Investor Group Proposes $5.8B Bid to Take Macy's Private
An investor group has proposed a bid to acquire Macy's, aiming to privatize the famed department store chain following major value loss due to intense online competition.
Investor Group Proposes a Whopping $5.8 Billion to Take Macy's Private
An investor group has proposed a $5.8 billion bid to acquire Macy's, aiming to privatize the famed department store chain following major value loss due to intense online competition.
Bold buyout: Arkhouse Management and Brigade Capital Management have proposed a $5.8 billion buyout of Macy's in a major move in the retail industry. The offer, made on December 1, aims to take Macy's private, reflecting a generous premium of approximately 32% over its previous closing stock price, which has plummeted to below $20 since its 2015 peak of $70 per share.
Strategic play: Arkhouse Management, a real estate investment firm, and Brigade Capital Management, a global asset manager, are the primary architects of this takeover. Their current holdings in Macy’s through Arkhouse-managed funds underscore their vested interest in the retailer's future. The investor group believes Macy's is undervalued in public markets and has even expressed openness to raising their offer following due diligence.
More than just a store: Macy's iconic status extends beyond its business metrics. Known for its cultural significance, especially highlighted by the annual Macy’s Thanksgiving Day Parade and lavish holiday window displays in New York City, Macy's represents a substantial part of American retail history. It also owns Bloomingdale's and Bluemercury, adding to its retail breadth. Despite recent decreases in profit and revenue, Macy's still squeezed around $1.2 billion in profit from $24.4 billion in revenue last fiscal year.
Turnaround efforts: Macy’s has faced many takeover attempts and shareholder pressures in the past, including a proposal by Canada’s Hudson’s Bay Co. in 2017 and shareholder activism focusing on its valuable real estate assets. Under CEO Jeff Gennette, Macy's has been navigating a turnaround strategy, including store closures, new brand launches, and supply chain modernization. With Gennette set to retire soon, the future leadership under Tony Spring, head of Bloomingdale’s, could mark a new chapter for the company.
➥ THE TAKEAWAY
A pivotal moment: The proposed privatization of Macy's marks a critical juncture in the evolution of traditional retail amidst ongoing industry consolidation and the rise of e-commerce. The outcome of this bid could set a precedent for how legacy retail brands adapt and survive in an increasingly digital marketplace. It reflects the growing trend of investors valuing retail giants' real estate and cultural assets as much as if not more than, their current commercial performance.
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Indoor waterpark: VICI Properties is financing Kalahari Resorts' new $900 million indoor waterpark resort in Thornburg, Va., with a $212 million mezzanine loan, expected to open by 2026.
Denver acquisition: MG Properties acquired the Bear Valley Park Apartments in Denver for $76 million, reflecting their confidence in the city's economic growth and enhancing their regional operations.
Field closure: Drilling will cease by 2029 in the Culver City portion of Los Angeles County's Inglewood Oil Field as part of a larger initiative to end oil and gas extraction in urban areas.
Car wash net lease properties: Once favored due to their subscription-based model, sophisticated operations and tax incentives have become problematic for some investors.
Eminent domain halted: The Texas Parks and Wildlife Department has abandoned its eminent domain effort to reclaim land formerly used for Fairfield Lake State Park, following an appraisal valuing the property over four times its earlier estimate.
Rail expansion: Four major U.S. passenger rail expansion projects will receive up to $7.3 billion in federal grants, likely driving commercial and residential real estate development between major metropolitan areas.
Investors Flock to High-End RV Parks Amidst Development Challenges
Source: Safe Harbor Development Camp Margaritaville in Pigeon Forge, Tennessee
Luxury RV parks are transforming American road trips, drawing investors with their upscale amenities and catering to a new era of travelers.
RV resort boom: With the pandemic reshaping work and leisure, luxury RV parks have become the latest commercial real estate craze. Embracing remote work, travelers are flocking to amenity-rich parks at record rates, seeking out upscale amenities like gourmet food and lazy rivers.
Investment frenzy: RREAF, typically known for projects in multifamily and hospitality, has ventured into the RV park market with a $157 million investment to revamp five southern U.S. RV parks, with a further $550 million earmarked for additional acquisitions and revamps this year. Firms like KKR, Starwood Property Trust, and Sun Communities have also noted a surge in camping interest, highlighted by over 6.4 million new camping households in 2022.
Development challenges: However, finding success in the RV park sector isn't without challenges. The lack of available campgrounds, complicated rezoning processes, and the high barrier to entry create a tough environment for new deals. Firms like Provident Realty Advisors see this as an opportune moment.
➥ THE TAKEAWAY
Zooming out: While the investment surge continues in the short term, there's an undercurrent of concern about the market's sustainability. Industry veterans warn of a potential overbuilding bubble. Despite the initial pandemic-driven demand spike, there's a risk of creating excess supply as the demand begins to normalize and the initial fervor cools down. The industry's future will depend on careful expansion and navigating a post-pandemic landscape where remote work and travel habits continue to evolve.
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Tampa faces a significant turnover in real estate, with leases for over 3.6 million square feet due to expire in 2024 and 2025. This looms during a period of varied leasing momentum across different industries following the pandemic's impact.
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