Sunday, November 29, 2009

Citibank Bay Area Sale Leaseback of Bank Branches Winding Up - November 26, 2009

Citibank came to market with 17 of its Bay Area retail branches last fall offering 10-year leasebacks with up to 3% annual rent increases based on the CPI. Marketed by CB Richard Ellis, all but a couple of the well-located former CalFed branches quickly had signed LOIs from high-net-worth investors looking for an inflation hedge. The closings didn’t go quite as smoothly due to the financial meltdown in the fourth quarter but 13 of them closed this year at an average cap rate of 6%, with the first seven selling at a 5.8% cap rate on average.

“It was a huge undertaking getting that many [sales] going at once,” CBRE retail investment sales specialist Don LeBuhn tells “But they were the best locations so the intrinsic value was there and even though it took a long time to close deals due to the deteriorating economy [which took Citibank’s stock price from $19 to less than $1 while the properties were on the market] the buyers stuck with their prices, with most using 50% bank financing.”

The bank branches range in size from 3,000 square feet to 7,000 square feet and are located in several Bay Area markets including Burlingame, San Mateo, Los Altos, Palo Alto, San Jose, Santa Clara and Sunnyvale. One of the two remaining properties, a branch in Millbrae, closed last week at a 6.5% cap rate. The other should be under contract within a week or so, also at a sub 7% cap rate, says LeBuhn, a vice president with CBRE’s private client group.

All of the transactions were under $5 million, where LeBuhn says there is “tremendous velocity” because thanks to a lot of people who have $1 million or $2 million to invest and have not done well in the stock market in recent years. “They’re thinking I can put this down on a piece of real estate that has built-in annual rental growth and a steady income-producing tenant,” he says.

Moreover, LeBuhn says properties of this size, quality and price are achieving much better cap rates than more expensive deals requiring more equity. “When you get up to $10 million an above it’s highly unlikely you can get even close to a 6% cap rate; it will be more like 7.5% to 8.5%.”

“The yield curve based on pricing steepens dramatically as you ramp up toward $10 million,” explains LeBuhn’s partner, CBRE managing director Trevor Thorpe. “It’s the impact of the capital markets; the greater the equity the greater the risk premium that is required.”

“Ultimately these properties could have been sold as a portfolio at a mugh higher cap rate,” LeBuhn says. “Citibank wanted to maximize their return and we accomplished that for them.” Sphere: Related Content

Saturday, November 28, 2009

Clarian Health Secures $190 Million Lease Financing for New Indiana Medical Campus - November 24, 2009

Clarian Health Partners Inc. has secured $190 million in financing for the proposed Clarian Saxony Medical Center Campus here. Cain Brothers’ Real Estate acted as Clarian’s financial advisor in the deal and also managed to secure a build-to-suit construction leaseback, long-term ownership deal for Clarian.

The Herrick Co. Inc. provided the financing. The real estate investment firm, which has been in operation since 1960, has been involved in more that $3 billion worth of transactions.

Plans for the medical center campus have been in the works for years, with the first sketch of the project going before the public in November of 2007. Without financing the first phase, estimated to cost $180 million, has been stalled. But with the construction and ownership capital in place, Clarian was able to move from the planning phase to actual construction.

This first stage provides for the construction of a 200,000-square-foot forty-bed hospital and urgent care center, and a 100,000-square-foot medical office building. HKS was the architect on the project. Turner Construction and Harmon Construction are join venturing on the construction.

The campus will be built within the 725-acre Saxony mixed-use development in Hamilton County. In 2007, the project was estimated to be worth $750 million and would add one million square feet of retail, 3.5 million square feet of office/industrial and 1,300 residential units. Sphere: Related Content

Friday, November 27, 2009

CBRE - European Sale and Leasebacks Special Report

CB Richard Ellis European Web Site - November, 2009

Corporate sale and leasebacks represent a viable, effective and competitive way of securing capital in an age when cash flow is all-important and the stigma of ‘selling off the family silver’ is a fast-retreating myth.

Our research into this sector of business tells us that the climate has never been better to reap some of the many advantages of a sensibly conducted sale and leaseback of appropriate property. The outlook is positive – so we believe this is a good time for Corporate Treasury to take advantage of this growing opportunity.

The acceptability of the sale and leaseback route was helped by the ‘watershed’ moment when the €1.6 billion HSBC headquarters deal was completed in London in 2007. Other large deals – such as the sale of KarstadtQuelle’s €4.5 billion department store portfolio across Germany – only served to secure sale and leaseback activity’s place in the headlines.



BTicino Completes EUR 23 Million Sale Leaseback of Office Building in Milan

PropertyEU - November 23, 2009

Italian property company Beni Stabili said it has signed an agreement to acquire the D tower of the Procaccini business park located in Via Messina, Milan, for a total of nearly EUR 23 mln, including transaction costs of EUR 3 mln. The transaction reflects a gross yield of around 7%.

The office scheme, offering 7,100 m2 of gross leasable space, was acquired by the Milan-listed property company through a sale-and-leaseback agreement with BTicino. The seller will occupy the scheme under a seven-year lease agreement, with an option for a further six years.

The transaction includes around 50% of equity and a mortgage loan of approximately EUR 15 mln provided by Germany's Dekabank. Beni Stabili already owns another of the four towers in the business park. Sphere: Related Content

Wednesday, November 25, 2009

AIB Completes €19 Million Sale Leaseback of Seven Bank Branches

Irish Independent - November 25, 2009

AIB has sold seven branches across north Leinster for a combined €19m in seven separate deals. The total proceeds are close to the €20m target which agents CB Richard Ellis had been seeking when they launched them in June.

The most recent of the branches to sell is that in Monaghan which achieved in excess of €2.5m and close to the quoted price. With a rent of €200,000, it is generating a yield of 7pc. This is slightly higher than the average yield achieved across the seven branches of 6.9pc.

The seven branches are located in Swords, Navan, Dundalk, Monaghan, Kells, Castleblaney and Maynooth.

AIB is committed to a 20 year lease on each branch with a five year break clause and upward only rent reviews every five years. The purchasers of the Navan branch will achieve the highest of the rents €335,000. The purchasers are all investors rather than developers. Two of the purchasers are expected to farm out a share of the investments in two of the branches. Sphere: Related Content

Sunday, November 22, 2009

Investors Look to Sale and Leaseback

The Sunday Business Post Online - November 22, 2009

Corporate sale and leasebacks represent a viable, effective and competitive way of securing capital in an age when cash is all-important.

The stigma of ‘selling off the family silver’, which had been associated with this practice, is now a fast-retreating myth.

The acceptability of the sale and leaseback route was helped by the watershed moment when the €1.6 billion HSBC headquarters deal was completed in London in 2007, along with the sale of Karstadt Quelle’s €4.5 billion department store portfolio across Germany.

Closer to home, both Bank of Ireland and AIB have undertaken substantial sale and leasebacks of their headquarter properties and branch networks.

The first obvious reason that sale and leaseback represents an attractive option is that there has been very little capital available in recent times, largely because of the limited availability of bank credit.

Other key advantages are that it allows a corporate body to raise capital through the business - but unlike a loan, this capital does not have to be paid back, can be cheaper than placing a corporate bond or raising equity and meets the interest of shareholders.

In an environment where conventional forms of finance have become severely restricted and prohibitively expensive, sale and leaseback transactions represent a viable alternative for raising capital through and for the business.

This is evidenced by the fact that sale and leaseback activity experienced rapid growth in recent years, from a €6.9 billion market in Europe in 2004 to €46 billion - and more than 750 separate transactions - in 2007.

This represented a 585 per cent increase over four years, and such disposals went from comprising just 6 per cent of the European investment market in 2004 to nearly 20 per cent in 2007.

In 2008, falling values reduced the relative attraction and volume of asset sales, so occupier disposals in Europe effectively halved in value to €22.5 billion. However, this still comprised some 794 transactions and maintained the sector’s 19 per cent share of the total investment market.

In the first half of this year, an exceptionally quiet period for investment turnover, a further €4.1 billion in occupier disposals accounted for around 17 per cent of the market. These figures reinforce CBRE’s view that sale and leasebacks have established themselves as an important part of the property investment market.

This is because sale-and-leaseback transactions generally create long and well-secured income streams for the purchaser - precisely the kind of investment many are looking for in the current, more risk-averse climate.

In terms of sectors, certain other patterns are emerging. The retail sector has continued to increase its share, accounting for just over 50 per cent of occupier disposals in the first half of 2009, with offices accounting for 23 per cent and industrial 9 per cent.

This is something of a turnaround: office disposals accounted for almost half of all European sale and leaseback transactions in 2007, dropping to 31 per cent in 2008 as retail and manufacturing started to become a growth sector.

Interestingly, in the first half of this year Spain and Italy led the way, with Italy accounting for the largest transaction value, at 24 per cent of the European market. This largely reflects the disposal of a portfolio of 180 high street bank branches by Unicredit for €530 million.

This was followed by Spanish banks Caixa Catalunya and BBVA, totalling €251 million, and BNP Paribas with €250 million in Paris.

CBRE’s research has found that many investors are returning to the property market having invested relatively little in the last few years. The current focus is on the main European markets such as Britain, France and Germany. However, Ireland is now appearing on investors’ radar screens on the basis of offering good value.

Sale and leasebacks are inherently attractive to these investors in offering a secure income stream on a new lease. A good example is the AIB branch on Grafton Street, which offers an opportunity to acquire a prime retail investment on secure terms.

More generally, the potential for continued growth in sale and leaseback activity is immense:

the value of European real estate assets still in the hands of corporates is estimated at around €2.25 trillion, 12 times the average level of European real estate investment turnover over the last five years. It therefore represents a real and present opportunity. Sphere: Related Content

Premier Inn Seeking £30 Million Sale Leaseback of Five UK Hotels

Property Gazette is reporting that Whitbread is seeking to raise around £30 million on the sale leaseback of five of its 584 Premier Inns to gauge market interest. BNP Paribas Real Estate has been retained by Whitbread to conduct the sale. Premier Inns will reportedly offer 25-year leases on the properties plus additional renewal option. A successful transaction at an attractive initial yield will likely lead to further Premier Inn sale leaseback opportunities in the near future. Sphere: Related Content

Griffin Capital Launches Net Lease REIT - November 19, 2009

With its securities registration effective earlier this month, Griffin Capital Corp. has rolled out its new investment vehicle, the GC Net Lease REIT Inc.

The publicly registered, non-traded REIT will purchase both sale-leasebacks directly from corporate occupiers and existing net lease assets from third parties, though its preference is for sale-leasebacks, since those allow the REIT to structure its own leases. It is targeting “mission critical office and industrial properties that are net leased to corporate tenants for long duration,” says Griffin Capital president Kevin Shields.

It’s those kinds of assets—diversified by tenant credit quality, industry, geography, lease duration and property type—that will provide “a very stable return dynamic for us and our investors,” Shields tells

While Griffin Capital management had considered launching a net lease REIT a few years ago, it ultimately waited until this year. One main reason for shelving the REIT earlier was the low cap rate environment in which properties were selling. To be able to pay shareholders a reasonable dividend, properties would need to be purchased in the range of 8.65% to 8.7% caps, says Shields. “At the end of ’07, there was nothing you’d want to own at that kind of cap rate,” he adds.

Today, however, Shields says he sees the return of asset pricing that makes sense, and expects attractive buying opportunities ahead. “We see some pretty frothy opportunity in the sale-leaseback market going forward, because given the capital constraints for every corporate borrower out there, the opportunity to do a sale-leaseback transaction appears to be progressively more appealing” to corporate America, he says.

GC Net Lease REIT’s management team is currently looking at several potential deals, at least one of which Shields hopes to have closed by the end of the year. But unlike most non-traded REITs, GC Net Lease REIT has launched already owning two properties, which were contributed by Griffin Capital principals and represent about $55 million in value, including more than $20 million of equity.

The assets, which Shields says are indicative of the kind of assets the REIT intends to buy going forward, have both recently undergone renovations and extended their absolute net lease leases. One is a 176,025-square-foot office and laboratory facility in Plainfield, IL used by Chicago Bridge & Iron Co. on a 15-year lease that expires in 2022; the other is a 565,206-square-foot distribution facility in Clinton, SC, occupied by Renfro Corp. on a 12-year lease that expires in 2021. Both have rental increases and renewal options.

“Our initial property contributions help support our current dividend,” says Griffin Capital national sales director David Ford. “We are very excited to be bringing this product to the marketplace at this point in the real estate market cycle.”

GC Net Lease REIT’s registration allows it to raise $750 million of equity over the next couple of years, and it can be re-filed in the future to sell even more shares. To start, Shields says he expects to raise $100 million in 2010, which could translate to a couple hundred million dollars of properties. And ultimately Griffin Capital’s objective is to raise as much as $3 billion of equity over a seven-year period, building a portfolio of $5 billion to $6 billion of assets in the process and eventually listing the REIT on an exchange, he says.

Griffin Capital has been investing in the net lease property market going back to 1996. In more recent years, it has been a sponsor of investments structured as tenant-in-common and Delaware Statutory Trust programs, with both single-tenant and multi-tenant assets. Single-tenant properties account for about one-third of its current $1 billion of owned and managed assets. Sphere: Related Content

Bickford Senior Living Closes $28.25 Million Sale Leaseback of Five Assisted Living Facilities in MI & IL

SEC Edgar Web Site - November 19, 2009

National Health Investors, Inc. (NYSE:NHI) announced today it has closed a $28.25 million purchase/leaseback transaction with Bickford Senior Living and its affiliates (“Bickford”) involving four assisted living facilities in Michigan and one in Illinois. The assisted living communities are two to three years old totaling 216 units and attract 100% private payment for services. The purchase price was funded from NHI’s accumulated cash liquidity and includes $3 million in contingent payments to be made over the next three years based on Bickford’s expected achievement of certain operational measures. The five facilities are being leased to Bickford over 15 years at an initial lease rate of 9.5% plus annual fixed escalators. Bickford Senior Living, headquartered in Olathe, Kansas, operates over 40 assisted living, independent living and memory care facilities in Kansas, Iowa, Illinois, Indiana, Missouri, Nebraska and Michigan. The purchase/leaseback of the Bickford facilities brings NHI’s total 2009 year-to-date new investments in long-term care real estate and mortgages to $88.6 million. Sphere: Related Content

IDS Logistics Agrees to $28 Million Sale Leaseback of Seven Warehouses in Malaysia

The Star Online - November 20, 2009

Axis REIT Managers Bhd (ARMB) has proposed to buy seven warehouses in Klang and Seberang Prai for RM96mil from IDS Logistics Services (M) Sdn Bhd.

ARMB said in a statement the sale and leaseback deal comprised five warehouse buildings located in Bukit Raja, Klang, on two pieces of freehold land, while two more were in Seberang Prai, Penang, on separate pieces of leasehold land.

The acquisition was for a total cash consideration of RM71.75mil and RM24.25mil respectively, it said.

The Klang property is located in Bukit Raja Industrial Estate, a premier industrial zone in that area.

The Penang properties are located within the largest industrial estate in northern Peninsular Malaysia, the Prai Industrial Estate Phase 4, about 15km from the Butterworth Ferry Terminal and Railway Station.

The deal comes with a 15-year fixed lease agreement with an option to renew for a further 15 years with IDS Logistics, the current owner and operator. (The monthly rentals will reportedly be be RM666,666.67, resulting in an initial annual yield of approximately 8.3%.)

IDS Logistics is a wholly-owned subsidiary of Hong Kong-based Integrated Distribution Services Group Ltd, a logistics services provider and a member of the Li & Fung Group.

The lease agreements come with an agreed step-up in rental every three years over the 15-year period.

On completion of the acquisition, the fund will, for the first term of the lease, receive RM8mil a year in gross income.

ARMB chief executive office and executive director Stewart Labrooy said the acquisitions would provide a steady income and contribute positively to its earnings next year.

These new acquisitions will also see the company’s assets under management rise to over RM900mil. Sphere: Related Content

Thursday, November 19, 2009

Toys 'R' Us to Issue $650 Million in Lease Backed Notes

Fitch Ratings - November 9, 2009

Fitch Ratings has assigned an Issuer Default Rating (IDR) of 'B-' to Toys 'R' Us Property Co. II, LLC (previously known as Giraffe Holdings, LLC) and rates Toys 'R' Us Property Co. II, LLC's new $650 million senior secured notes 'B+/RR2'. The notes are secured by first-priority liens on 129 properties held in a bankruptcy-remote entity with a Master Lease covering all the properties, which requires Toys Delaware to pay all costs and expenses related to the ownership, operation, leasing and maintenance of the properties. In addition, while the property company currently does not have any subsidiaries, the notes will benefit from guarantees by any future subsidiary of the property company. Proceeds from the offering, an intercompany loan and a cash contribution from Toys 'R' Us, Inc. (TOY), as well as the release of restricted cash and cash on hand will be used to repay the existing $600 million Giraffe Holdings CMBS facility and $200 million MPO Holdings CMBS facility.

Fitch has also affirmed the following ratings:

Toys 'R' Us, Inc.
--IDR 'B-'
--Senior Unsecured Notes 'C/RR6'

Toys 'R' Us - Delaware, Inc.
--IDR 'B-'
--Secured Revolver 'B/RR3'
--Secured Term Loan 'CC/RR6'
--Unsecured Term Loan 'CC/RR6'
--Senior Unsecured Notes 'CC/RR6'

Toys 'R' Us Property Co. I, LLC (previously known as TRU 2005 RE Holding Co.)
--IDR 'B-'
--Senior Unsecured Notes 'B+/RR2'

Toys 'R' Us Europe, LLC (previously known as Toys 'R' Us (UK) Ltd.)
--IDR 'B-'
--Secured Revolver 'B/RR3'

The Rating Outlook is Stable. TOY had $5.6 billion in debt outstanding on Aug. 1, 2009. Sphere: Related Content

Wednesday, November 18, 2009

Blog Update......Finally

Finally, at long last, I am getting around to updating my blog. Most readers have assumed it was dead, joining the hundreds or perhaps thousands of other well intentioned efforts to provide meaningful content to a faithful following. The truth is I have been following the industry and capturing news all along in “draft” form for the benefit of those I work for or advise. (You cannot provide expert advice without adequate market research.) But I have found it difficult to find the time to refine each post or search for the most revealing or insightful source for each story.

Most people grossly underestimate the time commitment that a blog requires. I try to provide readers with links to news articles that provide the greatest level of transaction detail and insight possible on transactions that “move the needle” ($20 million or greater.) I try to avoid press releases and articles that are nothing more than marketing fluff. But this has become increasingly difficult in a media environment where journalism budgets have been drastically cut and some of the better news I uncover is only available for a fee. This makes maintaining this blog a very time consuming endeavor, and one that takes a “back seat” to the more pressing demands of livelihood and family.

You may notice a disproportionate number of news stories covering European companies as I update this blog. That’s because Europe is where the “action” is now and has been for some time. European companies own a disproportionately larger share of their occupational real estate than their U.S. counterparts. They have been monetizing real estate assets at very rapid pace lately with banks clearly leading the pack. I foresee this trend continuing for some time to come.

I will make a concerted effort to keep this blog as current as it is informative. Please send me any news links you uncover about significant sale leaseback or net lease transactions that would be of interest to readers.

Best Regards,
Sphere: Related Content

Sunday, November 15, 2009

Tesco Accelerates Sale Leaseback Program to Meet Market Demand

Property Week - November 13, 2009

Tesco has begun the next phase of its £5bn sale-and-leaseback programme to take advantage of the surge in the investment market.

The supermarket giant is bringing forward its next tranche of properties to the market to capitalise on the current bubble of large numbers of buyers chasing a scarcity of stock.

Tesco is thought to have presented up to £1bn of property to investors, although it may sell this in a number of smaller chunks.

A Tesco spokesman said: “There is good interest in sale and leasebacks at this time. Funds are back looking for the right deal with cash to invest, particularly on properties let to strong covenants like Tesco. We are talking to people on our next deal.”

It is thought that yields for the Tesco properties have even dipped below 5.3%, the level at which its last tranche of properties transacted.

Greg Nicholson, chairman of UK capital markets at CB Richard Ellis, said: “Prime shop yields have seen a 0.75% yield improvement from 6% to 5.25% over the last 12 months but for prime supermarkets, this yield shift has been even more marked — a 1% yield shift from 6% to 5% over the last six months. The supermarket retail asset class has more depth today and, often, there are more than 10 bids for any property that comes to the market.”

Tesco raised £637m from its portfolio in September through a £559m securitisation of 17 properties — 15 supermarkets and two distribution warehouses — by selling commercial mortgage-backed securities at a price of gilts plus 220 basis points.

It also completed the sale and leaseback of two food stores in Hertfordshire and Oxfordshire with LaSalle Investment Management for £78m, a yield of 5.29%.

Julian Stocks, Jones Lang Lasalle’s head of UK capital markets, said: “In the last few months we have switched from lots of overseas buyers in London and the UK to the retail funds and REITs who have now joined the party.

“Demand is very strong and a lack of vendors and lack of stock is pushing prices up, perhaps at a time when the occupational market is still weak.”

Tesco announced in April 2006 that it was embarking on programme to raise money from its vast property portfolio through joint ventures and other transactions. It has since met with success, selling large portfolios and forming joint ventures with buyers including Prupim and British Land.

Morgan Williams advises Tesco. Sphere: Related Content

Thursday, November 12, 2009

AIB Seeking EUR 30 Million Sale Leaseback of Bank Branch in Dublin

The Irish Times - November 11, 2009

Allied Irish Bank is to sell its most valuable high street property in Ireland.

The Dublin city centre bank branch with dual frontage onto Grafton Street and Wicklow Street is expected to be bought either by a cash-rish Irish investor or a British or German property fund.

Colm Luddy of CB Richard Ellis confirmed yesterday that his agency is “discreetly” marketing the sale and leaseback and said there were already a number of expressions of interest. “This is without doubt one of the best pieces of real estate on the street and, coupled with a long secure lease, is exactly where the investor interest is in the current market.”

No guide price has been suggested to date but investment experts expect that the price could be between €28.37 million and €30.7 million – reflecting an initial yield of 6 to 6.5 per cent.

The bank will obviously be hoping to get the best possible price in order to set an enhanced valuation benchmark on the street before it passes over €24.6 billion in toxic loans and €7.1 billion in associated loans to the State rescue bank Nama. AIB could not be seen to be holding on to one of the most valuable retail buildings in the city centre while seeking a State bail-out.

Investors pitching for the AIB branch will be conscious of the 6.4 per cent yield set only weeks ago when the German banking group DekaBank bought the Tommy Hilfiger store on the opposite side of Grafton Street for around €25 million.

The AIB investment will have a broader appeal because of the strength of the covenant and the potential for opening up a major new store of around 464sq m (5,000sq ft) on the ground floor, or two separate retail operations on Grafton Street and Wicklow Street in the unlikely event of AIB moving out.

AIB is due to pay a rent of close to €2 million for the bank branch under a 20-year lease with a break option in year 15. The L-shaped banking hall near Weir Sons, the jewellers, is easily the busiest of its branch network in the city centre and has three and four storeys of overhead offices.

AIB has sold off much of its branch network in recent years, arguing that it was unlocking shareholder equity for its core business. The disposal programme has become more important in recent months because of the liquidity problems facing all banks. Yields on bank branches have been rapidly creeping up since AIB started offloading branches at the peak of the property market in the autumn of 2006. The first 12 branches – including some of the best in the country – were bought in one lot by property developer Gerry Gannon for around €100 million and showed an initial return of only 2.8 per cent. The most recent tranche of branches sold by the bank gave investors yields of between 6.25 and 7.25 per cent. Early in 2006 AIB also sold its Ballsbridge headquarters, to property developer Sean Dunne, and Hibernian Life and Pensions for €377.7 million. Sphere: Related Content

AXA Corporate Services HQ in Paris Sold for $95 Million

Wall Street Journal - November 12, 2009

Property developer Tishman Speyer Properties is expected to announce Wednesday that one of its investment funds had acquired the Paris office building that houses the headquarters of AXA Corporate Services for roughly $95 million.

Tishman has acquired the building from SCI Vendome in a sale-and-lease-back arrangement. Located near the Gare Saint-Lazare train station in central Paris, the building has served as corporate headquarters for various units of French insurer and asset manager AXA SA since it was built in 1910. AXA Corporate Services, which is the only tenant, will remain in the building and has agreed to a nine-year lease, Tishman said.

The sale is a sign that Tishman is able to do deals despite the problems it has had with some of its investments in the U.S., such as the CarrAmerica office-building portfolio in Washington, D.C., and the Stuyvesant Town and Peter Cooper Village apartment complex in Manhattan. The developer, which owns such landmarks as Rockefeller Center, does many of its deals through investment funds that it has raised.

The 140,000-square-foot office building is being purchased by Tishman Speyer's European Core Fund, which owns office buildings throughout Europe.

The deal, one of the larger office transactions in the French capital this year, is typical of the kind of commercial-office property sought in Paris. The building is in the Haussmannian style, named for the 19th-century city planner who created the characteristic appearance of the buildings in central Paris.

"Financing is hard to come by so it's all about equity players, and everyone is looking for this kind of building," said Vincent Bollaert, partner in the capital-markets unit of property services group Cushman Wakefield in Paris. "This is quite a big deal for Paris." Sphere: Related Content

US Theatre Chain Negotiating $135 Million Sale Leaseback of 19 Movie Theatres - November 12, 2009

Entertainment Properties Trust is negotiating a letter of intent with what it describes as “a prominent theatre operator” for a $135-million sale-leaseback, according to a filing with the Securities and Exchange Commission this week. In addition, the locally-based REIT, which trades under the ticker EPR, is in discussions with a tenant regarding the purchase of several more charter school properties and is raising new equity for what its C suite has termed “growth transactions.”

The contemplated theatre deal involves 19 properties with 291 screens, 67,000 seats and 1.56 million square feet of space combined, according to the Nov. 10 filing. If the transaction is closed, EPR expects the properties to be leased to the theatre operator under one master lease, structured as a triple-net lease with an initial 20-year term and an initial base rent equal to the purchase price multiplied by 12%, plus rent escalators every five years. “The theatre operator is currently negotiating with a third party for the purchase of the theatres,” the filing states. “It is anticipated that [EPR] would acquire the theatre properties directly from the third party and lease them to the theatre operator.”

Meanwhile, the same filing discloses that EPR is discussing an option to buy as many as five charter schools from Imagine Schools Inc. The purchases as well as plans to invest in the expansion of a charter school the REIT already owns, is estimated to total $50 million.

During the company’s third quarter earnings conference call last week, EPR executives alluded to possible transactions in the theatre and charter school property markets, saying they have been spending a lot of time looking at deals in the 11% to 12% cap rate range. The deals are generally coming from “distressed sellers, not necessarily distressed properties, but distressed sellers,” president and chief executive officer David Brain said during the call. Sphere: Related Content

Sunday, November 08, 2009

MTD Capital Agrees to $52 Million Sale Leaseback of Two Office Towers in Malaysia

Business Times - November 6, 2009

MTD Capital Bhd said it will sell both its MTD Building and Bangunan Shell Malaysia to its major shareholder for RM175 million to fund its highway project in Phillipines.

MTD’s wholly owned unit, MTD Properties Sdn Bhd, has agreed to sell MTD Building, a 14-storey office tower for RM70 million to Haluan Gigih Sdn Bhd (HSGB), a unit of Alloy Consolidated Sdn Bhd, which in turn is MTD’s major shareholder.

It will also sell the 12 storey Bangunan Shell to HGSB for RM105 million.

MTD Properties will lease back the MTD Building as it is the group’s headquarters. Sphere: Related Content

Downer EDI Works Seeks Sale Leaseback of 22 Sites in New Zealand

NZ Herald News - November 6, 2009

Downer EDI Works, the listed national infrastructure business, is advertising 22 properties in a big sale-and-leaseback deal. Cos Bruyn, Manukau-based chief executive, said Downer wanted to free up capital and get out of real estate so it could expand the business into new areas.

The diversified engineering and services group is offering to lease back its big works depots and provincial bases for 10 to 20 years, paying new owners so it can continue to operate from the same sites. Downer will pay an annual rent on each property of from $12,000 to $1.17 million. It operates here as a subsidiary of the Australian business but is listed on NZX.

Six large regional depots are being advertised for sale by private treaty closing on November 26, to be leased for 20 years. The other 16 properties will be leased on decade-long terms with four rights of renewal for five years. Those will be offered at two auctions.

Charles Cooper, Colliers International's Queen St-based national industrial director, said the agency had been involved in sale-and-leaseback deals this year for NZ Post, Fisher & Paykel Appliances and Farmlands. Sphere: Related Content

Saturday, November 07, 2009

Banesto Seeking EUR 100 Million Sale Leaseback of 24 Bank Branches Across Spain

Reuters (as translated by Google)- November 3, 2009

Banesto (BTO.MC) has 24 sales offices in operation 'sale & leaseback' with which they hoped to raise 150 million euros, a source said Tuesday the operation concedora .

A spokesman for Banesto confirmed that the agency had given a mandate to Aguirre Newman sales, but declined comment on the amount of the transaction.

A spokesman for Aguirre Newman also commented on the transaction. "Banesto has put up for sale 'sale & leaseback' office a package of 150 million euros," the source said.

The financial institution follows in the footsteps of its parent Santander (SAN.MC) two years ago sold for subsequent lease its headquarters in Boadilla del Monte and several bundles of branches. Sphere: Related Content

Friday, November 06, 2009

EnergyAustralia Seeking $100 Million Sale Leaseback of Downtown Sydney HQ

The Sydney Morning Herald - November 3, 2009

The EnergyAustralia headquarters at George Street, opposite Sydney’s Town Hall, where a $100 million sale and leaseback is planned, is on the market as the NSW Government prepares to sell the electricity retailer. Sphere: Related Content

Thursday, November 05, 2009

Collapse of Bond Insurers Slams Municipal Transit Agencies

The New York Times - November 1, 2009

(Note: While these transit authority deals did not involve real estate, they clearly demonstrate that fact that credit risk can never be completely eliminated. And transit authorities are not alone in their misery.)

Like a tsunami that follows an undersea earthquake, collateral damage from the collapse of credit markets is about to strike the millions of daily transit riders in America’s biggest cities. Public transit agencies in cities including New York, Atlanta, San Francisco and Washington are under pressure to surrender $2 billion from their budgets because financial institutions have spotted a chance to gain a windfall from complicated tax-shelter deals known as “leasebacks.”

In the heady 1990s, the federal government encouraged these leaseback deals as a quick fix for budget problems. Transit agencies like New York’s Metropolitan Transportation Authority would sell their railcars and other equipment to banks, which would then lease them back to the agencies.

Leasebacks appeared to promise that everyone would emerge a winner. Banks — including many that later took federal bailout money like Bank of America and Wells Fargo — were able to cash in on substantial tax deductions through the transactions. The transit companies, which were paid with a portion of those tax savings, could use the cash to modernize their systems and make safety improvements.

Alas, as with any quick fix, the deals have set off a cascade of problems.

First, while the Internal Revenue Service declared the deals illegal in 2004, it allowed previously completed deals to remain on the books. And the situation exploded last fall when financial markets crashed and the third-party insurers chosen by the transit agencies as guarantors of the transactions lost their triple-A credit ratings (in many cases, the insurer was A.I.G.). This placed the transit agencies in “technical default” on the leases, even though they hadn’t missed any payments.

In turn, many of the banks have decided to take advantage of these “technical defaults” to reap a windfall in early-termination payments. By rights, they can immediately demand from transit authorities an amount equal to all their anticipated tax savings. These can run to hundreds of millions of dollars — New Jersey Transit alone is on the hook for $150 million.

Virtually all major city and state public transit systems in the country have at least one of these deals still on the books. If they have to make these payments, commuters will bear the brunt, in terms of higher fares and deferred maintenance.

A solution exists, however. Senator Robert Menendez, a Democrat from New Jersey, and Representative John Lewis, a Georgia Democrat, have proposed a bill that would levy a 100 percent excise tax on any lump-sum payments demanded by the banks. This would effectively force the financial industry to stop demanding default penalties and go back to the old lease payment schedule — at no cost to taxpayers.

As the nation climbs out of one of its toughest economic crises ever, we cannot be lulled into thinking the problems caused by imprudent financing techniques have vanished. Yes, the transit groups were unwise to get involved in the leasebacks, but that’s no reason to let banks continue to exploit loopholes in them at the expense of transit riders. Congress must act to protect commuters and taxpayers from this insidious legacy of a careless period in American finance. Sphere: Related Content

Aurora Health Care Completes $169 Million Sale Leaseback of 10 Medical Buildings in Wisconsin

JSOnline - October 2, 2009

Aurora Health Care Inc. has sold 10 eastern Wisconsin buildings to a Massachusetts-based real estate investment trust for $169 million, a company spokesman said Friday.

Aurora sold the medical office buildings and outpatient surgery centers to SNH Medical Office Properties Trust Inc., a real estate investment trust based in the Boston area, said Aurora spokesman Ron Irwin. The buildings total 640,000 square feet, according to SNH Medical.

The buildings will be leased back to Aurora, which has done other sale-leasebacks. Those transactions provide cash for Aurora to invest into its medical operations and reduce its debt.

The facilities sold are in Wauwatosa, at 3289 N. Mayfair Road; Glendale, at 3003 W. Good Hope Road, and 7000 N. Range Line Road; Pewaukee, at W231-N1440 Corporate Court; Grafton, at 215 W. Washington Ave.; Mount Pleasant, at 8348 Washington Ave. and 8400 Washington Ave., and Sheboygan, at 1221 N. 26th St., 2414 Kohler Memorial Drive, and 1222 N. 23rd St.

SNH Medical is a subsidiary of Senior Housing Properties Trust, based in Newton, Mass. Senior Housing Properties primarily owns nursing homes, assisted living centers and other residential properties, but has been diversifying by buying medical office buildings and other medical facilities, said Timothy Bonang, vice president of investor relations.

Aurora, in two separate sales earlier this year, sold six medical office buildings to Santa Ana, Calif.-based Grubb & Ellis Healthcare REIT Inc. for around $75 million.

(NOTE: A quarterly earnings release from the buyer indicates that the transaction was a 15 year sale leaseback at an initial rent of approximately $15 million annually - an initial yield of approximately 8.9%.) Sphere: Related Content

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