Bob Evans is considering options for its real estate.

NEW ALBANY, OHIO – The board of directors at Bob Evans Farms approved plans to sell some of the company’s restaurant properties. Bob Evans Farms retained J.P. Morgan to help evaluate the company’s options for its real estate.

The transaction will be a sale-leaseback agreement or a tax-free real estate investment trust (REIT) conversion and spin-off. Factors governing the type of transaction the company chooses include the performance of Bob Evans’ business segments; market values for restaurant real estate; performance of publicly traded real estate companies; interest rates and domestic economic conditions.

“We expect to conclude the assessment of alternative paths for our restaurant real estate over the next several months,” said Mark Hood, chief financial officer. “The ultimate size of any transaction will depend on the factors we have noted, but is expected to range from approximately 30% to 60% of currently owned restaurant real estate.

“Either of the forms of a transaction is expected to enable the company to reduce its investment in lower-return assets, and we expect that in structuring a transaction we would seek to maintain our flexibility to pursue a separation of the foods and restaurant segments at some point in the future if advisable at that time."

Bob Evans is gaining distance from a proxy fight with activist shareholder Sandell Asset Management (SAMC) over the strategic direction of the company. When the dust settled, Steve Davis, then the chief executive officer of the company, stepped down. The management shake-up came shortly after Sandell managed to have four board nominees proposed by the investor elected to Bob Evans Farms’ 12-member board of directors.

Thomas Sandell, c.e.o. of SAMC, advocated spinning off the Bob Evans’ food business, BEF Foods and a sale-leaseback transaction to extract value from company-owned restaurant properties. Several investment firms expressed interest in acquiring Bob Evans’ real estate.

Mr. Hood said that combined with the company’s announcement of a sale lease-back of Bob Evans’ headquarters building and select industrial properties, “this will enable us to further enhance shareholder value through our capital deployment strategies as we continue to execute the turnaround of our businesses.”