Last week's news concerning Macy's Inc closing down numerous stores to cut costs as one of its strategic plan to keep the business still running. Another news break that one of its stockholders is urging the company to pursue the real estate deal.
It has been one of the plans of the company to monetize its real estate aside from closing several of its stores. But it comes as a surprise that one of its stockholders is rushing this route.
National Real Estate Investor reports that Macy's Inc. might convert its real estate to cash. This was shortly after with the planned strategy to cut costs as they experience a 4.7 percent decrease in sales for November and December of 2015. The department store company has close to 900 stores in Puerto Rico, District of Columbia, Guam and 45 states in the United States.
Jeffrey C. Smith, a managing member of the Macy's Inc sent a letter to Chairman and CEO Terry J. Lundgren that showed Starboard's proposal on strategy and structures. Starboard Value LP, is one of Macy's shareholders, that has clearly showed its intent to monetize Macy's real estate portfolio.
The letter stated the substantial value of Macy's real estate which estimated to be at $21 billion. The letter also points out that the move to liquidate its mall-based and quintessential properties will be a good decision for both the company and its shareholders. It also emphasized that the company notably has the most valuable range of real estate in terms of department store space. This was concurred by Wall Street noting that the company's real estate is of tremendous value.
New York Times adds that Herald Square Flagship in Manhattan is one of the portfolios that are deemed to generate cash. It also adds that the estimated $21 billion assets value is twice the value as of Friday's close market value of $11 billion.
The slump in sales was said to be due to its competitors such as H&M and T.J. Maxx. With that it has signed up Credit Suisse, Goldman Sachs and Eastdil Secured to aid in the selling of property minority stakes. Tishman Speyer, one of the major real estate firms is eyeing on the prize.
Coming out with the last say on the matter is Macy's Inc stating that Starboard's case is in line with the actions that are already being taken.
What do you think of Macy's Inc monetizing their real estate properties?
