Toronto–Hudson’s Bay Company said today it has sold some $533 million of its equity in HBS Global Properties, HBC’s real estate joint venture with Simon Property Group, to three third party investors.
Proceeds from the equity sale, together with cash on hand, will be used to reduce HBC’s debt $1.08 billion to $500 million. HBC will still retain 63% ownership in HBS Global Properties.
“We are thrilled to have three premier real estate investors join HBS Global Properties, bringing with them significant real estate investment expertise. These transactions further demonstrate the substantial value of our real estate portfolio, and our ability to unlock this value for our shareholders,” Richard Baker, governor and executive chairman of HBC, said in a release. “We look forward to working with our partners to significantly expand and diversify the assets of HBS Global Properties. We believe this will lead to an increase in the value of HBS Global Properties and therefore benefit HBC shareholders.”
This equity sale follows the HBC’s announcement in September that it expected to sell between $400 and $600 million of equity in HBS Global Properties. The total third party investment of $533 million values HBS Global Properties’ portfolio at $4.5 billion based on a blended capitalization.
The $533 million equity sale is comprised of individual investments from Ivanhoé Cambridge ($250 million); Madison International Realty ($150 million); and a $133 million equity investment by a large U.S. pension, HBC said.
As part of the transactions, Ivanhoé Cambridge will be granted representation on the board of directors of HBS Global Properties, raising the total number of board seats from four to five.
The new investment values HBS Global Properties portfolio at $4.5 billion.