WeWork buys oldest luxury store in US
- Author: Eleanor Harrison Oct 25, 2017,
Oct 25, 2017, 0:25
The flagship store at the building in NY would continue operations through the 2018 holiday season after which it will be converted into WeWork's headquarters, the company said on Tuesday. They can be converted into an equal number of HBC common shares, which represent a 21.8 per cent stake in the company.
The 676,000-square foot-building on Fifth Avenue in New York City will sell for $850 million, and WeWork partner Rhone Capital will invest another $500 million in Lord & Taylor parent company Hudson Bay, The New York Times reported. "Immediately upon closing, these transactions are expected to significantly strengthen HBC's balance sheet, enhance our liquidity, and advance our core strategies by monetizing the Lord & Taylor Fifth Avenue building and increasing the productivity of key locations, which taken together, is expected to enable us to drive ongoing value creation".
Under the deal announced Tuesday, Lord & Taylor retail operations will continue to occupy all of the Manhattan location through the end of next year's holiday season.
The deals come as HBC faces increased pressure from a USA activist investment fund that has argued Hudson's Bay stock is worth only one-third of the real estate it owns.
HBC, which also owns the Saks Fifth Avenue chain, faces pressure to extract more value from its real estate assets at a time when brick-and-mortar retailers lose market share to more nimble online operators.
Land & Buildings holds about 5 percent of HBC shares.
"We believe the partnership with WeWork to redefine retailing and reactivate less productive space throughout the company's global real estate portfolio will put us in a leadership position and add significant value to HBC shareholders", M. Steven Langman, managing director of Rhône, said.
Baker maintained that the alliance puts HBC "at the forefront of dynamic trends reshaping the way current and future generations live, work and shop: the sharing economy and urban and suburban mixed-use real estate planning".
WeWork Cos said on August 24 it received an additional $3 billion investment from Japan's SoftBank Group and its Vision Fund to ramp up its expansion globally. "There is no reason why retail space should not be part of that movement".