Description

(all currency in CAD unless noted otherwise)
(Defined terms: HBC = the parent company, HBS = the US REIT, Riocan JV = the Canadian REIT, Opco = the retail business which leases property from the REITs)

For those who have looked at this name in the past, I will first highlight that the fact-pattern supporting the thesis has improved dramatically over the past several months, notwithstanding some recent broad weakness in US retail.  Since its IPO in Nov-12, the story of Hudson’s Bay Company (HBC) has centered on its real estate and the ability to monetize it through a REIT conversion.  Investors grew impatient with the stock in 2013/14, and it now feels all but forgotten.  This is remarkable, given mgmt has been quietly executing on every aspect of their strategic plan; and the real estate value of HBC’s premier storefront assets has been validated and partially monetized through a REIT conversion and third party investments by real estate investors into that REIT.  To date, third party real estate investors have invested over US$1bn in new capital to acquire from HBC ~37% of its US REIT and ~20% of its Canadian REIT.  This makes HBC unique from the body of other SOTP theses in the market, as the valuation of individual pieces of HBC’s SOTP are being actively validated by outside investors; and HBC is moving toward a wholesale monetization of these assets over the next few years.   

This opportunity exists in-part because retailers have been going through a soft patch recently, making it a controversial sector.  A perfect storm of headwinds, including warm weather, a strong dollar, fashion trends (athleisure), off-price competition, and some secular pressures to traffic have combined to make this 2015 holiday season a challenging one for retail.  HBC's US business was not immune to the slow-down in 3Q, and the resulting uncertainty in the industry caused mgmt to take down their guidance for FY'15 and FY'16.  The strong USD hit Saks' business and its tourism exposure in 'gateway markets', while the terrorist attack on Paris and subsequent manhunt in Belgium impacted the Kaufhov business.  I believe a more conservative approach to inventory and guidance is prudent on the part of mgmt, and many of the current headwinds will prove transitory.  Fortunately, HBC continues to grow its business organically, and has better geographic and currency diversification than any of its peers.  What's more, the retail business ("Opco") is a relatively small piece (<20%) of HBC’s NAV, with the majority of NAV comprised of class-A real estate assets that are being actively monetized.  Ultimately, the stock's reaction to the guide-down was violent and over-done.  With the lowered guidance priced-in, HBC offers an incredible value and long-term growth story.

Based on the valuations that third parties have invested in HBC’s REITs over just the past couple months, and assuming a 6x EBITDA multiple for the retail business, HBC has NAV of nearly $45/sh, yet trades at below $17/sh; this means you’re getting the retail business for free AND the real estate at a ~55% discount.  Even assuming a 25% discount to NAV, HBC has ~100% upside.  Contrary to the misleadingly high headline leverage, Opco debt excluding real estate mortgages is just ~2.5x EBITDA.

Mgmt has proven themselves to be brilliant in their transaction structuring, and they have lived up to everything they said they were going to do along the way.  With Opco leverage at just ~2.5x EBITDA and plenty of dry powder left (to monetize) in the equity of its majority-owned REITs, mgmt has many levers to continue creating value through accretive transactions.   Neiman Marcus Group’s (NMG) IPO is likely off the table now, and NMG could present an ideal next acquisition candidate that would add premier retail banners (Neiman Marcus and Bergdorf Goodman) and valuable real estate to HBC’s portfolio (~60% of Neiman Marcus GLA is owned).  WWD has reported that Richard Baker has expressed interest in this asset in the past.  A debt and equity-financed deal with NMG could possibly be consummated concurrently with a US listing of HBC, providing NMG’s sponsors with liquidity and incremental upside.  Over the longer term (1-3yrs), the further reduction of HBC’s ownership interests in its REITs (and eventual IPO) will highlight the value of Opco and its real estate and the tremendous discount the stock now trades at relative to NAV.       

SITUATION OVERVIEW

I believe this opportunity exists for several reasons: (i) the stock is closely held and trades on TSE, (ii) the stock has traded down due to transitory softness in retail, even though the current price already implies negative value for Opco, (iii) HBC’s headline valuation multiple and leverage have historically appeared relatively high due to property mortgages and the consolidation of its REITs, and (iv) the thesis has historically been complicated and somewhat ambiguous given uncertainty around real estate monetization.  However, the story has become a lot simpler as a result of several developments over the past twelve months.

Nov-14: HBC puts a new US$1.25bn mortgage on its Saks flagship store on 5th Avenue, and has the building independently appraised at US$3.7bn.  This transaction validated that value of HBC’s most valuable real estate asset, and I believe the US$3.7bn valuation to be appropriate (see “REAL ESTATE” section below).  Though even applying a meaningful discount to the value of this building only marginally impacts the stock’s current tremendous discount to NAV.  

Feb-15: HBC forms two REITs, one Canadian and one US, to hold all of its real estate excluding the Saks and L&T flagship properties on 5th Ave.  Simon Properties Group (SPG) committed to acquire 20% of the US REIT, named HBS Global Properties ("HBS"); and RioCan committed to acquire 20% of the Canadian REIT (the “RioCan JV”).  These transactions were completed at 6.1% and 5.1% cap rates, respectively. (http://investor.hbc.com/releasedetail.cfm?ReleaseID=898207; http://investor.hbc.com/releasedetail.cfm?ReleaseID=898194;http://investor.hbc.com/releasedetail.cfm?ReleaseID=898193)     

Jun-15: HBC’s stock began to sell-off on press reports that a deal was in the works for HBC to acquire Germany’s leading department store operators, Kaufhov, as investors incorrectly assumed that HBC would be forced to issue equity (through a secondary offering) in order to complete the transaction.  In fact, HBC issued no equity and instead financed the transaction through debt and the sale of HBS’ REIT equity at a sub-6% cap rate.  Kaufhov was a perfect acquisition for HBC, given its market dominance, premier store-front real estate, and healthy German economy.  HBC mgmt was savvy and innovative in its financing of the transaction with REIT equity valued at a sub-6% cap.  (http://investor.hbc.com/releasedetail.cfm?ReleaseID=917844)

Sep-15: HBC closes on Kaufhov and provides FY’15 and FY’16 guidance above Street.  (http://investor.hbc.com/releasedetail.cfm?ReleaseID=934427)

Nov-15: Ivanhoe Cambridge, Madison International Realty, and an undisclosed US pension invest US$533mm to acquire stakes in HBS at a 5.9% cap rate.  This transaction further validates the value of the HBS REIT, and confirmed mgmt was spot-on in its ability to finance Kaufhov with its REIT’s equity.  This transaction is perhaps the most important development to date in validating the NAV and SOTP thesis for HBC.  (http://investor.hbc.com/releasedetail.cfm?ReleaseID=943273)

Dec-15: HBC reports 3Q'15 revenue and EBITDA above Street, but reduces its prior guidance for FY'15 and '16 to reflect a soft retail environment, citing the strong USD's impact on tourism and the impact on Kaufhov of the terrorist attack on Paris.  HBC's SSS for 3Q were +12.9%, and +2.0% on a constant-currency basis.  The legacy banners performed ahead of expectations, with DSG (Hudson's Bay and L&T) comping up +5.1%, while Saks and OFF5TH performed below expectations at -3.6% and +2.8% SSS, respectively.  Kaufhov performed well with SSS +6.6% for the one month since the acquisition closed.     

Mgmt will continue to diversify the tenant base at HBS and the RioCan JV through accretive acquisitions like Kaufhov, while at the same time growing the productivity of its retail business.  Potential near-term catalysts include (i) an acquisition of NMG or another real estate-rich retailer, (ii) further monetization of HBC’s stake in its REITs though sales of equity in HBS and/or the RioCan JV to real estate investors, and (iii) a US listing which would bring much needed liquidity and Wall Street attention to this under-followed and severely under-valued stock.  Longer-term (1-3yrs), after it has further diversified the rent roll, HBC is moving toward an IPO of HBS and the RioCan JV that will highlight the tremendous discount to NAV that HBC’s stock price currently reflects.

Recent weakness in the stock has been the result of a controversial retail environment and the reduction to guidance as a result of increased uncertainty in the industry.  A perfect storm of headwinds, including fashion (athleisure), warm weather, off-price competition, a strong dollar, and some secular pressures to traffic have combined to make this 2015 holiday season a challenging one for retail.  This fundamental weakness has caused an unprecedented sell-off in department store stocks (M/JWN/DDS).  Since July, these stocks are down 25-50%.  HBC has traded down in sympathy with these names even though less than 20% of NAV is comprised of Opco, and HBC already trades at a ~60% discount to NAV (i.e., the stock implies negative value for the retail business).  The market's focus on transitory weakness in retail and the underperformance of peers, has caused it to completely ignore the pivotal developments with regard to HBC’s real estate over the YTD.       

BUSINESS OVERVIEW

HBC is one of the world’s largest department store operators that most people have never heard of, but you almost certainly know their banners.   Until recently, HBC was comprised of (i) Saks Fifth Avenue and Off5th which were acquired by HBC in 2013, (ii) Lord & Taylor (“L&T”) which is focused primarily in the northeast US, and (iii) Hudsons Bay which is Canada’s leading department store operator and includes a Home Outfitter banner as well.  In June 2015, HBC acquired Kaufhov, which is Germany’s largest department store operator with 119 locations and 31% market share.  Previously a relatively small subsidiary of a German conglomerate, Kaufhov is uniquely well-suited for HBC given its market leadership and large portfolio of premier real estate located in prime downtown locations of major cities.  With the merger of Kaufhov, HBC now is well diversified geographically, across the US (44% of sales), Germany and Belgium (33%), and Canada (23%).

HBC’s current Chairman, Richard Baker, formed HBC through the acquisition of L&T (2006) and Hudson’s Bay (2008) by his private equity shop, NRDC.  Baker’s career is deep in real estate property development and management, and he continues to own National Realty & Development Corp with his father, Robert Baker.  Baker served as CEO of HBC until Jan-15, when Jerry Storch stepped into the role, and Baker remains Chairman of the Board.  Storch’s background is in retail, previously at Toys”R”Us and Target.  HBC continues to be closely held, and mgmt is clearly committed to the long-term vision for the Company that they have articulated.  Mgmt and funds they control own over 30% of HBC stock.  Together with Abu Dhabi (Hanover Investments) and Ontario Teachers, ~60% of shares are closely held.                

HBC reports same-store sales growth (SSS) in four segments: (i) DSG, which includes Hudson’s Bay and L&T, (ii) Saks, (iii) OFF5TH, and (iv) Kaufhov.  On a constant currency basis, the consolidated company has been comping low/mid-SD% with DSG growing mid-SD%, OFF5th growing low-DD%, and Saks growing low-SD%, though growth has slowed in the US since the 3Q'15.  Hudson’s Bay is performing very well, and any negative impact from lower oil is not showing up in the numbers (likely due to geographic concentration in Ontario and Quebec).  L&T has historically struggled to find its place in the competitive landscape, but mgmt has indicated that initiatives to differentiate the banner are showing real progress and positively impacting DSG’s SSS.  Saks has been negatively impacted by the strong dollar and its impact on tourism, but will be lapping those headwinds soon.  OFF5TH has been driving strong SSS, and this concept has been mgmt’s primary store growth vehicle.  Currency is an ongoing tailwind for HBC given they report in CAD, and the USD and EURO have appreciated meaningfully against the CAD over the past year.    

Mgmt’s operational initiatives focus on (i) growing productivity at Saks, (ii) building its omni-channel presence across all concepts, (iii) selectively developing its real estate, such as its Saks flagship building on 5th Ave, and (iv) bringing Saks and OFF5TH to Canada and Germany.  On 12/3, mgmt announced four new Canadian OFF5TH locations, bringing the total number of announced locations for Canada to ten.  These new stores move HBC closer to mgmt’s target for up to 25 OFF5TH stores in Canada by 2018.  Mgmt also announced that it would open OFF5TH locations in large German markets by early-2017 at the latest.  Strategically, mgmt is focused on (i) acquiring strong retailers with real estate portfolios, and financing these acquisitions with debt and REIT equity, (ii) diversifying the tenant base of HBS and the RioCan JV, and (iii) ultimately taking its REITs public through IPO. 

SOTP

The foundation of the HBC thesis is in understanding the respective buckets of value that build to $45/sh of NAV.  What’s key here, is that the value of all of these buckets has now been validated by the private markets; and few assumptions are still needed in order to build the SOTP model.  Unlike other SOTP stocks in the market right now, many of which have had a rough year, the valuation of individual pieces of HBC’s SOTP have been validated by third party investments and monetization.  So, there’s no guessing game as to what individual assets are worth – the market has already told us.  And since mgmt has already demonstrated its commitment to realizing the full NAV of its SOTP, we don’t have to wait around hoping an activist will come along and compel mgmt to do ‘what’s right’ – they’re already doing it.      

There are only a couple key assumption you have to make here, now that there is an independent appraisal of the Saks flagships buildings and third parties have validated the value of the REITs: (i) what multiple to use for the retail business (mgmt uses 6.0x), and (ii) what cap rate to use for purposes of calculating rent on the Saks flagship and L&T flagship (mgmt usses 3.75% and 5%, respectively).  I have used mgmt's assumptions for the SOTP below.  Note: I do not ascribe any incremental value to 19 Kaufhov properties that were not contributed to HBS, though there is likely incremental value in these.  You can flex these assumptions per your views on the value of class A real estate, but the story is still the same: HBC’s stock is offering the retail business for free and the real estate at a big discount to NAV.  Based on the SOTP below, the stock has ~170% upside to current NAV.  
    

CAPITAL STRUCTURE

As a result of HBC’s unique structure and real estate holdings, its headline leverage has historically been wildly misleading due to its real estate mortgages and the consolidation of its REITs.  It is necessary to look at the REITs and owned real estate separately from the Opco.  Below, I have broken out the capital structure by each bucket (these tie to the SOTP table above).  This illustrates that leverage is moderate across the structure, and mgmt is efficiently using its balance sheet and real estate mortgages to enhance equity value.  Funded leverage on Opco is 2.5x, slightly above DDS/JWN and inline with M. 

THE REAL ESTATE

There are essentially three buckets of real estate owned (wholly or in-part) by HBC: (i) properties in the RioCan JV, (ii) properties in HBS, and (iii) the Saks and L&T flagship stores on 5th Avenue, which are still wholly-owned by Opco (they are not in the REITs).

The RioCan JV owns all 10 properties in Canada that were owned by HBC immediately prior to the formation of the REIT (i.e., only excludes Canadian properties that HBC leases from third parties) and 2 mall properties contributed by RioCan when the REIT was formed.  These properties comprise 4.2mm sqft of gross leasable area (GLA).

HBS owns all of the US properties that were owned by HBC immediately prior to the formation of the REIT (excluding the Saks and L&T flagships on 5th Ave), comprising 5.4mm sqft of GLA.  HBS also owns 41 of Kaufhov’s owned locations in Germany and Belguim, which comprises the majority of the value in Kaufhov’s real estate portfolio of 59 owned and partially-owned properties representing 16.6mm sqft of GLA. 

The Saks flagship store on 5th Ave is by-far HBC’s most valuable piece of real estate.  In Nov-14, it was appraised at US$3.7bn.  It is an iconic building with 650k sqft of GLA, situated on the most expensive stretch of retail real estate in the world.  Mgmt excluded this property from HBS when it was initially formed, along with the L&T flagship, as they see opportunities for further development and future monetization that exceed the value they could receive from these properties’ inclusion in the REIT today.  As part of its development plan, mgmt will invest US$250mm into the Saks building for a renovation that is commencing now and will be completed over the next few years.  The L&T flagship, located further south on 5th avenue, comprises 675k sqft of GLA and is valued by mgmt at ~US$600mm.     

 Saks/L&T Flagship Properties on 5th Ave:

Historically, the biggest push-backs on the HBC story have been that (i) the real estate value isn’t ‘real’, and/or (ii) the assumed lease payments are too high.  Third party validation of the real estate value in HBS and RioCan puts the first concern to rest.  Multiple real estate investors have made meaningful investments (amounting to >US$1bn) into the REITs at sub-6% cap rates. 

Regarding the assumed lease payments concern: now that HBS and RioCan have inked their master leases, the only remaining lease assumption is regarding the Saks and L&T flagship buildings on 5thAve, which are both still owned by Opco.  Given the Saks building comprises a meaningful portion of total NAV, I'll explore mgmt’s assumptions here.  Based on press reports, the property did US$700mm of sales in 2014 (see here: http://ny.racked.com/2015/9/11/9303429/saks-fifth-avenue-renovations-nyc) and US$620mm in 2012 (see here:http://www.crainsnewyork.com/article...).  At US$700mm of sales, mgmt’s assumed US$140mm of rent implies occupancy cost of exactly 20%, which is consistent with what retailers are paying for 5th Ave prime retail space.  As mgmt continues to improve productivity and the $250mm renovation of this property boosts traffic, sales from this location should push closer to US$1bn over the next few years.  At close to US$1bn of sales, the occupancy costs will be at a conservative mid-teens% level. 

With regard to the valuation of the Saks building, you can flex the cap rate if you think mgmt is being too aggressive.  I personally find mgmt's valuation to be in an appropriate range.  Ultimately though, even discounting the NAV of the Saks building by 50% will still result in a SOTP at $37/sh NAV (+120% versus current stock price).

I think ultimately, HBS will acquire the Saks building from Opco by raising outside capital from real estate investors, possibly through an IPO of HBS.  Mgmt first wants to renovate the property to drive up productivity.  With this building added to HBS’ already exceptional portfolio of premier real estate, there will be a strong case for HBS to trade well inside a 5% cap rate as a public REIT.  At that point, the real estate monetization will have been complete, and it will be 100% clear to the market that the Opco is trading at a negative equity value (assuming the discount to NAV has not been closed by then).    

From a coverage perspective, HBC’s Property EBITDAR / rent (includes third party and JV rent) stands at ~1.8x (assumes corporate overhead of ~$200mm) which is consistent with other Propco/Opco structures.  EBITDAR coverage will improve further as mgmt's ongoing investments and initiatives continue to drive increased store productivity.   

ACQUISITIONS

HBC’s retail banners are growing organically, and mgmt continues to invest and pursue initiatives to increase productivity, particularly at Saks and Kaufhov.  In addition, mgmt is growing the store base through expansion of Saks and OFF5TH into Canada and Germany.  The Saks brand is globally recognized and under-penetrated outside of the US.  OFF5th is driving DD% SSS, and is on-point with the consumer trend towards off-price concepts.  But in addition to organic and store growth, what makes HBC’s growth story unique is its acquisition opportunity. 

HBC has brilliantly used its REITs as cheap currency to acquire real-estate rich retailers.  They first arbitraged real estate value in their Saks acquisition, when they acquired Saks (publicly traded at the time) for just US$2.9bn.  Saks 5th Ave property alone is now worth US$3.7bn based on an independent appraisal (as discussed in the “REAL ESTATE” section above).  More recently, HBC acquired Kaufhov and contributed Kaufhov’s real estate into HBS, before selling HBS equity at a 5.9% cap rate to private real estate investors.  Effectively, HBC is buying retailers at single-digit EBITDA multiples, and then monetizing their real estate at 17x NOI.  With the real estate structured in a REIT, HBC can also issue low-cost mortgage leverage at higher LTVs.  This combination of real estate debt financing and HBC’s remaining 63% ownership stake in HBS amounts to substantial dry powder for future accretive acquisitions of retail and real estate assets.

Mgmt is focused on acquisition targets that (i) have real estate, (ii) generate synergies with HBC, and/or (iii) offer opportunities for operationally improvement.

Richard Baker (6/10/15): “…we would look at acquisitions that added value in three different buckets, and they don't have to be all of the buckets... One is acquiring a retailer that owns real estate, where we could create value by putting the real estate within one of our real estate ventures and creating value at a much higher multiple for NOI than the multiple of EBITDA that we're acquiring the company.  Second bucket is synergies, and synergies could come in the form of overlapping infrastructure or it could come in the form of having greater buying power or greater advantages with multiple businesses put together.  And then the third bucket is a business that we believe we could manage better than the way the business is presently being managed. And we are always out looking in the world and having conversations with  companies about how to create value through those three mechanisms.” 

HBC’s M&A pipeline includes over a dozen companies globally, which they have been watching for years.  Mgmt had been following Kaufhov since 2006, before finally pulling the trigger earlier this year.  Perhaps the most obvious next potential target is Neiman Marcus Group (“NMG”).  NMG has been PE-owned since the 2005 LBO by TPG and Warburg Pincus.  In 2013, it was acquired by Ares for US$6bn, and they tried to take it public earlier this year.  Against the backdrop of carnage in retail stocks, an IPO was not possible.  It’s possible that Ares may still try to IPO NMG at some point in the future, but the postponement opens the door for HBC to potentially strike a merger deal instead.  WWD has reported that Richard Baker has expressed interest in the asset in the past, and a transaction can be structured to provide Ares with liquidity while adding substantial value to HBC's NAV.  

DEPARTMENT STORE REITS

HBC is unique in the exceptional quality of its real estate and its innovative structure.  Macy’s and Dillard’s both have large real estate holdings, and Dillard’s has even formed a wholly-owned REIT structure to hold much of its real estate.  However, the mgmt teams of both of these companies have summarily dismissed the notion of a spin-off or wholesale monetization of their real estate, after a thorough review of their alternatives.  While not likely the determining factor, the IRS recently shed doubt on the feasibility of the tax-free spin necessary for Macy’s or Dillard’s to separate its real estate from the retail business.  Potentially more restrictive is a new tax law attached to the tax extenders bill which would prohibit tax-free spins of REITs.  Dillard’s is family-controlled, and Macy’s has a huge, widely-held float.  Both are struggling operationally.  For these reasons, it appears that a REIT structure by either of these two retailers is unlikely for the foreseeable future. 

Why is HBC different?  Unlike Macy’s and Dillard’s, HBC’s real estate is highly concentrated in high-traffic urban markets, where real estate and store-front property is in high demand.  HBC has already formed the REITs, and is not going to pursue a tax-free spin; also, it’s a Canadian domiciled company.  So there are no issues with the IRS.  Lastly, HBC’s REITs are being slowly monetized through sales of equity to dedicated real estate investors, and will eventually be IPO-ed to dedicated REIT investors.  So there are none of the holder-base turnover technicals that have weighed on the stocks of tax-free REIT spinoff situations in the past. 

Bottom Line: HBC’s REITs hold premier real estate that is in demand by REIT investors.  There are no IRS/tax concerns related to the REITs, and this structure will not be replicated by other department store operators.  HBC is unique from other department stores that own real estate, in that HBC has a proven and ongoing plan to monetize this real estate which has been validated by investments from dedicated real estate investors.     

US LISTING

HBC currently trades on the Toronto Stock Exchange (TSE), and has little Wall Street coverage.  As a result, and given its relatively small float, HBC’s strategic progress and value creation over the past year has gone unnoticed and unrewarded by the markets.  An eventual US listing of the HBC could bring much-needed attention to the stock, and result in a re-rating.  I believe mgmt intends to eventually list in the US, though the timing remains unclear.      

CONCLUSION

HBC is an exceptionally undervalued stock that has been forgotten by the hedge fund community, and lacks Wall Street coverage due to its TSE listing.  Investors' current indiscriminate aversion to retail and complex situations has created an outstanding opportunity own HBC at a ~60% dicount to NAV.  While the retail environment remains controversial, HBC’s value is primarily driven by its real estate, the value of which has been recently validated by private investors.  What’s more, HBC’s retail business continues to perform well, and the current stock price implies negative value for it.  HBC’s exceptional mgmt team will continue to pursue accretive acquisitions of retailers, where it can arbitrage low retail multiples against the high multiples its real estate commands.  Over the longer-term, a US-listing and IPO of its REITs will make the value discount of HBC’s Opco apparent to the market, resulting in a shrinking of the current discount to NAV.  I have found that most push-back on the HBC thesis from the hedge fund community is premised on an outdated or fundamentally flawed understanding of HBC’s current leverage and value profile.  HBC has NAV of nearly $45/sh, yet trades at below $17/sh; this means you’re getting the retail business for free AND the real estate at a ~55% discount.  Even assuming a 25% discount to NAV, HBC has ~100% upside from its current level.

DISCLAIMER:  DO NOT RELY ON THE INFORMATION SET FORTH IN THIS WRITE-UP AS THE BASIS UPON WHICH YOU MAKE AN INVESTMENT DECISION - PLEASE DO YOUR OWN WORK.  THE AUTHOR AND HIS FAMILY, FRIENDS, EMPLOYER, AND/OR FUNDS IN WHICH HE IS INVESTED MAY HOLD POSITIONS IN AND/OR TRADE, FROM TIME TO TIME, ANY OF THE SECURITIES MENTIONED IN THIS WRITE-UP.  THIS WRITE-UP DOES NOT PURPORT TO BE COMPLETE ON THE TOPICS ADDRESSED, AND THE AUTHOR TAKES NO RESPONSIBILITY TO UPDATE THIS WRITE-UP IN THE FUTURE.

Catalyst

Acquisition of NMG or another real estate rich retailer
Further sales of REIT equity to real estate investors
IPO of REITs, HBS and the RioCan JV
US-listing of HBC's stock