Hooker Furniture Expanding into 628,000 SF at Virginia Distribution Facility

Hooker Sold This Facility to Expand in Another

Martinsville, VA-based Hooker Furniture Corp. has entered into a new, seven-year operating lease with landlord 1350 State Road, LLC for a 628,000 square foot warehouse facility in Henry Co., VA, which Hooker Furniture refers to as its Central Distribution Center II facility (CDC2).

The company occupied, and previously leased, approximately 400,000 square feet in this facility, which is utilized for its casegoods segment and the imported upholstery division of its upholstery operating segment.

Its expanded footprint will encompass the entire 628,000 square foot CDC2 facility. Hooker Furniture will pay an initial base rent of $1.80 per square foot and has two, three-year renewal options.

The Company expects to pay rent, which will increase by 2% annually, of approximately $1.1 million in the first year of the lease to $1.3 million in the seventh year, for an aggregate of approximately $8.4 million over the initial seven-year term of the lease.

Concurrent with entering the lease, Yale Realty Associates, LLC, an affiliate of the landlord, purchased the Company’s 189,000 square foot “Cloverleaf” warehouse facility located in Henry County, Virginia for $1.75 million.

Hooker Furniture expects to record a gain of approximately $300,000 pretax ($191,000 after tax, or $0.02 per share) on the sale of the property in its fiscal 2015 first quarter financial statements.

Both parties have agreed to rent-free transition periods to allow moves in and out of the respective buildings. The Company will have a 45-day rent free period to vacate the Cloverleaf facility. Similarly, the CDC2 landlord will have a 45-day rent free period to vacate portions of CDC2 not currently being utilized by the Company.

Other material terms of the lease include a schedule of repairs and improvements to be made by the landlord and customary covenants, events of default and remedies.

In its most recent annual report, Hooker Furniture reported that its Henry County, Virginia warehouses housed approximately 51 percent of its consolidated inventories, with approximately 28 percent stored at its Central Distribution Center (CDC) facility, also located in Henry County, Virginia. During fiscal 2013, approximately 55 percent of its invoiced sales were shipped out of its Henry County, VA facilities, with 40 percent shipped out of the CDC.

The company’s corporate headquarters, which houses all corporate administration, sourcing, sales, finance, product design, customer service and traffic functions for imported products, is also located in this area.

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