Hudson's Bay, the iconic Canadian department store chain, has filed for creditor protection as it seeks court permission to begin liquidating all 80 of its stores. The filing, which occurred on March 7, marks a pivotal moment for the retailer, which has long been reliant on leases for its operations. The company, however, remains hopeful that it can secure sufficient financing to remove some stores from the impending fire sale.
As Hudson's Bay navigates these turbulent waters, its property holdings are under scrutiny. The company maintains a 78% ownership stake in several flagship locations across Canada, including stores in Montreal, Vancouver, Calgary, and Ottawa. Additionally, it holds a 50% ownership in locations in Oakville and Barrie, Ontario, as well as a store on the outskirts of Ottawa. Notably, Hudson's Bay has leased its Toronto flagship store and the adjoining Simpson's Tower from Cadillac Fairview for a 25-year term, with an option for extension.
The joint venture with RioCan Real Estate Investment Trust further complicates the scenario. This partnership owns 12 store properties, including a 50% stake in stores located in Oakville, Barrie, and other key downtown locations. RioCan has expressed understanding of the current restructuring process while emphasizing the importance of fair and balanced terms.
“RioCan understands that restructuring can be a necessary step for companies to stabilize their operations and financial position; however, it is essential that any restructuring steps are on fair and balanced terms,” – RioCan
Jonathan Gitlin, representing RioCan, acknowledged the challenges ahead but remained optimistic about finding solutions to protect the value of the real estate involved.
“Our team has a proven track record of finding solutions for vacant space and will work to protect the value of the real estate in the JV,” – Jonathan Gitlin
“This process will take time, expertise and collaboration among all stakeholders.” – Jonathan Gitlin
As Hudson's Bay awaits court permission to proceed with liquidation, stakeholders are closely monitoring the situation. The company has not ruled out saving some stores from closure should additional financing become available. This potential reprieve underscores the retailer's determination to navigate through its financial challenges while exploring viable options.
