Safeway Wraps Up Property Development Centers Sale

Safeway Inc. has completed the sale of the shopping center and real estate development assets owned by its wholly owned subsidiary, Property Development Centers LLC (PDC), to Carlsbad Calif.-based Terramar Retail Centers LLC, for about $830 million.

The estimated total cash payment to Safeway stockholders for PDC is $2.45 per share, of which $2.38 is estimated to be paid at the closing of the pending merger between Safeway and Albertsons. Safeway stockholders will additionally receive a contingent value right (CVR) at the merger's close, in connection with any further net cash proceeds from the sale of PDC, including any amounts released from escrow, any additional payments from Terramar and any holdback amounts not spent for potential contingent liabilities. Safeway now estimates these amounts at about $29 million, or around $18 million net of tax, which, if paid, would come to approximately seven cents per share, with payment to be made within one year.

The grocer sold PDC ahead of the merger, which was revealed last March and is expected to close in January 2015. Safeway currently estimates that, as well as the $32.50 cash per share to be paid at the closing of the merger, stockholders will receive, as additional merger consideration, the above mentioned cash payment of $2.38 per share from the initial net proceeds of the PDC sale, along with the PDC CVR and a second CVR relating to Safeway’s 49 percent interest in Mexico-based food and general merchandise retailer Casa Ley, S.A. de C.V.

In April 2014, Safeway stockholders received a distribution of stock in the company's former Blackhawk Network Holdings subsidiary, valued at $4.02 per Safeway share at the time of the distribution.

Safeway formed PDC in 2008 to develop retail shopping centers, and most PDC shopping centers have the grocer as one of their primary anchor tenants. PDC's assets consisted of 11 completed retail shopping centers, nine retail shopping centers under construction, and five projects in the due diligence and entitlement phases. The centers and projects are primarily located in California and Hawaii.

Pleasanton, Calif.-based Safeway operates Safeway, Vons, Pavilions, Randalls, Tom Thumb, and Carrs stores. The company has 1,326 stores in 20 states and the District of Columbia, 13 distribution centers and 19 manufacturing plants, and employs about 138,000 employees.