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Hudson’s Bay Company Completes $650 Million Real Estate Sale

Hudson's Bay Company ("HBC" or the "Company") (TSX: HBC) is pleased to announce that it has completed the sale of its Queen Street flagship store and Simpson Tower office complex in Toronto to The Cadillac Fairview Corporation Limited (“Cadillac Fairview”) for a purchase price of $650 million at an implied capitalization rate of approximately 4.75%. HBC has leased both the Queen Street store and Simpson Tower back from Cadillac Fairview for a base term of 25 years, with renewal terms available at the Company’s option. As previously announced, the Queen Street property will serve as the site of Canada’s first Saks Fifth Avenue location, expected to open in the fall of 2015.

“We are thrilled to have completed this transaction, which clearly demonstrates the tremendous value of our real estate portfolio,” stated Richard Baker, HBC’s Governor and Chief Executive Officer. “This sale-leaseback allows HBC to establish a benchmark valuation for one of our many flagship assets, reduce the debt on our balance sheet and accelerate our strategic investments. We remain committed to using our significant real estate holdings to unlock further value for our shareholders and are exploring a broad range of alternatives to help us accomplish this goal.”

Expected Use of Proceeds

Net of associated fees, all proceeds from the sale initially will be utilized to reduce the Company’s debt. Specifically, HBC will retire in entirety its US$300 million Second Lien Term Loan, currently bearing interest at a rate of 8.25%, and permanently pay down US$150 million of its US$2 billion First Lien Term Loan, currently bearing interest at a rate of 4.75%. The balance of the net proceeds will be used to reduce the outstanding balance on the Company’s Canadian revolving credit facility. Over time, a portion of the proceeds will provide ample liquidity to fund the Company’s strategic investments including the expansion of Saks Fifth Avenue into Canada and growth initiatives such as our HBC Digital and OFF 5TH businesses.

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