JC Penney stock is up on speculation it will turn real estate into cash ...

UPDATED AT 1:39 P.M. WITH MORE ASSETS?

There?s chatter again about J.C. Penney forming a real estate investment trust with its properties.

Penney?s stock price was trading 6 percent higher and back above $15 a share.

A Penney spinoff of its real-estate holdings into a unit that could issue debt is one scenario on the table, according to sources quoted by Bloomberg News.?Presumably, the assets are?429 owned department stores, including 123 stores located on ground leases, and 12.1 million square feet of distribution centers, regional warehouses and online fulfillment centers.

Penney said last week that it hired advisers to help it raise cash and it?s been liquidating real estate assets in recent months. By some estimates, Penney wants to raise $1 billion. It just borrowed $850 million from its $1.85 revolving credit facility. The short-term loan has to be paid back in a year, so it?s not a long-term solution.

J.C. Penney could also sell its real estate and then lease it back. Real estate editor Steve Brown and I reported?in February that Penney had hired real estate brokers to explore options for the 240 acres it owns around its headquarters.

The 2 million-square-foot headquarters building facing Legacy Drive in Plano could also be sold. Penney has owned the Plano property since 1987 when it decided to move to Texas from Manhattan. Penney could move into a smaller building.

Penney has already sold the easy stuff. In 2012, it sold $526 million in real estate assets.

Last summer, Penney raised $248 million in cash by selling 2 million units of Simon Property Group. It still owns 205,000 units of the real estate investment trust. That would be worth $35 million at yesterday?s Simon Property closing price of $170.44

It also sold a building left over from when it owned the Eckerd drugstore chain for $3 million.

In October it sold its 1.8 million units of CBL & Association Properties at a price of $21.35 a share for a total price of $40 million.

Also last fall, Penney sold its investments in four joint ventures that own regional mall properties for $90 million and received $151 million including cash distributions.

And it?sold all of its leveraged lease assets for $146?million.?

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Source: http://bizbeatblog.dallasnews.com/2013/04/j-c-penney-stock-is-advancing-on-speculation-it-will-turn-real-estate-into-cash-soon.html/

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