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RioCan Real Estate Investment Trust is cutting its payments to investors as COVID-19 wreaks havoc in the real estate sector and after the big owner’s CEO pledged to preserve distribution earlier this year.
The REIT finally announced Thursday that the monthly distribution will drop to eight cents per unit starting in January from the prevailing rate of 12 cents, which has been constant since February 2018.
“As RioCan continues to navigate the uncertain retail landscape created by the COVID-19 pandemic and faces an unknown length and breadth of closures, the board has taken prudent action to curtail our distribution,” he said. RioCan CEO Ed Sonshine in a statement.
In May, Sonshine gave the impression that this kind of move could be avoided.
“Either the market overreacted to the downside, or there is this feeling that the world is so horrible that [distributions] they will all be cut, ”he said of market sentiment in the REIT sector.
“I can assure you that’s not the case with RioCan.”
The turmoil caused by the pandemic was evident this week as dozens of retailers urged the Ontario government to ease regional lockdown measures.
“It is causing a carnage. Nothing less than a carnage has been caused. We understand the pressure the premier is under, we are all on the side. But the strategy is wrong,” said Heather Reisman, president and CEO of Indigo Books & Music in an interview on Wednesday.
RioCan – which counts Indigo among its tenants – has seen its units lose nearly a third of their value this year. At close of trading on Thursday, RioCan’s yield was 7.99%.
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