Thursday, January 20, 2011

Dillard's to Lease Back Store Portfolio to Newly Formed REIT

Chicago Breaking News / Dow Jones Newswires
- January 19, 2011

Shares of department-store operators climbed Thursday as investors made bets on which retailers may follow Dillard’s Inc. in its plan to form a real-estate investment trust.

Dillard’s said in a regulatory filing late Wednesday it believes the formation of a REIT may enhance its ability to access debt or preferred stock and improve its liquidity. The retailer said it plans to transfer interests in certain properties to the REIT and will then lease back the properties.

“This announcement could force a reappraisal of the negative stance that many of the department stores have been viewed by the investment community over the last two months. If the transaction were to be completed, significant attention will be placed on the value of retail real estate going forward,” Credit Suisse said in a note.

Dillard’s shares surged 12 percent, to $42.18, and lifted shares of other department stores despite weakness in the broader market. Among the biggest gainers were Sears Holdings Corp. , 5 percent higher at $75.81,; Macy’s Inc., which climbed 2 percent, to $23.33; and J.C. Penney Co. Inc. , up 3 percent, to $30.13. None of the companies were immediately available for comment.

J.C. Penney has been the subject of speculation since activist investor William Ackman’s Pershing Square Capital Management and real-estate investment trust Vornado Realty Trust disclosed a large stake in the company last fall.

Ackman tried in 2009 to get himself and four other dissident candidates elected to Target Corp.’s board. At the time, he was one of the company’s largest shareholders, and had proposed a real-estate transaction in which Target would have spun off the land under its stores as a publicly traded real-estate investment trust, something the company rejected. He has since trimmed his stake after losing the bid.

Cort Gwon, director of research at FBN Securities, noted that J.C. Penney is likely further along in the process of analyzing its capital structure than other retailers due to the stake held by Ackman and Vornado.

Dillard’s plans come at a time when REITs are surging after one of the worst downturns in commercial real estate in a generation. REITs outperformed the broader equity markets again last year and mall and shopping-center REITs were among the top-performing sectors amid rising retail sales and an economic recovery.

One could argue department stores should get out of the real-estate business and in essence that’s what Dillard’s is doing, BMO Capital Markets analyst Wayne Hood said. “On the other hand, when you bring back on the balance sheet the lease liability, leverage will increase in a business that’s very difficult,” he said. Sphere: Related Content

Sainsbury Completes £125 Million Sale Leaseback of Three UK Supermarkets

Property Week - January 19, 2011

Prupim has completed the £125m purchase of three supermarkets on a sale-and-leaseback basis for M&G’s Secured Property Income Fund.

The real estate fund manager has bought three Sainsbury’s superstores in Worcester, Truro and Huddersfield. The leases at stores are for 25 years, with RPI-linked rent reviews.

Steffan Francis, director of fund management at Prupim, said: “These assets, which offer long-term income from a high-quality tenant, with the added security of good quality underlying real estate, meet the needs of institutional investors in the fund.

“Pension schemes in particular are increasingly attracted to this Fund as properties such as these can help address inflation risk at a lower cost than equivalent government bonds.”

The M&G Secured Property Income Fund targets prime properties, many on sale-and-leaseback arrangements, let to high quality tenants. Other assets include offices, hotels, student accommodation and healthcare. All leases have contracted rising rental income - typically linked to inflation - with a weighted unexpired term of around 25 years.

The M&G Secured Property Income Fund was launched three years ago to enable pension schemes to diversify some of their inflation risk management away from index-linked gilts. It offers an additional yield pick up of 3.5% over index-linked government bonds.

Prupim and GL Hearn advised Prupim. Jones Lang LaSalle acted for Sainsbury’s. Sphere: Related Content

Wednesday, January 19, 2011

C1000 BV Strikes $209.3 Million Sale Leaseback of Six Logistics Facilities in the Netherlands

The Wall Street Journal - January 19, 2011

In a deal that highlights how European companies are using their property for alternative financing, C1000 BV, the second-largest food retailer by sales in the Netherlands, has sold all six of its logistics facilities to W.P. Carey & Co. for €155 million ($209.3 million).

The deal, which will be announced as early as Wednesday, was arranged as a sale and lease-back transaction. Under the terms of the deal, C1000 agreed to a 15-year "triple net" lease. That means that while W.P. Carey is the new owner of the property, C1000 is responsible for paying for upkeep, any modernization of the facilities and property taxes.

The logistics facilities represent C1000's entire distribution network in the Netherlands, supplying a chain of 390 full-service supermarkets across the country. C1000 is controlled by private-equity firm CVC Capital Partners Ltd., which acquired the company in 2008, when the Dutch food retailer was called Schuitema. According to CVC's website, C1000 generates about €3.9 billion in sales a year.

The deal "has allowed us to convert illiquid assets into cash," said Tom Heidman, chief executive officer of C1000, in a statement reviewed by The Wall Street Journal that could be issued as early as Wednesday. He said C1000 will use the cash to expand its business, support a rebranding campaign, and "pay down debt and optimize our capital structure."

A spokeswoman for CVC declined to comment. Sphere: Related Content

Sunday, January 16, 2011

Goldman Sachs UK HQ Trades for $444 Million

Bloomberg - January 14, 2011

A building that’s part of Goldman Sachs Group Inc.’s London headquarters was purchased by Chinese Estates Holdings Ltd. for about 280 million pounds ($444 million), the broker that advised on the sale said.

The New York-based bank has about 10 years left on its lease at River Court, a building on Fleet Street in the U.K. capital’s main financial district, Gresham Down Capital Partners said in a statement today. Warren & Partners bought the office for 246.5 million pounds in 2001 on behalf of a group of Irish investors, Gresham Down said.

“These large, high-profile assets continue to attract strong interest from overseas investors who view London as their preferred investment location and a safe haven during this period of global economic uncertainty,” Stephen Down, managing partner of Gresham Down, said in the statement.

London’s commercial property market probably received the most investment for the second straight year in 2010 as prospects of rising rental income attracted cash from as far afield as Hong Kong, Qatar and Canada, according to Real Capital Analytics Inc. Low interest rates and concern that the global economy may deteriorate have made other investments more risky.

Chinese Estates -- a Hong Kong-based property developer and investor controlled by its billionaire chairman, Joseph Lau -- will pay about 38 million pounds in cash and assume a 240.5 million-pound bank loan and 1.7 million pounds of other liabilities, Chinese Estates said in a separate statement.

River Court has annual rental income of 15.6 million pounds, according to Chinese Estates. Gresham estimated its net yield at about 5.25 percent. The building has 430,000 square feet (40,000 square meters) of space.

Fiona Laffan, a spokeswoman for Goldman Sachs, declined to comment when contacted by Bloomberg News. Sphere: Related Content

Saturday, January 15, 2011

Agrokor Completes EUR 49 Million Sale Leaseback of Six Supermarkets in and Around Zagreb

PropertyEU - January 11, 2011

WP Carey, the global sale-and-leaseback specialist, has announced the acquisition of a portfolio of retail facilities in Croatia for a total consideration of EUR 49 mln. The deal was carried out through its non-traded REIT affiliate, CPA:17 - Global.

The transaction is WP Carey's second in Croatia and its second with Agrokor following a EUR 77 mln acquisition of Agrokor’s Zagreb office and logistics facilities in May 2010. The retail facilities comprise a six property portfolio of super-markets and hyper-markets mainly located in Zagreb and surrounding cities. The portfolio is leased on a long term triple-net basis to Konzum, Agrokor's food retailing subsidiary.

Founded in 1976, Agrokor is the largest private company in Croatia and one of the largest companies among its peers in Central Eastern Europe. A vertically-integrated business with nearly 40,000 employees and almost EUR 4 bn in revenues, Agrokor is Croatia's largest food producer, processor, distributor, and retailer.

WP Carey has been investing in Europe for over 10 years and has completed more than EUR 430 mln in European sale leaseback transactions during the past 18 months.

Jeffrey Lefleur, executive director of WP Carey, said: "This marks our second large scale transaction with Agrokor this year and underlines our commitment to investing in Eastern Europe. Our continued ability to invest in capital-constrained regions has allowed us to transact with large, stable businesses and secure attractive, long-term yields for our investors." Sphere: Related Content

HealthNow HQ in Buffalo Sold for $84.5 Million - January 13, 2011, 2010

HealthNow New York's corporate headquarters has been sold in what may appears to be the second-largest commercial real estate deal in Buffalo history.

A Phoenix-based real estate investment firm has completed its previously announced purchase of the landmark building and adjacent parking garage, paying $84.5 million for the 469,000-square-foot complex.

Cole Real Estate Investments bought the Class A office complex at 257 W. Genesee St. downtown from Duke Realty Corp. of Indianapolis, which built the environmentally friendly, silver-LEED-certified facility in 2007 for $110 million.

The highest amount ever paid for a Buffalo-area commercial property is believed to be $95 million forked over in 2005 by Seneca One Realty of New York City for the One HSBC Center office tower, Buffalo's tallest building. That included $85 million for the tower itself and $10 million for a parking garage across the street, which is linked to the tower by a bridge.

Other notable deals: In 2005, a Nebraska real estate company bought the Niagara Center at 130 S. Elmwood Ave. for $70 million; and KeyCenter at Fountain Plaza sold for $41 million in 2001.

"The HealthNow property is known as a distinctive landmark building that offers magnificent views of Lake Erie," said Joseph Garibaldi, a managing director at national real estate brokerage Jones Lang LaSalle, which handled the deal for Duke.

Duke, which had begun the search for a buyer months ago, had always planned to sell the building eventually and had indicated last summer that the timing seemed right.

The sale does not affect HealthNow, parent of BlueCross BlueShield of Western New York, or its 1,300 employees in the landmark building. HealthNow will continue to occupy the eight-story building, located next to the Niagara Thruway, under a lease through July 2024.

"The strong pricing we achieved for this is testament to the quality of the asset and the investment-grade tenancy of HealthNow," said Peter Nicoletti, another Jones Lang managing director. "This sale will allow Duke Realty to reposition its portfolio and concentrate in markets where they already have a strong presence." Sphere: Related Content

Getty Realty Completes $111.3 Million Sale Leaseback of 59 Convenience Stores in Northern Suburbs of New York City

Convenience Store News - January 14, 2011, 2010

Adding to its more than 1,000 holdings across the country, Getty Realty Corp. has acquired 59 convenience stores in and around the northern suburbs of New York City -- including Westchester and Rockland counties -- and the lower Hudson Valley. The locally headquartered real estate investment trust took ownership of the Mobil-branded properties for a total investment of $111.3 million.

The deal was a simultaneous transaction among ExxonMobil, CPD NY Energy Corp. and Getty Realty. Specifically, CPD acquired the 65-property portfolio (consisting of convenience stores and gas stations) from ExxonMobil and, at the same time, completed a sale/leaseback of almost all the properties with Getty Realty, the company explained in a release.

On the financing front, approximately 85 percent of the funding was provided by Getty via a sale/leaseback transaction with a long-term triple net unitary lease having an initial term of 15 years plus renewal options. Additional funding was provided by Getty to CPD under a secured, self-amortizing loan having a 10-year term, the company said.

Under the deal, the locations will continue to sell Mobil-branded gas and will be operated by CPD or by the existing independent dealers who will be supplied fuel by CPD.

"We are pleased to have been able to finance the acquisition of these excellent properties for CPD. The sites have secure and steadily growing operating histories and are located in strong markets with excellent long term demographics," said David Driscoll, chief executive officer at Getty Realty. "We are equally pleased to have begun a relationship with CPD, a respected and growing regional gas station and convenience marketer, and look forward to continue to grow with them. This acquisition is an example of our efforts to seek growth through quality acquisitions. We expect this acquisition to be immediately accretive to annual earnings."

The $111.3-million transaction comes eight months after Getty Realty held a public stock offering in hopes of raising $94 million. At the time the company said it planned to use some of the funds for acquisitions, as CSNews Online previously reported. Sphere: Related Content

Accor Confirms EUR 378.4 Million Sale Leaseback of 49 Hotels in France, Belgium and Germany

Fox Business/Dow Jones Newswires - January 13, 2011

French hotel operator Accor S.A. (AC.FR) Thursday confirmed the sale of 49 hotels in France, Belgium and Germany to a consortium comprised of Predica, a subsidiary of Credit Agricole S.A. (ACA.FR) and Fonciere des Murs.


- 43 of the properties were divested in December 2010, while the six remaining hotels will be sold in 2011.

- The total transaction is valued at EUR378.4 million.

- Accor will continue to manage the hotels through a variable lease agreement, with the rent averaging 19% of the hotels' annual revenue without any guaranteed minimum1. Under the terms of the lease, structural maintenance costs, insurance and property taxes will be paid by the new owner.

- The agreement includes a EUR47.6 million renovation program, of which EUR33 million will be financed by the buyer, thereby enabling Accor to speed up the introduction of its new-generation Etap Hotel and Ibis rooms.

- The transaction is in line with Accor's 2010 goal of selling EUR600 to EUR650 million in hotel property assets, as part of its broader objective of divesting EUR2 billion worth of assets over the 2010-2013 period. Sphere: Related Content

Enterprise Inns Completes £42.5 Million Sale Leaseback of 29 Pubs in Central London - January 14, 2011

Enterprise Inns has sold 29 central London pubs to Max Property Group for £42.56m.

The deal, brokered by CB Richard Ellis, will see the properties leased back to Enterprise on a 35-year lease with an initial rent of £2.975m per year (7.0% cap rate.)

David Batchelor, senior director at CB Richard Ellis and head of Leisure and Alternative Investments commented: “The demand from institutional investors for well located real estate is well known. This transaction shows that good pubs are an excellent and intelligent alternative to more traditional asset classes and that there is a keen interest among mainstream investors. We anticipate that 2011 will see significant portfolio volume in both the Leisure and Healthcare markets where we specialise.”

The pubs, all of which are freehold, include: the Crown in Chelsea, the Famous Cock Tavern in Islington, Frog & Forget-Me-Not in Clapham and Thornbury Castle in Marylebone. Sphere: Related Content

Monday, January 10, 2011

Sainsbury’s Superstore in UK Trades for 4.4% Initial Yield

British Land Website - January 7, 2010

British Land sells Sainsbury’s Superstore in Macclesfield for £36 million
British Land announces today that it has sold a Sainsbury’s superstore in Macclesfield to Aviva Investors for their Lime Property Fund for £36 million, representing a net initial yield of 4.4%.

The 73,500 square foot superstore is leased to Sainsbury’s for 28.5 years at a passing rent of £22.90 per square foot with annual RPI linked increases capped at 4% pa with a minimum increase of 2% pa.

Charles Maudsley, British Land’s Head of Retail said, "We are delighted to have agreed the sale of Sainsbury’s Macclesfield superstore at a value which reflects the significant yield compression in this sector over the last year. The store is the dominant food store in the town, has an affluent catchment area, and will provide Aviva Investors with a long-term, high quality secure and growing income stream.” Sphere: Related Content

Wednesday, January 05, 2011

Facebook Weighing $420 Million Leaseback Arrangement for New HQ

Tech Crunch - January 4, 2010

Faceook is considering moving its headquarters to the old Sun Microsystems campus in Menlo Park, as we previously reported. Some new details about the transaction have come to light. Facebook is considering a leaseback of the property, which would save the company from doling out hundreds of millions of dollars in cash right now (although it can afford to).

The assessed value of the Sun campus is $228.4 million, but tax assessments are typically lower than the market value of the property unless the value of the property dropped significantly since the last assessment. One rumored figure I heard a couple weeks ago for the value of the leaseback was $420 million, although another source claims that number is way too high and even the assessed value is still in question. Translation: negotiations are still in progress. But it is safe to assume the deal will be somewhere in between and could free up hundreds of millions of dollars for Facebook.

The way the leaseback would work is that Facebook would sell the property to a REIT or other institutional investment group like a state pension fund. The investment group would then enter into a longterm lease with Facebook as the tenant of the campus. This arrangement would allow Facebook to move to a bigger headquarters while at the same time saving itself from sinking a big lump of cash into real estate. Of course, it still has to buy the property, but the leaseback would produce more cash than Facebook would have to come up with for a down payment on a more traditional commercial mortgage for the same property. Perhaps the $500 million it just got from Goldman Sachs and DST can help finance the real estate deal.

Update: I changed some language in the first paragraph to make it clearer that Facebook is saving itself from a big cash outlay rather than netting a cash windfall from the deal, as many people in comments rightly pointed out. After some more digging, my understanding of the deal, or at least a proposed version of it, is that Facebook has a contract to buy the property from Sun, and that it wants to assign the purchase contract to a state pension fund (possibly Wisconsin). In return for buying the property, the state pension fund gets a long-term signed lease from Facebook for 15 to 20 years, and over that time period it will make a return on the purchase price. Facebook, meanwhile, doesn’t have to put up cash for real estate right now. But another part of the deal is that Facebook will have an option to buy the property at a negotiated price (which it might want to do when it goes public). Sphere: Related Content

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