In This Article:
TORONTO, March 18, 2025--(BUSINESS WIRE)--In connection with Hudson’s Bay Company’s ("HBC") CCAA filing announced on March 7, 2025, RioCan Real Estate Investment Trust ("RioCan" or the "Trust") (TSX: REI.UN) provides an update on its exposure to the Hudson's Bay Company ULC ("HBC") given its relationships with HBC as both landlord and partner in the RioCan-HBC Joint Venture ("the JV").
HBC’s recent CCAA filing is disappointing. RioCan understands that restructuring can be a necessary step for companies to stabilize their operations and financial position; however, it is essential that any restructuring steps are on fair and balanced terms. RioCan remains committed to protecting the interests of its Unitholders and other stakeholders. To achieve this, RioCan will pursue all available business and legal avenues, and will leverage its extensive leasing and development capabilities to achieve the best possible outcome for each of the properties within the JV.
"The HBC locations in the JV include prime real estate within Canada’s major markets, that have value either as operating retail centres or redevelopment opportunities. Our team has a proven track record of finding solutions for vacant space and will work to protect the value of the real estate in the JV. This process will take time, expertise and collaboration among all stakeholders," said Jonathan Gitlin, President and CEO of RioCan. "With a strong core business, team and balance sheet, RioCan is well-positioned to navigate this situation. We will provide updates as we progress."
HBC Exposure:
For the year ended December 31, 2024, RioCan’s exposure to HBC is as follows:
-
The RioCan-HBC JV had a carrying value of $249.0 million (or 3.3% of Equity) and contributed $23.7 million of NOI (or 3.2% of NOI on a proportionate share basis) and $13.6 million of FFO (or 2.5% of FFO).
-
RioCan has provided credit support totaling $88.7 million in the form a loan guarantee and mezzanine loans to HBC through the JV. In exchange, RioCan has protected its interests through the receipt of security in several joint venture properties. RioCan earned $6.6 million in fees in respect to the guarantee and financing services as well as $3.3 million of interest income from the JV. Further details are provided in the table on page 2.
RioCan’s HBC location summary:
|
| As at December 31, 2024 | ||
| Name | Address | RioCan Ownership | NLA (1) |
| HBC locations held in the JV (2) |
|
| |
| Downtown Montreal | 585 Ste-Catherine St. W, Montreal, QC | 22% | 144.2 |
| Downtown Vancouver | 674 Granville St., Vancouver, BC | 22% | 140.1 |
| Downtown Calgary | 200 8th Avenue S.W., Calgary, AB | 22% | 98.7 |
| Downtown Ottawa | 73 Rideau St., Ottawa, ON | 22% | 73.8 |
| Yorkdale Shopping Centre (3) | 3401 Dufferin St., Toronto, ON | 22% | 66.8 |
| Scarborough Town Centre (3) | 300 Borough Drive, Toronto, ON | 22% | 51.0 |
| Square One Shopping Centre (3) | Hwy 10/Burnhamthorpe, Mississauga, ON | 22% | 44.2 |
| Carrefour Laval (3) | 3045 Boulevard Le Carrefour, Laval, QC | 22% | 38.9 |
| Devonshire Mall | 3030 Howard Avenue, Windsor, ON | 22% | 36.4 |
| Promenades St. Bruno (3) | Boulevard des Promenades, St. Bruno, QC | 22% | 29.0 |
| HBC locations in multi-tenanted assets (the JV owns 50% and RioCan owns 50% directly) | |||
| Oakville Place (4) | 240 Leighland Avenue, Oakville, ON | 61% | 59.7 |
| Georgian Mall (4) | 509 Bayfield St., Barrie, ON | 61% | 45.4 |
| HBC location in multi-tenanted asset that is not part of the JV | |||
| Tanger Outlets Ottawa (5) | 8555 Campeau Dr., Ottawa, ON | 50% | 14.2 |
| 13 HBC locations |
| 842.4 | |
| 1) | Net Leasable Area (NLA) represents property level NLA for the 10 standalone HBC stores. NLA for Oakville Place, Georgian Mall and Tanger Outlets Ottawa represent the NLA of the HBC stores within these properties. NLA is in thousands of square feet and at RioCan ownership percentage. | |
| 2) | RioCan has a 22% ownership interest in the 10 single-tenant HBC stores through the RioCan-HBC JV. | |
| 3) | The stores operate under long-term ground leases. | |
| 4) | RioCan has a 61% ownership interest in Oakville Place and Georgian Mall through 50% direct ownership and 22% ownership interest in the JV. RioCan has exclusive decision-making rights with respect to certain operation and leasing decisions relating to these two assets, without requiring the consent of the RioCan-HBC JV and has certain termination options to protect RioCan as the landlord. | |
| 5) | RioCan has a Saks OFF 5TH store as a tenant at its co-owned Tanger Outlets Ottawa property. RioCan has a termination right at this property. |
The three HBC stores integrated within RioCan managed shopping centres include two Hudson’s Bay stores located at Georgian Mall and Oakville Place, and a Saks OFF 5TH store at Tanger Outlets Ottawa. These three stores are paying below market rents and have strong backfill prospects. RioCan has certain termination options and rights at these properties to protect the Trust as the landlord.