We noted earlier this month that a gang of hedge funds might be pushing Macy’s to spinoff its real estate. The key thesis remains that Macy’s has a lot of property it owns that coul be sold for a pretty penny, inlcuding its prized Hearld Square location.
It’s three flagship locations in NYC, Chicago and San Fran are valued at roughly a third of its entire market value.
The idea is to get these properties sold and then lease them back. Yet, questions remain over what this means for the long-term, where it would be burdening itself with lease obligations and be locked into locations over the next couple decades.
Another key is that Macy’s doesn’t need the cash.
Macy’s management has shown little interest in giving up its real estate for some cash. One notion is that Macy’s might partner with a mall operator, putting up cash for a stake in the mall. Yet, we haven’t seen such a deal on the table.
There’s a lilkilhood that Macy’s real estate isn’t getting any true value, with its real estate value exceeding the retail operations. But it’ll be awhile before Macy’s finds a setup that meets all the criteria.
