SUPERVALU Announces Agreements to Sell and Leaseback Eight Distribution Centers
April 24 2018 - 4:14PM
Business Wire
SUPERVALU INC. (NYSE: SVU) today announced it has entered into
definitive agreements to sell eight of its owned distribution
centers, representing approximately 5.8 million square feet, to a
single buyer for an aggregate purchase price, excluding closing
costs and taxes, of approximately $483 million. Upon closing of the
sales, SUPERVALU will enter into lease agreements for each of the
facilities for an initial term of 20 years with five five-year
renewal options. Adjusting for taxes and closing costs, net
proceeds to SUPERVALU are estimated to be approximately $445
million. Subject to customary closing conditions, the sale and
leaseback of these properties is expected to be completed in May
for seven of the properties and by October for one property.
“The completion of these sale leaseback transactions is another
positive step in the continued transformation of our business,”
said Mark Gross, SUPERVALU’s President and Chief Executive Officer.
“By unlocking significant value in a portion of our real estate
portfolio, we’re able to meaningfully pay down debt, improve our
balance sheet, and deliver value to our shareholders. I appreciate
the hard work and dedication from our team as we continue to move
quickly on a variety of initiatives we believe position us for
future success.”
Expected Use of Proceeds
Net proceeds from the sales will be used to reduce outstanding
debt including, and as required, the payoff of a mortgage related
to one of the properties being sold and a mandatory prepayment of
SUPERVALU’s secured term loan.
Expected Impact on Results of Operations
SUPERVALU is expected to pay cash rent of approximately $31
million in the first year of these leases (approximately $24
million in fiscal 2019 based on a partial year). Due to customary
rent escalators in the leases, SUPERVALU’s rent expense related to
these leases will be approximately $37 million on an annual basis
(approximately $27 million in fiscal 2019 based on a partial year).
The resulting reduction in interest expense will depend on how and
when the net proceeds are applied to reducing debt. Following the
sale of these facilities, SUPERVALU will continue to own over 13
million square feet of real estate.
In addition, the buyer has also agreed to fund an expansion at
SUPERVALU’s distribution center in Harrisburg, PA, one of the
facilities included in the sale and leaseback, for an estimated
cost of $20 million. The expansion, which will help support the
growth of SUPERVALU’s wholesale business and broaden the
availability of its Market Centre products across the
network, will also be leased to SUPERVALU upon
completion.
LIST OF DISTRIBUTION CENTERS BEING SOLD AND LEASED BACK AS
PART OF THIS TRANSACTION
SUPERVALU Distribution Center Location Champaign, IL
Commerce, CA Green Bay, WI Harrisburg, PA Joliet, IL Oglesby, IL
Pompano Beach, FL Stockton, CA
About SUPERVALU INC.
SUPERVALU INC. is one of the largest grocery wholesalers and
retailers in the U.S. with annual sales of approximately $14
billion. SUPERVALU serves customers across the United States
through a network of 3,437 stores composed of 3,323 wholesale
primary stores operated by customers serviced by SUPERVALU’s food
distribution business and 114 traditional retail grocery stores in
continuing operations operated under three retail banners in three
geographic regions (store counts as of February 24, 2018).
Headquartered in Minnesota, SUPERVALU has approximately 23,000
employees (in continuing operations). For more information about
SUPERVALU visit www.supervalu.com.
Forward Looking
Statements
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
Except for the historical and factual information, the matters
set forth in this news release, particularly those pertaining to
the expected completion of the sales and leaseback of the
facilities (including the timing thereof), the ability to
consummate the sales and SUPERVALU’s expectations, guidance, or
future operating results, and other statements identified by words
such as "estimates" "expects," "projects," "plans," "intends,"
"outlook" and similar expressions are forward-looking statements
within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to risks and uncertainties that may cause
actual results to differ materially, including the ability to
satisfy the closing conditions and close the proposed sales and
leasebacks on a timely basis or at all, the possibility that
modifications to the terms of the transactions may be required,
business disruption, and other risk factors relating to the
business or industry as detailed from time to time in SUPERVALU's
reports filed with the SEC. You should not place undue reliance on
these forward-looking statements, which speak only as of the date
of this news release. For more information, see the risk factors
described in SUPERVALU’S Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and other filings with the SEC. Unless legally
required, SUPERVALU undertakes no obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20180424006373/en/
SUPERVALU INC.Investor
Contact:Steve Bloomquist,
952-828-4144steve.j.bloomquist@supervalu.comorMedia Contact:Jeff Swanson,
952-903-1645jeffrey.s.swanson@supervalu.com
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