Activist Jolt

According to conventional definition, an activist shareholder is one using an equity stake in a corporation to put public pressure on its management. The goals of activist shareholders range from financial (increase of shareholder value through changes in corporate policy, financing structure, cost cutting, etc.) to non-financial (disinvestment from particular countries, adoption of environmentally friendly policies, etc.). Adding to their tool kit, activists have become increasingly focused on real estate, most recently, and aggressively, pressing retail companies such as Sears and Macy’s to unlock their real estate values. Gaming companies have also been targets for activists who claim that spinning out real estate into a REIT or other structures will reward shareholders with significant unlocked value. In many cases the activists make a fair point, but they are not real estate experts. I contend that the company—be it a retailer, a gaming company or other real estate-rich enterprise—should bring the best real estate expertise to the table to address the real estate “opportunity” in the context of what is also good for the long term health of their core business, and not just a quick “jolt.”