Several of Canada’s most outstanding real estate companies are criticizing an attempt by a BC billionaire to carry in charge of the 25 former leases of Hudson Bay, saying that their plan for their spaces “challenges commercial common sense” and is “completely unrealistic”.
The owners, including Cadillac Fairview, Oxford Properties, Ivanhoe Cambridge, Kingset Capital Inc., Morguard Investments Ltd. and Primaris Real Estate Investment Trust, made presentations on Saturday that they asked the Superior Court of Ontario to prevent Liu from moving.
The majority said that they oppose Liu becoming a tenant because it does not have a detailed or credible business plan and, despite being the owner of three BC shopping centers, it lacks the experience or staff that would need to successfully operate a retailer of the old excavations of the bay.
His business is “an empty shell without guarantee of financial means beyond the naked statement of Mrs. Liu that she will keep it afloat,” said Rory Macleod, executive vice president of Operations of Cadillac FairView, in a sworn statement.
“All indications are that (your company) will run out of money before the first store is opened.”
The BC billionaire, Ruby Liu, hopes to expand his empire of the mall assuming 28 former retail spaces of Hudson’s Bay. He joined Gloria Macarenko from CBC with a translator to share her vision for department stores, in her first interview with the media in English in Canada.
His affidavit and a matrix of other retail executives in a battle that has been supplied between Liu and the owners since the bay announced in May that he had chosen it to buy 28 of his leases. The first three obtained the approval of the Court and were transferred in a short time because they were in the three shopping centers of Liu.
The remaining 25, however, have been much more tense. These leases cover some of the most precious retail spaces in the country and arrived with cheaper rental and very attractive terms for the bay, which requested the protection of creditors under the weight of the huge debt in March.
For example, the bay paid $ 1.3 million for annual rental for 152,420 square feet in FairView Mall in Toronto, as shown by the judicial documents, which is a fraction of what the non -advertising tenants would pay.
Unable to launch most of the owners with a lease transfer, the bay asked a court at the end of July to force the owners to accept Liu as a tenant.
Liu and Bay have until next Tuesday to respond to the accusations of Cadillac Fairview. A judge will listen to the matter at the end of the month.
Liu has said that he wants to convert the bay stores that he hopes to buy in his own department stores that his name herself. She has repeatedly told Canadian Press and CBC News that their stores will not only offer retail space, but also in restaurant areas, entertainment, children’s game and recreation.
Macleod says that he has also talked about equipping the spaces of the bay with groceries, educational centers, facilities for the elderly, robotics and musical performances.
On June 1, the famous department stores of Hudson’s Bay will be closed at the intersection of Georgia and Granville streets in the center of Vancouver. CBC News spoke with people in the center of Vancouver, who said that there will now be a vacuum in the city’s retail fabric.
Cadillac Fairview says that the leases in the six shopping centers you want from the company: Fairview Mall, Sherway Gardens, Masonville Place and Markville in Ontario, Market Mall and Chinook Center in Alberta and Richmond Center in BC) do not allow anything more than a department store there.
“Despite its private guarantees that you intend to respect the lease terms, Liu has constantly presented an idea other than the public, one that would not be compatible with leases,” Macleod said.
When Oxford Properties met with Liu, he had the impression that his goal is to direct his own shopping center within the anchor tenants spaces and felt that he has ambitions that extend far beyond what is allowed in the leases of the bay.
Nadia Corrado, Vice President of Oxford, alleged in an affidavit that Liu criticized the food court in Hillcrest Mall, north of Toronto, and shared a vision to include good Asian food, “when the food court is part of the Oxford owned shopping center, and not part of the HBC premises, it is looking for an assignment task.”
Concern for timelines and budgets
The affidavits of the executives of the owners also raised concerns with the deadlines and the budget in their business plan.
Liu has said that he will be ready to open at least 20 stores within 180 days after obtaining leases and will spend $ 120 million in “backward” repairs to ceilings, HVAC systems, bathrooms, elevators and mechanical stairs and $ 135 million in the initial inventory.
Cadillac Fairview says that its proposed timeline is “completely unrealistic” for a new brand, much less established, and its plan has no funded based on the large number of repairs that need the properties and suppliers of expensive terms will require that you accept.
Macleod estimates that the stores will need more than $ 15.8 million in repairs before the end of 2026 to put the leases in good position. By 2027, Liu will need to spend another $ 5.7 million on repairs, not including taxes, permits or rates for accelerated labor.
During the next 10 years, he estimates that Liu must spend at least $ 43.1 million on the leases of Cadillac Fairview Solo.
Oxford Corrado said that the $ 8 million LIU budget for renovations in SouthCentre Mall in Calgary was also insufficient. She claimed that Liu was surprised that he was responsible for the outer or structural parts of the leased spaces, such as the roof, and said that Liu indicated that her proposed budget did not explain such costs.
Even if their budget for renovations changes, the owners have concerns about whether they can ensure the inventory.
Although Liu argues that companies are willing to supply an inventory, an affidavit of Kingset Capital said that the evidence he has presented in the court is mainly equivalent to letters of merchants who say they have the capacity to support their stores, instead of committing to a relationship.
Personnel concerns
The owners also disagree with their personnel estimates, who show that they will need 1,800 employees to carry out their plan.
If the 1,800 are sales personnel who would only leave 64 people on the floor of each of its 28 stores. Macleod said that such personnel levels are “inappropriate to support a chain throughout the country” and “inconsistent with a retail location even a fraction of that size.”
“With my decades of experience in commercial real estate, it is evident to me and Cadillac FairView that (Liu) will fail and will leave these vacancies again,” he said.
Ruby Paola, managing director of the parent company of the owner Ivanhoe Cambridge, also agreed that Liu is “more likely to fail” because her retailer is “uncertain, not proven and unknown.”
If that happens, “it will negatively impact the shopping center for many, many years and will probably exceed the costs that Ivanhoe will spend on the reurbanization of space.”
