The value of department store company Hudson's Bay comes down to its real estate holdings — and it needs to consider redeveloping those investments or going private, activist investor Jonathan Litt told CNBC on Monday.
Litt, whose firm Land & Buildings Investment Management owns 4.3 percent of Hudson's Bay, sent a letter to shareholders on Monday urging the company to explore those options.
"The company's valued its real estate at almost four times where the stock is trading," Litt said in an interview with "Closing Bell."
"What's remarkable and what's different about this company than any other department store company is they own the location at Fifth Avenue across from [Rockefeller] Center — probably one of the most valuable locations in the country," he added.
Hudson's Bay's real estate portfolio includes its Saks Fifth Avenue flagship store in New York, valued at $3.7 billion in 2014, and its Lord & Taylor flagship, valued at $655 million in 2016.
Hudson's Bay acknowledged it received the letter on Monday and said it will respond "in due course."
Litt said he's looking to be collaborative with the company in unlocking the real estate value.
"The next step really needs to be monetizing the real estate by redeveloping it or if they want to stay as a retailer, take it private," he told CNBC.
Shares of Hudson's Bay, located in Canada, popped on the news on Monday, closing up more than 15 percent.
— Reuters contributed to this report.