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The landmark Saks Fifth Avenue building in Manhattan was appraised at about $3.7 billion as part of an effort by parent Hudson’s Bay Co. to squeeze more money out of its real estate.

The company refinanced its property with a $1.25 billion, 20-year mortgage on the ground portion of its Saks store in New York, according to a statement today. An independent appraiser valued the land and building, which will undergo a $250 million renovation starting next year, highlighting a potential source of capital for Hudson’s Bay in the future. The announcement sent Hudson’s Bay shares to their highest price since they began trading in 2012.

“We believe that this building is the most valuable retail building in the world,” Chief Executive Officer Richard Baker said in an interview. “What’s going on in Manhattan is valuations and rents and transactions have gone up materially, and this appraisal is a real indication of the strength of that market.”

The property could be spun out as part of a real estate investment trust or used to secure additional debt, he said. The $3.7 billion assessment is higher than the $2.9 billion Hudson’s Bay paid for the entire Saks chain last year, underscoring how much value the retailer could wring from its properties. It previously agreed to sell leases for its Zellers discount chain stores to Target Corp. for about $1.8 billion in 2011 and sold its Toronto Queen Street location, its largest, for C$650 million ($577 million) earlier this year.

Sears’s Rally

Upper Fifth Avenue, where the store is located, commands the highest retail rents in Manhattan, according to brokerage Cushman & Wakefield Inc. The average for ground-floor retail in the area was $2,849 a square foot in the third quarter, up 13 percent from a year earlier, Cushman data show.

Investors have applauded retailers’ efforts to spin off their properties into REITs. When Sears Holdings Corp. disclosed plans to create a REIT, its shares jumped 31 percent.

Today, Hudson’s Bay gained 8 percent to C$21.82 at the close in Toronto, the best single day in more than 18 months. The shares have climbed 31 percent since they started trading in November 2012.

The Toronto-based company expects the mortgage transaction to close in December. When that happens, about 80 percent of its debt will be backed by real estate.

“Our main goal in life is to run our business, but it’s part of our responsibility to our shareholders to share with them as best we can the value that sits inside our company,” Baker said.

(Updates with rent data in fifth paragraph, closing stock price in seventh.)