Empire Co. Ltd., the Nova Scotia-based conglomerate that owns a number of Canadian supermarket chains, has announced it will be selling 68 Safeway properties to a real estate investment trust for $990 million.
The properties involved in the sale are located in the Canadian provinces of British Columbia, Alberta, Saskatchewan and Manitoba.
Here’s where it gets complicated. The operator of the Safeway chain, Sobeys Inc., is a subsidiary of Empire; so is Crombie REIT, the trust that is obtaining the properties in a sale-leaseback deal.
According to The Canadian Press, Empire signed an agreement last month to buy more than 200 grocery stores from Canada Safeway Ltd. in a $5.8 billion deal. At the time, it said that it intended to finance the acquisition with a $1 billion sale-leaseback that it would first offer to Crombie REIT.
“We are pleased to announce this sale leaseback transaction between Sobeys and Crombie REIT,” Empire president and ceo Paul Sobey said in a statement. “The sale proceeds will be used by Sobeys to assist in the funding of the Canada Safeway acquisition which provides Sobeys with a much stronger presence in Western Canada and allows them to benefit from increased economies of scale.”
Empire created Crombie REIT when it spun off a number of properties in 2006.
The properties in the deal total 3 million square feet of gross leasable area and include 49 freestanding stores and 19 retail plazas, each anchored by a Canada Safeway grocery store.