Standard & Poor's - June 26, 2009
Standard & Poor's Ratings Services today assigned its BBB+ rating to CVS Caremark’s $478.8 million 8.353% pass-through certificates due 2031. The certificates are secured by mortgage loans totaling approximately $478.8 million, encompassing 122 drug stores leased to subsidiaries of CVS Caremark Corp. (BBB+).
The rating reflects the credit quality of CVS Caremark Corp., which unconditionally guarantees the tenant's lease obligations. The transaction was evaluated as a credit-tenant loan and is dependent on the credit rating on CVS Caremark Corp. Any change in the rating on CVS Caremark Corp. will result in a change in the rating on the pass-through certificates.
Sphere: Related Content
Monday, June 29, 2009
Friday, June 26, 2009
WP Carey Mulls Sharia Compliant Sale Leaseback Fund
Reuters - June 23, 2009
U.S. real estate financing company W.P. Carey (WPC.N: Quote, Profile, Research, Stock Buzz) is mulling a plan to launch an Islamic compliant fund, a plan first spawned in 1997, as part of its global fundraising efforts, its president said on Tuesday.
Edward LaPuma told the Reuters Global Real Estate Summit the company had set up an Islamic-compliant fund in the late 1990s, which had attracted interest in the Middle East. The company eventually abandoned the launch because the amount of money committed outweighed the opportunities available in the market at that time, LaPuma said. However, as the volume of exciting deals carved out of the deep property market correction continues to grow, LaPuma said a new fund launch was now a much more appealing prospect.
"I think there is a possibility (to launch the fund), and the possibility is better than 50-50," he said. The firm, which has about $600 million in cash, is looking to raise $1 billion to fully exploit a wealth of new market opportunities. Inflows from U.S. investors remain healthy, but the firm is keen to broaden its capital base, LaPuma said, and bolster the $2 million to $3 million generated each day from wealth management companies.
Islamic finance avoids sectors such as alcohol, pornography and weapons, which it regards as forbidden. It also rules out unnecessary risk-taking and demands low leverage. W.P. Carey's business model, which specializes in sale and lease-back activities, potentially conforms to the Islamic principle that demands business transactions be backed or based by tangible assets, such as real estate.
The fund idea proposed in 1997 would have deployed the investors' cash in the U.S., although a new fund would deploy cash in other countries, LaPuma said.
"The Middle East is an area we would like to be, governments are solvent and companies there are very financially stable companies. So for our business are a lot of opportunities," he said. W.P. Carey, however, would be selective in its acquisitions. "The Middle East seems to be getting lumped together as a group, which does a disservice to the region because there certainly are areas that would be much more interesting than ours.
"One thing I have on my agenda is to spend more time trying to understand those various markets and being able to drill down to country level," LaPuma said. Sphere: Related Content
U.S. real estate financing company W.P. Carey (WPC.N: Quote, Profile, Research, Stock Buzz) is mulling a plan to launch an Islamic compliant fund, a plan first spawned in 1997, as part of its global fundraising efforts, its president said on Tuesday.
Edward LaPuma told the Reuters Global Real Estate Summit the company had set up an Islamic-compliant fund in the late 1990s, which had attracted interest in the Middle East. The company eventually abandoned the launch because the amount of money committed outweighed the opportunities available in the market at that time, LaPuma said. However, as the volume of exciting deals carved out of the deep property market correction continues to grow, LaPuma said a new fund launch was now a much more appealing prospect.
"I think there is a possibility (to launch the fund), and the possibility is better than 50-50," he said. The firm, which has about $600 million in cash, is looking to raise $1 billion to fully exploit a wealth of new market opportunities. Inflows from U.S. investors remain healthy, but the firm is keen to broaden its capital base, LaPuma said, and bolster the $2 million to $3 million generated each day from wealth management companies.
Islamic finance avoids sectors such as alcohol, pornography and weapons, which it regards as forbidden. It also rules out unnecessary risk-taking and demands low leverage. W.P. Carey's business model, which specializes in sale and lease-back activities, potentially conforms to the Islamic principle that demands business transactions be backed or based by tangible assets, such as real estate.
The fund idea proposed in 1997 would have deployed the investors' cash in the U.S., although a new fund would deploy cash in other countries, LaPuma said.
"The Middle East is an area we would like to be, governments are solvent and companies there are very financially stable companies. So for our business are a lot of opportunities," he said. W.P. Carey, however, would be selective in its acquisitions. "The Middle East seems to be getting lumped together as a group, which does a disservice to the region because there certainly are areas that would be much more interesting than ours.
"One thing I have on my agenda is to spend more time trying to understand those various markets and being able to drill down to country level," LaPuma said. Sphere: Related Content
WP Carey Seeks to Raise $1 Billion to Pursue Sale Leaseback Deals in Europe and Emerging Markets Worldwide
Reuters - June 23, 2009
U.S. real estate financing firm W.P. Carey (WPC.N: Quote, Profile, Research, Stock Buzz) is looking to raise $1 billion of capital to fund its expansion into European and emerging property markets, its president and international transactions head told Reuters.
"We have many more opportunities outside the U.S. ... I would like to see us do $500 million of deals in Europe in 2009 and that is very realistic," Edward LaPuma told the Reuters Global Real Estate Summit on Tuesday.
"I'd like to do $1 billion but we're doing a lot of all-equity deals at the moment and that really puts a ceiling on things," he said, adding the firm has about $600 million of cash on deposit.
The fundraising plans represent the firm's first active cash call since 2006-2007, when it stopped seeing investment opportunities that were worth splashing out on.
LaPuma said the plans were devised to fully exploit an impending $10 billion to $12 billion wave of real estate disposals from European corporate occupiers, who were considering cashing out of their property as traditional sources of capital dried up.
"I don't know how many large principals shut down fundraising in those years, but if you didn't you had to put the money to work and a lot of deals were done in that period that didn't make a lot of sense," LaPuma said.
"But in today's market, we are seeing more deals than I have seen in the last 15 years. Companies are really being forced to consider financing alternatives," he said. The "sale-and-leaseback" specialist, which in March sealed a $225 million deal to buy and lease back part of the Manhattan headquarters of the New York Times newspaper (NYT.N: Quote, Profile, Research, Stock Buzz), is also scouting opportunities in Brazil, the Middle East, India and China, where LaPuma hoped to conclude the firm's debut deal soon.
"We have been trying to do a deal there (in China) for some time but it is complicated. More people who go there lose money than make money," he said.
"Before the end of the year we will target a few other places we want to be in," LaPuma added, citing Southeast Asia as another particular region of interest.
WP Carey, which has offices in New York, Amsterdam, London and Shanghai, recently closed a $25 million deal in Malaysia, will finalize a $30 million deal in London and a $100 million deal in Hungary in the next week, LaPuma said.
PORTFOLIO SHIFT
The firm, which holds 70 percent of its $10 billion to $11 billion portfolio in the United States, expects its exposure to Europe and emerging markets to rise to 50 percent from 30 percent in the future.
In the meantime, LaPuma said the team was striving to deflect losses inflicted by the biggest banking and property sector meltdowns seen for generations in its core U.S. market.
"We take on corporate credit risk, and as companies are having a more difficult time, we have seen our corporate default risk increase by probably around 400 percent since the beginning of last year," LaPuma said.
"But we have done a good job to manage this, we still have a vacancy rate of around 1 percent across all our funds," he said.
LaPuma said he expected a slow recovery for the U.S. commercial real estate market, largely because of the colossal burden of real estate mortgages weighing on bank balance sheets.
"The last real estate bubble was really developer driven and then they didn't have users for the property. This time there are users for the property, but people paid too much," he said.
"I think you're probably less than halfway through (the U.S. slump) but I don't think it will get a lot worse, I just don't think the recovery will come that quickly." Sphere: Related Content
U.S. real estate financing firm W.P. Carey (WPC.N: Quote, Profile, Research, Stock Buzz) is looking to raise $1 billion of capital to fund its expansion into European and emerging property markets, its president and international transactions head told Reuters.
"We have many more opportunities outside the U.S. ... I would like to see us do $500 million of deals in Europe in 2009 and that is very realistic," Edward LaPuma told the Reuters Global Real Estate Summit on Tuesday.
"I'd like to do $1 billion but we're doing a lot of all-equity deals at the moment and that really puts a ceiling on things," he said, adding the firm has about $600 million of cash on deposit.
The fundraising plans represent the firm's first active cash call since 2006-2007, when it stopped seeing investment opportunities that were worth splashing out on.
LaPuma said the plans were devised to fully exploit an impending $10 billion to $12 billion wave of real estate disposals from European corporate occupiers, who were considering cashing out of their property as traditional sources of capital dried up.
"I don't know how many large principals shut down fundraising in those years, but if you didn't you had to put the money to work and a lot of deals were done in that period that didn't make a lot of sense," LaPuma said.
"But in today's market, we are seeing more deals than I have seen in the last 15 years. Companies are really being forced to consider financing alternatives," he said. The "sale-and-leaseback" specialist, which in March sealed a $225 million deal to buy and lease back part of the Manhattan headquarters of the New York Times newspaper (NYT.N: Quote, Profile, Research, Stock Buzz), is also scouting opportunities in Brazil, the Middle East, India and China, where LaPuma hoped to conclude the firm's debut deal soon.
"We have been trying to do a deal there (in China) for some time but it is complicated. More people who go there lose money than make money," he said.
"Before the end of the year we will target a few other places we want to be in," LaPuma added, citing Southeast Asia as another particular region of interest.
WP Carey, which has offices in New York, Amsterdam, London and Shanghai, recently closed a $25 million deal in Malaysia, will finalize a $30 million deal in London and a $100 million deal in Hungary in the next week, LaPuma said.
PORTFOLIO SHIFT
The firm, which holds 70 percent of its $10 billion to $11 billion portfolio in the United States, expects its exposure to Europe and emerging markets to rise to 50 percent from 30 percent in the future.
In the meantime, LaPuma said the team was striving to deflect losses inflicted by the biggest banking and property sector meltdowns seen for generations in its core U.S. market.
"We take on corporate credit risk, and as companies are having a more difficult time, we have seen our corporate default risk increase by probably around 400 percent since the beginning of last year," LaPuma said.
"But we have done a good job to manage this, we still have a vacancy rate of around 1 percent across all our funds," he said.
LaPuma said he expected a slow recovery for the U.S. commercial real estate market, largely because of the colossal burden of real estate mortgages weighing on bank balance sheets.
"The last real estate bubble was really developer driven and then they didn't have users for the property. This time there are users for the property, but people paid too much," he said.
"I think you're probably less than halfway through (the U.S. slump) but I don't think it will get a lot worse, I just don't think the recovery will come that quickly." Sphere: Related Content
Monday, June 22, 2009
AIB Seeking EUR 20 Million Sale Leaseback of Seven Bank Branches in Ireland
Independent - June 17, 2009
AIB is seeking to raise a further €20m from its real estate portfolio through the sale and leaseback of seven prominent branches around the country.
The bank has instructed CB Richard Ellis to sell its branches in Swords, Navan, Dundalk, Monaghan, Kells, Castleblaney and Maynooth on a sale and leaseback basis.
AIB has unlocked over €1bn in shareholder equity for its core business activities since the sale of AIB Bankcentre in Ballsbridge in 2005/2006 and it has sold 40 branches.
The latest tranche follows on from the recent sale of three branches in Dublin, Naas and Mullingar. All the branches will have 20 year leases with AIB and a break option in year 15. The initial rents will be subject to upward only reviews at five year intervals.
"Since the programme started yields have moved out significantly," Colm Luddy of CBRE comments.
Demand
"However, demand in the investment market is for long leases to strong covenants and these investments will offer investors good value and very secure income."
The Navan AIB premises is expected to make €5m and off a rent of €335,000 will yield 6.5pc. The Dundalk branch will be rented at €239,000 and is valued at €3.4m again yielding 6.5pc.
Swords is expected to make €3.4m too and off a rent of €248,000 will provide in excess of 6.5pc. Maynooth will have a similar yield off a rent of €235,000 and a €3.33m. price.
The Monaghan branch will be leased at a rent of €200,000 and is expected to sell for in excess of €2.7m yielding in excess of 6.5pc as well.
Castleblaney will have an initial rent of €86,000 and is expected to achieve in excess of €1m, yielding over 7pc. The Kells property will offer a similar yield with a rent of €84,000 and a price in the order of €1m.
Another AIB branch in Cork City has been for sale for some months. Sphere: Related Content
AIB is seeking to raise a further €20m from its real estate portfolio through the sale and leaseback of seven prominent branches around the country.
The bank has instructed CB Richard Ellis to sell its branches in Swords, Navan, Dundalk, Monaghan, Kells, Castleblaney and Maynooth on a sale and leaseback basis.
AIB has unlocked over €1bn in shareholder equity for its core business activities since the sale of AIB Bankcentre in Ballsbridge in 2005/2006 and it has sold 40 branches.
The latest tranche follows on from the recent sale of three branches in Dublin, Naas and Mullingar. All the branches will have 20 year leases with AIB and a break option in year 15. The initial rents will be subject to upward only reviews at five year intervals.
"Since the programme started yields have moved out significantly," Colm Luddy of CBRE comments.
Demand
"However, demand in the investment market is for long leases to strong covenants and these investments will offer investors good value and very secure income."
The Navan AIB premises is expected to make €5m and off a rent of €335,000 will yield 6.5pc. The Dundalk branch will be rented at €239,000 and is valued at €3.4m again yielding 6.5pc.
Swords is expected to make €3.4m too and off a rent of €248,000 will provide in excess of 6.5pc. Maynooth will have a similar yield off a rent of €235,000 and a €3.33m. price.
The Monaghan branch will be leased at a rent of €200,000 and is expected to sell for in excess of €2.7m yielding in excess of 6.5pc as well.
Castleblaney will have an initial rent of €86,000 and is expected to achieve in excess of €1m, yielding over 7pc. The Kells property will offer a similar yield with a rent of €84,000 and a price in the order of €1m.
Another AIB branch in Cork City has been for sale for some months. Sphere: Related Content
Sunday, June 21, 2009
Xerox Seeking Sale Leaseback of US Properties
Democrat and Chronicle - June 19, 2009
Xerox Corp. is looking to sell the 29-story, 850,000-square-foot Xerox Square building on South Clinton Avenue as well as the adjacent auditorium, its Jefferson Road facility in Henrietta and a building at its manufacturing and research campus in Webster.
Xerox hasn't set an asking price for the tower.
The sales represent the latest step in a strategy the company has pursued for two years of shedding excess space and moving into leased facilities.
About 1,500 people work at Xerox Square, a significant part of the company's 7,000-member local work force. Xerox doesn't plan to move the employees from the building but instead is pursuing a lease-back arrangement in which it would rent the building from a new owner, said spokesman Bill McKee.
"There's no intention to leave the Square," McKee said. "Xerox is committed to downtown Rochester."
The auditorium, which is serving as a venue for the Rochester International Jazz Festival, might be sold as part of Xerox Square or separately, McKee said. Along with the purchase of Xerox Square comes its underground parking garage.
Lease-back arrangements are common in corporate real estate. Companies typically decide that the money they get from the sale can provide a higher return than the added cost of having a landlord, said Larry Glazer, CEO of Rochester-based real estate development company Buckingham Properties.
"It gives them working capital to pay off debt or invest in and grow the company," said Glazer, who isn't involved in the current sales.
Xerox in 2007 sold its headquarters building in Stamford, Conn., and moved to leased space in nearby Norwalk. And in the past year it moved operations in Paris and Mexico City to leased facilities and relocated about 200 workers from leased space at Linden Oaks Office Park to Xerox Square.
Brokering the downtown sale is real estate giant Cushman & Wakefield, based in New York City. Xerox is handling the sale of the 440,000-square-foot Henrietta facility and Building 205 at the Webster campus.
The Jefferson Road site houses 1,250 workers and is used primarily for engineering work. Those workers likely would be moved to the Webster campus, McKee said.
Building 205 in Webster contains office space. Work done there would be moved to other Xerox properties. Sphere: Related Content
Xerox Corp. is looking to sell the 29-story, 850,000-square-foot Xerox Square building on South Clinton Avenue as well as the adjacent auditorium, its Jefferson Road facility in Henrietta and a building at its manufacturing and research campus in Webster.
Xerox hasn't set an asking price for the tower.
The sales represent the latest step in a strategy the company has pursued for two years of shedding excess space and moving into leased facilities.
About 1,500 people work at Xerox Square, a significant part of the company's 7,000-member local work force. Xerox doesn't plan to move the employees from the building but instead is pursuing a lease-back arrangement in which it would rent the building from a new owner, said spokesman Bill McKee.
"There's no intention to leave the Square," McKee said. "Xerox is committed to downtown Rochester."
The auditorium, which is serving as a venue for the Rochester International Jazz Festival, might be sold as part of Xerox Square or separately, McKee said. Along with the purchase of Xerox Square comes its underground parking garage.
Lease-back arrangements are common in corporate real estate. Companies typically decide that the money they get from the sale can provide a higher return than the added cost of having a landlord, said Larry Glazer, CEO of Rochester-based real estate development company Buckingham Properties.
"It gives them working capital to pay off debt or invest in and grow the company," said Glazer, who isn't involved in the current sales.
Xerox in 2007 sold its headquarters building in Stamford, Conn., and moved to leased space in nearby Norwalk. And in the past year it moved operations in Paris and Mexico City to leased facilities and relocated about 200 workers from leased space at Linden Oaks Office Park to Xerox Square.
Brokering the downtown sale is real estate giant Cushman & Wakefield, based in New York City. Xerox is handling the sale of the 440,000-square-foot Henrietta facility and Building 205 at the Webster campus.
The Jefferson Road site houses 1,250 workers and is used primarily for engineering work. Those workers likely would be moved to the Webster campus, McKee said.
Building 205 in Webster contains office space. Work done there would be moved to other Xerox properties. Sphere: Related Content
Saturday, June 20, 2009
Rising Public Debt Encouraging Sales of Government Property Assets
CB Richard Ellis EU Web Site - June 18, 2009
Rising public debt levels in response to the global banking crisis and recession appear to be encouraging a new wave of government property sales across Europe, according to new research from CB Richard Ellis (CBRE). CBRE has today released a new report, Governments Turn to Property Sales?, which considers the scope for sales of government property and reviews asset disposal plans in a number of major markets including France, Germany, Greece and the UK.
The report follows the announcement by the UK Government that it is to sell up to £20 billion of commercial property and related assets during the next 10 years while generating a further £5 billion in annual operating cost savings. With other governments also developing similar plans, the report analyses the investor appeal of such assets in the current market and considers the potential for these dispositions to become a more powerful global trend in the coming 12 months.
Nick Axford, Head of EMEA Research and Consulting, CBRE, said: “Most governments across the world are seeing a deterioration in public finances as they battle with the impact of the recession and the banking crisis. Many governments are running large deficits and incurring debt to finance bank and other company bailouts. With concerns being expressed about the depth of investor appetite for government bonds, selling off real estate could be a means of raising much needed capital.”
John Wilson, Head of Corporate Strategies, CB Richard Ellis, said: “Without a doubt, the global recession has had an acute effect on governments, as tax receipts have fallen but spending on stimulus plans, social welfare and bailouts has sky-rocketed. With investor demand for vacant property currently more limited and prices at low levels relative to historic norms, sales of surplus property could be harder to achieve. Yet sale and leasebacks of good quality occupied stock could be attractive to investors whilst also raising substantial amounts for governments.”
The volume of government property sales has risen rapidly in recent years. Almost €16 billion of government property was sold from 2006-08 across Europe. This compares to almost €4 billion sold from 2003-05. Current financial conditions are expected to continue to drive this trend.
This approach by governments recognises the fact that overall investor appetite for sale and leasebacks has been growing. In 2004, the European sale and leaseback market totalled just €6.7 billion largely through a small number of large deals. By 2007 that total had risen to €46 billion and comprised more than 670 separate transactions, boosting the proportion of occupier real estate disposals in the European investment market (including government and corporate sales) to nearly 20 per cent in 2007 compared to 6 per cent in 2004. Part of this growth was due to rising property values. However, in 2008 - a year of significantly reduced investment turnover and a fall of around 13 per cent in average commercial property values - sale and leasebacks still totalled over €22 billion and maintained a 19 per cent share of the total European investment market.
Mr. Wilson continued: “The current financial climate may actually enhance the opportunity for governments to sell and leaseback assets. With active investors remaining highly risk-averse and with demand focused on prime property in liquid transparent markets, public authorities are often the ideal candidate to offer long, secure income streams from quality covenants. Reduced stock in the market provides further opportunity to convert these assets at the moment. For investors who fear the prospect of rising government bond yields and/or a higher level of inflation in the years ahead, a building let to the state on a long lease has attributes similar to index-linked government bond, with the benefit of owning a real asset at the end of the lease.
Sale and leasebacks only form one part of any government’s strategy. Attention will be focussed not only on operational office space, but also on infrastructure and public service facilities such as schools, hospitals and student accommodation. Investment appetite for these public investment opportunities is mixed. In the current environment, many active investors are focusing on the quality of tenants and length and security of income streams above all other considerations. From this perspective, state sale and leasebacks may be viewed relatively favourably by the market. Other investors are more cautious of government-backed assets that will have less arbitrage over time being a less volatile investment.
“The longer the recession holds across Europe, the more we will see government assets being offered to the market to help bolster public finances,” Mr. Wilson concluded. Sphere: Related Content
Rising public debt levels in response to the global banking crisis and recession appear to be encouraging a new wave of government property sales across Europe, according to new research from CB Richard Ellis (CBRE). CBRE has today released a new report, Governments Turn to Property Sales?, which considers the scope for sales of government property and reviews asset disposal plans in a number of major markets including France, Germany, Greece and the UK.
The report follows the announcement by the UK Government that it is to sell up to £20 billion of commercial property and related assets during the next 10 years while generating a further £5 billion in annual operating cost savings. With other governments also developing similar plans, the report analyses the investor appeal of such assets in the current market and considers the potential for these dispositions to become a more powerful global trend in the coming 12 months.
Nick Axford, Head of EMEA Research and Consulting, CBRE, said: “Most governments across the world are seeing a deterioration in public finances as they battle with the impact of the recession and the banking crisis. Many governments are running large deficits and incurring debt to finance bank and other company bailouts. With concerns being expressed about the depth of investor appetite for government bonds, selling off real estate could be a means of raising much needed capital.”
John Wilson, Head of Corporate Strategies, CB Richard Ellis, said: “Without a doubt, the global recession has had an acute effect on governments, as tax receipts have fallen but spending on stimulus plans, social welfare and bailouts has sky-rocketed. With investor demand for vacant property currently more limited and prices at low levels relative to historic norms, sales of surplus property could be harder to achieve. Yet sale and leasebacks of good quality occupied stock could be attractive to investors whilst also raising substantial amounts for governments.”
The volume of government property sales has risen rapidly in recent years. Almost €16 billion of government property was sold from 2006-08 across Europe. This compares to almost €4 billion sold from 2003-05. Current financial conditions are expected to continue to drive this trend.
This approach by governments recognises the fact that overall investor appetite for sale and leasebacks has been growing. In 2004, the European sale and leaseback market totalled just €6.7 billion largely through a small number of large deals. By 2007 that total had risen to €46 billion and comprised more than 670 separate transactions, boosting the proportion of occupier real estate disposals in the European investment market (including government and corporate sales) to nearly 20 per cent in 2007 compared to 6 per cent in 2004. Part of this growth was due to rising property values. However, in 2008 - a year of significantly reduced investment turnover and a fall of around 13 per cent in average commercial property values - sale and leasebacks still totalled over €22 billion and maintained a 19 per cent share of the total European investment market.
Mr. Wilson continued: “The current financial climate may actually enhance the opportunity for governments to sell and leaseback assets. With active investors remaining highly risk-averse and with demand focused on prime property in liquid transparent markets, public authorities are often the ideal candidate to offer long, secure income streams from quality covenants. Reduced stock in the market provides further opportunity to convert these assets at the moment. For investors who fear the prospect of rising government bond yields and/or a higher level of inflation in the years ahead, a building let to the state on a long lease has attributes similar to index-linked government bond, with the benefit of owning a real asset at the end of the lease.
Sale and leasebacks only form one part of any government’s strategy. Attention will be focussed not only on operational office space, but also on infrastructure and public service facilities such as schools, hospitals and student accommodation. Investment appetite for these public investment opportunities is mixed. In the current environment, many active investors are focusing on the quality of tenants and length and security of income streams above all other considerations. From this perspective, state sale and leasebacks may be viewed relatively favourably by the market. Other investors are more cautious of government-backed assets that will have less arbitrage over time being a less volatile investment.
“The longer the recession holds across Europe, the more we will see government assets being offered to the market to help bolster public finances,” Mr. Wilson concluded. Sphere: Related Content
Friday, June 19, 2009
Tesco Completes £458 Million Sale Leaseback: Deal Financed by First European CMBS in Two Years
Property Week - June 17, 2009
Tesco has sold £458m of its properties, financed by the first property securitisation for two years.
The supermarket giant has carried out a £458m sale-and-leaseback transaction as part of its £5bn programme of property disposals that it began in 2006.
Arranged by Goldman Sachs, the issue represents a ‘true-sale securitisation’ of two loans, secured by 12 supermarkets and two distribution properties let on long-term leases guaranteed by Tesco. Rental uplifts are fixed at 2.5-5% for the first five years and are RPI-linked afterwards.
The sale of £430.65m of commercial mortgaged back securities (CMBS), issued by a special purpose vehicle Tesco Property Finance 1, was three times oversubscribed.
Investors were 85% from the UK and 15% from continental Europe and Asia. 85% of the investors were from the pension, insurance and asset management world and 10% were banks, including private banks.
Tesco had so far completed about £2.2bn of sale and leasebacks.
The bonds are fully credit-linked to Tesco’s corporate rating, which is currently A-. They will amortise fully by their 30-year maturity, leaving no residual risk to investors. Sphere: Related Content
Tesco has sold £458m of its properties, financed by the first property securitisation for two years.
The supermarket giant has carried out a £458m sale-and-leaseback transaction as part of its £5bn programme of property disposals that it began in 2006.
Arranged by Goldman Sachs, the issue represents a ‘true-sale securitisation’ of two loans, secured by 12 supermarkets and two distribution properties let on long-term leases guaranteed by Tesco. Rental uplifts are fixed at 2.5-5% for the first five years and are RPI-linked afterwards.
The sale of £430.65m of commercial mortgaged back securities (CMBS), issued by a special purpose vehicle Tesco Property Finance 1, was three times oversubscribed.
Investors were 85% from the UK and 15% from continental Europe and Asia. 85% of the investors were from the pension, insurance and asset management world and 10% were banks, including private banks.
Tesco had so far completed about £2.2bn of sale and leasebacks.
The bonds are fully credit-linked to Tesco’s corporate rating, which is currently A-. They will amortise fully by their 30-year maturity, leaving no residual risk to investors. Sphere: Related Content
Wednesday, June 17, 2009
Claire's Seeking $21 Million Sale Leaseback of HQ in Suburban Chicago
Crain's Chicago Real Estate Daily - June 15, 2009
Teen jewelry and accessories retailer Claire’s Stores Inc. is offering a sale/leaseback of its corporate headquarters and U.S. distribution center in Hoffman Estates.
The 527,661-square-foot building near the intersection of Interstate 90 and Barrington Road has an asking price of $21.1 million, and Claire’s would enter into a 15-year lease with annual rent of $2.1 million, according to a marketing flier by CB Richard Ellis Inc.
“We’re not in the real estate business, so we’re exploring this,” says J. Per Brodin, the company’s chief financial officer. “If we can get this done with attractive economics, it’s something we’d consider. If we can’t with economic terms that we think are attractive, we won’t do it.”
Sale/leaseback deals are gaining popularity these days as companies look to raise cash by selling real estate to cope with the recession. Mr. Brodin says the company doesn’t own any other big properties.
Real estate executives say investment firms are able to land financing for such deals because they’re seen as less risky than speculative projects or unleased buildings.
In this case, investors would be betting that Claire’s, which was taken private by Apollo Management L.P. in May 2007, will be able to survive the battered retail climate and remain at 2400 W. Central Road. The company’s chief executive, its buyers and other executives are based in the building. About 20% of the property is office, according to CB Richard Ellis' flier.
Claire’s, which has more than 3,000 stores worldwide, with most of those in U.S. malls, had revenue of $1.4 billion last year. The company reported a first-quarter loss this year of $29 million compared with a loss of $35.6 million in the year-ago period.
Marketing of the 28-acre property began last week, says Robert Brennan, a CB Richard Ellis senior vice-president who is handling the assignment. He says they’ve already gotten some interest, despite the moribund investment sales market and frozen capital markets that has made financing hard to come by.
“We think that we should have some success even though there are a lot of headwinds,” Mr. Brennan says. Sphere: Related Content
Teen jewelry and accessories retailer Claire’s Stores Inc. is offering a sale/leaseback of its corporate headquarters and U.S. distribution center in Hoffman Estates.
The 527,661-square-foot building near the intersection of Interstate 90 and Barrington Road has an asking price of $21.1 million, and Claire’s would enter into a 15-year lease with annual rent of $2.1 million, according to a marketing flier by CB Richard Ellis Inc.
“We’re not in the real estate business, so we’re exploring this,” says J. Per Brodin, the company’s chief financial officer. “If we can get this done with attractive economics, it’s something we’d consider. If we can’t with economic terms that we think are attractive, we won’t do it.”
Sale/leaseback deals are gaining popularity these days as companies look to raise cash by selling real estate to cope with the recession. Mr. Brodin says the company doesn’t own any other big properties.
Real estate executives say investment firms are able to land financing for such deals because they’re seen as less risky than speculative projects or unleased buildings.
In this case, investors would be betting that Claire’s, which was taken private by Apollo Management L.P. in May 2007, will be able to survive the battered retail climate and remain at 2400 W. Central Road. The company’s chief executive, its buyers and other executives are based in the building. About 20% of the property is office, according to CB Richard Ellis' flier.
Claire’s, which has more than 3,000 stores worldwide, with most of those in U.S. malls, had revenue of $1.4 billion last year. The company reported a first-quarter loss this year of $29 million compared with a loss of $35.6 million in the year-ago period.
Marketing of the 28-acre property began last week, says Robert Brennan, a CB Richard Ellis senior vice-president who is handling the assignment. He says they’ve already gotten some interest, despite the moribund investment sales market and frozen capital markets that has made financing hard to come by.
“We think that we should have some success even though there are a lot of headwinds,” Mr. Brennan says. Sphere: Related Content
Thursday, June 11, 2009
Lloyds Banking Group Mulls Sale Leaseback of UK Bank Branch Portfolio
Reuters / The Guardian - June 10, 2009
Lloyds Banking Group has hired real estate brokers CB Richard Ellis and Jones Lang LaSalle to review its property estate in a move that could spark a welter of balance-sheet boosting sales.
Lloyds, which on Tuesday said it would shut its Cheltenham & Gloucester unit, has appointed the duo to flush out opportunities for property disposals or sale-and-leasebacks, two people familiar with the situation said on Wednesday.
Lloyds intends to save up to 1.5 billion pounds ($2.46 billion) annually from its takeover of HBOS earlier this year.
CBRE will advise on a possible consolidation of the banks' eight biggest regional offices, including properties in London, Birmingham and Manchester, while Jones Lang LaSalle will focus on unlocking cash from the retail branch network nationwide, the sources said.
The property review is in line with strategy laid out at the time of the HBOS deal, when Lloyds said it would conduct a detailed assessment of its brands and the future size and shape of the combined entity.
Talks between the banks and its new advisors were described by one source as at "a very early stage" and it was not yet possible to say exactly what assets might be sold or estimate how much the lender could raise from a sales programme.
It is not yet known when the first properties could come to market, but some may be offloaded close to the bottom of an intense two-year British real estate market slump to boost the banks' cash reserves before the end of the year.
UK commercial property prices in Britain have fallen by an average of 44 percent since the market peaked in June 2007, data from CBRE shows.
Lloyds said the 164-branch network of Cheltenham & Gloucester, which specialises in mortgages and savings, would be closed in November. Sphere: Related Content
Lloyds Banking Group has hired real estate brokers CB Richard Ellis and Jones Lang LaSalle to review its property estate in a move that could spark a welter of balance-sheet boosting sales.
Lloyds, which on Tuesday said it would shut its Cheltenham & Gloucester unit, has appointed the duo to flush out opportunities for property disposals or sale-and-leasebacks, two people familiar with the situation said on Wednesday.
Lloyds intends to save up to 1.5 billion pounds ($2.46 billion) annually from its takeover of HBOS earlier this year.
CBRE will advise on a possible consolidation of the banks' eight biggest regional offices, including properties in London, Birmingham and Manchester, while Jones Lang LaSalle will focus on unlocking cash from the retail branch network nationwide, the sources said.
The property review is in line with strategy laid out at the time of the HBOS deal, when Lloyds said it would conduct a detailed assessment of its brands and the future size and shape of the combined entity.
Talks between the banks and its new advisors were described by one source as at "a very early stage" and it was not yet possible to say exactly what assets might be sold or estimate how much the lender could raise from a sales programme.
It is not yet known when the first properties could come to market, but some may be offloaded close to the bottom of an intense two-year British real estate market slump to boost the banks' cash reserves before the end of the year.
UK commercial property prices in Britain have fallen by an average of 44 percent since the market peaked in June 2007, data from CBRE shows.
Lloyds said the 164-branch network of Cheltenham & Gloucester, which specialises in mortgages and savings, would be closed in November. Sphere: Related Content
Tuesday, June 09, 2009
Banco Pastor Completes EUR 104 Million Sale Leaseback of Property Portfolio in Spain
PropertyEU - June 7, 2009
Spain's Banco Pastor said it has made a profit of almost EUR 40 mln through the sale of property assets for a total of EUR 104 mln. In a statement to the Spanish market regulator CNMV on Friday, the bank said that 41 office buidlings and bank branches were sold in a sale-and-leaseback transaction to a number of investors. The portfolio includes its main headquarters in Madrid's Paseo de Recoletos and Barcelona's Paseo de Gracia.
The operation is part of a plan announced in March by the bank to raise up to EUR 230 mln via the sale of 160 office assets, out of a total of 650 Banco Pastor owns in the country. The properties will be leased back on a 20-year rental term.
Aguirre Newman is advising the company in the sale process. Sphere: Related Content
Spain's Banco Pastor said it has made a profit of almost EUR 40 mln through the sale of property assets for a total of EUR 104 mln. In a statement to the Spanish market regulator CNMV on Friday, the bank said that 41 office buidlings and bank branches were sold in a sale-and-leaseback transaction to a number of investors. The portfolio includes its main headquarters in Madrid's Paseo de Recoletos and Barcelona's Paseo de Gracia.
The operation is part of a plan announced in March by the bank to raise up to EUR 230 mln via the sale of 160 office assets, out of a total of 650 Banco Pastor owns in the country. The properties will be leased back on a 20-year rental term.
Aguirre Newman is advising the company in the sale process. Sphere: Related Content
Monday, June 08, 2009
Fisher& Paykel Appliances Agrees to $70 Million Sale Leaseback of Auckland Facilities
TVNZ - June 5, 2009
Fisher & Paykel Appliances Ltd has an unconditional agreement to sell and lease back its 14.4ha East Tamaki site and is continuing to market its Cleveland, Brisbane, site.
The site in East Tamaki in Auckland is the company's largest property sale.
The company did not disclose the sale price but market speculation has been around $70 million. The agreement is conditional on due diligence and finance.
The buyer is Direct Property Fund.
The sale and lease back of the campus, covering 14.4ha and over 62,000 sq m of office and manufacturing facilities, is part of the company's global manufacturing strategy.
"We are delighted to be able to reach an agreement suitable to both parties, subject to due diligence and finance," said managing director John Bongard.
The agreement is conditional until August 2009.
Fisher & Paykel Appliances is raising capital and selling assets to reduce debt. It earlier sold its Mosgiel site to Fonterra.
Fonterra plans to build a new 45,000 tonne drystore and a 17,000 tonne coolstore on the former 16.45ha Fisher & Paykel site. Sphere: Related Content
Fisher & Paykel Appliances Ltd has an unconditional agreement to sell and lease back its 14.4ha East Tamaki site and is continuing to market its Cleveland, Brisbane, site.
The site in East Tamaki in Auckland is the company's largest property sale.
The company did not disclose the sale price but market speculation has been around $70 million. The agreement is conditional on due diligence and finance.
The buyer is Direct Property Fund.
The sale and lease back of the campus, covering 14.4ha and over 62,000 sq m of office and manufacturing facilities, is part of the company's global manufacturing strategy.
"We are delighted to be able to reach an agreement suitable to both parties, subject to due diligence and finance," said managing director John Bongard.
The agreement is conditional until August 2009.
Fisher & Paykel Appliances is raising capital and selling assets to reduce debt. It earlier sold its Mosgiel site to Fonterra.
Fonterra plans to build a new 45,000 tonne drystore and a 17,000 tonne coolstore on the former 16.45ha Fisher & Paykel site. Sphere: Related Content
Saturday, June 06, 2009
Banco Pastor Agrees to EUR 75 Million Sale Leaseback of Madrid HQ
Reuters - June 4, 2009
Spain's Banco Pastor (PAS.MC) has agreed the sale of its Madrid headquarters to the Garcia Baquero family, known for their eponymous Spanish cheeses, sources said on Wednesday.
"Banco Pastor has sold its Madrid headquarters. The buyer is the Garcia Baquero family," one of the sources said.
Another source said the operation, which included a building in the center of Barcelona, was sealed at about 75 million euros ($106.3 million).
The bank put 160 of its 650 offices up for sale last March to shore up funds against soaring bad loans as Spain's decade-long property boom came to an abrupt end.
Pastor hoped to fetch 230 million euros for the lot. The Madrid headquarters were the bank's crown jewel.
Pastor's financial director Gloria Hernandez has said the bank's office leaseback programme was very advanced and could be closed this month. Sphere: Related Content
Spain's Banco Pastor (PAS.MC) has agreed the sale of its Madrid headquarters to the Garcia Baquero family, known for their eponymous Spanish cheeses, sources said on Wednesday.
"Banco Pastor has sold its Madrid headquarters. The buyer is the Garcia Baquero family," one of the sources said.
Another source said the operation, which included a building in the center of Barcelona, was sealed at about 75 million euros ($106.3 million).
The bank put 160 of its 650 offices up for sale last March to shore up funds against soaring bad loans as Spain's decade-long property boom came to an abrupt end.
Pastor hoped to fetch 230 million euros for the lot. The Madrid headquarters were the bank's crown jewel.
Pastor's financial director Gloria Hernandez has said the bank's office leaseback programme was very advanced and could be closed this month. Sphere: Related Content
Thursday, June 04, 2009
Citigroup Agrees to Sale Leaseback of Italian HQ in Milan
Reuters - June 2, 2009
Citigroup Inc (C.N: Quote, Profile, Research) will sell its Italian private banking operations and headquarters as part of the troubled U.S. bank's restructuring, a spokesman said on Tuesday.
Citigroup, the biggest foreign bank in Italy, will keep open its corporate lending unit with its 400 employees, he said, confirming a report in Il Sole 24 Ore business newspaper.
He declined to comment on the newspaper's report that the bank would sell its Italian credit card unit and close the consumer credit operations.
'We are basically focusing on the corporate business in Italy and the sale of the private bank is part of this refocusing,' he said.
Il Sole 24 Ore said Citigroup was completing the sale of the private banking unit with its 600 million euro portfolio to Spain's Banco Santander SA (SAN.MC: Quote, Profile, Research). The private banking unit has 27 employees.
The spokesman declined to comment on Santander. Citigroup has sought to sell the unit but no deal has been agreed, he said.
The bank will sell its Milan headquarters building but will lease it back, the spokesman said. Citing unconfirmed rumours, Il Sole 24 Ore said Italy's Prima SGR and the Hines Real Estate Investment Trust Inc would buy it. Prima is a joint venture between Banca Monte dei Paschi di Siena SpA (BMPS.MI: Quote, Profile, Research) and the Clessidra fund launched last month.
Citigroup has racked up more than $90 billion in credit losses and writedowns since 2007. It has taken about $45 billion from the U.S. government's Trouble Asset Relief Program. Sphere: Related Content
Citigroup Inc (C.N: Quote, Profile, Research) will sell its Italian private banking operations and headquarters as part of the troubled U.S. bank's restructuring, a spokesman said on Tuesday.
Citigroup, the biggest foreign bank in Italy, will keep open its corporate lending unit with its 400 employees, he said, confirming a report in Il Sole 24 Ore business newspaper.
He declined to comment on the newspaper's report that the bank would sell its Italian credit card unit and close the consumer credit operations.
'We are basically focusing on the corporate business in Italy and the sale of the private bank is part of this refocusing,' he said.
Il Sole 24 Ore said Citigroup was completing the sale of the private banking unit with its 600 million euro portfolio to Spain's Banco Santander SA (SAN.MC: Quote, Profile, Research). The private banking unit has 27 employees.
The spokesman declined to comment on Santander. Citigroup has sought to sell the unit but no deal has been agreed, he said.
The bank will sell its Milan headquarters building but will lease it back, the spokesman said. Citing unconfirmed rumours, Il Sole 24 Ore said Italy's Prima SGR and the Hines Real Estate Investment Trust Inc would buy it. Prima is a joint venture between Banca Monte dei Paschi di Siena SpA (BMPS.MI: Quote, Profile, Research) and the Clessidra fund launched last month.
Citigroup has racked up more than $90 billion in credit losses and writedowns since 2007. It has taken about $45 billion from the U.S. government's Trouble Asset Relief Program. Sphere: Related Content
Monday, June 01, 2009
Home Depot Distribution Facility in California's Central Valley Sold
Nasdaq / PRNewswire - May 28, 2009
US Industrial REIT III, an affiliate of USAA Real Estate Company, announced the recent acquisition of a 657,600-square- foot Class A bulk distribution facility occupied by specialty retailer, Home Depot USA, Inc. in Tracy, California on a 15 year lease for an undisclosed sum.
The Home Depot, Inc., founded in 1978, specializes in building materials, home improvement supplies as well as lawn and garden products retailed from 2,200 stores in the United States. The Tracy facility, a Rapid Deployment Center (" RDC"), is part of the company's 2008-2009 conversion from de-centralized to regional distribution and will service approximately 100 stores initially, with the capacity to serve up to 150 stores.
"This acquisition provides great opportunity for our investors to gain an asset that is 100% leased by the world's largest home improvement specialty retailer," says Pat Duncan, chairman and CEO of USAA Real Estate Company. " Seeking high quality tenants in strategic industrially-prosperous locations continues to build successful investment relationships."
Completed in December 2008, the Home Depot RDC facility utilizes state-of-the- art tri-load design and other upgrades including more than 400 secured and lighted trailer positions. Its central and accessible location off I-205, neighboring the San Francisco/Oakland Bay area within fast-growing San Joaquin County, serves Northern California and the Pacific Northwest regions. The property is well located near five major highways, two transcontinental railroads and two international airports.
The US Industrial REIT III portfolio, totaling $1 billion, consists of large scale bulk industrial properties across the continental United States. USAA Real Estate is a subsidiary of USAA, a leading financial services company, serving military families since 1922. Sphere: Related Content
US Industrial REIT III, an affiliate of USAA Real Estate Company, announced the recent acquisition of a 657,600-square- foot Class A bulk distribution facility occupied by specialty retailer, Home Depot USA, Inc. in Tracy, California on a 15 year lease for an undisclosed sum.
The Home Depot, Inc., founded in 1978, specializes in building materials, home improvement supplies as well as lawn and garden products retailed from 2,200 stores in the United States. The Tracy facility, a Rapid Deployment Center (" RDC"), is part of the company's 2008-2009 conversion from de-centralized to regional distribution and will service approximately 100 stores initially, with the capacity to serve up to 150 stores.
"This acquisition provides great opportunity for our investors to gain an asset that is 100% leased by the world's largest home improvement specialty retailer," says Pat Duncan, chairman and CEO of USAA Real Estate Company. " Seeking high quality tenants in strategic industrially-prosperous locations continues to build successful investment relationships."
Completed in December 2008, the Home Depot RDC facility utilizes state-of-the- art tri-load design and other upgrades including more than 400 secured and lighted trailer positions. Its central and accessible location off I-205, neighboring the San Francisco/Oakland Bay area within fast-growing San Joaquin County, serves Northern California and the Pacific Northwest regions. The property is well located near five major highways, two transcontinental railroads and two international airports.
The US Industrial REIT III portfolio, totaling $1 billion, consists of large scale bulk industrial properties across the continental United States. USAA Real Estate is a subsidiary of USAA, a leading financial services company, serving military families since 1922. Sphere: Related Content
Aurora Completes $40 Million Sale Leasback of Two Medical Office Buildings in Milwaukee
JSOnline - May 29, 2009
Aurora Health Care Inc. has sold two more medical office buildings to Santa Ana, Calif.-based Grubb & Ellis Healthcare REIT Inc. for just over $40 million, a move that raises additional cash for Wisconsin's largest health care provider.
An investors group affiliated with the real estate investment trust bought a 62,991-square-foot Aurora facility, at 3111 W. Rawson Ave., Franklin, for $19.8 million, according to documents filed with the Milwaukee County Register of Deeds.
The group also bought a 66,638-square-foot facility, at 12203 N. Corporate Parkway, Mequon, for $20.9 million, according to the Ozaukee County Register of Deeds.
In March, Aurora sold four other Milwaukee-area medical office buildings to Grubb & Ellis Healthcare, which is leasing the facilities back to Aurora. Those buildings, totaling 185,000 square feet, sold for around $34 million.
The sales are generating cash for Aurora, which is building two hospitals, in Grafton and Summit, costing $373 million, and which has been cutting back on expenses. Aurora has done sale-leaseback transactions on its facilities for several years, said spokesman Ron Irwin.
Aurora acquired the Franklin outpatient surgery center in December 2008, when it bought a stake in Associated Surgical and Medical Specialists, Irwin said.
The Mequon building, which houses doctors' offices, was acquired in January 2008 through Aurora's purchase of Advanced Health Care, Irwin said. Sphere: Related Content
Aurora Health Care Inc. has sold two more medical office buildings to Santa Ana, Calif.-based Grubb & Ellis Healthcare REIT Inc. for just over $40 million, a move that raises additional cash for Wisconsin's largest health care provider.
An investors group affiliated with the real estate investment trust bought a 62,991-square-foot Aurora facility, at 3111 W. Rawson Ave., Franklin, for $19.8 million, according to documents filed with the Milwaukee County Register of Deeds.
The group also bought a 66,638-square-foot facility, at 12203 N. Corporate Parkway, Mequon, for $20.9 million, according to the Ozaukee County Register of Deeds.
In March, Aurora sold four other Milwaukee-area medical office buildings to Grubb & Ellis Healthcare, which is leasing the facilities back to Aurora. Those buildings, totaling 185,000 square feet, sold for around $34 million.
The sales are generating cash for Aurora, which is building two hospitals, in Grafton and Summit, costing $373 million, and which has been cutting back on expenses. Aurora has done sale-leaseback transactions on its facilities for several years, said spokesman Ron Irwin.
Aurora acquired the Franklin outpatient surgery center in December 2008, when it bought a stake in Associated Surgical and Medical Specialists, Irwin said.
The Mequon building, which houses doctors' offices, was acquired in January 2008 through Aurora's purchase of Advanced Health Care, Irwin said. Sphere: Related Content
Banks Rush to Build Capital via Property Sale Leasebacks
Financial Times - May 28, 2009
Several billion pounds worth of European corporate property is expected to be sold in the next few months as businesses look to free capital from their property assets.
This week, Credit Suisse placed the first of its Canary Wharf buildings on the market following a lengthy review, and more companies are expected to follow, particularly in the financial services and retail sectors.
CB Richard Ellis, which has been instructed to sell 20 Columbus Courtyard for Credit Suisse, estimates that it has more than €4bn (£3.5bn) of sale and leasebacks alone set to hit the market this year in Europe. This includes the sale and leaseback of HSBC’s headquarters in London, Paris and New York.
Though the market is reaching its lowest point, many corporate owner-occupiers are motivated by the advantages of additional liquidity.
Many also hold properties at depreciated historic cost for accountancy purposes, meaning that selling now gives a financial boost even with a slump in values.
There are a number of sectors where leasebacks make sense, according to Matt Pullen, CBRE’s head of European global corporate services, as companies look to raise money without damaging businesses. “It is a strategic leveraging of business assets,” says Mr Pullen.
In a report last week, property intermediaries Cushman & Wakefield forecast that banks would increase sale and leasebacks to raise capital in the next year, particularly those that have received state cash injections. Selling real estate has a strong benefit for banks’ tier one capital ratio, a key measure of balance sheet strength.
Credit Suisse, among the better capitalised banks with a 14.1 per cent tier one ratio, appears under no pressure to raise capital.
Other banks, including UniCredit, HSBC and BBVA, have committed to releasing capital via European real estate schemes, said Cushman & Wakefield, and more would follow later this year.
Matthew Stone, head of Cushman & Wakefield’s occupier strategy team, said: “Most European banks need to raise cash but the traditional routes of equity or debt are now significantly more expensive.
“The major European real estate sale-and-leaseback programmes that have been launched are probably only the tip of the iceberg in 2009. Those banks now part-owned by national governments, in particular, offer excellent covenants.”
Going against the current has been Santander, which in an apparent sign of its relative strength last month bought the building occupied by its Abbey business in London from British Land. Some agents say other robust groups are starting to investigate the merits of buying the freeholds of their leased premises while prices look cheap.
Outside the banking sector, sale and leasebacks have been triggered by acute financial difficulties. In March, the New York Times raised $225m in deal with WP Carey in order to help pay off debt, for example.
Michael Evans, director at Jones Lang LaSalle, said sale and leasebacks in the retail sector were now likely to be a focus, given pricing in the sector.
Overall, recent sale-and-leaseback activity has been motivated by very different reasons from those that dominated at the peak of the property boom, when many groups, particularly in the retail, leisure and banking sectors, were keen to cash in on highly priced assets.
Then, a clutch of banks sold their London offices, according to King Sturge’s James Beckham. Deals struck in the boom years included Standard Chartered, Merrill Lynch, Citi and ABN Amro, as well as HSBC first time round.
According to Jones Lang LaSalle, European corporate property disposals have more than doubled over the past four years. Sphere: Related Content
Several billion pounds worth of European corporate property is expected to be sold in the next few months as businesses look to free capital from their property assets.
This week, Credit Suisse placed the first of its Canary Wharf buildings on the market following a lengthy review, and more companies are expected to follow, particularly in the financial services and retail sectors.
CB Richard Ellis, which has been instructed to sell 20 Columbus Courtyard for Credit Suisse, estimates that it has more than €4bn (£3.5bn) of sale and leasebacks alone set to hit the market this year in Europe. This includes the sale and leaseback of HSBC’s headquarters in London, Paris and New York.
Though the market is reaching its lowest point, many corporate owner-occupiers are motivated by the advantages of additional liquidity.
Many also hold properties at depreciated historic cost for accountancy purposes, meaning that selling now gives a financial boost even with a slump in values.
There are a number of sectors where leasebacks make sense, according to Matt Pullen, CBRE’s head of European global corporate services, as companies look to raise money without damaging businesses. “It is a strategic leveraging of business assets,” says Mr Pullen.
In a report last week, property intermediaries Cushman & Wakefield forecast that banks would increase sale and leasebacks to raise capital in the next year, particularly those that have received state cash injections. Selling real estate has a strong benefit for banks’ tier one capital ratio, a key measure of balance sheet strength.
Credit Suisse, among the better capitalised banks with a 14.1 per cent tier one ratio, appears under no pressure to raise capital.
Other banks, including UniCredit, HSBC and BBVA, have committed to releasing capital via European real estate schemes, said Cushman & Wakefield, and more would follow later this year.
Matthew Stone, head of Cushman & Wakefield’s occupier strategy team, said: “Most European banks need to raise cash but the traditional routes of equity or debt are now significantly more expensive.
“The major European real estate sale-and-leaseback programmes that have been launched are probably only the tip of the iceberg in 2009. Those banks now part-owned by national governments, in particular, offer excellent covenants.”
Going against the current has been Santander, which in an apparent sign of its relative strength last month bought the building occupied by its Abbey business in London from British Land. Some agents say other robust groups are starting to investigate the merits of buying the freeholds of their leased premises while prices look cheap.
Outside the banking sector, sale and leasebacks have been triggered by acute financial difficulties. In March, the New York Times raised $225m in deal with WP Carey in order to help pay off debt, for example.
Michael Evans, director at Jones Lang LaSalle, said sale and leasebacks in the retail sector were now likely to be a focus, given pricing in the sector.
Overall, recent sale-and-leaseback activity has been motivated by very different reasons from those that dominated at the peak of the property boom, when many groups, particularly in the retail, leisure and banking sectors, were keen to cash in on highly priced assets.
Then, a clutch of banks sold their London offices, according to King Sturge’s James Beckham. Deals struck in the boom years included Standard Chartered, Merrill Lynch, Citi and ABN Amro, as well as HSBC first time round.
According to Jones Lang LaSalle, European corporate property disposals have more than doubled over the past four years. Sphere: Related Content
Credit Suisse May Seek Sale Leaseback of Second Canary Wharf Tower
Property Week / Financial Times - May 29, 2009
Credit Suisse has begun a sale of its London property estate that could raise as much as £500m as part of a strategy to focus on core banking operations.
The investment bank this week instructed CB Richard Ellis to begin marketing the smaller of its two buildings in Canary Wharf, with indications that its tower at Cabot Square is also likely to be brought to the market before the end of the year.
In total, the sales of the two buildings – 20 Columbus Courtyard and 1 Cabot Square – could raise more than £500m, depending on the terms set by the bank on the length of its occupancy and rent.
The move comes as other banks and companies look to sell off non-core assets, with property advisers forecasting that several billion pounds of sale and leaseback deals will be completed in the next few months. Sphere: Related Content
Credit Suisse has begun a sale of its London property estate that could raise as much as £500m as part of a strategy to focus on core banking operations.
The investment bank this week instructed CB Richard Ellis to begin marketing the smaller of its two buildings in Canary Wharf, with indications that its tower at Cabot Square is also likely to be brought to the market before the end of the year.
In total, the sales of the two buildings – 20 Columbus Courtyard and 1 Cabot Square – could raise more than £500m, depending on the terms set by the bank on the length of its occupancy and rent.
The move comes as other banks and companies look to sell off non-core assets, with property advisers forecasting that several billion pounds of sale and leaseback deals will be completed in the next few months. Sphere: Related Content
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