Central Walk Properties is negotiating to acquire the leases for 28 soon-to-be shuttered Hudson’s Bay Company (HBC) retail locations. If successful, the deal would expand Central Walk’s Canadian footprint and provide some flow-through compensation for HBC’s creditors.
The proposed agreement arises from HBC’s lease monetization process, which sought takers for up to 101 of the insolvent retailer’s leases in properties across Canada. Prospective candidates submitted qualified bids for 39 of those locations prior to the May 1 deadline, while recent court filings report that 59 lease disclaimers have now been issued to return space to landlords.
Central Walk is the landlord at three of the British Columbia malls where it is seeking to acquire leases. The global commercial real estate developer/operator, which primarily holds properties in Southeast Asia, currently owns and operates shopping centres in Victoria, Nanaimo and Delta, British Columbia, while the bid for HBC leases targets locations in B.C., Alberta and Ontario.
A company statement confirms it is aiming to create “modern department stores” in keeping with chairwoman Ruby Liu’s retail specialization, and that it plans to retain former HBC employees and vendors/suppliers wherever possible. The conditional agreement is still awaiting Court and landlord approvals before the leases can be transferred.
“We are evolving to serve Canadians better,” Liu asserts. “Central Walk Canada is planning to conduct a series of transformative initiatives aimed at fostering intergenerational connections, promoting active lifestyles and empowering youth through meaningful engagement as part of this transaction.”
Elsewhere, Primaris Real Estate Investment Trust (REIT) has officially taken back five HBC spaces, while prospective new leaseholders negotiate purchase agreements with HBC at four other locations. In total, more than 530,000 square feet of space has been returned to the landlord from malls in Calgary, Medicine Hat, Kingston, Ottawa and Quebec City. However, that comes with additional development flexibility since Primaris will be freed from the obligation to provide 1,866 parking spots and refrain from building in various strategic locations on the mall properties.
“Regaining control of five of our valuable anchor locations allows Primaris to commence repurposing a significant amount of low productivity space, and marks the beginning of our value surfacing exercise,” says Alex Avery, the REIT’s chief executive officer. “The disclaiming of leases has finally removed obstructionist barriers enabling us to enhance our properties.”
Potential for future intensification is cited, including the sale of excess land for multifamily residential, hotel or other high-density uses. The REIT reports brewing tenant interest in vacated HBC stores, either for the full or a subdivided configuration, but acknowledges that “others are likely to be demolished” to allow for redevelopment.
As well, Primaris anticipates “significant influence” as the landlord at four malls where prospective new occupants are currently negotiating to acquire HBC leases. That comprises nearly 500,000 square feet at Oshawa Centre, Conestoga Mall in Waterloo, Ontario, Orchard Park Shopping Centre in Kelowna, B.C., and the Southgate Centre in Edmonton. The REIT underscores “significant deferred maintenance” within the subject stores, expected to necessitate investment to restore them to “satisfactory operating condition for a retailer”.
Nearly 9,500 HBC employees will lose their jobs in the next two weeks as retail outlets cease to do business on June 1 and distribution centres close by June 15. However, corporate staff involved in the lease monetization process will be among the small remnant that will remain after that date to assist with the closing of those deals.
