Thursday, December 30, 2010

Pace University Enters Build-to-Suit for Student Housing in Manhattan

Reuters - December 30, 2010

Israel's Harel Insurance Investments & Financial Services (HARL.TA) said on Thursday it was teaming up with U.S. real estate partners for a project in New York, as it expands its property portfolio abroad.

Harel, U.S. office space owner SLG Green Realty (SLG.N) and real estate developer Jeff Sutton aim to build a $58 million complex in lower Manhattan's financial district.

The 23-storey building at 180-182 Broadway is slated to be completed in 2014, Harel said. Harel said its stake in the project is 49 percent and it will invest $28.5 million. The building will be used mainly to house students at Pace University and will be rented to the university for 30 years.

In October, Harel acquired two office buildings in Houston, Texas with Beacon Investment Properties for $85.2 million. Sphere: Related Content

Wednesday, December 29, 2010

DTS Completes EUR 80 Million Sale Leaseback of Madrid HQ

Property Week - December 29, 2010

CB Richard Ellis has completed the €80m (£68m) sale and leaseback of the headquarters of the largest provider of digital pay television in Spain, Distribuidora de Television Digital S.A.U. (DTS).

CPA®:17 – Global, an affiliate of WP Carey, the global investment management company that provides long-term sale and leaseback and build-to-suit financing, acquired the building. DTS will remain as tenants for a period of 20 years.

DTS’s 441,320 sq ft headquarters in Madrid is located in Tres Cantos and was constructed in 2008. The building comprises both office and television production space.

Adolfo Ramirez-Escudero, executive managing director of Capital Markets at CB Richard Ellis Spain, said: “Despite a difficult year for the investment and financing of real estate in Spain, this transaction confirms institutional investors’ interest in these kinds of deals in the Spanish market and is a reminder of the special place that sale and leasebacks hold in Spain.

“The banks have sold over €8.5bn of property via sale and leaseback in the last three years in Spain, of which CBRE has advised on almost €5bn. WP Carey had been out of the Spanish market over the past 10 years but decided to return last year and is now very active. We will see more sale and leasebacks from corporates, just as we saw Eroski, Mercedes-Benz and FCC active this year.”

DTS is a subsidiary of Promotora de Informaciones S.A. (PRISA) and operates the group’s pay TV production and distribution activities.

CBRE also advised PRISA in 2008 on the sale and leaseback of its headquarters in Madrid; the editorial office of El País; and Cadena Ser’s headquarters in Barcelona. The assets were sold to Drago Real Estate for €315m. Sphere: Related Content

Tuesday, December 28, 2010

Mercedes-Benz Spain Agrees to Sale Leaseback of HQ in Alcobendas (as translated in Google) - December 27, 2010

The Spanish subsidiary of German carmaker Daimler, Mercedes-Benz Spain, has reached an agreement with a subsidiary business of the insurer Mapfre life to sell its headquarters in Spain, located in the town of Alcobendas (north of Madrid) and shall leased for a minimum period of ten years, extendable to 20 years.

According to the company, the sale and leaseback agreement was closed on the basis of parameters of return of 6% and allows the firm to sell goods from his property to "immediately afterwards" rent for a period of time. The companies did not provide financial details of the operation.

Following the signing of this agreement, President and CEO of Mercedes-Benz Spain, José Luis López-Schumm, said in a press release with this real estate deal his company "follows the Daimler group's business strategy, which seeks progressive transformation in their rented office facilities and property of their factories, commercial outlets and mixed use.

"In this context," said the manager, "Daimler decisively bet for our country, as shown by, among others, the recent investments in expanding After Sales Logistics Center in Miralcampo (Guadalajara), the adaptation of the Vitoria plant for the mass production of electric version of the Vito van, and the creation of Shared Service Centre Accounting and Finance, Daimler to Western Europe in Madrid, "he added.
The firm noted that Daimler started this business strategy in 2006 with the sale of its headquarters in Stuttgart (Germany) to the British firm IXIS Capital Partners, to move to its lease for a period of 15 years. The procedure of sale and leaseback has been chosen by other group companies like Santander and Grupo Prisa, publisher of CincoDías. Sphere: Related Content

Monday, December 27, 2010

Medica Completes EUR 130 Million Sale Leaseback of 19 Care Facilities in France

Medica Website - December 20, 2010

MEDICA, a leading provider of long and short-term dependency care in France, announced today the sale and leaseback of a portion of its property assets.

The new finance lease was signed on 17 December 2010 under a club deal with Natixis Bail, a wholly-owned subsidiary of Natixis, and Finamur, a wholly-owned subsidiary of Credit Agricole Leasing (co-leads) and Oseo Financement. Its main terms are as follows:
- Amount: €130 million
- Term: 12 years
- Rate: 3-month Euribor 120 bps

The lease has enabled MEDICA to diversify and optimise the terms of its financing by setting up a long-term property loan. The transaction, which was made possible by the quality of the underlying properties, also allows MEDICA to maintain control over its assets due to the purchase option exercisable at a future date.

The transaction covers 19 facilities with a total of some 1,400 beds. Sphere: Related Content

Carquest Completes $258 Million Sale Leaseback of 29 Distribution Centers and Four Office Buildings

Citybizlist New York - December 22, 2010

Corporate Property Associates 17 - Global Inc., one of the publicly owned, non-traded real estate investment trusts (REIT) of W. P. Carey, has completed a $258 million acquisition of 29 automotive equipment distribution centers and four office buildings totaling 3,572,684 square feet.

The real estate investment trust has also entered into a total of four net lease agreements, two with Carquest Canada Ltd. and two with General Parts Inc. The tenants are affiliates of General Parts International, Inc., doing business as CARQUEST Auto Parts.

CARQUEST has guaranteed the obligations of the tenants under the leases.

The total cost of the purchase, including acquisition and transaction costs, was approximately $258 million. Three of the four leases have an initial term of 20 years and each provides for six five-year renewal options. The remaining lease has a term of five years. Additionally, each of the three 20-year term leases provides for stated rent increases every five years.

In connection with the acquisition of 30 of the distribution centers and office buildings, the Company obtained a 10-year, non-recourse mortgage financing of approximately $117 million bearing interest at a fixed rate of 5.17% per year.

At September 30, 2010, Corporate Property Associates 17 - Global Inc.'s portfolio was comprised of a full or partial ownership interest in 91 fully occupied properties, substantially all of which were triple-net leased to 27 tenants, and totaled approximately 10 million square feet. Sphere: Related Content

Banca MPS Trust to Issue EUR 1.54 Billion in Lease-Backed Notes Secured by 683 Bank Branches and Offices in Italy

TD Waterhouse/Fitch Research - December 23, 2010

Fitch Ratings has assigned Casaforte S.r.l.'s EUR1,536.64m class A notes, due June 2040, a final 'A-sf' rating with Stable Outlook. The final rating addresses the timely payment of interest and ultimate repayment of principal. Fitch gave consideration to the legal and financial structures in assigning the final rating to the issue.

The transaction is a securitisation of rental income derived from 683 bank branches and offices in Italy. These real estate assets are let to Banca MPS ('A-'/Stable/'F2') and its subsidiaries until July 2033.

The class A notes are scheduled to fully amortise by their expected maturity date in December 2030. Banca MPS is responsible for about 86.5% of the initial rental payment. The remaining portion is paid by Banca MPS's subsidiaries, but Banca MPS is also jointly and severally liable for these obligations (if the relevant subsidiary does not make any payment or there is any payment shortfall).

Consequently, the final rating is fully credit-linked to Banca MPS's rating. Any change in Banca MPS's Long-term Issuer Default Rating is likely to result in a corresponding change in the rating of the notes. The transaction has an initial class A-to-portfolio value ratio of 89% and an initial class A-to-vacant possession value ratio of 107%, although these ratios are scheduled to amortise to zero by the class A expected maturity in December 2030. Sphere: Related Content

Sunday, December 26, 2010

Enterprise Inns to Pursue Sale Leaseback of 27 UK Pubs in 2011

The Publican - December 22, 2010

Enterprise Inns is believed to be preparing to sell off the freehold interest in 27 pubs, possibly as part of its ongoing sale and leaseback programme.

One of the pubs understood to be up for sale in the New Year is the Eagle Ale House in Battersea, South London, which is run by Simon Clarke, a leading light in the Fair Pint movement.

The UK’s largest leased pub company sold the freeholds to 71 pubs in its last financial year, renting back the pubs on new, 35 year leases. When it announced its full year results in November it said it planned to do a similar number of deals in 2010/11.

Proceeds from last year’s sales came in at £114m, achieving an overall rental yield of 6.4 per cent. Earlier this month it sold the freeholds of a further 11 pubs for £13m.

The freeholds are sold through auctioneers, generally Allsop but also another firm, Cushman & Wakefield. Both are hosting auctions early in the New Year. Industry observers also suggest the 27 pubs might be on the block as a single package deal. Sphere: Related Content

Friday, December 24, 2010

NH Hotels Seeking EUR 200 Million Sale Leaseback of Six Hotels in Spain

Bloomberg - December 21, 2010

Hesperia, the largest shareholder in NH Hotels SA, plans to sell six hotels in Spain in a sale and leaseback agreement for 200 million euros ($263 million) to reduce debt, Expansion reported.

Hesperia hired Spanish real estate consultant Aguirre Newman to advise on the sale, the newspaper said.

The company hopes the sale will produce a capital gain of 43 million euros that can be used to repay part of Hesperia’s 602 million euros debt, the newspaper added, citing unidentified people. Sphere: Related Content

Thursday, December 23, 2010

Banco Sabadell Bank Branch Portfolio Sold for EUR 55 Million

Private Equity Real Estate - December 20, 2010

Moor Park Capital, the London-based asset management and investment firm, has sold a package of 48 local bank branches in Spain to the private investment house of Armancio Ortega, the founder of the eponymous Inditex fashion chain.

In a statement issued today, it emerged ISC Freshwater Investments, which is an investment vehicle advised by Moor Park, has sold the prime branches for €55 million to Pontegadea Group.

The sale underlines the break-up strategy that investments firms are pursuing in Spain once they acquire multiple units in large sale and leaseback transactions with savings banks in the country.

Moor Park and a consortium of investors reported to include New York’s Och-Ziff Capital Management, bought 378 branches for €403 million in April this year from Banco Sabadell in a sale and leaseback deal. The bank agreed to a minimum rental term of 25 years across the properties. The subsequent sale comprises five large retail banking units situated in well-established retail locations in different Spanish major cities including Barcelona and Madrid.

Cushman & Wakefield and Aguirre Newman are exclusive selling agents across the whole portfolio. The former of the two agents said in a statement it received many inquiries from interested buyers so it decided to sell a small selection of individual assets from the portfolio. To date around €65 million of properties have been sold in total.

The buyer is the private property company of the founder of Inditex, Armancio Ortego, whose best-known high street chain is Zara.

Shares in Inditex have risen around 32 percent since the start of the year, giving the Ortega family a corresponding increase in paper wealth. Sphere: Related Content

Sunday, December 19, 2010

HCP Acquires ManorCare in $6.1 Billion Sale Leaseback of 338 Senior Care Facilities

The Toledo Blade - December 15, 2010

Toledo's largest privately held company has sold off its real estate to a California company and will lease it back as part of what amounts to a $6.1 billion refinancing of the deal that originally made HCR ManorCare a private firm three years ago.

Neither the day-to-day operations of ManorCare, which is owned by the Carlyle Group and headquartered in downtown Toledo, nor its approximately 60,000 employees will be affected by the transaction with HCP Inc., a real estate investment trust based in Long Beach, Calif., ManorCare spokesman Rick Rump said. The company also will remain a large part of the Toledo skyline for the foreseeable future, he said.

HCP will pay $3.53 billion in cash and $852 million in stock for the properties. It can issue 25.7 million shares or a cash equivalent. The deal includes $1.72 billion in funds HCP previously invested in ManorCare. HCP, the largest medical real estate investment trust (REIT) in the U.S., will have an option to buy a 9.9 percent stake in ManorCare for another $95 million.

"This needs to be looked at as a refinancing," Mr. Rump said. "When we took the company private in 2007, [the transaction] was backed by mortgage-backed securities. We are exchanging those for a sale-leaseback arrangement." (Note: Morningstar states that the assets will be triple-net leased to HCR Manorcare at a 7.9% initial capitalization rate with 3%-3.5% contractual annual rent escalators.)

Mr. Rump said ManorCare had become "the lone holdout" in its industry to still own its own real estate holdings. He said inside the company's 338 facilities across 30 states, ManorCare "will still have all the responsibilities it has always had. We will just be leasing these facilities instead of owning them, as we have in the past."

HCR ManorCare, which was purchased for $6.3 billion in 2007 by the Carlyle Group, a private equity firm based in Washington, has 338 facilities that provide postacute care, skilled nursing services, and assisted living facilities in 30 states. The company is centered around 275 skilled nursing and rehabilitation centers, and about 50 facilities that provide care for Alzheimer's and dementia patients, with many of its properties concentrated in Ohio, Pennsylvania, Florida, and Michigan.

The purchase by HCP will expand the California trust's portfolio to nearly 1,000 properties, which it says are worth $19 billion in total. HCP already runs 250 senior housing properties and 45 skilled nursing facilities.

Morgan Keegan analyst Robert Mains said HCP "has long indicated an interest in investing in premier nursing home assets," and described ManorCare as the top nursing home operator in the United States.

HCP took out a bridge loan worth up to $3.3 billion to complete the deal, and it will issue debt and 31 million shares of common stock in lieu of borrowings. The underwriters will have an option to buy another 4.7 million shares in the next 30 days to cover any over allotments.

The companies said they expect the deal, which needs regulatory approvals, to close late in the first quarter of 2011. The deal already had been approved by shareholders of both HCP and ManorCare.

HCP officials said Paul Ormond, ManorCare's president, chairman, and chief executive officer, will be invited to join the HCP board.

In a statement, Mr. Ormond said, "We at HCR are delighted to have the opportunity to help secure the future of HCR ManorCare's operations by partnering with HCP. Going forward, our company leadership remains the same, we will continue our high level of investment in training and facilities, and our employees will continue to provide the same high-quality care that our patients and residents expect." Sphere: Related Content

SuperAmerica Completes $248 Million Sale Leaseback 135 Convenience Store Service Stations in Minnesota and Wisconsin

CoStar Group - December 15, 2010

Realty Income Corp. completed the acquisition of 135 SuperAmerica convenience stores and one support facility for $248 million under long-term, triple-net lease agreements.

These, and certain other assets, were sold by Marathon Oil and will be leased to newly formed companies owned and operated by Northern Tier Energy, a portfolio company of ACON Investments and TPG Capital.

Realty Income acquired the 136 SuperAmerica properties under 15-year, triple-net lease agreements.

The stores are in Minnesota and Wisconsin, and average 3,500 leasable square feet on 1.14 acres.

In addition, the individual locations have, on average, 6.5 multi-pump gasoline dispensers, and are seasoned stores with long term operating histories. The stores are operationally strong with gallons sold and merchandise sales well above national averages, and strong cash-flow coverage of rent at the store levels.

With this acquisition, the company anticipates that the convenience store industry will now generate 20% of Realty Income's revenue going forward.

Including the SuperAmerica transaction, and other properties to be acquired in the fourth quarter, we now anticipate that acquisition activity should exceed $700 million for 2010," said Tom A. Lewis, CEO of Realty Income. "These acquisitions should contribute to the continued stable stream of lease revenue from which we pay monthly dividends." Sphere: Related Content

London HQ of Allen & Overy Sold for $882 Million

The Telegraph - December 16, 2010

The biggest office deal in the City this year has been completed after two JP Morgan funds agreed to buy Bishops Square for £557m.

The 825,000 sq ft property is the headquarters of law firm Allen & Overy and is located next to Spitalfields Market.

The deal highlights the scale of investor demand for property in the Square Mile, which has led to the capital values of commercial property recovering sharply since last summer.

Bishops Square is being sold by Hammerson, the FTSE 100 property company, and the Oman Investment Fund (OIF), who operated a 25:75 joint venture. Oman only acquired its stake last June in a deal that valued the property at £445m. Wednesday's sale represents a 25pc increase on that price and a gain on the £510m book value of the asset at June 30. The price reflects a yield of 6.2pc.

Peter Reilly, head of JP Morgan Asset Management's European real estate group, said: "We remain bullish on investing in high-quality, well-tenanted office properties located throughout Europe's most important cities and this acquisition represents a further expansion of our funds' core property portfolio in Europe."

Hammerson completed the office development in 2005 as part of the regeneration of the Spitalfields area.

David Atkins, chief executive, said: "We are capitalising on the market recovery over the past 15 months and Hammerson has released funds for investment into other office and retail developments and acquisitions."

OIF, traditionally a long-term holder of assets, said it sold the property because it is prepared to "adapt to market dynamics in an efficient manner to bring value to our shareholders". Sphere: Related Content

Saturday, December 18, 2010

YTL Agrees to $153 Million Sale Leaseback of Four Hotels in Japan and Kuala Lumpur

Business Times - December 15, 2010

YTL Corp Bhd is selling four properties to Starhill Real Estate Investment Trust (REIT) for RM472 million and leasing them back.

The properties are Cameron Highlands Resort, Hilton Niseko in Japan, Vistana Penang and Vistana Kuala Lumpur, the group said yesterday.

Apart from RM100 million cash payment, Starhill Global Real Estate Investment Trust will also issue convertible preference units at S$1 (S$1 = RM2.40) per unit.

Upon conversion of convertible preference units into Starhill Global REIT, YTL Corp's stake in the Singapore exchange-listed REIT will increase. Sphere: Related Content

Friday, December 10, 2010

Capital Automotive Preps $463.3 Million Lease-Backed Financing of 78 Auto Dealerships

TD Waterhouse/Thomson Reuters IFR - December 6, 2010

Last week, Credit Suisse (structurer), Barclays, and Goldman Sachs announced the US$463.3m CARS-DB4 Net-Lease Mortgage Notes Series 2010-1, which is backed by 78 commercial real estate properties (primarily automobile dealerships) including related rents according to triple-net leases.

The issuer is privately held McLean, Va.-based Capital Automotive LLC (CARS), which invests in real estate properties leased to franchised auto dealerships and other auto-related businesses.

CARS is owned by funds managed by DRA Advisors LLC, a real estate investment advisor based in New York. As of Sept. 30, 2010, CARS had roughly US$3.6bn invested in 358 properties with approximately 491 motor vehicle franchises representing 45 brands in 36 states and Ontario, Canada.

Price guidance on the offering came out this afternoon. The US$432.3m, Class A, 'A' rated tranche is expected to price in the mid-5% yield area. The 'BBB' rated, US$31m Class B piece will be retained.

According to S&P, CARS acquires retail automotive properties and improvements from dealer groups, such as AutoNation and Group 1 Automotive.

Through sale-leaseback transactions, a dealer group sells its real estate to CARS and leases the property back under a long-term, triple-net lease. Under a triple-net lease, the tenant is required to pay all property-level expenses including business expenses, real estate taxes, utilities, insurance, repairs, and maintenance.

Leases with a dealer group are cross-collateralized to ensure that the full strength of the dealer group supports each lease.

The offering has an appraised value of US$617.775m, and the Class A notes are 70% of the appraised value. The leases feature a diverse group of obligors, and 52.9% of the tenants are in the top 10 US dealer groups; 54.5% of tenants are publicly traded companies.

S&P says that the risks to the cashflows of the deal depend on four major factors: defaults by the initial pool of dealer groups (the lessees); the ability of the property manager to re-lease the properties vacated by defaulted lessees to new tenants, and the renewal rate of lessees who reach the end of their lease; the lease terms for new tenants (rental rate and term of lease); and the liquidation value of those properties where the manager is unable to re-lease and chooses to liquidate.

The rating agency used its CDO Evaluator model, the S&P ratings of the lessees (or 'CCC-" for unrated lessees), the present value of future lease payments, and the current lease expiration to determine the initial default rate of the initial pool of lessees. Sphere: Related Content

Thursday, December 09, 2010

CoStar Group Seeking Sale Leaseback of Washington, DC HQ

Washington Business Journal - December 6, 2010

CoStar Group Inc., the publicly traded firm known for its real estate data tracking, is continuing to prove that it can be quite the aggressive dealmaker itself.

Just 10 months after buying the former Mortgage Bankers Association headquarters at 1331 L St. NW for its new D.C. headquarters for just $41.25 million — compared with the $76 million the mortgage bankers group paid in 2008— CoStar has put the building back on the market.

Cassidy Turley is marketing the 169,429-square-foot building for sale. Its marketing materials bill the project as fully leased.

At the time of the acquisition, CoStar CEO Andy Florance estimated that buying its headquarters building would save about $1 million a year compared with leasing. But now, putting the property back on the market suggests the company sees an even greater financial opportunity from cashing in on the District’s hot investment sales market.

CoStar would stay in 88 percent of the building under an escalating triple-net lease that runs through 2025.

CoStar moved its headquarters to D.C. from Bethesda, lured by a $6.1 million, 10-year tax abatement passed by the D.C. Council in January, if it hires 100 D.C. residents, among other criteria. Sphere: Related Content

Tuesday, December 07, 2010

JP Morgan HQ in London Offered for Sale

The Telegraph - December 6, 2010

The company has appointed GM Real Estate to advise on the sale of Alban Gate, one of the City's most recognisable office buildings.

The 382,000 sq ft asset was only acquired by Carlyle in July as part of a £671m deal for the White Tower portfolio, a collection of London offices previously owned by bankrupt tycoon Simon Halabi.

The sale is seen as an opportunity to raise capital to invest in other White Tower offices, where there are significant redevelopment opportunities.

Alban Gate is the biggest asset in the portfolio and its long-term income stream is likely to be attractive to investors. Its annual rent is £18.2m and JP Morgan's lease runs until 2025.

Carlyle is understood to believe it can raise more than £300m from a sale. A £300m price would represent a yield of 6pc. The private equity group acquired the White Tower portfolio at a 9pc yield.

Alban Gate was snapped up by Carlyle after Mr Halabi, once regarded as one of the UK's wealthiest entrepreneurs, lost control of his empire.

His collection of nine London office buildings tumbled in value from £1.8bn in 2006 to £929m last June. The offices were backed by £1.15bn of bonds issued by the White Tower 2006-3 vehicle, and the decline in value caused a breach of loan-to-value covenants.

This prompted bondholders to call in the debt, with property agents CBRE and Knight Frank overseeing a disposal of the assets in order to raise funds to repay bondholders.

Carlyle acquired six of the properties, including Alban Gate and offices housing UBS and IBM. Aviva Tower, home of the insurer in London, is still in the hands of the loan servicer, but it is understood to be preparing a sale for the first half of next year.

Carlyle declined to comment. Sphere: Related Content

CVS Trust to Issue $338.1 Million in Lease-Backed Notes Secured by 77 Drug Stores in 28 States

Providence Business News - December 2, 2010

CVS Caremark Corp., the largest provider of prescription drugs in the U.S., sold $338.1 million of debt secured by mortgages and leases, raising capital through the sale leaseback market.

The securities due in January 2033 yield 287.5 basis points more than 10-year Treasuries, according to data compiled by Bloomberg.

Sale leasebacks involve property being simultaneously sold and leased back to the seller for long-term continued use. The arrangement allows CVS Caremark to “essentially monetize our real estate asset,” Chief Financial Officer David Denton said Nov. 16 at a conference.

Buyers of the pass-through certificates will receive monthly payments of 5.773 percent, backed by the leases. Proceeds help CVS finance new store development, according to the company’s most recent quarterly filing.

The company gained $124 million from sale leaseback transactions in the nine months ended Sept. 30, compared with $748 million in the year-earlier period, according to the filing. The market was inaccessible in the fourth quarter of 2008 as credit markets froze.

Barclays Capital managed the sale. Sphere: Related Content

Sunday, December 05, 2010

Deutsche Bank Weighs Sale Leaseback of Frankfurt HQ

Bloomberg - December 2, 2010

Deutsche Bank AG, Germany’s largest bank, may sell its Frankfurt base as investor demand for office space increases in the country’s financial center.

The company “is deliberating over the question if real estate should be kept in proprietary possession or should be used via a sale-and-lease-back,” according to an e-mailed statement today.

Deutsche Bank bought the two 36-story glass towers, known as Soll und Haben, or Debit and Credit, from one of its real estate funds for 272 million euros ($359 million) in 2007. The bank spent three years renovating the buildings to make them more environmentally friendly and has started the process of moving 2,800 people back in over the next three months.

Demand for Frankfurt office space is rising as the German economy rebounds from the global financial crisis, prompting the most investment in the city since 2007. It may reach 2 billion euros this year, according to CB Richard Ellis Group Inc., the world’s largest property adviser.

Deutsche Bank may sell the Frankfurt building for 500 million euros, Financial Times Deutschland reported today, citing unidentified people familiar with the situation.

Banco Santander SA, Spain’s biggest banks, and HSBC Holdings Plc, Europe’s largest bank by market value, both sold their head offices and leased them back in the past two years. Sphere: Related Content

Thursday, December 02, 2010

Scottish and Southern Energy Nearing Sale Leaseback of Glasgow HQ

The Herald - November 27, 2010

Scottish and Southern Energy is set to rake in at least £10 million by quickly offloading the Central Belt headquarters that it bought in Glasgow last month.

According to well-placed sources, the Perth-based energy giant is close to selling the nine-storey One Waterloo Street building in a 35-year sale and leaseback deal to Prupim, the investment vehicle of pension group Prudential.

Having originally paid somewhere north of £20m for the beachhead deep in Scottish Power territory in early October – which was seen as a knock-down price at the time – SSE is poised to significantly increase the value by committing itself as a long-term tenant.

Although SSE’s rental costs over the duration of the lease are very likely to exceed any windfall a deal will free up a substantial amount of capital for investments.

SSE has been an aggressive investor in renewable technologies as it seeks to maximise its earnings from the renewable obligation system of UK green energy subsidies in the coming years. It invested £3m in Edinburgh-based wave energy pioneer Aquamarine Power earlier this week. Other recent investments included buying an £8m 15% stake in April in Burntisland Fabrication, which has become a world leader in foundations for offshore wind turbines.

Property watchers were impressed by the speed at which SSE concluded the two deals, particularly compared to the many months that Scottish Power has spent weighing up whether to take a new large office space near the city.

One source said: “SSE bought it cheap and then quickly sold on the investment. They’re good operators.”

One Waterloo Street, which SSE bought from Australia’s Halladale Group, is to be used by the group primarily for its renewable energy activities. It is in the course of investing many billions into the sector, particularly onshore and offshore wind farms but also hydroelectricity, biomass and marine energy.

The city is also to be the location for SSE’s Centre of Energy Excellence for Renewable Energy, a joint venture with Strathclyde University that has received £2.8m of funding from the Scottish Government.

One Waterloo Street overlooks Glasgow Central Station and sits on the former site of Shaftesbury House. Its 60,000sqft of space could accommodate around 600 employees. SSE sublets some of the space to property agency CB Richard Ellis, which is set to remain there. SSE itself is due to start moving in staff members in the New Year, and is said to be planning an official opening around that time. Sphere: Related Content

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