The Real Deal New York

Hudson’s Bay to form joint ventures with US and Canadian REITs

Entities will be worth a total of $3.4B
February 25, 2015 03:10PM

Hudson’s Bay Company is forming two new companies that are valued at a total of $3.4 billion. The companies will be positioned for initial public offering and will look to purchase more real estate, according to Bloomberg.

Canada’s oldest company is contributing 42 properties to a retail venture it is forming with Indianapolis-based Simon Property Group. This entity will be valued at $1.8 billion. A second venture, with the Toronto-based RioCan Real Estate Investment Trust, will focus on growth opportunities in Canada and will be valued at $1.6 billion.

The Hudson’s Bay Saks Fifth Avenue building at 611 Fifth Avenue was valued at $3.7 billion last year.

Hudson’s Bay, the parent company of Saks Fifth Avenue and Lord and Taylor, decided on joint ventures, instead of spinning off its own REIT, in order to create a management team and diversify credit before an eventual IPO, the website reported.

“This is the optimal structure for our shareholders to participate in the long-term growth of our real estate and retail businesses,” Hudson’s Bay CEO Richard Baker said, Bloomberg reported. “If we had done an IPO we wouldn’t have created as much value as we will when we have a more mature, diversified portfolio.” [Bloomberg] — Claire Moses