Published: Tue, June 20, 2017
Money | By Armando Alvarado

Activist wants a real estate play at HBC

Activist wants a real estate play at HBC

Shares of Canadian retailer Hudson's Bay Co climbed as much as 17 percent on Monday after US activist investor Land & Buildings Investment Management LLC called for the Saks Fifth Avenue owner to explore strategic options, including going private.

Hudson's Bay Co (TSE HBC) traded up 14.98% during trading on Monday, reaching $10.21. "The path to maximizing the value of Hudson's Bay lies in its real estate, not its retail brands".

Some number crunching from L&B on the real estate held by Hudson's Bay leads to a valuation of C$35 per share. The Company is reviewing the letter and will respond in due course.

The shareholder called HBC a "diamond in the rough" that owns the majority of its real estate, which Land & Buildings said could be worth four times the share price of HBC, which closed Friday at $8.88 on the TSX. Even if the real estate is worth half the Company's estimate, the shares would still be worth double today's share price.

The Saks Fifth Avenue location in NY could be valued at C$5 billion ($3.8 billion) alone, Litt said. The Company's retail portfolio includes approximately 10 banners, in formats ranging from luxury to better department stores to off price fashion shopping destinations, with over 460 stores.

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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. The activist investor has suggested selling some of the retailer's prime real estate to be developed into hotels or office buildings.

Shoppers visit the redesigned designer boutique at the Saks Fifth Avenue flagship store, in New York City in this September 2016 photo. Two years later it formed joint ventures with retail real estate investment trust Simon Property Group and RioCan Real Estate Investment Trust. Hudson's Bay Co has a 52-week low of $8.08 and a 52-week high of $18.60.

"You have to change both the company, the operating side of things, as well as developing the real estate - which takes capital expenditures, as well".

Toronto-based Hudson's Bay bought Saks 2013.

In the letter, Litt says that while his firm does not know Richard Baker, governor and executive chairman of HBC, HBC board member Bill Mack, a real estate investor, is chairman of the board of Mack-Cali, where Litt served as a board member. The correct version of this news story can be viewed at

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