HBC has agreed to sell its downtown Toronto flagship retail complex and the Simpson's Tower located at 401 Bay Street to an affiliate of The Cadillac Fairview Corporation Limited for a purchase price of $650 million. HBC will lease the entire retail and office complex back for a base term of 25 years with renewal options for a term just under 50 years.
Proceeds of the transaction will be used to reduce the Company's debt and invest in growth initiatives. The transactions are subject to customary conditions and are expected to close on or about February 25, 2014. As part of this transaction Saks has also agreed to lease space in Toronto's Sherway Gardens for a full-line Saks store.
"We're very pleased to announce this agreement with Cadillac Fairview, which clearly demonstrates the tremendous value of our dynamic real estate portfolio," stated Richard Baker, HBC's Governor and Chief Executive Officer. "This sale-leaseback provides HBC with resources to deleverage and accelerate investment in our growth initiatives. We continue to explore other options to create additional value through the power and potential of our real estate assets."
"The opening of our first Saks Fifth Avenue stores at Toronto Eaton Centre and Sherway Gardens brings Canadian shoppers the full array of luxury fashion collections and exceptional service for which Saks is renowned," continued Mr. Baker. "We especially appreciate Cadillac Fairview's strong commitment to the Queen Street location and adjacent Toronto Eaton Centre, providing us with the opportunity to be a major part of Toronto's premier luxury shopping destination."
"We are excited to be the first to bring Saks to the Canadian market as part of this iconic property in the heart of downtown Toronto," said John Sullivan, President and Chief Executive Officer, Cadillac Fairview.
"We believe there is significant and untapped opportunity for retailers such as Saks in Canada. Through this agreement with HBC we are thrilled to expand the luxury offering in downtown Toronto and at Sherway Gardens, enhancing the superior customer experience for which Toronto Eaton Centre and Sherway are renowned."
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