Federated Department Stores Inc. (Cincinnati) has signed an agreement to sell its New York-based Lord & Taylor division to NRDC Equity Partners LLC (Purchase, N.Y.) for $1.195 billion in cash.
NRDC Equity Partners is an affiliate of National Realty & Development Corp., the owners and developers of over 14 million square feet of shopping centers throughout the United States.
The sale includes 48 Lord & Taylor stores in New Jersey, New York, Illinois, Massachusetts, Connecticut, Maryland, Virginia, Michigan, Pennsylvania and the District of Columbia. Federated will continue to operate the stores until NRDC assumes ownership. Federated acquired Lord & Taylor as part of its acquisition of The May Department Store Co. last year.
The new owners said Lord & Taylor’s 600,000-square-foot flagship store on Fifth Avenue would remain in place and that much of the entire chain would be left in place, as well. Richard Baker, who led the team of real estate and private equity investors, said the Fifth Avenue store could be reduced in size, but that was preferable to bulldozing it or reselling it.
“I am not sure we want to operate Lord & Taylor without a Fifth Avenue location,” said Baker, president of NRDC Equity Partners, who will assume the title of chairman of Lord & Taylor. He said current ceo Jane Elfers will keep her job after the sale.
NRDC Equity Partners has bid on Toys “R” Us, the Pathmark grocery chain and Burlington Coat Factory in the past year, acquiring Linens 'n Things in February 2006. Baker said his company's strategy was to buy and operate retailers with strong names and valuable real estate.
“This agreement concludes a successful process to divest Lord & Taylor,” said Federated chairman, president and ceo Terry Lundgren. “While Lord & Taylor does not fit with Federated's strategic focus on building the nationwide Macy's and Bloomingdale's brands, it is a well-known niche specialty retailer with a great name, many outstanding locations and an experienced management team.”
Lord & Taylor was started in 1826 by Samuel Lord. He later made his wife's cousin, George Washington Taylor, a partner.