Macy’s (NYSE:M) stock is about to get a shot in the arm thanks to its real estate partnership with Brookfield Asset Management (NYSE:BAM). The help comes as M stock is trying to climb back from its 52-week low.

I had forgotten entirely about the department store’s real estate gambit until I happened to read an article about it at the end of March.

If you don’t remember the details of the partnership, let me get you up to speed.

Initially, Macy’s gave Brookfield the exclusive rights to redevelop 50 Macy’s stores within 24 months of signing the deal in November 2016. Now, more than two years later, Brookfield is moving ahead with its plans to extract higher value from those 50 properties. 

“The Brookfield alliance [gives] us greater flexibility to invest in our most productive and highest potential locations, and to make the most of our real estate assets,” former Macy’s CEO and Chairman Terry Lundgren said in a statement at the time.

Current CEO Jeff Gennette is probably thanking his lucky stars his former boss signed that deal because with Brookfield’s plans heating up, it takes the pressure off Macy’s retail operations, which haven’t performed all that well in a relatively strong economy.

If you own Macy’s stock, the Brookfield partnership could be the gift that keeps on giving. Here’s why.

Some of the Projects

Last year, Macy’s former CFO Karen Hoguet, confirmed that the retailer and Brookfield had agreed on terms for nine of the 50 projects with approximately two-thirds of the locations getting some redevelopment.

Of those nine, six would involve adding retail shops on top of existing parking lots while the other three would be bigger, mixed-use developments.

What’s in it for Macy’s financially?

The Motley Fool’s Adam Levine-Weinberg wrote a year ago that Macy’s could generate $200 million from the redevelopment of 33 of the 50 properties, at a payoff of $6 million per property.

However, that’s a relatively conservative number that doesn’t take into account Macy’s accepting more of the risk in return for more of the cash flow down the road.

A particularly interesting project is at its Hawthorn Mall in suburban Chicago.

Macy’s and Brookfield have proposed four new buildings on property adjacent to the mall. City officials in Vernon Hills, Illinois, think it’s too much scale for this particular piece of property. Macy’s is now debating whether to go ahead with just three buildings.

Centennial Real Estate, which acquired Hawthorn Mall in December 2015, is eager to transform it into something beyond retail, with restaurants, hotels, and other non-retail uses.

The point of all of these projects is to drive more traffic to the mall.

While city officials are rightly concerned about a hodgepodge of buildings going up, Brookfield isn’t in the business of delivering crappy solutions. It will figure out a way to work with Centennial to bring a comprehensive plan to the mall’s redevelopment.

The harder the project, the more Brookfield’s ability to utilize its talent for getting difficult projects completed. Terry Lundgren picked the right group to partner on these projects.

Bottom Line for Macy’s Stock

Macy’s finished fiscal 2018 with same-store-sales (SSS) growth of 1.7%, 390 basis points higher than fiscal 2017 and 520 bps higher than fiscal 2016. While its fourth-quarter SSS grew by only 0.4%, it did manage to increase online sales by double digits as it continues to create a better omnichannel experience for Macy’s customers. 

Also, its Growth50 stores delivered better performance, on average, than its entire fleet of stores, a sign that the company’s North Star Strategy is working. As it reduces the bloat in its executive ranks while continuing to invest in those areas that will deliver the highest returns, Macy’s operating profits are likely to stabilize and grow, and Macy’s stock price should ride those coattails.

Macy’s partnership with Brookfield is starting to see real progress. That means the stores where redevelopments are happening are likely to see increased traffic and stronger sales in the future.

The combination of a slowly evolving retail operations plan from CEO Gennette, along with the ongoing transformation of some of its real estate suggests there are better days ahead for Macy’s stock, which continues to trade near five-year lows.

As my InvestorPlace colleague, Luke Lango wrote recently, M stock is unreasonably undervalued at the moment. 

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.