(Toronto) The real estate investment fund Riocan announced the breakdown of its financial links with five properties held as part of its joint venture with Hudson bay, now missing, in order to overcome this debacle as quickly as possible.
“We can announce that Riocan has chosen not to participate financially in five of his twelve active people,” said Dennis Blasutti, director, during a conference on the results on Friday. This means that we will no longer invest in these assets, in any form whatsoever. »»
Riocan was a member of a joint venture with Hudson bay, which held the properties of 12 stores in Hudson’s Bay, but all the stores closed in early June after liquidation sales.
After having depreciated by 208.8 million the value of its participations in the joint venture in the last quarter, Riocan indicated that its net investment in the joint venture amounted to 40.2 million, or 0.5 % of its total equity at the end of June.
The chief executive officer, Jonathan Gitlin, has argued that it was not wise to continue investing in these properties, taking into account the renewal costs and the current debt.
“We have opted for a more pragmatic solution, in my opinion, by getting rid of these properties financially,” said Gitlin during an interview.
The five locations include the Square One shopping center in Mississauga, Ontario, the one in downtown Scarborough in Toronto, the Baie store in downtown Calgary, so those of the Laval crossroads and Saint-Bruno, Quebec.
The company continues to assess the other locations of the joint venture, said Gitlin.
“The outcome will be different, some consistent with what has already happened, others will be released, others will be sold,” he enamed.
“What is clear to us is that we do not invest in assets that do not generate an adjusted return to appropriate risk,” he added.
The company breaks its links with the leases of the Hudson Bay Company, while indicating that its own real estate portfolio continues to record high increases in rental rates, despite timid economic growth.
Riocan indicated that the combination of new leases and lease renewals shows an increase of 20.6 % of the rates of new leases compared to old people, including differences of 51.5 % on new leases.
“Even if some retail segments experience some weakness, […] We are convinced that the conditions will allow us to very easily fill these spaces with better quality tenants at best, ”said Gitlin.
The occupancy rate of retail businesses was 98.2 % compared to 98.3 % last year.
The company declared a net profit of 145.6 million for the closed quarter on June 30, up compared to the 122.3 million in the previous quarter.
The net profit established 49 cents per unit for the period, representing an increase in relation to a profit of 41 cents per unit for the same quarter last year.
Turnover totaled 361.7 million, up compared to the 292.2 million from last year.
The company has considerably reduced its construction expenses by completing major projects for mixed use and by launching any new ones. However, it still provides filling work for the commercial sector, Gitlin said.
The smaller projects require much less capital and are much faster to execute, which allows good use of capital, he added.
“The current demand for tenants is sufficient for us to get appropriate rents and justify expenses,” he said.
