Sunday, February 29, 2004

BAE Systems Announces £50m Sale Leaseback Near London

BAE Systems will move all its avionics division from 370,000 sq ft at the Grove in Stanmore, north-west London to a new 200,000 sq ft design-and-build office campus at its 10-acre site at Capability Green in Luton. BAE staff in other divisions at the Grove are moving to locations including Bristol.

Buckingham Securities is the frontrunner in the £50m deal with BAE Systems to buy the new building and lease it to BAE for 21 years at £19 per sq ft. Buckingham Securities is in competition with Active Asset Investment Management, the footballers' fund and others. AIM was in exclusive talks with BAE at the end of last year before a deal fell through. BAE Systems is being represented by ATIS REAL Weatheralls and CB Richard Ellis. Sphere: Related Content

Mizuho Agrees to $2 Billion Sale leaseback of Head Office Buildings

Kyodo News International, Tokyo Knight Ridder/Tribune - February 20, 2004

Japan's biggest bank, Mizuho Financial Group Inc., said on Friday that it would sell its two main branch buildings in downtown Tokyo as part of group-wide cost-cutting initiatives. The group said it planned to securitise and sell the two central Tokyo buildings of its core banking unit, Mizuho Bank, for 217 billion yen ($2 billion), which would result in a 62 billion yen loss on book value.

The group will sell Mizuho Bank's head office building in the Uchisaiwaicho district, formerly the head office of Dai-Ichi Kangyo Bank, to a special-purpose company formed by Dai-ichi Mutual Life Insurance Co. for 105 billion yen ($963 million). The deal will be signed Tuesday for sale to take place March 12.

Mizuho Financial Group will also sell its Otemachi branch building to a special-purpose company of Tokyo Tatemono Co. for 112 billion yen ($1.027 billion) in a deal to be signed and completed next Friday. The building was formerly used for the Fuji Bank head office. The sales are aimed at cutting valuation losses on asset holdings, Mizuho Financial Group said, adding the deals will not affect its earnings outlook for the current business year to March 31.

Both properties will be loaned to Mizuho Bank after the sales, the banking group said. The group was created through the merger of Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan in April 2002. Sphere: Related Content

ChevronTexaco to Buy 1.2 Million SF Enron HQ in Houston, TX - February 26, 2004

The opulent 40-story tower completed by Enron shortly after its collapse will finally be filled. ChevronTexaco Corp. will buy the empty downtown tower as the home for 3,700 Houston employees. The investors who bought it for $102 million at a bankruptcy auction, New York-based Intell Management & Investment Co., said the sale price was not disclosed, but Intell President Gary Barnett said in a release, "Kudos to them for acquiring a trophy building at a fraction of its cost." The gleaming tower was completed shortly after Enron filed for bankruptcy on Dec. 2, 2001.

At the time of the Intell purchase, many said $102 million was less than half of what it would cost Enron to complete the unfinished tower. ChevronTexaco also will get a break from the city: It will pay taxes on the building's $80 million base value, the mayor said. The company is expected to add $45 million in improvements.
When that transfer of jobs is complete, ChevronTexaco will have 5,200 workers in Houston. The purchase is expected to close on March 15.

The buy will allow the company to consolidate many of the different office locations in Houston to downtown. Employees in five buildings throughout the city will move into the tower, company officials said. ChevronTexaco has two other buildings in Houston, on Fournace Place and on Briarpark Drive, which it will continue to use. The new acquisition will provide 1.2 million square feet, which is twice the downtown space ChevronTexaco now occupies. The company plans to sell its Chevron Tower at 1301 McKinney.

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Saturday, February 28, 2004

AMF Bowling Worldwide Pursuing $250 million Sale Leaseback

AMF Bowling Worldwide Website - Richmond, Virginia - February 27, 2004

AMF Bowling Worldwide Inc., the world's largest owner and operator of bowling centers, has been acquired by an affiliate of Hennessy & Simmons LLC, a Chicago-based private equity firm. Fred Hipp has been named President and Chief Executive Officer of AMF Bowling Worldwide, Inc. He joins AMF with thirty years in the hospitality industry, most recently as President and CEO of California Pizza Kitchen.

The merger transaction is valued at approximately $670 million, of which $250 million will be financed through the sale of certain real estate assets under a sale-leaseback facility. Debt financing consists of $135 million in term loans under a new senior secured credit facility, as well as a recently completed offering of $150 million in senior subordinated notes. Finally, a $135 million equity investment was made by Kingpin Holdings, the acquiring affiliate of CHS. Under the terms of the merger agreement, AMF shareholders will receive $25.00 in cash for each common share. Sphere: Related Content

A&P Completes $170 Million Sale Leaseback Transaction

MONTVALE, N.J. - BUSINESS WIRE - February 27, 2004

The Great Atlantic & Pacific Tea Company, Inc. (A&P)(NYSE:GAP) today announced the completion of a real estate sale/leaseback transaction with Cardinal Capital Partners, Inc. (Dallas, Texas). The transaction, executed at a cap rate of approximately 9%, will result in proceeds to A&P of approximately $170 million.

Founded in 1859, A&P was one of the nation's first supermarket chains, and is today among North America's largest. The Company operates more than 645 stores in 10 states, the District of Columbia and Ontario, Canada under the following trade names: A&P, Waldbaum's, The Food Emporium, A&P Super Foodmart, Super Fresh, Farmer Jack, Sav-A-Center, Dominion, The Barn Markets, Food Basics and Ultra Food & Drug. Sphere: Related Content

Monday, February 16, 2004

Specialty Laboratories Announces $47 Million Sale Leaseback of HQ in Valencia, CA

SANTA MONICA, CA - BUSINESS WIRE - February 12, 2004

Specialty Laboratories, Inc. (NYSE:SP) (Specialty), a leading hospital-focused clinical reference laboratory, today announced an agreement for the sale and lease-back of its future headquarters and laboratory facility in Valencia, California, with Lexington Corporate Properties Trust (NYSE:LXP) (Lexington), a real estate investment trust. Under the terms of the agreement, Lexington will purchase the existing facility for $47 million and Specialty will complete the construction project and enter a twenty-year lease for use and occupancy of the facility.

Specialty will receive, net of transaction expenses, more than $24 million at closing of the sale, which is expected before the end of the first quarter 2004. Lease payments are expected to begin in the third quarter and, upon commencement of the lease, Specialty will be required to issue a $9.0 million Letter of Credit. Net of these contributions, Specialty expects to incur capital expenditures of approximately $12 million in 2004 to complete the construction project.

The Sale/Lease-Back transaction is subject to the satisfaction of customary conditions, including a due diligence period, final inspections and closing, each of which is expected to be completed by the end of the first quarter of 2004.

The new 198,000 square-foot facility under construction will consolidate Specialty's business activities within a single building and significantly increase available space for future growth and capacity. The purpose-built laboratory and headquarters building is situated on a 14-acre site located in the Valencia Corporate Park in Valencia, California. Sphere: Related Content

Irish Buyers Pay €40 million for Microsoft Campus near Dublin

The Irish Times - February 11, 2004

A group of property developers led by Dublin businessman Paddy Shovlin has paid Green Property Company almost €40 million for Microsoft's former European operations centre on 12.5 acres at Sandyford, Co Dublin. The investment is currently producing rents of over €2 million per annum but it is expected that the site will eventually be redeveloped for a mixture of retail warehousing and apartments.

The largest of the three office blocks with 10,358 sq m (111,504 sq ft) is occupied by Microsoft at a rent of €1,516,067 per annum. The smallest block with 2,268 sq m (24,423 sq ft) is partially occupied at a rent of €520,000.

Microsoft has six year break options on all the space and it has already moved out of the third block which has a floor area of 7,563 sq m (81,419 sq ft). The general expectation is that Microsoft will also vacate the two other buildings after moving most of its European hub operations to a new six-storey, 16,722 sq m (180,000 sq ft) building at the Green Property's Atrium office development a short distance away in Sandyford.

Green's decision to sell the older complex is hardly surprising given its continuing need to raise capital following its delisting from the stock exchange and also because it was holding more than €120 million in properties occupied by Microsoft.

Green originally paid €72.6 million at the height of the high tech boom in 1999 for the three blocks in Sandyford and another office building in South County Business Park in a sale and leaseback deal with Microsoft. The four investments accounted for 28,334 sq m (305,000 sq ft) of office space in all with the building in South County Business Park accounting for 8,361 sq m (90,000 sq ft).

Both the high tech business and the Dublin office market have taken a nose-dive since then and, with a huge volume of newly completed office space overhanging the market in the Sandyford area, Green had little hope of finding replacement tenants for the older blocks as Microsoft moved out.

New owners Landmark Developments will be taking a long- term view of the Microsoft campus after making a huge success of Beacon Court against all the odds. More than 18,580 sq m (200,000 sq ft) of office and health clinic facilities have been completed and sold at Beacon Court over the past three years at an end value of €95 million.

Landmark is likely to demolish the office buildings when they are vacated and seek planning permission for retail warehousing which is still in constant demand both from Irish and overseas traders. The opening of the Luas service and the completion of the M50 will improve accessibility in Sandyford.

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Rotch Pursuing £247.5 Million Sale Leaseback of Welcome Break Service Stations in UK

London Times Online - February 12, 2004

Robbie Tchenguiz, the multimillionaire property investor, is to buy eight Welcome Break motorway service stations in a deal worth £247.5 million. The sale and leaseback with Mr Tchenguiz's Rotch Property Group is a key plank in a £386.9 million rescue proposal for the roadside operator by Investcorp, the Bahrain-based private equity firm that bought Welcome Break from Granada in 1997 for £476 million.

Under the terms of the deal, proceeds of the sale and leaseback, together with new debt and equity funding, would be used to pay off £345.9 million of company bonds.
Welcome Break, which operates 25 service stations and 21 lodges, became one of the UK’s first “whole business” securitisations after it was acquired by Investcorp. The sites being sold to Mr Tchenguiz are the last eight that remain.
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ABB Pursuing Sale Leaseback of French Property Portfolio

Sweedish engineering group ABB is reportedly having difficulty structuring the sale and leaeback of its French property portfolio because of the sharp decline in its credit ratings. At least one large European bank has reportedly refused to participate in a planned sale and leaseback deal of ABB offices in the Paris region.

The project consisted of selling offices, estimated to be worth up to €100m ($125m), to property investors. ABB has suffered a dramatic deterioration in its credit rating over the past five years with Moody's downgrading its long-term debt on several occasions, from Aa2 in 2000 to B1 more recently.

In June 2002, the group sold $300m of Swedish properties to London & Regional Properties and agreed to lease back 75% of them on a long-term basis. It is reported that similar deals might be under study in other locations. Sphere: Related Content

PricewaterhouseCoopers Plans Office Building in Detroit - February 12, 2004

Accounting firm PricewaterhouseCoopers LLC says it plans to consolidate some 600 metropolitan area employees into a new office building next to Ford Field in the city. The Detroit-Wayne County Stadium authority has approved the project and construction could start in the next few months. Move-in could be in late 2005. The building would be located in an existing parking lot on the east side of the football stadium.

Terms of the transaction have not been disclosed, but similar new projects run in the $15-million to $20-million range. PricewaterhouseCoopers says the new building would be in the 125,000-sf range, probably about five stories.

The move is being forced in part because PricewaterhouseCoopers' current principal metro area office is getting a new occupant. The accounting firm is located in Tower 400 of the Renaissance Center. General Motors, which owns the RenCen, is planning to move its OnStar unit into the corporate headquarters, which prompted PwC to start looking. PwC also rents about 35,000 sf of office space in Bloomfield Hills, which it will vacate when its new Detroit building is ready. The new office building is the first major significant spin-off from Ford Field, which opened as the home of the Detroit Lions two years ago. Sphere: Related Content

Net-Leased Hotels in Philadelphia and Manhattan for Sale - February 13, 2004

The 306-room Sofitel Hotel near Rittenhouse Square and the 398-room Sofitel at 45 West 44th St. in New York's theatre district, are being marketed for sale by New York-based CB Richard Ellis Hotels. Both assets are leased under long-term, bonded, triple-net leases to Miotel Corp., a subsidiary of France-based Accor SA.

The total value of the transaction, including assumption of debt on the properties, is between $175 and $200 million acording to Steven Bardsley of CB Richard Ellis Investment Sales. The sale represents an unprecedented opportunity to own two luxury, class A assets in CBDs in two major cities without having to participate in their respective hospitality operations. The leases run to 2022 and rents are guaranteed by Accor which is an investment-grade firm.

The sellers are a partnership owned by Pitney Bowes (PREFCO) and Finova Capital Corp. The Philadelphia property was a conversion and expansion of the former Philadelphia Stock Exchange building at 120 South 17th St. The New York hotel was newly developed. Sphere: Related Content

Volkswagen Pursuing £300m Sale Leaseback of its UK Property Portfolio

Property Week - February 13, 2004

Volkswagen, the largest car manufacturer in Europe, is working on plans to raise up to £300m through a sale-and-leaseback of its UK property. City sources say that Royal Bank of Scotland is the favourite to buy the portfolio of around 150 car showrooms throughout the country plus VW's head office in Milton Keynes.

In the UK, VW imports and distributes not only its most successful VW Golf series, but also ranges of Audi, Seat and Skoda. The vast majority of its VW, Audi, Seat and Skoda showrooms are owned freehold, but they are leased out to dealers. Those acquainted with the company said it began to sound out potential investors on a property deal in August last year.

At one stage, it explored the possibility of a complete property outsourcing deal with companies such as Mapeley and Land Securities Trillium, but it has now plumped for a sale-and-leaseback instead. Under the terms of the deal it is expected VW would take back the leases owned by dealers and sublet to them.

Experts said VW wanted to raise capital in the UK to show better returns on its burgeoning costs as it invests more capital in the business. The company has invested in a swathe of high-quality dealerships of up to 25,000 sq ft (2,322 sq m) in cities such as Birmingham and Reading. VW has been cashing in on a hot car market in the UK. Sales were higher in 2003 than at any other time since 1988 because of consumer confidence, lower car prices and low interest rates.

It is thought the sale-and-leaseback could be part of a plan by VW in the UK to become more independent of its German parent. Although VW in the UK has done well, the group has been badly hit by the downturn in the global economy. The impact of falling demand led to profits for the first nine months of 2003 slumping 53.7% below the same period in 2002, according to its latest interim report in September. Sphere: Related Content

Thursday, February 05, 2004

Washington Mutual to Build $300 Million HQ Tower in Seattle, WA

Puget Sound Business Journal - January 29, 2004

Washington Mutual Inc. said it has finalized its purchase of the site for its new headquarters building, to be shared with the Seattle Art Museum. The downtown parcel was purchased from the museum and the Museum Development Authority for $18 million, and an adjacent parking garage also was purchased from the development authority for $9.7 million.

The big bank and the museum will begin construction next month on the $300 million project to build and share a new office tower dubbed 'WaMu Center' in downtown Seattle. They hope to be able to move in within two years. The project will allow Washington Mutual to consolidate its far-flung Seattle headquarters operation into one site, and give the museum more space at the same time. The deal has been in the works since early 2002. Washington Mutual said it expects to employ 4,000 to 5,000 staff in the new tower.

The project's Washington Mutual component is 890,000 square feet in a 42-story office tower owned by the bank. The bank's offices will be located on the eastern portion of the site, and will front Second Avenue. The museum's component is made up of 335,000 square feet on 12 full or partial levels The entire project will be built on a six-level underground parking garage owned by the bank, which would accommodate 710 vehicles.

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Tuesday, February 03, 2004

UK's Largest Supermarket Group Evaluating £600 Million Sale Leaseback

Times Online - January 30, 2004

Tesco, the UK's largest supermarket group, is believed to be in talks to sell up to £600 million of property to Topland, the private property group run by Sol Zakay, through a sale and leaseback of its stores. British Land is among the other companies known to have expressed an interest in buying the stores, alongside private property companies such as Rotch. A spokesman for Tesco said that the supermarket had not officially picked a preferred party to buy its stores.

Tesco recently appointed the real estate finance team at Ernst & Young to help it evaluate options for releasing cash from its property, as part of a plan to build a £1.7 billion war- chest to protect its dominant position in the UK market. Property sources said that discussions with Topland were at an early stage but that an official agreement could be reached within two months.

The sale and leaseback deal is expected to involve Tesco selling about 30 stores into a joint venture company. Tesco, which is usually reluctant to sell its freehold properties, has discussed retaining the right to buy back the stores from its joint venture partner in five to seven years. The supermarket chain is keen to raise the money because its balance sheet has recently come under pressure. The company’s financial profile had deteriorated over the past 18 months after a series of debt-funded acquisitions and heavy capital expenditures. Competition in the sector is expected to get tougher this summer, when WM Morrison gains control of Safeway and J Sainsbury introduces price cuts. Sphere: Related Content

UK's Largest Life Asurer Planning £300 Million Sale Leaseback February 1, 2004

Insurance group Aviva is drawing up plans for the sale of the former General Accident headquarters in Perth as part of a £300m sale and leaseback of its property portfolio. The UK's largest life assurer, which trades under the Norwich Union brand, wants to sell and lease back around 50 properties in Perth, York and Norwich out of around 340 properties that it owns. General Accident's former HQ in Perth is one of the buildings which Aviva plans to sell to a property company and then rent back over 20 years. It is understood that three property companies - Land Securities Trillium, Mapeley and London & Regional - were invited to bid for the portfolio, which covers 1.3 million sq ft, in the autumn.

The companies are expected to submit their bids in the coming weeks, and the deal is expected to be concluded within the next two months. By selling and then leasing back its properties, Aviva - formerly CGNU - will raise capital immediately, and retain the buildings it requires. General Accident was based in Perth before merging with Commercial Union in 1998. The firm was renamed CGNU after the acquisition of Norwich Union. Sphere: Related Content

American Financial REIT to Acquire State Street HQ for $705 Million

JENKINTOWN, PA - February 2, 2004 - PRNewswire

American Financial Realty Trust (NYSE: AFR) today announced that it has signed an agreement with a partnership comprised of The State Teachers Retirement System of Ohio, Morgan Stanley Real Estate Funds, The Gale Company and Columbia Plaza Associates to acquire State Street Financial Center, a newly developed, 1.05 million square foot office building in Boston, Massachusetts, which is 100% leased by State Street Corporation under a 20-year lease. AFR will receive additional income from the operations of the parking garage.

State Street Financial Center is a 36-story, Class A+ office building centrally located in Boston's Financial District, just one block from Boston's South Station. It features approximately 1.05 million square foot of office space, including two 75,000 square foot state-of-the-art trading floors, and serves as the headquarters for State Street Corporation, an AA-/Aa3 rated global financial services firm. The property also includes a below-grade, 900-space parking garage.

The acquisition, at a purchase price of approximately $705 million, is scheduled to close within two weeks. The Company will finance the acquisition with available cash and a 20-year secured, fixed rate loan in excess of $500 million with an interest rate of approximately 5.65% to 5.80%.
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