October 24, 2017
Willkie advises HBC on a series of strategic transactions that demonstrate the value of HBC’s global real estate and HBC’s commitment to maximize productivity.
On October 24, Willkie client HBC (TSX: HBC) announced a series of strategic transactions with WeWork Companies (WeWork), Rhône Capital (Rhône) and an affiliate of WeWork Property Advisors (WeWork Property Advisors), a joint venture between WeWork and Rhône, which will create a multi-faceted strategic relationship designed to maximize the productivity and value of HBC’s global real estate assets and position HBC at the forefront of experiential retailing.
The complex cross-border transactions include:
- An equity investment by Rhône of $500 million in the form of 8-year mandatory convertible preferred shares, initially convertible into HBC’s Common Shares at $9.82 per share.
- The sale of the Lord & Taylor Fifth Avenue building to WeWork Property Advisors in a transaction valued at $850 million. The Lord & Taylor flagship store is expected to continue operations in the entire building through the 2018 holiday season. Thereafter the building is intended to be converted into WeWork’s New York headquarters, WeWork office space, and a redesigned Lord & Taylor store of approximately 150,000 sq. ft.
- Agreements with WeWork to lease retail space within select HBC department stores, including Galeria Kaufhof in Frankfurt.
HBC is a diversified global retailer focused on driving the performance of high quality stores and their all-channel offerings, growing through acquisitions, and unlocking the value of real estate holdings. Founded in 1670, HBC is the oldest company in North America. HBC's leading banners across North America and Europe include Hudson's Bay, Lord & Taylor, Saks Fifth Avenue, Gilt, Saks OFF 5TH, Galeria Kaufhof, the largest department store group in Germany, and Belgium's only department store group Galeria INNO.
WeWork is a community for creators, providing more than 150,000 members around the world with space, community, and services through both physical and virtual offerings. WeWork currently has more than 170 physical locations in over 56 cities and 18 countries around the world.
With over 20 years of investing experience, Rhône is a global alternative investment management firm with approximately $5.5 billion in assets under management. In addition to its real estate joint venture with WeWork, the firm focuses its private equity investments in market leading businesses with a pan-European or transatlantic presence and global growth opportunities.
The cross-border, multidisciplinary Willkie deal team included partners Gordon Caplan, Russell Leaf, Michael Brandt, David Drewes, Henry Cohn, Hillel Jacobson, Michael Katz, Patrick Meiisel, David Tarr, Stefan Jörgens and Georg Linde, counsel Jonathan Konoff, and associates Guy Inbar, Caleb Vesey, Adam Remo, Jennifer Coffey, Rose Ohanesian, Andrea Hwang, David Blassberger, Patrick Wacker, Wolfgang Münchow and Miriam Wolffsky. This is the latest in a series of strategic transactions in which Willkie has represented HBC as the company has expanded in the United States and into Europe.
