A report from the Wall Street Journal revealed Macy's (M) is considering a buyout offer from real estate investor Arkhouse Management and asset manager Brigade Capital Management worth $5.8 billion. While brick and mortar retail stores have faced an uphill battle in recent years, at the center of interest for most investors is Macy's real estate portfolio, which contains the crown jewel, New York City's iconic Herald Square location. Triangle Capital Co-Founder and Partner Richard Kestenbaum joins Yahoo Finance to discuss the potential buyout and Macy's real estate portfolio.

Kestenbaum explains that since department stores have struggled, investors have taken a different approach, looking at the whole portfolio of departments stores, and ask "how do we make this investment worthwhile?"

Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.

Video Transcript

- An investor group has put forth a $5.8 billion bid for department store chain Macy's. Perhaps the most notable asset the company holds, its sizable real estate portfolio. Between the Macy's brand Bloomingdale's and Bluemercury, Macy's operates more than 700 locations, including its iconic Herald Square location. So where can the retailer win with its portfolio?

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We want to bring in Richard Kestenbaum, Triangle Capital co-founder and partner. So Richard, thanks so much for joining us. When you think about this deal, what does this tell you about where Macy's is in terms of the retail space?

RICHARD KESTENBAUM: Well, the consumer is changing. And consumers don't want to shop where their parents shopped. They want new venues. And that's been very challenging for the department store business. And so what you see is other people taking a different look at the assets of department stores and trying to figure out, how do we make this investment worthwhile?

That may not mean that they grow or have a new formula for the department store business, as you guys have been very well describing, they may have a different strategy for the future of the brand. They haven't told us what that is. But it seems likely that that's the case.

- Can we ask about valuation here? $5.8 billion. I've heard rumblings among various analysts that the numbers a little bit low and we don't just yet. But it appears as though the buyer the Investment Group could be willing to pay a little bit more. What are your thoughts on this? What do you think in terms of the valuation? What does this deal look like?

RICHARD KESTENBAUM: I think they've come in with a premium that's not exceptionally high. And I would not be surprised if the bid goes up before it's over, if it does go forward, or that someone else comes in and makes a higher bid.