Retail woes on high-end 5th Ave.

Value of Hudson Bay’s Saks flagship has plummeted,

The value of Hudson’s Bay Co.’s Saks Fifth Avenue flagship store has plummeted over the past five years, pulled down by retail woes and sliding rents in a high-profile Manhattan shopping district.

The building at 611 Fifth Ave. was appraised at $1.6 billion (U.S.) recently, according to a filing by the Toronto-based company, dropping by almost 60 per cent from about $3.7 billion five years ago.

The reasons for the decline include “the performance of the store relative to expectations in 2014, changes in market rents on New York’s Fifth Avenue and the changes in the retail landscape,” the company said.

Last month, Hudson’s Bay agreed to go private at a valuation of $1.45 billion in a deal that was put together by chair Richard Baker, who wants to reinvigorate the struggling retailer. But the proposal requires the approval of shareholders, and there’s been debate among investors about the value of the company’s real estate.

Activist investor Jonathan Litt has argued that the company is undervaluing its “exceptional assets” and last year he said that the Saks Fifth Avenue building should be sold.

Hudson’s Bay went to great lengths on Tuesday to defend the appraised value of its properties, releasing a report on the Saks building. CBRE, which conducted the appraisal, concluded the building was worth $1.6 billion as a flagship for Saks and that value of the property would drop if the company pursued a redevelopment project.