Darden Restaurants Q4 Profit Rises; Plans To Pursue A REIT Separation

(RTTNews) - Darden Restaurants, Inc. (DRI) reported fourth-quarter net income of $105.3 million or $0.82 per share, compared to $86.5 million or $0.65 per share for the year-ago quarter.

Earnings from continuing operations for the latest fourth quarter were $118.1 million or $0.92 per share, compared with $48.4 million or $0.36 per share in the prior year quarter.

Excluding items, adjusted earnings from continuing operations for the current quarter rose to $1.08 per share from $0.54 per share in the fourth quarter of last year.

Total sales for the latest fourth quarter rose 13.8% to $1.88 billion from $1.65 billion in the comparable quarter last year.

Analysts polled by Thomson Reuters expected the company to earn $0.93 per share on revenue of $1.87 billion for the fourth quarter. Analysts' estimates typically exclude special items.

For fiscal 2016, the company expects adjusted earnings to be between $3.05 and $3.20 per share. Analysts currently expect the company to earn $2.88 per share for the fiscal year 2016.

Separately, the company announced that its Board of Directors approved a strategic real estate plan to pursue a separation of a portion of the Company's real estate assets. The separation would be achieved through a combination of selected sale leaseback transactions and the transfer of a portion of its remaining real estate assets to a new real estate investment trust or REIT that will be separated by a spin-off, split-off or similar transaction, resulting in the REIT becoming an independent, publicly-traded company.

Under the plan being pursued, Darden said it will transfer approximately 430 of its owned restaurant properties to the REIT, with substantially all of the REIT's initial assets being leased back to Darden.  The leases are expected to have attractive rent coverage ratios, fixed rent escalations and multiple renewal options at Darden's discretion. The potential REIT would be well positioned to expand through real estate acquisitions of other businesses.