Sobeys Inc. and parent company, Empire Company Limited, have entered into a new agreement with Crombie Real Estate Investment Trust that will allow the companies to sell or lease back several retail properties, distribution center interests, development land, and more, for a total transaction of $418 million.
“This transaction is aligned with our strategic position of providing Crombie REIT preferred access to real estate assets while giving Sobeys access to capital to support our expansion as a leading national retailer,” explained Marc Poulin, President & CEO, of Sobeys in a statement.
According to the companies, the new deal includes:
As for the details of the transaction, Crombie has announced it will pay for the deal, in part, by issuing approximately $93.4 million in value of Crombie Limited Partnership Class B units, with attached Crombie special voting units at a price of $14.70 per unit. This is the same price per unit as a Crombie REIT subscription receipt bought-deal public offering that the investment trust announced on the same day as the Sobeys deal. The transaction will maintain Empire’s approximately 41.5 percent equity accounted ownership interest in Crombie, and Sobeys will receive the balance of approximately $324.6 million in cash, which will be used for debt repayment.
The deal sees Sobeys entering into long-term, fully net leases for each property, including the distribution centers and renovated and expanded stores. Sobeys will also provide environmental indemnities for the properties.
While the transaction is still subject to both regulatory approval, and approval of non-Empire affiliated Crombie unitholders, we can likely expect this to put a substantial dent into Sobeys' debt. For more on the latest retail deals and agreements, keep your eyes on DeliMarket News.
