Sobeys Enters a $418 Million Deal with Crombie Real Estate Investment Trust; Selling Several Properties
STELLARTON, NS – Sobeys Inc. and its parent company, Empire Company Limited, have announced 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 deal includes:
- The sale or lease back of 19 retail properties
- The sale or lease back of 50 percent interests in three automated distribution centers
- The sale of two parcels of development land for a total of $360 million
- Crombie will invest $58 million in renovations/expansions of ten Sobeys locations
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.
As the deal closes, Sobeys will enter into long-term, fully net leases for each property, including the distribution centers and renovated and expanded stores. Sobeys will also provide environmental indemnities on 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 AndNowUKnow.
