Hudson’s Bay Co. (HBC.TO) is facing few good options in its fight with an activist investor, says the man best known for launching the Club Monaco and Joe Fresh brands.

“They are caught and they really will have to do something if they want to avoid a fight with Land and Building,” Joe Mimran, Chairman of Gibraltar Growth Corp. told BNN in an interview.

Shares of Hudson Bay have been moving higher in recent weeks as the company defends itself against activist investor Johnathan Litt, who runs the Land and Buildings hedge fund that focusses on real estate. The fund disclosed a 4.3 per cent stake in Hudson’s Bay in June.

Litt is calling on HBC to sell off its real estate assets and concentrate on its core retail brands. HBC’s own estimates peg its real estate at $6.4-billion and include prime properties in New York and Toronto.

But that’s a risky bet on the struggling retail sector, said Mimran. “At the end of the day, is there enough cash flow to warrant the rents they are going to have to pay going forward?” he said.

Hudson Bay shares spiked more than 10 per cent last week on reports the retailer was considering going private.  But that type of move would require the company to assume what could be a crippling debt load, warned Mimran.

“If they look at going private, that’s a lot of debt that they are going to be putting on themselves,” he said. “The debt that you are going to have to carry is something you should really, really be cautious of.”

Hudson Bay is still in a strong position compared to its peers, but fighting off an activist investor like Litt is creating a hazard for the company, he said.  “I think HBC will be one of the last men standing,” he told BNN. “But this outside pressure makes them react in a way that perhaps is not consistent with their long-term goals.”