Finance Net Leasing
$166M Sale-Leaseback on Tap for Pep Boys
Nov 2, 2007
By: Barbra Murray, Contributing Editor

Pep Boys will soon pocket a large chunk of cash, now that it has committed to a sale-leaseback transaction involving 34 properties. The Philadelphia-based automotive retail and service chain will take away $166.2 million from the deal.

Pep Boys has not revealed the name of the buyer of the retail stores, but the company will leaseback the facilities under 15-year lease agreements carrying four five-year extension options. Pep Boys' owns or leases 593 stores in 36 states and Puerto Rico for total of nearly 12.2 million square feet of retail space, including service bays. A total of 582 of those properties are designed in the company's SUPERCENTER format, which generally features approximately 20,000 square feet of space; California has the largest concentration of SUPERCENTERS with about 120 sites. The Pep Boys EXPRESS stores generally encompass 9,700 square feet.

The sale-leaseback deal for the 34 properties is on schedule to close by the end of this month. Pep Boys will likely execute more such transactions in the near future. In an August report on second quarter activities, president & CEO Jeffrey Rachor noted that Pep Boys' portfolio of owned stores and distribution centers has an estimated market value of approximately $1 billion, and that sale-leaseback arrangements could probably yield a total of $1.3 billion. Company stock opened today at $15.60.



 
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