Bob Evans Farms, Inc. announced it signed a letter of intent to sell 145 restaurant properties to Mesirow Realty Sale-Leaseback, Inc., an affiliate of Mesirow Financial Holdings, Inc., for $200 million. The company expects the transaction to close during its fourth fiscal quarter ending April 29, 2016, and to yield net proceeds of around $165 to $170 million.
The properties will be leased under an absolute triple-net single master lease agreement under which the lessee will continue to be responsible for all costs related to taxes, insurance, maintenance, repairs, and replacements. The primary term of the lease, which will be treated as an operating lease, is 20 years with up to five successive five-year renewal options. Annual straight-line rent expense, inclusive of a 1.5 percent annual escalator, will be around $15.4 million, excluding amortization of deferred gains.
Mark Hood, chief administrative officer and chief financial officer, says, "Completion of this transaction, after the previously announced sale-leaseback of two manufacturing facilities, marks another major milestone in the company’s efforts to monetize a significant portion of its real estate assets. We expect to use the net proceeds from this transaction to pay down debt and to repurchase shares, while maintaining prudent leverage."
Successful execution and completion of the transaction are subject to property due diligence, definitive documentation, and the normal conditions of closing.
Franchise Capital Advisors along with Quantum Global LLC served as lead arrangers while J.P. Morgan Chase & Co. served as financial adviser to the company on this transaction.