Sobeys said Friday it would raise more than $400 million (Canadian) in a sale/leaseback deal with Crombie Real Estate Investment Trust.
Under the agreement Sobeys said it would sell 19 retail properties, its interest in three distribution centers and two development parcels to Crombie for $360 million (Canadian), while Crombie would invest $58 million in renovations and expansions for Sobeys properties it already owns.
Sobeys, Stellarton, Nova Scotia, will concurrently enter into long-term lease agreements with Crombie for those properties.
Sobeys and Crombie are sister companies under control of parent Empire Cos.
Crombie will pay for the transaction by issuing around $93.4 million (Canadian) in new Class B shares for a public offering. Following the transaction, Empire would maintain a 41.5% ownership interest in Crombie.
Sobeys said cash received in the deal would be used to pay down debt.
“This transaction is aligned with our strategic position of providing Crombie REIT preferred access to real estate assets while giving Sobeys access to capital to support our expansion as a leading national retailer,” Marc Poulin, president and CEO, Sobeys, said in a statement.
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