New Jersey-based Sovereign Investment Company has completed a $69 million (€43.7 million) sale-leaseback deal for 32 steakhouses operated by private equity firm Lone Star Funds.
Lone Star Funds is the owner of Lone Star Steakhouse and Saloons, as well as Texas Land & Cattle, after taking the company private in 2006. The deal with Sovereign will see 32 of 180 restaurant properties leased back to the private equity firm on a 15-year, triple-net basis.
Sovereign’s acquisitions vice president Barry Bain said in a statement the Princeton firm is actively targeting private equity sale-leaseback deals following similar deals with JS Chapman and Sun Capital Partners. “[We are] in negotiations with several others.”
Peter Mavoides, chief executive officer of Sovereign, added: “As companies look to access capital in the current market environment many chief financial officers are funding alternative capital strategies like sale-leasebacks as more attractive then they have been in the past. We are very excited about the recent pick up in activity.”
Lone Star, which was reportedly trying to sell its 68 percent stake in Tokyo Lone Star Bank to Japanese private equity firm Advantage Partners last year as well as attempting to renegotiate its contract to sell Korea Exchange Bank to HSBC, has had more than $13.3 billion of assets under management since being founded in 1995.
Sovereign has invested more than $825 million in single tenant real estate with recent sale-leaseback acquisitions including a $78 million deal for 28 Joe’s Crab Shack restaurants, a $15.3 million deal for 20 Pizza Hut restaurants in Wisconsin and a $75.5 million acquisition for seven ShopKo department stores in the western US.