Target Canada has reached a deal with its former landlords last week, including Alberta-based Primaris, which owns and operates the St. Albert Centre.
After two years of distribution problems, dissatisfied patrons and $2.1 billion in losses, Target Canada filed for bankruptcy on Jan. 15, 2015. Three months later the failed retailer closed all 133 stores, laid off 17,600 employees and left 100,000-square foot gaps in shopping centres across the country – many of which still need to be filled.
It is estimated that Target Canada owes landlords and businesses upwards of $2.6 billion.
The deal announced on Friday would see unsecured creditors receive 66 to 77 per cent of their proven claims. The money will be allocated after guaranteed leases have been repaid.
Primaris is part of the group of landlords filing claims against Target Canada for lost revenue on leases and costs incurred while backfilling the locations.
The recovery process has taken over a year, but CEO Patrick Sullivan is happy with the deal that is currently on the table.
“It’s been a very long time in finalizing,” said Sullivan. “It’s hard to believe it has only been one year that they announced that they were closing all their stores in Canada. It feels much longer.”
The original plan offered creditors 75 to 85 per cent of the money owed. Landlords opposed the plan, since it hinged on them accepting significantly less than what they would receive under their guarantees.
Three of Primaris’ eight Target locations, including the one at St. Albert Centre, are secured, with varying timelines left on their lease.
Target was intended to act as an anchor tenant – drawing in foot traffic for other retailers. The plan obviously backfired as the company struggled with distribution issues, leading to empty shelves and disgruntled customers.
“It was very unfortunate. Target is a great company and they were clearly very successful in the U.S.,” said Sullivan. “They just stumbled coming into Canada and unfortunately it never worked out the way we all envisioned it would.”
Primaris is looking at the situation as a chance to rebuild.
Although the company continues to suffer loses, as it backfills its former Target locations, Sullivan welcomes the opportunity to replace the failing retailer with more productive tenants and collect higher rents.
The St. Albert Centre is currently in the process of designing a redevelopment plan that will see the 117,000-square-foot space transformed into a new common area, three or four large box units and a number of regular-sized retail spaces.
The redevelopment is intended to attract 12 to 15 new retailers, which could include new food options, and improve the connectivity of the mall.
