ShopKo Agrees to $75.5 Million Sale Leaseback Seven Stores in Western US

The Business Journal of Milwaukee - March 8, 2007

The operator of ShopKo discount department stores has agreed to sell and lease back seven store properties in the western United States under a transaction that will provide cash for new stores and remodeling of existing locations.

ShopKo Stores Operating Co. L.L.C. sold its ownership interest in the properties to Princeton, N.J., private equity investor Sovereign Investment Co. and its partner Atlas Investments for $75.5 million, the buyers said late Wednesday. The stores are in Salem, Bend and Eugene, Ore.; Boise, Idaho; Sandy City and Orem, Utah; and Lacey, Wash. ShopKo will lease the stores back for 20 years.

Proceeds from the transaction are expected to help strengthen ShopKo's financial position and allow management to focus on remodeling stores and growing the store base, Sovereign said.

In mid-2006, ShopKo sold 112 ShopKo store properties, 66 Pamida store properties, three distribution centers, ShopKo's corporate headquarters in Ashwaubenon and the Pamida headquarters in Omaha, Neb., to Spirit Finance Corp., a real estate investment trust based in Scottsdale, Ariz., for $815.3 million. Proceeds of that deal were to be used to retire a $700 million real estate debt and pay down a portion of a revolving credit facility.

ShopKo Stores Operating Co. is a company formed from the reorganization of SKO Group Holding Corp., a company created by private equity firm Sun Capital Partners Inc., of Boca Raton, Fla., in association with Sun's acquisition of the formerly publicly traded ShopKo Stores Inc. in December 2005. Sphere: Related Content