Hudson Bay aims to ‘unleash’ real estate values

Plan must deal with wide Canadian price variations: Vancouver downtown site is valued north of $670M; Winnipeg’s flagship store appraised as worthless

By
Western Investor
October 21, 2020





Hudson Bay store in downtown Vancouver. | Leonard Whistler, BIV
— Hudson Bay store in downtown Vancouver. | Leonard Whistler, BIV

A plan by Hudson Bay Company (HBC) to unlock the real estate values of its vast property holdings could run into dramatic price differences among its holdings in Western Canada.

On October 19, the venerable retailer, founded in Canada in 1670, announced it had formed HBC Properties and Investments (HBCPI), a dedicated real estate and investments business to “manage, maximize and enhance” the 40 million square feet of gross leasable space that HBC owns across North America.

Richard Baker, HBC’s executive chairman and CEO said, “This is an exciting phase of our company’s transformation and provides us with a significant opportunity to unleash the full potential of our real estate and investments business. Under this new organization, we will build upon our strong foundation of valuable real estate assets in key demographic areas. We will also continue our strong track record of maximizing our portfolio and generating value from these assets, as we did through the sales of the Lord + Taylor flagship building and our interest in European real estate assets,” He added, “HBCPI is well-equipped to further elevate and increase the value of our portfolio.”

HBCPI sold HBC’s Lord + Taylor building in New York City last year for $1.1 billion. It unloaded the company’s share of European assets for a reported $1.5 billion.

The plan to monetize real estate could include downtown locations in Vancouver, Edmonton and Winnipeg.

The 168,000-square-foot Edmonton store is slated to close this fall. The Winnipeg downtown store, once the HBC flagship outlet in Canada, is scheduled to close February 2021 after more than 125 years in business.

In Vancouver, HBC had a conditional agreement in 2018 to sell its downtown store at 674 Granville Street to RioCan Real Estate Investment Trust for $675 million, but the transaction failed to go through.

The site, which includes 767,000 square feet of land at the corner of West Georgia Street, is currently assessed at $251.6 million by BC Assessment.

As a comparison, the 650,000-square-foot Winnipeg downtown building was valued at zero in a January 2020 appraisal done by Cushman & Wakefield.

According to the appraisal, the building is worthless, but the site would likely be developed with retail and other commercial uses, such as offices or multi-residential development.

This would likely be the fate of other HBC downtown locations in Canada.

HBCPI now owns New York-based Streetworks Development, a large-scale property development division that specializes in mixed-use redevelopments.

“This new division focuses on creating multi-use spaces that feature a variety of services and experiences across the workplace, retail, residential and entertainment categories,” according to a HBCPI statement October 19.


Frank O'Brien is the editor of Western Canada's biggest commercial real estate newspaper, Western Investor, as well as a contributing editor at West Coast Condominium, real estate contributor to Business in Vancouver and a regular media commentator on real estate investment.
Copyright © Western Investor

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