Cash in ‘crown jew­els:’ in­vestor

U.S. in­vest­ment says HBC’S Saks Fifth Av­enue store is worth more than the com­pany as a whole

The Telegram (St. John’s) - - BUSINESS -

Shares in Hud­son’s Bay Co. (TSX:HBC) soared more than 13 per cent Mon­day amid news that it’s fac­ing in­vestor pres­sure to un­lock value from its real es­tate as­sets, even if that means clos­ing its “crown jewel” lo­ca­tions.

Land & Build­ings In­vest­ment Man­age­ment of Stam­ford, Conn., said in a pub­lic let­ter that HBC’S Saks Fifth Av­enue store in Man­hat­tan, New York, is worth more than the com­pany as a whole at cur­rent stock prices.

It es­ti­mates that the Saks flag­ship lo­ca­tion would be worth C$16 per share, after debt, com­pared with HBC’S re­cent stock price of C$8.88 at the close of trad­ing on Fri­day. The com­pany has said in the past that the build­ing is worth US$3.7 bil­lion.

The Toronto-based com­pany’s shares gained $1.21 to $10.09 on the Toronto Stock Ex­change by mid-mon­day.

Land & Build­ings says HBC’S man­age­ment has many op­tions, in­clud­ing go­ing pri­vate or re­de­vel­op­ing its prop­er­ties in Canada, Europe and the United States.

But it urges HBC to aban­don at­tempts to buy ad­di­tional re­tail brands, such as Neiman Mar­cus or Macy’s.

“Hud­son’s Bay is a real es­tate com­pany, full stop. If there is a smarter and bet­ter use of any or all of the lo­ca­tions, stores should be closed and re­de­vel­oped and put towards their op­ti­mal use,” the let­ter says.

Toronto-based Hud­son’s Bay Co. says it’s re­view­ing the let­ter and will re­spond later.

Last week, at the com­pany’s an­nual gen­eral meet­ing, HBC chair­man Richard Baker said that the com­pany “will con­tinue to strive to high­light the value” of its real es­tate as­sets, whether that be a sale or po­ten­tially en­gag­ing in a pub­lic list­ing.

Baker cau­tioned, though, that a de­ci­sion would only be made with the con­sid­er­a­tion of cur­rent mar­ket con­di­tions.

Land & Build­ings In­vest­ment Man­age­ment - which now owns about 4.3 per cent of Hud­son’s Bay eq­uity - says in its let­ter to HBC’S board that the “jury is still out” on Baker, given that the com­pany’s shares peaked two years ago at $28.80.

At the time, HBC was in the midst of forg­ing ma­jor real es­tate joint ven­tures with Toronto-based Rio­can and Si­mon Prop­er­ties of In­di­anapo­lis. It had also an­nounced plans to ac­quire Ger­man depart­ment store chain Ga­lerie Kaufhof.

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