REIT Watch: Possible REIT Play Behind Hudson’s Bay Acquisition of Saks

on Jul 30, 2013

**US & North America**

**Hudson’s Bay Buying Saks Draws REIT Speculations** Tuesday July 30th: Yesterday luxury retailer Saks agreed to be bought by Canadian department store chain Hudson’s Bay Co for $2.4 billion (₤1.57 billion) in an all cash deal, bringing the creation of a mulled-over real estate investment trust much closer on the horizon. “The key to the deal is the ability to arbitrage the Saks-owned real estate into a Canadian REIT,” Perry Caicco, analyst at CIBC World Markets, wrote in a note to clients. The cash generated from a floatation of the new public REIT would be a way for Hudson’s Bay to pay down the debt assumed in financing the acquisition.

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Saks’ real estate includes a trophy property on Manhattan’s Fifth Avenue as well as 42 Saks Fifth Avenue stores and 66 outlet stores. Citigroup analyst Deborah Weinswig valued the fleet of stores at about $1.5 billion (₤980 million), including $805 million (₤526 million) for the much-desired New York location.
“HBC [Hudson’s Bay Co] will evaluate strategic alternatives to fully realize the substantial value from the

combined property portfolio including but not limited to the creation of a real estate investment trust,” Hudson Bay announced in a joint statement released Monday.
**Hong Kong**
**Fortune REIT to Acquire Shopping Centre for HK$8.5 Billion**
Fortune REIT, a real estate investment trust with a portfolio of retail shopping centres in Hong Kong, signed a memorandum of understanding with Cheung Kong Holdings to buy a shopping mall complex for HK$8.5 billion (₤716 million).

Fortune REIT would finance the acquisition of the Kingswood Ginza Property with HK$5.09 billion (₤429
million) in loans and by issuing HK$764 million (₤64 million) of new equity. The acquisition is expected to be yield-accretive and provides strong growth potential through asset enhancement initiatives.
Fortune REIT, which has 16 malls in Hong Kong, is looking to buy more properties in the city, Justin Chiu, chairman of the REIT’s manager and also an executive director for Cheung Kong, said in a July 16 briefing in Hong Kong.

!m[Fortune REIT to Buy Shopping Centre for HK$8.5 Billion](/uploads/story/4447/thumbs/pic1_inline.jpg)
**IGB REIT Reports Q2 Net Profit of RM50.72 Million**
IGB REIT, an owner and operator of Mid Valley Megamall and The Gardens Mall in Kuala Lumpur, posted net profit of RM50.72 million (₤10.2 million) in the three months ended June 30. Revenue in the period came out at RM107.05 million (₤21.6 million) while earnings per share were RM0.0149.
For the first half of the year the REIT delivered earnings of RM100.03 million (20.19 million) on the back of RM208.43 million (₤42 million) in revenue. As of June 30 the market value of Mid Valley Megamall and The Gardens Mall remained at RM3.5 billion (₤707 million) and RM1.2 billion (₤242 million), respectively.
**Hudson’s Bay Co’s share price was C$17.50 as of 30.07.2013, 14.36 BST.**
**Saks’ share price was $15.96 as of 30.07.2013, 14.36 BST.**
**Fortune REIT’s share price was HK$7.12 as of 30.07.2013, 14.36 BST.**


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