STORE Capital Seals $105M Sale-Leaseback Deal with O’Charley’s

October 18, 2011
By Paul Rosta, Senior Editor

A new player on the net-lease scene is making a splash with a $105 million sale-leaseback deal with the O’Charley’s Inc. restaurant chain.

STORE Capital, a five-month old Scottsdale, Ariz.-based REIT, said late Monday that it has acquired 50 of O’Charley’s 342 restaurants, which the chain operates under the O’Charley’s, Ninety Nine Restaurant and Stoney River Legendary Steak brands. STORE will lease the properties back to O’Charley’s under a long-term triple-net lease. For its part, the restaurant chain said that it will use proceeds from the deal and $11.4 million in cash to redeem senior notes valued at $115.2  million

Details on the properties that changed hands were not disclosed yesterday, but according to information on O’Charley’s Web site, the company operates 227  locations in 18 Southeastern and Midwestern states under the O’Charley’s brand name; 106 Ninety Nine restaurants in upstate New York and New England; and 10 Stoney River locations in the Southeast and Midwest.

STORE—the firm name is an acronym for “single tenant operational real estate”—hung out its shingle in May with a $500 million equity raise, including a $400 million commitment from Oaktree Capital Management L.P., the investment management firm. The company is initially targeting restaurants, supermarkets, health clubs, education-related properties and other retail, service and distribution facilities.

STORE’s co-founders, REIT veterans Morton Fleischer and Christopher Volk, previously teamed up to start Spirit Finance in 2003, which the two ran for four years until selling it in 2007.  Fleisher was also the founder of Franchise Finance Corp., which he headed from 1980 until selling it to GE Capital in 2001.

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