Red Robin Gourmet Burgers, Inc. Completes Third Sale-Leaseback Transaction With Essential Properties Realty Trust, Inc.
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Insights
Red Robin's recent sale-leaseback transaction signifies a strategic financial maneuver designed to optimize the company's capital structure. The infusion of $24 million in gross proceeds and the subsequent debt reduction of approximately $23 million directly impacts the company's leverage ratios, potentially improving its credit profile and liquidity position. By converting fixed assets into liquid capital, Red Robin can enhance financial flexibility, which is crucial for navigating the highly competitive and capital-intensive restaurant industry.
However, it's essential to scrutinize the terms of the lease-back arrangement, as these will dictate future financial commitments and could affect profitability. The long-term lease obligations must be weighed against the immediate benefits of debt reduction. Additionally, investors should monitor how this capital restructuring aligns with Red Robin's broader strategic initiatives, such as expansion plans, operational improvements, or digital transformation.
The transaction between Red Robin and Essential Properties Realty Trust is indicative of a broader trend in the restaurant industry, where operators leverage real estate assets to unlock capital. For Essential Properties, the acquisition of ten well-located restaurant properties enhances its portfolio diversity and stability, given the long-term nature of the leases and the creditworthiness of Red Robin as a tenant.
From a real estate investment perspective, the quality and location of the properties are paramount, as they determine the long-term value and revenue potential of the investment. The partnership's success hinges on Red Robin's operational performance, which drives the properties' underlying value. Investors in Essential Properties should consider how this transaction complements the trust's existing assets and the potential for rent escalations, property appreciation and occupancy rates.
This sale-leaseback deal reflects Red Robin's strategic response to the evolving market dynamics within the restaurant sector. The move may signal a shift towards a more asset-light business model, which has gained traction among restaurant chains seeking to improve capital efficiency and focus on core competencies like menu innovation and customer experience.
For stakeholders, the key is to evaluate how Red Robin's reduced debt levels and increased liquidity might support its competitive positioning. In the short term, the transaction could provide a buffer against market volatility and unforeseen expenses. Long-term, it could afford Red Robin the agility to invest in growth opportunities such as technological advancements, market expansion and enhanced customer service initiatives, which are critical factors in maintaining relevance in a rapidly changing industry.
Gross proceeds of approximately
Expected to reduce debt by approximately
The transaction generated gross proceeds of approximately
Todd Wilson, Red Robin’s Chief Financial Officer, said, “We are pleased to extend our partnership with EPRT, a best-in-class real estate partner to middle market companies, with the completion of a third sale-leaseback transaction. Over the past year, these transactions have enabled us to reduce our debt by approximately
Pete Mavoides, Essential Properties’ President and CEO, added, “We greatly value our relationship with this iconic brand and would like to thank Red Robin for their partnership. This transaction adds another ten well-located restaurants to our portfolio, leased on a long-term basis to a high-quality tenant.”
CBRE Group served as an advisor to Red Robin on the transaction.
About Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB)
Red Robin Gourmet Burgers, Inc. (www.redrobin.com), is a casual dining restaurant chain founded in 1969 that operates through its wholly owned subsidiary, Red Robin International, Inc., and under the trade name, Red Robin Gourmet Burgers and Brews. We believe nothing brings people together like burgers and fun around our table, and no one makes moments of connection over craveable food more memorable than Red Robin. We serve a variety of burgers and mainstream favorites to Guests of all ages in a casual, playful atmosphere. In addition to our many burger offerings, Red Robin serves a wide array of salads, appetizers, entrees, desserts, signature beverages and Donatos® pizza at select locations. It’s now easy to enjoy Red Robin anywhere with online ordering available for to-go, delivery and catering, or you can download our new app for easy customization, access to the Red Robin Royalty® dashboard and more. There are more than 500 Red Robin restaurants across
About Essential Properties Realty Trust, Inc. (NYSE: EPRT)
Essential Properties Realty Trust, Inc. is an internally managed REIT that acquires, owns and manages primarily single-tenant properties that are net leased on a long-term basis to companies operating service-oriented or experience-based businesses. As of December 31, 2023, the Company’s portfolio consisted of 1,873 freestanding net lease properties with a weighted average lease term of 14.0 years and a weighted average rent coverage ratio of 3.8x. In addition, as of December 31, 2023, the Company’s portfolio was
Forward-Looking Statements
Forward-looking statements in this press release regarding the Company’s use of proceeds from its recently completed Sale-Leaseback transaction, including anticipated debt repayment and all other statements that are not historical facts are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on assumptions believed by the Company to be reasonable and speak only as of the date on which such statements are made. Without limiting the generality of the foregoing, words such as "expect," "believe," "anticipate," "intend," "plan," "project," "could," "should," "will," "outlook" or "estimate," or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. Except as required by law, the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date and cautions investors not to place undue reliance on any such forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements based on a number of factors, including but not limited to changes in or the effectiveness of the Company‘s “North Star” plan and other plans, operations and/or strategic initiatives, including plans with respect to the repayment of the Company’s debt and other risk factors described from time to time in the Company's Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) filed with the
View source version on businesswire.com: https://www.businesswire.com/news/home/20240304007518/en/
For Red Robin investor relations questions:
Jeff Priester, ICR
jeff.priester@icrinc.com
(332) 242-4370
For Red Robin media relations questions:
Kathleen Bush, Red Robin Gourmet Burgers, Inc.
kbush@redrobin.com
(303) 846-5114
For Essential Properties Realty Trust investor relations/media questions:
Mark E. Patten, Chief Financial Officer
(609) 436-0619
info@essentialproperties.com
Source: Red Robin Gourmet Burgers, Inc.
FAQ
How much gross proceeds did Red Robin Gourmet Burgers, Inc. (RRGB) generate from the Sale-Leaseback transaction with Essential Properties Realty Trust, Inc. (EPRT)?
How much debt does Red Robin Gourmet Burgers, Inc. (RRGB) expect to reduce as a result of the transaction?
Who served as an advisor to Red Robin Gourmet Burgers, Inc. (RRGB) on the transaction with Essential Properties Realty Trust, Inc. (EPRT)?
