Cadillac Fairview is opposing billionaire Ruby Liu’s attempt to take over 25 former Hudson’s Bay leases, citing that her plan lacks commercial viability. In court filings submitted to the Ontario Superior Court, Cadillac Fairview expressed skepticism about Liu’s capability to manage the leases effectively. They argue that Liu, who currently owns three shopping centers in British Columbia, has presented no credible business plan or relevant retail experience. Rory MacLeod, Cadillac Fairview’s executive vice-president of operations, stated in an affidavit that Liu’s company resembles “an empty shell” and lacks financial guarantees beyond her optimistic claims.
This legal dispute stems from a broader conflict between Liu and landlords after Hudson’s Bay selected her to acquire 28 of its leases, with only three receiving quick court approval. The remaining leases, encompassing prime retail locations, pose significant challenges as they come with lower rental rates and favorable leasing terms for Hudson’s Bay, which recently sought creditor protection due to heavy debt. Notably, a lease at Fairview Mall in Toronto cost Hudson’s Bay only $1.3 million annually, highlighting the advantageous conditions that are now in question.
As Hudson’s Bay struggles to secure landlord agreements for the lease transfer, the company has sought judicial intervention to compel landlords to accept Liu as a tenant. Liu aims to transform the acquired Hudson’s Bay outlets into department stores branded with her name, promising a diversified retail environment, including dining and entertainment options. However, Cadillac Fairview maintains that the existing leases only permit operations akin to traditional department stores, negating Liu’s broader vision.
In his affidavit, MacLeod emphasized discrepancies between Liu’s assurances regarding the lease terms and her public statements suggesting an expansive, multi-faceted retail strategy. He raised critical concerns about the feasibility of her business plan, particularly regarding timelines and budget allocation. Liu has proposed launching at least 20 stores within six months of acquiring the leases while planning substantial investments in repairs and initial inventory. Cadillac Fairview argues that this timeline is unrealistic, especially for a new brand lacking established infrastructure.
MacLeod projected that the stores would require significant repairs—over $15.8 million by the end of 2026 and an additional $5.7 million by 2027—along with extensive permit and labor costs. This estimation indicates that Liu would need a minimum of $43.1 million over a decade to bring the leases into compliance, a financial burden that raises flags about her operational viability. Additionally, his analysis critiques Liu’s staffing plan, asserting that 1,800 employees across 28 stores would be insufficient to maintain an effective retail operation.
Given these assessments and the lack of a solid foundation for Liu’s proposed enterprise, Cadillac Fairview concludes that her venture is unlikely to succeed, predicting that it may ultimately leave the stores vacant once again. MacLeod’s extensive experience in commercial real estate underpins this skepticism, leading him to argue that without the necessary resources and realistic planning, Liu’s enterprise is destined to fail. A court ruling on this matter is expected later this month, following Liu and Hudson’s Bay’s response to Cadillac Fairview’s claims.
