NEW YORK (The Deal) -- Newly installed Darden Restaurants (DRI) - Get Report CEO Gene Lee on Friday suggested that the company is considering taking some strategic steps sought by activist investor Starboard Value soon but spinoffs sought by the insurgent fund will have to wait.

Last month Darden named Lee, who had been running the company as interim CEO, as its full-time chief executive. The move comes after activist Starboard Value in October won a proxy fight to take over the entire board of the restaurant chain.

Starboard had been urging the company to improve operations and to separate its real estate business through a merger or publicly-traded REIT spinoff. Down the road it is urging another possible spinoff of the company's specialty restaurants group, which includes higher-end restaurant chains like The Capital Grille and Yard House.

However, Lee in a call with analysts suggested that the company's evaluation of strategic options for its real estate and operating business will be a long, detailed and possibly multiple-staged process. He said that the company is continuing to evaluate opportunities for its real estate and as a test case launched a few weeks ago it listed 16 properties to undergo sale-lease backs. He added that Darden saw "great demand" for those properties and subsequently listed an additional 15 more. Since then the company has received letters of intent from qualified borrowers at a majority of the 31 properties, he added.

"As we continue to analyze our options for real estate it is encouraging to receive positive feedback with qualified borrowers who are interested in purchasing our assets. These transactions will inform other strategies we are considering," he said.

However, Lee did not discuss the REIT spinoff initially sought by Starboard, suggesting that approach may not be on the table yet. He added that the proceeds from the sales will be used to pay down debt to help improve Darden's credit profile. "To that end we have been conducting a comprehensive evaluation of wide range of options to create value with real estate while fortifying our credit metrics," he said.

A Darden spokesman added that the company is going to take its time to do an exhaustive analysis that will take place in phases and it will consider all options including a REIT spinoff.

The company's board on Friday declared a regular dividend of 55 cents a share to be paid in the fourth quarter, a move likely cheered on by Starboard.

Finally, in response to a question about breaking the two operating businesses apart, Lee indicated that it won't be teed-up in the near-term. "Right now our strategic focus is on two fronts: running restaurants better and second it's the real estate," he said. "Everything is still on the table and we will come back and consider other strategic options available to us, but right now we are focused on those two initiatives."

In a Sept. 11 presentation to investors, prior to their sweeping board election victory, Starboard suggested that the company should employ a "conservative" approach by focusing first on improving operations and separating the real estate business through a merger or publicly-traded REIT spinoff. The activist fund suggested that separating the real estate could create $1 billion to $2 billion in shareholder value. It added that a spinoff of the company's specialty restaurants group, which includes higher-end restaurant chains, should occur roughly 12 months to 18 months after that October annual meeting, the presentation said. That would leave the remaining operating business of Olive Garden restaurants and Longhorn Steakhouse chain, at Darden.

Critics, including analysts, have raised concerns that spinning off the real estate could be a bad move for Darden in the long-term even though it would cash to the balance sheet. One observer argued that in a recessionary environment it would be difficult for Darden to renegotiate bank loans if it doesn't have significant real estate assets as collateral. One analyst noted, however, that after the Red Lobster sale, Darden no longer needed to raise capital to pay down debt.

Lynne Collier, analyst at Sterne Agee, said that the next major step before the company takes any major strategic considerations, is to hire a new chief financial officer. The Darden spokesman added that the restaurant chain has retained a firm to assist it in that search, which will include internal and external candidates. He added that no deadline has been set to find a new CFO.

Collier added that she believes that the company will proceed with a series of smaller property sale lease backs but she is now doubtful about whether it will ever conduct a REIT spinoff. She expects the proceeds from those sales to be used to help pay down debt initially but she added that if the business continues to stabilize she could see it revisiting stock buybacks.

Starboard did not return calls.

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