HBC hbc said Tuesday it will sell the flagship Fifth Avenue department store of its Lord & Taylor chain in Manhattan to WeWorks for $850 million, in a deal that speaks volumes about the market for retail and office space.
Hudson's Bay also said WeWork and private equity firm Rhone Capital would also invest US$500 million in the company.
Hudson's Bay Co. has a $1-billion deal to sell its Lord & Taylor flagship store in NY to WeWork Cos and team up with the office-sharing business to run its operations in parts of HBC's stores.
The Lord & Taylor flagship store will continue to operate through the end of the 2018 holiday season, upon which it will be converted to WeWork's NY headquarters, though HBC will continue to operate a 150,000 square-foot Lord & Taylor store in the location.
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Hudson's Bay also plans to start leasing some space in its department stores to WeWork, including stores in Toronto and Vancouver.
Still, it's a significant move and it shows a willingness in Hudson's Bay's management to give up treasured property. The Italian Renaissance building was specially designed for the retailer-part of the long march uptown over the 19th and early 20th centuries by the ascendant wealthy and the venues that catered to them, and one of many elaborate temples to commercial culture built in the era.
HBC expects the transaction to result in an aggregate debt reduction of C$1.6 billion and an increase in total liquidity of about C$1.1 billion. "Jerry Storch is only the most recent casualty at the company, joining several other senior executive departures", including CFO Paul Beesley and Brian Pall, former president of HBC Real Estate.
"This is a transformative partnership that rethinks how retailers create exciting environments and leverage less productive space, while substantially improving the value proposition", HBC's interim CEO, Richard Baker, said in a statement. Beesley moved back to Canada from NY to be closer to his family, according to the company and was replaced by Edward Record in August.