Litt's Land And Buildings Ups Pressure On Hudson's Bay

Jul 31 2017 | 10:09pm ET

Jonathan Litt’s activist hedge fund manager Land and Buildings has upped the pressure on Canadian retailing giant Hudson's Bay, threatening in a new letter to shareholders that a proxy war could await if the company doesn’t take concrete steps to increase shareholder value.

Land and Buildings unveiled a 5% stake in the company back in late June, saying the firm should explore going private, selling assets such as its Saks Fifth Avenue brand or otherwise monetizing its massive real estate holdings. At the time, the Stamford, Connecticut-based hedge fund expressed frustration that despite compelling value in the firm’s real estate holdings and an estimated C$5 billion valuation for the Saks brand, Hudson Bay’s share price had fallen sharply from its mid-2015 levels above C$28. 

In the letter, Litt called for a full review of capital expenditures and noted that without significant progress in better unlocking the estimated $10 billion in real estate assets on Hudson Bay’s balance sheet, he would consider calling a special meeting of shareholders in order to nominate a slate of new board nominees. 

Back in June, news of Litt’s position (and his C$35 estimated per-share value) propelled Hudson Bay’s shares sharply upwards. This time, the stock ended the day flat at C$10.67 after rising just under 3% in early trading. The stock has fallen nearly 20% so far in 2017.

For its part, Hudson’s Bay said in a statement that it welcomes feedback from all shareholders and remains committed to both a retail strategy and “creatively unlocking the value of our associated real estate holdings.” 

Prior to founding Lands and Buildings in 2008, Litt was a top gaming and lodging analyst for Citigroup. He started the company in the immediate aftermath of the financial crisis to take advantage of distressed pricing in the industry. Aptly-named Land & Buildings specializes in publicly traded real estate and real estate related securities. 

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