Things haven’t been running smoothly for the Hudson’s Bay Company recently, and that’s an understatement. According to a French-language report by Marie Eve Fournier in La Presse last week, landlord Cominar has brought forward a motion in Quebec courts to terminate the leases for three Hudson’s Bay Company stores in Quebec due to non-payment of rents. The Hudson’s Bay Company says that the move by landlords is a form of intimidation and ‘bad faith’ and that the retailer is looking for resolution.
Cominar REIT says in court filings that HBC hasn’t paid rent since April at Rockland Centre in Montreal (monthly rent $86,200), Mail Champlain in Brossard (rent $110,200/month), and at Centre Laval in Laval (rent $20,500/month). Notices of default were sent in June and notices of termination followed last month. In total, damages and unpaid rents claimed amount to $3.68 million for Rockland Centre, $26.95 million for Mail Champlain, and $2.21 million for Centre Laval. All three Bay stores in those malls are currently open.
Another French-language report last week in La Presse noted that landlord Oxford Properties is suing HBC for more than $2.29 million in unpaid rents at two shopping centres including Galeries de la Capitale in Quebec City (monthly rent of $220,000) and Promenades Gatineau near Ottawa ($145,900/month rent). The same report notes that HBC had not paid rents for eight of the 11 Oxford-owned malls in Canada containing Hudson’s Bay stores.
Hudson’s Bay claimed that the Oxford-owned malls are no longer “first-class” and are not doing enough to attract shoppers. As a result, Hudson’s Bay says it is withholding rents. It wasn’t revealed which of the three Hudson’s Bay stores’ rent was paid, though one might guess that Toronto’s Yorkdale location and Square One were likely included given past sales numbers.
In April, at the worst of the pandemic, the number of transactions at the Promenades Gatineau Bay store fell by 99.1% (from 16,090 to just 149) compared to the same month of the previous year. Sales were down a whopping 99.5% (from $1.07 million to $ 7,926). Five months later, in September, transactions were still 35% lower than a year earlier (9,962 versus 15,337 12 months earlier). Sales were down nearly 29% (from $1.07 million to $759,000) over the same period.
The return to previous sales numbers were even slower at the Galeries de la Capitale near Ottawa, with sales in September being 39% lower than a year ago (from $1.73 million to $1 million). As for the number of transactions, it was down 43% from 22,425 to 12,684 over the same period.
Dorval Property Corporation, a Toronto real estate company that owns Les Jardins Dorval in Montreal, is also suing HBC for unpaid rents amounting to almost $ 660,000.
Larco, owner of Park Royal in West Vancouver, is also suing HBC four outstanding rents estimated to be about $365,000. Hudson’s Bay’s monthly rent is about $61,000 at Park Royal.
Hudson’s Bay is said to be in material default for its remaining shuttered real estate once occupied by home furnishings retailer Home Outfitters. The Hudson’s Bay Company states that it is not insolvent, though things appear to be very concerning.
In the United States, 24 Lord & Taylor and 10 Saks Fifth Avenue locations are the target of a US $846.2 million foreclosure lawsuit by Wilmington Trust. Hudson’s Bay held the Lord & Taylor locations despite selling the retailer to Le Tote last year. The complaint alleges the borrowers missed the April 1 payment on an $846.2 million loan and have failed to make payments since. The April payment was the first one due after the COVID-19 outbreak caused widespread shutdowns.
Saks Fifth Avenue stores targeted for foreclosure under the loan include the following locations:
- Tysons Galleria near Washington DC in McLean, Virginia,
- Phipps Plaza in Atlanta,
- Fashion Show Mall in Las Vegas,
- Dadeland Mall in Miami,
- Walt Whitman Shops in Huntington Station, New York,
- Chicago Place (700 N. Michigan Avenue) in Chicago,
- Beverly Hills, California (9600 Wilshire Blv.),
- Somerset Collection near Detroit in Troy, Michigan,
- North Star Mall in San Antonio, Texas, and
- Beachwood Place near Cleveland in Beachwood, Ohio.
Employees from HBC’s offices in Brampton Ontario are being moved to offices on Lawrence Avenue in Toronto. The company notes that it’s part of a “new way of working” as the world shifts amid the COVID-19 pandemic.
The Hudson’s Bay Company is the oldest continuously operating corporation in North America. It once owned much of Canada’s landmass and is now a retailer with 89 stores across Canada as well as an e-commerce site. Recently Hudson’s Bay announced that it would shutter stores in downtown Edmonton and in downtown Winnipeg, marking the end of a history where the Hudson’s Bay Company founded those communities and anchored retailing for decades.
Source: Retail insider
