RioCan REIT to re-examine tenant mix, but says retail remains strong

TORONTO — RioCan Real Estate Investment Trust is “pruning” its tenant mix to ensure malls and other retail spaces it owns are filled with resilient businesses that are best positioned to weather any further COVID-19 upheaval.

Chief executive Jonathan Gitlin said Thursday that the Toronto-based commercial landlord’s close look at who is renting its spaces will result in the company shedding some assets in enclosed malls, “which are harder to evolve into today’s current demands from our tenants.”

“Within the properties that we are keeping, there is a tenant mix that in order to stay relevant and in order to stay on top of consumer trends, needs to continuously evolve and change,” he said on a call with analysts.

“We are switching over to more necessity-based purveyors and in some cases, it might not be tenants with amazing covenants, but they just have some great uses that will add to…the flavour of the shopping centre.”

Gitlin did not share which tenants could end up on the chopping block, but has often highlighted that the trust sees grocery, pharmacy and liquor store tenants, which make up just shy of 20 per cent of the company’s rent, as resilient.

His remarks come after Canadian retailers have spent roughly two years swinging between periods of intense lockdowns and cautious reopenings meant to quell the spread of COVID-19.

The rapidly changing restrictions have pushed many retailers to close their businesses entirely, rethink their brick-andmortar strategies or struggle to pay rent and cover other bills.

“I am not going to downplay the challenges that the commercial real estate industry faced throughout the year,” Gitlin said.

The company reported Wednesday that its rent collection rate reached 98.6 per cent in its most recent quarter, a slight climb from 96.2 per cent at the same time last year.

Its committed occupancy level across its portfolio of about 207 properties totalled 96.8 per cent in its fourth quarter, up from 95.7 per cent

Net income for the three months ended Dec. 31 amounted to $208.8 million, up from $65.6 million in the fourth quarter of 2020.