APPLE VALLEY – Big Lots, a discount furniture retailer, announced during the summer that they sold their Apple Valley Distribution Center, along with 26 store locations to Blue Owl Capital for $318 million. 

The sale agreement allows Big Lots to lease the property from Blue Owl Capital – called a leaseback, to continue the distribution center’s operations.

A leaseback is a financial move that can help a company use money from the sale of the property for other things they need.

In Big Lots’ case, the company intends to use $100 million of the net proceeds from the sale and leaseback transaction to fully pay down its synthetic lease on the Apple Valley distribution center. A synthetic lease is a financial arrangement that allows Big Lots to lease a property while keeping it off its balance sheet, often for accounting and tax benefits.

The remainder of the net proceeds will pay down debt on its asset-based lending revolving credit facility.

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“As we discussed on our Q1 earnings call, we are highly focused on ensuring we have plenty of liquidity to get through this period of macroeconomic challenges, and monetizing these assets is a significant step forward in ensuring such liquidity,” said Big Lots President and CEO Bruce Thorn.

The company’s stock went up 30% after posting their Q2 results with a better-than-expected loss.  

Thorn said the company remains in a very challenging environment because their core lower-income customer remains under significant pressure and has limited capacity for higher-ticket purchases.