Landlords vow to be creative as Hudson’s Bay returns leases intended for Ruby Liu

Stains on a the side of where the now bankrupt Hudson’s Bay signage once adorned the stores location on Bloor Street at Yonge Street in Toronto on June 5, 2025. Photo by Peter J. Thompson/National Post

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Many of the leases that Hudson’s Bay wanted to transfer to B.C.-based billionaire Ruby Liu for $69.1 million are now being returned to their landlords after an Ontario court rejected the retailer’s bid last week, people familiar with the matter say.

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These landlords now face the challenge of filling up thousands of square feet worth of empty spaces across the country.

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Toronto-based Primaris Real Estate Investment Trust, for instance, will be able to take control over five out of the 25 leases that the Bay wanted to sell to Liu toward the end of November, its chief executive, Alex Avery, said in an email.

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“We plan to provide an update on our planning for several of these sites, including the potential for multi-residential and hotel developments on excess land (we will sell the land to others who will develop), as well as further retail developments (we will do these on our balance sheet),” he said.

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He also said that Primaris has had “lots of leasing discussions” since those five locations are “highly sought after” with “very high” sales performance.

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HBC, Canada’s oldest retailer, which filed for bankruptcy protection under the Companies’ Creditors Arrangement Act in March, is trying to pay back millions of dollars to its creditors.

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Aside from seeking to monetize its leases, HBC also laid off all of its employees, sold intellectual property rights to Canadian Tire Corp. Ltd. and is still trying to auction off its artifacts.

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The leases are in demand because as the main tenant, HBC was able to negotiate below-market rents with its landlords. As such, buying those leases would allow other companies to enjoy similar conditions. The sale of the 25 leases to Liu could have led to a recovery of more than $50 million for HBC’s creditors. About half of the 25 leases are located in Ontario, while the rest are in Alberta and British Columbia.

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To monetize the leases, HBC went through an elaborate bidding process that began in March and lasted for several weeks. Aside from Liu’s bid, HBC also sold five leases for $5 million to a Toronto-based clothing retailer that owns brands such as Bluenotes, Suzy Shier and Urban Planet. This deal faced no issues and was approved by the Ontario court in August.

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Finding another buyer to replace the 25 leases that Liu had agreed to take would be difficult in a struggling retail sector and take time, analysts say, one which HBC can’t afford as the longer the lease issue isn’t resolved, the more costs HBC is expected to accrue.

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An additional 62 HBC leases received no bids at all.

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Six of those properties, comprising approximately 661,000 square feet, belonged to Primaris. Avery said the company got those leases back in June, three months after HBC filed for bankruptcy protection. About two-thirds of that space has already been leased, with more discussions underway, he said.

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“The tenancies are a combination of single-tenant replacements (and) subdivisions of Bay boxes into two or three stores,” said Avery. “We have a couple where we are likely to do a more costly and complex redemising of the space into several smaller stores, with the benefit of the higher cost being much higher rents.”