Macy's Inc. is reportedly one of the retail giants who are considering to spin off its real estate assets into another company. However, analysts are wondering whether the retailer should retain its New York flagship store in Herald Square or include it in the spin off transaction.
The retailer is reportedly thinking of following recent moves made by other companies such as Sears Holdings Corp. and Darden Restaurants Inc., states the Wall Street Journal (WSJ). Should Macy's decide to spin off its New York flagship store, the transaction will prove to be profitable for the company's shareholders, states experts. However, analysts are also thinking that the company should find a way to "extract some value without ceding control of such a prime location could pay off more in the long run." The Herald Square property is reportedly "tricky" given that no consensus has been made to identify the store's current worth. Although, estimates of the Macy's New York store is said to be around $3 billion to more than $4 billion.
Jim Costello, senior vice president for real estate research firm Real Capital Analytics, told WSJ that the "hard part" of deciding what to do with the New York property is that "there's nothing like Macy's Herald Square." Macy's flagship store in New York is considered as one of the company's crown jewels given its prime location. The WSJ report even cited that the retailer's future decision will serve as a precedent for other retailers with similar "crown jewel" properties such as Nordstrom Inc. and Neiman Marcus Group Inc..
Meanwhile, since summer, investors have been pressuring Macy's Inc. to spin off the 556 stores it owns nationwide into a separate company, reports the New York Business Journal. However, the company is still examining the value of its famous flagship building and other stores. Jim Sluzewski, a Macy's spokesman told the Journal Tuesday, "The real answer is, we don't know. And that's why we have teams of people looking at the question."'
The New York Business Journal also cited how earlier this month, Macy's announced a different approach to the matter, wherein the retailer will sell the top five stories of its downtown Brooklyn store located at 422 Fulton street. The company reportedly closed a $170 million transaction with real estate developer Tishman Speyer for the Macy's Fulton street property.
