HBS Global Properties announces the sale of $533 million of equity to three new investors

New investment values HBS Global Properties’ portfolio at US$4.5 billion(1)(2)

NEW YORK, LOS ANGELES & COLOGNE, Germany, 2015-11-18 — /EPR Retail News/ — (All amounts in US dollars) – HBS Global Properties, the real estate joint venture between Hudson’s Bay Company (“HBC”) (TSX: HBC) and Simon Property Group Inc. (“Simon”) (NYSE: SPG), is pleased to announce the sale of $533 million of equity, previously held by HBC, to three new investors.

The third party investment of $533 million values HBS Global Properties’ portfolio at $4.5 billion(1)(2), based on a blended capitalization rate of 5.90%. The investment is comprised of individual investments from the following premier real estate investors:

  • $250 million equity investment by Ivanhoé Cambridge;
  • $150 million equity investment by Madison International Realty; and
  • $133 million equity investment by a large U.S. pension.

HBC received all proceeds from the transaction. As a result of this transaction and the expected contribution of Simon Property Group’s $100 million commitment for tenant improvements, the pro forma ownership of HBS Global Properties will be held approximately as follows. All partner equity has been valued at a 5.9% capitalization rate:

  • 63% by HBC;
  • 13% by Simon Property Group;
  • 11% by Ivanhoé Cambridge;
  • 7% by Madison International Realty; and
  • 6% by a large U.S. pension.

“This investment highlights the value of our existing portfolio of properties. We are excited to combine the expertise of our new investors with our team to continue to grow our portfolio through anticipated accretive acquisitions in the United States and Europe,” said Lee Neibart, Chief Executive Officer of HBS Global Properties. “HBC’s collection of leading retail banners has the opportunity to serve as attractive tenants for a range of retail opportunities which we believe affords HBS Global Properties a significant competitive advantage.”

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.

With the recent acquisition of 41 GALERIA properties, HBS Global Properties now owns an international property portfolio of 83 marquee retail locations across the United States and Germany, including Saks, Lord & Taylor and GALERIA Kaufhof flagship department stores in Berlin, Beverly Hills, Cologne, Dusseldorf, Frankfurt, the greater New York area, and other metropolitan and suburban centers. HBS Global Properties has a mandate to pursue attractive credit tenant, net-leased and multi-tenanted retail buildings in the United States and Europe.

As appropriate, HBS Global Properties may sell new equity, the proceeds of which could be used to fund future acquisitions.

(1) Assumes a EURUSD exchange rate of 1.07
(2) Represents the value of the properties after all transactions are completed, including the post-closing acquisition of certain German real estate properties and the minority interest related to the Kaufhof transaction, expected to occur within 5 months.

For HBC Shareholders – Forward Looking Statements

Certain statements made in this news release constitute forward-looking statements within the meaning of applicable securities laws, including, without limitation, statements regarding the pro forma equity interests of HBC and other investors in HBS Global Properties, future anticipated accretive acquisitions by HBS Global Properties and the potential future sale of new equity of HBS Global Properties. The words “may”, “will”, “would”, “should”, “could”, “expects”, “plans”, “intends”, “trends”, “indications”, “anticipates”, “believes”, “estimates”, “predicts”, “likely” or “potential”, or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements. Forward-looking statements are based on current estimates and assumptions made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that it believes are appropriate and reasonable in the current circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct.

Although HBC believes that the forward-looking statements in this news release are based on information and assumptions that are current, reasonable and complete, these statements are by their nature subject to a number of factors that could cause actual results to differ materially from management’s expectations and plans as set forth in such forward-looking statements for a variety of reasons. Some of the factors – many of which are beyond HBC’s control and the effects of which can be difficult to predict – include, among others: (a) the possibility that the anticipated benefits from HBC are not realized; (b) the risk that HBS Global Properties will not be able to expand and diversify its assets or effect a future monetization transaction for shareholders of HBC; and © credit, market, currency, operational, liquidity and funding risks generally, including changes in economic conditions, interest rates or tax rates.

HBC cautions that the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect its results. For more information on the risks, uncertainties and assumptions that could cause HBC’s actual results to differ from current expectations, please refer to the “Risk Factors” section of HBC’s Annual Information Form dated April 30, 2015, HBC’s second quarter Management Discussion & Analysis dated September 10, 2015, as well as HBC’s other public filings, available at www.sedar.com and at www.hbc.com.

The forward-looking statements contained in this news release describe HBC’s expectations at the date of this news release and, accordingly, are subject to change after such date. Except as may be required by applicable Canadian securities laws, HBC does not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.

Media Contact

HBS Global Properties

Tiffany Bourré
Phone: (905) 595-7184
Email: tiffany.bourre@hbc.com

SOURCE: Hudson’s Bay Company