As part of $650 million deal, HBC has agreed to sell it’s flagship Queen Street store and adjacent office tower to Cadillac Fairview as it plans two Toronto Saks stores.
Cadillac Fairview and HBC announced the deal this morning which will see HBC continue to occupy the site as part of a leaseback arrangement. The deal will incorporate a multi-level 150,000 square foot Saks Fifth Avenue location into the existing Hudson’s Bay store (which is about 750,000 square feet in size). Cadillac Fairview owns the adjacent Toronto Eaton Centre.
HBC had previously reported its intention to convert the Hudson’s Bay Bloor Street store entirely to Saks Fifth Avenue, this plan has been shelved.
“We’re very pleased to announce this agreement with Cadillac Fairview, which clearly demonstrates the tremendous value of our dynamic real estate portfolio,” said Richard Baker, HBC’s Governor and Chief Executive Officer. “This sale-leaseback provides HBC with resources to deleverage and accelerate investment in our growth initiatives. We continue to explore other options to create additional value through the power and potential of our real estate assets.”
“The opening of our first Saks Fifth Avenue stores at Toronto Eaton Centre and Sherway Gardens brings Canadian shoppers the full array of luxury fashion collections and exceptional service for which Saks is renowned,” continued Mr. Baker. “We especially appreciate Cadillac Fairview’s strong commitment to the Queen Street location and adjacent Toronto Eaton Centre, providing us with the opportunity to be a major part of Toronto’s premier luxury shopping destination.”
The Globe and Mail is reporting that the lease agreement is for 25 years with a renewal option for just under 50. The transaction demonstrates how HBC is willing to unlock the substantial value of its real estate assets (it owns many of its flagship stores).
Saks Fifth Avenue will also open a full line store at Sherway Gardens, which is also owned by Cadillac Fairview.