MINNEAPOLIS–Target said it has concerns about a proposal by Pershing Square, which owns a 10 percent stake in the retailer, to spin-off a separate publicly traded real estate investment trust (REIT) that would own nearly all of the land currently owned by Target.
Pershing Square’s position on the proposed transaction was disclosed in a meeting hosted by Pershing Square yesterday in New York.
While Target has not reached a conclusion on the merits of the proposal, “its analysis raises serious concerns on a number of important issues,” Target said in a statement.
These include “the validity of assumptions supporting Pershing Square’s market valuation of Target and the separate REIT entity, and the reduction in Target’s financial flexibility due to the conveyance of valuable assets to the REIT and the large expense obligation created by the proposed lease payments, which are subject to annual increase,” the statement said.