On Monday, shares of Hudson’s Bay Company bounced very nearly 16 percent after a minority shareholder said the retailer ought to consider offering its real estate or consider a privatization by administration.
HBC shares were ahead by $1.40 at $10.28 on the TSX in morning trading.
The shareholder, Stamford, Conn.- based Land and Buildings Investment Management, LLC, which has a 4.3 percent in HBC, issued a letter Monday expressing there is “substantial untapped real estate value embedded in the company.”
The firm has viewed HBC’s endeavors to hit a merger deal with Neiman Marcus or Macy’s, and has seen the company as of late report a rebuilding as it tries to manage changes forces in the retail market. The Land and Buildings founder and chief investment officer Jonathan Litt said.
“We believe this sequence of events underscores a core fact: the path to maximizing the value of Hudson’s Bay lies in its real estate, not its retail brands,” Land & Buildings said in its letter. “In our view, the whole time the company’s management has been struggling to navigate this complicated maze of [mergers and acquisitions] options, the answer lies in its own real estate portfolio.”
The shareholder called HBC a “diamond in the rough” that possesses the larger part of its real estate, which Land and Buildings said could be worth four times the offer price of HBC, which shut Friday at $8.88 on the TSX. Land and Buildings said HBC has pegged the estimation of its land at $35 a share.
The financial specialist went ahead to state that regardless of the possibility that the land is worth a large portion of the HBC evaluate, the retailer’s offers would even now be worth twofold its Friday shutting share cost.
“This drastic public markets mispricing is why Hudson’s Bay should evaluate all strategic options to maximize value for shareholders, including monetization or repurposing of real estate or the company being taken private by management,” Land & Buildings said.
The activist financial specialist said HBC’s Saks Fifth Avenue flagship store in New York City was as of late assessed at $16 per share, net of debt.
HBC said it is reviewing the letter and will issue a response later.