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Brinker Completes Nearly $314M Sale-Leaseback Of Almost 100 Restaurants

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Brinker International, which is best known for its portfolio of Chili's Grill & Bar restaurants, is selling nearly 100 restaurants to two separate buyers. All together, the deals are worth more than $314M.

Four Corners Property Trust, which specializes in restaurant real estate, has inked a sale-leaseback deal to buy as many as 48 Brinker-owned Chili’s locations for up to $155.7M, though the buyer has the option of declining to purchase all 48 assets.

Chili's Restaurant

The properties will be under individual 15-year leases and are subject to rent increases of 10% every five years during the initial term. Mill Valley, California-based Four Corners will also have the option of renewing the leases for five-year periods, with the number of renewals depending on the property.

Most of the properties that Four Corners is acquiring are in Florida (14 units) and Texas (13 units), though the portfolio includes restaurants in 15 states. 

“In addition to the attractive locations, we are particularly pleased with the property-level rent setting and strong coverage in this portfolio,” Four Corners CEO Bill Lenehan said in a statement.

Brinker has also agreed to sell up to 50 properties to SunTrust Equity Funding in a sale-leaseback structure for as much as $158.6M. Similar to the Four Corners transaction, the deal includes 15-year leases, with the option of five-year lease renewals, the Dallas Business Journal reports. The total number of such options will vary by property.

Brinker hasn't specified the location of the restaurants to be acquired by SunTrust Equity Funding. The buyer is an affiliate of the financial services behemoth SunTrust Bank, based in Atlanta.

Dallas-based Brinker owns or franchises more than 1,680 restaurants. The vast majority of these are Chili's — more than 1,630 restaurants — though the company also operates 52 Maggiano's Little Italy restaurants. Brinker did not say whether the restaurants involved in the deals were all Chili's, or whether some Maggiano's will be included.

Brinker experienced an uptick in revenue in its fiscal Q3 2018, up 0.2% compared with a year earlier. Sales were flat year over year in fiscal Q3, according to the company's latest quarterly report.

Comparable restaurant sales at company-owned Chili's were down 0.4% year over year in the third quarter, while franchised Chili's took a much bigger hit: sales were down 3.2% in the fiscal Q3 compared with a year ago.

Maggiano's comp-restaurant sales increased 0.5% in fiscal Q3 2018 compared to the third quarter of fiscal 2017, the company reports.