Retail real estate giant Riocan REIT slashes monthly payout by one-third

Retail real estate giant Riocan REIT slashes monthly payout by one-third

RioCan REIT, one of Canada’s largest retail landlords, is slashing its monthly distribution to unitholders by one-third amid growing uncertainty about its tenants’ futures.

Under the new distribution plan, effective January, RioCan’s monthly payout will fall to 8 cents per unit from 12 cents per unit, saving the real estate investment trust $152-million annually.

RioCan is best known for its suburban shopping plazas and its list of tenants range from movie theatres to retail stores. Until now, management had resisted any calls to slash its distribution, but there had been speculation it would happen eventually because the stock was yielding 8 per cent after its price fell sharply this spring.

RioCan’s management team changed course late Thursday, attributing the decision in a statement to an “uncertain retail landscape” and the “unknown length and breadth of closures.”

“A more conservative payout ratio is important in this undeniably challenging environment despite our well positioned portfolio, solid base of tenants and deep liquidity,” chief executive officer Ed Sonshine said in the statement.

RioCan recently reported quarterly earnings and the REIT characterized roughly 22 per cent of its net rent as “potentially vulnerable.” This group include movie theatres, gyms and sit-down restaurants.

More to come

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Published at Thu, 03 Dec 2020 23:02:15 +0000