First Capital REIT (FCR) has launched a $30-million program to “bring immediate relief” to small business owners in the company’s portfolio during the crisis created by the COVID-19 (coronavirus) pandemic.
The REIT said the FCR Small Business Support Program is effective April 1 to qualifying tenants impacted by the current challenging economic times.
But some tenants are not happy, saying the program does not go far enough to help them get through this extremely difficult time and the requirements for qualification are not appropriate.
Jordan Robins, Executive Vice-President and Chief Operating Officer of First Capital, said the program provides short-term relief for small business tenants who need it most as a result of the profound impact of the COVID-19 pandemic.
“We’ll make available up to $30 million in the form of lease amendments that will defer rent for qualified small business tenants for a period of up to two months. The effective date of the program would be April 1,” he said. “And obviously it would assist the small businesses and their employees during this unprecedented period.”
The company has about 4,500 tenants across its portfolio in Canada. Qualifying small businesses that operate within the company’s portfolio and that demonstrate a need for assistance, may qualify to defer a portion or all of their rent for a time period that is initially set at two months commencing with April rent.
But some tenants are critical about the company’s response to the crisis they are facing which is putting many small businesses in Canada on the brink of permanent closure.
One tenant is upset that in order to qualify for the FCR program they must demonstrate need for financial assistance with the mandatory submission of both 2018 tax return and 2019 financial statements; monthly gross sales/revenues for each of the 12 months 2018 and 2019; and agree to provide signed authorization for FCR to conduct a credit check.
“All of that just to be considered, considered, for rent deferral,” said the tenant. If we don’t provide it to them, they will not consider our application. That is actually none of their business and literally has nothing to do with what is happening right now with sales.
“I don’t really know what kind of rent relief they’re talking about with $30 million because they’re not actually prepared to lose a penny. We are in a pandemic. We are in a situation where the entire economy has ground to a halt. There is just no foundation for asking for any financial information that literally has nothing to do with anything that is happening right now.”
Another tenant said what First Capital is doing is not enough and it’s a blanket solution to so many small businesses that are not all affected the same way.
“This offer is really cheap and low and so inadequate to so many small businesses,” said the tenant. “When you look at First Capital’s financials which are available on their website on their investor page, you look at a company that is doing extremely well. This offer is so weak compared to what they can do.”
Robins said FCR is in the final stages of developing a dedicated tenant portal including an on-line application process. Access details for the portal will be communicated to tenants.
“We have also asked for financials including sales, which should come as no surprise to anyone, as we are offering an interest free loan. This loan is being expedited by FCR but of course necessitates a certain degree of rigor and vigilance,” he said.
Robins said the company had been contacted by a number of its tenants prior to announcing the new program. When asked if he thinks what FCR is enough for those tenants to survive the next little while, he responded: “We don’t know what the next little while looks like. We don’t know how long this crisis will last. All we know is we have put in place a program to help people for the next 60 days.”
In a news release, Adam Paul, President and CEO of First Capital said small businesses play such an important role in the thriving neighbourhoods in which the company invests.
“Many of these businesses are also among the most impacted by the COVID-19 pandemic,” he said. “We have long recognized that one of our greatest strengths lies in working together as a community. This program continues First Capital’s investment in our properties and tenants so that through these challenging times we can give small businesses and the communities in which they operate some short-term relief to help them thrive over the long term.”