Ackman urging Target to adopt new real estate structure

October 29, 2008 03:38PM

Activist investor Bill Ackman is urging Target to move to a sale-leaseback model, in which Target would sell its real estate holdings to a subsidiary that would then lease the stores back to Target. Ackman argues that the move would raise the company’s shares. But the property might not command as high a price in this softened market, and having to lease its stores would also increase the chain’s operating costs. Target currently has stores in Brooklyn and the Bronx and will open its first Manhattan store next year.

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