02/10/2015 12:18 EST | Updated 04/12/2015 05:59 EDT

Target Canada, landlords reach compromise in sales process for leases

TORONTO - Target Canada and its landlords have reached an agreement on a process that gives the retailer until the end of June to sell its store leases.

Documents filed with an Ontario court say both sides have agreed to have a court-appointed monitor to supervise the sale, which shifts control away from Target Canada.

The retailer has also set May 15 as the deadline for wrapping up the sales process, with an final date set for June 30.

If a lease isn't sold by the June deadline, then the rights will be returned to the landlord, according to the documents filed ahead of a hearing on Wednesday when a judge will consider approving the changes.

Some of the landlords who own properties leased by Target include RioCan Real Estate Investment Trust (TSX:REI.UN) and Primaris, a division of H&R Real Estate Investment Trust (TSX:HR.UN).

The revised agreement addresses landlord concerns that delays could leave unoccupied properties in limbo. It also keeps Target Corp. close to its goal of exiting the Canadian market quickly rather than facing years of losses.

Target Canada is in the midst of liquidating 133 stores across the country, as the U.S.-based retailer pulls out of Canada and lays off more than 17,000 staff.

Representatives for some of the property owners had raised concerns that stores could remain vacant for extended periods and that other tenants could lose business during the liquidation of Target's inventory at discounted prices.

Last Thursday, Target Canada began its liquidation sales with discounts of up to 30 per cent off some products, though most were closer to a 10 per cent reduction off regular prices.

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