DineEquity Inc.’s Applebee’s Neighborhood Grill & Bar restaurant chain is moving its headquarters. Glendale-based parent company DineEquity is ending its lease with Lexington LAC Lenexa L.P., an affiliate of Lexington Realty Trust and property owner of the commercial space currently occupied by Applebee’s headquarters in Lenexa, Kan. Applebee’s will relocate about 350 headquarters-based team members to a smaller, more appropriately sized facility in the Kansas City area. A real estate search is underway and Applebee’s expects to complete the move before Sept. 30. DineEquity, which acquired Applebee’s International in 2007, has had plans to relocate the chain’s headquarters – known as the “Restaurant Support Center” – to better align with changes it has made to the brand. The company has been actively marketing the lease transfer of the building for the past couple of years. “Applebee’s Restaurant Support Center was conceived and built under prior ownership and during a different direction for the company,” said Julia A. Stewart, DineEquity’s chairman and CEO. “We anticipated the needs of the business would change as we implemented our strategy to become more highly franchised, and we acknowledged early on that would require moving to different offices in the Kansas City area better suited to our business model once a tenant could be found for the Lenexa campus.” The least termination will allow DineEquity to reduce its debt by about $34 million and is deemed economically advantageous on a long-term basis. The move to a smaller facility will result in an internal rate of return of about 12 percent. DineEquity also expects to recognize $26 million in pre-tax charges – $16 million after tax – related to the agreement. Those include a non-cash impairment charge of about $5 million primarily related to leasehold improvements to be recognized in the first quarter of 2011. They also included a cash lease termination fee and other closing costs of about $21 million to be recognized in the second quarter of 2011. The cash lease termination fee is expected to be paid during the second half of 2011.
