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“Rent Relief Update -- LEEFF”

Will large landlords including REITS, help their tenants with rent relief?

The federal government has unveiled a new financial relief program that is designed for large landlords including Real Estate Income Trust(REITS). It is an interest-bearing loan to large businesses who have been affected by COVID 19.

This program is specifically for large businesses with $300,000,000 or more in total revenue,have a significant impact on the Canadian workforce and operations, and require a minimum loan of $60,000,000

To qualify, companies must agree to:

❖ minimize the loss of employment,
❖ sustain domestic activities,
❖ put prohibitions on dividends, capital distributions and share repurchase
❖ publishing an annual climate-related financial disclosure, highlighting governance, reporting, strategies,policies, practices to help manage climate change
❖ contribute to Canada’s commitment under the Paris agreement goal of net zero by 2050
❖ if a publicly traded company(includes REITS) must make certain arrangements which may in effect allow the CEEFC to share in the upside of the borrower’s recovery
❖ limit certain executive compensation restrictions.

The loan will be provided either as an 80%unsecured loan at 5% per annum interest payable quarterly in first year, 8% in the next year and increasing at 2% per annum thereafter or a 20% secured loan, with the interest rate based on the rate of borrower’s existing rate.

If REITS receive funding, it does not appear they have to use the funding to give rent relief, but it does not mean they will not. It makes goodbusiness sense, but common sense has been thrown out the window with COVID-19. The agreements seem more akin to pushing non-related social initiatives. It is good the government is helping, but it does not appear to be reflective of the general needs of tenants to receive help with paying rents.

Our opinion is that the large landlords will not be particularly enthusiastic about this program, and that the landlords may develop their own approach to managing tenant rent payments.

Realty Lease Consultants invites you to have a free consult on your lease issues to see if we can help you.
Realty Lease Consultants has over 75 years combined leasing experience and founded by Ian D. Toms over 25 years ago. We are leasing experts and provide these services:
- Offer to Lease,
- Lease Negotiations
- Lease Term Renewals/Extensions
- Lease Assignments with Amendments
- Lease Review and Consult
- Demographics and Site Selection
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Realty Lease Consultants

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