Macy's Turns to Real Estate to Combat Brutal Q3 Decline

Photo credit: Wikimedia/Mike Strand

Macy’s has hired commercial real estate powerhouse Tishman Speyer to help manage its real estate after a poor Q3 saw the retailer lose $9.2B of its market value (as of Nov. 12).

Despite increasing investor pressure to spin off its real estate holdings—valued at anywhere from $7B to $21B—Macy’s ruled out plans to go the rumored REIT route, instead enlisting Tishman to come up with other ways to monetize its real estate.

"There is substantial value in their real estate; there's no question about that," Matthew Boss, equity research analyst at JP Morgan, told CNBC.

Poor results—profits sank 46% while sales fell 5%—sent the Macy’s stock into free-fall, plunging 14% to $40.61, making it the weakest performer on the S&P 500 (and a prime target for a takeover), according to CoStar.

Relying on its real estate instead of retail, it seems likely Macy’s will follow its recent trend and continue to sell off properties. Earlier this year, the shopping conglomerate sold off various locations, with the real estate outweighing the value of its retail business.

Macy’s is also looking into third-party JV opportunities to redevelop the retailer’s flagship assets in NYC, San Francisco, Chicago and Minneapolis. [CoStar]

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