Darden plans to place 430 stores in REIT

Orlando, Fla. - Darden Restaurants Inc. plans to separate a portion of its real estate assets through a combination of sale leaseback transactions and a new, publicly traded real estate investment trust ("REIT"). Under the plan, Darden will transfer approximately 430 of its corporate stores to the REIT, with substantially all of the REIT's initial assets being leased back to Darden.



The potential REIT would be positioned to expand through real estate acquisitions of other businesses. In addition, Darden has been marketing 75 selected properties for individual sale leasebacks. More than 30 of these properties have been sold or are under contract. The company expects an average cash capitalization rate of approximately 5.5% for all 75 properties, and expects to close most of these transactions by the end of August. In addition, Darden is seeking to sell and lease back its Orlando Restaurant Support Center property and buildings under a long-term contract with multiple renewal options.



Darden expects to retire approximately $1 billion of its debt over time and maintain its investment grade credit profile. The company currently expects to complete the REIT transaction by the end of calendar 2015, The dividend will be paid in a combination of cash and REIT stock, which Darden expects will consist of approximately 20% cash and 80% REIT stock. In addition, going forward, Darden expects that the REIT will distribute at least 90% of its annual taxable income as dividends. The spin-off transaction is expected to be tax-free to Darden's shareholders, except for any cash paid in lieu of fractional shares.



Darden has also adopted a short-term shareholder rights plan, or “poison pill” plan, to deter any person from acquiring ownership of more than 9.8% of the company's outstanding common stock during the period leading up to the REIT transaction by diluting shares.