Macy's Inc. disclosed in its fourth-quarter 2017 earnings release its plans to continue to explore opportunities to unlock the value of its real estate portfolio in fiscal 2018.
Specifically, the department store chain said it would "identify opportunities where the redevelopment value of its real estate exceeds that of non-strategic operating locations."
In February, Macy's reached a deal to sell seven floors of one of its sites in Chicago to a private real estate fund sponsored by Brookfield Asset Management Inc., which the asset manager plans to convert into office space. The transaction, set to close in the first half of fiscal 2018, will see Macy's receiving an aggregate $30 million.
Macy's also reached a deal under which Brookfield will redevelop nine properties in an approximately 50-asset portfolio. Upon receipt of certain approvals, Macy's will either sell its stakes in the assets to Brookfield or inject them into individual joint ventures. The cumulative value of these assets, if sold, is estimated to be about $50 million. The purchase price may also increase if certain financial targets are met for the three largest assets, the retailer said.
Additionally, Macy's is looking at opportunities to sell the roughly 240,000-gross-square-foot, stand-alone I. Magnin portion of its main Union Square building in San Francisco. It is also converting street-level selling space at the Union Square main building into high-end retail shops that it will lease to third parties. It expects the building to contain about 700,000 gross square feet.
In fiscal 2017, Macy's said it received cash proceeds of $411 million from asset sales, which included stores and nonstore real estate such as warehouses, outparcels and parking garages.