Canadian retailer Hudson’s Bay Co. on Monday said it has closed on the sale of its Fifth Ave. building in Manhattan to WeWork Property Investors.
The transaction was valued at 1.1 billion Canadian dollars, or $850 million at current exchange, and was the former home of the iconic Lord & Taylor flagship. As part of the transaction, WeWork exercised an option to convert 163 million in Canadian dollars, or $125 million, of the transaction value into a preferred equity interest in the building helped by the Canadian retailer through a joint venture structure.
“This transaction reinforces [Hudson’s Bay’s] ability to identify undervalued real estate investments with great potential,” Richard Baker, Hudson’s Bay’s governor and executive chairman, said.
Baker said the company continues to “strengthen” its retail business and unlock the value of it real estate holdings. The transaction helped the company eliminate 520 million Canadian dollars, or $400 million, connected with the Lord & Taylor mortgage, as well as reduced borrowings under its asset-based revolving facility.
Baker said the company has paid down debt totaling about 1 billion in Canadian dollars, which gives the firm “flexibility to support our business goals and advance our strategy.”
The deal with WeWork for the 11-story Fifth Avenue building between 38th and 39th Streets was announced in October 2017. The company said in June 2018 when it posted first-quarter results that it would close the Lord & Taylor flagship. Going-out-of-business sales at the flagship began in October and, after a century in operation, the doors finally went dark on Jan. 2.
Hudson’s Bay still operates other Lord & Taylor stores, an online business, as well as a Lord & Taylor flagship on walmart.com.