One of Canada’s biggest commercial property landlords said it is deferring rent for its retailers in Quebec and others are working on rent deferrals for their hardest hit tenants, as the country shuts down in an attempt to stop the novel coronavirus from spreading.
Ivanhoé Cambridge, which operates 22 malls across the country, said the rent reprieve is aimed at alleviating the liquidity problems of tenants at its shopping centres in Quebec and to support the province’s economy.
Shops, restaurants and other businesses have seen their revenue evaporate after local and federal governments closed schools, halted non-essential activity and told Canadians to stay at home.
"We are implementing exceptional measures in order to respond to an exceptional situation. Each of us must do our part to support the well-being of our community,” said Nathalie Palladitcheff, CEO of Ivanhoé Cambridge, the real estate company owned by the Caisse de dépôt et placement du Québec.
The province’s economy minister said Ivanhoe would announce a six month moratorium on rent. However, the company said the length of the deferment will be determined “according to the evolution of the situation.” Ivanhoe said it is evaluating similar scenarios in the other provinces in which it operates.
Ivanhoé said the relief will be determined “according to the evolution of the situation,” and it is evaluating similar scenarios in the other provinces in which it operates.
Other retail operators said they were getting requests from their tenants.
“The bulk of our tenants are supermarkets, drugstores, Costcos and they don’t need any help,” said Ed Sonshine, CEO of RioCan Real Estate Investment Trust, one of the country’s largest property owners with malls, shopping plazas, offices and apartments in major cities. ”But then you have tenants like the nail store, and it is not life as usual.
“With those tenants, we are going to work with them. We are not going to start forgiving rent because we can’t, but we will certainly work on deferrals and so on.”
It’s a similar situation at SmartCentres REIT, which operates 165 retail plazas in the country and leases space to 115 Walmarts.
Although business has spiked at grocers and discount stores such as Walmart, many other retailers are facing mounting bills without any revenue.
“I spoke this week with one small independent retailer whose business is very affected by the virus and I assured them that we have every intention to stand by her and help her through this, even if it includes a form of rent deferral,” said Mitchell Goldhar, CEO of SmartCentres, adding that very few tenants have requested deferrals and of those, all are small businesses and they make up less than 5 per cent of its space.
The country’s other big mall operators, Cadillac Fairview and Oxford Properties, have kept their properties open but are allowing only take-out from restaurants in their food courts. Spokespeople for the two real estate companies declined to comment on rent deferrals.
Malls along with department stores and other physical retailers were already under pressure to retool their business with growing competition from Amazon.com and other online retailers. Now with Canadians staying at home, dozens of retailers are closed or empty.
“Top of mind is not buying a new jacket for spring,” Mr. Sonshine said. “Business, except for the essentials, is slowing down dramatically for everyone.”
The slowdown is also affecting owners of office buildings, where cafés and other shops typically occupy the basement and ground floor. In Toronto, the country’s financial capital and biggest job market, offices are virtually empty after federal and provincial governments urged people to work from home.
"If the government is telling the store to shut down, how does the store pay the rent?” said Alex Arifuzzaman, owner of retail real estate adviser InterStratics Consultants Inc.
Dream Office REIT, which owns 32 office properties, most of which are in Toronto, said right now it is mostly retail, not office tenants, that are feeling the pain. “It is still very early in this so we are just talking now. Mostly the retail tenants are struggling,” said Dream chief executive Michael Cooper.
Brookfield Asset Management, one of the largest property owners globally with two dozen office towers in Toronto, Ottawa and Calgary, has not received many requests but is considering rent deferrals on a case-by-case basis for its hardest hit tenants, according to a person close to Brookfield. The Globe and Mail granted confidentiality because the person was not permitted to speak publicly.
Toronto Mayor John Tory is asking landlords to help small businesses on the timing of rent payments in light of the severe cash-flow difficulties many are facing, according to his spokesman, Don Peat. “Getting through this pandemic requires an effort from everyone.”
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.