Hudson’s Bay capitalizes on real estate

Toronto - Hudson’s Bay Company (HBC) is capitalizing on 42 real estate assets. The retailer has closed a joint venture with Simon Property Group focused on credit tenant, net-leased and multi-tenanted retail buildings in the U.S. and internationally.



The joint venture will enable HBC and Simon to build on the strength of existing real estate assets and identify new real estate growth opportunities. HBC contributed 42 owned or ground-leased properties to the venture, including the Saks Fifth Avenue Beverly Hills flagship and the Westchester and Manhasset Lord & Taylor stores, for an aggregate purchase price of approximately $1.7 billion. The contributed properties total approximately 5.4 million sq ft.

Third-party debt at the HBC-Simon JV totaling $846 million was arranged in conjunction with the closing. Of this amount, HBC received $600 million cash for the properties it contributed. HBC intends to use these proceeds to repay the balance of its an existing loan and reduce borrowings on its U.S. revolving credit facility.



The partnership expects to use the remaining $246 million toward the proposed purchase of at least 40 owned or partially-owned properties in Germany, which HBC is expected to acquire at the end of the third fiscal quarter as part of its previously announced acquisition of Galeria Holding.



Simon contributed an initial $1 million upon closing, and has committed to contribute up to a total of $278 million to the venture. This includes $100 million for improvements to properties contributed by HBC, with the balance of $178 million intended to be used by the venture to partially fund the acquisitions of the properties in Germany.



The venture is establishing a dedicated management team to oversee the contributed properties and growi the portfolio, with support from HBC and Simon. This team will be led by Lee Neibart, who has extensive real estate experience and is a member of the HBC board of directors. The venture’s board is comprised of four directors, two of whom have been appointed by each partner. Unanimous board consent is required for all major operating decisions.