Saturday, March 27, 2004

Land Securities Sells London Qualifications Board HQ for £42.5 Million

Freeman News - March 26, 2004

Land Securities has sold its interest in 190 High Holborn to a private investor for £42.5m. The 83,000 sq ft building is let to the London Qualifications Board on a 20-year lease with fixed uplifts every five years. The building generates around £2.52m a year in rent, equating to an initial yield of 5.95%.

LandSec acquired the building, formerly known as Enterprise House, from Compaq back in 2001. The company then undertook a comprehensive refurbishment of the building, which was completed in April 2002. King Sturge acted for LandSec. Velleman & Co represented the purchaser. Sphere: Related Content

Boots Pursuing GBP 1 billion Sale Leaseback of Drug Store Portfolio?

Telegraph - March 27, 2004

UK Retailing giant Boots has warned investors that next year's profits will be hit by a larger-than-expected store investment program and rising pension charges. Boots, which has 1,400 drug stores in the UK, disclosed margins had fallen 30 basis points as the group has struggled to compete against supermarkets.

At their recent press briefing Richard Baker, who has been the chief executive of Boots for six months, refused to dismiss rumours of plans for a GBP 1 billion sale and leaseback of the group's freehold property: "We are not commenting on that at all." Sphere: Related Content

Lexington REIT Acquires Baker Hughes Portfolio for $119.3 Million

PR Newswire - March 25, 2004

Lexington Corporate Properties Trust (NYSE: LXP), a real estate investment trust, today announced that it has acquired four properties in the Houston, Texas area from Dana Commercial Credit Corp for $119.3 million. The properties are net leased to Baker Hughes, Inc. (NYSE: BHI) and are occupied by various subsidiaries of Baker Hughes, Inc. under leases that each have approximately 11.5 years remaining.

The portfolio has a combined total of 1,061,471 square feet of net rentable area consisting of office, research and development and manufacturing space and includes the WesternGeophisical World Headquarters building (Houston, TX), the Hughes Christensen World Headquarters building, the Baker Petrolite World Headquarters building, and the Baker Hughes Worldwide Training/Worldwide Data Facility.

The average annual lease payments during the lease terms are $13.2 million, or 11.1% of the purchase price. The acquired properties are encumbered by non-recourse first mortgages with a current balance of approximately $110.7 million. The mortgage debt bears interest at a fixed rate of 8.04% and matures in September, 2015. Sphere: Related Content

Moody's May Downgrade GBP 431 Million In Sainsbury Leaseback Bonds - March 26, 2004

Moody's Investors Service has placed the A3 rating of the GBP 331,119,309 Secured Bonds due 2023 issued by Highbury Finance B.V. on review for possible downgrade. Moody's also placed the A3 rating of the GBP 100,677,717 Class A Floating Rate Notes due 2023 and the A3 rating of the GBP 30,000,000 Class B Floating Rate Notes due 2023 issued by Dragon Finance B.V. on review for possible downgrade.

The news comes the same day Sainsbury announced it was selling off its US supermarkets business for £1.3bn. The 202 stores, trading as Shaw’s Supermarkets, located in several New England states will be sold to US market rival Albertsons Inc., netting the UK food retailer a post-tax profit of more than £225m.

The rating review is prompted by Moody's decision to review for possible downgrade the A3 rating of J Sainsbury PLC's senior long-term debt. Moody's A3 rating on the Highbury Finance B.V. Secured Bonds is principally based on the strength of Sainsbury as lessee and guarantor.

The Dragon Finance securitisation represents a 23-year sale and leaseback transaction of 10 supermarket sites to Sainsbury, the UK retailer. The Highbury Finance securitisation represents a 23-year sale and leaseback transaction of 16 supermarket sites to Sainsbury. Sphere: Related Content

Tuesday, March 23, 2004

Realty Income to Acquire 112 Circle K Convenience Stores for $100.5 Million


Realty Income Corp. (NYSE:O) announced today that it has signed a definitive agreement to acquire 112 Circle K-branded convenience stores, under long-term, net-lease agreements, from Alimentation Couche-Tard Inc. (Toronto:ATDb.TO), for approximately $100.5 million. It is anticipated that the transaction will close shortly.

Realty Income will acquire the 112 properties under 15 to 17-year, triple-net lease agreements. The stores have, on average, approximately 2,780 leasable square feet and are situated on an average lot size of 1.0 acre. Each location has, on average, 3.4 multi-pump gasoline dispensers and the stores within the acquired property portfolio are seasoned units with an average operating history of 16 years. The average purchase price for each property will be approximately $897,000. The 112 properties are located in 9 states including 41 properties in Florida (primarily Tampa, Orlando, Fort Myers and Naples MSA), 38 in Arizona (primarily Phoenix and Tucson MSA), 8 each in South Carolina and Louisiana, 7 in North Carolina, 3 each in Alabama and Mississippi, and 2 each in Georgia and New Mexico.

The company further disclosed that it plans to hold approximately $92.3 million of the properties in its core portfolio as long-term investments and will place approximately $8.2 million of the properties in its Crest Net Lease Inc. subsidiary for future sale. After the sale of the Crest Net Lease properties, the company anticipates that Alimentation Couche-Tard will generate approximately 4.84% of its annual revenue.

Alimentation Couche-Tard Inc. is the leader in the Canadian convenience store industry and the 4th largest convenience store operator in North America. The company is based in Laval, Quebec, Canada and operates a network of approximately 4,800 stores, of which approximately 2,700 are located in the United States. The company acquired Circle K, including 2,290 U.S. stores, from Conoco Phillips (NYSE:COP) on December 17, 2003. Sphere: Related Content

Former Reebok HQ near Boston Sold for $38.1 Million

The Enterprise at - March 23, 2004

A California investment firm paid $38.1 million for the former Reebok headquarters at 100 Technology Drive. Currently occupied by the Stone & Webster engineering firm, the building was built in 1988 to be the headquarters for sneaker-maker Reebok. Stone & Webster's long-term lease of the entire building made it an attractive investment, said Richard Herlihy, senior director of financial services at Cushman & Wakefield of Massachusetts, which handled the transaction.

Herlihy said the building was on the market for a month and his company received 18 offers from real estate investment firms. The winning bid came from Global Innovation Partners LLC, a California-based private equity investment firm that specializes in technology-related property. The $193-per-square-foot selling price is one of the highest in recent years, Herlihy said. Herlihy said Stone & Webster has 10 years left on its lease.
Sphere: Related Content

Tesco Raises £650 Million in 33 Store Sale Leaseback

The Guardian - March 23, 2004

Tesco yesterday raised more cash for acquisitions by selling off 33 of its UK stores for £650m. The stores, which range in size, have been sold to a joint venture that is half owned by Tesco and real estate firm Topland. Tesco has also sold two distribution centres in the deal. Tesco's £650m cash will come from issuing bond debt, which will be secured on the rent that it will begin to pay for the properties. Tesco will rent the stores on a long leasehold and carry on running the operations, so customers will not see any change.

Topland, run by Israeli-born brothers Sol and Eddie Zakay, has done similar sale and leaseback deals with retailers Marks & Spencer, Littlewoods and Budgens.
Tesco will use the extra cash for expansion in the UK market, where it is the dominant force in retailing, or for more acquisitions overseas.

The supermarket firm raised £773m in January by selling new shares to investors. A small chunk of this cash was used to buy Adminstore, which owns the Europa convenience stores. A source at Tesco said that it could use its combined £1.4bn in cash to buy up some of the 52 Safeway stores that are on the market after its takeover by Wm Morrison. However, the firm is keenly watched by competition regulators as it has such a strong position in the British market. Tesco could also use the cash to convert more of its stores into the large "hypermarket" format where non-food ranges such as clothes, CDs and homewares are sold alongside food.

The 35 properties being sold make up about 5% of Tesco's total property assets. It has done similar sale and leaseback schemes on a smaller scale, including 21 stores with UK property group British Land and two properties with Slough Estates. Sale and leaseback schemes mean a company effectively raises debt but does not have to put it on its balance sheet.

Sphere: Related Content

Italy's Largest Utility Agrees to $1.73 billion Sale Leaseback of Property Portfolio Germany - March 19, 2004

Enel SpA, Italy's biggest utility, agreed to sell most of its real estate holdings to a Deutsche Bank AG-led group for 1.4 billion euros ($1.73 billion) to reduce debt and focus on its electricity and gas businesses. Deutsche Bank, Europe's second-biggest bank by assets, and French money manager CDC Ixis will buy 887 properties, Rome-based Enel said in a faxed statement. Enel expects to record a pretax gain of 200 million euros from the sale.

Enel, Europe's fourth-biggest power producer, has a market value of 37.2 billion euros. Enel debt is rated A1 at Moody's Investors Service and A+ at Standard & Poor's Corp., the fifth-highest level. Both ratings companies have a negative outlook on their rankings. The difference between the yield on the notes and that of similarly dated government debt is 19 basis points, little changed from six months ago.

State-controlled Enel cut the amount of property offered for sale after rejecting a 1.7 billion-euro offer from Deutsche Bank and CDC for all of its real estate holdings, the Italian newspaper MF reported in January. Enel said today it transferred 335 properties valued at 380 million euros to another of its property units. Deutsche Bank and CDC have until April 30 to sign the purchase contract, Enel said. The two companies submitted the only bid for the property in November. Two other potential buyers couldn't agree on the terms under which Enel would rent some of the assets. Pirelli & C. Real Estate SpA, Italy's biggest property manager, has said it may buy some of the assets from Deutsche Bank and CDC for as much as 200 million euros.

CDC is a unit of Caisse des Depots et Consignations, France's biggest financial institution, and manages pension funds for government employees. Deutsche Bank is making the purchase through its DB Real Estate Management unit, Enel said.

Cost Savings

Enel plans to use the cash from the sale to reduce debt, which stood at 24.3 billion euros at the end of last year. The agreement will allow Enel to save 20 million euros a year by cutting debt and interest payments, and renting back some of the properties will reduce maintenance costs. Enel follows Italian companies such as Telecom Italia SpA, the nation's biggest telephone company, and Eni SpA, Europe's fourth-biggest oil producer, in selling property. Buyers have included Pirelli Real Estate and the property funds of Morgan Stanley and Goldman Sachs Group Inc.

Italian Trend

Italian companies have sold property valued at $13.1 billion in the past four years, according to Bloomberg data. Shares of Pirelli Real Estate have advanced 65 percent in the past year, and Beni Stabili SpA, Italy's second-biggest property manager, has climbed 53 percent. A Bloomberg index of 104 European property companies has jumped 61 percent in the period.

Enel and Deutsche Bank formed a property joint venture in 2000, when former Chief Executive Franco Tato was seeking to expand in such areas. Deutsche Bank bought Enel's share of the venture two years later. The Italian utility put its Enel Real Estate unit up for sale in 2002. At the time, the business had a book value of 2.6 billion euros, included a car-rental subsidiary and employed 1,128 people. It had 3 million square meters of industrial real estate and 1.1 million square meters of residential properties.

Citigroup Inc. and Lazard LLC advised Enel on the sale.

Sphere: Related Content

Sunday, March 21, 2004

Babcock & Brown bank seeks Australian listing

CBS MARKETWATCH - March 19, 2004

Babcock & Brown, the leasing and structured finance powerhouse, is reportedly considering an initial public offering within the next 12 months to raise capital to fund its increasing interest in principal investing. Set up in the 1970s by two American tax lawyers, the San Francisco-based bank was a pioneer of leveraged leasing, a method of financing it initially used in the airline industry in particular. Now present in more than 20 countries, it has since established a reputation as a specialist project and structured financing operation.

The listing in Sydney of a niche but well-regarded international financial group would be a coup for the ASX and a boost to government efforts to promote the city as a global financial centre. Only three years ago at the height of the tech boom, Australia was pilloried as an 'old economy' and it feared its capital markets would be marginalised.

Rob Topfer, one of the group's Sydney-based directors, said the bank was considering a listing in Australia, which accounts for up to 30 per cent of its revenues, because its local operations had the greatest need for capital within the group and because the funds would be used to support the expansion internationally of the business model it had developed locally in the past five years.

The bank has increasingly been using its balance sheet to make its own investments. It then either finds partners for the assets or houses them in an investment fund such as Prime Infrastructure, its Australian-listed vehicle.

An IPO will also enable the bank, which operates as a limited partnership and has about 45 directors, to offer share options and a more liquid investment to staff. At present it is 80 per cent owned by staff following the sale of a 20 per cent stake to HypoVereinsbank, the German bank, in 1999, for $120m. Babcock & Brown would become one of only a handful of US-based groups, to list in Australia. With the exception of News Corporation, the US-Australian media giant, the other US companies are mainly small operators in the IT and biotechnology sectors. Sphere: Related Content

Bentley Forbes Acquires US HQ of PHH Arval for $42 Million


BentleyForbes, a Los Angeles-based national commercial real estate investment firm, has completed the $42 million acquisition of the United States Headquarters building for PHH Arval, one of nation's leading vehicle management service companies . The 216,000-square-foot, three-story, Class A office building is a campus-style, build-to-suit development completed in March 2004. BentleyForbes acquired the building at the completion of construction in a net lease acquisition that required the structuring of a long-term lease with the tenant and a sale agreement with the developer.

Located at 940 Ridgebrook Road in Sparks, Md., a township of Baltimore County, the office building is strategically located within easy reach of regional business markets and residential communities including Baltimore, the DC, DE, PA and VA.

BentleyForbes represented itself in the transaction. David Scheffenacker Jr. of Preston Partners, Inc. represented PHH Arval in the lease transaction and the developer, Highland Partners, in the sale. The building was designed and constructed by the project's general contractor, Opus East LLC.

Sphere: Related Content

Friday, March 12, 2004

German Fund Buying Crate & Barrell Distribution Center for $44 Million

Real Estate Alert reports that Deka Immobilienfonds, a German operator of open-end funds has agreed to pay about $44 million, or $65/sf, for a two-building Crate & Barrel Distribution Center complex that breaks ground next month in Cranbury, NJ. The price would bring an initial yield of 6.5%. The property will consist of two distribution buildings, one of which is to include a 9,000-sf factory outlet store, as well as land zoned for an additional 275,000-sf building. Rockefeller Group Development, which is developing the park, is the seller. Sphere: Related Content

Wachovia Flipping Pepco HQ in DC After Long Term Leaseback

Real Estate Alert reports that Wachovia is apparently flipping a single-tenant Washington office building it acquired in September. The bank is reportedly selling the 353,000-square-foot Edison Place at 701 Ninth Street NW to Brookfield Properties of Toronto for about $166 million, or $470/sf. Brookfield's initial annual yield would be about 5.8%.

Wachovia acquired the 10-story property just five months ago for $151 million, or $428/sf, for a cap rate of 6.4%. The seller was Potomac Capital Investment, a unit of Pepco, the Washington-area electric utility. Cassidy & Pinkard brokered the deal. Wachovia is not using a broker with the Brookfield transaction.

The building, which was constructed in 2001, is fully leased to a unit of Pepco, PHI Service, through 2025. It is estimated that PHI pays a triple-net rent of roughly $27/sf. The property consists of 329,000 sf of office space, 24,000 sf of street-level stores, a small amount of storage space and a 416-car underground garage.

Sphere: Related Content

Thursday, March 11, 2004

Spirit Group Agrees to £500m Sale leaseback of 220 UK Pub Portfolio

Freeman News - March 8, 2004

Tom Hunter's West Coast Capital is reported to have teamed up with Prestbury Investment Holdings and HBOS in order to buy a portfolio of 220 freehold pubs from Spirit Group, in a deal worth over £500m. Under the deal, which is expected to be finalised within the next week, the pubs will be let back to Spirit on leases of 30 years. Spirit is understood to be paying an initial rent of around £30m a year, with annual uplifts.

The bidding consortium successfully beat Rotch Property Group to the portfolio, plus a number of UK funds and other investors. Colliers CRE and Lazard are representing Spirit. Spirit became the biggest managed pub chain in the UK when it acquired Scottish & Newcastle Retail for £2.51bn last year. The portfolio for sale represents just 15% of Spirit's total estate, which includes around 2,500 pubs plus a number of restaurants and budget hotels.

Commenting on the deal, a source close to Spirit commented: "It releases cash to Spirit less than six months after it bought S&N. But it also leaves the group with a large amount of fixed assets for a future IPO. The analysts are likely to look favourably on the way Spirit has begun to make the portfolio work for itself." Last week, Spirit officially put its Premier Lodge chain of budget hotels up for sale with a price tag of around £500m. Sphere: Related Content

Willis Group Holdings Signs Long Term Lease for New 420,000 sq ft HQ in London

Freemans News - March 9, 2004

British Land has pre-let its 420,000 sq ft office scheme at 51 Lime Street, London EC3, to the global insurance broker, Willis Group Holdings. Designed by Foster and Partners, 51 Lime Street will be situated opposite the Lloyd's Underwriting Centre. British Land is undertaking the development in partnership with Stanhope, and the scheme is set for completion by the end of 2006 to meet Willis' requirements. Cushman & Wakefield Healey & Baker and DTZ advised British Land. ATIS REAL Weatheralls acted for Willis.

Sphere: Related Content

Rotch Acquires £260 Million Portfolio Net Leased to BAE Systems

Property Week - March 10, 2004

R20, the property investment vehicle of Robert Tchenguiz, announced today it has bought four buildings from Dana Commercial Credit. The purchase price is understood to be £260m. The buildings, adjacent to Farnborough Airport in Surrey, provide 255,000 sq ft (23,690 sq m) of office space, and are let to BAE Systems.

The properties give a combined rental income of $20.7m. At today's exchange rate, this equates to £11.37m, and the deal reflects a net initial yield of 4.4%. Robert Tchenguiz said: "The acquisition continues our strategy of investing in long-term, blue chip cashflows supported by high quality assets with a useful life well beyond expiry of the current leases" Sphere: Related Content

UK Govt Completes £58 Million Sale Leaseback of Courts in Birmingham

Freemans News - March 9, 2004

The Department for Constitutional Affairs has sold the 115-year long lease in Priory Court, Birmingham, to a private investor for £58m. The current owner of the freehold on Priory Court, a private Israeli client of Blandford Goldsmith, has bought the long leasehold interest in the building. The DCA, formerly known as the Lord Chancellor's Department, will lease the building back for 30 years, at a rent of £25.50 per sq ft.

Priory Court comprises 130,000 sq ft of floorspace. The building houses Birmingham's main civil courtrooms, with 11 magistrates courts plus six floors of office space. The purchaser also owns the building next to Priory Court, the 265,000 sq ft Temple Court office block, for which it paid British Land £42m five years ago. Jed Wolfe of Knight Frank, which advised the DCA, said that the sale would enable the government to reinvest the proceeds in public services. Sphere: Related Content

Ashtenne Completes £64.75 Million Sale of 570 houses in UK Net Leased to US Air Force

Property Week - March 8, 2004

Ashtenne has sold its freehold interest in a portfolio of 570 houses at Lakenheath Airbase in Suffolk, currently let to the US Air Force, to a consortium of investors led by Cardiff based Hodge & Co. for £64.75m. The sale represents a profit for Ashtenne of £9.75m, based on a book value of December 2003. Ian Watson, joint chief executive of Ashtenne, said: 'This is a textbook example of what we try to do. We bought this asset with a lease coming to an end within the year as part of a 'job-lot'. We then renewed the lease on excellent terms and have now sold the property to crystallise the very considerable value added. Sphere: Related Content

Carrefour SA Completes 58 Million Euro Sale Leaseback of Office Buildings in France

Industry sources claim that Carrefour SA has sold a portfolio of office buildings to Aerium, a real estate investment consortium, in a leaseback deal for 58 million euro as part of Carrefour's policy of divesting non-strategic real estate. Carrefour has reportedly signed long-term leases with Aerium, and will continue to occupy the sites. Sphere: Related Content

Seattle TV Station KCTS Planning Sale Leaseback of HQ

Seattle Daily Journal of Commerce - March 11, 2004

KCTS Television, one of the most watched stations in the Public Broadcasting System, may sell its headquarters in a leaseback agreement to settle debts and avert legal action by PBS, the head of the station says. 'I think it's the most realistic option we have,' KCTS president William P. Mohler said Tuesday.

Three potential buyers have expressed interest in a deal for the building, located at the Seattle Center and appraised at $13.2 million, and one could make a move in as little as three weeks, Mohler said. A leaseback agreement would allow KCTS to remain in the building and manage $7.2 million in debt, which has mounted over a decade of operating losses. Sphere: Related Content

Luminar Considering Sale and Leaseback of 63 UK Nightclubs

Times Online - March 11, 2004

LUMINAR, the bar and nightclub operator, is considering a sale and leaseback on its estate of about 60 unbranded dancing venues in a move that could presage a share buyback. The group hived off 63 non-core clubs into a separately run division in October in an attempt to improve trading ahead of an eventual disposal. A sale and leaseback would allow it to release cash tied up in the freeholds while continuing to address the issue of performance. Steve Thomas, Luminar's chief executive, said that the turnaround strategy put in place after last year's profit warning, the first since its 1996 flotation, was designed to put the group in a strong enough financial position to consider a range of options. Sphere: Related Content

Wednesday, March 10, 2004

Cesky Telecom Plans €332 Million Property Sale Leaseback

Central & Eastern Europe Telecom Newsletter - March 9, 2004

Cesky Telecom has announced plans to sell and lease back property worth around 11bn kroner (€332m). The sale is the largest in the domestic property market and will be undertaken to assist the company cut costs and mobilise cash flow. No further details are as yet available but a piecemeal approach is apparently possible. The sale process is expected to take one year and to take three to six months to prepare. Sphere: Related Content

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