Darden Restaurants, whose entire board was replaced last year in a proxy fight, will split off about 430 properties and transfer them to a real estate investment trust, following through on a promise made by its new bosses.
The REIT, which will be traded publicly, will lease back the properties to Darden, according to a statement Tuesday. Darden, the owner of Olive Garden and other casual-dining chains, also is selling about 75 individual restaurants under separate deals. More than 30 of those properties already have been sold or are under contract, the company said.
Starboard Value, the hedge fund run by CEO Jeffrey Smith, won a proxy contest with Darden last year, leading to the board shake-up. The company also got a new CEO in October, when Gene Lee took the helm. A key tenet of the activist investor’s campaign was the idea of better exploiting the company’s property. Proceeds from the real estate deal should help Darden retire about $1 billion of debt.
“While a significant amount of work remains in order to proceed with the REIT transaction, we believe this plan will result in a more optimized capital structure and will create long-term shareholder value,” Lee said.
Darden shares rose 1 cent to close at $69.39 Tuesday.
