Bob Evans Farms Completes First Agreement in Real Estate Monetization Plan

Bob Evans Farms (NASDAQ:BOBE) completed two sale-leaseback agreements in a sweeping real estate monetization plan.


Bob Evans Farms (NASDAQ:BOBE) completed two sale-leaseback agreements with Broadstone Net Lease Acquisitions, LLC, a private REIT out of New York.

Under an October 19 deal, Broadstone—which owns 313 properties across 33 states—bought two industrial manufacturing facilities. The food production and storage facilities in Lima, Ohio and Sulphur Springs, Texas, went for $51.6 million.

On October 23, BEF Foods and Broadstone entered a 20-year lease agreement for the two facilities at an annual rent of $4.1 million, including of a $2.3 million deferred gain amortized throughout the lease term.

"We're exceptionally excited to complete this transaction with Bob Evans. The Texas and Ohio properties are proven industrial assets to add to the growing BNL portfolio," said Chris Czarnecki, President and CFO of Broadstone Real Estate, in a press release. "We continue to be on pace to exceed our acquisition goals for 2015, and look forward to announcing additional transactions before year-end."

The deals are the first in a sequence of asset monetization that were pushed by activist investor Thomas Sandell after a public proxy fight that left him with a third of the 12-seat board.

The New Albany, Ohio, corporate office is next on the docket, with Bob Evans Farms projecting another sale-leaseback deal in the realm of  $35-$40 million in the second half of the fiscal year ending in April 2016. It is not clear whether Broadstone will continue working with BEF Foods, Inc. on the remaining monetization plan.

According to the company, the proceeds of the plan will go toward debt and a $150 million share-repurchasing program.  

“With this transaction now complete, we continue to pursue monetization of our corporate headquarters facility along with approximately $200 million of restaurant properties,” said Chief Administrative Officer and Chief Financial Officer Mark Hood in a press release. “We expect to utilize the net proceeds from these asset monetization transactions to pay down debt and to repurchase shares, while maintaining prudent leverage.”

The repurchasing agenda currently that currently comes in at $104.9 million.  The $200 million restaurant property monetization targets about 125 of the company’s 549 units and could come in the form of a tax-free REIT spinoff or more sale-leasebacks.

The company raised EPS projections from $1.75 to $1.95 to $1.85 to $2.00 in September and expects flat to low-single digit same store sales growth through the year. Shares are up 2.43% in Monday trading, up $0.90 since the announcement.

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