Saturday, October 30, 2010

Adidas' Seeking $90 Million Sale Leaseback of Portland HQ

Portland Business Journal - October 29, 2010

Adidas America Inc. has put its North Portland headquarters up for sale.

The company is looking for a buyer that will lease the eight-year-old, 320,000-square-foot campus back to it for 10 years, according to a flyer announcing the property’s availability.

"There are several business and financial reasons we are considering a sale-leaseback transaction, the most important being that it would free up funds which we can reinvest in our brand, employees and community in which we operate," said spokeswoman Lauren Lamkin, in an e-mail. "Adidas remains committed to continuing our strong local presence in Portland.”

Officials with the Seattle office of Jones Lang LaSalle Americas Inc., the real estate services firm offering the property, could not be reached for comment.
The campus, which includes five office buildings and an athletic facility, has a market value of nearly $88.8 million, according to Multnomah County property tax records.

According to the flyer, Adidas would pay $15 per square foot in rent, including 2 percent annual escalators, providing the eventual buyer with first-year operating income of $4.8 million.

Adidas bought the site of Beth Kaiser hospital at 5055 N. Greeley Ave. in 1999.

The $90 million development opened in 2002, allowing the company to consolidate its offices in Northeast Portland and Beaverton. Sphere: Related Content

AOL Sells Portion of Campus Leased to Raytheon Near DC for $144.5 Million

Commercial Property Executive - October 29, 2010

AOL Inc. has decided to forgo steady income stream from four fully leased office buildings at its campus in Dulles, Virginia, for cash up front. The online services company has signed a deal to sell Pacific Corporate Park, totaling 700,000 square feet of office space and 22 acres of developable land on the eastern portion of its campus, to CB Richard Ellis Realty Trust for $144.5 million.

Real estate services firm CB Richard Ellis Group Inc. represented AOL in the transaction. Despite the disposition, AOL continues to have a strong presence at its campus, with three office buildings totaling 500,000 square feet for its 1,800 full-time workers, two childcare buildings, a warehouse and a data center.

AOL had emptied Pacific Corporate Park of its employees earlier this year, rendering the facilities appropriate for the company’s current strategy of disposing of non-core real estate assets. Developed over a two-year period beginning in 2000, the structures sit just off Route 28 about 30 miles east of Washington, D.C., and carry the addresses of 22110, 22260, 22265, 22270 Pacific Boulevard. Raytheon is the lead tenant at Pacific Corporate Park, having signed a lease agreement in 2009 for every single square-foot in three of the four buildings, and a portion of the space in the fourth building for an aggregate 600,000 square feet. The technology company’s lease on the space lasts through February 2021.

With the purchase of Pacific Corporate Park, CBRE Realty Trust will also get its hands on two parcels at 22275 Pacific Boulevard and 22341 Dresden Street that are entitled tot accommodate two additional 180,000 square-foot buildings. However, with an 18.6 percent vacancy rate, according to a third quarter report by CBRE, Loudoun County is not currently in need of 360,000 square feet of new office space. But the future is a different story. “Loudoun County is not a large market, it has about 13 million square feet of office space,” Marianne Swearingen, research manager with CBRE, told CPE. “It’s unknown what potential impact the planned Metro extension to Dulles Airport may have on the market. Some companies are already looking for build-to-suits with an office/industrial mix in the area, and data centers are doing very well in Northern Virginia because of its advanced fiber optic network. Northern Virginia is the Silicon Valley of the East Coast.”

CBRE Realty Trust plans to finance the purchase of Pacific Corporate Park with net proceeds from its current public offering. The transaction is on track to close in November. Sphere: Related Content

Monday, October 25, 2010

Morgan Lewis HQ in DC Sold for $220 Million

Real Estate Alert - October 13, 2010

In one of the biggest deals in Washington this year, Invesco Real Estate last week acquired a fully leased office building near the White House from a Shorenstein Properties partnership for about $220 million.

The off-market transaction for the 331,000-square-foot property, at 1111 Pennsylvania Avenue NW, is further evidence of strong demand for core buildings in the nation's capital. The price tag of roughly $665/sf translates into a 4.9% capitalization rate - the lowest seen recently in that market. Cap rates for core office properties in Washington have ranged from 5% to 6.5%, with larger properties trending toward the upper end of that range.

The Shorenstein partnership marketed the property for two months in the spring via Eastdil Secured, but pulled the listing after bids fell short of expectations. The partnership, still advised by Eastdil, then struck a deal with Invesco, which acted via its $1.7 billion open-end Invesco Core Real Estate Fund. Market players put the price at close to $220 million.

The property, known as the Presidential Building, is fully leased to Morgan Lewis until July 2017. The law firm pays a triple-net rent of $32/sf. The local East End submarket has 42 million sf of office space that is 91.3% occupied.

The trade is among the biggest in the city this year in terms of both per-foot and outright prices. The only larger trade on a per-foot basis involved the Evening Star Building. TIAA-CREF acquired that 227,000-sf property in June from a KanAm partnership for about $793/sf, or $180 million. The capitalization rate was 5.3%. The Evening Star Building, at 1101 Pennsylvania Avenue NW, is next to the Presidential Building.

The city's largest office trade by overall price this year was Northwestern Mutual Life's purchase of the 589,000-sf Two Constitution Square from a Walton Street Capital partnership for $305 million, or $518/sf. The June transaction carried a 6.2% initial annual yield.
Shorenstein, a San Francisco fund shop, owned 1111 Pennsylvania Avenue via a partnership that included investors Mark Karasick, Victor Gerstein and David Werner. They teamed up to buy it in 2004 for $158 million, or $477/sf, from the estate of Washington surgeon and investor Laszlo Tauber.

The 14-story building is at the northeast corner of 12th Street, five blocks from the White House. When it was erected in 1967, its address was 415 12th Street NW. In 2002, the property underwent a $40 million renovation that shifted the main entrance to Pennsylvania Avenue. Sphere: Related Content

Sunday, October 24, 2010

New REIT Formed to Pursue Sale Leaseback Deals in US & Europe - October 20, 2010

Former W.P. Carey CEO Gordon DuGan and US investment head Benjamin Harris have teamed up with American Realty Capital’s Nicholas Schorsch and William Kahane to compete on W.P. Carey’s turf. They’ve formed Corporate Income Properties ARC Inc. a joint venture that will focus on corporate sale-leasebacks in the US and Europe.

A W.P. Carey spokesman referred to a comment from CEO Trevor Bond appearing in the Wall Street Journal. “Our success is based on the strength of a whole organization and not just one or two people,” Bond told the WSJ. “We have a process based on 37 years of accumulated institutional expertise. No one has replicated our success in the net-lease sector.” DuGan left W.P. Carey in July over disagreements with chairman William P. Carey about long-term investment direction.

According to an SEC filing by Northcliffe Asset Management, which DuGan and Harris formed in September, the JV intends to raise a minimum of $200 million and a maximum of $500 million to acquire single-tenant commercial properties and lease them back to the sellers. The IPO is being handled by Realty Capital Securities, an affiliate of American Realty Capital.

Corporate Income Properties will invest, directly or indirectly, at least 85% of the net proceeds in single tenant net-leased commercial properties and will limit aggregate borrowings to between 50% and 60% of the aggregate cost of investments, according to a spokesman. While the primary geographic target will be US markets, up to 25% of the portfolio may include properties purchased internationally.

The issuers expect unlevered cap rates of 8% to 9%. Leases will run at least 10 years, the spokesman says.

Last week, Schorsch announced the launch of American Realty Capital Healthcare Trust, a non-traded healthcare REIT that will target medical office properties. The JV with DuGan and Harris, which is also expected to qualify as a REIT, fits in with the Schorsch strategy of sector-specific, publicly registered, non-traded REITS.

Currently, Realty Capital Securities is raising more than $10 billion for seven non-traded REITs, according to the American Realty Capital spokesman. The company has raised more than $1 billion in the past 20 months and is currently raising about $140 million a month. Last month, RCS fundraising accounted for 18% of the total equity raised in the non-traded REIT market for September, the spokesman says. Sphere: Related Content

Monday, October 18, 2010

Barclays Seeking Sale Leaseback of Another 55 Bank Branches in Spain

Reuters Spain (as translated by Google) - October 14, 2010

British bank Barclays has given a mandate to sell and then rent in multiple packages of 55 of its branches in Spain, said Thursday a spokesman for the British bank.

"We have a book sale at CBRE to seek a buyer for a total of 55 offices," confirmed a spokesman for Barclays.

Industry analysts estimate that, taking into account the nearly 2.3 million per year that Barclays would pay rent for the rental of office and assuming a yield (yield) of 6 percent within 10 to 15 years - - common in these transactions - the bank might enter around 38 million euros with the operation.

The spokesman said the bank has about 590 branches in Spain.

Barclays already has operations similar to this in the past and also put on sale May 34 branches in the same regime.

This type of sales operations for subsequent rental of the premises of the network of offices are still very common in commercial banks to raise funds and improve without losing credit portfolio management.

However, unlike other banks BBVA and Santander, Barclays has opted to sell the offices in small packages and no large lots of branches and distinctive buildings. Sphere: Related Content

CVS Enters $110 Million Sale Leaseback of 36 Drug Stores in 19 States

PRWeb - October 13, 2010

The Landes Investment Group Inc., a privately held real estate investment and development company, announced today that entities affiliated with it have acquired 36 CVS pharmacy properties valued at approximately $110 million. The properties, which were acquired from CVS in September 2010 in sale-and-leaseback transactions, are located in 19 states; two of them are in the Dallas area, where the Landes Investment Group is based.

“We are pleased to acquire these properties and complete another transaction with CVS, further augmenting our robust portfolio of investments,” says Brett Landes, the company’s founder and president. “We have had a strong, mutually beneficial relationship with CVS for more than a decade, and we look forward to continuing that association.”

Entities affiliated with the Landes Investment Group secured financing for the properties through Teacher Insurance & Annuity Association (TIA-CREF) and Prudential Capital Group. Liechty & McGinnis LLP served as advisor and legal counsel on the transactions.

In 2009, LLWG Capital Inc., an entity affiliated with the Landes Investment Group, purchased 313 CVS pharmacy properties valued at $1.375 billion. The acquisition of those properties, located in 33 states, came via three separate sale leaseback transactions last year.

CVS is the nation’s largest provider of prescriptions and related healthcare services, with more than 7,000 locations. Sphere: Related Content

Tuesday, October 12, 2010

State of California Selects Buyer in $2.33 Billion Sale Leaseback Deal

Business Wire - October 11, 2010

Today, the Department of General Services announced it has selected California First, LLC, a partnership led by Hines and Antarctica Capital Real Estate LLC, as the buyer for 11 state office properties authorized by the legislature and Governor last year. The winning offer was $2.33 billion — resulting in more than $1.2 billion for the state general fund, and $1.09 billion to pay off bonds on the buildings. Over the next 20 years, the state will lease the offices back from the new owner at predetermined rates, and will no longer maintain, operate, or repair the buildings. All the leases with California First allow the state to buy back any or all of the buildings at anytime during the 20-year term.

“After an extensive review of the more than 300 bids that were received, I have determined that this offer presents the best value for the state and achieves the goals set forth by the Legislature and Governor,” said Acting DGS Director Ron Diedrich. “This sale will allow us to bring in desperately needed revenues and free the state from the ongoing costs and risks of owning real estate.”

Hines, a privately owned real estate firm headquartered in Houston, Texas, is involved in real estate investment, development and property management worldwide. The firm’s historical and current portfolio of projects that are underway, completed, acquired and managed for third parties includes 1,119 properties representing more than 457 million square feet of office, residential, mixed-use, industrial, hotel, medical and sports facilities, as well as large, master-planned communities and land developments. Antarctica Capital Real Estate, LLC; a venture led by California real estate veteran Rich Mayo of Spyglass Realty Partners, along with Chandra Patel of Antarctica Capital headquartered in Irvine, California and New York, NY, is a private equity firm specializing in real estate. There are also additional equity investors. The all cash offer will utilize a typical debt and equity ratio with the general partners and investors providing approximately 40 percent of the purchase price, and a major financial institution supplying the balance as a loan to the new owners.

In his letter to the legislature, Diedrich shared the department’s economic analysis summary of the sale comparing the status quo of ownership of the buildings to the sale and leaseback transaction. Using a series of reasonable and prudent assumptions the analysis shows that the sale allows California to retire $1.09 billion in bond debt, leaving over $1.2 billion in new revenues to shore up the state budget, as a result eliminating the need for more program cuts statewide or tax increases. By no longer owning the properties, the state eliminates annual lease payments and interest, as well as operating expenses. The state also sheds the responsibility for deferred and major capital improvements, as well as the obligation to pay for unforeseen and unpredictable repairs that cannot be anticipated but are increasingly likely as the buildings age.

In April, the state’s broker, CB Richard Ellis received more than 300 offers to purchase the buildings. The offers included individually priced offers on each building; however, the most aggressive pricing came largely from 30 offers for the entire portfolio. Portfolio buyers were given the opportunity to submit a second round of offers on May 11. CBRE received 16 increased portfolio offers, 11 of which exceeded the state’s $2 billion estimate of the value of the properties. Those 11 bidders were then invited to submit a “best and final” offer by May 21.

Since May 21, DGS, in conjunction with its broker, has been evaluating the top offers. This evaluation included a comprehensive analysis of each of the 11 best and final offers which included separate interviews with each finalist. Buyers were evaluated based on a reconciliation of two primary factors – price and certainty of execution. CB Richard Ellis investigated with DGS the bidder’s track record; and how much due diligence the bidder had done on the state properties prior to making a buyer selection. Evaluation criteria included whether due diligence reports were reviewed; due diligence inspections were completed; the extent of property tours; the nature of contract and lease comments; the financial backing the buyer had in place and finally, the buyer’s ability to both remove contingencies and close the transaction quickly.

“The State of California received significant portfolio interest, and the proceeds at the sale price of $2.33 billion will far exceed the $660 million originally estimated. Far from a fire sale, this was a stiff, multiple offer competition that generated favorable pricing for the state,” said Kevin Shannon with CBRE, who handled the sale on behalf of the state. “Current historically low interest rates have allowed the state to obtain extraordinary pricing comparable with peak level capitalization rates with leaseback rents well below peak market levels. An additional benefit is that the state will be getting out of the commercial real estate management business, and transferring asset management to Hines, a globally recognized leader.”

The Department of General Services anticipates completing all transactions in the 4th quarter of 2010.


Original Sale Brochure

DGS Financial Analysis Summary

Video/Photos Sphere: Related Content

Freight Links Enters Into S$193 Million Sale Leaseback of Five Logistics Properties in Singapore

Singapore Exchange - October 11, 2010

Main board-listed Freight Links Express Holdings Limited (“Freight Links”), one of the leading logistics management and integrated freight forwarding groups in Singapore, has entered into proposed sale and leaseback transactions with Sabana Investment Partners Pte. Ltd. (“SIP”), for the benefit of the proposed Sabana Shari’ah Compliant Industrial Real Estate Industrial Trust (the “Sabana REIT”), for five of its properties for a total consideration of S$192.95 million, with a leaseback period of 5 years (the “Proposed Sale and Leaseback”). Subject to the receipt of the relevant regulatory approvals (including approval of the Monetary Authority of Singapore), the Sabana REIT is a Singapore-based real estate investment trust to be established and authorised in Singapore principally to invest in income producing real estate used for industrial purposes in Asia, as well as real estate-related assets. The five properties are at 30 & 32 Tuas Avenue 8, 218 Pandan Loop, 51 Penjuru Road, 33 & 35 Penjuru Lane and 18 Gul Drive (the “Properties”).

The sale of the Properties (the “Proposed Sale”) will result in net proceeds over the book value of the properties amounting to approximately S$99.4 million.

Freight Links, through its 51% shareholding equity interest in SIP, will participate in (subject to the receipt of relevant regulatory approvals) the manager (the “REIT Manager”) and the property manager (the “Property Manager”) of the Sabana REIT. Sabana REIT plans to acquire a portfolio of properties worth about $850 million. A conditional eligibility-to-list letter (the “ETL”) was received on 8 October 2010 from the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for the listing of and quotation for the units in the Sabana REIT on the Main Board of the SGX-ST.

The Proposed Sale and Leaseback constitutes a major transaction for Freight Links, requiring the approval of the shareholders at an Extraordinary General Meeting to be convened at a later date.

The Proposed Sale and Leaseback is also subject to, amongst other things, (a) the listing of the units in the Sabana REIT and commencement of trading of such units on the SGX-ST, and (b) obtaining JTC Corporation’s approval (and the approval/clearance of such other authorities as JTC may require).

Freight Links Express Holdings Limited (“Freight Links”) is one of the leading Logistics Management and Integrated Freight Forwarding Groups in Singapore. Established in 1981, the international freight forwarding business of the Group has links to almost 600 destinations throughout the world. Freight Links has offices in Malaysia, Thailand, Hong Kong, China, South Korea and United Arab Emirates. Sphere: Related Content

Monday, October 11, 2010

Esporta Seeking GBP 200 Million in Sale Leaseback of 17 Fitness Centers in the UK

Estates Gazette - October 4, 2010

The French owner of fitness club chain Esporta is preparing to bring a £200m sale-and-leaseback portfolio to market.

Investment bank Société Générale will soon start marketing a package of 17 of its Health and Racquet clubs in locations including Oxfordshire, Brighton and Cardiff.

Esporta has a total of 55 clubs in the UK.

Colliers International, which was appointed by SocGen last year to provide asset management advice on the portfolio, is expected to be instructed with the sales mandate.

It is not known whether the bank will be providing debt for the sale-and-leaseback.

One source said: “It will be difficult to get bank debt for the deal because it is an untested covenant and not a very popular asset class. However, a number of opportunistic companies could be interested.”

The source added that it is expected that SocGen will seek to sell the operating business in the future.

Esporta was previously part of Syrian property tycoon Simon Halabi’s empire. Halabi bought the chain from private equity group Duke Street Capital for £476m in 2006, with £330m of funding from SocGen.

However, Esporta’s holding companies, Bell Leisure I and Bell Leisure II, collapsed into administration a year later. SocGen took ownership, completing a debt-for-equity swap. Sphere: Related Content

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