Bon-Ton has sold off six retail properties in an REIT with W.P. Carey's CPA:17-Global for $84 million. The department store chain will use the proceeds from the sale to repay an existing mortgage on the sold properties and leaseback the space from the new owners.
Three of the properties are in Milwaukee, Wisconsin, and the remaining three are in Green Bay, Wisconsin; Fargo, North Dakota; and Joliet, Illinois.
The acquired properties will be leased to an affiliate of Bon-Ton for a period of 20 years.
"We are very pleased to announce this significant transaction with CPA:17-Global and look forward to a continued successful partnership with them. The sale-leaseback of these six properties allows us to address the maturity of one of our mortgage facilities and further enhances our financial flexibility through the value of the remaining properties no longer encumbered by the mortgage facility," said Kathryn Bufano, president and CEO of The Bon-Ton Stores, Inc.
Bufano said the company is still actively pursuing refinancing options for the second mortgage facility.
Bon-Ton operates 270 stores, including nine furniture galleries and four clearance centers, in 26 states. Stores that were sold were anchors at high-quality malls or lifestyle centers, and the stores ranked in the top 25 percent of Bon-Ton stores in terms of total sales. Sales per sq. ft. at these stores ranged from $350 to $595.
Bon-Ton is not the first department store to enter into an REIT to help raise cash. Sears (NYSE:SHLD) recently entered into an agreement to sell 254 Sears stores to Seritage Growth Properties, a Sears Holdings real estate investment trust, for $2.5 billion.
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