The Hudson’s Bay Co. (TSX:HBC) (HBC) and joint venture partner RioCan REIT have signed a conditional agreement to sell HBC’s flagship store in downtown Vancouver for about C$675 million to an “Asian buyer,” according to a May 7 Reuters report that cited an anonymous source who was said to be familiar with the deal.
Business in Vancouver reported last year that HBC and RioCan were seeking a buyer for its iconic flagship store at the corner of Granville and West Georgia streets, following news that the retailer was selling its Lord & Taylor Fifth Avenue store in New York City for about $1.1 billion.
HBC’s decision to sell its New York and Vancouver stores is because HBC wants to monetize its sizable real estate holdings so it can either pay down debt or invest in its retail business, which has been under siege from e-commerce giants such as Amazon.com.
As part of its deal to sell its New York store, HBC also partnered with workspace company WeWork to lease a significant slice of that store after the sale closes. HBC would continue to offer retail operations in the rest of the store.
HBC also forged a partnership with WeWork to lease upper floors of its Vancouver flagship store. It would then continue to operate its store on lower floors.
BIV asked broker CBRE whether a conditional sale has been signed and CBRE executive vice-president and managing director Norm Taylor replied in an email that “I cannot comment on the validity or accuracy of the story; in keeping with our corporate policy we do not comment on any active deals until such time as they are 100% complete.”
Reuters reported that its anonymous source said the prospective buyer who signed the conditional agreement owns a closely held real estate company and is seeking to arrange interim financing from at least one Canadian lender.
The source declined to identify or give the nationality of the buyer, but expects the deal to be finalized by mid-June, according to Reuters.
The six-storey HBC building was built in 1927 and is known for its iconic cream terra cotta exterior and Corinthian columns. At 650,000 square feet, the site is one of the largest retail spaces in Vancouver.
The site of 674 Granville Street had an assessed value of $218.18 million on July 1, 2017.
Retail Insider Media owner Craig Patterson told BIV that the sale price could have been higher than the reported $675 million, particularly if the buyer is able to get the city to approve the demolition of the structure except for the terra cotta facades.
The interior of the building includes slow elevators that badly need to be replaced, Patterson said.
"That building is in terrible shape," he said. "They need to do anything they can to fix [the elevators.] If you compare the store to the downtown Toronto store, the downtown Toronto store is so much nicer."
