Home improvement and automotive retailer Canadian Tire has announced a deal to sell and lease back 12 of its store locations for $174 million. The company expects to receive a pre-tax gain of $70 million on the deal.
The transaction is expected to close in September 2008. The company did not disclose a buyer.
Each of the properties included in the deal include a recently constructed or expanded Canadian Tire store, and six of the sites also feature a Mark's Work Wearhouse, the company’s work clothing retail banner. Together, the properties total approximately 996,000 square feet of gross leaseable area, the company said in a statement.
Currently, Canadian Tire owns approximately 74 percent of its Canadian Tire retail store network and leases the balance of its other retail properties.
"While we continue to see real value in owning the majority of our real estate assets, carefully selected sale/leasebacks enable us to monetize the value of select properties creating financial flexibility while maintaining our overall operating flexibility," said Tom Gauld, president and CEO of Canadian Tire.
In its second quarter, Canadian Tire recorded adjusted net earnings of $94.7 million, down 13.8 percent compared with last year. Sales increased 1.5 percent.
“Retail sales across all product categories were generally impacted by the economy, however seasonal businesses in the leisure category were particularly soft due to the cold wet weather in May and June,” the company said in a statement.
Based in Toronto, Canadian Tire operates more than 1,170 general merchandise and apparel retail stores and gas stations throughout Canada.