NJ.com - August 25, 2010
Desperate to close an $83 million deficit, Newark plans to sell one of the last assets it has remaining. Itself, one municipal building at a time.
Police precincts, fire houses and office buildings are being eyed for a sale the city council hopes will generate $50 million for the 2010 budget.
The financial gambit calls for the Essex County Improvement Authority to sell bonds to buy the buildings and then lease them back to Newark over a period of years, according to a plan laid out Tuesday by city and county officials.
It’s a costly and risky solution. With capital improvements, fees and services, the deal is expected to cost the city about $60 million in the long term.
Before any of that happens, the city will have to run through a gauntlet of bureaucracy at warp speed. The plan has to be approved by the authority, the Newark City Council, the Essex County Freeholders, and the state Local Finance Board.
But city leaders say they are running out of time and options to forestall a crippling financial meltdown. Without a solution soon the city will be forced to levy a 30 percent tax increase. Even with the "lease-back" revenue, Newark is facing a possible 20 percent property tax hike and more than 600 layoffs.
The city must have the $50 million in its accounts by mid-November in order to guarantee a balanced budget for this year — and avoid a potential takeover by the state. City officials Tuesday said there was no room for error or delay.
"We’ve built a calendar around a Nov. 12 to a Nov. 18 window, and we’ve worked backward," said Henry Amoroso, a paid city budget consultant. "This is unprecedentedly tight."
City leaders and budget experts disagree on how the city found itself in a budget crisis. Some say the mayor should have attacked the city’s bloated spending years ago. Others say the recession has choked off revenues at the worst possible time for Newark.
Though selling your police precincts seems a bizarre way to raise money, some urban experts say it's a solution that’s catching on.
"The variety of places that are exploring a variety of measures is really quite striking," said Mark Muro, senior fellow at the Brookings Institution. Newark is "really quite in the mainstream," he said.
Mayor Cory Booker’s office would not provide the list of properties being considered, but Amoroso said the buildings had to be in reasonably good condition and the city had to be the tenant. The finance building on Broad Street, one of Newark’s main drags, was mentioned as a good example, along with the city welfare building and the child and family well-being building. The only building not on the table is City Hall, officials said.
"We’re going to follow the council’s leadership on which buildings" to sell, said Booker, who stressed that the idea is being pushed by city council members. "At the end of the day, they’re the deciders. They and the Essex County Improvement Authority."
Essex County Executive Joseph DiVincenzo said as long as bond buyers and not taxpayers were the only ones liable in the transaction, he would support it, but he warned that it is far from a done deal.
"It’s just in the beginning stages," DiVincenzo said. "There’s a lot of work that has to be done. Every building has to be appraised."
Newark will pay the county between $50,000 and $100,000 to appraise the properties as well as hire their own evaluators.
The plan was first floated by West Ward Councilman Ronald Rice as one of several alternatives to the creation of a municipal utilities authority to manage the city’s water. When the council tabled the MUA, it was left with a $70 million hole in the 2010 budget. That number has grown to $83 million, Amoroso said Tuesday.
Rice said he is glad the administration is working more closely with the council after the failure of the MUA.
"I have to give my colleagues credit. They’re the ones who were emphatic that the administration drill down on these ideas," Rice said. "We were told put up or shut up, so we started putting up."
Sphere: Related Content
Wednesday, August 25, 2010
Monday, August 23, 2010
Accor Agrees to $467 Million Sale Leaseback of 48 Hotels in Europe
Reuters - August 23, 2010
French hotel company Accor (ACCP.PA) agreed to sell 48 hotels in Europe for 367 million euros ($466.7 million) as part of its mission to cut debt and secure growth over the next few years.
The deal, which is due to be completed before the end of this year, will give Accor a cash boost of 282 million euros and will add around 3 million euros to its annual pretax profit from 2010, the hotel group said in a statement on Monday.
The hotels include a Novotel at Munich Airport and a 772-room Ibis at Charles de Gaulle Airport in Paris. The two buyers are insurer Predica, part of Credit Agricole (CAGR.PA), and property group Fonciere des Murs (FERP.PA), a subsidiary of Fonciere des Regions (FDR.PA).
Taken together with previous announcements, the deal means Accor has secured a year-to-date positive cash impact of just over 500 million euros from asset sales, above its current full-year target of 450 million. [ID:nLDE64D0LI]
An Accor spokesman was unavailable for comment. The firm said it would continue to manage the 48 hotels under a 12-year variable lease, renewable six times. Average annual rent will be 19 percent of the hotels' revenue, with a minimum guarantee for 2011 and 2012 of 23 million euros (an initial annual yield of approximately 6.25%).
Accor is eyeing asset sales through 2013 of around 2 billion euros to help fund growth after spinning off its cash-rich services unit Edenred (EDEN.PA) earlier this year.
It is aiming for the world No. 3 spot by 2015 and wants to be Europe's largest franchisor. It is currently world No. 4 after InterContinental (IHG.L), Marriott (MAR.N) and the Hilton and Starwood (HOT.N) chains. Sphere: Related Content
French hotel company Accor (ACCP.PA) agreed to sell 48 hotels in Europe for 367 million euros ($466.7 million) as part of its mission to cut debt and secure growth over the next few years.
The deal, which is due to be completed before the end of this year, will give Accor a cash boost of 282 million euros and will add around 3 million euros to its annual pretax profit from 2010, the hotel group said in a statement on Monday.
The hotels include a Novotel at Munich Airport and a 772-room Ibis at Charles de Gaulle Airport in Paris. The two buyers are insurer Predica, part of Credit Agricole (CAGR.PA), and property group Fonciere des Murs (FERP.PA), a subsidiary of Fonciere des Regions (FDR.PA).
Taken together with previous announcements, the deal means Accor has secured a year-to-date positive cash impact of just over 500 million euros from asset sales, above its current full-year target of 450 million. [ID:nLDE64D0LI]
An Accor spokesman was unavailable for comment. The firm said it would continue to manage the 48 hotels under a 12-year variable lease, renewable six times. Average annual rent will be 19 percent of the hotels' revenue, with a minimum guarantee for 2011 and 2012 of 23 million euros (an initial annual yield of approximately 6.25%).
Accor is eyeing asset sales through 2013 of around 2 billion euros to help fund growth after spinning off its cash-rich services unit Edenred (EDEN.PA) earlier this year.
It is aiming for the world No. 3 spot by 2015 and wants to be Europe's largest franchisor. It is currently world No. 4 after InterContinental (IHG.L), Marriott (MAR.N) and the Hilton and Starwood (HOT.N) chains. Sphere: Related Content
Saturday, August 21, 2010
Aldi Agrees to Sale Leaseback of 80 Retail Outlets in Southern Germany
The Wall Street Journal - August 20, 2010
Insurer Allianz SE (ALV.XE) paid a 'clear three-digit million euros amount' for the 80 retail outlets in southern Germany owned by Aldi Immobilien KG, a person familiar with the matter told Dow Jones Newswires Friday.
Earlier Friday, Allianz, Europe's largest insurer by premium income, said its German real-estate unit is buying 80 retail outlets in southern Germany from Aldi Sued in a leaseback deal aimed at diversifying its investment portfolio.
Aldi, which is one of Germany's largest discount grocery retail chains, will continue to operate the outlets. Aldi Sued is the main long-term lessee of the outlets, which have an average sales area of 900 square meters, Allianz said.
Spokespeople for Allianz Real Estate Germany GmbH and Aldi Sued declined to comment on the transaction value, saying both parties agreed not to disclose the investment details of the deal.
Frank Neumann, a real-estate stock analyst for Bankhaus Lampe, had said he estimates the value of the deal at around EUR80 million.
Aldi Sued operates more than 1,780 retail branches in western and southern Germany. Aldi Nord operates more than 2,500 retail outlets in northern and eastern Germany. Sphere: Related Content
Insurer Allianz SE (ALV.XE) paid a 'clear three-digit million euros amount' for the 80 retail outlets in southern Germany owned by Aldi Immobilien KG, a person familiar with the matter told Dow Jones Newswires Friday.
Earlier Friday, Allianz, Europe's largest insurer by premium income, said its German real-estate unit is buying 80 retail outlets in southern Germany from Aldi Sued in a leaseback deal aimed at diversifying its investment portfolio.
Aldi, which is one of Germany's largest discount grocery retail chains, will continue to operate the outlets. Aldi Sued is the main long-term lessee of the outlets, which have an average sales area of 900 square meters, Allianz said.
Spokespeople for Allianz Real Estate Germany GmbH and Aldi Sued declined to comment on the transaction value, saying both parties agreed not to disclose the investment details of the deal.
Frank Neumann, a real-estate stock analyst for Bankhaus Lampe, had said he estimates the value of the deal at around EUR80 million.
Aldi Sued operates more than 1,780 retail branches in western and southern Germany. Aldi Nord operates more than 2,500 retail outlets in northern and eastern Germany. Sphere: Related Content
Friday, August 20, 2010
Eroski Enters EUR45 Million Sale Leaseback of 21 Grocery Stores in Spain
Property Week - August 18, 2010
Rockspring Property Investment Managers has bought a portfolio of 21 Spanish food stores for €45m.
The fund manager has bought the properties, all in the Basque country and Majorca, in a sale-and leaseback-deal with Spanish food retailer Eroski.
Eroski has signed a 20-year lease on the entire 320,000 sq ft portfolio, which was bought on behalf of the single-client account of a UK pension fund.
The UK pension fund account is targeting un-leveraged core and core plus returns across central and western European retail, office and industrial properties – with a toal spending power of €300m.
James Preston, Rockspring Iberia’s managingdirector, said: “Food retail has proven to be a well performing, defensive sector across Spain both before and during the economic downturn; we are therefore pleased to have secured exposure to this successful asset type.
“These properties appealed to us due to the combination of their prime location, strong local economic fundamentals, sustainable rental levels and the quality of Eroski as a tenant.
“As such, the investment provides a high degree of insulation from any further effects of the downturn, as well as being well positioned for any recovery.”
José Miguel Fernández Astobiza, Eroski’s development manager, said “This portfolio disposal shows further progress in our strategy as we seek to dispose of the freehold interest in our properties in order to release capital to develop our commercial retail activities.”
Cushman & Wakefield advised Eroski and Nicea Abogodas advised Rockspring. Sphere: Related Content
Rockspring Property Investment Managers has bought a portfolio of 21 Spanish food stores for €45m.
The fund manager has bought the properties, all in the Basque country and Majorca, in a sale-and leaseback-deal with Spanish food retailer Eroski.
Eroski has signed a 20-year lease on the entire 320,000 sq ft portfolio, which was bought on behalf of the single-client account of a UK pension fund.
The UK pension fund account is targeting un-leveraged core and core plus returns across central and western European retail, office and industrial properties – with a toal spending power of €300m.
James Preston, Rockspring Iberia’s managingdirector, said: “Food retail has proven to be a well performing, defensive sector across Spain both before and during the economic downturn; we are therefore pleased to have secured exposure to this successful asset type.
“These properties appealed to us due to the combination of their prime location, strong local economic fundamentals, sustainable rental levels and the quality of Eroski as a tenant.
“As such, the investment provides a high degree of insulation from any further effects of the downturn, as well as being well positioned for any recovery.”
José Miguel Fernández Astobiza, Eroski’s development manager, said “This portfolio disposal shows further progress in our strategy as we seek to dispose of the freehold interest in our properties in order to release capital to develop our commercial retail activities.”
Cushman & Wakefield advised Eroski and Nicea Abogodas advised Rockspring. Sphere: Related Content
WP Carey Funds Build to Suit of Logistics Facility for Neuca SA in Poland
The Wall Street Journal - August 17, 2010
Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today announced that its publicly-held, non-traded REIT affiliate, CPA(R):17 - Global, has provided build to suit financing that will fund 100% of the construction and related development costs for a logistics facility in Poznan, Poland being developed by Panattoni Europe. Upon completion, the facility will be owned by CPA(R):17 and will be fully occupied under a long term triple net lease with Neuca SA (formerly known as Torfarm SA), the largest wholesale pharmaceutical distributor in Poland.
The to-be-built facility will comprise approximately 123,000 square feet and will serve as one of Neuca's three strategic logistics sites for pharmaceutical distribution across Poland. The facility is located in Poznan, the 4th largest logistics hub in Poland. Linking seven national and international roads and located midway between Berlin and Warsaw, Poznan forms an important trade-route junction. Construction is anticipated to be completed in January 2011.
Jeff Lefleur, Executive Director of W. P. Carey, said: "Our large capital base and long term investment approach gives us the ability to finance 100% of construction and related development costs in markets where such capital remains challenging for developers to access. We hope to continue being a reliable funding source to experienced developers such as Panattoni for their long term, single-tenant projects. We are also pleased that our financing will help Neuca meet its new facility needs."
Robert Dobrzycki, Managing Partner of Panattoni Europe, noted: "Choosing W. P. Carey as our funding source enabled us to focus on the needs and timing of the project, avoid the risks of relying on short-term borrowing and the process of securing a forward-purchaser, all while eliminating any equity outlay on our part." Sphere: Related Content
Investment firm W. P. Carey & Co. LLC (NYSE: WPC) today announced that its publicly-held, non-traded REIT affiliate, CPA(R):17 - Global, has provided build to suit financing that will fund 100% of the construction and related development costs for a logistics facility in Poznan, Poland being developed by Panattoni Europe. Upon completion, the facility will be owned by CPA(R):17 and will be fully occupied under a long term triple net lease with Neuca SA (formerly known as Torfarm SA), the largest wholesale pharmaceutical distributor in Poland.
The to-be-built facility will comprise approximately 123,000 square feet and will serve as one of Neuca's three strategic logistics sites for pharmaceutical distribution across Poland. The facility is located in Poznan, the 4th largest logistics hub in Poland. Linking seven national and international roads and located midway between Berlin and Warsaw, Poznan forms an important trade-route junction. Construction is anticipated to be completed in January 2011.
Jeff Lefleur, Executive Director of W. P. Carey, said: "Our large capital base and long term investment approach gives us the ability to finance 100% of construction and related development costs in markets where such capital remains challenging for developers to access. We hope to continue being a reliable funding source to experienced developers such as Panattoni for their long term, single-tenant projects. We are also pleased that our financing will help Neuca meet its new facility needs."
Robert Dobrzycki, Managing Partner of Panattoni Europe, noted: "Choosing W. P. Carey as our funding source enabled us to focus on the needs and timing of the project, avoid the risks of relying on short-term borrowing and the process of securing a forward-purchaser, all while eliminating any equity outlay on our part." Sphere: Related Content
Tuesday, August 17, 2010
AMF Bowling Completes £15.2 Million Sale Leaseback of Nine Family Entertainment Centers in UK
Property Magazine International - August 16, 2010
Columbus UK Real Estate Fund, advised by Columbus Capital Management, has completed a purchase and leaseback of nine family entertainment centres from AMF Bowling. This combined with an equity investment from Close Brothers Private Equity (CBPE Capital), has financed AMF’s simultaneous acquisition of its main rival, Hollywood Bowl, from Mitchells and Butler plc.
AMF has acquired the 24 Hollywood Bowl centres for £27 million which, together with the existing 18 AMF centres makes the combined AMF Hollywood business the UK market leader with 42 prime sites across the UK. The AMF management team is highly regarded in the sector and is backed by the shareholders of Bourne Leisure, the owner of Butlins and Haven Holidays.
The nine centres acquired by Columbus range in size from 20,000 sq ft to 30,000 sq ft and are all situated on retail parks or major arterial roads. They are located in Ashford, Maidstone, Torquay, Peterborough, Wellingborough, Shrewsbury, Wigan, Carlisle and Stirling. The units have all been leased back to the combined AMF Hollywood Bowl business for 25 years at an average rent of approximately £6 per sq ft with rent reviews geared to the RPI Index.
The price of approximately £15.2 million reflects an initial yield of 9.3%.
Douglas Stevens & Co and Chester Properties advised Columbus Capital whilst Montague Evans acted for AMF Bowling. Sphere: Related Content
Columbus UK Real Estate Fund, advised by Columbus Capital Management, has completed a purchase and leaseback of nine family entertainment centres from AMF Bowling. This combined with an equity investment from Close Brothers Private Equity (CBPE Capital), has financed AMF’s simultaneous acquisition of its main rival, Hollywood Bowl, from Mitchells and Butler plc.
AMF has acquired the 24 Hollywood Bowl centres for £27 million which, together with the existing 18 AMF centres makes the combined AMF Hollywood business the UK market leader with 42 prime sites across the UK. The AMF management team is highly regarded in the sector and is backed by the shareholders of Bourne Leisure, the owner of Butlins and Haven Holidays.
The nine centres acquired by Columbus range in size from 20,000 sq ft to 30,000 sq ft and are all situated on retail parks or major arterial roads. They are located in Ashford, Maidstone, Torquay, Peterborough, Wellingborough, Shrewsbury, Wigan, Carlisle and Stirling. The units have all been leased back to the combined AMF Hollywood Bowl business for 25 years at an average rent of approximately £6 per sq ft with rent reviews geared to the RPI Index.
The price of approximately £15.2 million reflects an initial yield of 9.3%.
Douglas Stevens & Co and Chester Properties advised Columbus Capital whilst Montague Evans acted for AMF Bowling. Sphere: Related Content
Wednesday, August 11, 2010
Casey's Counters Couche-Tard's Hostile Bid for Casey's 1,500 Store Property Portfolio
Winnipeg Free Press - August 10, 2010
Casey's General Stores says it has armed itself with more than enough cash to finance its self-tender offer against Alimentation Couche-Tard's hostile takeover bid after completing a US$569 million private placement financing.
The placement with a series of insurance companies involves (5.22%) senior unsecured notes due in 2020.
The Iowa-based convenience store company originally planned to use cash on hand and debt to fund the US$500 million recapitalization plan and buy back its shares in a move to raise its stock price and thwart the Couche-Tard offer.
But demand was so strong for the private placement that it will use only debt to purchase 25 per cent of its shares at between US$38 and US$40 each.
The remaining money will be used for fees and expenses in connection with the offer, along with a US$59 million repayment of other senior notes holding a higher interest rate. Any extra funds will be directed at general corporate expenses.
"We are excited that we are able to move forward with our highly accretive recapitalization plan, while maintaining a strong balance sheet and continuing to execute on our strategic initiatives," the company told its employees.
Casey's (Nasdaq:CASY) shareholders have until midnight on Aug. 25 to tender their shares to the company's modified Dutch auction.
Quebec-based Couche-Tard (TSX:ATD.B) extended its US$36.75 per share offer until Aug. 30.
Ben Brownlow, a Casey's analysts with Morgan, Keegan & Company, said he believes Couche-Tard will walk away from the battle by not extending the offer.
"I would be surprised if Couche-Tard went through with a higher offer because if they did so it would be contradictory to their prior trades," he said in an interview.
Brownlow has a US$44 per share target on Casey's shares. He said the recapitalization is very favourable to all shareholders and will lead to a doubling in the return on equity.
Casey's is holding its annual meeting on Sept. 23.
If it doesn't withdraw, Couche-Tard has indicated it plans to nominate eight directors and says it plans to ask shareholders to repeal any bylaws or amendments adopted by the board after June 10, 2009. The move is designed to remove a further roadblock designed to thwart Couche-Tard's takeover plan.
The U.S.-based convenience store operator has urged shareholders to reject both efforts and not use blue proxies sent by Couche-Tard "even in protest."
"Couche-Tard is attempting to utilize the strong balance sheet and real estate position built by Casey’s to subsidize the Couche-Tard Offer and transfer value to Couche-Tard’s shareholders," Casey's said in a proxy filing with the U.S. Securities and Exchange Commission.
Casey's owns 98 per cent of the land and buildings at its 1,500 stores, headquarters and distribution centre. It said Couche-Tard could use this real estate to subsidize its offer through sale-leaseback transactions, as it has done in prior acquisitions.
Couche-Tard declined to comment Tuesday on progress in obtaining financing for its US$1.9 billion takeover. The company has said it is confident about obtaining the financing when required.
But Casey's told its shareholders that its rival has no committed financing more than three months are submitting its offer.
Couche-Tard runs a network of 5,878 convenience stores, 4,146 of which include motor fuel dispensing, across North America.
On the Toronto Stock Exchange, Couche-Tard's shares fell 31 cents at C$21.00 in afternoon trading. Casey's shares were down 19 cents at $38.11 on Nasdaq. Sphere: Related Content
Casey's General Stores says it has armed itself with more than enough cash to finance its self-tender offer against Alimentation Couche-Tard's hostile takeover bid after completing a US$569 million private placement financing.
The placement with a series of insurance companies involves (5.22%) senior unsecured notes due in 2020.
The Iowa-based convenience store company originally planned to use cash on hand and debt to fund the US$500 million recapitalization plan and buy back its shares in a move to raise its stock price and thwart the Couche-Tard offer.
But demand was so strong for the private placement that it will use only debt to purchase 25 per cent of its shares at between US$38 and US$40 each.
The remaining money will be used for fees and expenses in connection with the offer, along with a US$59 million repayment of other senior notes holding a higher interest rate. Any extra funds will be directed at general corporate expenses.
"We are excited that we are able to move forward with our highly accretive recapitalization plan, while maintaining a strong balance sheet and continuing to execute on our strategic initiatives," the company told its employees.
Casey's (Nasdaq:CASY) shareholders have until midnight on Aug. 25 to tender their shares to the company's modified Dutch auction.
Quebec-based Couche-Tard (TSX:ATD.B) extended its US$36.75 per share offer until Aug. 30.
Ben Brownlow, a Casey's analysts with Morgan, Keegan & Company, said he believes Couche-Tard will walk away from the battle by not extending the offer.
"I would be surprised if Couche-Tard went through with a higher offer because if they did so it would be contradictory to their prior trades," he said in an interview.
Brownlow has a US$44 per share target on Casey's shares. He said the recapitalization is very favourable to all shareholders and will lead to a doubling in the return on equity.
Casey's is holding its annual meeting on Sept. 23.
If it doesn't withdraw, Couche-Tard has indicated it plans to nominate eight directors and says it plans to ask shareholders to repeal any bylaws or amendments adopted by the board after June 10, 2009. The move is designed to remove a further roadblock designed to thwart Couche-Tard's takeover plan.
The U.S.-based convenience store operator has urged shareholders to reject both efforts and not use blue proxies sent by Couche-Tard "even in protest."
"Couche-Tard is attempting to utilize the strong balance sheet and real estate position built by Casey’s to subsidize the Couche-Tard Offer and transfer value to Couche-Tard’s shareholders," Casey's said in a proxy filing with the U.S. Securities and Exchange Commission.
Casey's owns 98 per cent of the land and buildings at its 1,500 stores, headquarters and distribution centre. It said Couche-Tard could use this real estate to subsidize its offer through sale-leaseback transactions, as it has done in prior acquisitions.
Couche-Tard declined to comment Tuesday on progress in obtaining financing for its US$1.9 billion takeover. The company has said it is confident about obtaining the financing when required.
But Casey's told its shareholders that its rival has no committed financing more than three months are submitting its offer.
Couche-Tard runs a network of 5,878 convenience stores, 4,146 of which include motor fuel dispensing, across North America.
On the Toronto Stock Exchange, Couche-Tard's shares fell 31 cents at C$21.00 in afternoon trading. Casey's shares were down 19 cents at $38.11 on Nasdaq. Sphere: Related Content
Knight Capital Forms CTL Lending Team
PRNewswire-FirstCall - August 10, 2010
Knight Capital Group, Inc. (NYSE Euronext: KCG) today announced an expansion of ABS/MBS capabilities in commercial real estate finance with the hiring of Barry M. Funt and Winston G. van Buitenen as Managing Directors.
The Commercial Real Estate (CRE) Finance team will leverage Knight's institutional fixed income platform to originate real estate loans for leased-backed and project financings of all types. The team will provide creative structuring advice on transactions that seek to achieve both the economic and qualitative project goals of participating landlords and tenants.
"Barry and Winston bring considerable experience to Knight in the CRE market," said Ronak Khichadia, Managing Director, Global Head of ABS/MBS at Knight Libertas. "Using Knight's extensive client network of leading buy-side firms, they will be able to execute across the credit spectrum, undertake both large and small transaction sizes, structure taxable and tax-exempt real estate financings, and flexibly tailor structures to meet project objectives. Sphere: Related Content
Knight Capital Group, Inc. (NYSE Euronext: KCG) today announced an expansion of ABS/MBS capabilities in commercial real estate finance with the hiring of Barry M. Funt and Winston G. van Buitenen as Managing Directors.
The Commercial Real Estate (CRE) Finance team will leverage Knight's institutional fixed income platform to originate real estate loans for leased-backed and project financings of all types. The team will provide creative structuring advice on transactions that seek to achieve both the economic and qualitative project goals of participating landlords and tenants.
"Barry and Winston bring considerable experience to Knight in the CRE market," said Ronak Khichadia, Managing Director, Global Head of ABS/MBS at Knight Libertas. "Using Knight's extensive client network of leading buy-side firms, they will be able to execute across the credit spectrum, undertake both large and small transaction sizes, structure taxable and tax-exempt real estate financings, and flexibly tailor structures to meet project objectives. Sphere: Related Content
Tuesday, August 10, 2010
Transport for London HQ Sold for £97 Million
Telegraph - August 10, 2010
Pier Walk, which is located next to The O2, has been purchased by Deka, Germany's largest open-ended property fund manager.
TfL moved into the building last August on a 20-year term at £29 per sq ft. The organisation and its 1,800 employees that occupy the office are unaffected by the deal.
Quintain owns the office building with joint venture partner Lend Lease and said it would seek to reinvest the proceeds from the sale into "alternative opportunities with higher potential for value creation".
The company is leading a regeneration of the Greenwich Peninsula and the area surrounding Wembley Stadium in North London. Over the next three years Quintain, which bolstered its balance sheet with a £183m rights issue last year, aims to double assets under management to £2bn and complete the Western part of Wembley City.
The deal for Pier Walk has been struck at 6pc above the last valuation on March 31, providing evidence that a recovery in the commercial property market over the past year can be maintained, despite fears that economic uncertainty may be dampening investor demand.
Figures from property agent CB Richard Ellis published last week showed growth in UK commercial capital values slowed from 0.6pc to 0.4pc in July.
Deka, which has a UK portfolio worth in excess of £1.5bn, said the deal "confirms Deka's commitment to the UK market".
Adrian Wyatt, chief executive of Quintain, added: "This sale achieves three things for Quintain. It fulfils one of our key milestones for the financial year, which together are designed to move the company substantially closer to the achievement of our 2013 business plan. It demonstrates in a difficult market the strength of the independent valuation of our assets at Greenwich Peninsula, and, finally, it enables us to realise the value we have created within the asset and recycle resources into other opportunities with potential for higher returns."
Harm Meijer, property analyst at JP Morgan, said the sale, agreed at a yield of 5.9pc, was "good news" for the company.
Quintain and Lend Lease will retain control of seven retail assets on the ground floor of the building.
Quintain was advised by Savills. Deka's advisers are CB Richard Ellis and Savills. Sphere: Related Content
Pier Walk, which is located next to The O2, has been purchased by Deka, Germany's largest open-ended property fund manager.
TfL moved into the building last August on a 20-year term at £29 per sq ft. The organisation and its 1,800 employees that occupy the office are unaffected by the deal.
Quintain owns the office building with joint venture partner Lend Lease and said it would seek to reinvest the proceeds from the sale into "alternative opportunities with higher potential for value creation".
The company is leading a regeneration of the Greenwich Peninsula and the area surrounding Wembley Stadium in North London. Over the next three years Quintain, which bolstered its balance sheet with a £183m rights issue last year, aims to double assets under management to £2bn and complete the Western part of Wembley City.
The deal for Pier Walk has been struck at 6pc above the last valuation on March 31, providing evidence that a recovery in the commercial property market over the past year can be maintained, despite fears that economic uncertainty may be dampening investor demand.
Figures from property agent CB Richard Ellis published last week showed growth in UK commercial capital values slowed from 0.6pc to 0.4pc in July.
Deka, which has a UK portfolio worth in excess of £1.5bn, said the deal "confirms Deka's commitment to the UK market".
Adrian Wyatt, chief executive of Quintain, added: "This sale achieves three things for Quintain. It fulfils one of our key milestones for the financial year, which together are designed to move the company substantially closer to the achievement of our 2013 business plan. It demonstrates in a difficult market the strength of the independent valuation of our assets at Greenwich Peninsula, and, finally, it enables us to realise the value we have created within the asset and recycle resources into other opportunities with potential for higher returns."
Harm Meijer, property analyst at JP Morgan, said the sale, agreed at a yield of 5.9pc, was "good news" for the company.
Quintain and Lend Lease will retain control of seven retail assets on the ground floor of the building.
Quintain was advised by Savills. Deka's advisers are CB Richard Ellis and Savills. Sphere: Related Content
Monday, August 09, 2010
Proposed Accounting Changes Could Make Long Term Leases Scarce (and More Valuable)
Real Capital Analytics Website - August 5, 2010
Sweeping changes proposed in the accounting treatment of leases will have steep implications for investors should they take effect in the next few years. Just how great the resulting impact is up for debate, but implementation would compel many tenants to avoid making long term lease arrangements. For real estate investors, the potential implications loom large, and could have a profound impact for those with strategies that include single-tenant properties and sale-leasebacks, both large segments of the property markets.
Over the past 12 months, 23% of all commercial property trades globally, or $46.6 billion in assets, have involved single-tenant properties. By number of properties sold, the proportion of single-tenant properties changing hands is much higher, at close to 40%, up from 25% before the downturn. Investors typically flock to the security of single-tenant properties, particularly those with long-term credit tenants when economic conditions stumble.
The proposed regulations, part of an ongoing effort between US and international accounting bodies to converge global standards and provide greater financial transparency, would essentially require tenants to report all leases as liabilities. The March 2009 discussion paper is available from the Financial Accounting Standards Board (FASB). Instead of reporting rent as an operating expense, occupiers would have to book the value of the lease as a liability using the full term of the lease, including renewal options. The added liability could endanger existing debt covenants or be a hurdle for companies looking to raise credit. And so while some in the market will argue that accounting treatment does not impact underlying economics, practical issues do arise.
The primary concern for real estate owners is that tenants will opt for shorter lease terms – the longer the lease, the greater the liability a company would have to book. In addition, more companies are likely to buy and own their properties outright. Indeed, the proposals are already coming into play. When aerospace contractor Northrop Grumman announced that it will acquire a vacant 334,000-square-foot building for its headquarters just outside of Washington DC, it cited these potential accounting changes as a factor behind the decision.
The most vulnerable part of the property sector may be sale-leaseback transactions, where the seller/occupier is required to execute a long term lease. These have accounted for $24.8 billion, or just over 50%, of all single-tenant deals over $10 million globally over the past year. Over the same period, there have been $4.0 billion of sale-leaseback transactions in the United States, representing just under 40% of all single-tenant deals domestically.
Corporations that found traditional credit routes frozen often turned to sale-leasebacks to raise capital, and top-rated companies often use the sale-leaseback market as a vital component of their corporate finance strategy. The top ten companies engaged in the practice have used it to raise $30.0 billion globally since the start of 2007.
Although the changes have not been finalized by FASB and the International Accounting Standards Boards (IASB), most experts believe that some changes to current standards are inevitable and will take effect as early as 2012. A final draft is expected to be published for comment this fall. As the date for implementation moves nearer, single-tenant properties with long-term leases are sure to gain in desirability and value, since with adoption, long-term leases could become scarce. Sphere: Related Content
Sweeping changes proposed in the accounting treatment of leases will have steep implications for investors should they take effect in the next few years. Just how great the resulting impact is up for debate, but implementation would compel many tenants to avoid making long term lease arrangements. For real estate investors, the potential implications loom large, and could have a profound impact for those with strategies that include single-tenant properties and sale-leasebacks, both large segments of the property markets.
Over the past 12 months, 23% of all commercial property trades globally, or $46.6 billion in assets, have involved single-tenant properties. By number of properties sold, the proportion of single-tenant properties changing hands is much higher, at close to 40%, up from 25% before the downturn. Investors typically flock to the security of single-tenant properties, particularly those with long-term credit tenants when economic conditions stumble.
The proposed regulations, part of an ongoing effort between US and international accounting bodies to converge global standards and provide greater financial transparency, would essentially require tenants to report all leases as liabilities. The March 2009 discussion paper is available from the Financial Accounting Standards Board (FASB). Instead of reporting rent as an operating expense, occupiers would have to book the value of the lease as a liability using the full term of the lease, including renewal options. The added liability could endanger existing debt covenants or be a hurdle for companies looking to raise credit. And so while some in the market will argue that accounting treatment does not impact underlying economics, practical issues do arise.
The primary concern for real estate owners is that tenants will opt for shorter lease terms – the longer the lease, the greater the liability a company would have to book. In addition, more companies are likely to buy and own their properties outright. Indeed, the proposals are already coming into play. When aerospace contractor Northrop Grumman announced that it will acquire a vacant 334,000-square-foot building for its headquarters just outside of Washington DC, it cited these potential accounting changes as a factor behind the decision.
The most vulnerable part of the property sector may be sale-leaseback transactions, where the seller/occupier is required to execute a long term lease. These have accounted for $24.8 billion, or just over 50%, of all single-tenant deals over $10 million globally over the past year. Over the same period, there have been $4.0 billion of sale-leaseback transactions in the United States, representing just under 40% of all single-tenant deals domestically.
Corporations that found traditional credit routes frozen often turned to sale-leasebacks to raise capital, and top-rated companies often use the sale-leaseback market as a vital component of their corporate finance strategy. The top ten companies engaged in the practice have used it to raise $30.0 billion globally since the start of 2007.
Although the changes have not been finalized by FASB and the International Accounting Standards Boards (IASB), most experts believe that some changes to current standards are inevitable and will take effect as early as 2012. A final draft is expected to be published for comment this fall. As the date for implementation moves nearer, single-tenant properties with long-term leases are sure to gain in desirability and value, since with adoption, long-term leases could become scarce. Sphere: Related Content
Sunday, August 08, 2010
Debenhams Mulls Sale Leaseback of UK Store Portfolio
New Statesman - August 5, 2010
In a bid to generate capital, department store group Debenhams has held discussions about unlocking the value in its property portfolio, in a move to reduce its debt which stood at £927m last year.
Debenhams has been speaking to potential investors over deals for nine of its stores. Reports suggest that the group, which owns 165 stores in the UK and Ireland, is contemplating a sale and lease back deal over a period of 25 years.
In April 2010, Debenhams had stated that its net debt had been brought down by 45 per cent to the tune of £512m. In addition, it signed a £650m credit facility last month towards refinancing its debt.
Debenhams is said to have held discussions with property consultants King Sturge about facilitating the process. No comment has been forthcoming yet from either company.
Reports also suggest that the group could direct the capital from the property deals into further investments in business, such as its recent acquisition of footwear chain Faith. Sphere: Related Content
In a bid to generate capital, department store group Debenhams has held discussions about unlocking the value in its property portfolio, in a move to reduce its debt which stood at £927m last year.
Debenhams has been speaking to potential investors over deals for nine of its stores. Reports suggest that the group, which owns 165 stores in the UK and Ireland, is contemplating a sale and lease back deal over a period of 25 years.
In April 2010, Debenhams had stated that its net debt had been brought down by 45 per cent to the tune of £512m. In addition, it signed a £650m credit facility last month towards refinancing its debt.
Debenhams is said to have held discussions with property consultants King Sturge about facilitating the process. No comment has been forthcoming yet from either company.
Reports also suggest that the group could direct the capital from the property deals into further investments in business, such as its recent acquisition of footwear chain Faith. Sphere: Related Content
Monday, August 02, 2010
MGM Resorts Agrees to $80 Million Sale Leaseback of Ground Under Borgata Casino in Atlantic City
Wall Street Journal - July 28, 2010
As part of its exit strategy from Atlantic City, MGM Resorts International is selling about $80 million of land to a partnership led by Vornado Realty Trust, one of the largest commercial real-estate owners in the country, people familiar with the matter said Tuesday.
The four parcels the Vornado group is buying from MGM Resorts are connected to the Borgata Hotel Casino & Spa in Atlantic City, N.J.
New Jersey-based Vornado is buying four pieces of land connected to the Borgata Hotel Casino & Spa, including parcels underneath an 800-room hotel, convention center and parking garage. The owner of the land collects rent from a venture of MGM and Boyd Gaming Corp., which owns the hotel, garage and other buildings on the land.
The Las Vegas-style Borgata, one of Atlantic City, N.J.'s most popular casinos, which also is owned jointly by MGM and Boyd, wasn't part of the purchase. Representatives for Vornado and MGM declined to comment.
The deal marks the first wave of asset sales under an MGM agreement with the state of New Jersey's Division of Gaming Enforcement, approved in March, in which MGM promised to sell most of its Atlantic City assets in 18 months. The division required this because it believes MGM has a business partner in Macau with ties to organized crime. MGM has denied this.
In the wake of the agreement with the state, MGM placed its 50% stake in the casino, the four parcels and other assets in a divestiture trust with the company as the sole beneficiary. The sale to Vornado is the first deal out of that trust.
The deal with Vornado is an unusual step for the real-estate giant, one of the country's largest landlords of retail and office space. Vornado is making its first entrance into the Atlantic City market during one of the gambling town's most brutal downturns. The market has been hurt as cash-strapped gamblers stay away amid the recession, or go to casinos and slot parlors closer to home in Pennsylvania and New York.
Casino revenue plunged to $3.9 billion in 2009, the lowest level since 1997, from a high of $5.2 billion in 2006. Employment dropped from 50,000 to 38,000 jobs. Earlier this month, New Jersey Gov. Chris Christie proposed a state takeover of the Atlantic City casino district to salvage the industry.
Vornado's investment is relatively safe, though, because the Borgata has consistently outperformed the other 10 casinos. But, it has seen its share of revenue declines, including an 11.7% drop in June versus a year earlier. Sphere: Related Content
As part of its exit strategy from Atlantic City, MGM Resorts International is selling about $80 million of land to a partnership led by Vornado Realty Trust, one of the largest commercial real-estate owners in the country, people familiar with the matter said Tuesday.
The four parcels the Vornado group is buying from MGM Resorts are connected to the Borgata Hotel Casino & Spa in Atlantic City, N.J.
New Jersey-based Vornado is buying four pieces of land connected to the Borgata Hotel Casino & Spa, including parcels underneath an 800-room hotel, convention center and parking garage. The owner of the land collects rent from a venture of MGM and Boyd Gaming Corp., which owns the hotel, garage and other buildings on the land.
The Las Vegas-style Borgata, one of Atlantic City, N.J.'s most popular casinos, which also is owned jointly by MGM and Boyd, wasn't part of the purchase. Representatives for Vornado and MGM declined to comment.
The deal marks the first wave of asset sales under an MGM agreement with the state of New Jersey's Division of Gaming Enforcement, approved in March, in which MGM promised to sell most of its Atlantic City assets in 18 months. The division required this because it believes MGM has a business partner in Macau with ties to organized crime. MGM has denied this.
In the wake of the agreement with the state, MGM placed its 50% stake in the casino, the four parcels and other assets in a divestiture trust with the company as the sole beneficiary. The sale to Vornado is the first deal out of that trust.
The deal with Vornado is an unusual step for the real-estate giant, one of the country's largest landlords of retail and office space. Vornado is making its first entrance into the Atlantic City market during one of the gambling town's most brutal downturns. The market has been hurt as cash-strapped gamblers stay away amid the recession, or go to casinos and slot parlors closer to home in Pennsylvania and New York.
Casino revenue plunged to $3.9 billion in 2009, the lowest level since 1997, from a high of $5.2 billion in 2006. Employment dropped from 50,000 to 38,000 jobs. Earlier this month, New Jersey Gov. Chris Christie proposed a state takeover of the Atlantic City casino district to salvage the industry.
Vornado's investment is relatively safe, though, because the Borgata has consistently outperformed the other 10 casinos. But, it has seen its share of revenue declines, including an 11.7% drop in June versus a year earlier. Sphere: Related Content
BlackRock HQ in London Under Agreement for $391 Million
Bloomberg - July 30, 2010
The co-owner of the London tower known as the Gherkin says the time is right to buy more offices in the U.K. capital and is about to make its biggest acquisition since 2007.
Evans Randall Ltd. will pay as much as 250 million pounds ($391 million) in the next few weeks for offices in Drapers Gardens, Michael Evans, the closely held investment bank’s founder and chairman, said in an interview. The building in the City of London, the main financial district, is owned by Morgan Stanley, Canary Wharf Group Plc and Exemplar Properties and leased by BlackRock Inc.
Evans Randall could spend as much as 1.5 billion pounds in a year to buy more central London properties, as it seeks to profit from rising demand for modern space, Evans said. City of London office values have rebounded 19 percent in the past 10 months, following a two-year slump that wiped 45 percent off prices, according to Investment Property Databank Ltd. A shortage of new developments is pushing up rents as companies recruit more staff.
“Now is the time to buy the best quality assets if we can get our hands on them,” said Evans, 57. “The pound is very weak, interest rates are at a record low, rental demand is at an exceptional level -- the best at any time since 2006.”
BlackRock, the world’s biggest asset manager, has a 25-year lease on Drapers Gardens, a 270,000 square-foot (25,100 square- meter) building near the Bank of England. Deka Immobilien, the real estate unit of Frankfurt-based Dekabank Deutsche Girozentrale, pulled out of an agreement to buy the site for about 240 million pounds in June, according to a report last month in Property Week. Sphere: Related Content
The co-owner of the London tower known as the Gherkin says the time is right to buy more offices in the U.K. capital and is about to make its biggest acquisition since 2007.
Evans Randall Ltd. will pay as much as 250 million pounds ($391 million) in the next few weeks for offices in Drapers Gardens, Michael Evans, the closely held investment bank’s founder and chairman, said in an interview. The building in the City of London, the main financial district, is owned by Morgan Stanley, Canary Wharf Group Plc and Exemplar Properties and leased by BlackRock Inc.
Evans Randall could spend as much as 1.5 billion pounds in a year to buy more central London properties, as it seeks to profit from rising demand for modern space, Evans said. City of London office values have rebounded 19 percent in the past 10 months, following a two-year slump that wiped 45 percent off prices, according to Investment Property Databank Ltd. A shortage of new developments is pushing up rents as companies recruit more staff.
“Now is the time to buy the best quality assets if we can get our hands on them,” said Evans, 57. “The pound is very weak, interest rates are at a record low, rental demand is at an exceptional level -- the best at any time since 2006.”
BlackRock, the world’s biggest asset manager, has a 25-year lease on Drapers Gardens, a 270,000 square-foot (25,100 square- meter) building near the Bank of England. Deka Immobilien, the real estate unit of Frankfurt-based Dekabank Deutsche Girozentrale, pulled out of an agreement to buy the site for about 240 million pounds in June, according to a report last month in Property Week. Sphere: Related Content
Stag Capital Readies IPO of Single Tenant Industrial REIT
Citybizlist Baltimore - July 29, 2010
Readying the stage for an IPO launch, Stag Industrial Inc. is sizing up $450 million of potential acquisitions while making plans for an opening play that calls for the purchase of 26 properties for $165 million from an affiliate fund and 75 properties in exchange for partnership units.
By year's end, the Boston-based investment group plans to be operating as a REIT. Through various affiliates, Stag owns 101 properties in 24 states, all single-tenant assets leased to 84 companies with an average weighted in-place lease term of five years, according to an SEC filing. The portfolio is 93.7 percent leased to 84 tenants.
Stag's 10 largest tenants are Bank of America, with five leases; Busche Enterprises, eight; Thyssen Krupp, four; Ohio Wholesale, two; and Verizon New England, American Beverage, Stream International, Woodbridge Venture, Brown Group and Wausau Paper, all with one location apiece. The companies' 25 locations account for 3.46 million square feet of the Stag portfolio and generate $14.35 million of annualized rent, which represents 27.9 percent of the portfolio's total rent revenue.
Stag Industrial will target acquisitions in secondary markets in the U.S. in the $5 million to $20 million range. Of those in its sights, 74 percent of properties are warehouse/distribution; 17 percent are manufacturing; and 9 percent are flex/office. "We believe that a significant portion of the 14 billion square feet of industrial space in the United States falls within our target investment criteria and that there will be ample supply of suitable acquisition opportunities," according to the SEC filing.
Stag Industrial is being formed to acquire the assets and operations of its predecessor business, which has deployed more than $1.2 billion to acquire in excess of 200 properties since 2003. The assets were bought through four private equity funds: SCP Green LLC (Fund I) , Fund II, Fund III and Fund IV.
All Fund I properties were sold in 2006. The following year, Fund II sold 16 properties and still owns 91. Stag Industrial will be seeded by 26 properties from Fund II. Fund II's remaining portfolio will not be transferred and will continue operations as-is, but not make any additional acquisitions going forward.
Funds III and VI will contribute 75 properties in formation transactions in exchange for common units. Also after the IPO launch, Stag Industrial will acquire another 890,891 square feet in three vacant properties, with Fund III retaining ownership. The new REIT will be given five years to exercise a purchase option.
Following the REIT's formation, the funds and affiliate Stag GI will make no additional acquisitions. With the proceeds of its offering, Stag Industrial plans to use about $58.3 million to satisfy principal mortgage debt secured by the properties being transferred. Sphere: Related Content
Readying the stage for an IPO launch, Stag Industrial Inc. is sizing up $450 million of potential acquisitions while making plans for an opening play that calls for the purchase of 26 properties for $165 million from an affiliate fund and 75 properties in exchange for partnership units.
By year's end, the Boston-based investment group plans to be operating as a REIT. Through various affiliates, Stag owns 101 properties in 24 states, all single-tenant assets leased to 84 companies with an average weighted in-place lease term of five years, according to an SEC filing. The portfolio is 93.7 percent leased to 84 tenants.
Stag's 10 largest tenants are Bank of America, with five leases; Busche Enterprises, eight; Thyssen Krupp, four; Ohio Wholesale, two; and Verizon New England, American Beverage, Stream International, Woodbridge Venture, Brown Group and Wausau Paper, all with one location apiece. The companies' 25 locations account for 3.46 million square feet of the Stag portfolio and generate $14.35 million of annualized rent, which represents 27.9 percent of the portfolio's total rent revenue.
Stag Industrial will target acquisitions in secondary markets in the U.S. in the $5 million to $20 million range. Of those in its sights, 74 percent of properties are warehouse/distribution; 17 percent are manufacturing; and 9 percent are flex/office. "We believe that a significant portion of the 14 billion square feet of industrial space in the United States falls within our target investment criteria and that there will be ample supply of suitable acquisition opportunities," according to the SEC filing.
Stag Industrial is being formed to acquire the assets and operations of its predecessor business, which has deployed more than $1.2 billion to acquire in excess of 200 properties since 2003. The assets were bought through four private equity funds: SCP Green LLC (Fund I) , Fund II, Fund III and Fund IV.
All Fund I properties were sold in 2006. The following year, Fund II sold 16 properties and still owns 91. Stag Industrial will be seeded by 26 properties from Fund II. Fund II's remaining portfolio will not be transferred and will continue operations as-is, but not make any additional acquisitions going forward.
Funds III and VI will contribute 75 properties in formation transactions in exchange for common units. Also after the IPO launch, Stag Industrial will acquire another 890,891 square feet in three vacant properties, with Fund III retaining ownership. The new REIT will be given five years to exercise a purchase option.
Following the REIT's formation, the funds and affiliate Stag GI will make no additional acquisitions. With the proceeds of its offering, Stag Industrial plans to use about $58.3 million to satisfy principal mortgage debt secured by the properties being transferred. Sphere: Related Content
Sobeys Agrees to $102 Million Sale Leaseback of Retail Portfolio Across Canada
Daily Commercial News - July 8, 2010
Crombie Real Estate Investment Trust ("Crombie") (TSX:CRR.UN) announced today that it has entered into a non-binding letter of intent for the acquisition of $102 million of Canadian retail properties with Sobeys (a wholly owned subsidiary of Empire Company Limited ("Empire") (TSX:EMP.A)) comprising a portfolio of 11 retail properties (the "Portfolio"). The Portfolio totals approximately 496,630 square feet and consists of eight properties located in Western Canada, two in Ontario and one in Atlantic Canada.
Crombie has also entered into an agreement with a syndicate of underwriters co-led by CIBC World Markets Inc. and TD Securities Inc., to issue, on a bought-deal basis, 2,670,000 units (the "Units") at a price of $11.05 per unit for gross proceeds of approximately $29.5 million. Concurrently, ECL Developments Limited (a wholly owned subsidiary of Empire) in satisfaction of its pre-emptive right with respect to the public Unit offering will subscribe for 1,855,000 Exchangeable LP Units at a price of $11.05 per unit for additional gross proceeds of $20.5 million. The total $50 million offering is subject to regulatory approval.
Crombie intends to use the net proceeds from this offering to fund in part the acquisition of the Portfolio, additional acquisitions to be completed later in 2010 and for general trust purposes. The Sobeys portfolio acquisition is subject to completion of a definitive agreement and normal due diligence.
The Portfolio is 100% leased and comprised of six freestanding Sobeys stores, four freestanding Sobeys stores with retail pads; and one Sobeys anchored plaza. Sobeys, Canada's second largest retail grocer will occupy approximately 95% of the total acquired space on lease terms averaging 20 years. The acquisition price represents a going in capitalization rate of approximately 7.7%. Sphere: Related Content
Crombie Real Estate Investment Trust ("Crombie") (TSX:CRR.UN) announced today that it has entered into a non-binding letter of intent for the acquisition of $102 million of Canadian retail properties with Sobeys (a wholly owned subsidiary of Empire Company Limited ("Empire") (TSX:EMP.A)) comprising a portfolio of 11 retail properties (the "Portfolio"). The Portfolio totals approximately 496,630 square feet and consists of eight properties located in Western Canada, two in Ontario and one in Atlantic Canada.
Crombie has also entered into an agreement with a syndicate of underwriters co-led by CIBC World Markets Inc. and TD Securities Inc., to issue, on a bought-deal basis, 2,670,000 units (the "Units") at a price of $11.05 per unit for gross proceeds of approximately $29.5 million. Concurrently, ECL Developments Limited (a wholly owned subsidiary of Empire) in satisfaction of its pre-emptive right with respect to the public Unit offering will subscribe for 1,855,000 Exchangeable LP Units at a price of $11.05 per unit for additional gross proceeds of $20.5 million. The total $50 million offering is subject to regulatory approval.
Crombie intends to use the net proceeds from this offering to fund in part the acquisition of the Portfolio, additional acquisitions to be completed later in 2010 and for general trust purposes. The Sobeys portfolio acquisition is subject to completion of a definitive agreement and normal due diligence.
The Portfolio is 100% leased and comprised of six freestanding Sobeys stores, four freestanding Sobeys stores with retail pads; and one Sobeys anchored plaza. Sobeys, Canada's second largest retail grocer will occupy approximately 95% of the total acquired space on lease terms averaging 20 years. The acquisition price represents a going in capitalization rate of approximately 7.7%. Sphere: Related Content
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