TORONTO – The lifting of COVID-19 restrictions helped one of Canada’s largest business owners collect more rent in its final quarter than at any time during the pandemic.
RioCan Real Estate Investment Trust said on Wednesday it received 98.1% of its gross billed cash rents in the third quarter, up from 90.8% in the same period last year.
Managing Director Jonathan Gitlin attributed the high level of rent collection to RioCan’s âneed-driven retailersâ, whom he called the âfoundationâ of the trust, as they constitute the bulk of its tenants and have made it up. proof of resilience over the past 20 months.
He attributed the remainder of the rent collection gains to a growing number of tenants able to reopen their doors and increase consumption capacity in recent months as COVID-19 restrictions were relaxed.
âExperiential uses like gyms and restaurants have limped during the pandemic, but they are finding their legs,â Gitlin said, on a call with analysts. “They are becoming viable again.”
This rebound translated into net income of $ 137.6 million for RioCan in the third quarter, compared to $ 117.6 million in the same quarter last year.
Gitlin believes that number will only increase as restrictions continue to lift and traffic returns to properties, increasing the ancillary revenue RioCan generates through parking, digital advertising and events.
As more people return to RioCan properties, Gitlin believes they will also realize that some of the bold assumptions people have made about the pandemic triggering the death of physical stores are wrong.
âThere were early conclusions about the difficulties of retailing, and I think they’ve given way to the recognition that people want to engage and control their shopping experience,â Gitlin said.
“Retailing brick and mortar is not an alternative to e-commerce. It is not that binary.”
Retailers also appear to be embracing this theory by grabbing leases even as the health crisis continues.
The Trust entered into more than 31,958 square meters of new leases and 58,157 square meters of renewed leases during the quarter ended September 30.
Jeff Ross, RioCan’s vice president of rental and rental construction, said a large portion of those leases came from national and ethnic grocers and quick, full-service restaurants.
âWhenever we have a blip, there is someone right behind them to pick it up,â he said on the same call as Gitlin.
Ross also noted that “owner retailers” like Under Armor, Levi’s, Nike, Adidas and Sketchers are taking on leases, generating foot traffic and credibility, especially in closed malls, which “hang around a bit.”
âThey’re just slower to come back,â Ross said. “Renters are just taking a step back. They want to see traffic keep coming back.”
Ross believes these gated mall spaces might be ideal for the influx of government requests for proposals and inquiries he sees, as spots can be converted inexpensively and efficiently.
Much attention is given to who could fill vacancies and take them through other pandemic woes.
“Across the board, no matter who it is, we spend a lot more time looking at who the new tenant is to make sure they have a skin in the game and have the strength to keep going,” said he declared. noted.
“But at the moment the speed and interest on the rental side has been pretty strong.”
This report by The Canadian Press was first published on November 10, 2021.
Companies in this story: (TSX: REI.UN)
Tara Deschamps, The Canadian Press