Bob Evans Farms Inc. has sold 145 restaurant properties in a sale-leaseback deal to Mesirow Financial Holdings for $200 million, the company said Monday.
The deal, which will close in Bob Evans’ fourth fiscal quarter ending April 29, 2016, is expected to yield proceeds of $165 million to $170 million.
Under the deal, Bob Evans will lease the properties and pay rent to Mesirow of about $15.4 million per year. Bob Evans will be responsible for taxes, insurance, maintenance, repair and replacement costs.
“Completion of this transaction … marks another major milestone in the company’s efforts to monetize a significant portion of its real estate assets,” Bob Evans chief financial officer Mark Hood said in a statement. He said the company expects to use proceeds from the deal to pay down debt and repurchase shares “while maintaining prudent leverage.”
Bob Evans said it would sell the restaurants, as well as a pair of manufacturing plants, in September.
The company has been planning to sell real estate for some time, since activist investor Sandell Asset Management won four seats to Bob Evans’ board more than a year ago. Sandell pushed the company to sell some of its real estate and lease it back.
Many investors think that publicly traded restaurant companies don’t get enough credit on Wall Street for real estate assets, and have pushed those companies to sell those assets and use the funds to pay down debt or buy back shares.