Investors wanting Macy’s Inc. to get more out of their real estate are making themselves heard.
The company, which has been needled by activist investor Jeffrey Smith to squeeze more value out of its property holdings, appointed real estate expert William Lenehan to its board.
Asked by WWD if the company’s shareholders have any input on the pick, a spokesman said: “Macy’s Inc. is constantly in dialogue with our shareholders and Mr. Lenehan’s name came up as someone who we should consider so that we could have additional real estate expertise on our board. After we met Mr. Lenehan and did our homework, our board voted to add him as a new director and he will also be renominated at the upcoming annual meeting. Real estate continues to be an important subject as we seek to increase shareholder value through joint ventures or similar partnerships with third parties. The company is moving ahead with input and advice from a variety of parties.”
Macy’s has met with Smith and publicly expressed its willingness to work with shareholders and hear all points of view — a strategy that could help keep investors from going hostile and trying to shake up the board in a proxy battle.
Lenehan, 39, is president and chief executive officer of Four Corners Property Trust Inc. and takes his seat on April 1.
The department store said he “has extensive knowledge and experience in real estate development and management.” Before taking the top job at Four Corners in August, he was a special adviser to the board of EVOQ Properties Inc., interim ceo of MI Development and an investment professional in the real estate group of Farallon Capital Management LLC.
That’s just the kind of expertise Macy’s is looking to bring on board. Macy’s has also been looking to hire a real estate expert in an executive position who would help the company explore its portfolio options.
“Bill will contribute to our board’s expertise and working knowledge on matters related to real estate, an important area of activity as we work to create shareholder value through joint ventures or other partnerships related to Macy’s flagship stores and mall properties,” said Terry J. Lundgren, chairman and ceo of Macy’s Inc. “Bill’s perspective is rooted in his real estate experience in a variety of industry sectors, including net lease, restaurants, mall, office, residential and mixed-use.”
Last year, the $27 billion chain explored and then rejected the idea of forming a real estate investment trust, an idea forwarded by Starboard’s Smith.
But other options remain on the table and the company has been busying making some real estate moves.
In January, Macy’s closed on a $270 million deal to remake its Fulton Street store in Brooklyn, N.Y., which served up $100 million to renovate the location and also extended some tax benefits. Tishman Speyer will develop office space at the site.
It’s also been shuttering stores, with 36 doors going dark this spring.
While there is plenty of value locked up in the company’s property assets and prominent examples of companies monetizing those assets, including Hudson’s Bay Co. and Sears Holding Corp., Lundgren has been careful to say the company will remain close to its roots even as it brings on a new real estate executive.
“We will always be a retailer first. And that’s our primary business,” Lundgren said at the Bank of America Merrill Lynch Consumer and Retail Technology Conference last week. “That’s what we do, that’s what we know. This is going to be another set of expertise here that’s going to add value to what we already do as a retailer. But we’re very excited about the potential there.”