Office space startup WeWork is buying Lord & Taylor's flagship Manhattan store and leasing some of the retailer's other retail locations.
The 676,000-square foot-building on Fifth Avenue in New York City will sell for $850 million, and WeWork partner Rhone Capital will invest another $500 million in Lord & Taylor parent company Hudson Bay, The New York Times reported.
Lord & Taylor will rent space in the building and maintain a smaller store on the lower floors of the building, while the upper floors will be rented out from WeWork as temporary office space for companies who need occasional or intermittent meeting spaces, the NYT reported.
The sale comes as Canada-based Hudson's Bay, which also owns Saks Fifth Avenue and other department stores, faces pressure from investment companies to create more value for shareholders.
Lord & Taylor will remain in the entire building until after the 2018 holiday season under the terms of the deal, Nasdaq reported.
The deal is expected to result in debt reduction of $1.26 billion and liquidity of about $870 million in U.S. dollars.
“Retail is changing, and the role that real estate has to play in the way that we shop today must change with it,” WeWork co-founder and Chief Executive Adam Neumann said, the NYT reported.
Twitter users were not surprised by the development.
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