The acquisition plan was announced late last night although it's been no secret in town that Prentiss was poised to take the deed from 7-Eleven Inc. The 42-story trophy, built in 1988, sits on eight acres at 2711 N. Haskell Ave.
Under the announced deal, Prentiss Properties would be required to pony up another $14.5 million if 7-Eleven extends its headquarters lease. 7-Eleven's 1,000 employees occupy about 500,000 sf in the landmark property. Its current lease has three years remaining on the term. The corporation has 18 months to decide whether to extend the lease for another seven years. Besides the deed, Prentiss Properties gets the "opportunity" to represent 7-Eleven in a market search for an alternate headquarters location, if needed.
"The strength of the commercial real estate market resulted in an outstanding transaction for 7-Eleven," Jeff Stone, senior managing director in Dallas with Holliday Fenoglio Fowler LP, said in the press release.
The official line is the asset came to market because 7-Eleven wanted "to take advantage of the strong commercial marketplace and believed the timing was right to sell Cityplace," said Jim Keyes, 7-Eleven's president and CEO.
When the deal closes, 7-Eleven will shave $110 million from its outstanding debt and pay off the asset's outstanding debt, which has a March 1, 2005, maturity. According to the company, the net gain will be amortized over the lease term and a pre-payment penalty for the early payoff will be taken as a non-core charge in the second quarter.
The corporate announcement said 7-Eleven is raising its core earnings guidance for 2004 due to the imminent sale: 88 cents per diluted share, up three cents. The expected range is set at 86 cents to 90 cents per diluted share. 7-Eleven, which generated $36 billion in last year's sales, is the largest chain in the convenience retailing industry with 5,800 stores in the US and Canada in franchises and owned locations. The chain also licenses 17,000 stores in 17 countries and territories.
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