TORONTO Hudson’s Bay has made significant progress in its ongoing restructuring efforts by reaching agreements to sell the leases of six store locations amidst legal challenges related to a larger deal with B.C. billionaire Ruby Liu. The retailer, which has been under financial pressure after filing for creditor protection, is navigating a complex landscape to benefit its lenders and nearly 1,000 creditors owed close to $1 billion.
Legal documents reveal that YM Inc., the owner of well-known brands such as Urban Planet, Bluenotes, West49, and Suzy Shier, has secured a deal to acquire five leases for a total of $5.03 million. Unfortunately, YM Inc. has struggled to obtain landlord approvals for three additional locations it aimed to acquire. The confirmed leases include prominent shopping centers such as Vaughan Mills in Vaughan, Ontario; Tanger Outlet in Kanata, Ontario; Outlet Collection in Winnipeg; CrossIron Mills in Rocky View, Alberta; and Toronto Premium Outlets in Halton Hills, Ontario.
In an additional bid, YM Inc. had expressed interest in securing leases at Pickering Town Center in Pickering, Ontario; Skyview Power Centre in Edmonton; and Midtown Plaza in Saskatoon for a proposed $1 million. However, those transactions could not move forward as the necessary landlord waivers were not granted.
Moreover, Ivanhoe Realties Inc., a subsidiary of Ivanhoe Cambridge, has also reached an agreement to purchase a lease at Metrotown in Burnaby, British Columbia, for a nominal fee of $20,000. These deals, however, still require court approval before any leases can change hands, highlighting the ongoing legal hurdles Hudson's Bay must overcome.
This latest round of deals represents Hudson’s Bay’s ongoing strategy to reclaim financial ground after closing all of its 80 stores, alongside 16 stores from its affiliated Saks brand. Earlier in the year, Hudson’s Bay put its leases up for sale, leading to interest from a dozen bidders seeking a total of 39 properties.
Among those bidders was Ruby Liu, who successfully acquired three leases for $6 million at her own malls, including Woodgrove Centre in Nanaimo, Mayfair Shopping Centre in Victoria, and Tsawwassen Mills in Delta. The court approved Liu's initial deal last month, allowing the leases to be transferred back to her. However, Liu’s ongoing attempt to purchase 25 additional leases has faced pushback from landlords. They claim that her business plan lacks credibility and feasibility.
Liu aspires to establish a new department store bearing her name, envisioned to feature dining, entertainment, retail, and children’s play areas. However, a recent court hearing regarding this deal was abruptly halted when Liu appeared without legal representation or the necessary documentation to support her case. Judge Peter Osborne adjourned the proceedings, strongly advising Liu to retain a lawyer for further assistance in navigating the legal complexities of her lease acquisition plans.
The rescheduled court hearing for the Liu deal is set for August 28. Yet, as the delays continue, the financial implications for lenders become increasingly dire. Alvarez & Marsal, the court-appointed monitor overseeing the process, projected that the ongoing delays related to the Liu deal are costing approximately $4.7 million each month in rent, property taxes, utilities, and various fees.
In light of these developments, Hudson’s Bay is seeking an extension of its creditor protection timeline from the initial deadline of July 31 to October 31. This extension is intended to facilitate the completion of the YM and Ivanhoe Realties transactions, gain approval for the Liu deal, hold an auction of art holdings, and explore additional avenues to maximize returns for its stakeholders.
