The Bon-Ton Stores will sell and lease back six of its properties, using the proceeds to help pay off a $105 million mortgage on 12 properties.
The six stores are in Joliet, Illinois; Fargo, North Dakota; Ashwaubenon, Wisconsin; Brookfield, Wisconsin; Greendale, Wisconsin; and Wauwatosa, Wisconsin.
They total 1.0 million square feet, the York-based department store chain said Monday in announcing the financing move.
The 12 mortgaged properties were not identified.
Selling the six properties to CPA:17-Global, a real estate investment trust of W.P. Carey, will generate $84.0 million for The Bon-Ton.
The proceeds, plus borrowing from The Bon-Ton's revolving credit facility, will be used to pay off the mortgage, which is due in April.
Upon completion of the sale, Bon-Ton will lease the six properties for a 20-year initial term. The lease will come with three 10-year options.
The first-year annualized rent on the six properties is expected to be about $6.9 million, largely offset by reduced interest expense from terminating the mortgage.
In addition, The Bon-Ton will pay $4.7 million to satisfy a make- whole provision of the mortgage that will be triggered by paying off the debt.
The announcement comes a month after The Bon-Ton reported a deeper first-quarter net loss of $34.1 million, versus a $31.5 million net loss in 2014's first quarter.
The Bon-Ton has a department store at Park City Center and a furniture gallery on Plaza Boulevard.
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