Sunday, April 29, 2007

Travelodge Completes £128m Sale Leaseback of 17 UK Hotels

The Times - April 28, 2007

Travelodge, the budget hotel operator controlled by Dubai International Capital (DIC), has raised £128 million through a sale and leaseback of 17 of its hotels, The Times has learnt.

The company, which operates 314 hotels, the majority in the UK, is selling the underlying property assets to Prestbury, the property investment vehicle controlled by Nick Leslau. It will lease back the hotels for periods of between 25 years and 35 years.

It is the second sale and leaseback Travelodge has signed with Prestbury. Three years ago it raised £400 million from the dispsoal of 136 hotels to Mr Leslau’s vehicle, enbling it to step up its rapid rate of expansion. The 17 hotels in the latest deal, two of which are in London, are properties that have been added to the chain since the first transaction. About £100 million of the proceeds will be used to reduce Travelodge’s £500 million debt burden, with the balance to be invested in expansion.

Mr Leslau is expected to inject both packages of Travelodge properties into the £2 billion real estate investment trust (Reit) that he is planning to float on the London Stock Exchange. The Reit also includes properties run by Punch Taverns and Southern Cross Healthcare. Sphere: Related Content

Threshers Completes £200 Million Sale Leaseback of Retail Portfolio

Telegraph - April 27, 2007

Guy Hands' private equity house Terra Firma has raised £200m from the sale-and-leaseback of part of the property estate of off-licence chain Threshers.

It is understood that Terra Firma, which this week pulled out of the race to buy Alliance Boots, raised the money through a number of tranches of property sales earlier this year and late last year. But it is known that those sales have now come to an end and it is thought no further sell-offs are planned at the moment.

Terra Firma first invested in the Thresher Group in October 2000, buying it from Whitbread and Punch for £225m. Since then it has been reinvented somewhat, and has expanded organically and through site acquisitions, the most recent being the December 2005 purchase of 200 former Unwins stores.

Through its various retail brands - which include Wine Rack and Haddows in Scotland - the business owns 2,000 shops and employs more than 12,000 people.

It is not thought that the sale-and-leasebacks, masterminded by Threshers' property director Stephen Masters, are likely to lead to any form of corporate action involving a trade sale or a float. However, given the length of time Terra Firma has owned the business, nothing should be ruled out. Sphere: Related Content

Thursday, April 26, 2007

Jardiland Completes €242 Million Sale Leaseback of 57 Gardening Centers in France

Fonciere des Murs Web Site - April 24, 2007

Fonciere des Murs has signed a memorandum of understanding to acquire a portfolio of 57 gardening centres operated by the Jardiland group for €242m, including transfer duties and transaction costs. The property assets, operated by the leading garden centre retail chain in France, are located across the country and represent two thirds of Jardiland's garden centre asset base.

Triple net leases were signed on the properties for a firm period of 12 years. The leases, which may be renewed up three times every nine years, carry indexed fixed rents representing annual rental income of €15.2m (i.e. a 6.3% cap rate), net of VAT.

A partnership agreement will be drawn up as part of the transaction enabling Jardiland to benefit from Fonciere des Murs' skills in forging partnerships, to accommodate Jardiland's growth. The transaction will be carried out in the form of a sale and leaseback operation. Sphere: Related Content

Wednesday, April 25, 2007

Citibank Seeking Sale Leaseback of 24 Bank Branches in New York City Area - April 24, 2007

Citigroup Global Markets Inc. is marketing a 24-branch sale-leaseback transaction through Newmark Knight Frank. The properties are all centered in the New York City metro area.

“The portfolio consists of 214,000 sf,” says Kenneth Zakin, senior managing director of NKF. “Thirteen of the properties are leased only to Citibank, and 11 are anchored by Citibank but have other retail or office tenants. Each building, once sold, will be leased back to Citibank for 15 years, on separate leases. We’re offering the buildings as a package, or as individual properties, or they could be broken up into several smaller portfolios.”

Zakin tells that four of the properties are located in Manhattan, Brooklyn houses six locations, Queens four, the Bronx three, Westchester one, and the remaining properties are in Nassau and Suffolk counties. The properties range in size from 2,500 sf to 30,000 sf. Zakin says the best sites are those located in Manhattan. “They are really extraordinary branches.”

There is no asking price for the portfolio as the deal will be conducted through a bidding process. The initial bids will be collected by the end of the month, Zakin says. He expects bidders to be varied due to the quality of the portfolio.

He goes on to say, “This is an especially attractive portfolio in that you very rarely see so much space, so diversified by location throughout the New York metro area, all of it occupied by a credit tenant like Citibank, which is rated AA+ by Standard & Poor’s and Aaa by Moody’s,” Zakin remarks. Sphere: Related Content

Mercury Computer Systems Announces $26.5 Million Sale Leaseback of HQ in Chelmsford, MA

Mercury Computer Systems Web Site - April 23, 2007

Mercury Computer Systems, Inc. (NASDAQ: MRCY) announced the completion of the sale and leaseback of its property located in Chelmsford, MA. The company received net cash proceeds of approximately $26.5 million from the sale of the property. The transaction includes a leaseback agreement with an initial term of 10 years, plus multiple renewal options. The property will continue to house Mercury’s corporate headquarters.

April 23, 2007 8-K Filing
The annual rent for the first five years is $1,945,933.50 (7.35% cap rate) and increases by 10% for the remaining five years. The company also delivered a security deposit in the form of a $3,000,000 standby letter of credit which will remain in effect for the entire term of the lease. Sphere: Related Content

Sunday, April 22, 2007

Pierre & Vacances Planning Sale Leaseback of Four Holiday Villages in Belgium

Pierre & Vacances Web Site - April 20, 2007

Pierre & Vacances Group has reached an agreement to acquire Belgian group Sunparks. The acquisition fits entirely with the core focus of the development strategy in place at Center Parcs Europe by bolstering its positions, adding four holiday villages similar to Center Parcs, in the three/four star category in Belgium.

Sunparks owns the freehold and operations of four holiday villages similar to Center Parcs, in thethree/four star category. Two villages are located in seaside resorts in the North Sea, one in the Ardennes region and one in Campine. The group offers a total of 1,683 cottages and 50 hotel rooms as well as a number of covered central facilities (aqua-centre, restaurant, supermarket, childrens’ play centres etc.), and open-air sports complexes.

Center Parcs Europe currently operates 16 villages, 12 of which in the five-star category and four in the three/four-star category.

The acquisition of Sunparks is based on an enterprise value (including debt) of €150 million. In line with the group’s policy not to own the assets it operates, the Sunparks assets are likely to be sold off before the end of the year as part of a sale and lease-back operation currently being negotiated. Sphere: Related Content

Saturday, April 14, 2007

Joe’s Crab Shack Completes Sale Leaseback of 29 Restaurants

Memphis Daily News - April 12, 2007

A local Joe’s Crab Shack site is among 29 that have been bought by Princeton, N.J.-based Sovereign Investment Co.

The private principal equity investment firm, working under the name Sovereign JCS II LLC, paid $2.5 million for the Joe’s real estate at 7990 Horizon Blvd. in The Commons at Wolfchase shopping center. In conjunction, a $2.8 million loan was filed through BMO Capital Markets Corp. The seller was J.H. Whitney Capital Partners Inc. under an entity named Joe’s Crab Shack Real Estate Holding Inc.

The restaurant was among 120 Joe’s affected by a 2006 sell-off by Joe’s parent company Landry’s Restaurants Inc. Of the 120, the 29 in the Sovereign portfolio include all the locations for which Joe’s parent company owned the sites, said Sovereign’s vice president of acquisitions Barry Bain, emphasizing the purchase included only the real estate on which the restaurants are located. “The others were already leased stores (and) these were the only remaining 29 which the real estate was owned, so we purchased the real estate and leased it back to them on a long-term basis,” Bain said.

“We’re going to be selling some of the locations to retail investors, 1031 exchange buyers. ... (The Memphis) one will be sold as well eventually, probably within the next 12 months,” he said. Sphere: Related Content

Coles Group Ponders $100 Million in Sale Leaseback Deal in Australia

Sydney Morning Herald - April 14, 2007

Any new owner of Coles Group could make a very quick $100 million-plus through the sale of properties the retailer has on in its books.

And given the scarcity of supply of retail properties across the country, all the major property trusts such as Westfield, Stockland, GPT, Mirvac and CFS Retail, and possibly some smaller players, would snap up the sites without hesitation.

Big private equity players, which along with Wesfarmers are showing interest in the Coles auction, are quick to review the status of idle assets, such as land and buildings, and put them on the market. It is the cheapest and quickest way to raise cash.

A review of Coles's portfolio shows it has in excess of $100 million of property sitting on its balance sheet, predominantly in NSW. The group also has shopping centres in Western Australia and Victoria.

But it has made no secret of its hopes to follow other businesses in selling the property and leasing it back, then using the cash to expand its core retail operations.

Already the landlords are in the market vying for Myer's landmark Melbourne CBD complex in a sale expected to be worth up to $450 million.

Westfield is said to be firming up as the favourite, although GPT is also very keen given its ownership of the nearby Melbourne Central shopping centre between Elizabeth and La Trobe streets in Melbourne.

Myer, which will lease back the property, said at its results presentation recently that it was willing to pay $18.25 million in annual rent. Myer's chairman, Bill Wavish, said the new owner should be known mid-year.

Myer is also selling some of its last remaining property assets: stores at Dubbo, Wagga Wagga and Bendigo and will also lease back the three stores. The portfolio is expected to fetch up to $55 million. Sphere: Related Content

HSBC Signs Build-to-Suit Agreement for HQ Annex in Kuala Lumpur

Malaysia Star - April 11, 2007

HSBC Bank Malaysia Bhd does not easily forget its roots as proven by its decision to remain at the spot it started 123 years ago.

Rather than relocate to newer and bigger premises to cater to further business expansion, it has chosen to lease a new 24-storey building that will be an annexe to its current headquarters in Leboh Ampang, Kuala Lumpur.

Deputy chairman and chief executive officer Datuk Zarir J. Cama said: “This (Leboh Ampang) was the spot on which HSBC started 123 years ago and we have really prospered during these years. “Our feng shui here has been very good and I am not going to disrupt it.” He said it was much more cost effective for the group to refurbish and rent a new building than to move to another place.

Zarir was speaking after signing an agreement with Quill group of companies on the lease for the new HSBC building yesterday. The Quill group will design and build the 265,000-sq-ft building and then lease it to HSBC. Besides the annexe, the HSBC headquarters will also get a facelift.

Quill group executive director Datuk Michael Ong said HSBC Malaysia would be taking a 15-year lease on the Grade A office building, which is expected to cost RM100mil to develop. Construction is expected to start in June for completion by the first quarter 2010. Sphere: Related Content

Friday, April 06, 2007

Microsoft Preleases 1.3 Million Sq. Ft. in Five Buildings Under Construction in Bellevue, WA - April 6, 2007

Microsoft Corp. on Thursday said it has inked long-term leases for the entirety of two under-construction office developments here totaling 1.3 million sf. Headquartered in the neighboring Redmond, the public software company says it has leased the 740,000-sf Bravern Office Commons next to Meydenbauer Center in Downtown Bellevue and the 600,000-sf Advanta Office Commons adjacent to Interstate 90 in southeast Bellevue.

Tom Bohman, senior director of the Bellevue office of Cushman & Wakefield, tells the lease is the largest one-time transaction in the history of not just Bellevue but the entire Seattle region. Rental rates may also set a record in the near future.

The exact length of Microsoft’s commitment, the negotiated lease rates and the concession package were not released by the parties involved and not otherwise immediately available. The asking full-service rental rate for the Advanta development was approximately $35 per sf per year. The asking net lease rate for Bravern was $25 to $28 per sf, which would put the full-service rate (building services and parking) there above $40 per sf. Microsoft surely received a healthy bulk discount, say local brokers. "To unload something of that size, [Schnitzer Northwest] had to have reasonable market terms," says one source.

Microsoft says its leasing activity is in addition to plans for an accelerated expansion of its headquarters campus that were announced in February 2006. Later in 2006, the company leased 320,000 sf at Kemper Development's newest Downtown development Lincoln Square and another 87,000 sf at Eastpointe Corporate Center.

“Microsoft continues to grow at a rapid pace…,” says the company’s general manager of real estate Chris Owens. “Adding additional work space in Puget Sound, the company’s center of gravity, helps address our current space limitations and ensures that we are prepared for future growth.”

Microsoft likely will begin occupying Advanta late this year and the Bravern late next year. The two projects are developments of Schnitzer Northwest LLC, a Bellevue-based partnership that includes Portland, OR-based Schnitzer Investment Corp. and Dan Ivanoff. Sphere: Related Content

AT&T Completes $53 Million Sale Leaseback of Cleveland Office Tower

The Plain Dealer - April 5, 2007

The latest prize in what has become a derby for downtown Cleveland office property: the 16-story AT&T building at Erieview Plaza.

Inland American Real Estate Trust Inc. of Chicago has paid $53 million for the San Antonio phone company's Northeast Ohio base, AT&T spokesman Bob Beasley said. The deal includes more than 450,000 square feet of office space and an attached 290-space garage.

AT&T will keep its roughly 1,100 employees - mostly administrative and call-center workers - in the building for at least 10 years as part of the sale-leaseback deal.

Previously known to Cleveland-area customers as SBC Communications, Ameritech and Ohio Bell, AT&T had amassed a surplus of property through a series of mergers. Beasley noted the company does not own its national headquarters campus in San Antonio.

More significant to the local real estate market, the AT&T building is the latest in a line of downtown office complexes to change hands. Since 2005, new owners collectively have spent more than $500 million on five properties, including the city's top trophies: the BP and Key towers.

Other downtown office towers that have sold include Fifth Third Center and the old East Ohio Gas Building. Another, Eaton Center, was put on the market in January.

"This is the best market I've seen in years," said David Browning, regional managing director for CB Richard Ellis, the firm that represented AT&T in the deal. Sphere: Related Content

Natrol Completes $26 Million Sale Leaseback of HQ in CA

Natrol Web Site - April 5, 2007

Natrol, Inc. (Nasdaq: NTOL), a premier manufacturer and marketer of nationally branded nutritional products, today announced that it has closed on a sale/leaseback transaction with an affiliate of TA Associates Realty for its corporate headquarters and shipping facilities, both located in Chatsworth, California. The sale price of the real estate was $26 million. After paying off the associated mortgage debt, taxes and expenses that relate to the transaction, the Company received approximately $12 million in free cash at closing.

“During the last year, we have been a disciplined company, building profits quarter by quarter,” said Wayne Bos, Natrol’s President and CEO when making the announcement. “We unlocked a hidden asset, our real estate. Twelve million dollars equates to approximately 30% of our current market capitalization. We believe that releasing the cash will help us drive capitalization up by utilizing what was a dormant resource to stimulate growth. We believe this will benefit our shareholders. We understand the importance of leveraging the cash generated to make the type of strategic investments to drive top line growth and meaningful profits.”

The Company will continue to occupy the two facilities, leasing back the space at market rates for a 5-year term, with two 5-year renewal options. Approximately half of the gain on the sale will be recorded in the second quarter of 2007. The remainder will be amortized over 5 years and will offset rental expenses per US GAAP rules. Sphere: Related Content

Cable & Wireless Enters £88 Million Sale Leaseback of Nine Network Properties

Cable & Wireless Web Site - April 2, 2007

Cable & Wireless announces that it has today completed a 25 year sale and leaseback agreement with British Land of a portion of its property portfolio. The deal covers nine properties used as network sites in the UK. Cable & Wireless will receive £88m.

Lease payments for the first five years will be £4.54m per year and subject to five yearly reviews thereafter. These amounts were not included in Cable & Wireless’ cash guidance of November 8 2006.

Jim Marsh, CEO of Cable & Wireless UK, said: “Our number one priority is to deliver excellent service to our top end customers. We’re transforming our business to do just that – and as part of that transformation, we’ve taken a close look at all of our assets.

“This deal makes good commercial sense in that it takes advantage of the buoyant property market and releases capital to the business.” Sphere: Related Content

Thursday, April 05, 2007

Deutsche Securities Creates Fund Seeking Sale Leasebacks With Hospitals in Japan

MarketWatch - April 3, 2007

Deutsche Securities said Tuesday it will establish an investment fund specializing in hospital real estate management in collaboration with Itochu Corp. by the end of this month as the Topix real estate investment trust, or REIT, index reached a new lifetime high Monday. The fund will be capitalized at Y300 million, with the two firms each committing Y100 million and the remainder coming from other parties.

"We are looking to set up a fund which can combine our financing know-how with Itochu's depth of experience in the Japanese healthcare field," said a spokesman for Deutsche in Tokyo. Although the Deutsche-Itochu venture is being set up initially as a private fund, a spokesman for the German financial firm said it was looking at the possibility of converting the fund into a REIT in the future.

Deutsche's latest foray into Japan's real estate market comes as the 4-year-old Topix REIT index hit a lifetime high of 2492.92 yesterday. It is up by more than 47% since the end of last September as investors flocked to the sector, attracted by the comparatively high-yields offered by REITs in Japan's ultra-low interest rate environment.

Deutsche said the fund, which will buy real estate from hospitals with the aim of managing properties and leasing them back to the hospitals, would give its investors' exposure to Japan's growing economic recovery outside its major cities. The venture also underscores growing interest among real estate investors in moving outside of central business district properties in Japan's major cities now that many of these areas are tapped out, say analysts.

The brokerage also said that real estate funds are increasingly having to look at alternatives "outside of Tokyo, where competition for properties is less intense and yields are higher." Sphere: Related Content

Sunday, April 01, 2007

M&B to Raise £1.1 Billion in Sale Leaseback of UK Pub Estate?

Morning Advertiser - March 30, 2007

Mitchells & Butlers could follow the example of Tesco by creating a joint venture property company that crystalises property value but avoids a full conversion to a real estate investment trust, according to Deutsche Bank analyst Geof Collyer.

A move by M&B to copy the Tesco model would release as much as £950m - 220p a share -to hand back to shareholders, he said. Tesco banked £570m of cash last week after injecting sites worth £366m at book value into a joint venture with British Land. Both parties put in £80m of equity each and the properties were revalued at £650m and leased back to Tesco at an initial yield of 4.46%.

The deal was broadly profit-and-loss neutral with Tesco planning to return most of the £570m to shareholders. Tesco retained a call option that allows it to buy back the properties in ten years’ time.

Collyer said that M&B could sell 20% of its estate, worth £625m at 1999 book value, into a joint venture like the Tesco one and raise £1.1bn less the equity - around £137m - it injected into the joint venture. He added: “This would leave it with over £950m to hand back to shareholders. “This is equivalent to about 30% of the group’s current market capitalisation.

“This would leave M&B with scope for further asset revaluations - notably from the Whitbread pub conversions - and retain control over an estate that would be 70% freehold /30% leasehold with an option to buy back 20% in ten years’ time.”

Collyer noted the Tesco deal “seems to be a way of crystalising current property values whilst retaining at least 50% ownership and control over the properties versus a maximum of 10% ownership under a Reit structure”. Sphere: Related Content

ABN Amro’s London HQ Nearing Sale for £180 Million

Citywire Blogs - March 30, 2007

From Property Week

ABN Amro’s London headquarters is to be bought by fund manager Prupim in a deal that will reflect one of the lowest ever yields in the City of London.

In an off-market deal that is expected to complete next week, the fund manager has paid more than £180m for the building at 250 Bishopsgate, at a yield close to 4%, from Mayfair-based investment bank Evans Randall.

Although buildings have been sold for lower than 4% in the City, they tend to have vacant floors or other asset management angles.

So what's the investment angle for Prupim when the yield is so meagre and you can more income (and less hassle) from a cash ISA?

Prupim’s property arm has been working with its fixed income team to buy buildings for its annuity business with long leases and index-linked rental increases that are let to companies with good credit ratings. Sphere: Related Content

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