The Letter I Wrote Today About Crombie REIT

Please note that as of Feb 5th I've since published a follow up post this post: How Now, Mr. Clow?

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Well, the stories in my last post got me thinking a lot.  

Today I decided to write a letter clarifying my thoughts and send it off to a bunch of people.  I figure I'd better post this letter on my blog.  I also wrote a preamble, which I've since moved to the end of this post, explaining why I wrote this up.

Here is the letter:

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Dear members of the media, investment community and government;.

I think it is time that as Canadians we open our eyes and recognize the possibility that Real Estate Investment Trusts such as Crombie REIT are potentially damaging the Canadian economy. 

Please review 2 recent Halifax news articles:

The first was in Halifax’s Coast Magazine:

http://www.thecoast.ca/RestaurantandBarNews/archives/2014/01/31/rays-lebanese-food-and-a-taste-of-india-are-being-evicted-from-scotia-square

   
And here is the article in the Halifax Herald, Canada’s only remaining family-owned daily:

http://thechronicleherald.ca/business/1183569-ray-s-taste-of-india-exit-scotia-square

Scroll through all the comments and it is evident that the local community, especially readers of the Coast, are understandably outraged by the mistreatment of these small business owners.  Sure, some people have mentioned, no worries they can move someplace else.  But where are they supposed to move to?  How far can their regular Scotia Square customers walk during their lunch breaks?  Please check out the large list of properties that Crombie REIT now owns and manages not just in downtown Halifax but across Canada:

http://www.crombiereit.ca/en/regions.aspx

At first glance, maybe this just appears to be a story about 2 small businesses getting ousted in favour of what is best for a company’s goals and profits.  But is there a bigger picture here?  Can we "connect the dots"?  CBC's Doczone recently aired “The Condo Game”

http://www.cbc.ca/doczone/episodes/the-condo-game

which highlights many issues with the Condo boom in Toronto.  My understanding is that projects such as these are often backed by REITs. 

Here’s another dot to connect:  Doczone also aired “Generation Jobless”

http://www.cbc.ca/doczone/episodes/generation-jobless

This episode highlights the lack of opportunities now available for millennials.   

Can we not recognize that if the boomer parents of millennials are mindlessly shoveling their retirement dollars into investment vehicles such as Crombie REIT, they are in effect creating the very economic conditions that are robbing their offspring of opportunities?  I am talking about outrageous commercial rents, the disappearance of affordable housing, and an economic landscape that becomes increasingly devoid of small businesses and overrun with large chains.   

 So many young people would love to take a run at owning their own business, but where is their chance to succeed if REITs like Crombie keep ratcheting up the rents in city centres in order to make money for their investors?

If I understand correctly, Crombie REIT is a child of parent companies Sobey’s Inc. and Empire Co Ltd.   

The Sobey’s website has a section boasting its social responsibility which describes how it serves its communities.  

 Isn’t Ray, owner for 31 years and Scotia Square Mall Tenant, part of the downtown Halifax community? How is Ray being served, or rewarded for the positive impact his business has made on his customers?

I am hopeful that the humans in charge of Sobey’s and Crombie REIT truly do care about community and can recognize the power that their corporations wield.  

I hope they choose to use this power to promote community health and not obliterate it.  

I hope that the media coverage of this story will help them to recognize the error of their ways, and to take the opportunity to right a bad decision.  

I hope Ray and Taste of India get an apology and are allowed to stay.  Because as a society, if we all stand idly by while this sort of thing happens I’m afraid that we’re going to find ourselves living in a country where REITs own entire downtown cores, and the only jobs available for young people are with chains such as the Subway restaurant that Crombie REIT plans to replace these small businesses with.

Investors: is there not an opportunity here to create an “Ethical REIT” that would use real estate investment not as a mere cash cow but a tool of social change? 

Modest, sustainable profits could still be realized for your investors while downtown cores of our cities could be re-imagined in ways that would help small business owners flourish while promoting creativity and community health.   

This imaginary REIT would be committed to providing more affordable rents for both businesses and residents, as well as providing rent to own opportunities and mentorship. 

Reduction in gross rents might sound off-putting at first to some, but this could be mitigated by a lack of vacancies and reduced repair costs.  Conscious investors would be relieved to have a place with excellent ethics to park their cash.   Local governments could fast-track development proposals from this REIT.  People would seek to rent homes or commercial space from this REIT.  Tenants in return would, hopefully, respect this REIT and not break leases without notice or damage property.    

With lower rents business owners might have a better shot at staying in business, making a decent living, and creating decent jobs for employees.  This could in turn strengthen the economy as a whole and reverse the trend in the destruction of our middle class.   The Landlord/Tenant relationship doesn’t need to be one of domination and control, it can be a symbiotic one where each side recognizes and appreciates what they receive from the other.  

Why must we sacrifice long-term community health for short term profits? If we keep going with our current model of unbridled REITs swallowing up cities and ousting or extorting small businesses in the name of profit, who wins in the end? And can we not see how short sighted this is?

Sincerely,

Susan Paczek

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 change.org petition to keep Ray's and Taste of India open. 

And (as of Feb 3rd) a CBC NS interview with Ray:




Note: Feb 4th: I found this Herald article "Crombie REIT executives get major pay hikes in 2012"

Looks like working for a REIT pays pretty well!  

I would also like to know Mr. Clow reconciles the information given in the above Herald article, with this most recent Herald article about the public outcry to Crombie REIT's actions.

And here's a  recent CBC article about the online backlash. 

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I wrote up a little preamble for this post, but I moved that to the end of my post, as this post is getting a bunch of hits.  Does that make it a "postamble"?  

anyhow...

To any recipients of my letter who might check on my blog, I figure I'd better point out a couple of things: 

1. To the taxpayers of Canada; you paid a pile of money for me to spend years in university so I could get a BSc in Animal Behaviour and an MSc. in Conservation Biology.  Lately I've taken it upon myself to try to use this training in critical thinking to try to conserve Humans.

2. To natives of Nova Scotia: yes I am a "Come From Away".  But before you choose to hold this against me, I'll ask you the same question I asked my bluenosed husband the other day.  Where exactly am I supposed to live? 

My father's village in Poland was taken over by the Russians at the start of WWII, so he and his whole family got loaded onto a train and sent off to a Siberian work camp.  So my "first family home"? Gone.  

After the war my father emigrated to Canada and built a life for him, my mom and siblings in Richmond BC.  That's where I grew up.  Have you been to Richmond BC lately?  Apparently from the air it looks like the head of a dragon in the mouth of the Fraser River, and so was selected as an auspicious place to move to around the time Hong Kong's lease came up in 1997.  It is now a big city with a population that is over 60% Chinese immigrants that has awesome night markets but over-development (in my opinion) and little affordable housing.  It is also below sea-level so I've always been a bit wary of living there long term.

My family home, built in the early 70's, has since been sold to developers, smashed down and replaced with a monster home.  The folks remaining in our small family have bugged out to Ladner which still has that Suburban-Canadian feel.  I tried being a conservation biologist in BC but found it so frustrating that I decided to leave and try something else.

I moved to Regina for awhile.  My house there burned down.  

So I've been kicked out, priced out and burned out.  

Now I'm here.  Moving to rural Nova Scotia has made me realize I've always been homesick for a home I'll never be able to visit.  I love it.  I'm staying.  And I'm committed to doing anything I can to keep this province an awesome place to live.  Because really, I have nowhere left to go! 

I really hope my letter helps the owners of Ray's and "A Taste of India" somehow, in case they also feel like they have nowhere else to go...