

OptionsOutstandingat January 1,

2015#

AdditionalOptionsGranted

#

Options Expired/

Cancelled #

OptionsExercised

#

OptionsOutstanding

at September30, 2015

#

ProceedsDuring Nine

Months EndedSeptember 30,

2015$

Options to acquire TrustUnitsMarch 2005 (1) 19.60 53,040 — (53,040) — — —July 2005 (3) 20.10 776,438 — (776,438) — — —December 2006 29.55 to 33.55 57,344 — — — 57,344 —July 2007 29.55 to 33.00 1,348,223 — — — 1,348,223 —

2,235,045 — (829,478) — 1,405,567 —Options to acquire Class BLP Units and Class D LPUnits (2)

July 2005 (Earnout) 20.10 1,446,915 — — (66,389) 1,380,526 1,334July 2005 (Development) (3) 20.10 1,560,382 — (1,560,382) — — —December 2006 29.55 to 30.55 2,303,267 — — — 2,303,267 —

July 2007 29.55 to 33.00 1,600,000 — — — 1,600,000 —June 2008 (4) 20.10 708,004 — — — 708,004 —

7,618,568 — (1,560,382) (66,389) 5,991,797 1,334Options to acquire Class BLP III Units (5)(10)

September 2010 Market price 771,974 — (14,744) (44,768) 712,462 967August 2011 Market price 621,465 — — (8,764) 612,701 118August 2013 Market price 621,746 — (18,465) — 603,281 —September 2014 Market price 424,432 — (18,293) (63,288) 342,851 1,659

2,439,617 — (51,502) (116,820) 2,271,295 2,744Options to acquire Class BLP IV Units(6)(10)

May 2015 Market price — 480,000 (201) (15,338) 464,461 440— 480,000 (201) (15,338) 464,461 440

Options to acquire Class BOshawa South LP Units andClass D Oshawa South LPUnits(7)

May 2015 Market price — 60,000 — — 60,000 —— 60,000 — — 60,000 —

Options to acquire Class BOshawa Taunton LP Unitsand Class D OshawaTaunton LP Units(8)

May 2015 Market price — 460,000 — — 460,000 —— 460,000 — — 460,000 —

Options to acquire Class BBoxgrove LP Units(9)

May 2015 Market price — 170,000 — — 170,000 —— 170,000 — — 170,000 —

Total Earnout options 12,293,230 1,170,000 (2,441,563) (198,547) 10,823,120 4,518

(1) As at March 1, 2015, all remaining options have expired and are therefore no longer exercisable.(2) Each option is represented by a corresponding Class C LP Unit or Class E LP Unit.(3) As at July 1, 2015, all remaining Earnout and development options have expired and are therefore no longer exercisable.(4) Each option is convertible into Class F Series 3 LP Units. At the holder’s option, the Class F Series 3 LP Units may be redeemed for cash at $20.10 per Unit or, on the completion

and rental of additional space on certain development properties, the Class F Series 3 LP Units may be exchanged for Class B LP Units.(5) Each option is represented by a corresponding Class C LP III Unit. (6) Each option is represented by a corresponding Class C LP IV Unit. (7) Each option is represented by a corresponding Class C Oshawa South LP Unit or Class E Oshawa South LP Unit. (8) Each option is represented by a corresponding Class C Oshawa Taunton LP Unit or Class E Oshawa Taunton LP Unit. (9) Each option is represented by a corresponding Class C Boxgrove LP Unit. (10) During the nine months ended September 30, 2015, 59,512 Class C LP III Series 4 Units, 8,764 Class C LP III Series 5 Units, 18,465 Class C LP III Series 6 Units, 81,581 Class

C LP III Series 7 Units and 15,539 Class C LP IV Series 1 Units, were available for conversion into Class B LP III Series 4 Units, Class B LP III Series 5 Units, Class B LP IIISeries 6 Units, Class B LP III Series 7 Units and Class B LP IV Series 1 Units, respectively, of which 44,768 Class C LP III Series 4 Units, 8,764 Class C LP III Series 5 Units,63,288 Class C LP III Series 7 Units and 15,338 Class C LP IV Series 1 Units were exercised using the predetermined conversion prices, in exchange for 33,288 Class B LP IIISeries 4 Units, 4,052 Class B LP III Series 5 Units, 56,907 Class B LP III Series 7 Units and 15,156 Class B LP IV Series 1 Units, respectively, issued based on the market price atthe time of issuance. 14,744 Class C LP III Series 4 Units, 18,465 Class C LP III Series 6 Units, 18,293 Class C LP III Series 7 Units and 201 Class C LP IV Series 1 Units werecancelled due to the price differential between the market price and fixed conversion price.





The following presents the number of units recognized, expired/cancelled, exercised and outstanding and proceeds for the ninemonths ended September 30, 2014:

Strike Price$

OptionsOutstandingat January 1,

2014#

AdditionalOptions

Recognized#

Options Expired/

Cancelled #

OptionsExercised

#

OptionsOutstanding

atSeptember

30, 2014#

Proceeds During Nine

Months EndedSeptember 30,

2014$

Options to acquire Trust UnitsFebruary 2004 (1) 14.00 95,452 48,334 — (143,786) — 2,013May 2004 15.25 1 — (1) — —November 2004 17.80 91,857 — — — 91,857 —March 2005 19.60 53,040 — — — 53,040 —July 2005 20.10 849,185 — — (72,747) 776,438 1,462

December 2006 (2)15.25, 29.55

to 33.55 57,344 — — — 57,344 —

July 200729.55 to

33.00 1,348,223 — — — 1,348,223 —2,495,102 48,334 (1) (216,533) 2,326,902 3,475

Options to acquire Class B LPUnits and Class D LP Units (3)

July 2005 (Earnout) 20.10 1,495,414 — — (48,499) 1,446,915 975July 2005 (Development) 20.10 1,675,823 — — (114,786) 1,561,037 2,307

December 2006 (2)15.25, 29.55

to 30.55 2,356,252 — — (52,985) 2,303,267 1,431

July 200729.55 to

33.00 1,600,000 — — — 1,600,000 —

June 2008 (4) 708,004 — — — 708,004 —7,835,493 — — (216,270) 7,619,223 4,713

Options to acquireClass B LP III Units (5)(6)

September 2010 Market price 771,974 — — — 771,974 —

August 2011 Market price 639,631 — (14,529) (3,637) 621,465 92

August 2013 Market price 662,000 — (15,328) (24,926) 621,746 641

September 2014 Market price — 450,000 — — 450,000 —

2,073,605 450,000 (29,857) (28,563) 2,465,185 733Total Earnout options 12,404,200 498,334 (29,858) (461,366) 12,411,310 8,921

(1) Pursuant to agreements entered into in February 2004, Penguin was entitled to 2,500,000 options. However, at the time of issuance, it was estimated that only 1,860,000 optionswould be exercised based on management's best estimates. As of June 30, 2014, Penguin was entitled to an additional 48,334 options with respect to additional density created onexisting Earnout properties, which were all exercised during the period. The recognition of these additional options resulted in a remeasurement of the fair value of the Earnoutoptions in the amount of $621, which was included in the fair value change in earnings.

(2) Prior to September 30, 2014, 45,233 options were exercisable at $15.25 after both a May 2004 and December 2006 Earnout occurs (for Trust or LP Units). During the three andnine months ended September 30, 2014, 9,434 options were exercised at $15.25 while the remaining 35,799 options are no longer exercisable at $15.25 as there are no more May2004 Earnouts remaining.

(3) Each option is represented by a corresponding Class C LP Unit or Class E LP Unit.(4) Each option is convertible into Class F Series 3 LP Units. At the holder’s option, the Class F Series 3 LP Units may be redeemed for cash at $20.10 per Unit or, on the completion

and rental of additional space on certain development properties, the Class F Series 3 LP Units may be exchanged for Class B LP Units.(5) Each option is represented by a corresponding Class C LP III Unit. (6) During the nine months ended September 30, 2014, nil Class C LP III Series 4 Units, 18,166 Class C LP III Series 5 Units, 40,254 Class C LP III Series 6 Units and nil Class C

LP III Series 7 Units were available for conversion into Class B LP III Series 4 Units, Class B LP III Series 5 Units, Class B LP III Series 6 Units and Class B LP III Series 7 Units,respectively, of which nil Class C LP III Series 4 Units, 3,637 Class C LP III Series 5 Units, 24,926 Class C LP III Series 6 Units and nil Class C LP III Series 7 Units were exercisedusing the predetermined conversion prices, in exchange for nil Class B LP III Series 4 Units, 3,707 Class B LP III Series 5 Units, 24,795 Class B LP III Series 6 Units and nil ClassB LP III Series 7 Units, respectively, issued based on the market price at the time of issuance. 14,529 Class C LP III Series 5 Units and 15,328 Class C LP III Series 6 Units werecancelled due to the price differential between the market price and fixed conversion price. 450,000 Class C LP III Series 7 Units were granted (Note 3(a)).





The following summarizes the change in the fair value of the Earnout options:

Three Months Ended September Nine Months Ended September2015 2014 2015 2014

Fair value – beginning of period 7,513 9,455 9,749 8,222Trust options exercised — — — (2,077)LP options exercised (1) (163) (101) (491) (899)Fair value change (4,119) (530) (6,027) 3,578Fair value – end of period 3,231 8,824 3,231 8,824

(1) For the three months ended September 30, 2015, LP options exercised represent $163 relating to LP Units classified as equity (three months ended September 30, 2014 – $101)and $nil relating to LP Units classified as other financial instruments (three months ended September 30, 2014 – $nil). For the nine months ended September 30, 2015, LP optionsexercised represent $491 relating to LP Units classified as equity (nine months ended September 30, 2014 – $899) and $nil relating to LP Units classified as other financial instruments(nine months ended September 30, 2014 – $nil).

c) Conversion feature of convertible debenturesThe following represents the fair value of the conversion feature of the convertible debentures:


Fair value – beginning of period — 1,702 1,783 1,160Debentures converted (Note 14(c)) — — (3,062) (1)Fair value change — (1,266) 1,279 (723)Fair value – end of period — 436 — 436

d) Deferred unit planThe Trust has a deferred unit plan that entitles Trustees and senior management, at the participant's option, to receive deferredunits in consideration for Trustee fees or executive bonuses with the Trust matching the number of units received. On April 16,2015, the Trust amended the vesting schedule for Trustees which resulted in the immediate vesting of all outstanding Trustee unitsas well as immediate vesting of future granted units to Trustees. Any deferred units granted to senior management as part of theircompensation structure effectively vest immediately and the matching deferred units vest 50% on the third anniversary and 25%on each of the fourth and fifth anniversaries, subject to provisions for earlier vesting in certain events. The deferred units earnadditional deferred units for the distributions that would otherwise have been paid on the deferred units (i.e. had they instead beenissued as Trust Units on the date of grant). Once vested, participants are entitled to receive an equivalent number of Trust Unitsfor the vested deferred units and the corresponding additional deferred units. Deferred units are granted at the beginning of thefollowing fiscal year.

The outstanding number of deferred units for the periods ended September 30, 2015 and September 30, 2014 are summarized asfollows:

Outstanding Vested Non-VestedBalance – January 1, 2014 655,343 576,246 79,097Granted during the period 81,150 40,575 40,575Reinvested distributions 34,217 29,835 4,382Vested during the period — 31,857 (31,857)Exchanged for Trust Units (7,000) (7,000) —Redeemed for cash (4,000) (4,000) —Balance – September 30, 2014 759,710 667,513 92,197

Balance – January 1, 2015 795,375 689,908 105,467Granted during the period 85,406 44,768 40,638Reinvested distributions 29,375 26,337 3,038Vested during the period — 94,550 (94,550)Exchanged for Trust Units (10,000) (10,000) —Redeemed for cash (197,217) (197,217) —Forfeited during the period (2,958) — (2,958)Balance – September 30, 2015 699,981 648,346 51,635





The following represents the carrying value of the deferred unit plan as at September 30, 2015 and September 30, 2014:


Carrying value – beginning of period 19,086 18,428 20,324 15,805Deferred units granted for trustee fees and bonuses 105 — 1,270 1,007Reinvested distributions on vested deferred units (Note

10(e)) 259 255 756 754Compensation expense – reinvested distributions,

amortization and fair value change on unvesteddeferred units 169 144 1,838 620

Exchanged for Trust Units (1) (296) — (296) (179)Redeemed for cash (2) — — (6,141) (106)Fair value change – vested deferred units 1,089 (550) 2,661 376Carrying value – end of period 20,412 18,277 20,412 18,277

(1) During the three months ended September 30, 2015, 10,000 deferred units totalling $296 were exchanged for $296 of Trust Units (three months ended September 30, 2014 – nildeferred units totalling $nil were exchanged). During the nine months ended September 30, 2015, 10,000 deferred units totalling $296 were exchanged for $296 of Trust Units(nine months ended September 30, 2014 – 7,000 deferred units totalling $179 were exchanged for $177 of Trust Units net of payroll taxes).

(2) During the three months ended September 30, 2015, nil deferred units totalling $nil were redeemed (three months ended September 30, 2014 – nil deferred units totalling $nilwere redeemed). During the nine months ended September 30, 2015, 197,217 deferred units totalling $6,141 were redeemed for $6,015 of cash net of payroll taxes (nine monthsended September 30, 2014 – 4,000 deferred units totalling $106 were redeemed for $104 of cash net of payroll taxes).

13. Fair value of financial instrumentsThe fair value of financial instruments is the amount for which an asset could be exchanged or a liability settled between knowledgeable,willing parties in an arm's length transaction based on the current market for assets and liabilities with the same risks, principal andremaining maturity.

The carrying value of the Trust's financial assets included in amounts receivable, deposits, cash and cash equivalents and financialliabilities included in accounts payable and accrued liabilities approximates their fair value because of the short period to receipt orpayment of cash. The fair value of the LP Units classified as liabilities is based on the market price of the Trust Units. The fair valuesof mortgages and loans receivable, secured debt and credit facilities are estimated based on discounted future cash flows using discountedrates that reflect current market conditions for instruments with similar terms and risks. The fair value of Earnout options is determinedusing the Black-Scholes option-pricing model using certain observable inputs with respect to the volatility of the underlying Trust Unitprice, the risk free interest rate and using unobservable inputs with respect to the anticipated expected lives of the options, how manywill ultimately vest and the expected Trust Unit distribution rate. Generally, increases in the anticipated lives of the options, decreasesin the number of options that will ultimately vest and decreases in the expected Trust Unit distribution rate result in a lower fair valueof the Earnout options. The fair value of the convertible debentures and unsecured debentures is based on their market price. Thefair value of the conversion feature of the convertible debentures is determined using the differential approach between the marketprice of the convertible debentures and the present value of unsecured debentures that reflects current market conditions for instrumentswith similar terms and risks. The deferred units are measured at fair value using the market price of the Trust Units on each reportingdate with changes in fair value recognized in the interim condensed consolidated statements of income and comprehensive income asadditional compensation expense over their vesting period and as a gain or loss on financial instruments once vested. Such fair valueestimates are not necessarily indicative of the amounts the Trust might pay or receive in actual market transactions.

The fair value of the Trust's financial instruments is summarized in the following table:

September 30, 2015 December 31, 2014Fair value

through profitor loss

Loans Receivable/Other Liabilities Total Total

Financial assetsMortgages and loans receivable — 175,805 175,805 188,493

Financial liabilitiesSecured debt — 2,760,900 2,760,900 1,826,724Revolving operating facilities — — — 17,000Unsecured debentures — 1,290,434 1,290,434 1,288,217LP Units — 20,403 20,403 8,491Convertible debentures inclusive of conversion feature — — — 65,375Earnout options 3,231 — 3,231 9,749Deferred unit plan 20,412 — 20,412 20,324





Fair value hierarchyThe Trust values financial assets and financial liabilities carried at fair value using quoted closing market prices, where available. Level1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical financial assets or financialliabilities. When quoted market prices are not available, the Trust maximizes the use of observable inputs within valuation models.When all significant inputs are observable, the valuation is classified as Level 2. Valuations that require the significant use of unobservableinputs are considered Level 3. Valuations at this level are more subjective and therefore more closely managed. Such testing has notindicated that any material difference would arise due to a change in input variables.

September 30, 2015 December 31, 2014Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Recurring measurementsFinancial liabilities

Conversion feature of convertible debentures — — — — 1,783 —Deferred unit plan — 20,412 — — 20,324 —Earnout options — — 3,231 — — 9,749

Refer to Note 12(b) for a reconciliation of Earnout option fair value measurements.

14. Unit equityThe following presents the number of Units issued and outstanding, and the related carrying value of Unit equity, for the nine monthsended September 30, 2015 and September 30, 2014. The LP Units are classified as non-controlling interests in the interim condensedconsolidated balance sheets.

Number of Units Issued and Outstanding Carrying AmountTrustUnits

#LP Units

TotalUnits

#

TrustUnits

$

LPUnits

$Total

$(Tables A to C) (Tables D to F)

Balance – January 1, 2014 115,722,842 18,347,291 134,070,133 2,239,123 438,995 2,678,118Options exercised (Notes 12(b) and 4) (1) 216,533 244,772 461,305 5,552 6,345 11,897Deferred Units exchanged for Trust Units

(Note 12(d)) 6,906 — 6,906 177 — 177Distribution reinvestment plan (b) 826,268 — 826,268 21,520 — 21,520Debentures converted (c) 970 — 970 25 — 25Unit issuance cost — — — (87) — (87)Units issued for properties acquired (Note 3) — 354,000 354,000 — 9,285 9,285Balance – September 30, 2014 116,773,519 18,946,063 135,719,582 2,266,310 454,625 2,720,935

Balance – January 1, 2015 117,044,978 18,959,194 136,004,172 2,273,604 454,990 2,728,594Options exercised (Notes 12(b) and 4) (1) — 175,792 175,792 — 5,009 5,009Deferred Units exchanged for Trust Units (Note 12(d)) 10,000 — 10,000 296 — 296Distribution reinvestment plan (b) 940,319 — 940,319 27,799 — 27,799Debentures converted (c) 2,192,495 — 2,192,495 57,827 — 57,827Units issuance cost — — — (4,771) — (4,771)Units issued for properties acquired (Note 3) — 5,712,719 5,712,719 — 163,955 163,955Units issued for cash (Notes 3 and 8) 8,015,500 — 8,015,500 230,285 — 230,285Balance – September 30, 2015 128,203,292 24,847,705 153,050,997 2,585,040 623,954 3,208,994

(1) The carrying values of Trust Units and LP Units issued include the fair value of options on exercise of $nil and $491, respectively (nine months ended September 30, 2014 – $2,077 and$899).





Table A: Number of LP Units issued and outstanding – Class B Series 1, 2 and 3 LP Units and Class B LP II Units

Class BSeries 1LP Units


Class B Series 3LP Units

Class BLP II Units Total

Balance – January 1, 2014 14,489,474 820,756 720,432 756,525 16,787,187Options exercised (Note 12(b)) 163,285 52,985 — — 216,270Balance – September 30, 2014 14,652,759 873,741 720,432 756,525 17,003,457

Balance – January 1, 2015 14,653,414 873,741 720,432 756,525 17,004,112Options exercised (Note 12(b)) 66,389 — — — 66,389Balance – September 30, 2015 14,719,803 873,741 720,432 756,525 17,070,501

Table B: Number of LP Units issued and outstanding – Class B Series 4, 5, 6 and 7 LP III Units

Class BSeries 4

LP III Units

Class BSeries 5

LP III Units

Class BSeries 6

LP III Units

Class BSeries 7

LP III UnitsTotal

Balance – January 1, 2014 611,467 551,637 397,000 — 1,560,104Options exercised (Note 12(b)) — 3,707 24,795 — 28,502Units issued for properties acquired (Note 3) — — — 354,000 354,000Balance – September 30, 2014 611,467 555,344 421,795 354,000 1,942,606

Balance – January 1, 2015 611,467 555,344 421,795 366,476 1,955,082Options exercised (Note 12(b)) 33,288 4,052 — 56,907 94,247Balance – September 30, 2015 644,755 559,396 421,795 423,383 2,049,329

Table C: Number of LP Units issued and outstanding – Class B Series 8 LP III Units, Class B Series 1 LP IV Units, ClassB Series 1 Oshawa South LP Units and Class B Series 1 Oshawa Taunton LP Units

Class BSeries 8

LP III Units

Class BSeries 1

LP IV Units

Class BSeries 1

Oshawa SouthLP Units

Class BSeries 1

Oshawa TauntonLP Units

Total

Balance – January 1, 2014 — — — — —Balance – September 30, 2014 — — — — —

Balance – January 1, 2015 — — — — —Options exercised (Note 12(b)) — 15,156 — — 15,156Units issued for properties acquired (Note 3) 1,698,018 3,020,600 688,336 305,765 5,712,719Balance – September 30, 2015 1,698,018 3,035,756 688,336 305,765 5,727,875

Table D: Carrying value of LP Units – Class B Series 1, 2 and 3 LP Units and Class B LP II Units



Class B Series 3LP Units

Class BLP II Units Total

Balance – January 1, 2014 341,013 23,723 16,836 17,680 399,252Proceeds from options exercised (Note 12(b)) (1) 4,080 1,532 — — 5,612Balance – September 30, 2014 345,093 25,255 16,836 17,680 404,864

Balance – January 1, 2015 345,109 25,255 16,836 17,680 404,880Proceeds from options exercised (Note 12(b)) (1) 1,825 — — — 1,825Balance – September 30, 2015 346,934 25,255 16,836 17,680 406,705

(1) The carrying values of LP Units issued include the fair value of options on exercise of $491 (nine months ended September 30, 2014 – $899).





Table E: Carrying value of LP Units – Class B Series 4, 5, 6 and 7 LP III Units

Class BSeries 4

LP III Units

Class BSeries 5

LP III Units

Class BSeries 6

LP III Units

Class BSeries 7

LP III UnitsTotal

Balance – January 1, 2014 14,768 14,764 10,211 — 39,743Proceeds from options exercised (Note 12(b)) — 92 641 — 733Units issued for properties acquired (Note 3) — — — 9,285 9,285Balance – September 30, 2014 14,768 14,856 10,852 9,285 49,761

Balance – January 1, 2015 14,768 14,856 10,852 9,634 50,110Proceeds from options exercised (Note 12(b)) 967 118 — 1,659 2,744Balance – September 30, 2015 15,735 14,974 10,852 11,293 52,854

Table F: Carrying value of Class B Series 8 LP III Units, Class B Series 1 LP IV Units, Class B Series 1 Oshawa South LPUnits and Class B Series 1 Oshawa Taunton LP Units

Class BSeries 8

LP III Units

Class BSeries 1

LP IV Units

Class BSeries 1

Oshawa SouthLP Units

Class BSeries 1

Oshawa TauntonLP Units

Total

Balance – January 1, 2014 — — — — —Balance – September 30, 2014 — — — — —

Balance – January 1, 2015 — — — — —Options exercised (Note 12(b)) — 440 — — 440Units issued for properties acquired (Note 3) 48,732 86,692 19,755 8,776 163,955Balance – September 30, 2015 48,732 87,132 19,755 8,776 164,395

a) Authorized Units(i) Trust Units

The Trust is authorized to issue an unlimited number of voting trust units ("Trust Units"), each of which represents anequal undivided interest in the Trust. All Trust Units outstanding from time to time are entitled to participate pro rata inany distributions by the Trust and, in the event of termination or windup of the Trust, in the net assets of the Trust. AllTrust Units rank among themselves equally and rateably without discrimination, preference or priority. Unitholders areentitled to require the Trust to redeem all or any part of their Trust Units at prices determined and payable in accordancewith the conditions provided for in the Declaration of Trust. A maximum amount of $50 may be redeemed in total in anyone month unless otherwise waived by the Board of Trustees.

In accordance with the Declaration of Trust, distributions to Unitholders are declared at the discretion of the Trustees.The Trust endeavours to declare distributions in each taxation year in such an amount as is necessary to ensure that theTrust will not be subject to tax on its net income and net capital gains under Part I of the Income Tax Act (Canada) (the"Tax Act").

The Trust is authorized to issue an unlimited number of special voting units that will be used to provide voting rights toholders of securities exchangeable, including all series of Class B LP Units, Class D LP Units, Class B LP II Units, ClassB LP III Units, Class B LP IV Units, Class B Oshawa South LP Units, Class D Oshawa South LP Units, Class B OshawaTaunton Units, Class D Oshawa Taunton Units and Class B Boxgrove LP Units, into Trust Units. Special voting units arenot entitled to any interest or share in the distributions or net assets of the Trust. Each special voting unit entitles the holderto the number of votes at any meeting of Unitholders of the Trust that is equal to the number of Trust Units into whichthe exchangeable security is exchangeable or convertible. Special voting units are cancelled on the issuance of Trust Unitson exercise, conversion or cancellation of the corresponding exchangeable securities. At September 30, 2015, there were25,514,906 (December 31, 2014 – 19,270,216) special voting units outstanding. There is no value assigned to the specialvoting units. A July 2005 agreement preserves Penguin's voting rights at a minimum of 25.0% for a period of 10 yearscommencing on July 1, 2005, on the condition that Penguin's owner, Mitchell Goldhar, remains a Trustee of the Trust andowns at least 15,000,000 Trust Units, Class B LP and LP III Units, collectively. On May 26, 2015, the Trust extended thevoting rights agreement for an additional five years. These special voting units are not entitled to any interest or share inthe distributions or net assets of the Trust nor are they convertible to any Trust securities. The total number of specialvoting units is adjusted for each annual meeting of the Unitholders based on changes in Penguin's ownership interest.





(ii) Smart Limited Partnership Units Smart Limited Partnership ("LP"), formerly known as Calloway Limited Partnership, was formed on June 15, 2005, andcommenced activity on July 8, 2005.

An unlimited number of any series of Class A LP Units, Class B LP Units, Class C LP Units, Class D LP Units,Class E LP Units and Class F LP Units may be issued by the LP. Class A LP partners have 20 votes for each Class A LPUnit held, Class B LP and Class D LP partners have one vote for each Class B LP Unit or Class D LP Unit held, respectively,and Class C LP, Class E LP and Class F LP partners have no votes at meetings of the LP. The LP is under the control ofthe Trust.

The Class A LP Units are entitled to all distributable cash of the LP after the required distributions on the other classes ofUnits have been paid. At September 30, 2015, there were 63,133,698 (December 31, 2014 – 63,133,698) Class A LP Unitsoutstanding. All Class A LP Units are owned directly by the Trust and have been eliminated on consolidation.

The Class B LP Units and the Class D LP Units are non-transferable, except under certain limited circumstances, but areexchangeable into an equal number of Trust Units at the holder's option. Holders of Class B LP Units and Class D LPUnits are entitled to receive distributions equivalent to the distributions on Trust Units. Each Class B LP Unit and Class DLP Unit is entitled to one special voting unit, which will entitle the holder to receive notice of, attend and vote at all meetingsof the Trust. The Class B LP Units and the Class D LP Units are considered to be economically equivalent to Trust Units.All Class B LP Units and Class D LP Units (owned by outside parties) have been presented as non-controlling interestsand liabilities, respectively.

The Class C LP Units and Class E LP Units are entitled to receive 0.01% of any distributions of the LP and have nominalvalue assigned in the interim condensed consolidated financial statements. At the holder's option, and on the completionand rental of additional space on specific properties and payment of a specific predetermined amount per Unit, the ClassC Series 1 and Series 2 LP Units, the Class C Series 3 LP Units and the Class E Series 1 LP Units are exchangeable intoClass B LP Units, Class F Series 3 LP Units and Class D Series 1 LP Units, respectively, and the Class E Series 2 LP Unitsare exchangeable into Class D Series 2 LP Units (the Class C LP Units and Class E LP Units are effectively included in theEarnout options – see Note 12(b)). On exercise of the Earnout options relating to the LP, the corresponding Class C LPUnits and Class E LP Units are cancelled.

Number of Class C and E Units Outstanding September 30, 2015 December 31, 2014Class C Series 1 LP Units 3,471,714 5,098,485Class C Series 2 LP Units 3,103,267 3,103,267Class C Series 3 LP Units 708,004 708,004Class E Series 1 LP Units 16,704 16,704Class E Series 2 LP Units 800,000 800,000

Of the 3,471,714 Class C Series 1 LP Units: 1,363,822 Units relate to Earnout options, 1,357,892 Units relate to expiredEarnout options and 750,000 Units are cancelled concurrently with Class F Series 3 LP Units on the completion and rentalof additional space on specific properties.

The Class F Series 3 LP Units are entitled to receive distributions equivalent to 65.5% of the distributions on Trust Units.At the holder's option, the Class F Series 3 LP Units are exchangeable for $20.10 in cash per Unit or on the completionand rental of additional space on specific properties, the Class F Series 3 LP Units are exchangeable into Class B LP Units.As at September 30, 2015, there were nil Class F Series 3 LP Units outstanding (December 31, 2014 – nil). On issuance,the Class F Series 3 LP Units are recorded as a liability in the interim condensed consolidated financial statements.

The Class D LP Units (owned by outside parties) are considered to be a financial liability under IFRS. The Class B Series1, Class B Series 2 and Class B Series 3 LP Units are classified as equity.

(iii) Smart Limited Partnership II UnitsSmart Limited Partnership II ("LP II"), formerly known as Calloway Limited Partnership II, was formed on February 6,2006, and commenced activity on May 29, 2006.

An unlimited number of Class A LP II Units and Class B LP II Units may be issued by LP II. Class A LP II partners havefive votes for each Class A LP II Unit held, and Class B LP II partners have one vote for each Class B LP II Unit held. LPII is under the control of the Trust.





The Class A LP II Units are entitled to all distributable cash of LP II after the required distributions on the Class B LP IIUnits have been paid. At September 30, 2015, there were 200,002 (December 31, 2014 – 200,002) Class A LP II Unitsoutstanding. The Class A LP II Units are owned directly by the Trust and have been eliminated on consolidation.

The Class B LP II Units are non-transferable, except under certain limited circumstances, but are exchangeable into anequal number of Trust Units at the holder's option. Holders of Class B LP II Units are entitled to receive distributionsequivalent to the distributions on Trust Units. Each Class B LP II Unit is entitled to one special voting unit, which willentitle the holder to receive notice of, attend and vote at all meetings of the Trust. The Class B LP II Units are consideredto be economically equivalent to Trust Units. All Class B LP II Units are owned by outside parties and have been presentedas non-controlling interests.

(iv) Smart Limited Partnership III UnitsSmart Limited Partnership III ("LP III"), formerly known as Calloway Limited Partnership III, was formed on September2, 2010 and commenced activity on September 13, 2010.

An unlimited number of Class A LP III Units, Class B LP III Units and Class C LP III Units may be issued by LP III.Class A LP III partners have 20 votes for each Class A LP III Unit held, Class B LP III partners have one vote for eachClass B LP III Unit held and Class C LP III Units have no votes at meetings of the LP III. LP III is under the control ofthe Trust.

The Class A LP III Units are entitled to all distributable cash of LP III after the required distributions on the Class B LPIII Units have been paid. At September 30, 2015, there were 5,200,001 (December 31, 2014 – 5,200,001) Class A LP IIIUnits outstanding. The Class A LP III Units are owned directly by the Trust and have been eliminated on consolidation.

The Class B LP III Units are non-transferable, except under certain limited circumstances, but are exchangeable into anequal number of Trust Units at the holder's option. Holders of Class B LP III Units are entitled to receive distributionsequivalent to the distributions on Trust Units. Each Class B LP III Unit is entitled to one special voting unit, which willentitle the holder to receive notice of, attend and vote at all meetings of the Trust. The Class B LP III Units are consideredto be economically equivalent to Trust Units. All Class B LP III Units are owned by outside parties and have been presentedas non-controlling interests.

The Class C LP III Units are entitled to receive 0.01% of any distributions of LP III and have a nominal value assigned inthe interim condensed consolidated financial statements. At the holder's option, and on the completion and rental ofadditional space on specific properties and payment of a specific formula amount per Unit based on the market price ofTrust Units, Class C Series 4 LP III Units, Class C Series 5 LP III Units, Class C Series 6 LP III Units and Class C Series7 LP III Units are exchangeable into Class B LP III Units (the Class C LP III Units are effectively included in the Earnoutoptions – see Note 12(b)). On exercise of the Earnout options relating to LP III, the corresponding Class C LP III Unitsare cancelled. At September 30, 2015, there were 2,271,295 (December 31, 2014 – 2,439,617) Class C LP III Unitsoutstanding.

(v) Smart Limited Partnership IV UnitsSmart Limited Partnership IV ("LP IV") was formed on May 28, 2015 in connection with the acquisition of 22 propertiesfrom Penguin and other vendors (Note 3) as well as the Penguin platform from Penguin (Note 8).

An unlimited number of Class A LP IV Units, Class B LP IV Units and Class C LP IV Units may be issued by LP IV.Class A LP IV partners have 20 votes for each Class A LP IV Unit held, Class B LP IV partners have one vote for eachClass B LP IV Unit held and Class C LP IV Units have no votes at meetings of the LP IV. LP IV is under the control ofthe Trust.

The Class A LP IV Units are entitled to all distributable cash of LP IV after the required distributions on the Class B LPIV Units have been paid. At September 30, 2015, there were 100,000 (December 31, 2014 – nil) Class A LP IV Unitsoutstanding. The Class A LP IV Units are owned directly by the Trust and have been eliminated on consolidation.

The Class B LP IV Units are non-transferable, except under certain limited circumstances, but are exchangeable into anequal number of Trust Units at the holder's option. Holders of Class B LP IV Units are entitled to receive distributionsequivalent to the distributions on Trust Units. Each Class B LP IV Unit is entitled to one special voting unit, which willentitle the holder to receive notice of, attend and vote at all meetings of the Trust. The Class B LP IV Units are consideredto be economically equivalent to Trust Units. All Class B LP IV Units are owned by outside parties and have been presentedas non-controlling interests.





The Class C LP IV Units are entitled to receive 0.01% of any distributions of LP IV and have a nominal value assigned inthe interim condensed consolidated financial statements. At the holder's option, and on the completion and rental ofadditional space on specific properties and payment of a specific formula amount per Unit based on the market price ofTrust Units, Class C Series 1 LP IV Units are exchangeable into Class B LP IV Units (the Class C LP IV Units are effectivelyincluded in the Earnout options – see Note 12(b)). On exercise of the Earnout options relating to LP IV, the correspondingClass C LP IV Units are cancelled. At September 30, 2015, there were 464,461 (December 31, 2014 – nil) Class C LP IVUnits outstanding.

(vi) Smart Oshawa South Limited Partnership UnitsSmart Oshawa South Limited Partnership ("Oshawa South LP") was formed on May 28, 2015 in connection with theacquisition of 22 properties from Penguin and other vendors (Note 3) as well as the Penguin platform from Penguin (Note8).

An unlimited number of Class A Oshawa South LP Units, Class B Oshawa South LP Units, Class C Oshawa South LPUnits, Class D Oshawa South LP Units and Class E Oshawa South LP Units may be issued by Oshawa South LP. Class AOshawa South LP partners have 20 votes for each Class A Oshawa South LP Unit held, Class B Oshawa South LP andClass D Oshawa South LP partners have one vote for each Class B Oshawa South LP or Class D Oshawa South LP Unitheld respectively, and Class C Oshawa South LP and Class E Oshawa South LP Units have no votes at meetings of OshawaSouth LP. Oshawa South LP is under the control of the Trust.

The Class A Oshawa South LP Units are entitled to all distributable cash of Oshawa South LP after the required distributionson the other classes of Units have been paid. At September 30, 2015, there were 100,000 (December 31, 2014 – nil) Class AOshawa South LP Units outstanding. The Class A Oshawa South LP Units are owned directly by the Trust and have beeneliminated on consolidation.

The Class B Oshawa South LP Units and Class D Oshawa South LP Units are non-transferable, except under certain limitedcircumstances, but are exchangeable into an equal number of Trust Units at the holder's option. Holders of Class B OshawaSouth LP Units and Class D Oshawa South LP Units are entitled to receive distributions equivalent to the distributions onTrust Units. Each Class B Oshawa South LP Unit and Class D Oshawa South LP Unit is entitled to one special voting unit,which will entitle the holder to receive notice of, attend and vote at all meetings of the Trust. The Class B Oshawa SouthLP Units and Class D Oshawa South LP Units are considered to be economically equivalent to Trust Units. All Class BOshawa South LP Units and Class D Oshawa South LP Units (owned by outside parties) have been presented as non-controlling interests and liabilities, respectively.

The Class C Oshawa South LP Units and Class E Oshawa South LP Units are entitled to receive 0.01% of any distributionsof Oshawa South LP and have a nominal value assigned in the interim condensed consolidated financial statements. At theholder's option, and on the completion and rental of additional space on specific properties and payment of a specificformula amount per Unit based on the market price of Trust Units, Class C Series 1 Oshawa South LP Units and Class ESeries 1 Oshawa South LP Units are exchangeable into Class B Oshawa South LP Units and Class D Oshawa South LPUnits, respectively (the Class C Oshawa South LP Units and Class E Oshawa South LP Units are effectively included inthe Earnout options – see Note 12(b)). On exercise of the Earnout options relating to Oshawa South LP, the correspondingClass C Oshawa South LP Units and Class E Oshawa South LP Units are cancelled.

Number of Class C and E Units Outstanding September 30, 2015Class C Series 1 Oshawa South LP Units 45,000Class E Series 1 Oshawa South LP Units 15,000

The Class D Series 1 Oshawa South LP Units (owned by outside parties) are considered to be a financial liability underIFRS, whereas the Class B Series 1 Oshawa South LP Units are classified as equity.

(vii) Smart Oshawa Taunton Limited Partnership UnitsSmart Oshawa Taunton Limited Partnership ("Oshawa Taunton LP") was formed on May 28, 2015 in connection with theacquisition of 22 properties from Penguin and other vendors (Note 3) as well as the Penguin platform from Penguin (Note8).

An unlimited number of Class A Oshawa Taunton LP Units, Class B Oshawa Taunton LP Units, Class C Oshawa TauntonLP Units, Class D Oshawa Taunton LP Units and Class E Oshawa Taunton LP Units may be issued by Oshawa TauntonLP. Class A Oshawa Taunton LP partners have 20 votes for each Class A Oshawa Taunton LP Unit held, Class B OshawaTaunton LP and Class D Oshawa Taunton LP partners have one vote for each Class B Oshawa Taunton LP and Class D





Oshawa Taunton LP Unit held respectively, and Class C Oshawa Taunton LP Units and Class E Oshawa Taunton LP Unitshave no votes at meetings of Oshawa Taunton LP. Oshawa Taunton LP is under the control of the Trust.

The Class A Oshawa Taunton LP Units are entitled to all distributable cash of Oshawa Taunton LP after the requireddistributions on the Class B Oshawa Taunton LP Units have been paid. At September 30, 2015, there were 100,000(December 31, 2014 – nil) Class A Oshawa Taunton LP Units outstanding. The Class A Oshawa Taunton LP Units areowned directly by the Trust and have been eliminated on consolidation.

The Class B Oshawa Taunton LP Units and Class D Oshawa Taunton LP Units are non-transferable, except under certainlimited circumstances, but are exchangeable into an equal number of Trust Units at the holder's option. Holders of ClassB Oshawa Taunton LP and Class D Oshawa Taunton LP Units are entitled to receive distributions equivalent to thedistributions on Trust Units. Each Class B Oshawa Taunton LP Unit and Class D Oshawa Taunton LP Unit is entitled toone special voting unit, which will entitle the holder to receive notice of, attend and vote at all meetings of the Trust. TheClass B Oshawa Taunton LP Units and Class D Oshawa Taunton LP Units are considered to be economically equivalentto Trust Units. All Class B Oshawa Taunton LP Units and Class D Oshawa Taunton LP Units (owned by outside parties)have been presented as non-controlling interests and liabilities, respectively.

The Class C Oshawa Taunton LP Units and Class E Oshawa Taunton LP Units are entitled to receive 0.01% of anydistributions of Oshawa Taunton LP and have a nominal value assigned in the interim condensed consolidated financialstatements. At the holder's option, and on the completion and rental of additional space on specific properties and paymentof a specific formula amount per Unit based on the market price of Trust Units, Class C Series 1 Oshawa Taunton LPUnits and Class E Series 1 Oshawa Taunton LP Units are exchangeable into Class B Oshawa Taunton LP Units and ClassD Oshawa Taunton LP Units, respectively (the Class C Oshawa Taunton LP Units and Class E Oshawa Taunton LP Unitsare effectively included in the Earnout options – see Note 12(b)). On exercise of the Earnout options relating to OshawaTaunton LP, the corresponding Class C Oshawa Taunton LP Units and Class E Oshawa Taunton LP Units are cancelled.

Number of Class C and E Units Outstanding September 30, 2015Class C Series 1 Oshawa Taunton LP Units 230,000Class E Series 1 Oshawa Taunton LP Units 230,000

The Class D Series 1 Oshawa Taunton LP Units (owned by outside parties) are considered to be a financial liability underIFRS, whereas the Class B Series 1 Oshawa Taunton LP Units are classified as equity.

(viii) Smart Boxgrove Limited Partnership UnitsSmart Boxgrove Limited Partnership ("Boxgrove LP") was formed on May 28, 2015 in connection with the acquisition of22 properties from Penguin and other vendors (Note 3) as well as the Penguin platform from Penguin (Note 8).

An unlimited number of Class A Boxgrove LP Units, Class B Boxgrove LP Units and Class C Boxgrove LP Units may beissued by Boxgrove LP. Class A Boxgrove LP partners have 20 votes for each Class A Boxgrove LP Unit held, Class BBoxgrove LP partners have one vote for each Class B Boxgrove LP Unit held and Class C Boxgrove LP Units have novotes at meetings of Boxgrove LP. Boxgrove LP is under the control of the Trust.

The Class A Boxgrove LP Units are entitled to all distributable cash of Boxgrove LP after the required distributions on theClass B Boxgrove LP Units have been paid. At September 30, 2015, there were 100,000 (December 31, 2014 – nil) Class ABoxgrove LP Units outstanding. The Class A Boxgrove LP Units are owned directly by the Trust and have been eliminatedon consolidation.

The Class B Boxgrove LP Units are non-transferable, except under certain limited circumstances, but are exchangeable intoan equal number of Trust Units at the holder's option. Holders of Class B Boxgrove LP Units are entitled to receivedistributions equivalent to the distributions on Trust Units. Each Class B Boxgrove LP Unit is entitled to one special votingunit, which will entitle the holder to receive notice of, attend and vote at all meetings of the Trust. The Class B BoxgroveLP Units are considered to be economically equivalent to Trust Units. All Class B Boxgrove LP Units are owned by outsideparties and have been presented as non-controlling interests. At September 30, 2015, there were nil (December 31, 2014 –nil) Class B Boxgrove LP Units outstanding.

The Class C Boxgrove LP Units are entitled to receive 0.01% of any distributions of Boxgrove LP and have a nominalvalue assigned in the interim condensed consolidated financial statements. At the holder's option, and on the completionand rental of additional space on specific properties and payment of a specific formula amount per Unit based on themarket price of Trust Units, Class C Series 1 Boxgrove LP Units are exchangeable into Class B Boxgrove LP Units (the





Class C Boxgrove LP Units are effectively included in the Earnout options – see Note 12(b)). On exercise of the Earnoutoptions relating to Boxgrove LP, the corresponding Class C Boxgrove LP Units are cancelled. At September 30, 2015, therewere 170,000 (December 31, 2014 – nil) Class C Boxgrove LP Units outstanding.

b) Distribution reinvestment planThe Trust enables holders of Trust Units to reinvest their cash distributions in additional Units of the Trust at 97% of the weightedaverage Unit price over the 10 trading days prior to the distribution. The 3% bonus amount is recorded as an additional distributionand issuance of units.

c) Convertible debenturesDuring the three months ended September 30, 2015, $nil (three months ended September 30, 2014 – $nil) of the face value ofthe convertible debentures was converted into nil (three months ended September 30, 2014 – nil) Trust Units. During the ninemonths ended September 30, 2015, $56,457 (nine months ended September 30, 2014 – $25) of the face value of the convertibledebentures was converted into 2,192,495 (nine months ended September 30, 2014 – 970) Trust Units. The following presents theadjustments related to the conversion of convertible debentures into Trust Units.


Face value of convertible debentures converted — — 56,457 25Adjustment of conversion feature of convertible debentures

on conversion (Note 12(c)) — — 3,062 1Adjustment to accretion expense on conversion — — (1,692) (1)

— — 57,827 25

15. Unit distributionsPursuant to the Declaration of Trust, the Trust endeavours to distribute annually such amount as is necessary to ensure the Trust willnot be subject to tax on its net income under Part I of the Tax Act. Unit distributions declared during the nine months endedSeptember 30, 2015 and September 30, 2014 are as follows:



Trust Units 148,539 135,724Class B Series 1 LP Units 17,646 16,968Class B Series 2 LP Units 1,049 967Class B Series 3 LP Units 865 836Class D Series 1 LP Units 373 361Class B LP II Units 908 878Class B Series 4 LP III Units 739 710Class B Series 5 LP III Units 669 644Class B Series 6 LP III Units 506 473Class B Series 7 LP III Units 448 46Class B Series 8 LP III Units 1,133 —Class B Series 1 LP IV Units 2,017 —Class B Series 1 Oshawa South LP Units 459 —Class D Series 1 Oshawa South LP Units 168 —Class B Series 1 Oshawa Taunton LP Units 204 —Class D Series 1 Oshawa Taunton LP Units 70 —

175,793 157,607Distributions classified as liabilities relating to LP Units (Note 10(e)) (563) (361)Distributions recorded as acquisition costs relating to LP Units (Note 3) (809) —Distributions relating to Units classified as equity 174,421 157,246

On October 31, 2015, the Trust declared distributions of $21,153 on all classes of Units, which represents $0.1375 per Unit.





16. Rentals from investment propertiesRentals from investment properties consist of the following:


Base rent 116,052 99,999 322,291 298,911Property operating costs recovered 53,810 45,205 159,452 146,672Miscellaneous revenue 2,566 1,902 9,203 7,343

172,428 147,106 490,946 452,926

During the three months ended September 30, 2015, the Trust recorded amortization of tenant incentives of $1,390 (three monthsended September 30, 2014 – $1,162), which was netted against base rent. During the nine months ended September 30, 2015, the Trustrecorded amortization of tenant incentives of $4,065 (nine months ended September 30, 2014 – $3,392), which was netted againstbase rent.

The future minimum base rent payments under non-cancellable operating leases expected from tenants in investment properties areas follows:

Total2015 114,8802016 449,0282017 421,0852018 376,6522019 330,392Thereafter 1,472,591

3,164,628

17. General and administrative expenseThe general and administrative expense consists of the following:


Salaries and benefits 10,340 3,324 20,912 10,244Professional fees 418 603 1,374 1,721Public company costs 221 289 1,027 961Rent and occupancy 638 312 1,125 866Other 1,383 830 3,032 2,127

13,000 5,358 27,470 15,919Allocated to property operating costs (2,966) (2,430) (7,575) (6,760)Capitalized to properties under development (1,008) — (1,672) (98)Charged back to Penguin and third party (3,288) (344) (5,170) (1,200)

5,738 2,584 13,053 7,861

18. Supplemental cash flow information Cash and cash equivalents consist of the following:

September 30, 2015 December 31, 2014Cash 72,943 19,346Term deposits 910 906

73,853 20,252





The following summarizes supplemental cash flow information and non-cash transactions:


SupplementalInterest paid on debt 42,510 39,711 121,832 122,068Interest received 867 479 6,618 3,381

Non-cash transactionsSecured debt assumed for acquisitions 8,660 — 645,503 —Adjustment for other working capital amounts 4,145 2,114 6,423 2,192Distributions payable at period-end 20,506 17,548 20,506 17,548Liabilities at period-end relating to additions to investment

properties 29,711 30,696 29,711 30,696

Value of Units issued:Consideration for acquisitions and Earnouts 3,446 11,174 178,695 15,899Distribution reinvestment plan 11,058 7,500 27,799 21,520Conversion of convertible debentures — — 56,457 25

Changes in other non-cash operating itemsChanges in other non-cash operating items consist of the following:


Amounts receivable and prepaid expenses (2,596) (1,627) (48,561) (48,686)Accounts payable and accrued liabilities 729 (16,487) 17,160 (10,498)

(1,867) (18,114) (31,401) (59,184)

19. Related party transactionsTransactions with related parties are conducted in the normal course of operations and have been recorded at amounts agreed on bythe parties.

At September 30, 2015, Penguin (the Trust's largest Unitholder), owned by Mitchell Goldhar, owned 13,732,800 Trust Units, 12,462,443Class B Series 1 LP Units, 291,232 Class B Series 2 LP Units, 720,432 Class B Series 3 LP Units, 644,755 Class B Series 4 LP III Units,559,396 Class B Series 5 LP III Units, 421,795 Class B Series 6 LP III Units, 423,383 Class B Series 7 LP III Units, 1,698,018 Class BSeries 8 LP III Units, 2,887,012 Class B Series 1 LP IV Units, 688,336 Class B Series 1 Oshawa South LP Units and 305,765 Class BSeries 1 Oshawa Taunton LP Units, which represent in total approximately 22.7% of the issued and outstanding Units.

Certain conditions related to a July 2005 agreement require Penguin to have a minimum of 25.0% of voting rights. As a result, theTrust has issued additional special voting Units to increase Penguin's voting rights to 25%. These special voting Units are not entitledto any interest or share in the distributions or net assets of the Trust, nor are they convertible into any Trust securities. The total numberof special voting Units is adjusted for each annual meeting of the Unitholders based on changes in Penguin's ownership interest. Thereis no value assigned to the special voting Units. As a result of the extension for an additional five years of the existing voting top upright in favour of Penguin, that was approved by Unitholders at the Trust’s most recent Unitholder meeting, at the request of the TSX,the Trust also re-designated its trust units as “Variable Voting Units”. Such designation will cease on the termination of the voting topup right in 2020. The voting top up right is more particularly described in the Trust’s management information circular dated April 27,2015 and filed on the System for Electronic Document Analysis and Retrieval ("SEDAR").

Penguin has Earnout options to acquire approximately 2,182,703 Trust Units, approximately 5,175,093 Class B Series 1, Class B Series2 and Class B Series 3 LP Units; 2,271,295 Class B Series 4, Class B Series 5, Class B Series 6 LP III and Class B Series 7 LP III Units;422,051 Class B Series 1 LP IV Units; 45,000 Class B Series 1 Oshawa South LP Units; and 230,000 Class B Series 1 Oshawa TauntonLP Units. At September 30, 2015, its ownership would increase to 27.4% (December 31, 2014 – 27.2%) if Penguin were to exerciseall remaining Earnout options. Pursuant to its rights under the Declaration of Trust, at September 30, 2015, Penguin has appointedtwo Trustees out of seven.

The other non-controlling interest, which is included in equity, represents a 5.0% equity interest by Penguin in five consolidatedinvestment properties.





In connection with the acquisition of the Penguin platform as well as interests in 22 properties from Penguin and other vendors onMay 28, 2015, the original management, services and trademark agreements, have been replaced by the following:

1) The Development and Services Agreement, under which the Trust has agreed to provide to Penguin the following servicesfor a five-year term:

a. Construction management services and leasing services are provided, at the discretion of Penguin, with respect tocertain of Penguin's properties under development for a market based fee based on construction costs incurred.Fees for leasing services, requested at the discretion of Penguin, are based on various rates that approximate marketrates, depending on the term and nature of the lease. In addition, management fees are provided for a market basedfee based on rental revenue.

b. Transition services relate to activities necessary to become familiar with the Penguin projects and establishingprocesses and systems to accommodate the needs of Penguin.

c. Support services are provided for a fee based on an allocation of the relevant costs of the support services incurredby the Trust. Such relevant costs include: office administration, human resources, information technology, insurance,legal and marketing. In addition, the Trust rents its office premises from Penguin for a term ending May 2025.

2) The Service Agreement under which Mitchell Goldhar, owner of Penguin, has agreed to provide to the Trust certain advisory,consulting, and strategic services, including but not limited to strategies dealing with development, municipal approvals,acquisitions, dispositions, and construction costs, as well as strategies for marketing new projects and leasing opportunities.The fees associated with this agreement are $875 per quarter for a five-year term.

In addition to agreements and contracts with Penguin described elsewhere in these interim condensed consolidated financial statements,the Trust had previously entered into the following agreements with Penguin, which were effective until May 27, 2015:

1) The Management Agreement, under which the Trust had agreed to provide to Penguin certain limited property managementservices for a market based fee based on net rental revenues of the managed properties, for a one-year term ending December31, 2015. The Management Agreement automatically renewed for subsequent one-year terms unless terminated by eitherPenguin or the Trust.

2) The Support Services Agreement, under which Penguin had agreed to provide to the Trust certain support services for a feebased on an allocation of the relevant costs of the support services incurred by Penguin for a one-year term endingDecember 31, 2015. The Support Services Agreement automatically renewed for subsequent one-year terms unless terminatedby either Penguin or the Trust. In addition, the Trust rented its office premises from Penguin for a term of five years toDecember 2016.

3) The Construction and Leasing Services Agreement, under which Penguin had agreed to provide to the Trust constructionmanagement services and leasing services. The construction management services were provided, at the discretion of theTrust, with respect to certain of the Trust's properties under development for a market based fee based on construction costsincurred. Fees for leasing services, requested at the discretion of the Trust, were based on various rates that approximatemarket rates, depending on the term and nature of the lease. The agreement was in force until terminated by either SmartCentresor the Trust.

4) The Trademark Licence Agreement and Marketing Cost Sharing Agreement (collectively, the Licence Agreement), underwhich the Trust licensed the use of the trademark "SmartCentres" from Penguin for a 10-year term ending December 31,2016. Under the Licence Agreement, the Trust would pay 50% of the costs incurred by Penguin in connection with brandingand marketing the trademark together with the Trust's proportionate share of signage costs. Penguin had the right to terminatethe Licence Agreement at any time in the event any third party acquires 20.0% of the aggregate of the Trust Units and specialvoting units.





In addition to related party transactions and balances disclosed elsewhere in these interim condensed consolidated financial statements,the following summarizes other related party transactions and balances with Penguin and other related parties, including the Trust'sshare of amounts relating to VMC:


Related party transactions and balances with PenguinDevelopment fees and costs (capitalized to real estate

assets) 1,487 1,266 4,257 3,714Interest expense (capitalized to properties under

development) — 6 11 98Interest income from mortgages and loans receivable 2,076 2,253 6,381 6,976Opportunity fees, head lease rents and operating cost

recoveries receivable:Included in rentals from investment properties 1,010 343 1,422 1,152Capitalized to properties under development 554 523 1,621 1,533

Management fee revenue pursuant to the ManagementAgreement 1,394 327 2,326 977

Services revenue 971 14 1,333 151Rent and operating costs (included in general and

administrative expenses, and property operating costs) 536 269 1,023 807Legal and other administrative services payable (included in

general and administrative expenses, and propertyoperating costs) 45 272 1,092 827

Marketing cost sharing (included in property operating costs) 99 192 352 308Amounts receivable, prepaid and deposits at period-end 4,597 2,121 4,597 2,121Accounts payable and accrued liabilities at period-end 1,461 1,175 1,461 1,175Future land development obligation at period-end 17,977 18,265 17,977 18,265Secured debt at period-end 4,774 4,989 4,774 4,989

Other related party transactions and balancesOpportunity fees (capitalized to properties under

development) 56 53 165 154

Key management compensationKey management personnel are those persons having authority and responsibility for planning, directing and controlling the activitiesof the Trust, directly or indirectly. The Trust's key management personnel include the President and Chief Executive Officer, ChiefFinancial Officer, Chief Operating Officer, Chief Development Officer, Executive Vice President Portfolio Management andInvestments and Trustees.

The compensation paid or payable to key management for employee services is shown below:


Salaries and other short-term employee benefits 605 344 1,436 1,032Trustee fees 110 159 528 360Deferred unit plan 261 164 1,645 479Unit-based awards 261 140 643 438Long term incentive plan 691 76 1,199 131

1,928 883 5,451 2,440

20. Co-ownership interestsThe Trust is a co-owner in several properties that are subject to joint control based on the Trust's decision making authority with regardto the operating, financing and investing activities of the properties. These co-ownerships have been classified as joint operations and,accordingly, the Trust recognizes its proportionate share of the assets, liabilities, revenue and expenses of these co-ownerships in therespective lines in the interim condensed consolidated financial statements.

The following amounts, included in these interim condensed consolidated financial statements, represent the Trust's proportionateshare of the assets and liabilities of the 22 co-ownership interests as at September 30, 2015 (23 co-ownership interests at December 31,2014) and the results of operations and cash flows for the periods ended September 30, 2015 and September 30, 2014:

September 30, 2015 December 31, 2014Assets 958,936 988,232Liabilities 375,438 382,982






Revenues 14,178 18,131 54,841 54,142Expenses 6,180 9,937 29,301 31,184Income before fair value adjustments 7,998 8,194 25,540 22,958Fair value gain on investment properties 9,215 7,762 23,215 7,729Net income 17,213 15,956 48,755 30,687

Cash flow provided by operating activities 8,011 9,092 16,678 19,752Cash flow provided by financing activities 3,738 66,572 111,857 73,010Cash flow used in investing activities (12,196) (73,250) (128,181) (92,250)

Management believes the assets of the co-ownerships are sufficient for the purpose of satisfying the associated obligations of the co-ownerships. Penguin is the co-owner in one of the operating properties and four of the development properties.

21. Segmented informationThe Trust owns, develops, manages and operates investment properties located in Canada. In measuring performance, the Trust doesnot distinguish or group its operations on a geographical or any other basis and, accordingly, has a single reportable segment fordisclosure purposes.

The Trust's major tenant is Walmart Canada Corp., accounting for 27.3% of the Trust's annualized rental revenue for the nine monthsended September 30, 2015 (nine months ended September 30, 2014 – 24.9%).

22. Fair value gain (loss)The following is a summary of the fair value gains (losses) for the three and nine months ended September 30:


Investment propertiesIncome properties 9,898 23,173 12,712 41,106Properties under development (2,414) (7,591) 4,052 (17,008)

Fair value gain on revaluation of investmentproperties 7,484 15,582 16,764 24,098

Financial instrumentsLP Units (1,108) 261 (1,690) (174)Earnout options 4,119 530 6,027 (3,578)Conversion feature of convertible debentures — 1,266 (1,279) 723Deferred unit plan – vested portion (1,089) 550 (2,661) (376)Unit issuance of subscription receipts (1) — — (240) —

Fair value gain (loss) on financial instruments 1,922 2,607 157 (3,405)

(1) In connection with the acquisition of the Penguin platform and group of 22 property interests (see Note 3), part of the purchase price included the issuance of 8,015,500 subscriptionreceipts at a price of $28.70 totalling $230,045 on April 20, 2015. Once the acquisition closed on May 28, 2015, the subscription receipts were exchanged for Trust units and thereforethe Trust performed a fair valuation of the subscription receipts from the date of issuance to the date the acquisition closed, resulting in a fair value loss for the nine months endedSeptember 30, 2015 of $240.

23. Risk managementa) Financial risks

The Trust's activities expose it to a variety of financial risks, including interest rate risk, credit risk and liquidity risk. The Trust'soverall financial risk management focuses on the unpredictability of financial markets and seeks to minimize potential adverseeffects on the Trust's financial performance. The Trust may use derivative financial instruments to hedge certain risk exposures.

i) Interest rate riskThe majority of the Trust's debt is financed at fixed rates with maturities staggered over a number of years, thereby mitigatingits exposure to changes in interest rates and financing risks. At September 30, 2015, approximately 15.52% (December 31,2014 – 6.63%) of the Trust's debt is financed at variable rates exposing the Trust to changes in interest rates on such debt.The Trust analyzes its interest rate exposure on a regular basis. The Trust monitors the historical movement of 10-yearGovernment of Canada bonds for the past two years and performs a sensitivity analysis to show the possible impact onnet income of an interest rate shift. The simulation is performed on a quarterly basis to ensure the maximum loss potentialis within the limit acceptable to management. Management runs the simulation only for the interest bearing secured debt





and revolving operating facility. The Trust's policy is to capitalize interest expense incurred relating to properties underdevelopment (nine months ended September 30, 2015 – 10.69% of total interest costs; year ended December 31, 2014 –7.31% of total interest costs). The sensitivity analysis below shows the maximum impact (net of estimated interest capitalizedto properties under development) on net income of possible changes in interest rates on variable-rate debt.

Interest shift of: -0.50% -0.25% +0.25% +0.50%Net income increase (decrease) 3,010 1,505 (1,505) (3,010)

ii) Credit riskCredit risk arises from cash and cash equivalents as well as credit exposures with respect to tenant receivables and mortgagesand loans receivable (see Notes 9 and 5). Tenants may experience financial difficulty and become unable to fulfill their leasecommitments. The Trust mitigates this risk of credit loss by reviewing tenants' covenants, by ensuring its tenant mix isdiversified and by limiting its exposure to any one tenant except Walmart Canada Corp. Further risks arise in the event thatborrowers of mortgages and loans receivable default on the repayment of amounts owing to the Trust. The Trust endeavoursto ensure adequate security has been provided in support of mortgages and loans receivable. The Trust limits cashtransactions to high credit quality financial institutions to minimize its credit risk from cash and cash equivalents.

iii) Liquidity riskLiquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amountof committed credit facilities and the ability to lease out vacant units. Due to the dynamic nature of the underlying business,the Trust aims to maintain flexibility and opportunities in funding by keeping committed credit lines available, obtainingadditional secured debt as the value of investment properties increases, issuing equity and issuing convertible or unsecureddebentures. During the period ended September 30, 2015, the Trust has been able to obtain additional secured debt andissue unsecured debentures. The key assumptions used in the Trust's estimates of future cash flows when assessing liquidityrisk are capital markets remaining liquid and no major bankruptcies of large tenants. Management believes it has consideredall reasonable facts and circumstances in forming appropriate assumptions. However, as always, there is a risk that significantchanges in market conditions could alter the assumptions used. The Trust's liquidity position is monitored on a regularbasis by management. A schedule of principal repayments on secured debt and other debt maturities is disclosed in Note10.

b) Capital risk managementThe Trust defines capital as the aggregate amount of Unitholders' equity, debt and LP Units classified as a liability. The Trust'sprimary objectives when managing capital are:

• to safeguard the Trust's ability to continue as a going concern, so that it can continue to provide returns for Unitholders; and• to ensure that the Trust has access to sufficient funds for acquisition (including Earnout) or development activities.

The Trust sets the amount of capital in proportion to risk. The Trust manages its capital structure and makes adjustments to it inlight of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust thecapital structure, the Trust may adjust the amount of distributions paid to Unitholders, issue new Units and debt or sell assets toreduce debt or fund acquisition or development activities.

The Trust anticipates meeting all current and future obligations. Management expects to finance future acquisitions, mortgagesreceivable, development and maturing debt from: (i) existing cash balances; (ii) a mix of debt secured by investment properties,operating facilities, issuance of equity, convertible and unsecured debentures; and (iii) the sale of non-core assets. Cash flowgenerated from operating activities is the source of liquidity to service debt (except maturing debt), sustaining capital expenditures,leasing costs and Unit distributions.

The Trust monitors its capital structure based on the following ratios: interest coverage ratio, debt to total assets, and debt to totalearnings before interest, taxes, depreciation , amortization and fair value changes associated with investment properties and financialinstruments (EBITDA). These ratios are used by the Trust to manage an acceptable level of leverage and are not consideredmeasures in accordance with IFRS, nor is there an equivalent IFRS measure.

The following are the significant financial covenants that the Trust is required by its operating line lenders to maintain: debt toaggregate assets of not more than 65%, secured debt to aggregate assets of not more than 40%, EBITDA to debt service of notless than 1.5, unencumbered investment properties value to consolidated unsecured debt of not less than 1.4, and Unitholders'equity of not less than $2,000,000.





The Trust's indentures require its unsecured debentures to maintain debt to gross book value including convertible debenturesnot more than 65%, interest coverage ratio not less than 1.65 and Unitholders' equity not less than $500,000.

These covenants are required to be calculated based on Canadian generally accepted accounting principles ("GAAP") at the timeof debt issuance. If the Trust does not meet all externally imposed financial covenants, then the related debt will become immediatelydue and payable unless the Trust is able to remedy the default or obtain a waiver from lenders. For the period ended September 30,2015, the Trust met all of the externally imposed financial covenants.

24. Commitments and contingenciesThe Trust has certain obligations and commitments pursuant to development management agreements to complete the purchase ofEarnouts totalling approximately 1.1 million square feet of development space from Penguin and others over periods extending to2020 at formula prices, as more fully described in Note 4(b). As at September 30, 2015, the carrying value of the properties underdevelopment was $93,405 (December 31, 2014 – $82,263) with respect to these obligations and commitments. The timing of completionof the purchase of the Earnouts, and the final price, cannot be readily determined as they are a function of future tenant leasing. TheTrust has also entered into various other development construction contracts totalling $5,309 (excluding VMC – see Note 6) that willbe incurred in future periods.

The Trust entered into agreements with Penguin in which the Trust will lend monies, as disclosed in Note 5(a). The maximum amountthat may be provided under the agreements totals $287,345, of which $125,432 has been provided at September 30, 2015.

Letters of credit totalling $30,300 (including letters of credit drawn down under the revolving operating facility described in Note 10(b)) have been issued on behalf of the Trust by the Trust's bank as security for debt and for maintenance and development obligationsto municipal authorities. The Trust carries insurance and indemnifies its trustees and officers against any and all claims or lossesreasonably incurred in the performance of their services to the Trust to the extent permitted by law.

The Trust, in the normal course of operations, is subject to a variety of legal and other claims. Management and the Trust's legalcounsel evaluate all claims on their apparent merits and accrue management's best estimate of the likely cost to satisfy such claims.Management believes the outcome of current legal and other claims filed against the Trust, after considering insurance coverage, willnot have a significant impact on the Trust's interim condensed consolidated financial statements.

25. Subsequent eventsOn October 16, 2015, $100,000 aggregate principal amount of variable rate Series K senior unsecured debentures matured, which wassettled by the Trust by existing cash and credit facilities.




CorPorate inforMation

trusteesGregory Howard 2, 3

PartnerDavies Ward Phillips & Vineberg LLP

Garry Foster 1, 3

Trustee

Mitchell Goldhar 3

President, Chief Executive OfficerPenguin Group of Companies

Jamie McVicar 1, 2

Trustee

Kevin Pshebniski 1, 3

PresidentHopewell Development Corporation

Huw ThomasPresident, Chief Executive Officer Smart Real Estate Investment Trust

Michael Young 2, 3

PrincipalQuadrant Capital Partners Inc.

1 Audit Committee 2 Compensation and Corporate Governance Committee3 Investment Committee

senior ManagementHuw ThomasPresident, Chief Executive Officer

Peter FordeChief Operating Officer

Peter Sweeney Chief Financial Officer

Rudy Gobin Executive Vice President, Portfolio Management and Investments

Mauro Pambianchi Chief Development Officer

auditors PricewaterhouseCoopers LLPToronto, Ontario

Legal CounselOsler, Hoskin & Harcourt LLPToronto, Ontario

registrar & transfer agentComputershare Trust Company of CanadaToronto, Ontario

investor relationsPeter SweeneyChief Financial Officer Telephone 905-326-6400 Ext. 7865Fax 905-326-0783TSX SRU.UN

TAbLe OF COnTenTS

1 President’s Message

3 Management’s Discussion and Analysis of Results of Operations and Financial Condition

4 Business Overview and Strategic Direction

5 Quarterly Financial and Operational Highlights

6 Investment Properties

9 Maintenance of Productive Capacity

9 Developments and Earnouts Completed on Existing Properties

9 Properties Under Development

11 Investment in Associates

12 Mortgages, Loans and Notes Receivable and Interest Income

14 Debt

16 Financial Covenants

17 Unitholders’ Equity

18 Capital Resources and Liquidity

19 Results of Operations

23 Leasing Activities and Lease Expiries

24 General and Administrative

25 Interest Expense

25 Other Measures of Performance

29 Quarterly Information

30 Related Party

31 Income Taxes and SIFT Compliance

31 Disclosure Controls and Procedures and Internal Controls Over Financial Reporting – National Instrument 52-109 Compliance

32 Critical Accounting Estimates

32 Future Changes in Accounting Policies

32 Risks and Uncertainties

35 The Transaction

37 Subsequent Events

37 Outlook

39 Condensed Consolidated Balance Sheets (Unaudited)

40 Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)

41 Condensed Consolidated Statements of Equity (Unaudited)

42 Condensed Consolidated Statements of Cash Flows (Unaudited)

43 Notes to Condensed Consolidated Financial Statements (Unaudited)

78 Corporate Information

700 Applewood Crescent Suite 200

Vaughan, Ontario L4K 5X3

Telephone 905-326-6400 Fax 905-326-0783www.smartreit.com

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2015

EXPANDING OUR REACH

EXTENDING OUR CAPABILITIES

EXPLORING NEW OPPORTUNITIES

THIRD QUARTER REPORT2015

expanding our reach extending our capabilities …

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