Dillard's Soars On REIT Speculation

Dillard's, Inc. DDS stock soared Thursday after Marcato Capital Management LP released a presentation on ways to increase shareholder value.

The presentation suggested the company spin-off real estate assets into a REIT.

According to the press release, Marcato Managing Partner Mick McGuire noted that “In recent months, several major corporations with significant real estate ownership have announced their intentions to explore the separation of these assets into stand-alone companies that would qualify for treatment as real estate investment trusts ("REIT"). We believe that Dillard's could unlock tremendous value were it to pursue such a transaction.

“Accordingly, we have decided to share our analysis highlighting the value of Dillard's underlying real estate assets and the compelling case for the creation of a stand-alone REIT. We believe executing on this plan would value the companies at a combined $193 per share, representing a 75 percent increase from current prices. We encourage Dillard's board and management to actively explore this opportunity to the extent it is not presently doing so.”

Dillard's recently traded at $121.98, up 10.1 percent