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The Hudson’s Bay Company has struck a deal to sell Lord & Taylor’s flagship store in New York to office-sharing company WeWork, which will move into some space in the retailer’s other properties.
The deal will see HBC continue to run the store in the location on 5th Avenue until the end of next year, at which point it will be converted into WeWork’s new headquarters, and a smaller Lord & Taylor store.
WeWork will also take up space in Bay locations on Queen Street in Toronto, Granville Street in Vancouver and Galeria Kaufhof in Frankfurt.
“This is a transformative partnership that rethinks how retailers create exciting environments and leverage less productive space, while substantially improving the value proposition,” HBC’s interim CEO, Richard Baker, said in a statement.
HBC had been under pressure from an activist shareholder to monetize its real estate assets, which by some estimates are worth more than the entire company. The deal has a price tag of just over $ 1.075 billion Canadian.
As part of the deal, financing firm Rhône Capital, which has worked with WeWork in the past on real estate deals, will make a $ 632-million equity investment in HBC, to help shore up the retailer’s balance sheet.
HBC says it will use proceeds of the transaction to pay down up to $ 1.6 billion in debt.