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Hudson's Bay Co.

Landlord-Tenant Dispute Erupts Over Former Hudson's Bay Store in Toronto Mall

Strategic Insights

— 2 min read

A dispute between RioCan Real Estate Investment Trust and Oxford Properties Group has intensified over the future of the former Bay store in an upscale Toronto mall. The standoff is the latest in a series of landlord-tenant disputes triggered by the Hudson's Bay Co. bankruptcy. RioCan is seeking to have Oxford buy out its lease on the shuttered Bay outlet for at least $75-million, while Oxford has refused the offer. If Oxford refuses, RioCan is threatening to rent the space to downmarket fashion store Les Ailes de la Mode for a relatively modest $1-million annually.

Key Takeaways:

  • The dispute centers around a 135-year lease held by RioCan on the former Bay store, with the company seeking to have Oxford buy out the lease for at least $75-million.
  • If Oxford refuses, RioCan is threatening to rent the space to Les Ailes de la Mode for $1-million annually.
  • The lease agreement with RioCan set the rent at either $1-million annually, or 12% of gross receipts, whichever number is higher.
  • The lease was inherited by RioCan in 2015 as part of a joint venture with Hudson's Bay Co., and it could extend until 2142 if all renewal options are exercised.
  • The Yorkdale mall, where the dispute is taking place, generated over $2-billion in sales in 2024, with more than 200 stores on site.
  • The lease deal between RioCan and Oxford echoes another dispute over Hudson's Bay leases, in which landlords opposed a plan to sell 25 former store leases to a wealthy B.C. real estate executive.
  • The sublease agreement with Fairweather Ltd. was signed on August 16, after a process to solicit bids on the lease yielded zero interest from potential bidders.

Statistics:

  • $75million: the minimum buyout price RioCan is seeking from Oxford for its lease on the former Bay store.
  • $1-million: the annual rent Les Ailes de la Mode would pay if RioCan rents out the space.
  • 135 years: the length of the lease RioCan holds on the former Bay store, which could extend until 2142.
  • $2.8-million: the annual rent HBC paid on the space before the bankruptcy.
  • 62: the number of Bay stores across the country that received zero bids during a process to monetize the leases.
  • $5.6-billion: the market capitalization of RioCan Real Estate Investment Trust.

Sources:

  • "Court filings and a source familiar with the negotiations" - The Globe and Mail, October [date missing]
  • "The Globe and Mail agreed not to name the source because they are not authorized to speak about the companies" - The Globe and Mail, October [date missing]
  • "Filings show that if RioCan successfully exits its 135-year lease at Yorkdale, Mr. Benitah's company will receive a portion of the payment from Oxford" - The Globe and Mail, October [date missing]
  • "Yorkdale is a crown jewel in Oxford's property portfolio, with 286 stores that sold more than $2-billion worth of goods in 2024, the highest sales per square foot of any mall in Canada" - The Globe and Mail, October [date missing]
  • "Toronto-based RioCan owns more than 200 properties and has a $5.6-billion market capitalization" - The Globe and Mail, October [date missing]
  • "A spokesperson for Oxford declined to comment" - The Globe and Mail, October [date missing]

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