SoftBank-backed WeWork to buy NY property for $850m

A guest attends the opening ceremony of WeWork Hong Kong flagship location in Hong Kong, China February 23, 2017. REUTERS/Bobby Yip

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.

HBC also reaffirmed a commitment to its European operations despite opposition from activist investor Jonathan Litt, who is considering seeking the removal of some directors.

HBC shares jumped as much as 8.7 percent in Toronto, their biggest intraday gain in two months.

Hudson’s Bay also said private equity firm Rhone Capital will invest $500 million in HBC, with the transactions reducing its debt by C$1.6 billion ($1.3 billion) and increasing liquidity by C$1.1 billion.

“As we’ve said and done in the past multiple times, if there’s an opportunity for someone to give us a very high valuation on one of our assets, we’d be willing to sell it,” Richard Baker, HBC executive chairman and interim chief executive officer, told Reuters.

He added that WeWork, which provides shared workspace for entrepreneurs and startups, is paying a 30 percent premium to the Lord & Taylor building’s last appraised value.

The Lord & Taylor store in New York will operate through the 2018 holiday season, then be reduced in size to 150,000 square feet from the current 650,000 square feet, with the building converted to WeWorks’ headquarters.

HBC, which also owns the Saks Fifth Avenue chain, faces pressure to extract more value from its real estate assets at a time when brick-and-mortar retailers lose market share to more nimble online operators.

Litt, founder of hedge fund Land & Buildings, has valued HBC’s real estate at C$35 a share, and has called for HBC to sell some stores, convert them to alternate uses or go private.

He said on Monday he would call a special shareholder meeting to potentially remove directors. The abrupt departure of CEO Gerald Storch, announced on Friday, was an attempt by the board to “buy time and placate investors to address underperformance and undervaluation,” he said.

Land & Buildings holds about 5 percent of HBC shares.

Following the CEO announcement, Baker sought to ease concerns about potential cuts at its struggling German department store chain Kaufhof.

“We’re very committed to our HBC Europe enterprise, we’ve no interest, no discussion, no need of changing our strategy in any way, or selling the business to anybody,” he said on Tuesday.

WeWork will also lease space at Hudson’s Bay stores in Toronto and Vancouver and Galeria Kaufhof in Frankfurt. It could also add 20 WeWork locations in HBC businesses around the world, Baker said.

WeWork Cos said on Aug. 24 it received an additional $3 billion investment from Japan’s SoftBank Group and its Vision Fund to ramp up its expansion globally. SoftBank had already invested $1.4 billion to fund expansion in China, Japan, South Korea and elsewhere in southeast Asia.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.