Hudson’s Bay Company, parent of Saks Fifth Avenue and Lord & Taylor, said it will create real estate joint ventures in Canada and the U.S. to leverage its real estate assets.
The company is looking to ultimately create real estate investment trusts (REITS) that could be traded on the stock market and acquire other desirable properties.
The plan, which in the U.S. includes a partnership with American mall developer Simon Property Group SPG, wouldn’t include Saks’ flagship store in Manhattan, the Lord & Taylor store on Fifth Avenue, or the Saks Off Fifth outlet chain.
Several retail companies have explored or attempted a REIT as a way to squeeze value out of their properties separate from their retail operations, but none so far has materialized. Most recently Sears Holding Corp., a longstanding real estate powerhouse, has said a REIT could bring in as much as $1.9 billion, much needed cash for that retailer. In that plan, some 300 affected stores would be leased back to Sears; Hudson's Bay's plan is similar.
“HBC is all about world-class operating retailers. But shareholders are entitled to understand the value of the real estate they own,” said Richard Baker, Hudson’s Bay’s executive chairman and a major American real estate investor.
But while many observers say that such a move is an innovative way to extract value, others have been skeptical.