'People are yearning for places to go': RioCan CEO
The chief executive officer of RioCan Real Estate Investment Trust said some of its larger tenants aren’t paying their rent due to COVID-19, despite likely having a stronger balance sheet than RioCan itself.
Ed Sonshine told BNN Bloomberg’s Jon Erlichman in an interview Monday that when it came to smaller tenants such as nail salons and small restaurants, his company has offered a 60-day rent payment deferral to help soften the financial blow from COVID-19 pandemic. Sonshine said “virtually everybody” took advantage of it.
“We are working with [small businesses] quite sympathetically because with our balance sheet we can afford to,” he said, noting independent retailers represent about 15 per cent of RioCan’s overall revenue.
“Some of the larger tenants – I think they have larger balance sheets than ours – just didn’t pay.”
Sonshine added it was "largely American" tenants, such as office supply chain Staples Inc., who failed to pay their rent April 1 despite their strong balance sheets and a significant amount of business being replaced through e-commerce.
“So with them, we’re sort of taking the gloves off as we roll into the end of April,” he said.
Staples Canada told BNN Bloomberg in an email that the company has closed its stores in Ontario and Quebec, and is working "proactively" with its landlords.
"Although we have proactively made several attempts to discuss possible solutions with RioCan, they have yet to be responsive, unlike other landlords," the company said via a spokesperson. Sonshine declined to further comment on RioCan's rental situation with Staples.
When asked whether he’d be more cautious about working with American retailers in the future based on his recent experience, Sonshine said he wouldn’t discriminate against U.S. companies.
“Some of our great retailers are American,” he said, adding he’s been cautious since U.S. retailer Target Corp. left Canada five years ago. That departure left a 10-per-cent vacancy hole in RioCan’s portfolio, Sonshine said.
“We don’t want that to reoccur,” he said. “We want to work with our American partners. But we’re also very cautious about it. There’s a little bit of a different culture down there in the style of doing business.”
On Friday, the federal government unveiled details for its rent relief program, which is expected to lower rent by 75 cent for small businesses facing financial hardship during April, May and June.
Sonshine said he thinks Ottawa’s approach is “very good” in principle but said some of the details are still unclear, notably how major landlords can deal with properties that aren't tied to a mortgage.