Hudson's Bay Co. enjoyed its maximum value gain within a 16 month period after Chairman Richard Baker, the Saks Fifth Avenue owner, gave hints that he may make public the real estate assets. If this is done, it will unlock value for this Canadian retailer. This will happen with the decline in same store sales. In a tete-a-tete with analysts on April 5, Baker exhibited never before sense of urgency when questioned about real estate plans to be executed by him. He knows that interest rates in the United States can only go up. From the time Hudson's Bay partnered with REITS in Canada and the United States, an Initial Public Offering or IPO of this investment trust made of real estate was always on the cards. REITS and Hudson's Bay were put together to make joint ventures. In 2014, Baker said that he wanted to increase the size of his portfolio first prior to making an IPO.
Going towards IPO
Baker admitted that his company enjoys a highly valuable real estate portfolio. There are umpteen ways to monetize it. In an interview discussing his company's quarterly results, he said that his company is doing everything it can to IPO the real estate portfolio in both the United States and in Canada too.
Baker has concentrated on transforming merchants into vehicles for real estate. Saks Inc. was snapped up by Hudson's Bay in 2013. The latter also consented to purchase Galeria Kaufhof stores for Metro in 2015. The amount of money which changed hands in the transaction? Three billion United States dollars. The Toronto headquartered firm then went to form two joint ventures. The partners were RioCab Real Estate Investment Trust and Simon Property Group. The 2015 inked deal was valued at approximately $3.4 billion. The Kaufhof stores further upped the value of the properties.
Hudson's Bay stocks went up 8.3 percent to touch C$10.50 during early hours of trade. This is the steepest intra-day increase from November 2015. Earlier, the same stock went up by 11 percent. According to Baker, investors from third parties had made their own valuations and arrived at the result: $4.8 billion, or in Canadian currency C$6.5 billion. He admitted that it would have been more profitable for him if he had done the IPO eight months before. He mentioned that there are a number of other ways to make a profit, like selling the building.