Hudson’s Bay Co. has a new mortgage on its Lord & Taylor flagship, which has been appraised at $655 million.

HBC closed on a $400 million, five-year mortgage maturing in August 2021, with an average interest rate fixed at about 4.3 percent. Previously, there was a $250 million mortgage on the flagship due September 2017.

The 650,000-square-foot L&T flagship is located on Fifth Avenue between 38th and 39th Streets in New York. A year ago, the 11-level flagship, which also has a basement, and other Lord & Taylor properties were valued together at about $640 million. Ten years ago, when HBC bought Lord & Taylor from Federated Department Stores, which is now Macy’s Inc., the L&T flagship alone was valued at between $300 million and $400 million.

In connection with the mortgage transaction, the lenders commissioned an international appraiser, which came up with the new $655 million property value.

Proceeds HBC picks up through the mortgage transaction will be used to reduce borrowings on the company’s revolving credit facility.

“The opportunistic refinancing of the mortgage on the L&T flagship property is yet another example of the successful execution of our strategy as we continue to leverage our significant real estate portfolio,” Richard Baker, HBC’s governor and executive chairman, said Tuesday. “We are pleased to extend our company’s debt maturity profile as well as secure an attractive interest rate of 4.3 percent through the term of the new mortgage.”

At one time, HBC was considering building a tower atop the L&T flagship but the plan was scrapped. HBC in the past has done some renovation work on the L&T flagship and is expected to do more.

Most of the L&T management is located in 15 West 38th Street adjacent to the flagship, though some management still have offices in the flagship. The entire team, along with the Saks Fifth Avenue management, is relocating to Brookfield Place in lower Manhattan beginning next month.

Baker noted that the Saks Fifth Avenue and L&T flagship properties have a combined value of $4.36 billion based on independent appraisals, with the Saks flagship worth $3.7 billion.

Starboard Value, an activist investor in Macy’s, came up with a $4 billion value for the Macy’s Herald Square flagship.

The refinancing of the L&T flagship reflects HBC’s strategy to unlock value in its retail real estate holdings, enabling the company to pay off debt and help finance acquisitions, though it does create rent obligations.

Among the deals of the past few years, HBC has partnered with Simon Property Group Inc. in the HBS Global Properties Joint Venture, which owns properties in the U.S. and Germany. HBC contributed 42 owned or ground-leased properties, including the Saks Fifth Avenue Beverly Hills flagship and the Lord & Taylor stores in Westchester and Manhasset, N.Y.

In Canada, HBC contributed 10 owned or ground-leased properties in partnership with RioCan Real Estate Investment Trust called the RioCan-HBC Joint Venture. The deal included four Hudson’s Bay Co. flagships in downtown Vancouver, Calgary, Ottawa and Montreal, Canada.

Earlier, HBC sold its Zeller’s chain in Canada to Target Corp. for the mass retailer’s ill-fated Canadian expansion, did a sale-leaseback on its Hudson’s Bay Co. Queen Street flagship in Toronto and sold the ground portion of the 640,000-square-foot Saks Fifth Avenue flagship in Manhattan.