WeWork Closes $850M Purchase of Lord & Taylor Building in Manhattan from HBC
NEW YORK CITY — Global coworking provider WeWork has closed on its $850 million purchase of the Lord & Taylor Building, a landmark Midtown Manhattan asset located at 424-434 Fifth Ave.
The seller, Hudson’s Bay Co. (HBC), is the parent company of Lord & Taylor, which for 104 years had its flagship store on the ground level of the 11-story building. The retailer closed its doors and its famous Fifth Avenue display windows after the 2018 holiday shopping season.
HBC and WeWork Property Investors (WPI), WeWork’s real estate division, originally announced the purchase back in October 2017. The final purchase price is consistent with the previously disclosed terms of the transaction.
WeWork is in the midst of overhauling the property. The New York-based company is collaborating with architect BIG to restore the Lord & Taylor Building’s display windows on the street level, two-story entrance and its rooftop terrace. WeWork is preserving the basement, first and second floors for retail.
“Preserving one of the most iconic buildings in New York City’s history is a monumental opportunity,” says Bjarke Ingels, founding partner at BIG. “Our design will honor Lord & Taylor’s past, building toward the future and ensuring this landmark continues to be a central figure in our city for years to come.”
WeWork exercised its option to convert $125 million of the transaction value into a preferred equity interest in the building held by HBC through a joint venture structure.
With the closing of the sale, HBC has eliminated the approximately $400 million mortgage on the property and has reduced borrowings under its asset-based revolving facility.
“We’ve fortified our balance sheet in short order,” says Richard Baker, governor and executive chairman of HBC. Baker said that HBC has paid down approximately $754 million in debt since the end of fiscal year 2017.
Founded in 1670, HBC claims to be the oldest company in North America. The Toronto-based company’s portfolio spans 350 stores staffing more than 45,000 employees around the world. HBC’s leading businesses across North America include Lord & Taylor, Saks Fifth Avenue, Hudson’s Bay and Saks OFF 5TH.
WeWork began 2019 with more than 400,000 members at 425 locations in 100 cities across 27 countries. After closing on a $6 billion investment from SoftBank last month, WeWork is valued at $47 billion.
— John Nelson