RioCan Real Estate Investment Trust is slashing its payout to investors as COVID-19 wreaks havoc on the real estate industry, and after the big landlord's CEO pledged to preserve the distribution earlier this year.

The REIT announced late Thursday that the monthly distribution will fall to eight cents per unit as of January from the prevailing rate of 12 cents, which has been consistent since February 2018.

In May, RioCan CEO Ed Sonshine gave the impression this type of move could be avoided.

“Either the market has way overreacted on the downside, or there’s this feeling that the world is so awful that [distributions] are all going to be cut,” he said about market sentiment on the REIT sector at the time.

“I can assure you that’s not the case for RioCan.”

However, after Prime Minister Justin Trudeau recently said he expects most Canadians won’t be vaccinated against COVID-19 until September 2021, Sonshine said it made the company realize the year ahead remains uncertain.

“May in calendar time was, I guess, about six or seven months ago; and in pandemic time it seems like years ago. So the world has certainly changed,” Sonshine said in an interview Friday.

“I think what we saw as we got into the last few weeks was that the pandemic – notwithstanding the optimism about vaccine – it wasn’t going to go away.”

He added that in order to take advantage of the opportunities out of the pandemic, RioCan has to have “the strongest balance sheet as possible.”

“We don’t want to raise our leverage beyond what it is – we want to do better,” Sonshine said.

The turmoil caused by the pandemic has been evident this week as dozens of retailers urged the Ontario government to ease regional lockdown measures.

"It’s causing carnage. Nothing short of carnage is being caused. We understand the pressure the premier is under, we’re all on side. But the strategy is wrong," said Indigo Books & Music Chair and CEO Heather Reisman in an interview Wednesday.

RioCan - which counts Indigo among its tenants - has seen its units lose almost one-third of their value this year. As of the close of trading Thursday, RioCan's yield was 7.99 per cent.

Sonshine said he believes most of his REIT peers have been looking at cutting their distributions.

“I think everybody’s been considering it,” Sonshine said. “Maybe not some of the single-tenant dominated REIT's like the Loblaws REIT, the Crombie REIT, the Canadian Tire REIT. I think they’re in a very different position – they’re not doing the major redevelopments we’re doing.”

“But the other REITS, I’m sure they’re always thinking about it.”