Dive Brief:
- Rite Aid is moving to sell an additional 92 store leases in eight states as it works to shrink its physical footprint as part of its ongoing bankruptcy restructuring process. A&G Real Estate Partners said Monday it will offer the retail leases, with the bankruptcy court’s approval, for private sale to help Rite Aid reduce its debt, after the retailer filed for Chapter 11 on Oct. 16.
- A&G Real Estate Partners on Oct. 17 announced the pharmacy retailer wanted to sell 78 leases and 21 stores and land parcels in 12 states. Monday’s announcement boosts the number of announced lease, store and land parcel sales to 191.
- “Rite Aid is continuing to assess its property portfolio and will close additional stores to optimize its real estate footprint and improve its overall financial performance,” A&G Real Estate Partners said.
Dive Insight:
Rite Aid is one of the largest pharmacies in the U.S. However its big physical footprint – about 2,100 stores at the time of its Chapter 11 filing – contributed to the company’s operational and financial difficulties.
The retailer said in court documents that its debt load had reached nearly $4 billion. Bankruptcy enables the company to reduce its “sub-optimal retail footprint” and potentially eliminate about $80 million annually in “dead rent” costs, according to CEO and Chief Restructuring Officer Jeffrey Stein.
Including options, all leases being marketed by Rite Aid have more than 10 years of remaining term. The stores range from 5,000 square feet to 33,548 square feet. They include 53 freestanding locations. All but nine offer attached one- or two-lane drive-thrus. Thirty-six stores are located in strip or power centers and three locations are in central business districts.
In the latest round, Philadelphia-based Rite Aid is offering 17 leases in California; six in Maryland; 22 in Michigan; seven in New Jersey; 11 in New York; two in Ohio; 17 in Pennsylvania; and 10 in Washington. Six of the Washington stores are under the Bartell Drugs banner, which Rite Aid acquired in 2020.
A&G previously announced fee-owned properties — stores and land — were available in Alabama, California, Idaho, Michigan, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania and Washington.
“In consultation with A&G, Rite Aid is working to strengthen its overall financial position by reducing its rent expenses and optimizing its portfolio,” Andy Graiser, co-president of A&G, said. “As it does so, other retailers and investors are now able to acquire leases and properties that once were out of reach locations, in attractive markets across the United States.”
U.S. Bankruptcy Judge Michael Kaplan on Oct. 17 approved Rite Aid’s request to close 154 stores. On Tuesday, the retailer asked for court approval to close an additional 15 stores.
