XPost: alt.transgendered, talk.politics.guns, alt.fan.rush-limbaugh   
   XPost: alt.politics.liberalism, alt.politics.homosexuality, sac.politics   
   From: remailer@domain.invalid   
      
   The best deal at Macy's (M) this year may be the stores themselves.   
      
   Shares of Macy's surged over 19% on Monday, after the 165-year-old   
   retail giant received a $5.8 billion buyout offer from real estate   
   investor Arkhouse Management and asset manager Brigade Capital   
   Management, a source familiar with the matter told Yahoo Finance   
   late Sunday.   
      
   What's the intent behind the offer? While the iconic company has   
   been struggling to keep up with sales, its robust real estate   
   portfolio is likely the target — yet getting full value for it won’t   
   be easy.   
      
   Estimates for Macy's real estate portfolio vary. Evercore ISI pegs   
   it at $5 billion to $7 billion, with its flagship New York City   
   Herald Square location at $900 million to $1.5 billion. TD Cowen   
   puts the portfolio at $7.5 billion to $11.6 billion, while JP Morgan   
   values it at $8.5 billion — with Herald Square worth at least $3   
   billion, according to a note to clients with research led by Matthew   
   Boss.   
      
   "The cake is the real estate," Neil Saunders, GlobalData’s managing   
   director of retail, told Yahoo Finance over the phone. "That's the   
   core of this deal."   
      
   Macy’s actual retail business is likely only the “icing on the   
   cake,” per Saunders. That Macy’s makes a profit — unlike most other   
   big box retailers — makes the deal “more palatable” for real estate   
   investors, Jonathan Miller, CEO of Miller Samuel Inc., told Yahoo   
   Finance over the phone.   
      
   But the varying portfolio numbers and the fact that the bid is lower   
   than Macy’s asset values speak to the difficulty facing retail real   
   estate. There isn’t a dearth of buyers waiting to snap up big box   
   space; instead, these million-plus-square-foot buildings need to be   
   converted to other use, in an environment where rezoning is onerous,   
   interest rates are high, and office space is no longer in demand.   
      
   "Unlocking real estate value may or may not be realistic depending   
   on time horizon, usage and restrictions, developer appetite, and how   
   this may intersect with Macy's as a retailer," TD Cowen analyst   
   Oliver Chen wrote in a note to clients.   
      
   Evercore ISI’s Michael Binetti pointed out in a client note that in   
   2015, an activist investor valued Macy’s real estate at $21 billion,   
   including $3.3 billion for seven downtown properties. Subsequently,   
   Macy’s sold four of those properties (San Francisco, Minneapolis,   
   Pittsburgh, and half of the Chicago store) for a combined $351   
   million.   
      
   Department stores' values are historically overestimated, per   
   Binetti. The Herald Square location could take $200-$500 per square   
   foot to reconfigure to make it useful, further reducing the value   
   available to Macy’s, Binetti added.   
      
   While these factors likely suppress the maximum figure for a Macy's   
   bid, the retailer's prime locations are a point in its favor.   
   Residential conversions, particularly at a time of housing shortage,   
   could unlock upside potential, said Miller.   
      
   "They must have some idea about the challenges and the time frame,   
   and that's factored into the price they're willing to pay,” Miller   
   said of the bidders.   
      
   Conversions are expensive and won’t happen overnight. Miller   
   estimates the process to be three to five years, though the timeline   
   dovetails with other economic trends as financing costs drop and the   
   economy strengthens in the future.   
      
   And this could be just the beginning of a battle for the department   
   store, making room for more to join in the buyout.   
      
   "They've come in with a premium that's not exceptionally high and I   
   would not be surprised if the bid goes up before it's over," Richard   
   Kestenbaum, Triangle Capital LLC co-founder and partner, told Yahoo   
   Finance Live. "I'd expect another financial bidder, if there is   
   going to be another bidder."   
      
   This offer comes as Macy's beat modest estimates in its latest   
   quarterly earnings results, but its stock, before Monday's surge,   
   was down 45% compared to five years ago.   
      
   https://finance.yahoo.com/news/macys-shares-surge-after-buyout-bid-   
   but-unlocking-its-real-estate-value-will-take-work-232625062.html   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)