Friday, April 27, 2018

Undisclosed Buyer to Pay $483M for SuperValu Distribution Centers

A single buyer is snapping up eight distribution centers totaling approximately 5.8 million square feet in a $483 million sale-leaseback deal with Eden Prairie-based grocery wholesaler and retailer SuperValu.

SuperValu announced the deal on Monday. The company did not disclose the buyer’s identity.

In early February, Supervalu announced that it had hired Los Angeles-based CBRE to market its properties, with the aim of using the proceeds from sale-leaseback arrangements to pay down existing debt.

The move to turn real estate into cash had been under discussion since at least December of 2017, though Supervalu did acknowledge that it was partly spurred to action by the threat of a proxy fight by an activist investor, Blackwells Capital of New York City. In a Feb. 6 letter to Supervalu’s board of directors, Blackwells estimated that the company’s portfolio could generate up to $1.8 billion if sold.

As of the company’s last full year report, issued on Tuesday, Supervalu owned 17 million square feet of industrial space, about 2 million square feet of retail and 345,000 square feet of office space at its headquarters.

A little less than half the sites included in the sale-leaseback transaction appear to be those once owned by two companies Supervalu acquired in 2017: Pompano Beach, FL- based Associated Grocers of Florida Inc., which Supervalu bought for $193 million, and Commerce, CA-based Unified Grocers Inc., which was purchased in a $390 million deal.

The properties included in the sale-leaseback deal are:
451 Joannes Ave. in Green Bay, WI;
5300 Sheila St. in Commerce, CA (Unified Grocers, Inc.);
1990 Piccoli Road in Stockton, CA (Unified Grocers, Inc.);
1141 SW 12th Ave. in Pompano Beach, FL (Associated Grocers);
2611 N. Lincoln in Champaign, IL;
501 N. Mallick Rd. in Ogelsby, IL;
2600 W. Haven Rd. in Joliet, IL, a 1 million-square-foot facility built in 2010 by Central Grocers Inc., which filed for bankruptcy in May 2017. Supervalu paid $60 million for the building in September 2017.
3700 - 3900 Industrial Rd. in Harrisburg, PA, a 750,000-square-foot distribution facility it purchased for $37.54 million in March 2017. In late March 2018, Supervalu and Pennsylvania Gov. Tom Wolf announced that the company would expand the facility in Harrisburg, an investment of $69 million on Supervalu’s part. As part of the sale-leaseback deal, the mystery buyer will put $20 million towards this project.

Supervalu estimates that the net proceeds of the sale-leaseback will total $445 million. Seven of the eight sales are expected to close by May. The eighth will close by October.

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