Supervalu has completed the sale and leaseback of seven of its distribution centers as part of a previously announced agreement to sell eight of its owned warehouses.
With the sale of these seven facilities now complete, Supervalu has entered into lease agreements for each facility for an initial term of 20 years with five five-year renewal options. The sale and leaseback of the eighth property is expected to be completed by October.
The sale of all eight facilities represents approximately 5.8 million square feet with an aggregate purchase price, excluding closing costs and taxes, of approximately $483 million.
The company said that net proceeds from the sales will be used to reduce outstanding debt including the payoff of a mortgage related to one of the properties sold and a mandatory prepayment of a secured term loan. Supervalu also intends to use net proceeds for a partial redemption of its outstanding senior unsecured notes due in 2021.
“The completion of these sale leaseback transactions is another positive step in the continued transformation of our business,” said Mark Gross, Supervalu president and CEO. “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.”