Safeway Properties Sold To Crombie REIT For $990M

Posted: Updated:
SAFEWAY PROFIT
Empire Company Ltd. says it is selling 68 Safeway properties to Crombie REIT for $990 million in cash. (AP) | AP

STELLARTON, N.S. - Empire Company Ltd. (TSX:EMP.A) announced a plan Wednesday to sell 68 Safeway properties in a sale-leaseback deal with Crombie REIT (TSX:CRR.UN) for $990 million in cash.

The company, which owns the country's second-largest grocer Sobeys Inc., said the properties involved in the sale are located in British Columbia, Alberta, Saskatchewan and Manitoba.

In early June, Empire signed an agreement to buy more than 200 grocery stores from Canada Safeway Ltd. in a $5.8-billion deal. At the time, it said that it intended to finance the acquisition with a $1 billion sale-leaseback that it would first offer to Crombie REIT.

"We are pleased to announce this sale leaseback transaction between Sobeys and Crombie REIT," Empire president and chief executive Paul Sobey said in a statement.

"The sale proceeds will be used by Sobeys to assist in the funding of the Canada Safeway acquisition which provides Sobeys with a much stronger presence in Western Canada and allows them to benefit from increased economies of scale."

Empire created Crombie REIT when it spun off a number of properties in 2006.

The properties in the deal Wednesday total three million square feet of gross leasable area and include 49 freestanding stores and 19 retail plazas, each anchored by a Canada Safeway grocery store.

There are 29 properties in B.C., 27 in Alberta, three in Saskatchewan and nine in Manitoba.

"The geographic location of these assets is highly complementary to our existing core portfolio, providing greater exposure to Western Canadian markets and solidifying Crombie’s position as a truly national retail landlord," Crombie president and chief executive Donald Clow said in a statement.

"Furthermore, this portfolio contains a significant number of assets that are located in key, highly sought-after urban locations that are difficult to acquire."

Clow noted the deal is expected to immediately add to the trust's adjusted funds from operations per unit.

Crombie REIT has said to partially finance the transaction, it will sell $225 million in subscription receipts to a syndicate of underwriters, which will be convertible into Crombie REIT units, as well as $75 million in extendible convertible debentures which will be exchangeable into Crombie REIT units.

Empire has also agreed to buy $150 million of Crombie class B limited partnership units at the same price per unit as the Crombie REIT subscription receipts.

Sobeys owns or franchises more than 1,300 stores across Canada under several banners that include Sobeys, IGA, Foodland, FreshCo, and Thrifty Foods.

Also on HuffPost:

Close
Canada's 10 Most Valuable Retail Brands
of
Share
Tweet
Advertisement
Share this
close
Current Slide

Suggest a correction

Around the Web

Empire Company sells 68 Safeway properties to Crombie REIT for $990M

Canadian Press NewsAlert: Empire sells 68 Safeway properties for $990M

Sobeys flood relief initiative raises more than $280000 for Southern Alberta

Sobeys gives back to Saskatoon community

Sobeys to sell 24 theatres in Atlantic Canada