STELLARTON, Nova Scotia — Empire Co. here said Wednesday it has reached an agreement to sell 68 Safeway properties in Western Canada to a real estate investment trust to help finance its acquisition of Safeway Canada.
The price of the sale-leaseback transaction is $960 million (U.S.). Crombie REIT is the buyer of the properties. Empire had previously said it would conduct such a transaction to help fund the purchase of Safeway’s Canadian division by Empire’s wholly owned subsidiary, Sobeys, for about $5.6 billion (U.S.).
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“The sale-leaseback transaction provides Crombie REIT with an attractive portfolio of assets,” said Paul D. Sobey, president and chief executive officer, Empire.
He also said Empire would purchase $150 million of Crombie Class B Limited Partnership units.
The properties Crombie REIT is acquiring — all anchored by a Safeway store — have about 3 million square feet of gross leasable area, with 39.6% in British Columbia, 42.6% in Alberta, 4.8% in Saskatchewan and 13% in Manitoba. As a condition of closing, Empire said that Sobeys, as tenant, will enter into fully net leases for each of the properties, with any third-party tenants becoming a tenant of Sobeys. The aggregate annual basic rent under all the Sobeys leases is $55.4 million (U.S.), increasing annually by 1.5% per year.
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