ShopKo Agrees to $815 Million Sale Leaseback of 178 Stores

Sun Capital Partners, a Boca Raton, Fla.–based private equity firm, is selling its ShopKo Stores properties to Spirit Finance Corp. in an $815.3 million sale-leaseback, making this the biggest such transaction ever in the U.S. retail real estate industry.

Sun Capital bought ShopKo in December for $880.8 million plus debt.

The deal involves 112 ShopKo and 66 Pamida sites. The seller has agreed to lease the ShopKo stores for 20 years and the Pamida properties for 15.

Up to now Kmart has held the record for a sale-leaseback transaction, according to a report in The Wall Street Journal. The retailer raised $621 million in such a deal during its bankruptcy proceedings.

The ShopKo discount stores, which measure about 90,000 square feet each on average, operate in open-air centers and as stand-alone locations in small cities. Pamida operates 30,000-square-foot general merchandise stores in rural locations.

Sale-leaseback transactions have grown increasingly popular among retailers eager to raise cash. Albertsons, J.C. Penney and Wal-Mart have all struck such deals, as have drugstores, fast-food chains and other stand-alone retailers. In recent years rival drugstore giants Walgreen Co. and CVS Corp. have both completed the occasional sale-leaseback deal. Walgreen leases 80 percent of its roughly 5,000 stores. Sphere: Related Content