NEW ALBANY, OH—Restaurant chain and food manufacturer Bob Evans Farms Inc. said Thursday it's exploring whether to convert some of its Bob Evans portfolio into a REIT or pursue a sale-leaseback on the properties. The news follows the company's announcement late last month that it had retained CBRE to pursue a sale-leaseback for its New Albany, OH headquarters and BEF Foods manufacturing facilities in Lima, OH and Sulphur Springs, TX.
“We expect to conclude the assessment of alternative paths for our restaurant real estate over the next several months,” says Mark Hood, CFO at BOBE. Although the transaction's ultimate size will depend on factors including market values for restaurant real estate and the performance of the company's business segments, it's expected to range “from approximately 30% to 60% currently owned restaurant real estate.”
Whether it's a sale-leaseback or a REIT conversion, the transaction is expected to enable BOBE “to reduce its investment in lower-return assets,” says Hood. “We expect that in structuring a transaction, we would seek to maintain our flexibility to pursue a separation of the foods and restaurant segments at some point in the future if advisable at that time.” Combined with the headquarters and industrial sale-leasebacks, “this will enable us to further enhance shareholder value through our capital deployment strategies as we continue to execute the turnaround of our businesses.”
BOBE operates 564 Bob Evans restaurants across 19 states, mainly in the Midwest, Mid-Atlantic and Southeast. Bloomberg Business reported Thursday that investors have called on the chain to sell or spin off some of its real estate.
In early March, the company said it had hired JPMorgan Chase & Co. to evaluate strategic options for its real estate. The following month, it announced plans to close 20 restaurants, 16 of which it owns, over the next 12 months, with most shutting their doors in May of this year.
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