In another major development tied to the ongoing collapse of the Hudson’s Bay Company’s Canadian retail operations, RioCan Real Estate Investment Trust has filed a motion seeking to place its real estate joint venture with Hudson’s Bay into receivership. The application, filed late Thursday with Ontario Superior Court, asks that FTI Consulting Canada Inc. be appointed as receiver over the companies that span the joint venture structure.
According to court filings, RioCan’s Chief Financial Officer Dennis Blasutti stated in an affidavit that, “The proposed receivership proceedings will provide the appropriate forum to protect the interests of the stakeholders of the joint-venture entities and maximize value.” The move marks a significant step in the unwinding of one of the country’s most prominent department store real estate partnerships, created less than a decade ago.
The Formation and Scope of the RioCan-HBC Joint Venture
The RioCan-Hudson’s Bay joint venture was established in 2015. It comprises a portfolio of 12 prominent Canadian retail properties, each leased to Hudson’s Bay for its department store operations. The properties are a mix of wholly owned, co-owned, and leasehold interests in some of Canada’s most high-profile shopping centres.
RioCan holds a 22 per cent ownership interest in 10 Hudson’s Bay stores within the joint venture, which include flagship locations in downtown Montreal, Vancouver, Calgary, and Ottawa. The portfolio also includes spaces in Yorkdale Shopping Centre and Scarborough Town Centre in Toronto, Square One Shopping Centre in Mississauga, Devonshire Mall in Windsor, and CF Carrefour Laval and Promenades St-Bruno in Quebec.
RioCan additionally has a 61 per cent ownership interest in properties used by Hudson’s Bay at Oakville Place and Georgian Mall, derived from a combination of its 50 per cent stake in the properties and its 22 per cent stake in the joint venture itself. This structure grants RioCan certain exclusive decision-making powers on operational and leasing matters related to the properties.
Hudson’s Bay Liquidation Triggers Receivership Action
The move towards receivership follows Hudson’s Bay filing for creditor protection in March under the Companies’ Creditors Arrangement Act (CCAA). Since then, the retailer has been liquidating all 80 Bay stores and 16 Saks locations across Canada. The liquidation sales are set to conclude this Sunday, leaving over 8,300 employees without jobs.
As part of its CCAA proceedings, Hudson’s Bay initiated a process to sell off its assets, including store leases. That process attracted interest in 39 rental contracts from 12 bidders but failed to produce offers for the remaining 62 leases. Alvarez & Marsal, the court-appointed monitor overseeing Hudson’s restructuring, confirmed in court filings that no bids were submitted for the joint venture properties or HBC’s 78 per cent interest in the RioCan-HBC JV.
While the lease sale process came up short, RioCan indicated in its application that certain unnamed third parties have expressed interest in negotiating new or amended sublease agreements for some of the leasehold sites. These properties include Yorkdale, Scarborough Town Centre, Square One, CF Carrefour Laval, Promenades St-Bruno, and potentially others.
The Debt Structure Behind the Joint Venture
The joint venture is heavily leveraged, with multiple secured lenders beyond RioCan itself. According to the filings, secured debt obligations include:
- $75 million Yorkdale RBC Financing
- $105 million BMO First Mortgage Financing (Calgary, Carrefour Laval, and Promenades St-Bruno)
- $202 million Vancouver HSBC First Mortgage Financing
- $161 million Montreal RBC First Priority Financing
- $56.5 million Ottawa First Mortgage Financing
- $87.4 million Oakville First Mortgage Financing
- $110 million Georgian Mall First Mortgage Financing
In addition, RioCan extended second mortgage loans totaling approximately $38.2 million on the Georgian Mall and Ottawa properties.
The collapse of Hudson’s Bay’s operations has left the joint venture unable to service its secured debts. HBC’s monthly rents, which previously funded the JV’s debt obligations and operating costs, have ceased. Without this primary revenue stream, the joint venture is unable to meet its financial commitments.
Receivership as a Solution to Maximize Value
With HBC having disclaimed several of its leases and halted rent payments, RioCan argues that transitioning the JV entities into receivership is necessary to stabilize operations and protect stakeholder interests.
“The appointment of FTI as the Receiver at this time is appropriate as it will provide the stability, structure and supervision required to preserve the value of the JV Property and maximize recoveries for the benefit of the JV Entities’ creditors in general,” Blasutti stated.
FTI would be empowered to borrow up to $20 million to fund the receivership process, with borrowing secured by a court-approved Receiver’s Borrowings Charge. RioCan noted that it is only prepared to provide such financing within the protections of a court-supervised process.
Importantly, the proposed receivership order includes a mechanism that allows certain priority secured lenders to withdraw properties from the receivership, provided they assume responsibility for any allocated receivership costs.
Canadian Tire and Ruby Liu Among Interested Buyers
The receivership filing comes as RioCan and Hudson’s Bay navigate multiple overlapping processes to resolve HBC’s insolvency. As part of the CCAA proceedings, Hudson’s Bay recently reached a $30 million deal to sell its intellectual property—including its name, coat of arms, and iconic stripes—to Canadian Tire. That agreement remains subject to court approval at a hearing scheduled for Tuesday.
Alvarez & Marsal has advised the court that the sale process attracted 17 bidders for the intellectual property, but disclosure of full bid details has been temporarily sealed pending court review. The monitor has cautioned that releasing financial details prematurely could hinder HBC’s ability to secure maximum value for stakeholders if the Canadian Tire transaction fails to close.
Meanwhile, mall landlord Ruby Liu has expressed interest in acquiring up to 28 leases in Alberta, B.C., and Ontario, reportedly intending to launch a new department store concept in former Bay locations.
RioCan’s Path Forward and Broader Implications
For RioCan, the stakes are significant. The trust’s exposure to the joint venture extends beyond its equity interest to include substantial debt holdings and its role as guarantor on certain financing arrangements. The receivership would allow RioCan, in conjunction with FTI and other secured lenders, to explore redevelopment options, tenant replacement, or outright property sales as part of a value-maximization strategy.
For Hudson’s Bay, the receivership represents yet another stage in its dismantling as an operating retailer. Once Canada’s oldest department store chain, HBC’s liquidation is now almost complete, with the company rapidly shedding both its retail footprint and legacy real estate holdings.
The Ontario Superior Court is scheduled to hear RioCan’s receivership application alongside HBC’s motion for approval of the Canadian Tire sale agreement on Tuesday.
