Albertsons Raises $660M in Sale-Leaseback

Albertsons Cos. has raised $660 million through the sale of five distribution centers. In connection with the sale, Boise, Idaho-based Albertsons said it has entered into agreements with the buyer to lease the properties back, which it announced in a filing with the U.S. Securities and Exchange Commission. It did not identify the particular properties, or the buyer.

CEO Jim Donald late last year said such sale-leaseback deals were likely as the company seeks additional financial flexibility to reduce its debts, which he said was a “priority” and likely a prerequisite for a potential public offering of the company’s stock.

The company raised $290 million in a sale of two distribution centers in a similar deal last year. Donald last year said Albertsons had roughly $10.5 billion in owned real estate holdings and $11 billion in debt.

Albertsons said it has entered into lease agreements of 15 to 20 years with the new owners of the five distribution centers, and has multiple options to extend the terms of the leases. The aggregate initial annual rent payment for the properties will be about $38 million, and includes 1.5% to 1.75% annual rent increases over the initial lease terms.

Albertsons will likely provide additional details while reviewing third-quarter financial results next week.

Related:Jim Donald Named CEO of Albertsons