Hudson's Bay and landlords fighting over rent

The Hudson’s Bay Co. is seeking a refund for rent paid since April for its location in the Bay Centre in downtown Victoria as the pandemic slices into sales revenues.

It’s also asking B.C. Supreme Court for permission to hold off on additional rent payments until its dispute with its landlord is resolved.

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The lawsuit is one of several in B.C. and elsewhere in Canada where Hudson’s Bay Co. ULC is facing off against landlords over rent ­payments and leases, as retailers experience drastic drops in sales amid the ­pandemic.

HBC argues that its landlords are breaching lease obligations to provide high-quality, safe and clean shopping centres, saying landlords haven’t been effectively marketing to calm customers’ fears and attract shoppers back.

As a result, HBC has “suffered a significant drop in sales,” it said in a court document.

The case around the HBC store in the Bay Centre on Douglas Street also involves another Bay store in the Cherry Lane Shopping Centre in Penticton.

TBC Nominee Inc. owns the Bay Centre, while Cherry Lane ­Shopping Centre Holdings Ltd. owns the ­Penticton mall. Those companies are affiliated with Manulife. A Manulife spokesperson could not be reached Thursday.

At the Bay Centre, rents have been paid on time, but under protest, said a Nov. 13 notice of civil claim from HBC filed in court in Vancouver.

Rents owed under the Bay Centre lease were not disclosed.

Sales in July, August, September and October dropped by more than 40 per cent in each month compared with the same months in 2019, HBC says in a court document.

The worst month for sales was April, when HBC’s sales at the Bay Centre declined to $3,267, down from $2.646 million in April 2019. Bay stores across Canada were closed from mid-March to mid-May.

Last year’s total March-through-October revenues topped $18 million. This year, they were at $7 million, according to the document.

The landlord for The Bay store at Mayfair shopping centre on Douglas Street is Ivanhoé Cambridge. The Montreal firm said in a Thursday statement that it does not comment on tenant leases.

In Penticton, Cherry Lane Holdings is trying to evict the Bay.

HBC stopped paying rent in April and has refused to move out since receiving an eviction notice on Nov. 10, the landlord said in a court filing.

Total rent owed is $546,255, the landlord said.

Cherry Lane Holdings disputes HBC’s claims about inadequate health and safety measures, saying it has met and exceeded standards required by authorities.

It also said it has undertaken significant marketing initiatives during the last several months to increase business at the shopping centre.

In Ontario Superior Court, Justice Glenn Hainey has ordered HBC to pay $659,395, or half the rent owing, at an HBC store in Hillcrest Mall in Richmond Hill after seven months of unpaid rent.

The judge blocked Oxford Properties Retail Holdings from evicting the retailer in an interim ruling prior to the outcome of the case being ­finalized.

Oxford is also in court on behalf of other properties, stating in court documents that while HBC continues to pay rent “under protest” at three of its shopping centres, it’s withholding rent at eight other locations.

Ian Putnam, president and chief executive of HBC Properties and Investment, said in a statement the court recognizes the need for a fair sharing of the burden of the pandemic.

HBC is 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,” Putnam said in a statement.

“HBC believes the courts will continue to provide a common-sense approach that is fair to landlords and retailers,” Putnam said. “The majority of Canada’s leading landlords share this view and have reached mutually acceptable agreements with us.”

He added that HBC has been an anchor tenant that has paid rent at the Hillcrest Mall “every single month without fail for 47 years.”

“When they tried to evict us, without regard for the impact on our employees, vendors and other retailers, we had no choice but to defend ourselves,” Putnam said.

Cominar Real Estate Investment Trust is suing HBC for unpaid rent in Quebec.

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