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Activist investor wants to unlock real estate value of Dillard’s department stores

Snow Park Capital Partners estimates Dillard's real estate worth $200 per share
August 01, 2017 03:45PM

Dillard’s Department Store in Orlando

Snow Park Capital Partners, an activist investor in Dillard’s, wants to unlock the property value potential of the sleepy department store chain’s real estate portfolio.

Snow Park estimates the Dillard’s real estate worth at $200 per share, Bloomberg reported.

Since 2008, Dillard’s has closed about 50 of its department stores. As mall retailers such as Dillard’s succumb to online retail giants like Amazon.com, Snow Park and like companies see it as an opportunity to accelerate store closures and maximize their returns.

Snow Park’s Managing Partner Jeffrey Pierce told Bloomberg, “Dillard’s is essentially an under-leveraged real estate company that is masquerading as a low productivity retailer.”

Pierce said Dillard’s top-tier mall locations should generate retail sales of $650 per square foot. Brick-and-mortar retailers like Dillard’s, Macy’s, and Wal-Mart have become targets for activists and investment management companies such as Snow Park.

Dillard’s has five locations at major malls in South Florida including Broward Mall, Wellington Green, Pembroke Lakes Mall, The Galleria at Fort Lauderdale, and Boynton Beach Mall. The South Florida locations are just a few of Dillard’s 268 store locations in top-tier malls and 25 clearance centers that operate in 29 states across the U.S.

“We believe the value of Dillard’s vast real estate holdings is well north of $200 per share. With an average sales per square foot of approximately $125, it’s fair to say that Dillard’s may not be getting the highest and best use for some or all of their owned space,” Pierce told Bloomberg.

“In fact, our estimated rental value to more productive retail tenants exceeds the company’s entire current income as a retailer,” he added. [Bloomberg]  Grace Guarnieri