The Real Deal New York

Saks owner pushed to sell off its RE assets

Hedge fund claims Hudson's Bay’s real estate holdings could be worth four times its sock price
June 19, 2017 04:20PM

Richard Baker and Sak’s Fifth Avenue (Credit: Getty Images)

The Canadian company that owns the Saks Fifth Avenue flagship store is under pressure to go private or sell off its real estate assets, which are worth billions.

Toronto-based Hudson’s Bay bought Saks Inc. in 2013. Two years later it formed joint ventures with retail real estate investment trust Simon Property Group and RioCan Real Estate Investment Trust.

Jonathan Litt of activist hedge fund Land & Buildings Investment Management, which owns a 4.3 percent stake in Hudson’s Bay, wrote to the company’s board Monday, the New York Post reported. Litt claims the company should “evaluate all strategic options to maximize value for shareholders, including monetization or repurposing of real estate or the company being taken private by management.”

Hudson’s Bay’s real estate assets, said to be worth $4.8 billion, are controlled by chairman Richard Baker, and includes Saks Fifth Avenue’s flagship store. In late 2014, the real estate at that store was valued at $3.7 billion. According to Litt, the collective real estate holdings of Hudson’s Bay are worth four times the company’s opening share price on Monday.

“Is the best use of this location truly a department store?” Litt wrote in the letter to the Hudson’s Bay board on Monday, according to the Post. “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.” Shares in the company surged nearly 15 percent to $10.17 Canadian on Toronto Stock Exchange’s Monday mid-day trades. Hudson’s Bay said it is reviewing the letter and will respond in due course.

In April, Hudson’s Bay said it is considering “spinning off” its real estate holdings into a separate public company.  The company also announced this year it may stack apartments and offices on top of its Fifth Avenue Lord & Taylor store.

It was also said to be in talks to buy Macy’s in February. [NYP]Miriam Hall