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For the months of April, May and June, RioCan collected 73.3 per cent of its rent on average — 7.7 per cent of rent was deferred with a definitive payment schedule, and 6.4 per cent of total rent remains to be collected. The company wrote off 6.8 per cent of rent, or $9.2 million, as bad debt and is expecting to receive $9.9 million (or 5.8 per cent of total rent) from the federal government’s Canada Emergency Commercial Rent Assistance (CECRA) program.
This has been the most unusual quarter in my 26 years of being CEO
Ed Sonshine
On the call, Sonshine criticized the CECRA program, calling it a “painful, painful application process.” He added that very few of RioCan’s tenants actually qualified for the program because the qualification criteria, at least in the months of May and June, were that the business had to lose 70 per cent of sales.
Rent collection, however, improved significantly in July to 85 per cent, according to RioCan’s financials.
Sonshine said he suspects that number will increase as RioCan’s government tenants usually pay rent only at the end of the month. He provided some guidance to analysts on the call, estimating rent collection of more than 90 per cent on average, if the country does not go back into full lockdown mode.
“The types of tenants that did not pay rent were largely fashion tenants. But we are confident in the collectability of most or all of that rent because for many of them, their only choice is to go into creditor protection,” Sonshine said.
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