Furniture Company Sells And Leases Back Almost 1M SF In U.S. Properties In The Midst Of Coronavirus Troubles
Coronavirus fears have taken a toll on furniture retailer Havertys.
To offset what CEO Clarence Smith calls a "challenging and extremely difficult" time, the retailer is selling three locations to SunTrust Equity Funding and then leasing them back.
SunTrust Equity is paying $70M for three Havertys properties in a sale-leaseback transaction that will hold Havertys over with extra liquidity as it faces the aftermath of the coronavirus retail disruption.
The sale involves a 458K SF property in Coppell, Texas, that has a 394K SF distribution center and 64K SF of retail and office space; a 335K SF distribution facility in Lakeland, Florida; and a 129K SF distribution unit in Colonial Heights, Virginia.
Havertys is leasing the sites back using 15-year operating lease agreements with renewal options, the firm said in a public statement. Going forward, Havertys will be paying $4.4M annually in rent with 2% increases yearly for all three properties.
Sale-leasebacks are often used to bolster companies' balance sheets, freeing up capital for other business expenses and removing liability.
The retailer has faced two difficult months, which included delays in store expansions, a closing of all locations on March 19, salary reductions for the CEO and tiered salary cuts for officers and managers. The firm also froze employee 401(k) contributions and negotiated work-out solutions with landlords for deferred rent payments.
The company furloughed 3,033 workers for 30 days on April 1, for the first time utilized a credit line put in place 12 years ago to hold the business over and cut quarterly shareholder dividends by 25%.
The company reopened 103 stores on May 1 and relaunched home deliveries this month, according to public statements.
"Our deliveries resumed on May 5 and we are offering customers the option of delivery to the doorstep or in-home placement and set-up," Smith said in a statement. "Digital shopping has been elevated to new levels and we have increased the number of team members that can serve online customers via chat."
The firm intends to close its Galleria Dallas location in the third quarter and open a new store in Southlake, Texas, later in the year.