MARANA, ARIZONA -- Tennessee-based Cracker Barrel has connected with Oak Street Real Estate Capital on two separate deals. In the first, the restaurant and retail chain assigned to Oak Street its right to buy back from a trio of entities 64 of its more than 400 locations around the country. Chicago-based Oak Street bought those stores the first week of August for nearly $206 million and then leased them to Cracker Barrel at rents below those under the previous sale-leaseback deal with US Realty.
Included in the bulk sale was the Cracker Barrel Old Country Store at 8400 North Cracker Barrel Road in Marana for $3,771,479, according to public records.
In the second deal, Cracker Barrel has agreed to sell another 62 of its restaurants to Oak Street for nearly $150 million before also leasing those back under a long-term deal. Combined, the agreements will place about 19 percent of Cracker Barrel’s real estate in the hands of Oak Street, which earlier this year struck similar deals with Bed Bath & Beyond and Big Lots, among others. Oak Street’s principals early this year said they were aiming to raise $2.5 billion for their fifth fund.
In a filing with regulators, the Cracker Barrel team said its Oak Street deals will “bolster its cash reserves and further strengthen its balance sheet in response to the novel coronavirus pandemic and to realize other benefits.” The company expects to take home $130 million after fees and expenses as well as a lower rent bill.
Cracker Barrel CEO Sandy Cochran and her team in March drew down more than $480 million available to them under their revolving credit line and suspended the company’s dividend and buyback programs. The company finished its third fiscal quarter on May 1 with about $363 million in cash and cash equivalents on its balance sheet.
The Master Lease has an initial term of 20 years, with five-year renewal options to extend the term of the Master Lease up to an additional 50 years. Initial annual lease payments under the Master Lease for the Original 64 Properties will be approximately $14.3 million in the aggregate and will be subject to a one percent annual increase. After the initial 20-year lease term, to the extent the Company elects to renew the leases under the Master Lease arrangement, annual lease payments will be reset at the beginning of the first five-year renewal term based on either the express rental rate specified for said renewal term or the fair market value rental rates pursuant to formulas provided in the individual leases and will thereafter continue to be subject to one percent annual increases. The Master Lease and any related individual leases are classified as absolute triple net leases, and Cracker Barrel remains responsible for all taxes, insurance and maintenance related to the properties.