On Thursday, June 4, 2020, the NAIOP Commercial Real Estate Development Association held a roundtable where members of the Canadian Mortgage and Housing Corporation (CMHC) and Department of Finance answered questions posed by leaders in the commercial real estate industry regarding the Canada Emergency Commercial Rent Assistance program (CECRA).
We have previously published articles providing information regarding the structure and requirements of the CECRA and will not reproduce that information here. Our previous articles are available at Clark Wilson LLP's COVID-19 Resources webpage.
During this roundtable, CMHC provided further clarity regarding the administration of the CECRA. Commercial property owners considering applying for the CECRA may find the following information to be of interest:
- Property owners are not required to apply to the CECRA for every eligible tenant. The CMHC does encourage property owners to apply for all eligible tenants, but that is not a requirement to receive funding from the CECRA.
- Property owners applying for the CECRA must provide the latest rent roll as part of their application package. The rent roll required is only for the tenant (or tenants) for which the CECRA application is made. The rent roll to be submitted is not required to include tenants that are not the subject of the proposed rent reduction agreements.
- If a lease includes an indemnifier for the tenant (or subtenant), the CMHC does not require the indemnifier to sign the rent reduction agreement that the landlord and tenant (or subtenant) are required to enter into in order to receive funding from the CECRA program. Property owners will want to carefully consider if they will proceed to choose to enter into a rent reduction agreement without the agreement of a tenant's indemnifier. There may be a risk that an indemnifier that does not sign onto a rent reduction agreement may argue that its position has been prejudiced such that it is released from its indemnity obligations.
- As of June 4, 2020, the CECRA program has approximately $3 billion in funding from federal, provincial and territorial governments. It remains to be seen if this funding is adequate for the number of applications that will be received. The CMHC has encouraged property owners to apply to the program as soon as possible.
We will keep you advised of further details regarding the CECRA program as they become available.
Originally published June 5, 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.