(Reuters) - Activist investor Jonathan Litt ratcheted up pressure on Hudson's Bay Co HBC.TO by threatening a proxy war against the Canadian retailer unless the company took drastic steps to make more money off its assets.

FILE PHOTO - A sign is seen at the Hudson's Bay Company (HBC) flagship department store in Toronto, Ontario, Canada on January 27, 2014. REUTERS/Mark Blinch/File Photo

Litt-controlled Land and Buildings on Monday pushed for Hudson’s Bay, popularly called HBC, to sell its Saks Fifth Avenue brand and think of it more as a real estate investment, rather than just a department store.

Land & Building, which owns about 5 percent stake in Hudson’s Bay, first launched the campaign against HBC last month.

Litt is known to aggressively target companies he deems undervalued and in need of leadership or strategy changes. His attack on Hudson’s Bay comes at a time when department store chains have been facing declining sales as customers go online to buy everything from clothes to groceries.

Litt has already suggested HBC should consider going private and monetize its vast real estate holdings.

“Is spending $250 million to renovate the Saks Fifth Avenue location a shrewd investment when a department store is likely not the highest and best use of the real estate,” the investor said in a letter to HBC shareholders, following a meeting with senior management.

“Shrinking the department store footprint would likely help maximize the value, which we believe could well be in excess of the C$5 billion,” he added.

Hudson’s Bay has over $10 billion in real estate assets, with the Saks store on Fifth Avenue itself valued at $3.7 billion.

Reuters reported on Friday that HBC is planning to open its first namesake department store in Canada in at least five years.

Litt called on a thorough review of all Hudson’s Bay capital expenditures related to existing assets, new store openings and M&A ambitions.

HBC said in a statement it was committed to operating both leading retail banners and unlocking the value in its real estate holdings.

“The company’s real estate is valued at C$35 (per share) by third parties, more than three times the current share price,” Litt said.

The investor said if the company did not make “substantive progress” in its plans, he would consider pushing out current board members. He also suggested a management-led buyout for HBC as one option to unlock shareholder value.

Shares of Hudson’s Bay were up 2.4 percent at C$10.85 in early trading, after having fallen nearly 20 percent this year.