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Olive Garden owner announces strategic real estate plan

Florida-based company Darden Restaurants, which owns the Olive Garden and Longhorn Steakhouse restaurant chains, has announced plans to pay down $1 billion in debt. On June 23, the company revealed some details of a strategic plan that will include the creation of a real estate investment trust. Shares in the company rose by 5 percent in pre-market trading the day that the plan was announced.

According to the owner of Darden Restaurants, 430 of the company's restaurants will be moved into a REIT and then most of those restaurants will be leased back. An additional 75 properties were listed for individual sale and leaseback transactions. By the end of 2015, Darden expects to complete its real estate plan and use the profit to help pay off the company's debt.

Sears announced a similar real estate plan in April. Like Darden Restaurants, Sears is real estate-rich and decided to leverage its real estate assets in order to raise $2.5 billion. The real estate plan by Darden Restaurants is reportedly an effort by the company to maintain its investment grade credit profile. The CEO of Darden Restaurants said that the plan should optimize the company's long-term shareholder value.

A business owner with a lot of real estate assets may be able to develop a strategic commercial real estate plan that is similar to those created by Sears and Darden Restaurants. Once a REIT is set up with existing real estate, the REIT could acquire additional properties and continue to grow in the long-term. An attorney may be able to help prepare the documentation necessary to execute such a transaction.

Source: Forbes, "Olive Garden Parent Spinning Off Real Estate To Pay Down $1 Billion In Debt," Lauren Gensler, June 23, 2015

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