Boston, MA 09/08/2014 (wallstreetpr) – Hedge fund Marcato is positive on Life Time Fitness, Inc. (NYSE:LTM) as it expects the gym operator to spin off some of its real estate assets going ahead. If it happens, the Hedge fund has got a price target of $70 on Life Time stocks.
The Strength In Assets
Marcato is a huge $3 billion hedge fund with about 8% stake in Life Time Fitness, Inc. (NYSE:LTM). It supports the idea of gym operator to convert some of its real estate assets into an investment trust. Marcato expects the spinoff to be straightforward and fast. It should take place within six months so as to create a maximum impact on company’s performance. The separation of real estate assets will be positive for Life Time Fitness stock price and can lead the shares to touch $70 in a short time. However, Richard McGuire urged Life Time to be clear with its plans.
McGuire wants Life Time Fitness, Inc. (NYSE:LTM) to design a more efficient and flexible real estate strategy. It will be fruitful for both the businesses. Also, it will create long-term value for shareholders. Life Time is expected to follow the property company and operating company structure in spinning off its real assets. It can also add other companies in the process. Similar strategy was followed by Penn National Gaming, Inc (NASDAQ:PENN).
The Change In Plans
Initially, Life Time Fitness, Inc. (NYSE:LTM)’s Chief Executive, Bahram Akradi, didn’t support the REIT plans. In March 2014, he said that REIT structure didn’t make any sense strategically for Life Time Fitness. However, company changed its stance and decided to go for REIT spinoff. The changed decision is called as a move taken for an efficient capital structure for enhancing growth. Life Time will not face government resistance in an REIT spin-off as U.S. government is more open for candidates opting for REIT structure.