Bon-Ton strikes $18.9M sale-leaseback deal for Minnesota store

In an effort to wipe away debt, The Bon-Ton Stores Inc. said it has reached an $18.9 million sale-leaseback deal for its Herberger’s store in Roseville, Minn.

The struggling Bon-Ton department-store chain, which has corporate offices in York County and Milwaukee, has used a sale-leaseback arrangement in the past to trim real estate expenses and pay down debt.

In 2015, the company entered into an $84 million sale-leaseback agreement with a non-traded real estate investment trust operated by W.P. Carey Inc., a leading net-lease REIT, for six stores.

Under the deal in Minnesota, Bon-Ton will lease the property for a 20-year term with the option to extend the term for four additional successive periods of five years at market rents. Bon-Ton officials were not immediately available for comment on the other party involved in the deal, and there have been no filings with the U.S. Securities and Exchange Commission.

“This sale-leaseback transaction unlocks additional capital, enabling us to repay debt and enhances our overall liquidity position,” William Tracy, Bon-Ton’s president and CEO, said in a statement. “We remain focused on executing our strategic initiatives to drive enhanced performance.”

Last month, Bon-Ton posted a second-quarter net loss of $33.2 million. Officials said they plan to close up to five more locations this year as the chain continues to adjust to a changing retail environment, where more merchandise is being sold online.

Bon-Ton has shown growth in its omnichannel model, meaning an online and brick-and-mortar presence, but it still needs to continue cutting costs to improve its long-term financial outlook, officials have said.

The company operates 260 stores in 24 states under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers banners. They include nine furniture galleries and four clearance centers.

Shares of the company’s stock are traded on the NASDAQ under the ticker symbol BONT.

Jason Scott
Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin and Cumberland counties. Have a tip or question for him? Email him at jscott@cpbj.com.

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