Wednesday, September 30, 2009

UK Ministry of Defense Planning £50 Million Sale Leaseback of Offices in Glasgow

Herald Scotland - September 27, 2009

The Ministry of Defence is planning a major UK-wide property disposal programme as part of efforts to shore up its embattled budget, according to trade union sources.

Following last week’s report that the MoD plans a £50 million sale and leaseback of Kentigern House, the 1700-strong personnel office in the Broomielaw area of Glasgow, the move is said to be an early salvo in a much bigger programme that could involve selling-off everything from army careers offices to fuel depots to barracks and bases.

Ian Fraser, West of Scotland branch secretary for the Public and Commercial Services Union, said that a team had been assembled at the Defence Estates offices in Rosyth to co-ordinate so-called “Project Sale”, which will see many more properties sold and then leased back by their new owners to the MoD where appropriate.

The former top secret RAF airbase at Machrihanish on the Kintyre peninsula was sold earlier this year, while union bosses have been told that the Navy Buildings at Greenock, which houses marines, amphibious police and coastguards, will close in March 2011 and also be sold. There had also been plans to close a missile testing range spread across the Uists, but they were recently abandoned in the face of local protests, saving 125 jobs.

Fraser said: “We have been told by management that Kentigern is just the first. The MoD is one of the biggest landowners in Europe – they are waiting to see how it goes and will then start going for other sites. “They will sell anything they can sell.” Such a project would certainly make sense given the MoD budget is already thought to be running at a £1.5 billion deficit and is widely tipped to bear the brunt of public spending cuts regardless of which party wins the next general election.

Fraser said that the unions were opposed to both the Kentigern House sale and any further sale and leaseback deals on the grounds that they will squeeze MoD budgets in the long-run. With Kentigern House, for instance, the cost to the ministry over the first 20 years of any deal is set to be at least £70m.

He said there were also concerns that the move would be the start of the MoD withdrawing from Kentigern, amid union consultations with management about several small departments moving to England, but other sources countered that a 20-year lease was a strong sign of its commitment to the site.

Fraser said: “If this is such good value for the public purse, why has it taken 28 years [since the Glasgow offices were completed] to think of it?

“We think that the best security for Kentigern House is to keep it in the MoD and continue to own the building.”

A spokeswoman for the MoD denied that there was a fully-developed project to sell swathes of the estate, but said: “We regularly look at some of our sites for sale and leaseback opportunities. At present we are only considering this for Kentigern House and Abbey Wood in Bristol [the ministry’s procurement headquarters].

“Any other similar moves will depend on whether they are commercially viable. I can’t give a percentage of the proportion of the estate that we want to sell because it doesn’t exist.”

She added: “The proposed sale and leaseback at Kentigern House is a normal commercial arrangement to realise capital from the estate. It’s an attractive investment opportunity, given the MoD’s covenant as a long-term tenant, and has generated significant interest from financial institutions.” Sphere: Related Content

Caja Madrid Seeking EUR 70 Million Sale Leaseback of 58 Bank Branches in Spain

Expansión (as translated via Google) - September 29, 2009

Caja Madrid has released 58 branches to its network, an operation that provided input at least 70 million euros ($102.4 million) according to BusinessWeek reported yesterday. The Executive Committee of the box was informed of the operation in its meeting yesterday.

In line with what we already have other banks and savings banks Caja Madrid wants to perform, through its private bank Altae a sale & leaseback transaction, ie sale and subsequent lease of the properties. It will target a gain of 40 million.

The lease is for 25 years plus four renewals of five years, after which the lender has an option to repurchase. It also has a preferential option if the tenant wishes to dispose of the investment.

The investor will receive an annual return of 6% plus CPI. The offices up for sale are distributed throughout the national territory and 70% of them are located in provincial capitals.

With this operation, the second box Spanish intends to strengthen its capital and improve its balance sheet, as they have done entities such as Santander, BBVA, Caixa Galicia and Banco Pastor. The sale of the property resulting from their low balance, which reversed a decline in risk-weighted assets, or, put another way, less need for capital.

Many of the Spanish financial institutions have already made, or are considering such operations. BBVA has just closed his for 1.154 million last week.

Others like Sabadell, which also will eventually be raised to sell their entire branch network, given the situation in the housing market have opted to sell in small lots, they're putting mainly private banking clients. In fact, the very Caja Madrid will assess the market response to its offer to decide whether to sell more offices. Its branch network with 2183 totals as of June, of which about half is in Madrid.

Fight with the Electoral Commission
Aguirre and Gallardon returned yesterday to fight in the Electoral Commission when the first box, backed by a large majority, demanded that the president of this body, Fernando Serrano-del Ayuntamiento-is inhibited in the court case initiated by the consistory against implementation of the new law on regional boxes to the electoral process of the entity.

Most claim that Serrano may not represent the Commission, whichever is called to testify at trial. Serrano declined to vote on the issue, not being included in the agenda. The Aguirre had asked to convene another meeting tomorrow. In addition, Esperanza Aguirre, said yesterday that Rodrigo Rato TVE and Ignacio Gonzalez could preside Caja Madrid.

Sell and rent
1. Runs the operation through its private bank and hopes to join Altae 70 million, with gains of 40 million.

2. It stays as a tenant for 25 years renewable for another 20 and secured an option to buy.

3. Many Spanish banks and savings banks have launched similar operations to improve its balance sheet. Sphere: Related Content

Tesco Ponders Another £400 Million Sale Leaseback of UK Property Portfolio

Estates Gazette Blog - September 28, 2009

The FT fails to mention this morning that former City golden girl Robin Saunders is involved in a deal that will see Tesco insert £400m of its stores into a new fund called Index Linked Properties. Even so, the principle (as well as the principal) behind the fund sounds interesting.

Saunders is the photogenic American who used to make the headlines at WestLB bank before leaving after a tiff in 2003. In 2005 she set up a £1b property fund with dealmaker Paul Bloomfield. Not sure what happened to that. But Saunders runs Clearbrook Capital out of 25, Grosvenor Street. Last summer she announced the firm had a £1b to spend.

The FT says Clearbrook and DTZ are to manage Index Linked Properties: a name which betrays the cautious thinking behind the fund. It will be a closed-end Jersey investment company which will only add properties with index-linked leases to the £400m of stock that Tesco are contributing by way of sale and leaseback.

What can go wrong? Finding more of the same stock perhaps? There are now dozens of nascent property funds, many given to empty boasting of having £1b of "firepower". But here we have a fund that appears to have bagged £400m of safe and solid stock and only wants more of the same. Sounds like a buy. Sphere: Related Content

Getty Realty Completes $49 Million Sale Leaseback of 36 Exxon Gas Stations in Washington DC Metro Area

Getty Realty Web Site - September 28, 2009

Getty Realty Corp. (NYSE: GTY) announced today that on Friday September 25, 2009 it acquired 36 Exxon branded gasoline station and convenience store properties located primarily in Prince George’s County, Maryland, for $49.0 million in a sale/leaseback transaction with White Oak Petroleum LLC.

The 36 properties were acquired in a simultaneous transaction among ExxonMobil, White Oak Petroleum and Getty Realty Corp., whereby White Oak Petroleum acquired the properties from ExxonMobil and simultaneously completed a sale/leaseback of all 36 properties with Getty Realty Corp. The unitary triple net lease for the properties between White Oak Petroleum and Getty Realty Corp. has an initial term of 20 years plus renewal options. The properties will continue to be operated under the Exxon brand by the existing independent dealers. White Oak Petroleum is an affiliate of DAG Enterprises, Inc., led by Joe Mamo, one of the largest motor fuel distributors in the DC, Virginia and suburban Maryland area.

Getty Realty Corp. is the largest publicly-traded real estate investment trust in the United States specializing in ownership and leasing of convenience store/gas station properties and petroleum distribution terminals. The Company owns and leases approximately 1,100 properties nationwide. Sphere: Related Content

Tuesday, September 29, 2009

Ferrovial Nearing EUR 43 Million Sale Leaseback of Madrid HQ

Reuters - September 29, 2009

Spanish construction-to-services group Ferrovial (FER.MC) said on Tuesday it had received various offers for its Madrid headquarters on a sale and leaseback arrangement.

The firm was considering the offers for the headquarters in Principe de Vergara, said a spokesman.

"Our core business is not property," he said. Ferrovial is an infrastructure company with operations in 48 countries in a range of sectors including construction, airport, toll road, and car park management and maintenance, and municipal services.

A source close to the deal said Ferrovial wanted about 43 million euros (USD 62.6m) for the building.

A number of Spanish companies, including banks Santander (SAN.MC), BBVA (BBVA.MC) and Pastor (PAS.MC), have sold buildings to raise liquidity, leasing them from the buyer. Sphere: Related Content

HSBC Nearing $2 Billion Sale Leaseback of Assets in New York, London & Paris

Reuters - September 29, 2009

HSBC, Europe's biggest bank, is close to selling landmark offices in London, New York and Paris to boost its balance sheet by around $2 billion by end-2009, a person familiar with the matter told Reuters.

HSBC has been mulling offers to sell its premises on New York's Fifth Avenue, the Champs Elysees in Paris and London's Canary Wharf for several months, and is now in advanced talks with buyers on each asset with a view to striking deals within weeks, the source said.

Bids for the New York office have come in at between $350 million and $400 million, the source said. The London and Paris buildings have attracted offers of around $1.3 billion and $500 million, respectively, he said.

Exclusive bidders on each office could be named as early as the end of the week, the source said, without disclosing buyer identities.

HSBC and real estate advisor CB Richard Ellis started marketing the portfolio as a sale-and-leaseback investment opportunity in April.

CBRE declined to comment on the proposed sales. HSBC could not be reached for comment.

HSBC shares were trading 0.9 percent down by 1239 GMT.


Like most banks, HSBC is keen to see how much cash it can potentially unlock from its operational real estate holdings while turbulence in global capital markets persists.

Lloyds Banking Group, which is majority-owned by the UK taxpayer, has also appointed property advisors CBRE and Jones Lang LaSalle to devise and execute a strategy to pump cash tied up in property back into its core business.

News of the progress on the sales scotches market chatter that HSBC was just testing demand for its offices and was unlikely to sell before a big rebound in global property prices.

It sold its iconic Canary Wharf skyscraper to Spain's Metrovacesa for 1.1 billion pounds ($1.75 billion) close to the top of Britain's real estate market in April 2007 before taking back possession last December after the property company failed to refinance bridging debt secured from HSBC to buy the tower.

It made a quick profit after buying the property back for 838 million pounds last December, but average UK commercial property prices have fallen by around 5 percent between December 2008 and July 31, threatening the bank's chances to achieve a sale at a similar level.

South Korea's National Pension Service is one investor linked with HSBC's London property. A spokesman for the organisation -- the world's fifth-largest pension fund -- said the NPS was interested in the asset but no detailed talks had taken place.

NPS appointed real estate investment manager Rockspring to take charge of its central London property acquisitions strategy less than a month ago.

The pension fund, which has around $200 billion in assets, plans to invest $3 billion in real estate in Tokyo, Sydney, New York and London in 2009. Rockspring declined to comment. Sphere: Related Content

Monday, September 28, 2009

BBVA Completes EUR 1.15 Billion Sale Leaseback of 948 Bank Branches and Office Buildings Across Spain

Financial Times - September 25 2009

BBVA, Spain’s second-biggest bank, on Friday completed one of Spain’s largest sale and leaseback deals after agreeing the €1.15bn ($1.6bn) disposal of almost 950 branches and other properties.

The bank said it would book an extraordinary gain of €830m on the deal, which it would assign to provisions against future bad loans. It is the latest of several similar deals, under which companies sell their own buildings to specialist funds and then rent them back. That deal comes as BBVA prepares a €2bn convertible bond issue.

The operations have provided one of the few bright spots in a severely depressed commercial property market in Spanish cities, where capital values have fallen by about 50 per cent in the past two years.

The best known transaction was that of Santander, BBVA’s main competitor and the eurozone’s largest lender. A year ago it completed the €1.9bn sale and leaseback of its huge purpose-built headquarters, complete with golf course, on the outskirts of Madrid.

The country’s smaller savings bank networks have also been looking for buyers to free up much-need capital, but property agents report that interest is generally limited to well-known names.

Iberdrola, Spain’s largest electricity group, also cast around for a deal on its Madrid headquarters before deciding against a sale.

BBVA said on Friday it had agreed a long-term sale and leaseback to Tree Inversiones Inmobiliarias, a subsidiary of Deutsche Bank’s RREEF Limited. The fund has acquired an initial 948 properties – mainly bank branches – but there were reports on Friday that it, or another buyer, might take on more later in the year.

BBVA, which was not hit directly by the US subprime crisis but faces rising bad loans in the domestic market, described the accord with Deutsche as “flexible”.

Most Spanish lenders have been closing branches and reducing full-time staff in response to the economic crisis. In keeping with this, special clauses in the leaseback deal will allow BBVA to vacate up to 6 per cent of the branches, and replace properties at present included in the deal with others. This would permit it “flexibility in the management of the network”, it said.

Many banks globally have been exploring real estate sale and leaseback programmes to increase capital, particularly those that have been forced to take government bail-out money.

The sale of real estate can have a strong benefit for a bank’s tier one capital ratio, a key balance sheet measure. Banks not in distress also see it as an easy way to raise cash. Few regard owning real estate as a core part of their operations.

Credit Suisse is selling a building in Canary Wharf, London, for example, and people close to the bank say that the sale of real estate was part of a longstanding strategy to focus on core banking operations. Sphere: Related Content

Sunday, September 27, 2009

Enterprise Inns May Seek Sale Leaseback of 100 Pubs Across UK

The Publican - September 24, 2009

Enterprise Inns could offload a further 100 pubs through sale and leaseback deals if the seven sites it is looking to sell and let back at next month’s auction are snapped up by investors.

Earlier this week the pubco revealed it was putting seven London pubs on the market and said it hoped to raise up to £15m via a sale and leaseback arrangement.

The money raised would be used to pay down some of the company’s £1bn bank debt.

Ted Tuppen, Enterprise’s chief executive told The Publican the group had a small lease rental bill – around £3m annually – and could easily afford to pay the combined rent of £990,000 for all seven pubs.

“This is an attractive proposition for people with cash to invest, one that will get them a return of around six per cent a year with a blue chip company,” Tuppen said.

“It will also give a strong indication as to underpinning the value of the pubs on our balance sheet,” he added.

If the auction proved successful Tuppen said he could see up to 100 or so more Enterprise pubs being sold and subsequently leased back.

However some observers have criticised the rents being offered for the pubs as being unrealistic. One property expert said the investment community would “spot this deal for what it is; over-rentalised”.

However Tuppen was unfazed by such comments. “If the rents are deemed too high by potential investors then the pubs won’t sell,” he said.

Tuppen said the move to a sale and leaseback programme was just another way in which the pubco was looking at its financing arrangements.

Sources meanwhile suggested the group had exceeded the £100m proceeds it was looking to achieve through pub disposals during the year. Sphere: Related Content

Saturday, September 26, 2009

State of California Seeking $2 Billion From Sale Leaseback of Several State Owned Office Buildings

Sacramento Bee - September 24, 2009

As the California economy roared in the 1990s and tax revenues poured into a treasury overseen by Gov. Pete Wilson, the state laid plans for a series of new office buildings in Sacramento to spare itself from paying rent to other landlords.

Barely a decade later, the Schwarzenegger administration is launching a process to sell many of the same buildings that were originally touted as long-term money savers for taxpayers. The goal today is more immediate: pay off debt and steer cash into the state's depleted general fund. It's among a variety of short-term crisis solutions that include selling surplus state property, moves also being undertaken in cash-strapped Arizona.

In California, 11 state-owned sites with an estimated value of almost $2 billion will be listed for sale in early 2010 to pay off about $1.4 billion in bonds and net another $600 million "to support other critical state government programs," said state Department of General Services spokesman Eric Lamoureux.

The state wouldn't move out of the buildings; it would continue to lease them from the new owners.

The sell-off has lit up the skies for brokers in an otherwise downcast office real estate sector, where few buildings are being bought, sold or even listed, especially in Sacramento. It's likewise called fresh attention to the state's battered finances and stirred banter about whether it's smart to sell long-term real estate assets for short-term goals in a weak market.

Many in the real estate industry acknowledge it's a close call, but believe "beautiful class A" state buildings with a single tenant will command premium prices.

"It's unfortunate they would sell them. But they definitely have a need for financing right now, for equity to solve this budget crisis," said Tom Aguer, president of Sacramento-based commercial real estate brokers Aguer Havelock Associates. "It's a very creative way for them to fix their problem. But in the long term, these are great assets."

Brokers like Aguer and others among the nation's leading real estate firms are already assembling proposals and lining up national teams to broker the sales. The state is demanding an experienced partner: a firm that has done five separate deals of $20 million or more in the past seven years, and at least $150 million in total deals in that span.

No one can calculate for certain the fees such a deal could bring a brokerage firm. But it's widely said in the industry that the higher the price, the lower the commission. Even a commission as low as one-quarter of 1 percent of almost $2 billion in sales could net a firm nearly $5 million.

Specifically, the state is proposing a so-called "sale/leaseback" deal in which buyers of state buildings would rent them to the state afterward.

"We intend to maintain 100 percent occupancy in the buildings just as we have today," said Lamoureux, whose department manages state buildings. "We're just looking to sell the property and lease back over an extended term, probably along the line of 20 years or so."

Brokers say the lease-back provision is likely to stir interest among risk-averse investors known in the trade as "coupon clippers." Those are big institutional investors such as pension funds and insurance companies.

"There are numerous buyers looking for single-tenant buildings with the long-term leases. It's a steady income. It's a low-risk deal," said Nico Coulouras, vice president in Sacramento for Lowe Enterprises, a Los Angeles-based development and investment firm.

Among the state complexes proposed for sale are some of Sacramento's biggest buildings and most distinctive landmarks: downtown's massive East End Complex next to Capitol Park, finished in 2003; the 17-story Attorney General Building on I Street, completed in 1995; and the sprawling 1.8 million-square-foot campus of the Franchise Tax Board, expanded earlier this decade at the city's eastern edge.

Elsewhere, fixtures of the Oakland, San Francisco and Los Angeles skylines – bearing names of politicians from Ronald Reagan to Hiram Johnson – will also be sold. Sphere: Related Content

Thursday, September 24, 2009

Accor Completes EUR 272 Million Sale Leaseback of 158 Hotels

Accor Web Site - September 22, 2009

In line with its ongoing asset-right strategy, Accor today announced a major real estate transaction in the Budget segment in France, with the sale of 158 hotelF1 properties, representing a total of 12,300 rooms.

Accor pioneered the low-cost hotel concept in France, opening the first Formule 1 hotel in 1984 and introducing particularly innovative construction and management techniques. Formule 1, renamed hotelF1 in 2007, is the entry-level hotel brand of Accor Group in France with an average room rate of around €33.

Following the sale, Accor will continue to operate the 158 hotels under the hotelF1 brand, thereby retaining full control on pricing policy and product innovation process, which are essential to ensuring the brand’s sustainability. Since the end of 2008, about a hundred properties have been renovated as part of a vast refurbishment program, which includes the new Duo room concept (2 twin beds). The new offer is designed not only to consolidate the brand’s core base, but also to attract new customers.

This sale and variable leaseback transaction was carried out with a consortium of leading French institutional investors through a property investment trust (OPCI).

With the sale of the hotel units for €272 million, Accor signed a 12-year business lease, renewable six times at Accor’s option. The variable rents are based on an average 20% of revenue with no guaranteed minimum.

Based on 2008 revenue, the variable rent would have been €21.3 million (approx. 7.8% cap rate.) This transaction will enable Accor to reduce its adjusted net debt by approximately €187 million in 2009, of which €130 million will be added to the Group’s cash reserves. In addition, it will have a positive impact of roughly €5 million on profit before tax.

In a difficult economic environment, the transaction confirms the renewed interest of investors for hotel real estate, and particularly for the low-cost segment. Sphere: Related Content

Sunday, September 20, 2009

UVIT Completes EUR 32 Million Sale Leaseback of Offices in Eindhoven

PropertyEU - September 17, 2009

Lloyd Fonds has acquired an office building in the Dutch city of Eindhoven for EUR 32 mln. The property was purchased in a sale-and-leaseback transaction from UVIT, one of the largest health insurance providers in the Netherlands. UVIT has a 15-year lease.

The asset is located in the Kennedy Business Centre in the city and is being contributed to 'Holland Eindhoven', the latest in a series of Lloyd funds for the Netherlands. Marketing for the fund begins later this year.

Based in Hamburg, Lloyd Fonds is a leading initiator of closed-end funds and structured investment products. The Company is predominantly active in two asset classes, namely transportation (shipping, aircraft and secondary-market shares) and real estate. To date, an investment volume totalling around EUR 4.5 bn has been realised. Sphere: Related Content

Thursday, September 17, 2009

Tesco Completes $824 Million Sale Leaseback of 15 Retail Stores and Two Distribution Centers in the UK

Bloomberg - September 15, 2009

Tesco Plc, the world’s third- biggest retailer, is planning to issue about 500 million pounds ($824 million) of bonds secured by rental payments from its own stores and distribution centers.

The U.K. supermarket chain’s notes due in October 2039 may yield about 2.25 percentage points more than U.K. government debt, said a banker with knowledge of the transaction. The bonds will be issued through Tesco Property Finance 2 Plc, a company set up to sell the notes, with the rent backing the securities guaranteed by Tesco, Fitch Ratings said in a report today.

The sale and leaseback transaction is Tesco’s second public issue of commercial property-backed securities this year, and the third for any company in Europe since 2007, according to data compiled by Bloomberg. The Cheshunt, England-based retailer issued 431 million pounds of notes secured by rents in June, while U.K. property firm Land Securities Group Plc sold 360 million pounds of lease-backed bonds in July.

“It represents an example of an effective and simple use of securitization to meet both investor and issuer needs,” said Stefano Loreti, a London-based portfolio manager at Cairn Capital Ltd., where he helps to oversee $40 billion of asset- backed securities. “More deals of this kind will keep coming to the market.”

Prices for bonds backed by consumer debt, corporate loans and real estate have plunged as the credit crisis caused investors to shun hard-to-value assets. The yield over benchmark rates investors demand to buy top-rated commercial mortgage- backed notes in euros is about 7.73 percentage points, more than double the rate a year ago, Deutsche Bank AG data show.

Leaseback Transaction

Tesco’s transaction involves the sale of 15 retail stores and two distribution centers with a total value of about 500 million pounds, according to Tesco spokesman Tom Hoskin.

“Similar to our most recent sale and leaseback deal in June, this will be primarily funded by the issue of a fixed-rate note,” Hoskin said.

Fitch estimates Tesco may issue about 559 million pounds new notes, which it ranks at A-, the seventh-highest investment- grade rating. Standard & Poor’s also ranked the debt at A-.

Goldman Sachs Group Inc. is managing the sale of Tesco’s bonds. Sphere: Related Content

Sunday, September 13, 2009

Bank of China Provides $120 Million Loan On New York Times HQ in Manhattan

National Real Estate Investor - September 9, 2009

How long does it take for a borrower to secure a first mortgage on 21 stories of the New York Times Building? After countless rejections by lenders, about six months, according to Ben Harris, managing director and head of domestic investments for W.P. Carey (NYSE: WPC). The New York investment firm announced today that it has closed a $120 million non-recourse loan on the landmark tower with the Bank of China.

“Overall, it’s very telling that W.P. Carey got the loan from the Bank of China,” notes Victor Calanog, chief economist with New York-based research firm Reis. It is telling because the China Investment Corp., a $300 billion sovereign wealth fund, is reportedly considering large investments in U.S. commercial real estate via the U.S. Public-Private Investment Program, or PIPP. China’s foreign reserves now stand at $2 trillion.

The deal began in early January when the financially troubled New York Times Co. announced plans to raise up to $225 million in cash by selling its portion of the 52-story Manhattan skyscraper in a sale-leaseback. At the time, industry watchers indicated that the plan had perhaps come too late for the beleaguered owner of The New York Times and the Boston Globe. The conventional wisdom was that even if willing buyers were to step forward, debt financing was largely unavailable.

Then in March, W.P. Carey closed the $225 million sale-leaseback in an all-equity deal that included two of its publicly held, non-traded REIT affiliates. The transaction with the Times Co. encompassed approximately 750,000 sq. ft. of rentable space. The leaseback terms include a 15-year lease period with a rental payment of $24 million for the first year, and escalating rents throughout the remainder of the lease.

Despite the deep pockets of W.P. Carey’s lender, securing a non-recourse loan in the current debt-restricted climate was not easy. “Typical commercial mortgage loan-to-values were 80% to 90% on assets like this in the heyday, and this is a 55% loan-to-value mortgage,” says Harris.

While specific details of the loan were not disclosed, Harris acknowledges that it falls within the range that W. P. Carey is seeing in today’s debt market of five to 10-year terms with interest rates based on spreads of 350 to 450 basis points over U.S. Treasuries.

Steve Kohn, president of Cushman & Wakefield Sonnenblick Goldman, which served as the exclusive advisor to W.P. Carey on the deal, agrees. "For a single lender, a loan of this size required us to focus on larger life insurance companies and major off-shore banks,” Kohn maintains. “Most lenders today need to syndicate loans over $50 million."

While the financing would likely have been easier to secure a couple of years ago and brought in much higher proceeds, W.P. Carey feels fortunate that it was able to acquire the Midtown Manhattan office space for approximately $300 per sq. ft. Excluding this deeply discounted sale, New York office properties on average traded for $800 to $900 per sq. ft. in the first quarter, according to Reis.

“The Bank of China is showing a very savvy strategy to come into the marketplace today and take advantage of a very thin competitive set where they can dictate terms and get great loans,” says Harris of W.P. Carey. Since September of 2007, the company has closed approximately $400 million in financing.

Calanog believes that many of the distressed sales over the past six months are the result of owners unable to cover debt service, many of whom have been weeded out of the market. Going forward, he says, there may be more pressure on U.S. buyers competing with foreign investors like China. Why? The Chinese investors are willing to accept less of a discount.

“If the Chinese can allocate their money wherever they want and they choose to invest in U.S. properties,” Calanog concludes, “that is a signal at least in the near term that values may actually increase and maybe they’ve bottomed out now.” Sphere: Related Content

Saturday, September 12, 2009

National Amusements Weighs £100 Million Sale Leaseback of 16 UK Cinemas

Property Week - September 9, 2009

Investor could buy 16 outlets after usurping bidders with property-only offer

Delancey has emerged as THE frontrunner to buy a £100m-plus package of up to 16 cinemas from US media mogul Sumner Redstone’s National Amusements.

Bidders were lined up for the auction of Redstone’s UK cinemas in April when Citi was appointed as adviser to sell its property and operating assets in the UK.

Several cinema operators bid for the portfolio, including Cineworld and Israel Theaters, Israel’s largest cinema group.

But it is thought that Delancey made a bid directly to National Amusements offering to enter into a property-only transaction.

The deal would involve Delancey buying the freehold properties owned by National Amusements and leasing them back to the company, allowing it to remain in the UK and raise money through a property sale rather than an outright sale of the business.

Both parties have entered an exclusivity agreement.

The total UK assets of National Amusements were valued at more than $500m 18 months ago and total 21 cinemas – including 16 freehold venues. Experts suggest the price under discussion for the sale and leaseback could exceed £100m, reflecting a yield of around 8%.

National Amusements trades as Showcase Cinemas in the UK. This includes its high-end cinema operation Cinema de Lux, which it opened last year in Derby, Bristol and Leicester (above). National Amusements owns these three cinemas on a leasehold basis.

It was to open a fourth venue at Westfield London but, following its difficulties in the US, the plan was scrapped. Rival operator Vue has now signed up at the mall.

It is thought Redstone is selling the cinema chain to help pay down a $1.6bn debt pile and avoid having to sell shares in Viacom, the owner of cable channels MTV and CBS.

National Amusements breached banking covenants last October, but struck an agreement with lenders that involved the sale of some of its cinemas.

The cinema sector has performed well in 2009. Operators such as Cineworld have reported good trade and predict the second half of 2009 will improve further.

None of the parties would comment on the cinema transaction. Sphere: Related Content

CIMB Eyes Large Sale Leaseback of Bank Branches and Offices in Malaysia

Business Times - September 9, 2009

CIMB Group is eyeing sale-and-leaseback exercise for its properties, said group chief executive Datuk Seri Nazir Tun Razak.

"We are engaging a few potential buyers and they are financially, potential investors," he said.

According to Nazir, the transactions for all its buildings, especially CIMB branches and some other offices, would be completed by the fourth quarter of this year or the first quarter of 2010.

Early this year, the group had signed an agreement with Pelaburan Hartanah Bumiputera Bhd (PHBB) for the sale and leaseback of the new 630,000 sq ft 39-storey Menara Bumiputra Commerce. The group is now the sole tenant of the building, he said.

"The transaction with PHBB was worth RM460 million. On top of that, we spent about RM80 million for internal refurbishments," he told reporters after the opening of the building by Yang di-Pertuan Agong Tuanku Mizan Zainal Abidin today.

The Menara Bumiputra-Commerce, which cost RM400 million, was constructed by IJM Corp Bhd. It began in October 2004 and was completed early this year.

It will serve as the headquarters for commercial banking, franchises of CIMB Group, CIMB Bank and CIMB Islamic.

Nazir said the investment banking and capital market arm would be located in Menara CIMB, which was still under construction in Kuala Lumpur Sentral.

He said construction was expected to be completed in 2012.

Nazir said today also marked the completion of CIMB Group's multi-year branch re-branding exercise.

"South-East Asia's largest retail network of 1,150 branches across Malaysia, Indonesia, Singapore and Thailand have now all assumed the CIMB icon, its red and green colours and consistent branch look and feel," he said. Sphere: Related Content

Wednesday, September 09, 2009

Co-operative Group Sale Leaseback - Update

Crain's Manchester Business - September 7, 2009

The Co-operative Group is on the verge of selling the freeholds to 20 of its stores for £40m as part of a sale and leaseback deal, Crain's has learned.

Property investor Threadneedle is within days of finalising the deal which has been in the pipeline for months, according to sources familiar with the situation.

The London-based fund, which is owned by New York Stock Exchange listed Ameriprise Financial, is buying the freeholds for cash and will lease the properties back to the Co-op for 25 years at rents linked to inflation.

Threadneedle and LaSalle Investment Management were whittled down from eight bidders in the race to land the properties, which are spread throughout the UK.

A source familiar with the situation said: “It's one of the biggest deals at the moment. The Co-op are just trying to raise a bit of cash.”

The stores have been in Co-op hands for decades in some cases and are not among those recently acquired as part of the £1.6bn acquisition of Somerfield in 2008.

In its latest accounts for the year to the end of January the Co-op said it was aiming to sell £175m of “surplus properties” over the next three years.

A note in the accounts says: “Disposals are particularly important as they realise capital that can be invested in other group projects.”

Last year the Co-op made a profit of £20m on property sales which raised a total of £58.4m. It said this was “well ahead of target” but some observers of the property scene have raised eyebrows about the decision to make large scale disposals at a time when asset values have been falling. The capital value of the Co-op's investment portfolio dipped by £62.3m in the year.

The Co-op owns land and buildings worth a collective £1.6bn, not including investment properties, and the sell-off comes at a time when other parts of the group, in particular the expanding food and financial services businesses, require more capital.

The group needs cash for a £100m rebrand of its stores, which began last year, and is planning a £100m project to build a new headquarters on Manchester's Miller Street. Sphere: Related Content

Saturday, September 05, 2009

Mayor Brown DC Headquarters Sold for $208 Million - September 3, 2009

In Washington, D.C.--which was named the best urban real estate market in the world by the likes of the Association of Foreign Investors--Germany-based DekaBank Group’s recent $207.8 million acquisition of the newly developed 250,000-square-foot 1999 K Street office building came as little surprise to many, even given the slow investment market nationwide.

Vornado Realty Trust sold the property in an off-market deal to the DekaBank Group, which is the largest provider of open-ended property funds in Germany. The two investment companies, Deka Immobilien Investment GmbH and WestInvest Gesellschaft für Investmentfonds mbH, together manage fund assets of more than EUR 19 billion.

The building was designed by internationally recognized architect Helmut Jahn and achieved LEED-CS gold certification.

Designed by Helmut Jahn and recently awarded a LEED-CS Gold certification, the office property was completed in August and serves as the new headquarters for the law firm Mayer Brown. The building is 100 percent pre-leased to the law firm, which occupies the entire 12-story building as part of a new 15-year lease. In addition, TD Ameritrade occupies a 5,000-square-foot retail unit on the ground floor. Vornado will continue to manage the property.

“I’m not surprised by this deal. This is a trophy quality asset and the prices were on target. There is alot of liquidity in the marketplace and we’re seeing more activity,” Collins Ege, managing director for Jones Lang LaSalle, told CPE. “There is more activity going on in Washington, D.C. We’re closing a transaction this week and we’re probably busier now than we have been in the last 12 months. We have four deals under contract and we’re seeing other deals in development.”

A deal like this demonstrates that the Washington, D.C., area is a good location and still a viable marketplace, he added.

The $207.8 million sales price is $830 per square foot and is a first year cash cap rate of 6.3 percent. Vornado realized a net gain of approximately $41 million and received net proceeds of approximately $90 million after repaying the existing loan and costs.

CB Richard Ellis Inc.'s buy-side investment advisory group, Global Property Advisors, with the support of the firm's Washington D.C., Capital Markets team, represented Deka in the transaction. Sphere: Related Content

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