Macy's (NYSE: M) big investor Starboard Value is tired of waiting for a recovery by the struggling department store chain, which has lost nearly 30% of its market value over the past 12 months. In a Bloomberg TV interview, Starboard CEO Jeff Smith stated, "We are not big fans of 'wait and see.' There is value there. How and when it gets unlocked is still open."

The key facts

Starboard disclosed its activist position in Macy's last July, and declared that the stock could be worth $135 -- if it capitalized its real estate by splitting its properties from its operations. The stock has declined by almost 50%  since that presentation, causing Smith to lament that Starboard had invested "too early" in the retailer.

Macy's has posted year-over-year sales declines for six consecutive quarters, due to competition from e-commerce and an abundance of underperforming stores. The company plan to get its growth back on track involved shuttering 100 stores and cutting costs, but its core business continues to struggle.

Starboard's suggestion is for Macy's to spin off its real estate -- much of it in high-value areas -- into a real estate investment trust, which would allow it to  take advantage of tax laws to maximize the value of that property company. Macy's could then lease back most of its space as a tenant, while the remainder could be leased out to other companies. However, the REIT would still be heavily dependent on Macy's, and its store closures would drag down the REIT if other tenants didn't move in.

Following Sears' footsteps?

This maneuver might sound familiar to investors, because Sears Holdings did the same thing earlier this year, spinning off an REIT called Seritage Growth Properties.

While the proceeds from that spinoff boosted Sears to its first quarterly profit in three years, that brief bottom line growth was overshadowed by its double-digit declines in same-store sales. And that highlights an important point: Spinning off real estate into a REIT might attract some investor interest, but it's not a magic bullet for the core problems in Macy's business.

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Leo Sun has no position in any stocks mentioned.

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