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Bon-Ton sells six stores in leaseback agreement


York, Pa. - The Bon-Ton Stores Inc. is selling six stores for $84 million to CPA: 17 – Global, a non-traded real estate investment trust (REIT) of global net lease REIT W.P. Carey Inc. Bon-Ton will lease the stores back.

Proceeds from the transaction will be used to pay one of two of the company’s mortgage loans due in April 2016. Each loan has about $105 million in principal and consists of 12 properties. Bon-Ton is actively pursuing refinancing options for the second loan.

Upon completion of the sale, Bon-Ton will lease the six properties for a 20-year initial term with the option to extend the term for three additional successive periods of 10 years. The first year annualized rent associated with the six properties is expected to be approximately $6.9 million, which the company will mitigate through reduced interest expense as a result of the termination of the mortgage. Additionally, in conjunction with that termination, the company will pay $4.7 million to satisfy the “make-whole” provision within the mortgage agreement.

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