June 21, 2018 / 2:28 PM / 2 years ago

Activist investor Land & Buildings resumes criticism of Hudson's Bay

TORONTO, June 21 (Reuters) - Activist investor Land & Buildings on Thursday resumed its criticism of department store owner Hudson’s Bay Co, urging it to correct its underperformance and extract value from its substantial real estate holdings.

The hedge fund, which has been agitating for change at HBC, agreed in December to cease public statements about the company until its annual shareholder meeting on June 12. That was in exchange for concessions from the company in a deal with Rhone Capital that the fund said gave the private equity firm preferential treatment.

Now, Land & Buildings Founder Jonathan Litt is again pushing the company to boost its share price, which is significantly below the value of its assets following a run of earnings disappointments, and to take steps to monetize its prime property assets.

The fund held a stake of nearly 5 percent in the company last July and hasn’t provided an updated figure for its holding.

Hudson’s Bay didn’t immediately respond to a request for comment.

“It has become clear that the familiar refrain blaming the challenges of the macro retail environment no longer rings true,” Litt said in a letter to shareholders, comparing the company’s share performance with those of its peers.

Hudson’s Bay shares are up 3.9 percent this year, compared with a 39 percent gain in the S&P 500 department store index, used as a benchmark because of the store’s big presence in the United States. On Thursday, shares fell 0.8 percent to C$11.68 at 9:57 a.m. in Toronto trading.

The company has taken some steps to turn its performance around. In December, it sold its flagship Lord & Taylor building in Manhattan, and received a $500 million investment from Rhone as part of that deal. It said this month that it would close that store and up to nine others to cut costs and operate more efficiently.

Hudson’s Bay has also signed a conditional agreement to sell its eponymous flagship store property in Vancouver, a person familiar with the matter told Reuters in May.

Litt also flagged concerns over the $54.8 million pay package awarded to Executive Chairman Richard Baker, which was approved by shareholders but opposed by large investors including the Ontario Teachers’ Pension Plan and the California Public Employees’ Retirement System.

“Land & Buildings continues to have significant doubts that HBC is interested in listening to its shareholders and taking the steps needed to truly realize the imbedded value of its real estate portfolio,” Litt said in the letter.

Hudson’s Bay’s real estate is worth C$31 a share, Litt said.

$1 = 1.3315 Canadian dollars Reporting By Nichola Saminather; Editing by Bernadette Baum

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