Hudson's Bay Co. HBAYF

RE:RE:RE:RE:RE:RE:RE:RE:Obvious response from Signa

[seatleslim]

Yes it was managements estimate and it was based SOLELY on real estate. 

In turn there were four categories of real estate: Saks flagship, L&T flagsip (both wholly owned), the RioCan JV, and the Simon JV. The prices used in the jv’s were Simply the prorated prices paid by the  JV partners a couple of years ago.   Remember that the Saks locations are typically in “A” malls and both simon and riocan are only interested in “A” assets.  The values on the traditional mall properties might be down a little, but the values on anything urban and specially the wholly owned properties is probably up.  The bid for Kaufhof certainly supports that. 

The two flagships are lender appraisals, but based only as retail assets and not necessarily highest and best use. So while the Source of the NAV estimate is in fact management, the is a transparently sound basis for that estimate.  Additionally it is not like the real estate assets are subjected to high leverage that would throw the estimate around based on small changes in assumptions.  I believe it’s a pretty good number and today would be within 10% and maybe even a little higher. Remember the Kaufhof bid imputes some value on the retail albeit low.  Managements estimate contained zero for retail.  My point is that HBC Board has really opened its kimono so to speak. That is why Signa showed up. Signa knows full well that there is an obligation by the board to at least pretend that it is working in the best interest of shareholders. Look for Signa to now prove up the “Funding” question. 

The stock really ally is too cheap. At worst it should be selling at a 10 or 15% premium to the exercise price in the WeWork deal. I don’t think it’s naive to say there is big time pressure on the Board. I agree that Land and Building is not calling the shots, but they are shining a light on these guys at a vulnerable moment.