Bon-Ton Stores Inc (NASDAQ:BONT) To Sell And Lease Back Six Properties In $84M REIT


Bon-Ton Stores Inc (NASDAQ:BONT) is taking the current market trend of converting real estate assets into cash.

The retail firm announced plans to sell six of its properties to a real estate investment trust called CPA:17-Global. The company will then lease back the sold properties in the same deal that is expected to generate $84 million for the retailer. Kathryn Bufano, the President, and Chief Executive of Bon-Ton Stores Inc. said that leasing back the property will facilitate the maturity of one of its mortgage facilities. It will also be a significant move towards enhancing the financial stability of the company.

Bufano also announced that the retailer is seeking alternative refinancing measures that will be extended to the other mortgage facility. She promised that the company will reveal further information in line with the firm’s activities. The Bon-Ton lease will take an initial term of 20 years, with a with a three 10-year option.

Three of the properties to be leased are located in Wisconsin, North Dacota, Fargo, Green Bay and Joliet, Illinois. The rest of the properties are distributed in Milwaukee, where the headquarters are located. It also has headquarters in Pennsylvania and New York. The firm currently operates 270 locations in 26 states.

The sale and leaseback trend is becoming more popular among American firms. A week ago, Darden Restaurants, Inc. (NYSE:DRI) announced that it plans to open a real estate investment trust where it will transfer the ownership of 430 of its restaurants. Sears Holdings Corp (NASDAQ:SHLD) also announced that it will sell more than 250 of its properties to a REIT that it formed.

Bon-Ton will use some of the proceeds from the sale to cater to the mortgage payment that is due in April next year. The announcement comes roughly one month after the company reported a first quarter net loss of $34.1 million that was bigger than the $31.5 million net loss reported in the corresponding first quarter of the previous financial year.