As part of a long-term plan to reduce its real estate portfolio, Macy's (NYSE: M) has sold a quintet of its stores to real estate investment trust General Growth Properties (NYSE: GGP) for $46 million in total.
The stores, located in North Carolina, Wisconsin, Oklahoma, Virginia, and Kentucky, range in size from 104,000 square feet to 265,000 square feet. The retailer will continue to operate the one located in McLean, Virginia, on lease from they buyer.
All told, the five stores employ 319 people. Macy's said the workers from the four which will be shuttered might be offered positions in stores nearby. Full- and part-time employees who meet eligibility requirements are to be offered severance benefits.
In the face of declining sales, both for itself specifically and the bricks-and-mortar retail sector in general, Macy's has been aiming to divest around 100 of its properties. In contrast to the struggles of the traditional retail, real estate prices in many areas of the country have been on the rise, and Macy's owns properties in a number of prize locations, including its flagship locations in San Francisco's Union Square and Manhattan's Herald Square. Company officials admitted this past summer that they were in talks to sell the former, an eight-floor, 263,640-square-foot facility, in addition to basement space in a nearby building. It did not specify the counterparty in those dicussions.
Macy's said it will book a gain of $32 million on the five stores being sold to General Growth Properties. This amount should land on the retailer's books in its fiscal 2016 third quarter.
General Growth Properties has not yet commented on the deal.
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Eric Volkman has no position in any stocks mentioned.