Activist investor Barington Capital Group LP said Monday that Darden Restaurants Inc.’s December-announced plan to spin off Red Lobster falls short, especially in taking advantage of the company’s owned real estate.

New York-based Barington, which represents a group of shareholders that owns more than 2 percent of Darden’s outstanding shares, said in a statement that it was “disappointed” with Darden’s plan, which also includes halting Olive Garden development and slowing LongHorn Steakhouse expansion.

“While we appreciate that Darden will be suspending new unit growth at Olive Garden and further reducing expenses as we recommended, we view the overall plan as incomplete and inadequate,” Barington said. “In particular, we are disappointed that Darden's plan fails to take advantage of opportunities to realize substantial value from Darden's extensive real estate holdings.”

A second activist investor, New York-based Starboard Value LP, took a 5.6-percent stake in Darden in December and pressed for changes as well, including opportunities in the company’s real estate holdings.

Barington said in December that it estimated Orlando, Fla.-based Darden's real estate assets at about $4 billion and called for spinning that off as a separate real estate investment trust.

“The costs associated with unlocking the value of these assets would be vastly exceeded by the value created for shareholders,” said Barington, which plans a Jan. 30 online presentation to discuss its concerns further.

Darden has stood by its Dec. 19 plan, which included a number of executive changes along with the announcement of a sale or spin-off of Red Lobster.

On Monday, Rich Jeffers, Darden’s director of communications, said the board of the nation’s largest casual-dining company remained focused on creating value for shareholders.

“We are confident that our plan, together with actions we are taking to enhance guest experiences and reinvigorate demand, will lead to improved performance in our restaurants and substantially increase value for all Darden shareholders,” Jeffers said.
Barington has been pushing since September for a breakup of Darden, which also owns the LongHorn Steakhouse, Bahama Breeze, Capital Grille, Eddie V’s, Seasons 52 and Yard House restaurants.

In its statement Monday, Barington said Darden’s current Red Lobster spin-off plan “could hinder the company's ability to monetize its real estate in the future, a prospect that should give all shareholders great pause.”  

While details of Darden’s Red Lobster plan have not been finalized, Barington said, “we would strongly object to any transaction that limits the ability to realize the significant value of the company's real estate assets for the benefit of all Darden shareholders.”