Thoughtful Leadership in Unprecedented Times - Raintree Financial Solutions

Thoughtful Leadership in Unprecedented Times

Governments and societies all over the world are facing new realities of doing business in a landscape rife with economic uncertainty and fear. Durum Capital Inc. and the funds managed by Durum are no exception. It’s during these extraordinary moments, however, where we believe business leaders must rise up and do what’s right to protect employees, customers and industry partners. Durum Capital has always been a “first who then what” organization, meaning that people come first. We remain focused on a thoughtful approach to navigating the current situation and ensuring our stakeholders are taken care of, including employees, investors, tenants and business partners. It is under such extraordinary circumstances that we refer back to our mandate of decisive considerate action focused on thoughtful leadership.
There is no benefit in assuming that the road to recovery will be short and easy. The following summarizes how we are taking care of our stakeholders in this time of uncertainty:

1.

Financial health checks have been conducted on all funds under management and contingency plans have been prepared.

2.

Management has focused on cutting out any unnecessary expenditures.

3.

As banks across Canada have begun to offer financial relief programs for businesses, we intend to leverage some of the financial relief such as mortgage deferrals within Durum Industrial REIT (the REIT).

4.

Focus on continued distributions in the REIT to existing investors. While distributions cannot be guaranteed, measures taken are intended to ensure there is cash on hand to service distributions.

5.

For tenants in the REIT whose businesses are struggling, financial support options are being put into place — including rent reductions or deferrals—in an effort to relieve pressure. In exchange for lowering front end occupancy costs, some leases may be renegotiated to include longer terms or commitments.
Since day one, distressed investing has been fundamental to our business. Purchasing assets in markets obscured by complexity and recent negative history has challenged us to discover value in unexpected ways. Our approach to this pandemic has been similar. The adversity brought on by the pandemic presents an opportunity for Durum Capital to become stronger and more resilient. As banks across Canada are reaching capacity dealing with relief requests, we have used this opportunity to conduct more thorough and extended credit quality and financial checks on each property. It has allowed us to re-evaluate our process and search for new opportunities in an otherwise uncertain market. Additionally, we believe the economic downturn will lead to future opportunities for acquisitions, particularly in the REIT, and will ultimately benefit investors in the long run.
As for the future, we expect the ripple effects of large-scale job loss and closures will be felt across our communities for a long time. However, as with all global pandemics and economic recessions of the past, this too shall pass. When it does, we will enter an era of slow recovery as governments employ strategic reforms to bolster the economy. Historically, the effects of government stimulation have led to increased inflation on fixed assets including the value of land. We believe Bow Water & Land will experience minimal impact in the short term. Over the two to four-year time horizon, the project may actually see the benefits of an inflationary market. The same outlook applies to industrial real estate, where the increased resale value and rental rates keep pace with the general rise in prices across the economy.
We are not saying the next several months are going to be easy; like many other issuers, we face significant challenges and uncertainties ahead. However, the decisions we make today are intentional as we look to weather this storm.
Jay Simmons, CEO
Durum Capital Inc.