Rex Reaches Agreement with Appliance Direct for 39 Stores
Rex Stores ended its months-long quest to offload some of its retail outlets, agreeing to lease 39 stores to Florida-bases Appliance Direct, according to SEC documents filed Monday. Appliance Direct, which operates 20 stores in Florida, agreed to buy the appliances, fixtures and other equipment from 37 outlets and lease the Rex-owned retail space, the documents state. It also will take over two Rex- leased locations, Rex said. It wasn’t clear whether the agreement also includes CE products, which accounted for 63 percent of Rex’s $223.9 million retail revenue in the fiscal year ended Jan. 31, 2008. Appliances were 28 percent of Rex’s revenue. Rex and Appliance Direct officials weren’t available for comment at our deadline.
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Appliance Direct will sign 6.25-year leases with a five- year renewal option for Rex-owned locations, Rex said. Appliance Direct also has an options to buy the locations for $70 per square foot in the first two years of the lease, and $75 per square foot in the 18 months after that, Rex said. Appliance Direct also agreed to “to use good faith efforts to negotiate an assumption” of Rex leases or new leases for 44 other locations, Rex said.
The pact appears to apply to 83 Rex locations, including eight in Alabama, five in Mississippi and four in Ohio. Rex had 105 stores in 32 states as of Oct. 31. While the fate of the 22 stores not included in the agreement wasn’t clear, many have closed in recent months. Rex reached agreement to sell 94 operating and closed stores to Coventry Real Estate Investments in 2007 for about $84 million (CED March 29/07 p6).
Appliance Direct stores are in Florida, where the chain specializes in selling new and refurbished appliances, including Whirlpool and Frigidaire. While Rex had 12 stores in Florida as of January 2008, it has closed many of them in the months since, including those in Tallahassee and Fort Walton Beach. The one Florida store listed in the deal is in Gainesville. It also couldn’t be determined whether the pact includes a 180,000-square-foot distribution in Pensacola, Fla., and a 470,000-square-foot facility near Rex’s headquarters in Dayton, Ohio. Rex completed a $1.6 million sale/leaseback in September of a 145,000-square-foot warehouse in Cheyenne, Wyo. It also posted a $700,000 gain on the sale of 52 acres of adjoining land. In an earlier restructuring, Rex sold 25 to 30 stores to Aaron Rents (CED Oct 31 p5).
Rex hired Brown Gibbons Lang & Co. in June to weigh plans for 111 stores, including a possible sale (CED June 26 p4). The firm also was helping Rex find ways to turn its real-estate holdings into cash while holding on to investments in ethanol plants. The review was to be completed by November, but was extended. Rex’s investments in ethanol have grown, but its retail business has slumped in the economic crisis. - Mark Seavy