SUPERVALU Announces Agreements to Sell and Leaseback Eight Distribution Centers

SUPERVALU INC. (NYSE: SVU) today announced it has entered into definitive agreements to sell eight of its owned distribution centers, representing approximately 5.8 million square feet, to a single buyer for an aggregate purchase price, excluding closing costs and taxes, of approximately $483 million. Upon closing of the sales, SUPERVALU will enter into lease agreements for each of the facilities for an initial term of 20 years with five five-year renewal options. Adjusting for taxes and closing costs, net proceeds to SUPERVALU are estimated to be approximately $445 million. Subject to customary closing conditions, the sale and leaseback of these properties is expected to be completed in May for seven of the properties and by October for one property.

“The completion of these sale leaseback transactions is another positive step in the continued transformation of our business,” said Mark Gross, SUPERVALU’s President and Chief Executive Officer. “By unlocking significant value in a portion of our real estate portfolio, we’re able to meaningfully pay down debt, improve our balance sheet, and deliver value to our shareholders. I appreciate the hard work and dedication from our team as we continue to move quickly on a variety of initiatives we believe position us for future success.”

Expected Use of Proceeds

Net proceeds from the sales will be used to reduce outstanding debt including, and as required, the payoff of a mortgage related to one of the properties being sold and a mandatory prepayment of SUPERVALU’s secured term loan.

Expected Impact on Results of Operations

SUPERVALU is expected to pay cash rent of approximately $31 million in the first year of these leases (approximately $24 million in fiscal 2019 based on a partial year). Due to customary rent escalators in the leases, SUPERVALU’s rent expense related to these leases will be approximately $37 million on an annual basis (approximately $27 million in fiscal 2019 based on a partial year). The resulting reduction in interest expense will depend on how and when the net proceeds are applied to reducing debt. Following the sale of these facilities, SUPERVALU will continue to own over 13 million square feet of real estate.

In addition, the buyer has also agreed to fund an expansion at SUPERVALU’s distribution center in Harrisburg, PA, one of the facilities included in the sale and leaseback, for an estimated cost of $20 million. The expansion, which will help support the growth of SUPERVALU’s wholesale business and broaden the availability of its Market Centre products across the network, will also be leased to SUPERVALU upon completion.

LIST OF DISTRIBUTION CENTERS BEING SOLD AND LEASED BACK AS PART OF THIS TRANSACTION

About SUPERVALU INC.

SUPERVALU INC. is one of the largest grocery wholesalers and retailers in the U.S. with annual sales of approximately $14 billion. SUPERVALU serves customers across the United States through a network of 3,437 stores composed of 3,323 wholesale primary stores operated by customers serviced by SUPERVALU’s food distribution business and 114 traditional retail grocery stores in continuing operations operated under three retail banners in three geographic regions (store counts as of February 24, 2018). Headquartered in Minnesota, SUPERVALU has approximately 23,000 employees (in continuing operations). For more information about SUPERVALU visit www.supervalu.com.

Forward Looking Statements

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

Except for the historical and factual information, the matters set forth in this news release, particularly those pertaining to the expected completion of the sales and leaseback of the facilities (including the timing thereof), the ability to consummate the sales and SUPERVALU’s expectations, guidance, or future operating results, and other statements identified by words such as "estimates" "expects," "projects," "plans," "intends," "outlook" and similar expressions are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the ability to satisfy the closing conditions and close the proposed sales and leasebacks on a timely basis or at all, the possibility that modifications to the terms of the transactions may be required, business disruption, and other risk factors relating to the business or industry as detailed from time to time in SUPERVALU's reports filed with the SEC.You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. For more information, see the risk factors described in SUPERVALU’S Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the SEC. Unless legally required, SUPERVALU undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

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