TORONTO & NEW YORK--(BUSINESS WIRE)--(all values in U.S. Dollars) - Hudson's Bay Company (TSX: HBC) is pleased to announce the closing of a $400 million, 5-year mortgage, on the Lord &Taylor flagship property in New York City, located at 424-438 Fifth Avenue to refinance the existing mortgage of $250 million due September 2017. The additional proceeds will be used to reduce the borrowings on the Company’s revolving credit facility. The new loan will mature in August 2021 and has an average interest rate fixed at approximately 4.3%. In connection with this transaction, the lenders independently commissioned a leading international appraiser to provide an appraisal of the property. This appraisal valued the property at $655 million based on the assumption that the property is net leased by Lord & Taylor at an estimated current fair market rent1.
”The opportunistic refinancing of the mortgage on the L&T flagship property is yet another example of the successful execution of our strategy as we continue to leverage our significant real estate portfolio. We are pleased to extend our Company’s debt maturity profile as well as secure an attractive interest rate of 4.3% through the term of the new mortgage,” stated Richard Baker, HBC’s Governor and Executive Chairman. Mr. Baker continued, “HBC's two wholly owned flagship properties on 5th Avenue in New York City, which have been valued at a combined $4.36 billion based on independent appraisals2, continue to provide the Company access to secure long term debt at attractive rates. This debt is non-recourse to the operating company and provides HBC with an efficient capital structure from which to continue its global retailing growth initiatives.”
About Hudson’s Bay Company
Hudson’s Bay Company is one of the fastest-growing department store retailers in the world, based on its successful formula of driving the performance of high quality stores and their all-channel offerings, unlocking the value of real estate holdings and growing through acquisitions. Founded in 1670, HBC is the oldest company in North America. HBC’s portfolio today includes ten banners, in formats ranging from luxury to premium department stores to off-price fashion shopping destinations, with more than 460 stores and 66,000 employees around the world.
In North America, HBC’s leading banners include Hudson’s Bay, Lord & Taylor, Saks Fifth Avenue, Gilt, and Saks OFF 5TH, along with Find @ Lord & Taylor and Home Outfitters. In Europe, its banners include GALERIA Kaufhof, the largest department store group in Germany, Belgium’s only department store group Galeria INNO, as well as Sportarena.
HBC has significant investments in real estate joint ventures. It has partnered with Simon Property Group Inc. in the HBS Global Properties Joint Venture, which owns properties in the United States and Germany. In Canada, it has partnered with RioCan Real Estate Investment Trust in the RioCan-HBC Joint Venture.
Appraisal Results
Caution should be exercised in the evaluation and use of the independent appraisal results. The appraisals are an estimate of value at a specific date and are not a precise measure of value, being based on a subjective comparison of related activity taking place in the real estate market. The appraisals are based on various assumptions of future expectations, including the assumption that the entire flagship property is net leased by Lord & Taylor at an estimated current fair market rent. While the appraiser’s assumptions are considered to be reasonable at the current time, some of the assumptions may not materialize or may differ materially from actual experience in the future.
