HACKENSACK, NJ—To the casual observer, Darden Restaurants Inc.'s announcement last week that it would spin off about 430 owned properties into a standalone REIT, which would then lease back most of the properties to Darden, looks like the latest example of a new trend among retailers. Sears Holdings has already put its plans in motion to create a REIT, and another food-oriented company, Bob Evans Farms, is also exploring a possible REIT conversion of some of its restaurant properties.

Yet Richard Abramson with law firm Cole Schotz makes it clear that the industry has been here before. “It's not a new strategy,” he tells GlobeSt.com. Co-chair of the firm's real estate special opportunities group, Abramson has represented retailers over the past 30 years.

“It seems as though sale-leasebacks go in and out of vogue,” he says, pointing out that supermarket chains favored SLBs in former years. A REIT separation, Abramson says, is just another vehicle for financing SLBs. “It's simply where real estate prices are right now, and people looking to capitalize on that.”

He notes that Macys, “which has huge real estate holdings as well,” reportedly is not considering an SLB of any of those holdings. “The question of whether to take it off the balance sheet or leave it on the balance sheet goes both ways.”

Nonetheless, a sale-leaseback—whether to a REIT spinoff or to an unaffiliated owner—is an option that retailers should consider, Abramson says. “These companies acquire these real estate assets over a long period of time, often at advantageous rates.”

A Macys, for example, might have been the initial anchor tenant for a newly developed shopping center. “They commanded pretty good leverage when they bought or ground-leased that property, in order to be the catalyst for the development of an entire shopping center,” says Abramson.

That doesn't mean, however, that selling off that portfolio and leasing it back is invariably the best strategy. “Once they do a sale-leaseback, they become a tenant—now they have to pay rent,” he says. “That becomes an operating expense they may not have otherwise incurred when they owned it.” The property's new owner is likely to have bought the asset with specific returns in mind, “so they're going to peg the rent to achieve those returns.”

For publicly traded companies, there's also the risk of incurring shareholder wrath. The Chicago Tribune reported earlier this month that SHLD was facing a class-action lawsuit from stockholders who alleged that the retailer's spinoff plan would benefit CEO Eddie Lampert more than them. Shareholders, says Abramson, “may not think they're getting fair value for the real estate.” Whether they'll be able to prove that the assets would be worth more in the future remains to be seen, he adds.

Another option for retailers, he says, is conventional financing. He notes that SHLD went that route with its Sears and Kmart properties for some time before deciding that a REIT transaction served its current interests better. The downside of financing, of course, is that “you have to pay interest on it.”