Rite Aid Corp. on Tuesday said it received approvals from the U.S. Bankruptcy Court for the District of New Jersey for its “First Day” motions related to the company’s voluntary Chapter 11 bankruptcy protection petitions filed Sunday.
The court granted interim approval to access up to $3.45 billion in debtor-in-possession financing from certain of its lenders. This financing is expected to provide sufficient liquidity to support the company throughout this process.
Among other things, the court has authorized the company to continue to pay associate wages, salaries and benefits without interruption, pay vendors and suppliers in full for goods and services provided on or after the filing date of Oct. 15, and otherwise continue to deliver leading health care products and services across its retail and online platforms.
Meanwhile, A&G Real Estate Partners, acting as a real estate adviser to Rite Aid, announced plans Tuesday to market for sale 78 Rite Aid and Bartell Drugs neighborhood pharmacy leases, as well as 21 fee-owned properties, pending approval by the courts.
Eight of those stores are in New Jersey (six are stores with more than 10 years on their lease and two are fee-owned).
The initial leases and properties are available in private sales, pending court approval, as part of Rite Aid’s financial restructuring process. As it moves through this process, the company will continue assessing its property footprint and close additional stores to improve its overall financial performance.
“Rite Aid, which operates more than 2,100 retail pharmacy locations across 17 states, is working collaboratively with its financial stakeholders to reduce its debt and position its business for success,” said Andy Graiser, co-president of New York-based A&G. “Portfolio optimization is a powerful and essential part of that go-forward strategy.”
As the company’s restructuring process moves forward in the weeks ahead, A&G will market additional leases, with the total number depending on the outcome of ongoing negotiations between A&G and Rite Aid landlords. The quickly moving plan centers on exiting certain locations to ensure optimal performance of Rite Aid’s real estate footprint.
“Our role also includes advising on lease portfolio optimization as Rite Aid strengthens its overall financial performance by reducing its rent expenses while continuing to meet the needs of its customers, communities and associates,” Graiser said. “As it does so, other retailers and investors will gain access to some strong locations, in many cases with complementary co-tenants, in attractive markets across the United States.”
Including options, all leases being marketed by Rite Aid — the third-largest drugstore chain in the U.S. — boast more than 10 years of remaining term. The initial leases are located in the following nine states: California (16); Michigan (15); New York (14); Pennsylvania (12); Washington (6 Rite Aid, 3 Bartell Drugs); New Jersey (6); Maryland (4); Ohio (1); and Oregon (1).
In addition, A&G is offering on behalf of the company 21 fee-owned properties (both stores and land) in the following 11 states: Pennsylvania (5); New York (3); Ohio (3); New Hampshire (2); New Jersey (2); Alabama (1); California (1); Idaho (1); Michigan (1); Oregon (1); and Washington (1).