REI Co-op has entered into a long-term sale-leaseback agreement with Madison Capital, a New York-based real estate investment firm, for its four, Class A distribution center properties. REI said it will continue to maintain and operate all buildings with no impact to employees.
REI Co-op has entered into a long-term sale-leaseback agreement with Madison Capital, a New York-based real estate investment firm, for its four Class A distribution center properties. The retailer reported that it “will continue to maintain and operate all buildings without impacting employees.”
SGB Media first reported the sale-leaseback deal in October 2024 after REI began running ads in commercial real estate websites. The ads cited a “long-term NNN sale/leaseback opportunity to own one or all of the essential distribution centers supporting America’s largest customer-owned retail co-op.”
Under a triple net (NNN) lease, REI would still pay the DCs’ expenses, such as real estate taxes, building insurance, maintenance, rent, and utilities. The outdoor chain retailer had hoped to close on a deal before the close of 2024.
REI has been looking for ways to raise cash and cut costs, including its decision in January 2025 to shutter its Experiences business, cutting 428 employees.
The company posted losses in 2022 and 2023 and appears to be ready to post a loss for 2024 when it releases its annual report later this spring.
The retailer also slowed new store openings, with plans to open only six new stores in 2025 after opening 10 in 2024.
The retailer does not expect the sale-leaseback arrangement to impact current REI employees.
“Based on the success of long-term leases with our current headquarters and majority of our stores, we determined a sale-leaseback model was a great option as part of our overall financial and real estate portfolio management,” said Kelley Hall, chief financial officer at REI Co-op. “Madison Capital was selected as the strongest partner after a thorough process that included interest from multiple buyers. We are enthusiastic about our partnership and their support of our commitment to sustainability.”
Madison Capital paid $230 million to REI for the buildings and land associated with four distribution centers in Sumner, WA; Bedford, PA; Goodyear, Arizona; and Lebanon, TN. The Lebanon location, the company’s newest, earned Leed v4 Platinum certification from the U.S. Green Building Council, the first in Tennessee, and is reportedly the” largest Leed Platinum industrial building in the Southeast.”
The co-op said it will continue to own all equipment and machinery inside each distribution center.
Real estate advisor and lead broker Heartland, LLC represented REI in cooperation with local brokers BRK Real Estate Advisors (PA), JLL (AZ) and Foundry Commercial (TN).
REI’s network of distribution centers services over 190 stores nationwide and fulfills online customer orders. Three of the four distribution centers are certified True Zero Waste facilities, with the fourth certification in process for the newest facility. Three distribution centers are Leed-certified by the U.S. Green Building Council. The Arizona facility was the first distribution center in the U.S. to achieve Leed Platinum certification and Net Zero Energy.
Madison Capital is a real estate investment and operating company based in New York City and reports having over “$3.2 billion in assets under management.”
Image courtesy REI Co-op (Sumner, WA)
