J.C. Penney REIT--Viable Solution for a Struggling Retailer?

It’s a road William Ackman, one of J.C. Penney’s largest shareholders, has tried to explore in the past, when he proposed spinning the land under Target stores into one of the country’s largest REITs. Now, an analyst with the ISI Group has proposed undertaking the manuever in order to save J.C. Penney.

According to a report by Bloomberg, ISI’s analyst Omar Saad believes that at this point, J.C. Penney’s most valuable asset is not its retail concern, but its real estate. Spinning the properties into a REIT would allow the company to sublease its space to other retail chains and could potentially drive its stock price up to $40 per share. J.C. Penney’s shares currently trade at $6 per share.

Investors seemed to respond favorably to Saad’s proposal:

J.C. Penney, based in Plano, Texas, rose 9.6 percent to $16.96 at 12:15 p.m. in New York, after reaching $17.17 for the biggest intraday gain since Sept. 19. The company was the biggest gainer in the Standard & Poor’s 500 Index.


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