Landlords sue Hudson's Bay for unpaid rent, retailer says malls aren't 'first class'
The Bay's flagship store in downtown Montreal is seen here Thursday, March 10, 2005. Hudson's Bay Company says it's cutting about 825 management and administrative jobs to realign its senior management team Thursday, Nov. 3, 2005.The Toronto-based retailer says the move will simplify its operations and save $45 million a year. (CP PICTURE ARCHIVE/Ryan Remiorz)
MONTREAL -- Two Hudson's Bay landlords are suing the retailer for unpaid rent, alleging the iconic department store that anchors shopping malls across Canada hasn't paid its bills at multiple locations since April.
The lawsuits, filed in Quebec Superior Court by Cominar Real Estate Investment Trust and Oxford Properties Group and its co-owners, are seeking so-called safeguard orders compelling parent Hudson's Bay Co. to pay rent.
The companies say in court documents that HBC owes more than $3.5 million in rent and other fees at five Quebec shopping malls, an amount that continues to climb by more than half a million dollars each month.
In an affidavit filed in response, Ian Putnam, president and chief executive officer of HBC Properties and Investment, said the company has been trying to reach a mutually acceptable solution with the landlords that recognizes COVID-19's "dramatic impact" on the retailer.
"HBC still hopes to arrive at a reasonable resolution," he said in court documents filed Wednesday.
"But their demand that HBC pay the entirety of the rent ignores the fundamental change in the nature of these properties," Putnam said, adding that they are no longer the "first class" malls HBC bargained for.
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.
Oxford Properties said the ongoing loss of rent from an anchor tenant could be crippling for its shopping centres, suggesting the retailer also has unpaid bills outside Quebec.
In court documents, the company said that while HBC continues to pay rent "under protest" at three of its shopping centres, it's withholding rent at eight other locations.
The company's portfolio of malls includes the Yorkdale Shopping Centre in North York, Ont., the Square One Shopping Centre in Mississauga, Ont., and the Southcentre Mall in Calgary, Alta.
"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.
The company, the real estate subsidiary of OMERS, the retirement plan for municipal workers in Ontario, added that an inability to collect the amount owing from HBC would cause "irreparable harm."
Meanwhile, Cominar is threatening Hudson's Bay with eviction from its three Quebec properties in addition to seeking unpaid rent.
Cominar claims in court documents that HBC owes $603,169 in rent at the Rockland Shopping Centre, $662,490 at the Champlain Mall and $144,393 at the Centre Laval.
Oxford Properties claims the retailer owes $1.4 million in overdue rent at Les Galeries de la Capitale and $875,680 at Les Promenades Gatineau.
Citing shifting consumer behaviour, The Hudson's Bay said earlier this month it would permanently close its Winnipeg store in February 2021.
-- this report by The Canadian Press was first published Oct. 14, 2020.