Lord & Taylor: WeWork Startup Buys Iconic 5th Ave Building

HBC to sell Fifth Avenue flagship Lord & Taylor store

In a novelistic detail that handily illustrates the big shifts happening American business, Lord & Taylor's corporate parent is selling the department store's landmark Fifth Avenue flagship-to WeWork. "Immediately upon closing, these transactions are expected to significantly strengthen HBC's balance sheet, enhance our liquidity, and advance our core strategies by monetizing the Lord & Taylor Fifth Avenue building and increasing the productivity of key locations, which taken together, is expected to enable us to drive ongoing value creation".

New York's iconic Lord & Taylor department store is being turned into office space.

In addition, Rhone Capital will make $500 million equity investment in HBC in the form of eight-year mandatory convertible preferred shares. The stock has dropped 5 percent this year, and plunged by nearly half in the past two years.

Under the deal, Lord & Taylor will sell its almost 676,000 square-foot flagship to WeWork for $850 million after the 2018 holiday season. Under the deal, Lord & Taylor will consolidate its store operations into 150,000 square feet of the 650,000 square-foot building after the 2018 holiday season, and WeWork will move its headquarters to the building.

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HBC now anticipates minimal impact on its earnings from the sale of the Lord & Taylor Fifth Avenue building, which is many times less productive in comparison to the Saks Fifth Avenue flagship building.

In total, the transaction will reduce HBC's debt by $1.3 billion (1.6 billion Canadian).

A symbol of the grand old days of department store retailing has been sold to a fast-growing tech start-up that specializes in shared office space.

"When its Fifth Avenue flagship opened in February 1914, it drew 75,000 visitors, who were treated to music from a pipe organ on the seventh floor and could chose to dine in one of three restaurants on the top floor", according to the Times. The vacancy rate on Fifth Avenue, the heart of the city's high-end shopping district and home to the most expensive retail real estate in the world, reached a record previous year.

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