Ruby Liu lacks ‘foundational' experience to run former HBC stores, Cadillac Fairview CEO says

Globe and Mail

2 days ago

Landlords have yet to receive a 'meaningful business plan' from B.C. mall owner Weihong (Ruby) Liu, or any evidence that she has the experience necessary to run department stores in former Hudson's Bay spaces, the chief executive officer of one of Canada's largest commercial real estate companies says.
Sal Iacono, the head of Cadillac Fairview, said in a statement on Wednesday that information on Ms. Liu's plans for the spaces are still lacking, 'despite multiple requests.'
Ms. Liu, the chairwoman of Nanaimo, B.C.-based real estate investment company Central Walk, received court approval Monday for a $6-million deal to acquire the leases of three former Bay stores in malls that she owns.
But court records show that her plan to acquire up to 25 additional leases has faced significant opposition from landlords.
Landlords for 23 former Hudson's Bay locations oppose plans for Ruby Liu department stores
Last week, The Globe and Mail reported that the pushback followed meetings between Ms. Liu and landlords earlier this month, in which she was unable to provide details about how she will operate the stores, according to two sources with knowledge of those meetings. In his statement, Mr. Iacono confirmed that was the case for Cadillac Fairview.
'Our sole meeting was brief, as she was unprepared to discuss her plans or present a business plan,' he wrote.
'We have not received any evidence of retail management expertise, established supplier relationships, logistical/e-commerce capabilities, or robust and realistic financial projections — elements that are foundational for even a single retail store, let alone 28 stores of this size.'
In the days after those meetings, Ms. Liu sent a letter to landlords laying out further details of her plan, including a commitment to set aside more than $300-million to fund the operations of the business, according to a third source who has a copy of the document. The Globe and Mail is not naming the source because they were not authorized to discuss the confidential matter.
The letter describes contact between Ms. Liu's team and more than 50 existing Hudson's Bay suppliers, who had expressed willingness to work with her, the source said. It also outlines plans to hire 2,500 to 3,000 employees and to hire executives with retail experience. It also specifies that Ms. Liu's team had already received more than 500 résumés from former Bay store employees.
It also provides a financial forecast that predicts those stores would begin to turn a modest profit starting in 2026. In his statement, Mr. Iacono said the financial projections were not realistic.
'Drawing from our decades of extensive experience owning and managing the most prominent shopping centers across Canada, we believe that her claims of enabling retail jobs in Canada – a goal that CF supports – would be much better served if CF and the other professional landlords could proceed with securing established retailers with proven track records to occupy these former HBC boxes,' he said.
'This approach would provide real retail careers in firms that offer stable employment with proper training, benefits, and career progression in a professional retail environment.'
Hudson's Bay was granted court protection from its creditors on March 7, as the company faltered under $1.1-billion in debt and faced mounting losses. Canada's oldest retailer has since closed all of its stores across the country. Ms. Liu has bid on the leases under a court-supervised sale process intended to generate funds to repay some of Hudson's Bay's lenders.
Hudson's Bay granted creditor protection to restructure its business
In an interview on Monday, Ms. Liu accused the landlords who oppose her of attempting to wait out that process, in hopes that they would be able to take back their spaces without paying for them.
Department stores traditionally acted as anchor tenants, drawing foot traffic to malls. In return, those types of tenants negotiated leases with valuable conditions, including below-market rents and rights to approve any developments elsewhere in the malls.
Some landlords may want to take those leases back, in order to redevelop the spaces and choose new tenants that would be a draw for shoppers and would be likely to succeed, paying higher rents over a number of years.
The three HBC leases Ms. Liu has received court approval to acquire are located in the Mayfair Shopping Centre in Victoria, Tsawwassen Mills in Tsawwassen, just south of Vancouver, and the Woodgrove Centre in Nanaimo.
In those and other spaces she may take over, Ms. Liu has told landlords that she plans to open a chain of department stores called Ruby Liu. The stores would offer a mix of fashion and jewellery products, dining spaces and would host events.
Ms. Liu has made a $9.4-million deposit on her bids for the other 25 leases, according to court documents. That suggests that she has offered up to $94-million for those leases, because the sale process required deposits of no less than 10 per cent of each bid.
Landlords who represent 23 out of the 25 remaining leases wrote letters to Hudson's Bay's lawyers and the court monitor overseeing the process, expressing concerns about the deal.
Hudson's Bay to change its name, landlords express 'concern' over lease deal
Those letters declared that 'based on the information provided to date, those Landlords would not consent to the assignment of their Leases to the Potential Lease Purchaser and would oppose any potential future forced assignment' by the court, according to a report filed by the court monitor, Alvarez & Marsal Canada Inc., last week.
After Monday's hearing in Toronto, Ms. Liu said she believes landlords will support her if she wins court approval.
'Since everybody is mature businessmen, when the right decision comes, they will support it,' Ms. Liu told reporters on Monday, speaking in Mandarin while Central Walk chief executive officer Linda Qin translated. She added that work has already begun to plan for the future of the Hudson's Bay spaces.
'We need innovation. We need new ideas. And we want to bring in new blood, new things,' she said. 'Without new things and creativity, the industry will go down, not go up.'