RioCan negotiating with potential tenants for 15 former Target stores

TORONTO — RioCan says it has begun negotiations with retailers that could potentially use some of the space in 15 former Target Canada stores that have been returned to the real estate investment trust.“We’ve got lots of interest,” said RioCan CEO Edward Sonshine, adding that some of the stores will be broken up into smaller units.RioCan says the space at the 15 former Target Canada stores represented about $8.6 million of annual revenue. In total, RioCan’s 26 former Target Canada stores make up 1.9 per cent of its total annual rental revenue.If RioCan is able to backfill the stores, that will reduce how much money it will seek from Target for lost rental revenue under the terms of a guarantee from the U.S. company, which closed all 133 Canadian Target stores during the first quarter.The landlord said it has not yet begun negotiations with the U.S. parent company regarding the indemnity agreement.Target Canada reaches compromise with landlords on sales of leasesAnybody want to rent some real estate? Target has a few stores availableAn additional 11 former Target Canada locations in RioCan’s property portfolio remain part of the retailer’s court-supervised windup. An auction of the dozens of Target Canada leases is scheduled to be held this week in Toronto.“It’s been an interesting process that Target Canada has set up,” Sonshine told investors during the company’s first-quarter conference call Tuesday.“Mostly the retailers they’re dealing with directly have been very, very quiet. We’ve been approached by a couple looking for changes in some of the leases.”RioCan’s update was included with its first-quarter financial report, which said no individual tenant generated more than 4.1 per cent of annualized rental revenue. Its biggest source of revenue was the Loblaw-Shoppers Drug Mart group.RioCan’s net earnings dropped by 48 per cent to $89 million in the three months ended March 31, from $171 million in the first quarter of 2014. That amounted to 27 cents per unit of net income, down from 55 cents a year earlier.However, RioCan said its funds from operations in the three months ending March 31 were still up 8.8 per cent from a year earlier, rising to $138 million or 44 cents per unit. read more