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Red Lobster real estate changes hands again

Red Lobster real estate changes hands again

Golden Gate Capital, which bought Red Lobster last year, buys some of its real estate back

The private-equity group that bought Red Lobster last year and quickly sold its real estate is now buying some of that real estate back.
Golden Gate Capital, which bought Red Lobster from Darden Restaurants Inc. for $2.1 billion, and then sold that real estate to VEREIT for $1.5 billion, has now agreed to acquire $204 million of Red Lobster real estate back from the firm.
In addition, San Francisco-based Golden Gate has agreed to help VEREIT, a real estate investment trust, sell another $400 million worth of Red Lobster properties.

“Our Red Lobster restaurant portfolio has been a successful investment,” Glenn Rufrano, VEREIT CEO, said in a statement. “As part of our business plan, we are enhancing our broader portfolio by reducing our overall exposure to restaurant real estate and providing the proper risk-return relationship. We’re very pleased with the outcome of this transaction and the opportunity to grow our strong partnership with Golden Gate Capital.”

In such real estate deals, a restaurant company that owns its restaurant buildings or land sells the real estate to investors and leases it back at a certain term. Golden Gate helped fund its purchase of Red Lobster by selling the chain’s real estate to VEREIT last year.

It’s rare to see an owner buy real estate back. Golden Gate suggested that its acquisition would help generate a return on its investment. The firm also said the acquisition demonstrates its confidence in Red Lobster’s performance — including four straight quarters of same-store sales growth and international development, said Josh Cohen, Golden Gate managing director.

“The acquisition of these Red Lobster properties will generate attractive returns for our investors and reflects our continued confidence in the strength of the Red Lobster brand, its management team, and the future growth prospects of the business,” Cohen said in a statement. “Red Lobster has made tremendous strides since the acquisition, including refocusing on its core customers, developing new and exciting dishes and continuing its international expansion with 15 new restaurant openings.”

The deal doesn’t affect how Red Lobster restaurants are operated. “Since the close of the Golden Gate acquisition of Red Lobster and the original sale of the restaurant properties to VEREIT, this has been an outstanding partnership,” Kim Lopdrup, Red Lobster CEO, said in a statement. “We are very pleased to see Golden Gate’s continued confidence in our business via these additional investments in the fundamental assets of our company.”

Contact Jonathan Maze at [email protected].
Follow him on Twitter: @jonathanmaze

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