Stikemans, Davies advising on Cadillac Fairview’s purchase of two HBC properties

REUTERS/Mark Blinch

REUTERS/Mark Blinch

What the Eaton Centre lost in the iconic Sears, it made up for in attracting the likes of US luxury retailers Nordstrom and on Monday morning, literally by (pedestrian walkway) extension, HBC’s Saks Fifth Avenue – now that Cadillac Fairview came to an agreement with Hudson’s Bay Company on a sale and lease back agreement for HBC’s Queen Street location and adjacent Simpson’s Tower on Bay Street.

This recent hot real estate activity at the prime retail location began with Sears selling its leases at five shopping centres to Cadillac Fairview last November. Sears – which bought Eaton’s when it went bankrupt in 1999 – pulled out of the Eaton Centre location but retained the upper four floors for head office operations. Almost two weeks ago, on January 15, it was reported that Nordstrom was officially moving into the space that Sears vacated.

Meanwhile, Saks’ introduction to the Canadian market was initially slated to be held in the high-end Yonge and Bloor area, but HBC couldn’t confirm to media whether that was the definitive location, as it was shopping around for locations. Reports suggested that Saks’ would replace the HBC location at Yonge and Bloor, a move that would have pitted this luxury retailer against another (Holt Renfrew & Co.).

The landlord behind the flurry of moves is Cadillac Fairview, the property management arm of the Ontario Teachers’ Pension Plan and owner and manager of the Eaton Centre. Monday’s deal will see Cadillac Fairview give HBC $650 million for the Queen Street property that HBC squats on and the neighbouring Simpson’s Tower on Bay Street. As part of the agreement, HBC will lease back the properties for 25 years with renewal options for nearly 50 years.

The pedestrian walkway between HBC and the Eaton Centre will be marketed as part of the Eaton Centre.

The proceeds of the transaction will be used to bring down the company’s debt and “invest in growth initiatives.”

Hudson’s Bay Company is represented by Stikeman Elliott LLP with a team of Ian Putnam, Doug Klaassen and Jonah Mann (corporate); Annie Pyke (real estate), Dean Kraus (tax) and Jeffrey Brown and Ashley Piotrowski (competition).

Stikemans is also representing Saks Fifth Avenue in connection with the negotiation of a space lease at Toronto’s Sherway Gardens.

Cadillac Fairview is represented by Davies Ward Phillips & Vineberg LLP.*

Both Stikemans and Davies were involved in Sears’ surrender of leases at the aforementioned five shopping centres.

*Team list updates to come.

Ahmad Hathout

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