How will this affect the stock?
Is it a buy hold or sell?
Thank you
LNF is planning to create a REIT, splitting the legacy retail business and the REIT which will own a portfolio of cash flow-producing properties of around 5.2 million square feet of wholly-owned real estate. The idea is to unlock shareholder value as the management believes the company is trading quite cheap on a sum-of-the-part basis (retail and real estate). That being said, there has been no news on the development since May when it was first announced. LNF plans to consolidate the REIT into its overall results, and a spin-off or dividend of the REIT may or may not happen. Details have not been finalized here.
Given the REIT is currently in management’s plan to implement, we think LNF is a hold for now, as we think LNF could experience decent upside potential if decides to distribute part of the REIT to shareholders.