EG Group Inks $1.5B Sale-Leaseback Pact for Select U.S. C-store Assets

BLACKBURN, United Kingdom — EG Group is making a change on the East Coast. The operator announced the sale-leaseback on a portfolio of 415 sites to Realty Income Corp. for gross consideration of approximately $1.5 billion.

Its Westborough, Mass.-based EG America subsidiary will continue to operate and trade the portfolio, which comprises store assets under the Cumberland Farms, Fastrac, Tom Thumb and Sprint banners.

The news comes weeks after reports surfaced that EG Group had hired investment bankers to market multiple parcels of U.S. assets, with prospective transactions likely structured as sale-leaseback deals, as Convenience Store News reported.

EG Group noted that it received a high degree of interest from multiple blue-chip investors and attractive terms for the transaction.

"Today's announcement demonstrates the progress we continue to make to put in place a robust capital structure for the medium term that will underpin our long-term strategy and represents an important first step in this process," said Zuber Issa, co-founder and co-CEO of EG Group.

Realty Income is an S&P 500 company structured as a real estate investment trust. Its monthly dividends are supported by the cash flow from more than 12,200 real estate properties primarily owned under long-term net lease agreements with commercial clients.

EG Group plans to use net proceeds from the transaction to repay debt. The relevant assets represent approximately15 percent of the company's total freehold property in 10 markets, reflecting how its estate continues to be underpinned by strong asset backing globally, the company stated. The deal is part of EG Group's plan to reduce total net leverage through debt reduction and free cash flow generation, which the company shared during its third-quarter trading update in November.

The deal is expected to close during the second quarter of 2023, subject to customary closing conditions. Upon completion, EG Group will pay an initial rent of $103 million a year.

Global real estate investment bank Eastdil Secured advised EG Group alongside Latham & Watkins, Skadden, Arps, Slate and Meagher & Flom, Rothschild & Co. and EY.

EG Group's Westborough-based U.S. arm operates more than 1,700 convenience and gas stores in 31 states in the United States. Its banners include Cumberland Farms, Certified Oil, Fastrac, KwikShop, Loaf n' Jug, Minit Mart, QuikStop, Sprint and Turkey Hill.