February 25, 2008 / 8:53 PM / in 10 years

UPDATE 1-Empire forecasts C$165 mln gain from property sale

(Adds details, stock price)

TORONTO, Feb 25 (Reuters) - Grocery chain operator Empire Co Ltd (EMPa.TO) said on Monday it is selling 61 retail properties to Crombie REIT (CRR_u.TO) for about C$428.5 million ($428.5 million).

Empire, which holds an indirect 48.1 percent ownership interest in Crombie, said it will book a pre-tax gain of about C$165 million once the deal closes.

The properties being sold include 40 free-standing grocery stores and 21 strip malls.

Stellarton, Nova Scotia-based Empire operates grocery store chains under the brands Sobeys, IGA and Price Chopper. It employs about 40,000 people.

    As part of the deal, the Sobeys chain -- Canada’s second-largest grocer -- will enter into new lease agreements with Crombie, ranging in terms from 17 to 23 years, Empire said.

    Empire shares were down C$1.08 at C$35.93 on the Toronto Stock Exchange shortly after the deal was announced.

    $1=$1 Canadian Reporting by Wojtek Dabrowski; editing by Rob Wilson

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