HBC investor turns up heat on retailer to tap into value of its real estate
Land & Building pushes for exit from Europe, renewed focus on Canadian roots
A shareholder of Hudson's Bay Co. is repeating it call for the retailer to tap into the value of its real estate holdings and says it may try to oust members of the company's board of directors.
Stamford, Conn.-based Land & Buildings Investments Management LLC , which owns almost fiver per cent of HBC's outstanding shares, said it recently met with company leaders over its previous call for real estate holdings to be sold. The investor said Monday in an open letter that it is unsatisfied following that meeting and said it may move to call a special meeting of shareholders to remove some directors if HBC doesn't come up with a plan.
Land & Buildings said HBC's real estate is valued at $35 a share, while the retailer's stock was trading Monday at $10.76 on the TSX.
"[HBC] must act expeditiously before value continues to deteriorate by consolidating its operations and monetizing its real estate to capitalize on the disconnect between the company's current share price and underlying real estate value," Land & Buildings said in its letter.
The investor also offered its own plan, which includes:
- Re-vamping HBC's Saks Fifth Avenue flagship location by shrinking the department store and redeveloping the property.
- Going back to its Canadian roots by selling the Saks Fifth Avenue banner
- Exiting Europe by selling its Galeria Kaufhof real estate, operations or both.
- Getting money from real estate joint ventures.
- Tightening up control on capital expenditures.
- Evaluating strategic alternatives to boost long-term shareholder value, such as a management privatization.
"If we do not see substantive progress on a plan to close the gap to underlying asset value," the investor said it will have no choice but to push for a special shareholder meeting.
HBC said it welcomes feedback from all of the company's shareholders, "and look forward to continued dialogue with Land & Buildings."
"We are committed to our strategy of both operating leading retail banners and also creatively unlocking the value of our associated real estate holdings. We continue to transform our business to optimize performance and pursue growth in North America and Europe," the company said in a statement emailed to CBC News.
HBC said it has a "strong history of successfully realizing underlying value of the company's real estate assets, and has generated more than $3 billion in cash proceeds through these efforts."