Safeway San Francisco closing Webster

[storewanderer]

Another closure for Safeway in San Francisco. This one is being redeveloped for housing.

The store got an above average Lifestyle remodel but no further remodeling has occurred.

Recently the store has an above average amount of lock up merchandise and disabled (maybe removed) self check out.

It does not sound like Safeway will be a part of the housing redevelopment.

[Alpha8472]

This is the controversial Safeway that closed down self checkout and started blasting classical music at all hours of the day to deter loitering.

It is a roughly 50,000 square foot store that has been open over 40 years. Safeway agreed to sell the 3.68 acres of land to Align Real Estate. I suspect the money Safeway got for it was staggering.

Rumors say they could build a 130 foot tall tower on the land. The Manhattanization of San Francisco continues.

The next closest Safeway is over a mile away in the Castro District.

A Trader Joe's is planned to be built in the area, but construction has not started.

[storewanderer]

This was a nice big store but clearly not the highest and best use of the land.

I didn't expect ANY Safeway units in San Francisco to close. I am shocked now we had Fisherman's Wharf and now this one closing.

The only one I thought may be at risk is Financial District as that area is pretty dead now, but there is still housing there, and the store is so small that it is probably cheap to run, and with the vacancies around there maybe they can get a break on rent.

[Alpha8472]

San Francisco has been pressuring Safeway to sell their stores. The city desperately needs new housing. The housing is very profitable for the city.

[ClownLoach]

San Francisco has been pressuring Safeway to sell their stores. The city desperately needs new housing. The housing is very profitable for the city.

This is assuredly one of the reasons Kroger is interested in the company. All the owned real estate in SF. Theoretically some of these sites could be worth 9 figures. Same situation as Macy's, they held onto their most valuable sites but now they're worth more dead than alive.

[storewanderer]

San Francisco has been pressuring Safeway to sell their stores. The city desperately needs new housing. The housing is very profitable for the city.

This is assuredly one of the reasons Kroger is interested in the company. All the owned real estate in SF. Theoretically some of these sites could be worth 9 figures. Same situation as Macy's, they held onto their most valuable sites but now they're worth more dead than alive.

Any idea how many of the stores in San Francisco they own? I don't have any idea. We know Fisherman's Wharf was a lease.

[HCal]

San Francisco has been pressuring Safeway to sell their stores. The city desperately needs new housing. The housing is very profitable for the city.

This is assuredly one of the reasons Kroger is interested in the company. All the owned real estate in SF. Theoretically some of these sites could be worth 9 figures. Same situation as Macy's, they held onto their most valuable sites but now they're worth more dead than alive.

What can Kroger do with the real estate that Albertsons can't?

We all know Cerberus wants to cash out. There is nothing stopping them from closing stores and selling the real estate to developers.

[storewanderer]

San Francisco has been pressuring Safeway to sell their stores. The city desperately needs new housing. The housing is very profitable for the city.

This is assuredly one of the reasons Kroger is interested in the company. All the owned real estate in SF. Theoretically some of these sites could be worth 9 figures. Same situation as Macy's, they held onto their most valuable sites but now they're worth more dead than alive.

What can Kroger do with the real estate that Albertsons can't?

We all know Cerberus wants to cash out. There is nothing stopping them from closing stores and selling the real estate to developers.

They have already been doing this with sale-leaseback transactions over the years. They did a couple big ones at Tahoe but anything in San Francisco would make the Tahoe sale-leasebacks look like monopoly money. But they still have an impressive amount of owned real estate. Somewhere here I posted it in the past and I think they still own around half of their real estate. Safeway owned closer to 2/3 of its real estate.

It was predicted by some back when Cerberus got control of Safeway they would rape the thing, sale-leaseback all of its real estate, load the store operating unit up with costs it could not afford, and Mervyn it. That didn't happen. Yet.

[ClownLoach]

San Francisco has been pressuring Safeway to sell their stores. The city desperately needs new housing. The housing is very profitable for the city.

This is assuredly one of the reasons Kroger is interested in the company. All the owned real estate in SF. Theoretically some of these sites could be worth 9 figures. Same situation as Macy's, they held onto their most valuable sites but now they're worth more dead than alive.

What can Kroger do with the real estate that Albertsons can't?

We all know Cerberus wants to cash out. There is nothing stopping them from closing stores and selling the real estate to developers.

Just accelerating the process. These stores make tons of money and thus backstop the Financials of the smaller Albertsons Companies. They would see measurable deterioration of profitability if they just pulled out of these sites for a one time check. Kroger is substantially larger, and they would be less affected by the loss of these high volume, very high margin owned stores thus they're more incentivized to liquidate them.

[ClownLoach]

This is assuredly one of the reasons Kroger is interested in the company. All the owned real estate in SF. Theoretically some of these sites could be worth 9 figures. Same situation as Macy's, they held onto their most valuable sites but now they're worth more dead than alive.

What can Kroger do with the real estate that Albertsons can't?

We all know Cerberus wants to cash out. There is nothing stopping them from closing stores and selling the real estate to developers.

They have already been doing this with sale-leaseback transactions over the years. They did a couple big ones at Tahoe but anything in San Francisco would make the Tahoe sale-leasebacks look like monopoly money. But they still have an impressive amount of owned real estate. Somewhere here I posted it in the past and I think they still own around half of their real estate. Safeway owned closer to 2/3 of its real estate.

It was predicted by some back when Cerberus got control of Safeway they would rape the thing, sale-leaseback all of its real estate, load the store operating unit up with costs it could not afford, and Mervyn it. That didn't happen. Yet.

The issue is that nobody is going to do a lease back transaction on these very high value sites. First, the rent would be so high the stores would be unprofitable and the return lower than an outright sale of the property no strings attached. Second, anyone who would buy the sites would want to demolish and build towers on them for $$$ and they don't necessarily want to lease back to Safeway. If you could buy this site for $100M but then you're stuck owning it and leaving an old single story grocery store there for 20 or 30 years with a few million a year in rent (as a new lease would probably be). So why bother funding a lease back? Your alternative would be to spend the $100M and be free and clear to level the site then spend $300M more and construct a tower that's now worth a billion.

That's why they haven't done lease backs on everything. Odds are the most desirable properties are still company owned, as no buyer would want to be stuck leaving the site as-is for decades.