IHOP Flips Applebee’s Assets for $347M

Restaurant firm IHOP Corp., through its Applebee’s division, has entered into a sale-leaseback deal in which it will dispose of 187 Applebee’s restaurant real estate parcels for an estimated $347 million. The buyer is a newly formed partnership involving Drawbridge Special Opportunities Fund L.P., Drawbridge Real Assets Fund L.P., and various affiliates. As per the terms of the agreement, the price tag on the transaction may change based upon adjustment of restaurant sales for the 12-month period concluding on April 30. Additionally, the Drawbridge team will have the option to forego the purchase of as much as 15 percent of the total restaurant sites should the properties be found defective in terms of property condition, title issues, zoning issues or other material shortcomings. The total purchase price is expected to be solidified by June 1 for an estimated closing date no later than June 16. The disposition of the Applebee’s properties is part of IHOP’s plan to generate resources to pay down its funded debt. In its first quarter earnings report, the company noted that it would sell a total of 191 company-owned Applebee’s real estate parcels via sale-leaseback arrangements. IHOP came into possession of the assets when it acquired Applebee’s International Inc. for approximately $2.1 billion in late 2007. Beyond the Applebee’s dispositions, last month, the restaurant company signed on to sell its support center in Lenexa, Kans., in a sale-leaseback deal valued at $40 million. The Drawbridge funds involved in the transaction are affiliates of New York City-based alternative asset manager Fortress Investment Group. Fortress stock opened at $15.19 today. Headquartered in Glendale, Calif., IHOP Corp. is a franchiser and operator of International House of Pancakes and Applebee’s Neighborhood Grill & Bar brand restaurants. The company’s portfolio encompasses 3,300 restaurant properties, making it the largest full-service restaurant company in the world. IHOP stock opened today at $51.20.