Bed Bath & Beyond will sell about half of its real estate to a private equity firm and then lease back the space, a deal expected to earn the company more than $250 million.
The retailer sold 2.1 million square feet of space to Oak Street Real Estate Capital, including its headquarters in Union Township, New Jersey, a distribution facility and some of its 1,500 stores, according to the Wall Street Journal. Bed Bath & Beyond will keep using the space under long-term leases and use the money from the sale to buy back shares, pay off debt and fund a turnaround effort.
The company has a new CEO in Mark Tritton, who joined in November after activist investors pushed out Bed Bath & Beyond’s top officials. The retailer’s strategy of attracting shoppers with coupons and stocking up stores with goods was becoming outdated under the dominance of online shopping.
Tritton restructured the leadership team in December and let six senior members go, including the chief marketing officer and the chief digital officer.
Retailers have faced more pressure recently to sell and lease back their properties, although several have resisted this strategy. Target fought off an attempt to do this in 2008, and Macy’s has done it occasionally but more often just outright sells its real estate. [WSJ] — Eddie Small