Edward Sonshine, the CEO of RioCan REIT. (Courtesy RioCan)
Investors are getting a much clearer picture this week of the impact, so far, of the COVID-19 pandemic on some of Canada’s largest retail-based commercial real estate firms.
As unit prices take a hit from the general market downturn and measures to control COVID-19 — RioCan was off more than 40 per cent year-to-date (as of close April 21), SmartCentres down over 30 per cent, Choice down about nine per cent — the companies are focusing efforts to assist tenants and prepare their business to ride out the turmoil.
RioCan says it collected 66 per cent of expected rents (as of April 20) from its business tenants. It approved two-month rent deferrals for an additional 17 per cent (about $15 million in monthly revenues).
“The majority of our properties are considered beacons of the surrounding neighbourhoods where they are located and provide necessity-based essential goods and services during this health crisis,” said CEO Ed Sonshine in a release.
“We are committed to a high level of responsibility, access and support for our stakeholders so that these critical and essential services can be maintained.”
The numbers are similar for SmartCentres, which reported 70 per cent of expected rents collected, after deferrals which were granted to some tenants.
Update from RioCan
RioCan’s portfolio has undergone a significant repositioning during the past two years, with the divestment of most holdings in secondary or tertiary markets to focus on Canada’s six largest urban markets. It is diversifying the portfolio through new developments and redevelopment at existing retail properties.
“More than 90 per cent of RioCan’s portfolio is comprised of grocery-anchored centres, mixed-use / urban centres and open-air centres,” the release states. “Grocery-anchored centres alone accounted for 40.9 per cent of annualized rental revenue as of year-end 2019.”
Many of these anchor retailers are deemed essential services, so they remain open.
On the diversification front, RioCan received 96 per cent of expected rent from its two new multiresidential properties, eCentral in Toronto and Frontier in Ottawa.
The REIT’s support and rent deferral program has been focused on small business, independent tenants and smaller national tenants on a “case-by-case basis.”
As impacts from the pandemic continue, it is also willing to work with any national tenants “while protecting the trust’s rights and financial positions.”
$1B in liquidity
RioCan reports about $1 billion in liquidity as of the end of Q1 2020 consisting of cash, undrawn portions of its revolving unsecured line of credit and construction lines of credit. The trust also has $9.2 billion of unencumbered assets.
During the remainder of 2020, RioCan has about $126 million of mortgage maturities remaining, but it expects these to be refinanced “in due course.”
Its $400 million in debenture maturities in June and August 2020, RioCan says, have been effectively refinanced with a $350-million, seven-year inaugural Green Bond issue completed inMarch.
“RioCan’s solid foundation is its resilient, major markets-focused portfolio, which was built to withstand challenges and adversity,” Sonshine said in the release. “We are in good financial health with a strong balance sheet and ample liquidity.”
To preserve cash, RioCan’s crisis management team has reduced spending, including: municipal tax and HST/QST deferrals, energy reductions, maintenance and revenue-enhancing capital expenditure reductions, staffing level adjustments, and streamlining procurement and operating costs management.
Construction at most of RioCan’s current projects continues, albeit at a slower pace, but the trust is stopping “new or early-stage projects.” This will reduce planned spending on development by $100-to-$150 million during 2020, to the $350-to-$400 million range.
Finally, RioCan has withdrawn its growth guidance, and plans to provide a further update during its Q1 2020 investor conference call on Tuesday, May 5.
RioCan’s 2020 AGM is subsequently scheduled for Tuesday, June 2. It will be conducted as a “virtual” meeting.
RioCan’s portfolio includes 220 properties with a net leasable area of approximately 38.4 million square feet (at RioCan’s interest) including office, residential rental and 14 development properties.
SmartCentres update
Transit City Condos at the Vaughan Metropolitan Centre. (Rendering courtesy SmartCentres)
Like RioCan, SmartCentres is also engaged in a major overhaul and repositioning of its portfolio, including an extended $12-billion development program.
Sixty per cent of its current tenant base is deemed essential, including its largest single tenant WalMart which accounts for 25 per cent of SmartCentres’ rental income.
For businesses which are heavily impacted, the REIT has been “proactively reaching out” with support through a rent deferral program.
“The majority of our tenants are healthy and paid their rent. While we are disappointed by the non-payment of rent by some strong capable companies, we still believe that we will collect April’s rent in due course,” said president and CEO Peter Forde in a release. “We expect strong retailers to pay their rent obligations.
“This also enables us and our peers to support the smaller more vulnerable retailers through this difficult time.”
To provide additional liquidity if needed, SmartCentres has nearly $6 billion in unencumbered assets, a $500-million operating line of credit and project specific-financing for its ongoing developments.
While construction of several self-storage developments is on hold due too the pandemic, development at the Vaughan Metropolitan Centre continues within government restrictions. The first two condo towers remain on pace for unit closings in late 2020.
“SmartCentres was built for heavy weather,” said executive chairman Mitchell Goldhar in the release. “We have ample liquidity to weather the storm, for an extended period of time, if necessary . . .”
SmartCentres REIT has a portfolio of 157 Canadian properties valued at $9.9 billion. They comprise 34 million square feet of income-producing retail space with over 98% occupancy at December 31, 2019, on 3,500 acres of land.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
