SUPERVALU To Sell Eight Of Its Owned Distribution Centers - Quick Facts

(RTTNews) - SUPERVALU INC. (SVU) announced definitive agreements to sell eight of its owned distribution centers to a single buyer for an aggregate purchase price, excluding closing costs and taxes, of approximately $483 million. The net proceeds to SUPERVALU are estimated to be approximately $445 million. The company said the net proceeds will be used to reduce outstanding debt including, and as required, the payoff of a mortgage related to one of the properties being sold and a mandatory prepayment of SUPERVALU's secured term loan.

Upon closing of the sales, SUPERVALU will enter into lease agreements for each of the facilities for an initial term of 20 years with five five-year renewal options. SUPERVALU is expected to pay cash rent of approximately $31 million in the first year of these leases (approximately $24 million in fiscal 2019 based on a partial year). Due to customary rent escalators in the leases, SUPERVALU's rent expense related to these leases will be approximately $37 million on an annual basis (approximately $27 million in fiscal 2019 based on a partial year).