Saturday, March 31, 2007

European Bank for Reconstruction and Development’s London HQ Offered at £387m Million

Property Week - March 29, 2007

British Land is carrying out the first-ever building sale at its £3.44bn Broadgate estate in the City of London.

The company has appointed DTZ to begin marketing this week of the European Bank for Reconstruction and Development’s office headquarters with an asking price of £387m and a net initial yield of 4.8%.

The 385,000 sq ft (35,770 sq m) building, formerly known as 175 Bishopsgate but now called 1 Exchange Square, is let at £52/sq ft (£559.73/sq m) for a further 15.75 years. British Land’s co-head of asset management Tim Roberts said the marketing would be ‘low key’ and targeted at institutional investors.

The sale is part of a new strategy instigated by chief executive Stephen Hester of recycling capital and selling assets with little asset management potential – in the last two years he has bought and sold £7bn of properties.

The EBRD building was chosen as the first to be sold at Broadgate because it has the longest lease and no opportunity for asset management. It will appeal to investors who want to tuck away a prime City office building, let to a company with a AAA-rated credit rating. Sphere: Related Content

Thursday, March 29, 2007

RTL Group Completes Sale Leaseback of Office Building Near Brussels

Belgian daily De Standaard reports that Cofinimmo SA will buy a recently completed office building in Schaarbeek, near Brussels, from German TV broadcaster RTL Group in a 15-year sale leaseback deal. The deal is expected to bring a substantial gain to RTL, which has invested 40 mln euro ($53.2 mln) in the building. Sphere: Related Content

Monday, March 26, 2007

Sainsbury Signs Build-to-Suit for 530,000 SF Midlands Warehouse

Commercial Property News - February 8, 2007

Establishing an even larger foothold in the U.K. industrial market, Denver-based ProLogis has signed on to build a 530,000 square-foot warehouse for Sainsbury's, a prominent supermarket chain that will lease the building from the industrial property developer. The distribution center will be the first structure at ProLogis Park Pineham, which will cost ProLogis an estimated $150 million to $180 million to develop at the property's full buildout of approximately 1.6 million square feet.

Sainsbury's signed a multi-year triple-net lease with ProLogis, and will use the facility as a distribution center for its stores across central England. Located off the M1 motorway, which offers a coveted connection to the country's national motorway network, ProLogis Park Pineham occupies a 112-acre site in the Midlands. "The Midlands is the number one distribution area throughout the U.K. and ProLogis has a very strong presence there," a ProLogis spokesperson told CPN. "The contract is the first lease at the park and is highly indicative of the market."

The company expects to wrap up construction of Sainsbury's new building during the second half of this year. Sphere: Related Content

National Grid Seeking £28 Million Sale Leaseback of Offices in Northampton

Estates Gazette reports that National Grid has put a second office building up for sale after the successful £60m sale-leaseback of its Warwick HQ. The group has put its 100,000 sq ft Lakeside House in Northampton on the market for £28m seeking a 5.47% yield in exchange for a 15-year lease on the property. GVA Grimley is reportedly advising National Grid on the sale. Sphere: Related Content

Morrisons in Talks Over £1 Billion Sale Leaseback of 26 UK Store Portfolio

Reuters - March 25, 2007

WM Morrison Supermarkets (MRW.L) is in talks with property tycoons Sol and Eddie Zakay to sell 26 sites that could be worth up to 1 billion pounds, the Sunday Express reported. The paper cited no sources but said it would be the supermarket's first-ever deal to sell off stores.

Morrison signalled earlier this month it was ready to tap the value of its extensive property assets if it needed to fend off a takeover attempt, but said it had not received any approaches from private equity firms. Sphere: Related Content

Sunday, March 25, 2007

Schibsted Agrees to $54.5 Million Sale Leaseback of Office Building in Oslo

Schibsted Web Site - March 23, 2007

Schibsted ASA has, through its fully owned subsidiary Schibsted Eiendom AS, accepted an offer from Aberdeen Property Investors Norway AS, on behalf of a client, concerning the sale of an office building in Apotekergaten 10 in Oslo for NOK 334 million. The accounting gain for Schibsted will be slightly lower than NOK 200 million. Schibsted will enter into a lease agreement for seven years with the option to extend the agreement for five plus five years. A final agreement is under negotiation, and the transaction is expected to be finalized during the second quarter of 2007. Sphere: Related Content

Cable & Wireless Pursuing £86 Million Sale Leaseback of Eight UK Properties

Property Week reports that Cable & Wireless has hired Doherty Baines to carry out an £86 million sale and leaseback of eight office and technical properties totaling 350,000 sq ft (32,515 sq m). Sphere: Related Content

Goldman Sachs’ London HQ Sold for £355 Million

Jesta Capital Web Site - March 27, 2007

Goldman Sachs’ City HQ has been bought by one of Canada’s largest property companies. Jesta Capita has paid £355m for Tishman Speyer’s 370,000 sq ft Peterborough Court on 133 Fleet Street, EC4. The deal reflects a 5% yield.

Jesta, chaired by Elliott Aintabi, came to the UK in 2003. It has since bought the 150,000 sq ft 6-8 Bishopsgate, EC2, and the 75,000 sq ft 55 Old Broad Street, EC2. Peterborough Court is its most significant buy to date.

Tishman has owned the building since May 2005 when it bought it from Goldman Sachs for £280m. BH2 and Jones Lang LaSalle are joint selling agents on Peterborough Court. BH2 also advised on the sale of Fleetway House. Sphere: Related Content

HSBC Gets 15 Bids for Canary Wharf HQ

The Times Online - March 24, 2007

HSBC has received 15 bids for its £1 billion Canary Wharf headquarters in a sale that could complete as early as next month.

Indicative offers for the building are understood to have come from firms including Evans Randall, the Mayfair-based boutique investment bank, IVG Immobilien of Germany, the new part-owners of the £600 million Swiss Re building, Active Asset Investment Management, the property fund managers backed by Sir Alex Ferguson and HBOS, as well as a number of billionaire Gulf investors and Far East property moguls.

The buyer will have to lease the building back to HSBC, which insists it will keep its global headquarters in Canary Wharf, in return for £43 million annual rent. The asking price of £1 billion covers 1.1 million sq ft of office space spread over 42 floors and four “basement levels” in what would be the largest single office sale in Britain.

Based on the rental income a £1 billion sales tag would mean the building offering a yield of just 4.25 per cent. The Swiss Re Tower, the most expensive single office block sale, was sold this year on a yield of 4.5 per cent.

Other potential bidders include Three Delta, the company owned by Qatar’s Foreign Minister, the Abu Dhabi royal family and the real estate arm of Dutch insurer ING.

A final shortlist of six bidders is due in six weeks. The building is to go under offer at the end of next month. Sphere: Related Content

Saturday, March 24, 2007

Kwik-Fit Completes €61.6 Million Sale leaseback of 141 Speedy Car Service Centers Across France

Europe Real Estate - March 22, 2007

LaSalle Investment Management has announced the purchase of 141 Speedy car service centers across France for a total of €61.6 million. The acquisition was made on behalf of LaSalle French Fund II, a €1.3-billion fund targeting emerging sector income, which is seeking further acquisitions providing rental income in the French automotive business.

The leaseback deal is guaranteed through Kwik-Fit, parent group to Speedy, the French tyre and exhaust market leader. The deal involves a 10-year lease and comprises approximately 50,600 m² across the 141 service centers. A first tranche of 110 centers was closed yesterday, with the remainder of the centers scheduled to close by July 2007.

Lasalle was advised by Colliers, Depardieu and Cheuvreux. Kwik-Fit was represented by Savills and Orrick. ABN AMRO provided banking finance for LaSalle. Sphere: Related Content

Carrefour Pressured to Monetize $28.6 Billion Store Portfolio

New York Times - March 23, 2007

Carrefour, Europe’s answer to Wal-Mart and the world’s second-largest retailer, is in play. Last month, the American real estate investment firm Colony Capital and the richest man in France, Bernard Arnault, announced that they had acquired nearly 10 percent of Carrefour’s shares and hoped to translate that value into a fat capital gain.

Late last year, the investment group invited Mr. Arnault to join it in buying a stake in Carrefour with an eye toward capturing some of its hidden value. Mr. Arnault, worth $26 billion, is chairman of the fashion house Christian Dior and the luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton.

Colony Capital and Mr. Arnault are now talking to various members of the Halley family. They have been tight-lipped about their intentions. Colony Capital and Mr. Arnault have asked for two seats on Carrefour’s nonexecutive supervisory board, and the Halley family, which already has two seats on the seven-member board, asked for an additional seat of its own.

With interest rates low, property prices high and retail profits under pressure, aggressive investors are focusing on big retail chains across Europe because their depressed stock prices do not reflect the value of their real estate holdings.

Commercial real estate values in France have soared, even as the profit margins of retailers thinned. So while Carrefour’s stock price steadily lost half of its value since 1999, its underlying value — literally — has continued to swell. Now worth as much as 21.5 billion euros ($28.63 billion), according to Morgan Stanley, the real estate is too ripe to ignore.

Colony Capital has been active in France before. In May 2005, the firm invested 1 billion euros in Accor, the hotel and restaurant operator, helping the company build the value of its real estate. Accor’s stock price has nearly doubled since then.

If Colony Capital and Mr. Arnault are to get seats on the supervisory board, resolutions must be presented to shareholders three weeks before the company’s next shareholders meeting on April 30. Sphere: Related Content

Corporate Sellers Find Success in Sale-Leaseback Deals

CoStar Group - March 21, 2007

Several big corporations continue to take advantage of the overheated investment sales market, choosing to give up their role as landlords and become tenants in choice properties across the country.

Among those seeking to cash out their real estate: Sun Microsystems is getting ready to hit the market near Boston with the sale of its property in Burlington, MA. The technology company has tapped Jones Lang LaSalle to market the property to prospective buyers. Pricing is expected to be in excess of $200 million, according to sources familiar with the offering.

Sun Microsystems will lease back more than half of the space for 10 years. It will also lease some additional space for one year as it transitions out of some of the space. The offering is said to have already generated intense interest among bidders and is expected to close in June.

Last year, Sun Microsystems, sold one of three large office complexes in the San Francisco area to BioMed Realty Trust Inc. for $215 million. As part of the deal, Sun Microsystems signed 10 short-term leases for the 10 buildings at its Newark, CA, campus with plans to exit the property in phases over an 18-month period. BioMed Realty plans to reposition the property for use by life science tenants.

"Everyone who owns a building now whose core business is not real estate is looking at monetization strategies like sale-leasebacks because the capital markets enable them to get higher returns, making sale-leasebacks a viable strategy," said Josh Hirsh, an investment sales broker with Studley's Atlanta office.

Proof that sale-leasebacks are gaining favor can be found in the number of such deals tracked by CoStar. Based on an analysis of sale comparables, the number of sale-leaseback deals more than quadrupled from first quarter in 2006 to year-end. While there were three sale-leaseback transactions totaling $106 million at the beginning of last year, in the fourth quarter, the volume of deals jumped up to 13 deals totaling about $952 million, according to CoStar Group information.

The trend is holding steady so far this year. Corporate users, especially those also going through rapid industry consolidation, are looking to take advantage of the unabated appetites of investors and unload some real estate assets to pour the money back into their core businesses.

AT&T offers a prime example. Late last year, AT&T did a $270 million sale-leaseback deal in Bedminster, NJ, selling its 879,000-square-foot headquarters property at 900 Route 202/206 to MetLife Inc.

It kicked off the year by selling the 42-story office tower at 909 Chestnut St. in St. Louis to MB REIT, Inland American Real Estate Trust Inc.'s venture with Minto Builders, for $204.9 million or about $136.60 per square foot.

And it recently sold a couple of Milwaukee-area properties to Inland Real Estate Acquisitions Inc. for $31.2 million in sale-leaseback transactions.

Meanwhile, JPMorgan Chase went back to the sales market and struck a deal last week to sell its 598,000-square-foot Chase Tower at 611 Woodward Ave. in downtown Detroit to local firm Sterling Group. The bank signed a 10-year lease with renewal options for about 215,000 square feet of space, saying it "made more sense to be a long-term tenant than owning the building."

Last October, the bank sold a portfolio of 33 properties to a fund managed by Toronto-based Brookfield Asset Management for about $460 million. JPMorgan leased back significant portions of the 5.3 million-square-foot portfolio. Sphere: Related Content

Merrill Lynch Agrees to £600 Million Sale Leaseback of London HQ

FT Alphaville - March 22, 2007

GIC, the investment arm of the Singapore government, has been chosen as preferred bidder for the £600m London headquarters of Merrill Lynch near St Paul’s Cathedral. Although the US investment bank refused to comment, City sources said that GIC had this week secured the sale-and-leaseback on the 827,751 sq ft office block at 2 King Edward Street.

The group beat competition from a shortlist including Simon Halabi, the Syrian-born tycoon, and Derek Quinlan, the Irish investor.

Merrill is among several banks selling their London headquarters to take advantage of strong demand from property investors. Others include HSBC, which is in the early stages of finding a buyer for its £1bn tower in Canary Wharf.

The latest deals include the sale on Thursday of Goldman Sachs’ London headquarters on Fleet Street for £355m to Jesta, a Canadian property group. Sphere: Related Content

Friday, March 23, 2007

Tesco Enters £1 Billion Sale Leaseback of 21 UK Superstores

TimesOnline - March 21, 2007

Tesco, the UK's largest retailer, has released more than £1 billion of capital from its bumper stores portfolio in less than three months, after striking a property joint venture with British Land that involves 21 of its superstores.

The deal, the fourth between the two companies, covers giant Tesco stores stretching from Ashford, Kent, to Hereford and Dundee in Scotland. It puts Tesco well on track to meet its target set last April of freeing up £5 billion of capital from its valuable property assets by the end of the decade.

It is expected that Tesco, which is sitting on property worth just under £16 billion at the last count, will unveil further sale and leaseback property deals before the end of the year.

Tesco's move follows a similar exercise undertaken last year by J Sainsbury, involving 127 of its supermarkets or, at £3.55 billion, approximately half the book value of its property assets. The UK's third-largest supermarket group used a mortgage-backed securities deal to raise £2 billion for debt refinancing purposes.

Today's deal sees Tesco and British Land set up a limited partnership joint venture on a 50/50 basis. Tesco banks profits of £142 million on proceeds of £570 million from selling the superstores to British Land. The retailer then pays British Land annual rent of £29 million secured against the stores, with payment increases linked to inflation but capped at 3.5 per cent a year for 20 years.

The deal, Tesco's second of the year, follows the deal in January with the British Airways pension fund that raised proceeds for the retailer of £445 million.

The latest move comes as Britain's retailers increasingly look to release value from their property assets, which have made them attractive to potential bidders but have also brought scrutiny from regulators.

Tesco has more property than any of its peers. Sphere: Related Content

Kwik-Fit Agrees to £103.7 Million Sale Leaseback of 148 UK Service Centers

Easier Property - March 23, 2007

GE Real Estate UK and Paradigm Real Estate Managers (“PREM”) have created a leveraged joint venture to acquire 148 Kwik-Fit specialist fitting centres for £103.7 million reflecting a net initial yield of 5.3%.

The 148 property portfolio, which are located throughout the UK, have been acquired through a sale and leaseback transaction and are let to Kwik-Fit UK on 25 year leases with fixed uplifts in years 5 and 10. The properties are generally well-located in town centres and many offer redevelopment opportunities.

Simultaneous with the transaction, GE Real Estate and PREM have entered into a development agreement with Kwik-Fit, which will enable the joint venture to assess and pursue redevelopment schemes. Kwik-Fit will also have the opportunity to benefit from any redevelopment profit after the payment of a priority return to the Joint Venture.

Montagu Evans acted on behalf of the joint venture. Savills acted on behalf of Kwik-Fit. RBS provided debt finance for the transaction Sphere: Related Content

Thursday, March 22, 2007

Whitbread Plc in Play Over $8.8 Billion Property Portfolio? - March 20, 2007

Shares of Whitbread Plc, the U.K. owner of the Premier Travel Inn budget lodging chain, had their biggest gain in 15 years on speculation the company may get a takeover bid worth about 4.5 billion pounds ($8.8 billion).

The shares advanced 193 pence, or 11 percent, to 1,934 pence in London, the biggest one-day gain since April 10, 1992. That raised the company's market value to about 3.81 billion pounds.

Citigroup Inc. analyst Charles Wilson said in a note yesterday that a break up of the company by a third party may realize value from the company's real estate. Whitbread has property assets worth 4.1 billion pounds, or 2,070 pence a share, according to Wilson, who has a ``buy'' rating on the stock.

Whitbread aims to open 3,000 more Premier Travel Inn hotel rooms in the U.K. next fiscal year after adding 2,500 this year, and to expand its Costa coffee-shop chain to about 2,000 stores from 650 in the next five years. Sphere: Related Content

Wednesday, March 21, 2007

Are Lease Accounting Rules Due For An Overhaul?

Web CPA / Accounting Today - March 19, 2007

In March, the working group assembled by the Financial Accounting Standards Board and the International Accounting Standards Board will meet in London for the first time to make a comprehensive review of lease accounting rules.

Because transparency has been seriously compromised under the current rules, Grant Thornton believes that this review is critical and comes not a moment too soon.

The problem is that existing lease accounting rules permit assets (and the related financing liabilities) to be kept off the books, regardless of economic substance, as long as the form of the transaction stays within the bright lines of the rules. Those rules have expanded over the years to include 16 FASB statements and interpretations, 11 technical bulletins and staff positions, and at least 30 Emerging Issues Task Force abstracts. Only specialists can hope to navigate such complexity.

Although there are legitimate tax and legal advantages to lease financing, too many transactions are structured for the purpose of arriving at a desired accounting treatment. The resulting balance sheet does not present a complete and transparent financial picture. Basic analytical tools like return on investment and debt-to-equity ratios are useless when neither the investment nor the debt is on the books. Before conducting even elementary financial statement reviews, users must look to the notes, and then make their own adjustments to published accounts based on what is, in many ways, incomplete information.

The dollars-and-cents implications are stunning. The Securities and Exchange Commission has estimated the undiscounted value of future lease payments among SEC registrants at more than $1.25 trillion, an amount that is greater than the gross domestic product of many countries. And that figure does not include leases to private entities not filing with the SEC. The rapid global growth of lease financing has made accounting for leases an international issue.

The way forward would seem simple. Both the Chartered Financial Analyst Institute, in its Comprehensive Business Reporting Model, and the SEC, in its report on off-balance-sheet financing, conclude that lease assets and obligations should be on-balance-sheet. Strong support for lease accounting changes is coming from chief financial officers and senior comptrollers. Sphere: Related Content

Tuesday, March 20, 2007

Mitchells & Butlers Pressured to Spin-off Of £5.5 Billion Pub Portfolio

The Telegraph - March 19, 2007

Robert Tchenguiz, the property tycoon, has made preparations for a hostile bid for Mitchells & Butlers if the pub chain's chairman, Roger Carr, does not bow to his demands to spin off its £5.5bn property portfolio.

Carr has promised a decision on whether to separate the property into a real estate investment trust (Reit) when the company presents its results in May and Tchenguiz is not expected to move until then.

Last month Tchenguiz increased his personal stake by nearly 3 per cent to 16 per cent and many of his friends and family are thought to have bought in on his coat-tails in the expectation of taking a big profit if he wins the battle to get M&B's property empire spun off.

Legislation providing for Reits - a form of highly tax-efficient property investment trust - came into force at the beginning of the year and since then 14 companies have converted to Reits. However, only property companies have converted so far and any move by Mitchells & Butlers could encourage other non-property businesses to make a similar move.

A source close to Tchenguiz said: "The real interest is to work with the company on any deal. It is an attempt to recreate the deal without private equity - to break up the company into an operating company and a property company and do it in a way where shareholders remain shareholders in the operating company, but get the benefits of the private equity strategy. Sphere: Related Content

EntreCap Sells Portfolio of 18 Net Leased Properties for $364 Million

Comercial Property News -March 19, 2007

With the signing of a definitive agreement with Shelton, Conn.-based EntreCap Financial Corp., New York City's Capital Lease Funding Inc. has committed to purchasing a diverse portfolio of 18 net leased properties. The acquisition cost, including the assumption of existing debt, is $364.4 million.

CapLease is a publicly-traded REIT that targets single-tenant commercial real estate assets that are leased under long-term agreements to high credit quality tenants. Company officials note in a statement that the properties it plans to acquire fit very well with its existing holdings. The company has made $750 million in such acquisitions since its 2004 initial public offering.

CapLease will rely on available cash and a short-term borrowing facility to complete the EntreCap deal, which called for CapLease to pay $5 million into escrow upon entering the agreement, and an additional $15 million into escrow upon the April 7 expiration of the due diligence period. The transaction is on schedule to close early next quarter. Sphere: Related Content

Monday, March 19, 2007

Myer Seeking Sale Leaseback of Flagship Melbourne Department Store - March 14, 2007

The flagship Myer department store in downtown Melbourne, the largest single department store in the southern hemisphere covering some 72,000 sqm, will be sold by CB Richard Ellis through an expressions of interest campaign that starts immediately.

Under plans announced yesterday, Myer will sell and lease back the Bourke Street component for 20 years with four additional 10-year options, but will cut adrift the Lonsdale Street section by selling it with vacant possession.

Myer currently occupies about 45,000sqm of retail space in the complex, which spreads over two blocks in two linked buildings that cover 15,000sqm of land. But according to a Myer spokesman, a future Myer department store will have between 35,000 and 37,000sqm of floor space.

Myer's redevelopment plans include a $45 million makeover of the ageing Bourke Street store, which was completed almost 75 years ago. Sphere: Related Content

UBS Launches £250 Million Ground Rent Investment Fund

Property Week - March 16, 2007

UBS Global Asset Management this week revealed a pioneering initiative to create a £250m-plus ground rent portfolio.

Instead of chasing small individual ground-rent lots for its flagship open-ended Secure Income Property Fund, UBS has appointed CB Richard Ellis and Colliers CRE to approach owners of large freehold property estates with a view to carving out ground leases that UBS would then use for the fund.

The scheme, which UBS has painted as a viable alternative to the traditional sale-and-leaseback transaction, will enable owner-occupiers to unlock cash from their assets but retain much of the market value of the property by holding on to its long-leasehold interest.

UBS will negotiate the purchase price and the length of the ground lease with the freeholder, which could range between 75 and 999 years. The ground rent will then be subject to five- or seven-yearly reviews rising in line with inflation benchmarks such as the Retail Prices Index.

Richard Tanner, managing director of real estate at UBS, believes the initiative takes active fund management to another level. "Ground rent investments have always appealed to liability-driven investors but the difficulty has always been getting hold of product," he said. "As far as we know we’re the only people to take such a proactive approach and, in theory, it gives us a chance to grow the fund to whatever size we want. "

"The yield differential between the average freehold central London office property and the comparable long-leasehold property is only around 250 basis points. This gives owners the chance to strip out considerable income at a low yield."

The initiative has sparked interest from investors as well as corporate property owners and local authorities. They see the scheme as a chance to access cheap capital, which they can raise from UBS at the same time as acquisition, and therefore gain a competitive edge in the marketplace.

"Some owners have asked us where the catch is, but there isn’t one,’ said Tanner. ‘We are simply interested in securing long-term, stable income that matches the liabilities of the institutional investors in this fund."

"We’re long-term investors. We won’t be packaging up lots to trade at auction and the owner is not liable to pay Stamp Duty in this sort of transaction." Sphere: Related Content

Saturday, March 17, 2007

Wm. Morrison Supermarkets Evaluating Options For £7 Billion Property Portfolio

Hemscott - March 15, 2007

William Morrison Supermarkets PLC is considering options for capitalising on its vast property portfolio but is not yet considering a full-scale sale-and-leaseback, chairman Sir Ken Morrison told reporters on a conference call.

William Morrison Supermarkets PLC is considering options for capitalising on its vast property portfolio but is not yet considering a full-scale sale-and-leaseback, chairman Sir Ken Morrison told reporters on a conference call.

As a 'first step' towards extracting value from the estate, which analysts reckon is worth between 7-7.8 bln stg, Morrison has confirmed it is in talks that may lead to it entering into a property partnership for some of its investment properties. Morrison explained that the 25 properties, which could be involved in the partnership, currently being examined are adjoining premises to Morrison's stores that the retailer generates rental income from.

Sir Ken ruled out the prospect of a major property disposal programme in the immediate future. Sphere: Related Content

Friday, March 16, 2007

AT&T Enters $29 Million Sale leaseback of Office Building Near Milwaukee - March 14, 2007

Inland has confirmed that a subsidiary it has purchased the AT&T Pewaukee office building for $29 million, in the company’s third sale-leaseback transaction with the telecom provider. Joe Cosenza, president of Inland Real Estate Acquisitions Inc., negotiated the Pewaukee transaction, as well as the $205 million purchase of One AT&T Center in St. Louis at the end of December.

At the Pewaukee building, AT&T Services Inc. will continue to be the sole occupant of the 117,000-sf facility, which is on more than 11 acres. The building houses a call center, a training facility, a sales and marketing center and a real estate department. Cosenza tells that the company signed a 25-year lease, but has the option to leave the building after 10 years. The company is paying $12 per sf for rent, he says.

Inland also owns the 1.7 million-sf AT&T Center property in Hoffman Estates, IL, purchased in November 2005 for $338 million. Cosenza also brokered that deal.

AT&T has been closing many sale-leaseback deals as of late, including the sale-leaseback of its headquarters property in Bedminster, NJ to MetLife Inc. for $270 million in December 2006. The telecom company also completed the sale and partial leaseback of Sterling Commerce Plaza, a 308,554-sf office building in Irving, TX with Wells Real Estate Funds.

An AT&T spokesperson describes the sale-leasebacks as part of the company’s ongoing real estate strategy. Sphere: Related Content

Thursday, March 15, 2007

Academy Sports Completes $102 Million Sale Leaseback of HQ in TX

CoStar Group - March 13, 2007

In a sale/leaseback, Academy Sports and Outdoors sold its 1.5 million-square-foot headquarters and distribution center at 1800 N Mason Rd in Katy, Texas to an affiliate of The Cole Cos. for $102 million or approximately $67 per square foot.

Academy leased back the 93-acre property under a 20-year triple-net lease reportedly worth $102 million. Cole funded the acquisition, which was made on the part of its Cole Credit Property Trust II investment fund, using proceeds from its ongoing public offering and $68.3 million loan from Bear Stearns Commercial Mortgage, Inc.

Under its lease, Academy will pay an initial annual base rent of $7,038,000 which increases each year, including during renewal terms, by 1.5% of the then current annual base rent. The initial term of the lease expires January 31, 2027. Academy has eight options to renew the lease, each for an additional five-year term beginning on February 1, 2027.

The Stan Johnson Company of Tulsa, OK represented Academy Sports in the sale/leaseback transaction. Academy is a sporting goods retailer, operating over 80 stores across the southeastern United States. Sphere: Related Content

JPMorgan Enters Sale and Partial Leaseback of Detroit Tower

CoStar Group - March 14, 2007

Saying it "makes more sense" to be a tenant rather than a building owner, JPMorgan Chase has sent another of its big-city namesake towers into the hands of investors.

The financial services firm announced a deal Tuesday to sell and lease back the Chase Tower in downtown Detroit, continuing a string of recent sale-leasebacks throughout the Midwest.

Locally based Sterling Group is buying the 14-story, nearly 600,000-square-foot building for an undisclosed sum. JPMorgan signed a 10-year lease with renewal options for eight floors totaling almost 215,000 square feet.

"It makes more sense to be a long-term tenant rather than owning the building," said Dick Wade, president of Chase in Michigan.

Sterling Group will lease the remainder of the building. The firm owns and manages several other downtown Detroit buildings, including the 43-story, castle-like Guardian Building, one of the city's most recognizable high-rises.

Chase Tower was constructed in 1959 as headquarters for the National Bank of Detroit, Chase's predecessor. The buidling occupies a prominent location at 611 Woodward Ave. in the city's business district.

Last October, JPMorgan closed a deal that sent 33 properties to a fund managed by Toronto-based Brookfield Asset Management for about $460 million. The 5.3 million-square-foot portfolio spanned 10 cities, mostly in the Midwest, and featured several trophy-class building, including 300 S. Riverside Plaza in Chicago and namesake high-rises in downtown Phoenix and Milwaukee. JPMorgan leased back significant portions of space as part of that deal.

Last month, Brookfield flipped two former JPMorgan assets -- the 750,000-square-foot Chase Tower in Phoenix and the 412,500-square-foot North American Technology Center in Houston -- to Crystal River Capital, a specialty finance company externally managed and advised by a wholly owned subsidiary of Brookfield Asset Management, for about $234 million.

JPMorgan anchors both those buildings under 15-year, triple net leases originally signed with Brookfield. Sphere: Related Content

Spirit Finance Corporation Enters $3.5 Billion Merger Agreement

Spirit Finance Corp Web Site - March 13, 2007

Spirit Finance Corporation (NYSE: SFC), a real estate investment trust focused on single tenant, operationally essential real estate, today announced that it has entered into a definitive merger agreement under which a consortium including Macquarie Bank Limited, Kaupthing Bank hf. and other independent equity participants (collectively, 'the Consortium') will acquire Spirit Finance in a transaction valued at approximately $3.5 billion, including approximately $1.9 billion of assumed debt.

Under the terms of the agreement, the Consortium will acquire all of the outstanding shares of Spirit Finance common stock for $14.50 per share in cash. This represents a premium of approximately 15% over Spirit Finance's 90 day average closing share price and an 11% premium over Spirit Finance's closing price on March 12, 2007.

The transaction is expected to close promptly following the satisfaction of all closing conditions, which is anticipated to occur by the end of the third quarter of 2007. Under the merger agreement, Spirit Finance may solicit superior proposals from third parties through April 9, 2007. The Board of Directors of Spirit Finance, with the assistance of its financial advisors, intends to solicit superior proposals during this period.

The Consortium's debt financing in relation to the transaction is being provided by Credit Suisse. Sphere: Related Content

US Govt Enters $270 Million Build-to-Suit of Military Housing in Germany

Stars & Stripes - March 13, 2007

German officials have given the go-ahead for a 300-unit, build-to-lease off-post housing area for U.S. soldiers in Grafenwöhr, Germany. Grafenwöhr mayor Helmuth Wächter said this month that government officials recently gave the green light to the project in Hütten, a small farming village a few miles south of Grafenwöhr Training Area.

Officials estimate about 1,600 off-post homes must be built to accommodate thousands of soldiers and family members due to arrive here over the next few years. The houses will be constructed under a build-to-lease program that will see the Army lease back the completed homes. The total cost of leasing all 1,600 homes to be built around Grafenwöhr will be $20 million annually, officials have said.

Officials have selected a private investor who work with the city in the Hütten on the Lake venture, Wächter said. He said it is too early to identify the investor. Wächter added that the housing project involves building new streets and utilities on bare farmland.

Hütten on the Lake will cost an estimated 200 million euros – about $270 million — to build, he said. Sphere: Related Content

Wednesday, March 14, 2007

Vue Entertainment Completes £71.1 Million Sale Leaseback of Six UK Cinemas

LawFuel - March 12, 2007

Anita Weightman, Vanessa Rickard, Claire Quinn, Stephen Jones and Susan Fink of DLA Piper have acted for Vue Entertainment on the £71.1 million sale and leaseback of a portfolio of six cinemas to Cheval Properties.

The portfolio composes five prime investment properties located in Cambridge, Doncaster, York, Accrington and the flagship Leicester Square cinema in London. The properties include a mix of freehold and leasehold interests.

There is also a redevelopment opportunity located in Bury adjacent to an ASDA Superstore. Vue has entered into a new 15-year lease on four of the investment properties, a 29-year lease on Leicester Square and a 3-year lease in Bury.

Vue is the largest operator of modern, stadia seated multiplex cinemas in the UK. It has 55 multiplex cinemas with 544 state-of-the-art auditoria. Sphere: Related Content

Fireman's Fund HQ in Novato, CA Sold for $310 Million

CoStar Group - March 12, 2007

American Financial Realty Trust (NYSE: AFR) is selling the Fireman's Fund Insurance Co. headquarters in Novato, CA to an undisclosed buyer for more than $310 million, or $436 a square foot.

The sale of the 710,330-square-foot, three-building property in the Marin County city north of San Francisco is expected to close in the second quarter. Jenkintown, PA-based AFR would only describe the buyer as a California-based private real estate investment group partnering with an institutional real estate investor.

First State Investors LLC, an AFR subsidiary, bought the 65-acre office complex from San Marin Assurance Co. in August 2005 for $283.5 million, or just under $400 a square foot. The building sold at a cap rate of 7.82% based on projected lease income from Fireman's Fund, which agreed to continue to lease the property on a net lease basis through November 2018. Susan Murdy, director of media relations for the national insurer, told CoStar that said the company’s headquarters would remain in Novato.

Fireman's Fund is one of the largest tenants in Marin County's modest office market, which amounts to about 7.5 million square feet.

Eastdil Secured is representing American Financial in the sale. Sphere: Related Content

Sunday, March 11, 2007

Sun Weighs $150 Million Sale Leaseback of Burlington MA Office Campus

Boston Herald - March 10, 2007

Sun Microsystems is exploring a sale of its116-acre Burlington campus, a move that comes as the once-hot tech giant slashes jobs and scales back its local ambitions, real estate executives said.

Santa Clara, Calif.-based Sun is weighing plans to sell the campus - a key research center which includes 700,000 square feet of office buildings - to an investor. It would then lease it back, enabling the company to cash in on a lucrative asset while relinquishing control over the real estate itself.

Sun could reap as much as $150 million from the so-called sale-leaseback, according to one real estate executive examining the deal. The site also includes untapped development sites that Sun is now not likely to use, executives said.

Sun’s real estate move comes as the company retrenches. It announced plans to cut 5,000 jobs last year. Sun made a big splash along tech-heavy Route 128 in the late 1990s, rolling out plans for a major corporate campus off Route 128 in Burlington with talk of someday employing 4,000 there. But today the number of Sun employees at its Burlington campus is roughly half that, with plans for new buildings mothballed. Sphere: Related Content

Bouygues Telecom Enters EUR 260 Million Build-to-Suit for Paris HQ

Property Magazine International - March 9, 2007

Having signed the deed for the Technôpole Bouygues Telecom project development just days ago, Commerz Grundbesitz (CGG) will invest more than 260 million euros in the property.

The building, which has a lettable area of 53,000 m² and 2,000 parking spaces, was sold by Bouygues Immobilier. The future tenant, Bouygues Telecom, is also part of the Bouygues Group and the third largest telco company in France.

The company signed a fixed lease over 9 years and will set up its corporate seat here as the building’s single tenant. On the seller side, the transaction was masterminded by Jones Lang LaSalle Paris.

Following its completion in late 2009, the office building will be added to the hausInvest europa portfolio. Sphere: Related Content

Saturday, March 10, 2007

Royal Mail Completes £70 Million Sale Leaseback of 285 UK Properties

Land Securities Group Web Site - March 8, 2007

Land Securities Group PLC announces that its property partnership business Land Securities Trillium (‘LST’) has completed the acquisition of a portfolio of 285 properties from the Royal Mail, for around £70 million.

Of the portfolio, a total of 108 leasehold properties are vacant and surplus to Royal Mail’s operations, the responsibility for which will now pass to Land Securities Trillium. These vacant properties will be refurbished by LST with a view to securing new occupiers. The remaining 177 freehold properties, where only part of the space is being used by Royal Mail for operational purposes, will be leased back by LST to Royal Mail for 15 years. Royal Mail will occupy just the space it needs within these buildings. It is expected that the contract will become earnings enhancing for LST from the second year of ownership onwards.

This transaction reportedly represents just 3% of the total operating space for Royal Mail. Sphere: Related Content

Cable & Wireless Pursuing £86 Million Sale Leaseback of Eight UK Properties

Property Week reports that Cable & Wireless has retained Doherty Baines to carry out an £86 million sale and leaseback of eight office and technical properties totaling 350,000 sq ft (32,515 sq m) in the UK. Sphere: Related Content

ShopKo Agrees to $75.5 Million Sale Leaseback Seven Stores in Western US

The Business Journal of Milwaukee - March 8, 2007

The operator of ShopKo discount department stores has agreed to sell and lease back seven store properties in the western United States under a transaction that will provide cash for new stores and remodeling of existing locations.

ShopKo Stores Operating Co. L.L.C. sold its ownership interest in the properties to Princeton, N.J., private equity investor Sovereign Investment Co. and its partner Atlas Investments for $75.5 million, the buyers said late Wednesday. The stores are in Salem, Bend and Eugene, Ore.; Boise, Idaho; Sandy City and Orem, Utah; and Lacey, Wash. ShopKo will lease the stores back for 20 years.

Proceeds from the transaction are expected to help strengthen ShopKo's financial position and allow management to focus on remodeling stores and growing the store base, Sovereign said.

In mid-2006, ShopKo sold 112 ShopKo store properties, 66 Pamida store properties, three distribution centers, ShopKo's corporate headquarters in Ashwaubenon and the Pamida headquarters in Omaha, Neb., to Spirit Finance Corp., a real estate investment trust based in Scottsdale, Ariz., for $815.3 million. Proceeds of that deal were to be used to retire a $700 million real estate debt and pay down a portion of a revolving credit facility.

ShopKo Stores Operating Co. is a company formed from the reorganization of SKO Group Holding Corp., a company created by private equity firm Sun Capital Partners Inc., of Boca Raton, Fla., in association with Sun's acquisition of the formerly publicly traded ShopKo Stores Inc. in December 2005. Sphere: Related Content

Thursday, March 08, 2007

Accor Enters EUR 863 Million Sale Leaseback of 91 Hotels in Germany & Netherlands

Hotel & Motel Management - March 5, 2007

As part of its real estate management strategy, Accor said today that it has signed a memorandum of understanding to sell 72 hotels in Germany and 19 in the Netherlands to Moor Park Real Estate for 863 million euros, including a 43-million-euro renovation program to be paid for by the owner. The Novotel, Mercure, Ibis and Etap Hotel properties involved in the transaction represent a total of 12,000 rooms.

Accor will continue to operate the hotels under 12-year variable-rent leases, whose rents are based on an average 18% of annual revenues with no guaranteed minimum. The leases are renewable six times, for a total of 84 years. Based on 2006 revenues, variable rent would have amounted to 49.5 million euros (5.74% cap rate.) Insurance costs, property taxes and structural maintenance capex (1.8 million euros in 2006) will be at the owner’s expense.

Accor is now pursuing its innovative real estate management strategy designed to reduce earnings volatility and can focus on its core business, hotels operations. Germany and the Netherlands now follow France, Belgium and the United Kingdom. The transaction enables Accor to join forces with a company that is already established in the German real estate market, owner of more than 70 Praktiker shops and with asset management teams.

As part of the agreement signed today, a long-term development partnership will be launched, enabling Accor to step up its expansion program in Germany and the Netherlands. Financially, the transaction will enable Accor to reduce its adjusted net debt by 612 million euros, of which 215 million euros will be added to the Group's cash reserves. It will have no impact on EBITDA, will add 5 million euros to 2007 profit before tax and 10 million euros on a full year base.

Accor's financial advisors on the transaction were BNP Paribas, with legal and tax advice by CMS Hasche Sigle and Stibbe. Sphere: Related Content

Nordic Cold Storage Completes $83.3 Million Sale Leaseback of Three Warehouses in Atlanta

CoStar Group - March 6, 2007

W.P. Carey & Co., a New York-based investment firm, acquired three cold storage facilities in Georgia from Nordic Cold Storage LLC for $83.3 million, or about $65 per square foot. Nordic Cold Storage is leasing back each facility under long-term, triple net agreements.

The 1.3 million-square-foot portfolio includes 3485 Empire Blvd. in Atlanta, 4300 Pleasantdale Road in Doraville and 1802 Rome Highway in Rockmart. The Empire Blvd. facility is about 152,500 square feet and the Pleasantdale facility is about 301,800 square feet, while the Rome Highway property totals 850,000 square feet.

"We are attracted to the growth trends in this sector," said Jason Fox, a director with W.P. Carey. "There is increasing demand for well-located cold storage sites with easy access to highways and truck routes, sites that are currently at a premium. Nordic’s three metro-Atlanta locations are benefiting from this demand and operating at capacity."

Both the buyer and seller were self-represented. Nordic said it will reinvest proceeds from the sale to improve operations. Sphere: Related Content

Sunday, March 04, 2007

YIT Agrees to EUR 69 Million Sale Leaseback of Helsinki HQ

YIT Web Site - March 2, 2007

Finnish construction group YIT has decided to expand its head office in Käpylä, Helsinki, and agreed on the sale of the extension to RBS Nordisk Renting for EUR 69 million. Furthermore, Ilmarinen Mutual Pension Insurance Company will sell the office premises used by YIT in Käpylä to RBS Nordisk Renting.

YIT will develop and build the extension. Upon the completion of the project, YIT will move into the premises under a 15-year lease. The extension will measure about 15,000 m2. Construction will begin in March 2007 and the new office building is slated for completion by the end of 2008. The extension will have workspace for a total of about 600 people.

At the same time, the existing commercial premises on the property will be extended and modernized, and a four-storey parking lot will be built mainly underground for the property. Sphere: Related Content

Saturday, March 03, 2007

Shell Oil HQ in in Helsinki Sold

Europe Real Estate - March 1, 2007

Aareal Nordic Fund, managed by Aareal Immobilien Kapitalanlagegesellschaft mbH, which is a 100% subsidiary of Aareal Asset Management GmbH, announces that it has purchased its fifth property in Finland, bringing its portfolio in the country close to the €100 million. The 10,000 m² office building is leased to Shell Oil and serves as their headquarters in Finland. Sphere: Related Content

Thursday, March 01, 2007

Health Net Enters $90 Million Sale Leaseback of Northeastern HQ in CT

CoStar Group - February 26, 2007

Following a trend of pricey sale-leasebacks among corporate real estate owners, Health Net Inc. is selling its 68-acre Northeastern headquarters campus to The Dacourt Group in a $90 million deal.

The Woodland Hills, CA-based healthcare coverage provider signed a 10-year leaseback for its three-building, 327,000-square-foot office complex, located at 1 Far Mill Crossing in Shelton, CT. The deal is expected to close by the end of the first quarter.

"Freeing up this capital provides us with even greater financial flexibility going forward," said Jay Gellert, president and CEO of Health Net.

A slew of corporations have recently jumped onto the sale-leaseback wagon, including Sun Microsystems, IBM, JPMorgan Chase, Volkswagen and Merrill Lynch, which is currently in negotiations to sell and leaseback its Princeton, NJ-area campus. Corporate owners are increasingly looking to cash out their real estate assets in a hot market, and reinvest capital into other core operations. Sphere: Related Content

National Grid Completes $61 Million Sale Leaseback of UK HQ

Property Executive - February 26, 2007

PRUPIM has purchased the freehold interest in National Grid House, Warwick Technology Park, Warwick for £61 million on behalf of one of its client funds.

The property comprises 244,192 sq ft of office accommodation, conference and meeting facilities, a health and fitness centre and a restaurant in six interlinked buildings. The net initial yield was 5.45%. The property was purchased on a sale and leaseback agreement, let to National Grid Electricity Transmission plc on a 20-year lease with a tenant's option to break at year 15.

Steffan Francis, PRUPIM's Head of Institutional Funds commented: 'We are very pleased to have secured a flagship headquarters office building with a long, well secured income. We expect to invest substantial sums this year in similar well let investments across the sectors.'

Savills acted for PRUPIM and GVA Grimley acted for National Grid. Sphere: Related Content

JP Morgan Chase Offices in Houston & Phoenix Sold for 234 Million

CoStar Group - February 28, 2007

Brookfield Asset Management (NYSE: BAM) is selling two fully leased office buildings in Houston and Phoenix to Crystal River Capital (NYSE:CRZ) in a deal valued at about $234 million. Crystal River is a specialty finance company externally managed and advised by a wholly-owned subsidiary of Brookfield Asset Management.

The 1.2 million-square-foot transaction includes the 750,000-square-foot Chase Tower -- Arizona's tallest building -- at 201 N. Central Ave. in downtown Phoenix, and the 412,500-square-foot North American Technology Center at 1111 Fannin St. in downtown Houston. JP Morgan Chase anchors both buildings under 15-year, triple net leases.

Toronto-based Brookfield, which teamed with The Blackstone Group to acquire Trizec Properties and Trizec Canada last year for $8.9 billion, acquired the two buildings last fall on behalf of Brookfield Real Estate Opportunity Fund in a 33-property, $460 million portfolio acquisition from JPMorgan Chase. That deal also included Chicago's landmark 300 S. Riverside Plaza office building and Milwaukee's 472,500-square-foot Chase Tower. Sphere: Related Content

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