Bon-Ton selling stores to help pay off loan

The Bon-Ton Stores is looking to help pay off a $105 million mortgage on 12 properties with a new deal.

The retailer announced it will sell six properties to CPA:17-Global, a real estate investment trust of W.P. Carey, and lease them back. The deal will generate $84 million for Bon-Ton.

“We are very pleased to announce this significant transaction with CPA: 17 – Global and look forward to a continued successful partnership with them. The sale-leaseback of these six properties allows us to address the maturity of one of our mortgage facilities and further enhances our financial flexibility through the value of the remaining properties no longer encumbered by the mortgage facility,” said Kathryn Bufano, president and CEO of the Bon-Ton Stores, Inc. “We are actively pursuing refinancing options for the second of our two mortgage facilities and will share updates as appropriate.”

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.

Gino Sabatini, head of Net Lease Investments at W. P. Carey, said: “We are pleased to expand our relationship with Bon-Ton with the inclusion of these properties in CPA: 17 – Global’s portfolio and the provision of sale-leaseback financing to fund the repayment of a portion of their existing mortgage facilities. As significant long-term assets for Bon-Ton, they are an attractive income generating addition to our portfolio, with the transaction providing a “win-win” solution for both Bon-Ton and CPA®: 17 – Global.”

The announcement comes a month after The Bon-Ton reported a bigger first quarter net loss of $34.1 million, versus a $31.5 million net loss in 2014’s first quarter.