February 11, 2019
Willkie advised HBC on the deal, which was part of a series of strategic transactions that demonstrated the value of HBC’s global real estate and its commitment to maximize productivity.
HBC (TSX: HBC) has closed the sale of its iconic Lord & Taylor Fifth Avenue building in Manhattan to WeWork Property Investors (WPI) for a total transaction value of $850 million. The deal was first announced in October 2017 as part of a series of strategic transactions with WeWork Companies, Rhône Capital and an affiliate of WeWork Property Advisors, a joint venture between WeWork and Rhône, to 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.
With the closing of this transaction, HBC has eliminated the approximately $400 million Lord & Taylor mortgage and has reduced borrowings under its asset-based revolving facility. WeWork exercised its option to convert $125 million of the transaction value into a preferred equity interest in the building held by HBC through a joint venture structure. The transaction reinforces HBC’s ability to identify undervalued real estate investments, enabling it to strengthen its retail business and unlock the value of real estate assets.
HBC is a diversified retailer focused on driving the performance of high quality stores and their omnichannel offerings and unlocking the value of real estate holdings. Founded in 1670, HBC is the oldest company in North America. HBC's portfolio today includes formats ranging from luxury to premium department stores to off price fashion shopping destinations, with 350 stores and more than 45,000 employees around the world.
In 2018, Willkie advised HBC in its agreement with SIGNA Retail Holdings to combine HBC Europe with Germany’s Karstadt Warenhaus GmbH, creating Germany’s leading retailer with annual revenue in excess of €5 billion, and the sale to SIGNA of 50% of HBC’s German real estate assets to form a 50-50 real estate joint venture with SIGNA valued at €3.25 billion.
The multidisciplinary Willkie deal team included partners Gordon Caplan, David Drewes and Henry Cohn, and associates Jennifer Coffey and Julia Bahms.
See Willkie's October 24, 2017 announcement here.
