Hudson's Bay
by Stephen Garner
Hudson's Bay
Image via education lab architects

Canadian-based retailer Hudson’s Bay Company is exploring a possible sale of its Vancouver, BC property occupied by a Hudson’s Bay store, located at 674 Granville Street. The possible deal is being explored by a joint venture between the retailer and RioCan Real Estate Investment Trust and the possible buyers CBRE and Brookfield Financial Real Estate Group.

In the same announcement, HBC stated that its joint venture expects to close on a $200 million mortgage on the same property, the proceeds of which would be distributed on a pro-rata basis to the joint venture partners. The mortgage is expected to be for a term of four years at a rate of prime plus 1.0 percent and has no prepayment penalty in the event of a sale of the property. BMO Capital Markets Real Estate Inc. is acting as the exclusive advisor on this financing.

The joint venture entails a limited partnership between HBC and RioCan Real Estate Investment, the RioCan-HBC Joint Venture owns or controls ten flagship properties in major cities across Canada, including Vancouver, Calgary, Ottawa, and Montreal, as well as a 50 percent interest in Oakville Place and Georgian Mall. Formed in 2015, the joint venture has a mandate to explore future acquisitions that would grow and diversify its real estate portfolio. As of June 30, 2017, the joint venture was owned 88.1 percent by HBC and 11.9 percent by RioCan.

“We are exploring a sale of this flagship property as the Vancouver real estate market has appreciated significantly over the past several years. While no decision to sell has been made, we continue to explore opportunistic transactions to enhance shareholder value,” said Richard Baker, HBC’s governor, executive chairman, and interim chief executive officer. “We are committed to operating our Hudson’s Bay store at this location and any possible sale would include the continued operation of Hudson’s Bay at this property.”

This news comes just days after the retailer announced the sale of the iconic Lord & Taylor Fifth Avenue flagship store in New York City to WeWork Property Advisors in a transaction valued at $850 million. The Lord & Taylor flagship store is currently expected to continue operations in the entire building through the 2018 holiday season. Thereafter the building is intended to be converted into WeWork’s New York headquarters, WeWork office space, and a redesigned Lord & Taylor store of approximately 150,000-square-feet.