TORONTO, April 21, 2020 (GLOBE NEWSWIRE) — RioCan Real Estate Investment Trust (âRioCanâ or the âTrustâ) (TSX: REI.UN) is committed to supporting communities and small businesses amid the COVID-19 pandemic and is providing an update today on its liquidity position, operations, developments, 2020 same property NOI guidance, and its Annual and Special Meeting of unitholders which will be held virtually.
âAs always, our top priority is the health and safety of all our employees, tenants, and the communities that our properties serve and even more so during these challenging times,â said Ed Sonshine, Chief Executive Officer. âThe majority of our properties are considered beacons of the surrounding neighborhoods where they are located and provide necessity-based essential goods and services during this health crisis. 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. We are grateful to all the people, many of whom are our tenants, working on the frontlines during the COVID-19 crisis.”
âRioCanâs solid foundation is its resilient, major markets focused portfolio, which was built to withstand challenges and adversity. We are in good financial health with a strong balance sheet and ample liquidity. Supported by our cycle-tested management team, RioCan is well-positioned to weather this storm and come out the other side poised to continue building our major market, urban mixed-use portfolio. We are already in the process of developing post-pandemic best practice protocols for our operations and developments once businesses and peopleâs daily lives start to go back to normal over time,â concluded Mr. Sonshine.
Balance Sheet â Ample Liquidity to Fund Operations and Weather the Storm
RioCan has a strong balance sheet with approximately $1.0 billion of liquidity on a proportionate share basis as of March 31, 2020, consisting of cash and undrawn portions of its revolving unsecured line of credit and construction lines of credit. The Trust also has a large unencumbered asset pool of $9.2 billion as at March 31, 2020, which offers RioCan the potential to obtain additional mortgages to bolster liquidity, if required, and preserve the revolving unsecured line of credit essentially undrawn or minimally drawn, while maintaining debt metrics.
As of April 20, 2020, only approximately $126 million of RioCanâs mortgage maturities for 2020, all of which mature in the second half of the year, have yet to be refinanced or have refinancing commitments in place. They are expected to be refinanced in due course. The Trustâs total $400 million debenture maturities in June and August of 2020 have been effectively refinanced with the Trustâs $350 million, 7-year inaugural Green Bond issuance that was completed in early March 2020 at an annual coupon rate of 2.361%.
Portfolio Strength â Major Markets Focused and Necessity-Based
RioCanâs pre-eminent portfolio is well-positioned to manage through the COVID-19 pandemic. As of December 31, 2019, 90.1% of RioCanâs annualized rental revenue was generated from Canadaâs six major markets and 52.4% from the Greater Toronto Area. With enclosed malls representing less than 10% of its portfolio, more than 90% of RioCanâs portfolio is comprised of grocery anchored centres, mixed-use / urban centres and open air centres. Grocery anchored centres alone accounted for 40.9% of annualized rental revenue as of year-end 2019. RioCanâs tenant base is well diversified with a strong focus on necessity-based and service-oriented tenants and no single tenant accounts for more than 5% of the Trustâs annualized rental revenue.
In an effort to slow the spread of the COVID-19 virus, a number of businesses have closed of their own volition or to comply with government mandated closures. To support small businesses and independent tenants, as well as small national tenants, RioCan has offered 60-day gross rent deferrals to such tenants on a case-by-case basis.
As of April 20, 2020, RioCan has approved approximately $15 million of April rent deferrals based on requests, representing approximately 17% of its total April gross rents. Such approved rent deferrals are payable either within the 12 months subsequent to the 60-day deferral period, or over a shorter timeframe in the case of certain small national tenants, all interest free. Accordingly, the Trust has collected 66% of expected April gross rents. The Trust is committed to working with its national tenants and finding solutions on a case-by-case basis to support their businesses while protecting the Trustâs rights and financial positions.
While the COVID-19 pandemic presents unprecedented challenges and its impact is difficult to quantify, the Trust expects to collect most, if not all, of the rents over time given the financial strengths and strong business fundamentals of many of its tenants in addition to various legal remedies available to RioCan to support rent collectability. Furthermore, RioCan holds approximately $30 million of security deposits from a number of tenants which can serve to offset rents owed on a tenant-by-tenant basis in the unfortunate event of unresolved tenant defaults.
For the Trustâs residential operations at eCentral in Toronto and Frontier in Ottawa, RioCan has received approximately 96% of the April residential rents as of April 20, 2020. The remaining rents are expected to be collected in due course. All dollar amounts and percentages included in this press release are at RioCanâs share.
Development â Active Construction Ongoing while Early-Stage Projects Postponed
The vast majority of RioCanâs construction projects qualify as essential projects under provincial governmentsâ regulations and remain underway, albeit at a slower pace. The Trust continues to monitor development progress daily, ensure worker safety and accommodate labour limitations, and will make necessary adjustments as the circumstances arising from COVID-19 develop.
RioCanâs staggered development program provides the flexibility to adjust development starts to conserve capital and enhance the Trustâs liquidity under the current unprecedented circumstances. The Trust has put a temporary hold on development spend related to new or early stage projects. This initiative is expected to reduce RioCanâs development spend for 2020 by $100 million to $150 million to the $350 million to $400 million range, net of expected cost recoveries and air rights sales. In addition to capital preservation, rescheduling certain development starts maintains the income producing capacity of existing sites and will contribute to cash flow generation.
Expense Management and Operation Efficiency Improvements
RioCan has engaged its pre-established crisis management team and is actively executing its pandemic plan to ensure business continuity while safeguarding the well-being and security of its employees, tenants and the communities it serves. At the same time, the Trust continues identifying areas of operations to reduce spending and offset the expected negative cash flow impact during this pandemic. Expense management and operations efficiency improvements identified and implemented include, but are not limited to: municipal tax and HST/QST deferrals, energy reductions, certain maintenance and revenue enhancing capital expenditure reductions, staffing level adjustments, and further streamlining of national procurement and operating costs management.
Outlook â Withdrawing Guidance
The COVID-19 crisis is a highly dynamic situation and its impact on RioCanâs business and the general economy is uncertain. The Trust is withdrawing its SPNOI growth guidance and will provide further commentary and updates during its first quarter conference call, scheduled for Tuesday, May 5, 2020 at 10:00AM E.T.
Virtual 2020 Annual and Special Meeting of Unitholders
RioCanâs 2020 Annual and Special Meeting of unitholders will be held on Tuesday, June 2, 2020 at 10:00AM E.T. The meeting will be conducted as a âvirtualâ meeting. The virtual meeting will utilize online tools to ensure unitholders have the same rights and opportunities to participate as they would in an in-person meeting. Further information about the virtual meeting will be provided in the management information circular for the meeting and at www.riocan.com. All unitholders are invited and encouraged to attend.
RioCan is one of Canadaâs largest real estate investment trusts. It owns, manages and develops retail-focused, increasingly mixed-use properties located in prime, high-density transit-oriented areas where Canadians want to shop, live and work. As at December 31, 2019, the Trustâs portfolio was comprised of 220 properties with an aggregate net leasable area of approximately 38.4 million square feet (at RioCan’s interest) including office, residential rental and 14 development properties. To learn more about us, please visit www.riocan.com.
Forward Looking Information
This press release may contain forward-looking information within the meaning of applicable securities laws. This information reflects RioCanâs objectives, our strategies to achieve those objectives, as well as statements with respect to managementâs beliefs, estimates and intentions concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as âoutlookâ, âobjectiveâ, âmayâ, âwillâ, âwouldâ, âexpectâ, âintendâ, âestimateâ, âanticipateâ, âbelieveâ, âshouldâ, âplanâ, âcontinueâ, or similar expressions suggesting future outcomes or events. Such forward-looking information reflects managementâs current beliefs and is based on information currently available to management. All forward-looking information in this News Release is qualified by these cautionary statements.
Forward-looking information is not a guarantee of future events or performance and, by its nature, is based on RioCanâs current estimates and assumptions, which are subject to numerous risks and uncertainties. Such risks and uncertainties include, but are not limited to, the effects of COVID-19 on the businesses, operations and financial positions of RioCan and its tenants, as well as on consumer behaviors and the economy in general, including the length, spread and severity of the pandemic; the nature and length of the restrictive measures implemented or to be implemented by various levels of governments in Canada; RioCanâs tenants’ ability to pay rents as required under their leases; the availability of various support programs that are or may be offered by the various levels of government in Canada and worldwide; domestic and global supply chains; timelines and costs related to the Trustâs development projects; the pace of property lease up and rents and yields achieved upon development completion; potential changes in leasing activities, market rents and property valuations; the availability and extent of rent deferrals offered or to be offered by the Trust; domestic and global credit and capital markets, and the Trustâs ability to access capital on favourable terms or at all, and its ability to maintain its current credit ratings; total market return and the dividend yield of the Trustâs Units; and the health and safety of our employees, tenants and people in the communities that our properties serve. For more information on other risks, uncertainties and assumptions that could cause the Trust’s actual results to differ from current expectations, refer to the âRisks and Uncertaintiesâ section in RioCanâs MD&A for the year ended December 31, 2019 and in its most recent Annual Information Form, available at www.sedar.com and at www.riocan.com.
The forward-looking statements contained in this News Release are made as of the date hereof, and should not be relied upon as representing RioCanâs views as of any date subsequent to the date of this News Release. Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
Senior Vice President and Chief Financial Officer
RioCan Real Estate Investment Trust