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Dillard’s Investor Advises Company to Pursue REIT Spinoff

2 min read

One of the investors of Dillard’s Inc. of Little Rock is advising the company to split into a publicly traded real-estate investment trust and an operating company.

The Wall Street Journal reports that Marcato Capital Management LP made the push after Caesars Entertainment Corp. proposed a similar split

Marcato, which has a 4.9 percent stake in the Little Rock-based company, said it thinks Dillard’s could “unlock tremendous value” were it to pursue such a strategy, noting that in recent months several major companies with significant real-estate holdings have disclosed plans to consider a REIT structure in their strategies.

Dillard’s shares climbed 8.5 percent in recent trading.

And as of this writing (around noon), Dillard’s shares (NYSE: DDS) are up about 11 percent.

You can see Marcato’s presentation on a Dillard’s REIT right here (PDF).

There was no comment from the company in the Wall Street Journal article, which stated a spokesman was not “immediately available.” Dillard’s declined comment when contacted by Arkansas Business.

You’ll remember that in 2011, Dillard’s announced plans to create a REIT as a subsidiary of the company. In an Oct. 6, 2011 filing, Dillard’s said it created the REIT “in order to enhance its financial flexibility by providing additional sources of liquidity.” The company transferred about $135 million of assets into the REIT.

Right now, Dillard’s — a $6.5 billion company — operates 278 Dillard’s department store and 20 clearance centers in 29 states.

We’ve been hearing a lot about REIT’s in Arkansas this year.

Windstream Holdings Corp. of Little Rock announced over the summer it would spin off certain assets, mainly its fiber and copper network, into a publicly traded REIT in an attempt to lower its debt by $3.2 billion.

More: Windstream Spinoff Hits Dividend Even More Than You Think

Meanwhile, the Wall Street Journal reports that Sears Holding Corp. is also looking into spinning off as many as 300 of its 712 company-owned stores. The Sears case is among several Marcato cites in its presentation urging Dillard’s to spin off its own REIT.

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