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Who will fill Sears space?

After making good progress filling empty retail spaces left behind by Target Canada, Quebec's largest commercial property owner is yet again facing the challenge as Sears prepares to vacate all its stores in Canada.

"We were recovering well from Target and unfortunately we are now being hit by Sears," incoming Cominar REIT CEO Sylvain Cossette said Friday during a conference call about its third-quarter results.

The Quebec City-based company owns properties that held seven Zellers stores whose leases were taken over by Target.

There are also six Sears stores in its malls that represent 0.6 per cent of its current operating revenues. It is trying to buy a seventh smaller location in Trois-Rivieres, Que., owned by Sears.

"We've been very proactive in trying to market the space and we are having discussions with certain tenants," he said.

The efforts are coming after Cominar said it made steady progress chipping away at filling the Target locations by adding Marshalls and other retailers.

The spaces are now 75 per cent leased and it is in discussions with prospective tenants for another 19 per cent of the space.

Cossette said the new leases are generating much higher rents than was paid by the U.S. giant before it fled Canada in 2015.

"At 75 per cent (occupancy), we are approximately 10 per cent above our total target revenue," he told analysts.

Still, the prospective loss of Sears and challenges with the rest of its Canada-wide portfolio of retail, office and industrial space caused it to reduce its annual distribution to unitholders.



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