MINNEAPOLIS--(BUSINESS WIRE)--Apr. 24, 2018--
SUPERVALU INC. (NYSE: SVU) today announced it has entered into
definitive agreements to sell eight of its owned distribution centers,
representing approximately 5.8 million square feet, to a single buyer
for an aggregate purchase price, excluding closing costs and taxes, of
approximately $483 million. Upon closing of the sales, SUPERVALU will
enter into lease agreements for each of the facilities for an initial
term of 20 years with five five-year renewal options. Adjusting for
taxes and closing costs, net proceeds to SUPERVALU are estimated to be
approximately $445 million. Subject to customary closing conditions, the
sale and leaseback of these properties is expected to be completed in
May for seven of the properties and by October for one property.
“The completion of these sale leaseback transactions is another positive
step in the continued transformation of our business,” said Mark Gross,
SUPERVALU’s President and Chief Executive Officer. “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. I appreciate the hard work and dedication
from our team as we continue to move quickly on a variety of initiatives
we believe position us for future success.”
Expected Use of Proceeds
Net proceeds from the sales will be used to reduce outstanding debt
including, and as required, the payoff of a mortgage related to one of
the properties being sold and a mandatory prepayment of SUPERVALU’s
secured term loan.
Expected Impact on Results of Operations
SUPERVALU is expected to pay cash rent of approximately $31 million in
the first year of these leases (approximately $24 million in fiscal 2019
based on a partial year). Due to customary rent escalators in the
leases, SUPERVALU’s rent expense related to these leases will be
approximately $37 million on an annual basis (approximately $27 million
in fiscal 2019 based on a partial year). The resulting reduction in
interest expense will depend on how and when the net proceeds are
applied to reducing debt. Following the sale of these facilities,
SUPERVALU will continue to own over 13 million square feet of real
In addition, the buyer has also agreed to fund an expansion at
SUPERVALU’s distribution center in Harrisburg, PA, one of the facilities
included in the sale and leaseback, for an estimated cost of $20
million. The expansion, which will help support the growth of
SUPERVALU’s wholesale business and broaden the availability of its
Market Centre products across the network, will also be leased to
SUPERVALU upon completion.
LIST OF DISTRIBUTION CENTERS BEING SOLD AND LEASED BACK AS PART OF
SUPERVALU Distribution Center Location
Green Bay, WI
Pompano Beach, FL
About SUPERVALU INC.
SUPERVALU INC. is one of the largest grocery wholesalers and retailers
in the U.S. with annual sales of approximately $14 billion. SUPERVALU
serves customers across the United States through a network of 3,437
stores composed of 3,323 wholesale primary stores operated by customers
serviced by SUPERVALU’s food distribution business and 114 traditional
retail grocery stores in continuing operations operated under three
retail banners in three geographic regions (store counts as of February
24, 2018). Headquartered in Minnesota, SUPERVALU has approximately
23,000 employees (in continuing operations). For more information about
SUPERVALU visit www.supervalu.com.
Forward Looking Statements
CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE
PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995.
Except for the historical and factual information, the matters set
forth in this news release, particularly those pertaining to the
expected completion of the sales and leaseback of the facilities
(including the timing thereof), the ability to consummate the sales and
SUPERVALU’s expectations, guidance, or future operating results, and
other statements identified by words such as "estimates" "expects,"
"projects," "plans," "intends," "outlook" and similar expressions are
forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially, including the
ability to satisfy the closing conditions and close the proposed sales
and leasebacks on a timely basis or at all, the possibility that
modifications to the terms of the transactions may be required, business
disruption, and other risk factors relating to the business or industry
as detailed from time to time in SUPERVALU's reports filed with the SEC.
You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this news release. For
more information, see the risk factors described in SUPERVALU’S Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings
with the SEC. Unless legally required, SUPERVALU undertakes no
obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.
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Source: SUPERVALU INC.
Jeff Swanson, 952-903-1645