Christopher & Banks has been subleasing its space -- now at 100,000 sf -- in the building for seven years from another company, who has a lease with Prudential that expires in 2005, says Andy Moller, chief financial officer at the retailer. Moller would not identify the company from whom the retailer is subleasing space. Christopher & Banks was paying less on its sublease than the unidentified company pays on its lease, so Moller says Christopher & Banks found it advantageous to keep the leases in place.
That's why, after the purchase, Christopher & Banks will continue to lease the entire facility to the unidentified third party and sublease it back.
Christopher & Banks will continue to lease the remaining 110,000 sf to two tenants, whose leases run out in 2005.
By buying the building, Christopher & Banks will also gain control of its headquarters offices, and have room to expand in the future.
"Since we will be able to reclaim space as subleases expire, the building will accommodate our planned growth over the foreseeable future," says Bill Prange,chairman and chief executive officer of Christopher & Banks.
When taking into account additional net rent payments received and offsetting such payments with increased depreciation and foregone interest income, the companyanticipates the purchase will add about $0.01 per share to net earnings in each of the next four years.
Christopher & Banks operates 304 stores in 29 states, located primarily in the northern half of the United States.
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