TORONTO (Reuters) - Canadian department store owner Hudson’s Bay Co and joint venture partner RioCan REIT have signed a conditional agreement to sell HBC’s flagship store in downtown Vancouver for about C$675 million ($524.4 million) to an Asian buyer, a person familiar with the matter told Reuters.

FILE PHOTO - A sign is seen at the Hudson's Bay Company (HBC) flagship department store in Toronto, Ontario, Canada on January 27, 2014. REUTERS/Mark Blinch/File Photo

The buyer, who owns a closely held real estate company, is seeking to arrange interim financing from at least one Canadian lender, according to the person, who declined to be identified as the deal has not been made public yet. The source declined to identify or give the nationality of the buyer, but said the deal is expected to be finalized by mid-June.

RioCan and Hudson’s Bay, which owns the Saks Fifth Avenue and Lord & Taylor brands, said in October they were exploring the sale of the store. Hudson’s Bay will lease back space in the property and continue to operate the store, they said then.

A HBC spokeswoman declined to comment. RioCan did not immediately respond to a request for comment.

HBC shares rose as much as 4.3 percent, and were trading up 2.2 percent at C$9.07 at 10:10 am ET (1410 GMT). RioCan shares rose 0.4 percent to C$23.47, while the Toronto stock benchmark added 0.7 percent.

The deal progresses HBC’s efforts to extract value from its substantial real estate holdings as it battles a retail industry-wide slump and faces investor pressure to lift its share price. It follows the sale of its Lord & Taylor flagship store on New York’s Fifth Avenue to WeWork Companies Inc for $850 million last year.

Hudson’s Bay shares have lost two-thirds of their value in the past three years, hurt by disappointing earnings for several quarters. The company valued its real estate at $35 a share before the Lord & Taylor store sale.

RioCan shares have fallen 21 percent in the same period, compared with a 2.4 percent gain in the Toronto stock benchmark.

RioCan is also shifting its strategy, honing in on malls in major Canadian cities and developing more condos and rental apartments to capitalize on surging demand for housing.

The joint venture between HBC and RioCan now owns properties including Hudson’s Bay stores in Montreal, Calgary and Ottawa, as well as 50 percent stakes in Oakville Place and Georgian Mall in Ontario province.

The JV was owned 88.1 percent by HBC and the rest by RioCan, but its terms entitle RioCan to 20 percent of the sale proceeds, the person said in October.

CBRE and Brookfield Financial Real Estate Group handled the sale.

($1 = 1.2872 Canadian dollars)