Vornado Exiting J.C. Penney

NEW YORK ( TheStreet) - Vornado Realty Trust ( VNO) said Friday it plans to sell its shares of embattled department store J.C. Penney ( JCP).

Vornado Realty and its affiliates own 13.4 million shares, or 6.1% of J.C. Penney's stock, worth about $185 million, according to Bloomberg data.

Vornado, in a Securities and Exchange Commission filing on Friday, said that Steven Roth, its chairman and CEO, has resigned from J.C. Penney's board of directors.

At a recent conference, Vornado's Chief Administrative Officer Joseph Macnow said that the company expects to exit its investment in J.C. Penney "in the not-too-distant future," according to the filing.

Vornado intends to "review their investments in the Issuer on a continuing basis," the filing said. "Depending on various factors, including, without limitation, the Issuer's financial position and strategic direction, actions taken by the board, price levels of Common Shares, other investment opportunities available to the Reporting Persons, market conditions and general economic and industry conditions, the Reporting Persons may take such actions with respect to their investments in the Issuer as they deem appropriate."

Shares of Vornado were up 0.30% to $84.57, while J.C. Penney's stock fell 0.72% to $13.81 on Friday.

In March, Vornado sold about 10 million shares, or 40% of its J.C. Penney stake, in an attempt to become more of a pure-play REIT.

Last month, the department store reported a worse-than-expected net loss of $586 million, or $2.66 a share, in a second quarter chock full of extraordinary charges that pulled the number down. Net sales slumped 12% year over year and gross margin fell to 29.6% in the quarter. The company said it plans to end the year with $1.5 billion of cash.

The dismal earnings results followed a very public battle with Pershing Square's Bill Ackman, who sought to shake things up at board and executive level to speed up J.C. Penney's turnaround. Ultimately, Ackman lost that battle and resigned his board seat. Ackman announced on Aug. 27 plans to sell his entire 18% stake in J.C. Penney.

In the wake of the activist investor headache, J.C. Penney recently adopted a stockholder rights plan in hopes to make it more difficult for anyone to acquire or own more than 10% of the company

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

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