Last week, Albertsons Companies informed the Securities and Exchange Commission that it had completed the sale of five distribution centers. The company sold its DCs to “an unaffiliated entity” as part of a sale-leaseback deal in an effort to secure $660 million.
“Pursuant to the related sale agreements and upon the closing of the sale of the properties, the company entered into lease agreements with the purchaser for each of the distribution centers for initial terms of 15 to 20 years and multiple options to extend the terms of the leases,” an SEC filing registered by Robert Gordon, EVP, General Counsel and Secretary, filed on behalf of Albertsons, read. “The aggregate initial annual rent payment for the properties will be approximately $38 million and includes 1.50% to 1.75% annual rent increases over the initial lease terms.”
The retailer completed the sale and leaseback of two distribution centers last August, for an aggregate purchase price, net of closing costs, of approximately $290 million.
That fall, CEO Jim Donald noted that the company was planning a transformative overhaul of its distribution network, and also noted the company’s plans to generate cash and improve the company’s position vis-a-vis its debt.
In an earnings report in October, the CEO noted: “We are energized and enthusiastic about our company and our ability to generate free cash flow and delever our balance sheet. The team continues to innovate through our digital engagement with customers in both the four-wall and no-wall environment…through the automation of our distribution centers which we believe will deliver strong returns going forward.”
Where will Albertsons invest the fruits of its sale-leaseback deal? Deli Market News will continue to report on this and other important retail news.