Canada’s first major retailer, which recently launched a real estate arm to maximize its real estate assets, has had its lease terminated at Coquitlam, B.C.'s biggest mall after it failed to pay rent.
The Hudson’s Bay Company’s location at Coquitlam Centre was shuttered Saturday, November 21, even as the mall filled with weekend shoppers. Inside, the lights had gone dark, save for the odd Christmas tree lit up for the pending shopping season.
“Black Friday warm up,” read one sign looking ahead to next week’s major shopping holiday.
No staff were in sight. A notice posted at the store’s entrance by landlord and mall owner Morguard Investments Limited, stated the company had defaulted on its rent payments.
“The Premises has been re-entered and the Lease has been terminated by the Landlord for default in the payment of rent,” began the notice dated Nov. 21.
The letter notes the department store has 30 days to dispute the existence of the default. The Tri-City News reached out to Morguard and Hudson’s Bay Co. but neither were immediately available for comment.
The iconic retailer just celebrated its 350th anniversary, but despite its staying power, the pandemic has strained the company’s viability.
This isn’t the first time Hudson’s Bay Co. has struggled to pay its rent.
According to a Toronto Star report published Saturday, court records show the company has leases valued at $20 million a month and hasn’t paid any rent to eight landlords across Ontario, Quebec, British Columbia and Florida.
Last week, an Ontario judge directed the company to pay half the rent — $659,395 — it owed to the landlord of a Toronto-area mall, while at the same time, blocking its eviction.
Hudson’s Bay Co. hadn’t paid rent for seven months.
"HBC’s aggregate indebtedness to the landlords of the Oxford Shopping Centres ... is extremely large and growing at an alarming rate," Oxford Properties said in court documents in the lead up to the decision.
The spokesperson for the Toronto-area landlord said the order was an interim ruling and that they were confident they will “prevail.”
A statement from Ian Putnam, president and chief executive officer of HBC Properties and Investment, said the company was grateful the court “has recognized the extraordinary challenges of the global pandemic and how the burden can be shared fairly and lawfully, especially as it relates to non-essential retailers.”
The legal wrangling highlights the challenges facing both commercial landlords and retailers as foot traffic in brick-and-mortar stores continues to lag after widespread closures last spring.
With the second wave of the pandemic intensifying, the coming months could see more disputes emerge as shoppers turn to e-commerce instead of local shopping malls ahead of the busiest shopping season of the year.
On October 19, the venerable retailer, founded in Canada in 1670, announced it had formed HBC Properties and Investments (HBCPI), a dedicated real estate and investments business to “manage, maximize and enhance” the 40 million square feet of gross leasable space that HBC owns across North America.
Richard Baker, HBC’s executive chairman and CEO said, “This is an exciting phase of our company’s transformation and provides us with a significant opportunity to unleash the full potential of our real estate and investments business.”
HBCPI sold HBC’s Lord + Taylor building in New York City last year for $1.1 billion. It unloaded the company’s share of European assets for a reported $1.5 billion.
The plan to monetize real estate could include downtown locations in Vancouver, Edmonton and Winnipeg.
The 168,000-square-foot Edmonton store is slated to permanently close this winter. The Winnipeg downtown store, once the HBC flagship outlet in Canada, is scheduled to close February 2021 after more than 125 years in business.
In Vancouver, HBC had a conditional agreement in 2018 to sell its downtown store at 674 Granville Street to RioCan Real Estate Investment Trust for $675 million, but the transaction failed to go through.
The site, which includes 767,000 square feet of land on West Georgia Street, is currently assessed at $251.6 million by BC Assessment. The Winnipeg outlet, by comparison, is appraised only for land value. Earlier this year, a Cushman & Wakefield appraisal deemed the once-flagship store building as "worthless".