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Consulting Services - Darden Restaurants Case Study


The Client

Starboard Value

Client Type: Hedge fund


Deal Size

Portfolio Size

$395 million

Approximately $4 billion

Situation

A sophisticated hedge fund client believed the value of Darden Restaurants, Inc's (NYSE: DRI) real estate holdings was not fully reflected in the company’s share price. The client retained Green Street to provide an independent opinion of the real estate value of nearly 2,000 owned and leased properties.

Our solution

Results

The analysis included a detailed review of each of Darden Restaurants’ operating locations. Using Green Street's proprietary data, industry contacts and knowledge, in combination with publicly-available information, the Advisory & Consulting team derived valuation estimates for the company's owned and leased real estate. We provided insight on how value may vary under different scenarios including a private sale, a public listing, or a merger. The activist hedge fund client used this information as part of its publicly-filed presentation to make the case for a sale or spin-off of the company's real estate to enhance shareholder value.

Green Street's valuation helped to clarify and support the client's thesis that Darden Restaurants' real estate was under-appreciated by the investment community. In May, Darden announced a plan to maximize the value potential of the spin-off of Red Lobster’s real estate assets in a sale-leaseback transaction with American Realty Capital Properties, Inc. (ARCP) for 9x Red Lobster’s EBITDA.

Starboard Presentation: Darden Real Estate Primer, March 31, 2014.

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This presentation contains some Green Street analysis, but the conclusions and recommendations are those of Starboard. Green Street has not verified the outside information contained in the presentation and therefore cannot make any guarantee to its accuracy.