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Applying The Hudson's Bay Model Featuring Starboard Value

Don't forget - sign up for our free daily newsletter to stay in the activist investing know. Hudson's Bay is a pioneer when it comes to unlocking real estate value. The model they're using of late is joint ventures for buying up real estate. Its latest being a deal with Simon Property Group. 

But the model could be extended to Starboard Value target Macy's. 

 

Hudson's Bay premise for doing such deals is that retailers aren't getting properly valued given the market doesn't understand or know of the real estate they own. 

JVs give Hudson's Bay the opportunity to highlight to shareholders the real estate value without selling it. 

This type of deal would allow Macy's to keep control of its real estate. A big worry for us and other [link to our previous thoughts]. Starboard and Jeff Smith has put the value of Macy's at $125 if it could find a way to highlight the real estate value. 

So Macy's could look to create a JV with a real estate player, putting up property for cash and later offer shares ot the public via an IPO. The question is; what does Macy's do with the cash it gets. It obviously doesn't need it. A buyback or dividend would be likely, yet, it'd be best served plowing it into operations.

Macy's, Starboard Value