Dillard’s Inc. — a family-run but publicly traded department store chain known for going its own way in areas of corporate policy — plans to spin off some properties into a real estate investment trust and then lease the properties back.
This story first appeared in the January 20, 2011 issue of WWD. Subscribe Today.
Real estate investment trusts, or REITs, bring certain tax benefits that aren’t available in other corporate structures. The Little Rock, Ark.-based firm has doors in 29 states and, according to last year’s annual report, owned 241 of its 309 stores.
In a short Securities and Exchange Commission filing outlining the plan Wednesday, the company said the formation of a REIT might enhance its ability to access debt or preferred stock and, in turn, enhance liquidity.
Dillard’s also formed a subsidiary insurance company to help manage risk and access additional reinsurance markets.
Standard & Poor’s said the formation of a REIT would not impact the company’s credit rating of “BB-minus.”
Dillard’s generated profits of $14.4 million for the third quarter, 80 percent above the prior-year period. In 2008, the company was needled by the activist efforts of Barington Capital Group and The Clinton Group, which lobbied the firm into refining its operations and ultimately cut a deal with management to put four outside directors on the board.
Shares of Dillard’s fell $1.53, or 3.9 percent, to $37.54 Wednesday as the S&P Retail Index contracted 1.2 percent to 501.52.