HBC may create REIT ‘someday in the future’
TORONTO — Hudson’s Bay Co. could be the next retail chain to seek more value for its shares through creating a real estate investment trust, chief executive Richard Baker told analysts Tuesday in the company’s first conference call as a renewed public company.
It came as the storied retailer, which owns the Bay, Home Outfitters and Lord & Taylor chains, reported a loss from continuing operations in the third quarter ended Oct. 27, but posted encouraging results in stores open for more than a year, a key retail metric known as same-store sales.
Loblaw Cos. Ltd. shares shot up last week after Canada’s largest grocery chain said it intended to create an REIT for its vast real estate holdings, assets industry analysts said were not fully showing up in the company’s share price.
HBC had noted the value of its real estate in its IPO documents. The company owns or controls 11 million square feet of retail space
“The type of real estate we own would fit nicely into an REIT.”
HBC CEO RICHARD BAKER
in Canada and also has 11.7 million square feet of leased retail space, with lease controls in excess of 45 years at 88 per cent of that leased retail space. The retailer raised $365 million from a public offering that closed Nov. 26.
“We own and ground lease 11 million square feet of really spectacular real estate, and we have always believed that some time in the future, we could have the opportunity to create similar to what Loblaw is proposing, so we are very excited by their announcement and we think it bodes well for future value,” said Baker, a veteran real estate investor who owns HBC.
“It is nice to be invested in a retailer that owns a lot of real estate, and the type of real estate we own would fit very nicely into an REIT. We are not presently working on this plan, but it is something that we often talk about and foresee getting more involved in someday in the future.”
HBC said its loss from continuing operations was $8.5 million or eight cents per share in the third quarter. That compared with a loss from continuing operations of $7.5 million or seven cents per share in the same yearearlier period.
Revenues in the three months ended Oct. 27 were $930.4 million, up from $896.7 million in the 2011 period.
The company’s net loss, which included a $6.5-million gain from discontinued operations, was $2 million or two cents per share. That compared with net income of almost $1.24 billion or $11.83 per share a year ago when HBC enjoyed an unusual gain of almost $1.25 billion from discontinued operations.
Consolidated same-store sales rose 3.5 per cent in the third quarter, with an increase of 4.5 per cent at Hudson’s Bay and 5.2 per cent on a U.S. dollar basis at Lord & Taylor.
Baker said executives had been achieving their objectives for the Bay and Lord & Taylor brands since acquiring the struggling chains in 2008 and 2006, respectively.