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Albertsons, Kimco Realty in Sale/Leaseback Deal Involving 71 Stores

Kimco Paying $720 Million; Combined First-Year Rent Will Range from $46 Million to $50 Million

Albertsons Cos. (NYSE:ABS) plans to close this week on the sale-leaseback of 71 of its owned grocery stores $720 million to Kimco Realty Corp. (NYSE:KIM).

The deals involves just a small fraction of the nearly 1,070 stores owned by the grocer but will net the company about $650 million in proceeds which it intends to use to pay down debt, the company said.

The company views the transaction as a one-off occurrence highlighting the value of its real estate. Although the retailer added that there may be an opportunity for a small additional sale of a couple of distribution centers going forward, it currently said it doesn’t view sale-leasebacks as a significant strategy.

“This transaction helps put a spotlight on the value of our owned real estate, which was appraised last year at $12.1 billion,” said Bob Dimond, CFO of Albertsons. “The annual rent payment associated with these properties after the sale is approximately $46 [million] to $50 million.”

Albertsons operates about 2,324 stores. It owns or ground leases approximately 46% of those stores. That works out to an average store value of approximately $11.32 million. The average value of the stores sold works out to $10.14 million.

Ray Edwards, executive vice president, retailer services for Kimco, said Albertsons “really kept out most of the most valuable properties from the sale-leaseback,” adding that the properties it sold range from from California to Wyoming and Chicago.

Kimco indirectly controls about 9.8% of Albertsons outstanding stock.

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