Dillard's Is the Focus of Investors Over Retailer's Real Estate

Dillard's Is the Focus of Investors Over Retailer's Real Estate CNBC (07/31/17) Thomas, Lauren; Picker, Leslie

Snow Park Capital Partners is calling out Dillard's for the untapped value of its commercial real estate. Jeff Pierce, managing director of the New York-based investor, which owns a 2 percent stake in the department store chain, said, "Dillard's is essentially an unleveraged real estate company that is masquerading as a low productivity retailer." Dillard's owns approximately 48 million square feet of real estate, with about 25 percent in Class A shopping malls that can command more than $650 per square foot in sales. However, Dillard's is only averaging about $125 in average sales per square foot.

The investor said the department store operator's properties alone should be valued at upwards of $200 per share. "It's fair to say that Dillard's may not be getting the highest and best use for some or all of their owned space," noted Pierce. "In fact, our estimated rental value to more productive retail tenants exceeds the company's entire current income as a retailer." This is not the first time an investor has pressured Dillard's. In 2014, Marcato Capital Management built up an ownership stake in the retailer in an effort to get the company to spin off its property into a REIT.

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