RioCan - CEO, Edward Sonshine
CEO, Edward Sonshine
Source: Globe and Mail
  • RioCan Real Estate Investment Trust (REI.UN) has had a tough second quarter of the year after COVID-19 played havoc with its tenants’ operations
  • For the quarter ending June 30, the trust reported a net loss of C$350.8 million compared to a net income of $253 million last year
  • This was primarily driven by rent abatements for eligible tenants under the Canada Emergency Commercial Rent Assistance (CECRA) program
  • At the end of the quarter, the trust had approximately $1 billion in liquidity, including cash, cash equivalents and undrawn lines of credit
  • RioCan Real Estate Investment Trust (REI.UN) is currently up two per cent and is trading at $15.28 per share

RioCan Real Estate Investment Trust (REI.UN) has had a tough second quarter of the year after COVID-19 played havoc with its tenants’ operations.

For the quarter ending June 30, the trust reported a net loss of C$350.8 million, which represents a substantial difference in comparison to a net income of $253 million reported last year.

This was largely attributable to RioCan’s participation in the Canada Emergency Commercial Rent Assistance (CECRA) program. Under the program, eligible tenants were able to receive up to a 75 per cent reduction in rent, whereby the government funds 50 per cent and landlords effectively incur a 25 per cent rent abatement.

During the second quarter, approximately 14.4 per cent of the trust’s portfolio qualified for the program. As such, a total $19.1 million provision for rent abatements and bad debts was accrued, representing roughly 6.8 per cent of the billed gross rents for the period.

In addition, the company reported a $9.5 million drop in lease cancellation and property management fees, as well as $7.6 million drop in residential inventory gains.

Edward Sonshine, CEO of RioCan Real Estate Investment Trust, said the second quarter of 2020 was undoubtedly the most challenging quarter ever.

“We exercised patience, approved deferrals where appropriate, participated in CECRA for all eligible tenants, and where necessary, managed a stern recovery process.

“This has enabled us to collect 86.8 per cent of our quarterly rents including expected government funding and short term deferrals with credit worthy tenants. The collections will continue to improve as evidenced in July,” he added.

The trust has approximately $1 billion in liquidity at the end of the quarter, including cash, cash equivalents and undrawn lines of credit.

However, RioCan cautioned that the length and severity of the pandemic’s impact is still unknown and that same property net operating income is expected to be negative for the rest of 2020.

RioCan Real Estate Investment Trust (REI.UN) is up two per cent and is trading at $15.28 per share at 12:54pm EDT.

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