Hedge-fund manager William Ackman said selling part of a real-estate investment trust that he wants spun off of Target Corp. would raise $5.1 billion as the rest of the "tarnished'' retail industry struggles to procure cash.
Ackman's Pershing Square Capital Management LP would buy $250 million of stock in an initial public offering of less than a fifth of the REIT, he said at a presentation in New York today. Target, the second-biggest U.S. discount chain, fell 10 percent in New York trading.
When Ackman proposed creating the REIT in October, the retailer questioned how much value the plan would produce for shareholders and said it had "serious concerns,'' including that a spinoff would hurt its debt ratings. Target has dropped 18 percent since Ackman said he had a plan for the company's real estate. The Standard & Poor's Index fell 5 percent in the period.
"I don't think it's a tough sell,'' Ackman said in a telephone interview. "The only thing that made it a tough sell was that it was going to cause a downgrade. We solved that problem.''
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