Sale-Leaseback Deal Eliminates Bon-Ton Mortgage

Bon-Ton Stores has entered into an agreement for an $84 million sale-leaseback transaction with CPA: 17-Global, one of W.P. Carey Inc.’s non-traded real estate investment trusts. Proceeds from the transaction, which includes six properties, supplemented with borrowings under the retailer’s revolving credit facility, will pay one of two of the retailer’s mortgage loan facilities due in April 2016.

Each mortgage loan facility has principal outstanding of $105 million and consists of 12 properties. In conjunction with the mortgage termination, Bon-Ton will pay $4.7 million to satisfy the make-whole provision within the debt facility agreement.

Upon completion of the sale, the retailer stated, Bon-Ton will lease the six properties for a 20-year initial term with the option to extend the term for three additional 10-year periods. Bon-Ton noted that it expects the first year annualized rent associated with the six properties to be approximately $6.9 million.

“We are very pleased to announce this significant transaction with CPA: 17-Global and look forward to a continued successful partnership with them. The sale-leaseback of these six properties allows us to address the maturity of one of our mortgage facilities and further enhances our financial flexibility through the value of the remaining properties no longer encumbered by the mortgage facility,” said Kathryn Bufano, Bon-Ton president and CEO.

She added, “We are actively pursuing refinancing options for the second of our two mortgage facilities and will share updates as appropriate.”