Richard Baker, interim CEO and executive chairman of the Hudson's Bay Company, noted in the announcement that the company expected "minimal impact" on its earnings from the flagship sale, which produced far less revenue than the Saks Fifth Avenue flagship building.
HBC announced the deal as part of a series of strategic transactions with WeWork Companies, Rhone Capital and an affiliate of WeWork Property Advisors, a joint venture between WeWork and Rhone.
Canadian department store operator Hudson's Bay Co agreed to sell its Lord & Taylor building for $850 million to SoftBank-backed WeWork Cos and shrink the flagship store on New York's Fifth Avenue to a quarter of its current size, HBC said on Tuesday.
Hudson's Bay soared on the deals, rising 6.5 percent to C$12.52 at 9:35 a.m.in Toronto, the biggest gain in six weeks.
Under the deal, Lord & Taylor will sell its almost 676,000 square-foot flagship to WeWork for $850 million after the 2018 holiday season. After that, the store will shrink to 150,000 square feet (the 12-story building is 676,000 square feet) with the rest of the space devoted to WeWork's NY headquarters.
Lord Taylor, whose retail dry goods store at Broadway and Twentieth Street has been familiar to New Yorkers for more than a generation, have decided that the time has come to establish a new headquarters in the uptown Fifth Avenue shopping centre, and they have taken a large plot for a new store on the west side of Fifth Avenue, between Thirty-eighth and Thirty-ninth Streets.
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.
On Oct. 20, Hudson's Bay announced that Chief Executive Gerald Storch would step down effective November 1.
The city opted to designate the 424 Fifth Ave. building a landmark in 2007, citing the Italian Renaissance Revival style of the structure, which was erected in 1913-14. The vacancy rate on Fifth Avenue, the heart of the city's high-end shopping district and home to the most expensive retail real estate in the world, reached a record past year.