Dillard’s Inc. has set a $500 million share buyback plan, enough to cover about 10 percent of its shares outstanding, as it faced pressure from an activist shareholder to consider spinning off its stores into a real estate investment trust.

The Little Rock, Ark.-based department store group said its board had approved the expenditure for buybacks of its Class A common stock without a time limit. At Thursday’s closing price of $121.04, that would allow for the purchase of about 4.1 million shares, or 10 percent of those outstanding.

In the third quarter of this year, the company completed the remaining $224.5 million if its previous authorization. “Returning cash to shareholders was a high priority during the quarter,” said William Dillard 2nd, chief executive officer, as the company reported third-quarter results last week.

Shares of Dillard’s spiked 9.3 percent to close at $121.04 Thursday after Marcato Capital Management LLC, the activist hedge fund, pushed for the retailer to spin off its stores into a REIT, saying it would unlock value for shareholders. Shares traded at $120, down 0.9 percent, in early New York Stock Exchange trading.

At the end of the third quarter, Dillard’s operated 280 Dillard’s stores and 18 clearance centers across 29 states, primarily in the southern half of the U.S. Of the 296 stores it operated at the end of fiscal 2013, 245 were owned by the firm and 32 leased. An addition 12 were in an owned building on leased land and another seven were partially owned and partially leased.

Sears Holdings Corp. is considering a spin-off of its stores into a REIT as a means of generating badly needed cash.

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