(HBC.TO) said Tuesday that it has agreed to sell the Lord & Taylor Fifth Avenue building in NY to WeWork Property Advisors in a deal valued at $850 million, or C$1.075 billion.
Richard Baker, interim CEO and executive chairman of the Hudson's Bay Company, noted in the announcement that the company expected "minimal impact" on its earnings from the flagship sale, which produced far less revenue than the Saks Fifth Avenue flagship building. (TSX:HBC) is selling its Lord & Taylor Fifth Avenue building in NY to a joint venture between WeWork and Rhone Capital in a deal valued at $1.075 billion.
Commercial-real-estate firm WeWork's $1-billion purchase of the Hudson's Bay Co.'s flagship Lord and Taylor store making waves in NY will send ripples through downtown Vancouver's commercial real estate market. As a part of the deal, Rhône will take a minority stake in the company, purchasing $500 million (632 million Canadian) in convertible shares. The stock has dropped 5 percent this year, and plunged by nearly half in the past two years.
In New York, The Lord & Taylor flagship location will eventually house a smaller store as well as WeWork, ' s headquarters for its operations that provide working space and services for more than 150,000 members around the world.
HBC expects the transaction to result in an aggregate debt reduction of C$1.6 billion and an increase in total liquidity of about C$1.1 billion.
HBC said that the Lord & Taylor flagship store will continue to operate in the entire building through the 2018 holiday season. The company has hired an executive-search firm to find a new permanent CEO. The iconic property is one of the city's oldest retail stores and traces its origins to the dry goods stores established by Samuel Lord and his partner George Washington Taylor in 1826. The Fifth Avenue store between 38th and 39th streets has been home since February 24, 1914. Retail tenants are struggling to pay the rent as the rise of e-commerce and a shift in consumer spending habits erodes sales at brick-and-mortar stores.