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  "documentTitle": "Macy's Inc. (M)",
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  "presentationDate": "2016-01-11 00:00:00",
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  "notes": "Uses Hudson's Bay as a comparative precedent for real estate monetization.",
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      "text": "The JV structure creates substantial immediate value, akin to raising equity at a massive premium to the current market price, while highlighting the value of Macy’s real estate ownership, and preserving the optionality for future value creation, financial flexibility, and reduced risk.",
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      "text": "Macy's also would have an investment grade rating (Hudson's Bay does not), so its properties would be expected to sell for, or trade at, better cap rates.",
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      "text": "IPO one or both JVs (similar to the recently announced MGM REIT IPO), either (i) bringing capital into the JVs (tax-free) through primary issuance to fund additional growth, diluting Macy's stake while establishing a highly visible public valuation marker, or (ii) selling part or all of its stake in a taxable transaction.",
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      "text": "On November 25, 2015, Hudson's Bay announced a second tranche of its joint venture with RioCan, which values the HBC real estate contribution at cap rate of 5.26%.",
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      "text": "Given the mix of the Hudson's Bay JVs (no iconic stores, mix of various mall classes, and 50% ground leased), we believe Macy's could realize even better cap rates.",
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      "text": "The transaction values the Hudson's Bay/Simon JV at approximately $4.5 billion based on a blended cap rate of 5.9%.",
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      "text": "Sell additional equity stakes in the JVs through private market transactions similar to the sale announced by Hudson's Bay.",
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      "text": "Once the Company is comfortable with the retail environment and its recurring cash flow profile before distributions from the JV, Macy's can further separate or monetize its JV stakes through numerous alternatives, including:",
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      "text": "On November 17, 2015, Hudson's Bay announced that it sold a total of $533 million of its equity in the Hudson's Bay/Simon JV to three third party investors.",
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      "text": "The JV structure creates substantial immediate value, akin to raising equity at a massive premium(1) to the current market price, while highlighting the value of Macy's real estate ownership, and preserving the optionality for future value creation, financial flexibility, and reduced risk.",
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      "text": "Source: Company filings and Starboard Value estimates. (1) Macy's would effectively be selling cash flows at an estimated 15x EBITDA multiple, whereas that same earnings stream currently trades at approximately 5.75x under Macy's current corporate structure.",
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      "text": "Permanent value creation for Macy's shareholders",
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