Saturday 14 December 2019

Value of iconic Saks Fifth Avenue store written down 60pc by owner

Saks' Fifth Avenue flagship store in New York
Saks' Fifth Avenue flagship store in New York

Natalie Wong and Sandrine Rastello

The value of Hudson's Bay Co's Saks Fifth Avenue flagship store has plummeted over the last five years, pulled down by retail woes and sliding rents in a high-profile Manhattan shopping district.

The building at 611 Fifth Avenue was recently appraised at $1.6bn (€1.5bn), according to a filing by the Toronto-based company, dropping almost 60pc from about $3.7bn (€3.34bn) five years ago.

The reasons for the decline include "the performance of the store relative to expectations in 2014, changes in market rents on New York's Fifth Avenue, and the changes in the retail landscape", the company said.

Last month, Hudson's Bay agreed to go private at a valuation of $1.45bn (€1.31bn) in a deal put together by chairman Richard Baker, who wants to reinvigorate the struggling retailer. But the proposal requires the approval of shareholders, and there's been debate among investors about the value of the company's real estate.

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Activist investor Jonathan Litt has argued that the company is undervaluing its "exceptional assets" and last year he said the landmark building on Fifth Avenue should be sold.

Hudson's Bay, in its attempts to round up support for Mr Baker's proposal, went to great lengths on Tuesday to defend the appraised value of its properties, releasing a report that ran more than 200 pages on the Saks building alone.

CBRE, which conducted the appraisal, concluded the building was worth $1.6bn as a flagship for Saks and that value of the property would drop if the company pursued a redevelopment project.

A representative for a special committee of the Hudson's Bay board, the group that commissioned the appraisal, declined to comment.

Hudson's Bay is spending about $279m (€252m) to upgrade the Saks store.

That includes a revamp of its handbag department on the main floor, where an elevator equipped with LED art leads to the beauty section. (Bloomberg)

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