How Now, Mr. Clow? (More About Crombie REIT)

Note: Since writing this post it has occurred to me that the Star Wars story is actually a good metaphor for what is happening here.  Darth Vader is Luke's father.  We're all connected.  We all have a "force" and the ability to choose how to use it.  My next post is a follows up on some of the ideas in this one, and proposes a solution: "A Proposal That Could Benefit Both Crombie REIT and Halifax". 

For youngsters reading this, the title of this post is a play on the phrase "How Now, Brown Cow?"

This post builds on my last post: The Letter I Wrote Today About Crombie REIT

I wrote the last post in order to express my concern over how Crombie REIT has been treating its tenants.  Crombie REIT tenants include small business owners that have been faithfully paying rent to this company in return for what they thought was a long term place to make a life for themselves.

My original post now has links to a petition, a CBC NS video interview with Ray and a few other news stories that have been published since.

The information in these stories compelled me to write another letter.  Here it is:

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Dear members of the media, investment community and government;

Further to my last letter, I'd like to express a few concerns with information in a follow-up  article that was published in The Herald on February 4th:

Public Dishes Out Backlash Against Eviction of Eateries 

Statements by Mr. Clow in this article contradict a CBC NS interview, with regards to tenants having been offered to stay at Scotia Square with long term leases and participate in the Scotia Square expansion.  The wording of this implies that this was on the table since last June, which is opposite to what Ray says in his interview.

 So I'm just curious what exactly is the truth?

To quote the most recent Herald article:

"Clow said the projects show Crombie’s commitment to downtown Halifax."

I don't understand, if Crombie is committed to downtown Halifax and working with these restaurants, why did the heartless eviction occur in the first place?  Is Mr. Clow being genuine, or is he just doing damage control for his shareholders?

Further in the article comes this statement:

"Crombie is in a difficult business where margins are tight, and like any business, if it can make more money by implementing changes at its properties, then it is obligated to do so for its unitholders."

Ok.  Then my next question is, if this is the case, then how can Mr. Clow justify the giant pay-bump he received in 2012 which saw his salary increase to $1,436,000 from $1,008,000 in 2011, and $833,900 in 2010. 

This salary information is outlined in this April 3rd, 2013 article, also in the Chronicle Herald: 

Crombie REIT Executives Get Major Pay Hikes in 2012 

Wait, it gets better.

Further in the Herald article from Feb 4, 2014:

"The leasing specialists, who asked not to be named, suggested that many of those who support the small operators probably don’t eat there often enough.

Although there is opposition to fast-food chains moving in, one expert said the reality is that those operations are profitable and help to draw others to the food court, with a greater payoff for the landlord."

I am sorry everyone, but the conclusions that I'm drawing from the actions of Crombie REIT are:

1. that it is justifiable to hand out 42% salary increases to executives, while doubling their tenants rent by more than 100% in the case of a Taste of India (whose rent increased from $3000 to $7000).  

2. It is justifiable to hand out these big salary increases, and at the same time imply that Ray's and Taste of India's customers are the ones to blame for not being more supportive.  Does this not contradict the fact that there is a huge public outcry in the first place?

3.  Crombie REIT needs more profits for its shareholders! So in order to do that, people like Ray and Taste of India, who are probably the ones who are actually operating on a tight margin, should be replaced with large American owned chains that can feed the visitors and workers at Scotia Square Mall high-profit low-nutrient food.

I think it is worth noting that according to this letter to Empire Co. Shareholders, Empire Co owns 42.8% of Crombie REIT.  

This letter and other articles on line indicate that Empire and Crombie REIT have been performing great for investors.

But at what cost to people like Ray?  It is disheartening to me that this article indicates Mr Clow is fine with taking longer, higher interest terms on mortgages and sleeping great at night.   In contrast,  this  CBC NS article about the online backlash indicates that Ray has barely been able to sleep since he was given notice to leave. 

I wish that Mr. Clow and other executives would take the time to actually read all of the comments posted by readers on all of the media articles and petitions that have been published to date. 

I wish everyone in Canada would take the time to read these articles and the comments, Crombie REIT has apparently been doing this to other small businesses all over.

I think if everyone were to do so we would realize that it is time for Crombie REIT to either make fundamental changes to its ethics, or to be deflated via investors pulling out their investments, and tenants finding other landlords.

If neither of these things happen, I wish that the Halifax Regional Municipality (HRM) would consider the expropriation of Scotia Square Mall.   This may sound ludicrous, but if HRM can expropriate property to build roads, why can't they expropriate a Mall to serve the best interests of its taxpayers?

Sincerely,

Susan Paczek

PS - Star wars fans, it seems that we now have an actual Empire to fight... [edit Feb 9th - I mean we have an Empire to communicate things to in a rational manner, I'm beginning to think that "fighting" is pointless, see my post on Feb 9th, favourite thing #1]