Canada-based Hudson’s Bay Co. will retain 63 percent ownership interest in HBS Global Properties, its real estate joint venture with Simon Property Group, after selling a chunk of equity to three third party investors.
Proceeds from the $533 million equity sale, together with cash on hand, will be used to reduce HBC’s outstanding term loan B borrowings from $1.1 billion to $500 million, the company said.
“We are thrilled to have three premier real estate investors join HBS Global Properties, bringing with them significant real estate investment expertise. These transactions further demonstrate the substantial value of our real estate portfolio, and our ability to unlock this value for our shareholders,” Richard Baker, governor and executive chairman of HBC, said in a release. “We look forward to working with our partners to significantly expand and diversify the assets of HBS Global Properties. We believe this will lead to an increase in the value of HBS Global Properties and therefore benefit HBC shareholders.”
The $533 million equity sale is comprised of individual investments from Ivanhoé Cambridge ($250 million); Madison International Realty ($150 million); and a $133 million equity investment by a large U.S. pension, HBC said.
The sale, HBC said, follows its announcement on Sept. 30 that it expected to sell between $400 and $600 million of equity in HBS Global Properties.
As part of the transactions, Ivanhoé Cambridge will be granted representation on the board of directors of HBS Global Properties, raising the total number of board seats from four to five.
The new investment values HBS Global Properties portfolio at $4.5 billion.
Back in September, HBC announced that it planned to slash 265 jobs at headquarters and in corporate offices across its store banners — which include Saks Fifth Avenue and Lord & Taylor. The company had forecasted that its realignment efforts would result in about $75 million in annual cost savings and synergies.