The retail marketplace has undergone significant changes since the inception of this fund, most notably in with the onset of online shopping and reduced storefront demand from many Canadian retailers. These trends have impacted many Canadian retail shopping centres in terms of store performance and re-leasing vacant space, especially at retail shopping centres located in smaller secondary and tertiary Canadian markets. This headwind has certainly hampered efforts at our properties and we have been working hard to stabilize the assets with the goal of divesting.
In October 2021, after many years of extensive work by the Sunstone team and its supporting outside consultants, the Ministry of Environment approved and issued a Certificate of Compliance (“COC”) for the Shops at Polson Park in Vernon, BC. Having been under contract to sell the property since May 2021 and with a clean COC, the Buyer has now waived all conditions and we expect to complete the transaction before the end of 2021. We will be making a distribution to our unitholders shortly after the transaction is completed.
Market demand continues to grow slowly in the Chilliwack, BC, area where City Gate Centre is located, and we expect increased interest from prospective tenants due to the opening of the massive new Molson Coors Brewery plant located nearby. There has been renewed interest in leasing the vacant units and we have a new pizza restaurant tenant expected to be moved in and operating by the end of spring.
COVID-19 (or the coronavirus) has had a significant impact on businesses through the restrictions put in place by the provincial and municipal governments regarding travel, business operations and isolation/quarantine orders. This is an unprecedented time, and the real estate world is very different. We have been flexible and working with our tenants and addressing each of their issues on a case-by-case basis. It is in our best interests to ensure that the tenants can continue to work through this crisis and continue to be sustainable when the isolation/quarantine orders are eventually relaxed or lifted. Since the phased reopening by the governments in BC, most of the tenants have opened their businesses and are operating to a certain degree in this unique environment.
We remain optimistic that the current strategy to divest and monetize the remaining asset will enable investors to collect a further distribution. Our focus and commitment have been to put unitholders' interests first while dealing with a challenging retail environment which is undergoing pressure from e-commerce and of course the global pandemic.
The 2006 Fund $12,500 original investment: $11,612.02 paid out to date.
For the Q3-2021 Quarterly Update letter please click here.