Lord & Taylor sells landmark Fifth Avenue store


In a novelistic detail that handily illustrates the big shifts happening American business, Lord & Taylor's corporate parent is selling the department store's landmark Fifth Avenue flagship-to WeWork. "Immediately upon closing, these transactions are expected to significantly strengthen HBC's balance sheet, enhance our liquidity, and advance our core strategies by monetizing the Lord & Taylor Fifth Avenue building and increasing the productivity of key locations, which taken together, is expected to enable us to drive ongoing value creation".

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The deal is expected to result in debt reduction of $1.26 billion and liquidity of about $870 million in USA dollars.

The deal also involves WeWork leasing space in HBC department stores, beginning with the upper floors of the Hudson's Bay locations on Queen Street in Toronto and Granville Street in Vancouver and Galeria Kaufhof in Frankfurt.

HBC now anticipates minimal impact on its earnings from the sale of the Lord & Taylor Fifth Avenue building, which is many times less productive in comparison to the Saks Fifth Avenue flagship building. The Fifth Avenue store between 38th and 39th streets has been home since February 24, 1914.

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"We believe the partnership with WeWork to redefine retailing and reactivate less productive space throughout the company's global real estate portfolio will put us in a leadership position and add significant value to HBC shareholders", M. Steven Langman, managing director of Rhône, said.

HBC has repeatedly claimed its real estate is worth three times more than its current market cap.

HBC's Baker credits WeWork with its ability to build active communities.

"Retail is changing, and the role that real estate has to play in the way that we shop today must change with it", WeWork co-founder and Chief Executive Adam Neumann said, the NYT reported.

WeWork in August announced that Japan's SoftBank Group made a $4.4 billion investment in the company. The Italian Renaissance building was specially designed for the retailer-part of the long march uptown over the 19th and early 20th centuries by the ascendant wealthy and the venues that catered to them, and one of many elaborate temples to commercial culture built in the era.