REI Co-op sold four warehouses across the United States in a $230 million sale-leaseback deal as the outdoor retailer tries to bounce back after years of financial struggles since the pandemic.
New York-based Madison Capital bought the Seattle area-based retailer's distribution centers with a total of more than 1.9 million square feet and adjoining land in Sumner, Washington; Bedford, Pennsylvania; Goodyear, Arizona; and Lebanon, Tennessee, the retailer said in a statement.
The transaction, among the biggest industrial property sales in the country this year, includes the $101.3 million sale of REI's 586,000-square-foot warehouse in Sumner, south of Seattle. It's the largest single-property industrial sale in the Puget Sound region by price since December 2022, CoStar data shows.
REI said it will continue to operate and maintain the distribution centers with no impact to employees.
“Based on the success of long-term leases with our current headquarters and majority of our stores, we determined a sale-lease back model was a great option as part of our overall financial and real estate portfolio management,” CFO Kelley Hall said in a statement.
The firm is the latest business to cut costs and raise funds by selling and leasing back its real estate.
Telecommunications giant AT&T last month announced an $850 million sale-leaseback of offices and other properties totaling more than 13 million square feet to New York-based investor Reign Capital, while national transportation company Wheeler Trucking recently sold and leased back a 15.2-acre property in Southern California's Inland Empire.
Break even
The latest transaction comes as the co-op that has over 190 stores across the United States reports that it is recovering after two straight years of operating losses that led to several rounds of job cuts, a restructuring of its stores and the shuttering last month of its experiences business line that held outdoor events, classes and tours.
REI, building on growth the co-op saw at the end of last year, expects to break even when it reports 2024 financial results this spring following two consecutive years of operating losses, the company said in a statement. The co-op announced last month that CEO Eric Artz will retire March 31, to be replaced by Mary Beth Laughton, a retail veteran who has held leadership roles at Nike, Athleta and Sephora.
REI plans to open six new and relocated stores in New York, California, Washington and Colorado this spring and summer, with new stores in Texas and Utah planned in 2026.
Madison Capital, which REI said was chosen from among multiple bids from buyers, did not immediately respond to requests to comment on it purchase of the warehouses that range from 400,000 square feet to just over 586,000 square feet.
The New York real estate investment and operating company, which typically acquires and repositions office, retail, industrial and flex properties, has over $3.2 billion in real estate and other assets under management.
For the record
REI was represented by real estate advisor and lead broker Heartland LLC, with cooperation with local brokers from BRK Real Estate Advisors in Pennsylvania, JLL in Arizona and Foundry Commercial in Tennessee.