The owner of Saks Fifth Avenue is in the crosshairs of an activist investor.
Canada-based Hudson’s Bay Co., which owns the Lord & Taylor chain in addition to Saks, is getting pressured to either take itself private or sell its valuable real estate holdings, which a hedge fund claims could be worth four times the company’s current stock price.
Hudson’s Bay shares on the Toronto Stock Exchange surged nearly 15 percent to $10.17 Canadian in mid-day trades Monday.
The land holdings of Hudson’s Bay — controlled by New York real estate mogul Richard Baker — include Saks Fifth Avenue’s flagship on Fifth Avenue, which “is one of the most valuable locations not only in Manhattan, but in the United States,” according to Jonathan Litt of Land & Buildings Investment Management, a hedge fund that has taken a 4.3-percent stake in Toronto-based Hudson’s Bay.
“Is the best use of this location truly a department store?” Litt added in a letter to Hudson’s Bay’s board on Monday. “What about a hotel? Or office?”
“If there is a smarter and better use of any or all of the locations, stores should be closed and redeveloped and put towards their optimal use,” Litt wrote.
Hudson’s Bay — which recently ended talks to buy Neiman Marcus — said in a statement that it is “reviewing the letter and will respond in due course.”
HBC’s real estate is four times as valuable at $35 Canadian per share than the company’s opening share price of $8.88 Canadian on Monday, according to Litt’s letter.
“This drastic public markets mis-pricing 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,” Litt wrote.
His firm also agitated for change this month at mall developer Taubman Centers, which owns the Mall at Short Hills, but lost a shareholder vote.
Saks Fifth Avenue is undergoing a $250 million,…