HBC sells off $340-million in real estate as it falls behind on payments to suppliers | Canada News Media
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HBC sells off $340-million in real estate as it falls behind on payments to suppliers

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A Hudson’s Bay department store in Toronto on February 25, 2022.Nathan Denette/The Canadian Press

Hudson’s Bay Co. has completed a series of real estate transactions in the United States and Canada worth US$340-million, cash that the company says will help to fund its retail operations after falling behind on payments to its suppliers.

The parent company HBC LP, which owns Hudson’s Bay, Saks Fifth Avenue and Saks OFF 5TH, confirmed the transactions in an e-mail to The Globe and Mail on Tuesday. Canada’s oldest retailer is using the cash to pay significantly overdue invoices to vendors.

“HBC is committed to its vendor partners, and to ensuring that we fulfill all financial obligations,” spokesperson Tiffany Bourre wrote in the statement, in response to questions from The Globe about the late payments. “Any delayed payments are due to HBC managing through the challenging environment that is impacting the wider retail industry, particularly in Canada.”

Sources at two companies in Canada who do business with Hudson’s Bay confirmed to The Globe that the retailer has fallen behind on payments in recent months, leading one of them to put product deliveries on hold. The sources asked not to be named because they have an continuing relationship with HBC, and are awaiting payment.

While 90-day payment periods are common in the retail industry, and it is not uncommon for retailers to fall slightly behind, HBC has been weeks or months late since last spring, according to the people who spoke to The Globe.

Earlier this week, industry publication The Business of Fashion reported that HBC’s U.S. chain Saks had been withholding payments from multiple vendors, citing unnamed sources. The sources told the publication that they had reduced the number of products they were shipping to Saks, or stopping shipments, while they awaited payment. The publication also reported the US$340-million transactions on Tuesday.

That report followed an anonymous claim on social media account Estée Laundry, which claimed Estée Lauder had stopped fulfilling orders from Saks as the company has failed to pay past invoices. Estée Lauder did not respond to a request for comment.

The news follows significant cutbacks at Hudson’s Bay: earlier this year, the retailer cut hundreds of jobs at its corporate offices in a bid to “streamline operations.”

Hudson’s Bay is working to resolve the issue with vendors as the crucial holiday shopping season ramps up, putting additional pressure on retailers to ensure stores are well-stocked, and to deliver to online customers on time. This year’s holiday season is already shaping up to be a challenging one for the industry, as shoppers stung by inflation cut back on spending and stores compete for customers with deep discounts.

In the statement sent on Tuesday, HBC placed the value of its North American real estate portfolio at approximately US$7-billion. HBC’s real estate arm, which is operated separately from the retail businesses, generates between US$300-million and US$500-million each year, partly by selling off some buildings it owns, as well as other sources of revenue such as payments from landlords for redevelopment of leased store space. The statement added that these transactions strengthen the company’s liquidity position.

“This valuable asset base and the incremental liquidity it generates strengthens our operating businesses as we focus on sound fiscal management and strategic growth initiatives,” Ian Putnam, the president and CEO of HBC Properties and Investments, said in an e-mailed statement.

HBC also raised capital by splitting off the e-commerce operations of the store chains it owns into separate businesses, and selling stakes in those digital operations. In 2021, the company raised US$500-million when it sold a stake in the online business of its Saks department stores. The company said at the time that US$200-million of those proceeds would be used to strengthen its balance sheet. A few months later, the company sold another stake, this time in SaksOff5th.com, for approximately US$200-million

 

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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Homelessness: Tiny home village to open next week in Halifax suburb

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HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

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