Two HudsonB次元官网网址檚 Bay Co. landlords are suing the retailer for unpaid rent, alleging the iconic department store that anchors shopping malls across Canada hasnB次元官网网址檛 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 HBC 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-19B次元官网网址檚 B次元官网网址渄ramatic impactB次元官网网址� on retail.
B次元官网网址淗BC still hopes to arrive at a reasonable resolution,B次元官网网址� he said in court documents filed Wednesday.
B次元官网网址淏ut their demand that HBC pay the entirety of the rent ignores the fundamental change in the nature of these properties,B次元官网网址� Putnam said, adding that they are no longer the B次元官网网址渇irst classB次元官网网址� 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 B次元官网网址渦nder protestB次元官网网址� at three of its shopping centres, itB次元官网网址檚 withholding rent at eight other locations.
The companyB次元官网网址檚 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.
B次元官网网址淗BCB次元官网网址檚 aggregate indebtedness to the landlords of the Oxford Shopping Centres B次元官网网址� is extremely large and growing at an alarming rate,B次元官网网址� Oxford Properties said in court documents.
Oxford Properties, which is the real estate subsidiary of OMERS, added that an inability to collect the amount owing from HBC would cause B次元官网网址渋rreparable harm.B次元官网网址�
Meanwhile, Cominar is threatening HudsonB次元官网网址檚 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.
The landlord also alleges that HBC has made it clear it has B次元官网网址渘o intention of paying any rent in the foreseeable future.B次元官网网址�
B次元官网网址淚t appears that HBCB次元官网网址檚 true intention is to take advantage of the current challenging times to occupy and carry on business from the leased premises rent-free as long as possible,B次元官网网址� Oxford Properties said.
B次元官网网址淗BC is attempting to use the pandemic as a pretext to unjustly enrich itself at the expense of the landlord.B次元官网网址�
Daniel OB次元官网网址橠onnell, a spokesman for Oxford Properties, said although the landlord is willing to share the financial burden of COVID-19B次元官网网址檚 impact, HBC has ignored B次元官网网址渕ultiple requests to enter into a constructive dialogue to find a mutually agreeable arrangement.B次元官网网址�
He said HBCB次元官网网址檚 continued refusal to pay any rent B次元官网网址� despite being open for business B次元官网网址� pushed the company to pursue legal action.
But in his affidavit, Putnam said the allegation that HBC has simply refused to pay rent while also refusing to engage in good faith negotiations is B次元官网网址渃ompletely false.B次元官网网址�
B次元官网网址淗BC is committed to arriving at a reasonable resolution with Oxford,B次元官网网址� he said. B次元官网网址淚t is not HBCB次元官网网址檚 intent to continue operating its stores without paying any rent.B次元官网网址�
Part of the issue for HBC is the current state of the malls it anchors.
James Tate, a retail market analyst retained by HBC legal counsel, said in an affidavit that the landlord B次元官网网址渋s not delivering a first-class suburban regional centre in terms of customer traffic and opportunity for HBC.B次元官网网址�
He said Oxford Properties has not consistently provided the elements required for a B次元官网网址渇irst class suburban regional shopping centre,B次元官网网址� including a place to shop, eat and socialize that is perceived as a clean and safe.
Diane J. Brisebois, Retail Council of Canada president and CEO, said itB次元官网网址檚 disappointing the landlords decided to take the issue to court.
B次元官网网址淭he case could set a precedent thatB次元官网网址檚 damaging to the retail sector,B次元官网网址� she said. B次元官网网址淚tB次元官网网址檚 unfortunate it had to come to this. Having huge anchor stores disappear from malls is a recipe for disaster.B次元官网网址�
Citing shifting consumer behaviour, HBC said earlier this month it would permanently close its Winnipeg store in February 2021.
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Brett Bundale, The Canadian Press
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