Future Shop closures latest challenge for Canadian real-estate investment trusts
Two of Canada’s biggest real estate investment trusts are facing shuttered stores as the closing of Best Buy Co.’s Future Shop chain adds to the upheaval facing retail landlords.
RioCan REIT, the country’s No. 1 REIT by market value, and Calloway REIT, No. 3, are the among Best Buy Canada’s biggest landlords. Richfield, Minn.-based Best Buy said on Saturday it would close 66 Future Shops with the loss of 1,500 jobs.
A further 65 stores will be kept open and rebranded as Best Buys.
“It shows there’s a tough retail market across Canada,” Farla Efros, chief operating officer of retail advisory firm HRC Advisory Inc., said by phone from Phoenix.
“Since January the number of them going has exceeded anything we’ve seen in a very long time. There’s more to come.”
The closing of Future Shop stores, including the highestgrossing location at one of the country’s busiest intersections at Yonge and Dundas Square in downtown Toronto, is the latest crack in Canadian retail.
Target Corp. said earlier this year it was pulling out of the country, closing 133 locations, clothing store Mexx said it would close 95 stores in the country and Reitmans Canada Ltd. is shuttering 107 Smart Set shops.
RioCan leases 32 Future Shop and Best Buy stores combined, making up 1.5 per cent of the rental revenue of the Toronto-based company, financial documents show. Calloway has 19 Future Shop leases, of which about five are closing permanently, chief executive Huw Thomas said.
“It’s not minuscule but it is extremely small,” Thomas said by phone Monday. “We’re already getting calls from large retailers who are extremely interested in the space.”
The Future Shops that are closing make up less than 0.5 per cent of Calloway’s gross leasable space, and Best Buy confirmed it will honour its lease agreements, Thomas said.