Macy's (NYSE:M) is under pressure once again to monetize its retail properties by either selling locations or creating a Real Estate Investment Trust.
Last week, Macy's announced plans to close stores as part of a cost-cutting plan. This includes consolidating flagships stores into fewer regions and districts with the subsequent adjustment of staff. In all, 3,000 positions will be eliminated and roughly 40 stores will be closed.
Approximately $400 million to $500 million in operating expenses will be reduced by the move.
But investors want Macy's to do more by exploring the sale of signature properties, including the retailer's iconic Herald Square location in New York City. Starboard Value has made public a letter to Macy's board of directors, outlining measures that could unlock value.
"We are pleased that management and the board of directors recognize that Macy's owned real estate has substantial value," wrote Starboard representatives in a statement. "The recent announcement that Macy's is moving forward with pursuing joint venture structures for both its mall-based and iconic properties is a good decision for the company and its shareholders."
"As you well know, we firmly agree that Macy's real estate portfolio is extremely valuable. We estimate the real estate assets are worth $21 billion, which implies that the operating business is currently trading for a negative value."
This isn't the first time Macy's has been pressured to capitalize on its real estate, but pressure is mounting following a lackluster holiday season.
-See this presentation from Starboard Value
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