TORONTO & NEW YORK--(BUSINESS WIRE)--Hudson’s Bay Company (“HBC”) (TSX:HBC) announced today that it has closed its joint venture with Simon Property Group focused on credit tenant, net-leased and multi-tenanted retail buildings in the United States and internationally. The joint venture will enable HBC and Simon to build on the strength of existing real estate assets and identify new real estate growth opportunities. Unless otherwise indicated, all amounts are expressed in US dollars.
At closing:
- HBC contributed 42 owned or ground-leased properties to the HBC-Simon JV, including the Saks Fifth Avenue Beverly Hills flagship and the Westchester and Manhasset Lord & Taylor stores, for an aggregate purchase price of approximately US$1.7 billion. The contributed properties total approximately 5.4 million square feet.
- Third-party debt at the HBC-Simon JV totalling US$846 million was arranged in conjunction with the closing. Of this amount, HBC received US$600 million in cash proceeds for the properties it contributed. HBC intends to use these proceeds to repay the balance of its existing term loan B and reduce the borrowings on its US revolving credit facility.
- The HBC-Simon JV currently expects to use the remaining US$246 million in proceeds from the third-party debt towards the proposed purchase of at least 40 owned or partially-owned properties in Germany (the “Kaufhof Properties”), which HBC is expected to acquire at the end of the third fiscal quarter upon completion of its previously announced acquisition of Galeria Holding, the parent company of Germany’s #1 department store Kaufhof.
- Simon contributed an initial US$1 million upon closing, and has committed to contribute up to a total of US$278 million to the HBC-Simon JV. This includes US$100 million for improvements to properties contributed by HBC to the HBC-Simon JV. The balance of US$178 million is intended to be used by the HBC-Simon JV to partially fund the acquisitions of the Kaufhof Properties.
The HBC-Simon JV is establishing a dedicated management team to be focused on overseeing the contributed properties and growing the portfolio, with support from HBC and Simon. This team will be led by Lee Neibart, who has extensive real estate experience and is a member of the Board of Directors of Hudson’s Bay Company. The HBC-Simon JV Board is comprised of four directors, two of whom have been appointed by each partner. Unanimous Board consent is required for all major operating decisions.
The contemplated acquisition of the Kaufhof Properties by the HBC-Simon JV is subject to definitive documentation and certain other conditions
About Hudson’s Bay Company
Hudson's Bay Company, founded in 1670, is North America's oldest company. Today, HBC offers customers a range of retailing categories and shopping experiences primarily in the United States and Canada. Our leading banners – Hudson's Bay, Lord & Taylor, Saks Fifth Avenue and Saks Fifth Avenue OFF 5TH – offer a compelling assortment of apparel, accessories, shoes, beauty and home merchandise. Hudson’s Bay is Canada's most prominent department store with 90 full-line locations, two outlet stores and thebay.com. Lord & Taylor operates 50 full-line locations primarily in the northeastern and mid-Atlantic U.S., four Lord & Taylor outlet locations and lordandtaylor.com. Saks Fifth Avenue, one of the world's pre-eminent luxury specialty retailers, comprises 39 U.S. stores, five international licensed stores and saks.com. OFF 5TH offers value-oriented merchandise through 84 U.S. stores and saksoff5th.com. The Company also operates Home Outfitters, Canada's largest kitchen, bed and bath specialty superstore with 67 locations. Hudson’s Bay Company trades on the Toronto Stock Exchange under the symbol “HBC”.
Forward-Looking Statements – Hudson’s Bay Company
Certain statements made in this news release, including, but not limited to, statements relating to the strategies, objectives and benefits of the Simon-HBC joint venture, Simon’s commitment to make future contributions to the Simon-HBC JV, and other statements that are not historical facts, are forward-looking. Often but not always, forward-looking statements can be identified by the use of forward-looking terminology such as "may", "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology.
Although HBC believes that the forward-looking statements in this news release are based on information and assumptions that are current, reasonable and complete, these statements are by their nature subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking statements for a variety of reasons. Some of the factors - many of which are beyond HBC’s control and the effects of which can be difficult to predict – include, among others: (a) the risk that the anticipated benefits from the Simon-HBC JV cannot be realized, (b) the risk that the Simon-HBC JV is unable to make future acquisitions and diversify its tenant base, (c) the risk that HBC does not complete the acquisition of Galeria Holding as contemplated and within the anticipated timeline, and/or that the Simon-HBC JV is unable to enter into definitive documentation, secure acceptable debt financing or satisfy other conditions in order to complete the acquisition of the Kaufhof Properties from HBC, (d) the risk that Simon fails to satisfy its future contribution commitments, (e) the risk that the purchase price paid by the Simon-HBC JV to acquire the properties is greater than the accounting fair market value of such properties that will be determined by third party appraisals; and (f) the risk that the Simon-HBC JV is unable to complete a future monetization transaction.
HBC cautions that the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect its results. For more information on the risks, uncertainties and assumptions that could cause HBC’s actual results to differ from current expectations, please refer to the "Risk Factors" section of HBC’s Annual Information Form dated April 30, 2015, as well as HBC’s other public filings, available at www.sedar.com and at www.hbc.com.
The forward-looking statements contained in this news release describe HBC’s expectations at the date of this news release and, accordingly, are subject to change after such date. Except as may be required by applicable Canadian securities laws, HBC does not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.
