Saturday, September 29, 2007

Citigroup Seeking $1.8 Billion Sale Leaseback of Manhattan Office Towers

Crain's New York - September 28, 2007

Citigroup Inc. is looking for a buyer for the former Travelers Group headquarters in lower Manhattan, which could fetch up to $1.8 billion, as part of a larger effort to reduce its real estate holdings. The Wall Street firm plans to lease back the space under a 13-to-15-year lease with 30-plus years of renewal options, said a Citi spokesoman.

The 40-story tower, comprising about 2.7 million square feet, is located about 10 blocks north of the World Trade Center site at 388 Greenwich St. It is being co-marketed with an adjacent 10-story property at 390 Greenwich St. Cushman & Wakefield is acting as the broker and Citis’ global markets unit is advising the company.

The leaseback strategy isn’t new for Citi. Over the past two years, the company has been trimming its real estate holdings, selling office buildings at 333 West 34th St. and 250 West St. Citi has leased back space in both properties. Sphere: Related Content

JPMorgan Chase Completes $300 Million Sale Leaseback of 52 U.S. Office Buildings and Bank Branches

Bloomberg - September 26, 2007

Brookfield Asset Management Inc.'s real estate unit bought 52 U.S. office buildings and bank branches from JPMorgan Chase & Co. for $300 million, adding to the 33 properties it bought from the U.S. bank last year.

The latest properties have 3.6 million square feet and are located in 14 states, Toronto-based Brookfield said today in a statement distributed by Marketwire.

They include the Elgin Card Services Building in suburban Chicago, the Sky Harbour Operations Center and two contiguous buildings in downtown Tempe, Arizona, and office buildings on Long Island and in Brooklyn, New York, Brookfield said.

Today's acquisition adds to the 5.3 million square feet of properties that Brookfield bought from JPMorgan Chase and affiliates last year for $460 million. The New York-based bank signed long-term leaseback agreements for "significant" portions of the space sold, Brookfield said.

The sale allowed New York-based JPMorgan Chase to get rid of vacant space it accumulated through mergers during the past several years and remove the responsibility of building ownership. Sphere: Related Content

CH2M Hill Completes $138 Million Sale Leaseback of Denver HQ

Commercial Property News - September 27, 2007

Wells Real Estate Investment Trust II has purchased the world headquarters of CH2M Hill near Denver in a $138.5 million sale-leaseback, not including closing costs, according to the SEC filing for the transaction.

The Class A, four-building complex on South Jamaica Street in Englewood, Colo., has about 478,000 square feet of space. Built between 2002 and 2007, it is located on nearly 31 acres in the Meridian Business Center, which has direct access to the region’s light rail system.

CH2M Hill, a global full-service engineering, construction and operations firm, will pay $10 million in annual rent, according to the SEC document. The firm will occupy the entire four-building complex in the net-lease transaction that covers 10 years. CH2M Hill has the right to extend the lease for two periods of five or 10 years each, the SEC filing noted.

( The SEC filing states that the ten year $138.5 million ($290/sf) sale leaseback was done at a 7.25% cap with 1.75% annual bumps starting at $21.00/sf NNN.) Sphere: Related Content

Thursday, September 27, 2007

Bell Canada Enters C$125 Million Build-to-Suit Agreement for Ontario Office Tower

H&R REIT Web Site - September 25, 2007

H&R Real Estate Investment Trust (TSX: HR.UN) announced that it has exercised its purchase option for the Phase III expansion of Bell Canada’s office complex in Mississauga, Ontario. The REIT will fund the construction of the 348,000 square foot, state-of-the-art building, which is expected to be completed in the summer of 2009. The estimated total construction cost is $125 million and the project will generate an un-levered return of 7.6%.

H&R President and CEO Tom Hofstedter added, “We are pleased to continue our development program with Bell Canada. We completed construction of the first, 525,000 square foot phase of this office complex in 2002 and the second phase of 249,000 square feet in 2004. In keeping with our strategy of leasing premises to creditworthy tenants on a long-term basis, the Phase III expansion will have a 20-year lease, as was the case in the first two phases.” Sphere: Related Content

Atlas Cold Storage Completes C$215 Million Sale Leaseback of 12 Rrefrigerated Distribution Facilities in Canada

H&R REIT Web Site - September 25, 2007

H&R Real Estate Investment Trust (TSX: HR.UN) (“H&R”) announced that it has acquired a portfolio of 12 refrigerated distribution facilities in six provinces totaling 1.7 million square feet, for approximately $215 million. The cold storage properties will be leased for a weighted average term of 19.3 years to Eimskip Atlas Canada Inc. The leases will be indemnified by hf Eimskipafelag Islands - an Icelandic, publicly listed company with a market cap of over USD$1 billion, and the largest North American refrigerated warehouse company.

H&R President and CEO Tom Hofstedter said, “This transaction will be highly accretive to the REIT. We have secured $161 million of first mortgage financing for a term of 10 years at an interest rate of 5.66% per annum. The REIT’s levered return on equity invested is expected to be in excess of 12%. Moreover, the acquisition of this nationwide portfolio further diversifies H&R’s income by type of asset and by geographic region.” Sphere: Related Content

Monday, September 24, 2007

Mitchells & Butlers Halts £4.5 Billion Sale Leaseback Deal

The Guardian - September 18, 2007

Annual profits at Mitchells & Butlers, Britain's biggest pub operator, are to be almost entirely wiped out by a £200m accounting charge relating to a property deal wrecked by recent turmoil in the debt markets.

Early last month M&B took out hedges against long-term interest rate rises and long-term deflation, in the final stages of negotiations on the debt-financed property deal. The hedges were put in place in order to secure the most favourable terms for debt raising. But just as the deal was to be signed - creating a £4.5bn property joint venture with real estate entrepreneur Robert Tchenguiz - the debt markets ground to a halt and the project collapsed.

M&B said the timing of the credit crisis left the company without a property deal but saddled with related hedges that would translate into huge losses if closed out. Nigel Parson, an analyst at Evolution Securities, noted that the accounting loss was not a cash loss, and there was little likelihood of M&B being under pressure to close out the position for some time. "The 'mark-to-market' discipline will serve as an ongoing reminder to the market of how close M&B got to its deal and how savage the debt crisis is/was."

M&B reiterated its determination to resurrect the property joint venture once the debt markets stabilised. "The board continues to believe that substantial value can be released to shareholders through the creation ... of a dedicated property company structure and discussions are continuing with banks to implement a transaction on acceptable financing terms."

M&B announced in May that it planned a property joint venture with Mr Tchenguiz's investment vehicle, R20, to which it would sell and lease back about 1,300 pubs. The collapsed deal would have seen M&B and R20 each inject about £300m of equity into the property company, which would borrow the remaining £4bn required to acquire M&B's 1,300 pubs. Sphere: Related Content

HSBC Completes €138 Million Sale Leaseback of London Office Building

Europe Real Estate - September 21, 2007

PRUPIM has acquired 62 Park Street, the prominent HSBC office building located on the River Thames next to Tate Modern, in a £103.25-million (c. €138m) sale-and-lease-back deal. The building, which has been let back to HSBC Bank plc for a further 20 years on an annually indexed lease, comprises more than 160,000 ft² of newly refurbished office accommodation, which is set over six floors. PRUPIM purchased the building on behalf of one of its annuity funds, Prudential Retirement Income Limited, for an initial yield of 4.72%.

62 Park Street is a highly recognizable building on the south side of the River Thames surrounded by a number of landmarks including Tate Modern, The Millennium Bridge, The Globe Theatre and Borough Market.

Southwark has become an increasingly prominent office location as a consequence of the recent improvements to the Jubilee Line underground service, now connecting Bond Street to the west and Canary Wharf to the east.

Catella acted for PRUPIM and CBRE acted for HSBC Bank plc. Sphere: Related Content

Sainsbury Seeking £200 Million Sale Leaseback of Four Distribution Centers in UK

Property Week - September 21, 2007

Sainsbury’s is considering a £200m sale and leaseback of its distribution sheds. The retailer has approached six parties to see if they are interested in four regional distribution centres in the Midlands and the north of England. However, the credit crunch and the low 5% yield could put off bidders, although the 20-year leases could be attractive.

A source close to the deal said: "The people who could be interested in this are finding it difficult to raise money. But the sites are good, and long leases to Sainsbury’s make it more tempting." The parties are a mix of equity-rich and debt-driven buyers. There is no deadline. Sainsbury’s is keen to offload the sites so it can focus on running its supply chain.

Cushman & Wakefield is advising Sainsbury’s Sphere: Related Content

Saturday, September 22, 2007

Old National Bank Agrees to $99.7 Million Sale leaseback of 25 Bank Branches

SEC Edgar Database - September 19, 2007

Old National Bank and ONB Insurance Group, Inc. (collectively, “Old National”), subsidiaries of Old National Bancorp (the “Company”), entered into a Purchase and Sale Agreement, dated September 19, 2007, to sell a portfolio of 25 of its banking properties and one insurance property (collectively, the “Properties”) to five limited liability companies (collectively, the “Buyers”). SunTrust Equity Funding, LLC is the sole member of each Buyer. The closing of the sale of the Properties occurred on September 19, 2007 contemporaneously with the execution and delivery of the Purchase and Sale Agreement.

Old National has entered into five lease agreements, each dated September 19, 2007 (the “Lease Agreements”), with the Buyers, whereby Old National has agreed to lease each of the Properties back from the Buyers for terms expiring September 30, 2031. Under each of the Lease Agreements, Old National has the right at its option to extend the term of the lease for four additional successive terms of five years each, upon specified terms and conditions. Old National is obligated to pay (on a monthly basis) aggregate base rents for the Properties in the aggregate annual amount of $9.0 million (i.e. a 9.0% cap rate) to the Buyers under the Lease Agreements through September 30, 2027; no rent is payable for the final four years of the initial 24-year term. For financial reporting purposes, the rents will be expensed ratably over the 24-year term at an annual rate of $7.5 million.

The Company anticipates that it will enter into a similar sale/leaseback transaction with SunTrust Equity Funding LLC in the fourth quarter of 2007 relating to approximately one trust property and 57 of its banking properties. Sphere: Related Content

Wednesday, September 19, 2007

Canadian National Railway Company Agrees to C$355 Sale Leaseback of HQ & Central Station Complex in Montreal

Canadian National Railway Web Site - September 19, 2007

Canadian National Railway Company and Homburg Invest Inc. announced today that they have reached an agreement under which Homburg Invest will purchase the Central Station Complex (CSC) in Montreal and CN will leaseback its corporate headquarters building and Central Station railway passenger facilities for C$355 million. The transaction is expected to close by yearend.

Under the agreement, CN will lease back its 17-storey office headquarters building and Central Station railway passenger facilities on a long-term basis. Central Station includes the Grand Hall, train platforms and portions of the sub-track level. The property also has the potential for up to one million square feet of additional development.

Brookfield Financial acted as the exclusive advisor to CN in the transaction. Sphere: Related Content

Monday, September 17, 2007

Jacobs Engineering HQ in Calgary Sold for €96 Million

Germany Real Estate - September 14, 2007:

The KanAm grundinvest Fonds has invested in Canada for the first time. The fund has acquired the Jacobs Building in Calgary which is currently under development. The building is situated in the Quarry Park area, which is being realized to the southeast of the city. After delivery, planned for the summer of 2008, the building with four floors and a basement will offer a total surface area of approximately 32,000 m². A total of 1,528 parking spaces are planned on the more than 90,000-m² site. The building has already been fully leased on a long-term basis to the Jacobs Engineering Group. The total investment costs are approximately CA$150 million (approx. €96 million).

The Jacobs Engineering Group is the second largest supplier of technical services worldwide and has 70 offices with over 40,000 employees in 12 countries. A leasing contract has been signed for a period of 15 years.

The Jacobs Building will be the first office building in Quarry Park. Calgary’s first Lifestyle & Business Park with offices, retail, hotels, industry and housing will be developed in this area. The park can benefit from the excellent available infrastructure via its location next to two important motorways. For 2012, delivery of a Light-Railway connection is planned from the center of Calgary to the international airport.

The decision for the acquisition was taken among other things because of the excellent economic parameters for the location. Alberta is the richest province of Canada. It is leading in comparison to the rest of Canada according to the 2006 statistics in terms of economic growth, job market development, income per capita, population and retail trade growth. Calgary possesses the highest concentration of head offices after Toronto countrywide. Sphere: Related Content

Nomura Nearing £234 Million Sale Leaseback of London HQ

Property Week - September 14, 2007

Propinvest is in advanced talks to buy Japanese bank Nomura’s headquarters in the City of London. Propinvest, which owns properties across central London, is thought to be close to agreeing a sale and leaseback with Japan’s second-largest investment bank.

Nomura instructed Drivers Jonas to put its headquarters at 1 St Martin’s Le Grand near St Paul’s Cathedral on the market in May. The 275,000 sq ft building was marketed at £234m, which would reflect a 4.75% yield. The deal has been structured so that Nomura will take a 15-year leaseback on the building. Nomura will pay £11.75m annually, and the rent will increase by 3% every year.

The details of Maud’s financing of the purchase and the amount of equity he has injected have not been disclosed. There was speculation that the sale was faltering because of the credit crunch, but Nomura is thought to have offered to provide the debt to aid the deal.

Other organisations are considering similar types of transactions where debt is offered by the vendor to secure a deal. Media group Emap’s lending banks have indicated that they could offer a loan to potential buyers to aid the sale of the £1.9bn company.

News that Nomura has completed its sale will be a boon for the City investment market, which has slowed down. Yields have risen by 25 basis points since the beginning of the year. While some purchases are completing, some buildings in the City are still struggling to find buyers. Nomura’s decision to market its headquarters, which is home to 1,500 staff, was driven by its long-term operational strategy for its property portfolio.

It followed other large sale and leasebacks carried out by investment banks, such as Merrill Lynch, which sold its European headquarters in the City to GIC Real Estate in a £480m sale and leaseback. Sphere: Related Content

Tuesday, September 11, 2007

Eircom Agrees to €40 Million Sale Leaseback of Network Management Centre in Dublin

Sunday Business Post - September 9, 2007

Investment firm Quinlan Private has agreed to buy Eircom’s network management centre in Citywest in west Dublin for about €40 million. The wealth management company has agreed a sale and leaseback deal for the premises, and the purchase price equates to a yield of around 4.5 per cent.

Eircom is likely to pay a rent of around €2 million a year for the network management centre which fronts onto the N7 and covers just under 6,900 square metres. There are 280 car-parking spaces which offer long-term redevelopment potential. Eircom has been selling off its property assets in recent years in order to help reduce debt.

Last December, it sold its new headquarters near Heuston Station for more than €190 million. The purchaser of that building was also Quinlan Private. Quinlan Private has more than €10 billion in assets under management. Sphere: Related Content

Saturday, September 08, 2007

Japan Air Lines Arranges $87 Million Sale Leaseback of Hanger Facilities in Japan

JCN Network / Jiji Press - September 5, 2007

Japan Airlines will procure more than 10 billion yen by selling its aircraft hangars in Narita, Haneda and other major Japanese airports by the end of September, JAL officials said Wednesday. The storage facilities will be leased back and the struggling airlines will continue to use them. JAL plans to spend the procured funds to repay interest-bearing debts and improve its financial health. JAL sold its head office building with a similar lease-back contract in 2004. It also sold affiliated hotels while maintaining their operations. Sphere: Related Content

Cartier's Paris HQ Sold for EUR 380 Million

PropertyEU - September 6, 2007

Germany's KanAm Grundinvest Fonds has acquired jeweller Cartier's head office in Paris for EUR 380 mln. The Cité du Retiro complex is located near the Élysée palace and provides some 21,000 m2 of space, distributed across four connected buildings on seven storeys. The German investment company declined to disclose the yield.

The building was bought by Cartier in 2002 and has since been extensively renovated. The complex has an underground parking lot as well as 260 parking spaces. It is entirely let to Cartier through 2014, with an option to extend. KanAm Grundinvest Fonds said the complex, which houses the company's international head office, was bought in an off-market transaction. Sphere: Related Content

Friday, September 07, 2007

Tiffany Completes $328 Million Sale Leaseback of Tokyo Store

Bloomberg - September 5, 2007

Tiffany & Co., the jewelry retailer, may sell the chain's main London store after divesting its principal location in Tokyo.

"We have been talking about doing that for some time," Chief Financial Officer James Fernandez said today at a Goldman Sachs Group Inc. conference in New York. "It is reasonable to expect that this is happening sometime soon."

Billionaire Nelson Peltz, who owns a 5 percent stake in Tiffany, has urged the retailer to boost profit. Besides selling and leasing back its Tokyo store, Tiffany has agreed to sell its Little Switzerland Caribbean jewelry chain, raised its dividend for a second time this year and plans to distribute watches through other retailers starting in 2008.

The Tokyo store, in the Ginza district, was sold to Goldman Sachs for $328 million. That sale will result in an after-tax gain of 47 cents a share in the third quarter, while the store will be leased for 15 to 25 years, New York-based Tiffany said Aug. 30. Tiffany purchased the property in 2003 for approximately $140 million.

Tiffany shares have increased 29 percent this year. The world's second-largest luxury-jeweler, Tiffany has 172 stores and boutiques worldwide. Piaget watchmaker Cie. Financiere Richemont SA of Geneva, Switzerland, is the world's biggest seller of luxury jewelry. Sphere: Related Content

Thames Water Completes £43 Million Sale Leaseback of UK Headquarters

Evening Post - September 5, 2007

Thames Water, the UK’s biggest water company, has agreed to a £43 million sale leaseback of it's landmark circular headquarters building on the banks of the River Thames. It is the first of a series of sales expected as Thames Water – under new ownership – carries out a review of all its Reading offices.

But the company is staying put at Clearwater Court, leasing back the building for £2 million a year on a 25-year lease. It is now owned by Standard Life Investment Funds Limited and estate agent Strutt & Parker acted for Thames Water.

The crescent-shaped concrete building with twin glass-clad spiral stairways has been the headquarters of Thames Water for the past seven years. It has 8,273.5 sq m of luxurious office accommodation with a central courtyard overlooking the river on Reading Bridge.

Strutt & Parker to dispose of the freehold of all our Reading offices with a long term lease back arrangement for Clearwater Court and other properties.” Thames Water has 4,000 employees and 13 million customers across London and the South East. It owns 20,000 acres over 5,000 sites. Sphere: Related Content

Sunday, September 02, 2007

Carrefour to Sell 20% of Property Unit

New York Times - August 30, 2007

Carrefour, the French supermarket chain and the world’s second-biggest retailer, said Thursday that it planned to sell part of its real estate portfolio in an initial public offering, bowing to pressure from investors including the French billionaire Bernard Arnault.

The company will sell a 20 percent stake in its Carrefour property unit next year. The unit owns 280 superstores and 540 smaller supermarkets in Europe — 60 percent of Carrefour’s real estate.

More than five months ago, Mr. Arnault, the richest man in France and chairman of the fashion house Christian Dior, teamed up with Colony Capital, an American real estate investment firm, to acquire almost 10 percent of Carrefour, with an eye toward its real estate, valued at 24 billion euros (nearly $33 billion).

Carrefour, which is surpassed among retailers only by Wal-Mart, said Thursday that it expected the sale to raise about 3 billion euros ($4.1 billion). Combined with proceeds from divestments of stores in Portugal, Switzerland and other countries, it will help Carrefour buy back as much as 4.5 billion euros’ ($6.13 billion) worth of its own stock.

“It creates value for shareholders and it makes sense,” said Alexandre Iatrides, an analyst at Richelieu Finance in Paris. “Carrefour at the beginning didn’t like it, but more and more distribution companies are selling their real estate.” Sphere: Related Content

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