‘Many layers of bad’

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This article was published 04/09/2020 (2067 days ago), so information in it may no longer be current.

Almost since the moment it was announced, both tenants and landlords have complained that the Canada Emergency Commercial Rent Assistance does not work.

A two-month extension is about to end, but there is no end date for the coronavirus pandemic. Its ill effects on business owners and their landlords will continue indefinitely.

The Free Press recently reported that less than one-third of the $3 billion the federal government budgeted for the program has been used, with only about $11 million of that dispersed in Manitoba.

A recent national survey by the Canadian Federation of Independent Business showed that only 15 per cent of its members have been able to use the program, and 20 per cent think it is helpful.

Jonathan Alward, CFIB’s director of provincial affairs for Manitoba, said, “There are so many layers of bad with this program, frankly.”

Even the property manager in Manitoba that has used the program the most, has nothing good to say about it.

“It’s not a good program,” said Sandy Shindleman, the president of Shindico Realty Inc., whose company is responsible for more than 10 per cent of the provincial takeup: about $1.6 million. “It’s not enough help. It is targeted at the wrong people, or the right people can’t get the help.”

Shindico has developed over 8 million square feet of mostly commercial real estate, most of it in Manitoba. Its tenants may have received about 10 per cent of the support but Shindico is not responsible for 10 per cent of the commercial tenants in the provinces.

“Many landlords have chosen not to participate,” Shindleman said, not as a slight against his peers.

The program forces landlords to initiate the process that requires tenants to pay 25 per cent of their rent, with the federal government covering 50 per cent and landlords agreeing to forfeit 25 per cent.

Shindleman said one of the fundamental flaws of the program is the assumption that landlords can handle that size of a hit.

“The misnomer is that landlords don’t have a 25 per cent margin,” Shindleman said. “If rent is $5,000 per month, you don’t have $1,000 net profit. You’re lucky if you have seven per cent.”

Tom Thiessen, the executive director of BOMA (Building Owners and Managers Association) Manitoba, said even though the CECRA program was extended for couple of months, there is no noticeable change in the way landlords use it.

Thiessen said, “Many of our members have been working with tenants through various means, including rent deferrals on a case-by-case basis, and, in rare instances, abatements.”

“It’s not enough help. It is targeted at the wrong people, or the right people can’t get the help.”
– Sandy Shindleman, president of Shindico Realty Inc. 

Retail and service industry businesses have been forced to close for varying lengths of time and to varying degrees, but to be eligible for CECRA support, a business must show a year-over-year revenue decline of 70 per cent.

Shindleman said that on one hand, many businesses do not want to have to disclose to their landlord that their business has declined that much. On the other hand, he said, “If their business has declined 70 per cent, they would close up. They would not pay their utility bills.”

Every business has a different level of tolerance when it comes to declining revenue. Many have scrimped and reduced overhead, laid off staff and undertaken every manner of cost-cutting. Many well-known retailers have declared bankuptcy. 

“We studied the program for weeks before we participated because it did not make any sense,” Shindleman said. “If our tenant’s business declined by 70 per cent they’re not able to pay staff, they’re not paying suppliers. If it is a food business they could go a month without paying suppliers, then (the food suppliers) don’t deliver any more.”

Shindico is known to have more professional staff per square feet of leasable space and has the human resources to keep talking to its tenants.

While clearly the commercial real estate business is challenged, Shindleman said his company prospects more than ever with tenants looking to downsize, relocate and sublet.

“The pipeline is bigger than ever,” he said. “But who knows if any of it will fall to the bottom.”

martin.cash@freepress.mb.ca