Albertsons to raise $720 million in store sale-leaseback

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storewanderer
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Albertsons to raise $720 million in store sale-leaseback

Post by storewanderer » October 2nd, 2017, 9:53 pm

And the stripping of assets begins. Or continues, if you consider the previous sales of distribution centers... but those were redundant and I think selling off that property made sense.

http://www.supermarketnews.com/news/alb ... -leaseback

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Re: Albertsons to raise $720 million in store sale-leaseback

Post by architect » October 2nd, 2017, 11:01 pm

storewanderer wrote:
October 2nd, 2017, 9:53 pm
And the stripping of assets begins. Or continues, if you consider the previous sales of distribution centers... but those were redundant and I think selling off that property made sense.

http://www.supermarketnews.com/news/alb ... -leaseback
Could this eventually evolve into a Macy's type situation in which the stores in these locations are eventually shuttered due to the land value being higher than the income from the store itself? If this is the case, the San Felipe/Sage Randalls in Houston would definitely fit this criteria, as it is a suburban-style store which is completely surrounded by dense development, and also faces heavy competition and decreased traffic from a new HEB to the west. The land which the Randalls at Westheimer/Shepherd sits on is also extremely valuable, though I doubt that Albertsons would give up this store without a fight as it is arguably one of the highest-profile stores for the banner.

I am guessing that the Dominick's store(s) listed are locations which reopened as Jewel but after the merger was complete. Either that or there is some weird legal technicality going on.

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Re: Albertsons to raise $720 million in store sale-leaseback

Post by wnetmacman » October 3rd, 2017, 6:14 am

architect wrote:
October 2nd, 2017, 11:01 pm
Could this eventually evolve into a Macy's type situation in which the stores in these locations are eventually shuttered due to the land value being higher than the income from the store itself?
I also call that the Sears/Seritage playbook.
If this is the case, the San Felipe/Sage Randalls in Houston would definitely fit this criteria, as it is a suburban-style store which is completely surrounded by dense development, and also faces heavy competition and decreased traffic from a new HEB to the west. The land which the Randalls at Westheimer/Shepherd sits on is also extremely valuable, though I doubt that Albertsons would give up this store without a fight as it is arguably one of the highest-profile stores for the banner.

I am guessing that the Dominick's store(s) listed are locations which reopened as Jewel but after the merger was complete. Either that or there is some weird legal technicality going on.
I would say that this may happen to more stores as time goes on. And more companies. It's a great way for them to raise money without being stuck with a piece of property that cannot be updated or molded into the current store model.

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Re: Albertsons to raise $720 million in store sale-leaseback

Post by Brian Lutz » October 3rd, 2017, 11:00 am

Especially in the Seattle market I can see this happening quite a bit. Within the last couple of years A number of the former Safeway manufacturing operations (dairy and bakery) in Bellevue have been closed down, and I suspect that these will either be sold of at some point or have already been sold off. The real estate market in that area is booming, and they probably reached the point where it was far more profitable to sell off the real estate than it would have been to keep operating the plants. They do still have a distribution center and (I believe) a soda bottling plant there as well as some offices, but I suspect those will get sold off soon as well.

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Re: Albertsons to raise $720 million in store sale-leaseback

Post by storewanderer » October 3rd, 2017, 10:06 pm

We will see what they do with the proceeds. If they invest the proceeds in price decreases and in-store labor, this could get good.

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Re: Albertsons to raise $720 million in store sale-leaseback

Post by pseudo3d » October 4th, 2017, 7:12 am

I wouldn't be too quick to make Sears/Seritage comparisons, especially since these locations aren't being closed yet. The merger as a whole has a lot of similarities to Kmart and Sears, but a lot of differences where it has the advantage. The recent news of Albertsons buying Plated, for instance, was a direct acknowledgement that Amazon is a threat, and that was one of the things that Sears/Kmart never really picked up on.

The Dominick's stores are probably empty stores that still have Albertsons' lease on from Safeway, and probably won't be renewed, so when they are "released", so the new landlord can easily flip them. The only thing that's a bit weird is that the landlord is basically a dummy company like Seritage is [https://www.sec.gov/Archives/edgar/data ... it10_1.htm] but unlike the Seritage buyback, Albertsons is doing this whole thing fairly early on and can actually re-invest in its operations (hopefully) instead of staving off bankruptcy.

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Re: Albertsons to raise $720 million in store sale-leaseback

Post by wnetmacman » October 4th, 2017, 7:34 am

pseudo3d wrote:
October 4th, 2017, 7:12 am
I wouldn't be too quick to make Sears/Seritage comparisons, especially since these locations aren't being closed yet.
WHAT? A good number of them are either in some sort of resize or are in the process of closing, if they haven't already. I know for sure that the 3 properties they had in Louisiana (Kmarts in New Iberia and Houma and Sears in Lafayette) are all closed and vacant. While all states don't have the same results, I'd bet if you went to www.seritage.com and looked at properties, you'd find some very startling results. Seritage's site doesn't show closures; you'll have to compare to Sears and Kmart's website store locators.
The merger as a whole has a lot of similarities to Kmart and Sears, but a lot of differences where it has the advantage. The recent news of Albertsons buying Plated, for instance, was a direct acknowledgement that Amazon is a threat, and that was one of the things that Sears/Kmart never really picked up on.
Spending blindly regardless of profits. SHC playbook #2.
The Dominick's stores are probably empty stores that still have Albertsons' lease on from Safeway, and probably won't be renewed, so when they are "released", so the new landlord can easily flip them. The only thing that's a bit weird is that the landlord is basically a dummy company like Seritage is [https://www.sec.gov/Archives/edgar/data ... it10_1.htm] but unlike the Seritage buyback, Albertsons is doing this whole thing fairly early on and can actually re-invest in its operations (hopefully) instead of staving off bankruptcy.
The ONLY difference between what SHC and ABS has done is timing. Otherwise, it looks identical. ABS hasn't made money since the Safeway merger. It doesn't look like they will anytime soon, with sales and profits declining, as well as store traffic going waaaaay down because of bad service.

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Re: Albertsons to raise $720 million in store sale-leaseback

Post by arizonaguy » October 4th, 2017, 7:37 am

Kroger has "deeded" many of its Fry's stores to "dummy" LLCs with Cincinnati addresses in the Phoenix area.

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Re: Albertsons to raise $720 million in store sale-leaseback

Post by pseudo3d » October 4th, 2017, 8:23 am

wnetmacman wrote:
October 4th, 2017, 7:34 am
pseudo3d wrote:
October 4th, 2017, 7:12 am
I wouldn't be too quick to make Sears/Seritage comparisons, especially since these locations aren't being closed yet.
WHAT? A good number of them are either in some sort of resize or are in the process of closing, if they haven't already. I know for sure that the 3 properties they had in Louisiana (Kmarts in New Iberia and Houma and Sears in Lafayette) are all closed and vacant. While all states don't have the same results, I'd bet if you went to www.seritage.com and looked at properties, you'd find some very startling results. Seritage's site doesn't show closures; you'll have to compare to Sears and Kmart's website store locators.
That's my point--Albertsons isn't closing these locations.
The merger as a whole has a lot of similarities to Kmart and Sears, but a lot of differences where it has the advantage. The recent news of Albertsons buying Plated, for instance, was a direct acknowledgement that Amazon is a threat, and that was one of the things that Sears/Kmart never really picked up on.
Spending blindly regardless of profits. SHC playbook #2.
To my knowledge, Sears and Kmart never opened any real locations post-2004 and only remodeled very few of them. Albertsons, OTOH, actually has invested in its store base. And if Safeway had the same amount of money Sears did when it was bought, then we could actually see Albertsons/Safeway really cook.

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Re: Albertsons to raise $720 million in store sale-leaseback

Post by wnetmacman » October 4th, 2017, 10:53 am

pseudo3d wrote:
October 4th, 2017, 8:23 am
That's my point--Albertsons isn't closing these locations.
No, but Seritage didn't immediately either.
To my knowledge, Sears and Kmart never opened any real locations post-2004 and only remodeled very few of them. Albertsons, OTOH, actually has invested in its store base. And if Safeway had the same amount of money Sears did when it was bought, then we could actually see Albertsons/Safeway really cook.
They actually did remodel some. While ABS is remodeling like wildfire, it isn't contributing enough, and in most cases is causing them to lose business. Sears spent a lot of money buying multiple technologies and ideas, and they all failed. This is the same path.

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