Reuters – Real estate owner Store Capital, backed by private equity firm Oaktree Capital Management LLC, has retained banks to explore an initial public offering or a sale to another landlord, said people familiar with the situation.
Scottsdale, Arizona-based Store Capital buys portfolios of real estate from large tenants, such as chain restaurants, supermarkets and health clubs, and then leases the properties back to the tenants.
An IPO of Store, which stands for Single Tenant Operational Real Estate, could raise $300 million to $500 million and value the entire company at around $2 billion, the people said, asking not to be named because the matter is not public.
The real estate company has hired Goldman Sachs Group (GS.N), Morgan Stanley (MS.N) and Credit Suisse Group AG (CSGN.VX) to help with the potential offering, the people said.
The offering process is slated to kick off in the fall with a market debut by the end of the year, the people said.
The company would more likely go public rather than sell, because its chief executive, Chris Volk, wants to continue to run the company, some of the people said.
Oaktree Capital, a Los Angeles-based private equity firm, helped launch Store in 2011 with an initial investment of $400 million.
Representative for Oaktree and Credit Suisse declined to comment. Representatives for Store, Goldman and Morgan Stanley did not immediately respond to requests for comment.
Volk is not new to the sale-leaseback market. He was also CEO of Spirit Finance Corp, which was sold to a consortium led by Macquarie Bank Ltd [MBL.UL] in 2007 for about $3.5 billion. That company, now Spirit Realty Capital Inc. (SRC.N), has a $4.5 billion market capitalization and trades at a forward price to earnings ratio of 13.24.
Store’s IPO could price in line with that of Spirit, or it could approach the valuation of National Retail Properties Inc (NNN.N), one of the people said. National Retail, with a market cap of $4.59 billion, has a forward price to earnings ratio of 17.4.
Store’s valuation, in the event of an IPO, would depend on the company’s debt load and the quality of its properties, the people said.
Sale-leasebacks are a popular way for companies to gain access to the cash tied up in their real estate holdings. Darden’s Restaurants Inc’s (DRI.N) Red Lobster brand recently sold 500 locations to a Store competitor, American Realty Capital Properties Inc (ARCP.O), and raised $1.5 billion from the sale.
(Editing by David Gregorio and Steve Orlofsky)Get your FREE trial or subscribe now to Buyouts to find new deal opportunities, super-charge your fundraising efforts and track top managers.