JSOnline - May 29, 2009
Aurora Health Care Inc. has sold two more medical office buildings to Santa Ana, Calif.-based Grubb & Ellis Healthcare REIT Inc. for just over $40 million, a move that raises additional cash for Wisconsin's largest health care provider.
An investors group affiliated with the real estate investment trust bought a 62,991-square-foot Aurora facility, at 3111 W. Rawson Ave., Franklin, for $19.8 million, according to documents filed with the Milwaukee County Register of Deeds.
The group also bought a 66,638-square-foot facility, at 12203 N. Corporate Parkway, Mequon, for $20.9 million, according to the Ozaukee County Register of Deeds.
In March, Aurora sold four other Milwaukee-area medical office buildings to Grubb & Ellis Healthcare, which is leasing the facilities back to Aurora. Those buildings, totaling 185,000 square feet, sold for around $34 million.
The sales are generating cash for Aurora, which is building two hospitals, in Grafton and Summit, costing $373 million, and which has been cutting back on expenses. Aurora has done sale-leaseback transactions on its facilities for several years, said spokesman Ron Irwin.
Aurora acquired the Franklin outpatient surgery center in December 2008, when it bought a stake in Associated Surgical and Medical Specialists, Irwin said.
The Mequon building, which houses doctors' offices, was acquired in January 2008 through Aurora's purchase of Advanced Health Care, Irwin said.
Sphere: Related Content
Monday, June 01, 2009
Banks Rush to Build Capital via Property Sale Leasebacks
Financial Times - May 28, 2009
Several billion pounds worth of European corporate property is expected to be sold in the next few months as businesses look to free capital from their property assets.
This week, Credit Suisse placed the first of its Canary Wharf buildings on the market following a lengthy review, and more companies are expected to follow, particularly in the financial services and retail sectors.
CB Richard Ellis, which has been instructed to sell 20 Columbus Courtyard for Credit Suisse, estimates that it has more than €4bn (£3.5bn) of sale and leasebacks alone set to hit the market this year in Europe. This includes the sale and leaseback of HSBC’s headquarters in London, Paris and New York.
Though the market is reaching its lowest point, many corporate owner-occupiers are motivated by the advantages of additional liquidity.
Many also hold properties at depreciated historic cost for accountancy purposes, meaning that selling now gives a financial boost even with a slump in values.
There are a number of sectors where leasebacks make sense, according to Matt Pullen, CBRE’s head of European global corporate services, as companies look to raise money without damaging businesses. “It is a strategic leveraging of business assets,” says Mr Pullen.
In a report last week, property intermediaries Cushman & Wakefield forecast that banks would increase sale and leasebacks to raise capital in the next year, particularly those that have received state cash injections. Selling real estate has a strong benefit for banks’ tier one capital ratio, a key measure of balance sheet strength.
Credit Suisse, among the better capitalised banks with a 14.1 per cent tier one ratio, appears under no pressure to raise capital.
Other banks, including UniCredit, HSBC and BBVA, have committed to releasing capital via European real estate schemes, said Cushman & Wakefield, and more would follow later this year.
Matthew Stone, head of Cushman & Wakefield’s occupier strategy team, said: “Most European banks need to raise cash but the traditional routes of equity or debt are now significantly more expensive.
“The major European real estate sale-and-leaseback programmes that have been launched are probably only the tip of the iceberg in 2009. Those banks now part-owned by national governments, in particular, offer excellent covenants.”
Going against the current has been Santander, which in an apparent sign of its relative strength last month bought the building occupied by its Abbey business in London from British Land. Some agents say other robust groups are starting to investigate the merits of buying the freeholds of their leased premises while prices look cheap.
Outside the banking sector, sale and leasebacks have been triggered by acute financial difficulties. In March, the New York Times raised $225m in deal with WP Carey in order to help pay off debt, for example.
Michael Evans, director at Jones Lang LaSalle, said sale and leasebacks in the retail sector were now likely to be a focus, given pricing in the sector.
Overall, recent sale-and-leaseback activity has been motivated by very different reasons from those that dominated at the peak of the property boom, when many groups, particularly in the retail, leisure and banking sectors, were keen to cash in on highly priced assets.
Then, a clutch of banks sold their London offices, according to King Sturge’s James Beckham. Deals struck in the boom years included Standard Chartered, Merrill Lynch, Citi and ABN Amro, as well as HSBC first time round.
According to Jones Lang LaSalle, European corporate property disposals have more than doubled over the past four years. Sphere: Related Content
Several billion pounds worth of European corporate property is expected to be sold in the next few months as businesses look to free capital from their property assets.
This week, Credit Suisse placed the first of its Canary Wharf buildings on the market following a lengthy review, and more companies are expected to follow, particularly in the financial services and retail sectors.
CB Richard Ellis, which has been instructed to sell 20 Columbus Courtyard for Credit Suisse, estimates that it has more than €4bn (£3.5bn) of sale and leasebacks alone set to hit the market this year in Europe. This includes the sale and leaseback of HSBC’s headquarters in London, Paris and New York.
Though the market is reaching its lowest point, many corporate owner-occupiers are motivated by the advantages of additional liquidity.
Many also hold properties at depreciated historic cost for accountancy purposes, meaning that selling now gives a financial boost even with a slump in values.
There are a number of sectors where leasebacks make sense, according to Matt Pullen, CBRE’s head of European global corporate services, as companies look to raise money without damaging businesses. “It is a strategic leveraging of business assets,” says Mr Pullen.
In a report last week, property intermediaries Cushman & Wakefield forecast that banks would increase sale and leasebacks to raise capital in the next year, particularly those that have received state cash injections. Selling real estate has a strong benefit for banks’ tier one capital ratio, a key measure of balance sheet strength.
Credit Suisse, among the better capitalised banks with a 14.1 per cent tier one ratio, appears under no pressure to raise capital.
Other banks, including UniCredit, HSBC and BBVA, have committed to releasing capital via European real estate schemes, said Cushman & Wakefield, and more would follow later this year.
Matthew Stone, head of Cushman & Wakefield’s occupier strategy team, said: “Most European banks need to raise cash but the traditional routes of equity or debt are now significantly more expensive.
“The major European real estate sale-and-leaseback programmes that have been launched are probably only the tip of the iceberg in 2009. Those banks now part-owned by national governments, in particular, offer excellent covenants.”
Going against the current has been Santander, which in an apparent sign of its relative strength last month bought the building occupied by its Abbey business in London from British Land. Some agents say other robust groups are starting to investigate the merits of buying the freeholds of their leased premises while prices look cheap.
Outside the banking sector, sale and leasebacks have been triggered by acute financial difficulties. In March, the New York Times raised $225m in deal with WP Carey in order to help pay off debt, for example.
Michael Evans, director at Jones Lang LaSalle, said sale and leasebacks in the retail sector were now likely to be a focus, given pricing in the sector.
Overall, recent sale-and-leaseback activity has been motivated by very different reasons from those that dominated at the peak of the property boom, when many groups, particularly in the retail, leisure and banking sectors, were keen to cash in on highly priced assets.
Then, a clutch of banks sold their London offices, according to King Sturge’s James Beckham. Deals struck in the boom years included Standard Chartered, Merrill Lynch, Citi and ABN Amro, as well as HSBC first time round.
According to Jones Lang LaSalle, European corporate property disposals have more than doubled over the past four years. Sphere: Related Content
Credit Suisse May Seek Sale Leaseback of Second Canary Wharf Tower
Property Week / Financial Times - May 29, 2009
Credit Suisse has begun a sale of its London property estate that could raise as much as £500m as part of a strategy to focus on core banking operations.
The investment bank this week instructed CB Richard Ellis to begin marketing the smaller of its two buildings in Canary Wharf, with indications that its tower at Cabot Square is also likely to be brought to the market before the end of the year.
In total, the sales of the two buildings – 20 Columbus Courtyard and 1 Cabot Square – could raise more than £500m, depending on the terms set by the bank on the length of its occupancy and rent.
The move comes as other banks and companies look to sell off non-core assets, with property advisers forecasting that several billion pounds of sale and leaseback deals will be completed in the next few months. Sphere: Related Content
Credit Suisse has begun a sale of its London property estate that could raise as much as £500m as part of a strategy to focus on core banking operations.
The investment bank this week instructed CB Richard Ellis to begin marketing the smaller of its two buildings in Canary Wharf, with indications that its tower at Cabot Square is also likely to be brought to the market before the end of the year.
In total, the sales of the two buildings – 20 Columbus Courtyard and 1 Cabot Square – could raise more than £500m, depending on the terms set by the bank on the length of its occupancy and rent.
The move comes as other banks and companies look to sell off non-core assets, with property advisers forecasting that several billion pounds of sale and leaseback deals will be completed in the next few months. Sphere: Related Content
Wednesday, May 27, 2009
Mikeva Completes Sale Leaseback of Seven Nursing Homes in Finland
PropertyEU - May 25, 2009
Mikeva has sold seven residential care properties to Ilmarinen Mutual Pension Insurance Company in a sale-and-leaseback transaction for an undisclosed amount. The care homes are located in Kaskinen, Kotka, Vaasa, Teuva, Oulu and Haukipudas.
Mikeva is one of the largest social care services providers in Finland with over 600 end-customers. All properties are under development and will be completed within the coming two years. The first of these properties will be completed in May 2009 in Kaskinen. Mikeva has signed long-term lease agreements with all the properties.
The total leasable area of the properties is approximately 13,500 m² accommodating approximately 300 customers when completed. The care homes offer residential services for mental health patients and the elderly.
Leimdörfer acted as financial adviser to Mikeva in the transaction. Sphere: Related Content
Mikeva has sold seven residential care properties to Ilmarinen Mutual Pension Insurance Company in a sale-and-leaseback transaction for an undisclosed amount. The care homes are located in Kaskinen, Kotka, Vaasa, Teuva, Oulu and Haukipudas.
Mikeva is one of the largest social care services providers in Finland with over 600 end-customers. All properties are under development and will be completed within the coming two years. The first of these properties will be completed in May 2009 in Kaskinen. Mikeva has signed long-term lease agreements with all the properties.
The total leasable area of the properties is approximately 13,500 m² accommodating approximately 300 customers when completed. The care homes offer residential services for mental health patients and the elderly.
Leimdörfer acted as financial adviser to Mikeva in the transaction. Sphere: Related Content
Monday, May 18, 2009
Pfizer Completes Sale Leaseback of Industrial Facility in Germany
PropertyEU - May 14, 2009
German property investors Harder and Partners have bought pharmaceuticals firm Pfizer's premises in Karlsruhe for an undisclosed amount as part of a sale-and-leaseback deal which includes 200,000 m2 of industrial space and 90,000 m2 of derelict land. Pfizer will lease back the buildings and distribution space for an unspecified period.
The Pfizer site is located in the Hagsfeld industrial area of Karlsruhe. Sphere: Related Content
German property investors Harder and Partners have bought pharmaceuticals firm Pfizer's premises in Karlsruhe for an undisclosed amount as part of a sale-and-leaseback deal which includes 200,000 m2 of industrial space and 90,000 m2 of derelict land. Pfizer will lease back the buildings and distribution space for an unspecified period.
The Pfizer site is located in the Hagsfeld industrial area of Karlsruhe. Sphere: Related Content
NH Hotels Seeking EUR 300 Million Sale Leaseback of Hotel Portfolio
PropertyEU - May 15, 2009
Spanish hotel group NH Hoteles has unveiled plans to sell EUR 300 mln worth of hotel properties after its loss widened in the first quarter of 2009 to EUR 39.2 mln. The properties will continue to be operated through a sale-and-leaseback agreement or a management contract. The company also said it will seek to raise EUR 197 mln of fresh capital through the issue of 99 million of new shares with a value of EUR 2 per share.
The company currently owns 349 hotels across 22 countries worldwide and an additional 55 in its development pipeline. It has debt of around EUR 700 mln. Sphere: Related Content
Spanish hotel group NH Hoteles has unveiled plans to sell EUR 300 mln worth of hotel properties after its loss widened in the first quarter of 2009 to EUR 39.2 mln. The properties will continue to be operated through a sale-and-leaseback agreement or a management contract. The company also said it will seek to raise EUR 197 mln of fresh capital through the issue of 99 million of new shares with a value of EUR 2 per share.
The company currently owns 349 hotels across 22 countries worldwide and an additional 55 in its development pipeline. It has debt of around EUR 700 mln. Sphere: Related Content
Saturday, May 16, 2009
Caixa Catalunya Agrees to EUR 183 Million Sale Leaseback of 146 Bank Branches Across Spain
PropertyEU - May 14, 2009
Spanish bank Caixa Catalunya has sold 146 bank branches and office buildings across Spain to a number of investors including family-owned investment groups. The bank will lease the assets back for a rental term of 20 years, and retains an option to buy back the assets after this period. Caixa Catalunya said it is making a profit of some EUR 54 mln on the deal, which totals EUR 183 mln.
The crown jewel of the bank's portfolio, its Recoletos head office in Madrid, was sold to Spanish investor Via Celere for EUR 16 mln. The lender has a network of over 1,200 branches across Spain and hopes to sell off another 800 properties through a similar sale-and-leaseback deal in the coming months. Sphere: Related Content
Spanish bank Caixa Catalunya has sold 146 bank branches and office buildings across Spain to a number of investors including family-owned investment groups. The bank will lease the assets back for a rental term of 20 years, and retains an option to buy back the assets after this period. Caixa Catalunya said it is making a profit of some EUR 54 mln on the deal, which totals EUR 183 mln.
The crown jewel of the bank's portfolio, its Recoletos head office in Madrid, was sold to Spanish investor Via Celere for EUR 16 mln. The lender has a network of over 1,200 branches across Spain and hopes to sell off another 800 properties through a similar sale-and-leaseback deal in the coming months. Sphere: Related Content
Friday, May 15, 2009
Sale Leasebacks Brew Anew
Wall Street Journal - May 13, 2009
Corporate sale-and-lease-back deals came to a virtual halt in Europe in the first quarter as property investment dried up, but signs of life may be emerging as cash-strapped companies look for new sources of financing.
Renault SA, the French car maker, is exploring the potential sale of property it owns and which is reported to be valued at as much as €1 billion ($1.36 billion). Eroski, a cooperative retail chain with more than 1,000 stores across Spain, is exploring the sale of as many as 150 supermarkets that could generate proceeds of as much as €300 million, according to people familiar with the matter.
"We are considering selling offices and commercial property as a sale-and-lease-back," says Renault spokeswoman Gita Roux. "Interest rates are high and it's hard to get credit, so property sales are part of a broader plan to improve our cash flow."
Ms. Roux wouldn't comment on how much Renault expects to raise through property sales, saying it depended on the price the company could achieve in the market.
Eroski is being advised by Cushman & Wakefield; neither Cushman nor Eroski would comment.
In a sale-and-lease-back arrangement the owner of a property -- typically a corporation or a government agency -- sells the property it is occupying and leases it back, usually on a long lease of 20 years or more. The advantage for the company selling is that it gets cash that it can reinvest in its business or use to lower debt, can stay in the property, and doesn't have to pay the money back.
As the recession grinds on and debt remains expensive and hard to come by, companies are again considering using their property to raise cash. But deals have been hard to do because of the lack of debt financing and the gap between what sellers hope to gain from a sale and what buyers are willing to pay.
Now, that buyer-seller gap is narrowing and there is also a greater willingness on the part of some buyers to pay with cash now with the hope of raising debt later.
One such buyer is W.P. Carey & Co., a New York investment group that in April paid cash for the space that New York Times Co. owns in its headquarters in midtown Manhattan. W.P. Carey is prepared to do similar all-cash deals in Europe.
"We're doing deals, but there is a premium to that because we're taking on the risk, hoping that we will later be able to get mortgage financing," says Edward LaPuma, head of W.P. Carey's international business.
In Europe, advisers on sale-and-lease-back transactions say chief financial officers from London to Lisbon have been comparing the costs of raising finance through issuing new shares, bonds or by turning their own property into cash.
With stock prices down, share issuance is expensive because investors, fearing stocks could keep falling, are demanding hefty discounts.
Bonds are costly because yield premiums over government paper have widened over the past year, and investors are shying away from corporate debt from all but the highest investment-grade issuers. Banks that used to issue mortgages with just 20% equity are now demanding as much 45%.
"If you're considering a sale-and-lease-back, it's not about where we are in the real-estate cycle," says Matthew Stone, head of occupier strategies for Europe, Middle East and Africa for Cushman & Wakefield. "It's about the need to raise capital and finding the least expensive way to do it."
A number of large deals were done last year. Caixa Galicia sold a portfolio valued at €250 million, said property consultants CB Richard Ellis. Banco Popular sold buildings in Madrid and Barcelona, raising €127 million. Banco Santander raised €4.4 billion with the sale of its Madrid headquarters, 1,152 branches and 10 individual buildings, and French bank BNP Paribas sold its Paris headquarters for €250 million.
With property investment down sharply, sale-and-lease-back deals screeched to a halt this year. But advisers are saying momentum could resume in the next few months.
CB Richard Ellis has deals in the works valued at more than €4.1 billion with clients in financial services, manufacturing, pharmaceuticals, research and development and technology, and retail, says John Wilson, executive director of corporate services. That compares to about €3 billion during the same period last year, he says.
There is a flip side to the sale-and-lease-back scenario. Low property prices create an opportunity for companies or public administrations that have enough cash on hand to buy the buildings they occupy from cash-strapped landlords.
In December, London's Metropolitan Police bought New Scotland Yard from the British REIT Land Securities PLC. And in April, British Land Co. sold an office building on 2-3 Triton Square in London to the building's main tenant, Abbey National PLC.
"We are talking to a number of large corporations seeking to buy their buildings," says Matthew Richards, director of corporate capital markets at Jones Lang LaSalle in London. Sphere: Related Content
Corporate sale-and-lease-back deals came to a virtual halt in Europe in the first quarter as property investment dried up, but signs of life may be emerging as cash-strapped companies look for new sources of financing.
Renault SA, the French car maker, is exploring the potential sale of property it owns and which is reported to be valued at as much as €1 billion ($1.36 billion). Eroski, a cooperative retail chain with more than 1,000 stores across Spain, is exploring the sale of as many as 150 supermarkets that could generate proceeds of as much as €300 million, according to people familiar with the matter.
"We are considering selling offices and commercial property as a sale-and-lease-back," says Renault spokeswoman Gita Roux. "Interest rates are high and it's hard to get credit, so property sales are part of a broader plan to improve our cash flow."
Ms. Roux wouldn't comment on how much Renault expects to raise through property sales, saying it depended on the price the company could achieve in the market.
Eroski is being advised by Cushman & Wakefield; neither Cushman nor Eroski would comment.
In a sale-and-lease-back arrangement the owner of a property -- typically a corporation or a government agency -- sells the property it is occupying and leases it back, usually on a long lease of 20 years or more. The advantage for the company selling is that it gets cash that it can reinvest in its business or use to lower debt, can stay in the property, and doesn't have to pay the money back.
As the recession grinds on and debt remains expensive and hard to come by, companies are again considering using their property to raise cash. But deals have been hard to do because of the lack of debt financing and the gap between what sellers hope to gain from a sale and what buyers are willing to pay.
Now, that buyer-seller gap is narrowing and there is also a greater willingness on the part of some buyers to pay with cash now with the hope of raising debt later.
One such buyer is W.P. Carey & Co., a New York investment group that in April paid cash for the space that New York Times Co. owns in its headquarters in midtown Manhattan. W.P. Carey is prepared to do similar all-cash deals in Europe.
"We're doing deals, but there is a premium to that because we're taking on the risk, hoping that we will later be able to get mortgage financing," says Edward LaPuma, head of W.P. Carey's international business.
In Europe, advisers on sale-and-lease-back transactions say chief financial officers from London to Lisbon have been comparing the costs of raising finance through issuing new shares, bonds or by turning their own property into cash.
With stock prices down, share issuance is expensive because investors, fearing stocks could keep falling, are demanding hefty discounts.
Bonds are costly because yield premiums over government paper have widened over the past year, and investors are shying away from corporate debt from all but the highest investment-grade issuers. Banks that used to issue mortgages with just 20% equity are now demanding as much 45%.
"If you're considering a sale-and-lease-back, it's not about where we are in the real-estate cycle," says Matthew Stone, head of occupier strategies for Europe, Middle East and Africa for Cushman & Wakefield. "It's about the need to raise capital and finding the least expensive way to do it."
A number of large deals were done last year. Caixa Galicia sold a portfolio valued at €250 million, said property consultants CB Richard Ellis. Banco Popular sold buildings in Madrid and Barcelona, raising €127 million. Banco Santander raised €4.4 billion with the sale of its Madrid headquarters, 1,152 branches and 10 individual buildings, and French bank BNP Paribas sold its Paris headquarters for €250 million.
With property investment down sharply, sale-and-lease-back deals screeched to a halt this year. But advisers are saying momentum could resume in the next few months.
CB Richard Ellis has deals in the works valued at more than €4.1 billion with clients in financial services, manufacturing, pharmaceuticals, research and development and technology, and retail, says John Wilson, executive director of corporate services. That compares to about €3 billion during the same period last year, he says.
There is a flip side to the sale-and-lease-back scenario. Low property prices create an opportunity for companies or public administrations that have enough cash on hand to buy the buildings they occupy from cash-strapped landlords.
In December, London's Metropolitan Police bought New Scotland Yard from the British REIT Land Securities PLC. And in April, British Land Co. sold an office building on 2-3 Triton Square in London to the building's main tenant, Abbey National PLC.
"We are talking to a number of large corporations seeking to buy their buildings," says Matthew Richards, director of corporate capital markets at Jones Lang LaSalle in London. Sphere: Related Content
Monday, May 11, 2009
Eroski Seeking EUR 300 Million Sale Leaseback of Supermarkets Across Spain
Property Week - May 8, 2009
Spanish retailer prepares sale and leaseback of up to 150 supermarkets.
Eroski is preparing to sell and lease back between 100 and 150 supermarkets, which could net the Spanish retailer more than €300m.
The supermarket operator is approaching a range of investors about the portfolio, which consists of ‘urban supermarkets’ in Spanish city centres.
It is thought that the portfolio, which does not include any hypermarkets, could be broken up into smaller lot sizes, which would be easier to finance and could attract a variety of buyers such as institutional and private investors.
The final lease terms that Eroski will offer to investors are likely to be long institutionally-friendly leases of between 20 and 25 years.
Large sale and leasebacks are becoming increasingly common in Spain as occupiers try to release equity from their property portfolio to create cash pools to carry out corporate acquisitions.
Eroski in particular is thought to be keen to raise cash to reduce its debt levels after the purchase of the Caprabo supermarket chain in 2007.
It also wants to raise funds in readiness of future acquisitions as it seeks to increase its market share in Spain. It is already one of the top three hypermarket operators in the country and the number one supermarket operator in the Catalunya region.
Any potential transaction with Eroski would be structured as a straight sale and leaseback rather than a joint venture partnership.
It already has one joint venture partnership with Sol Zakay’s Topland, which in November last year bought a 15-strong retail portfolio from Eroski in Spain’s biggest hypermarket sale-and-leaseback transaction. Eroski signed 25-year leases with fixed rental increases.
Topland paid €361m – a yield of around 6% – for the portfolio, comprising 13 hypermarkets and two shopping centres in the Basque area of Spain. It provided equity for 30% of the first purchase and the remaining 70% comes from a consortium of banks: La Caixa, Banco Bilbao Vizcaya Argentaria, Banco De Sabadell, Banco Espanol De Credito, Banco De Vasconia and Caja Madrid.
The transaction with Topland was structured as the first phase of a potential three-part sale-and-leaseback agreement between the two parties, in which Topland would buy more than 50 Eroski properties.
Spain’s property market, which has been badly hit by the global financial crisis, has experienced a rapid repricing similar to that in the UK and is attracting investors who want to buy at the bottom of the market.
Cushman & Wakefield advised Eroski on its transaction with Topland and it is thought that Cushman has now been instructed to act for Eroski on an exclusive mandate.
All parties declined to comment. Sphere: Related Content
Spanish retailer prepares sale and leaseback of up to 150 supermarkets.
Eroski is preparing to sell and lease back between 100 and 150 supermarkets, which could net the Spanish retailer more than €300m.
The supermarket operator is approaching a range of investors about the portfolio, which consists of ‘urban supermarkets’ in Spanish city centres.
It is thought that the portfolio, which does not include any hypermarkets, could be broken up into smaller lot sizes, which would be easier to finance and could attract a variety of buyers such as institutional and private investors.
The final lease terms that Eroski will offer to investors are likely to be long institutionally-friendly leases of between 20 and 25 years.
Large sale and leasebacks are becoming increasingly common in Spain as occupiers try to release equity from their property portfolio to create cash pools to carry out corporate acquisitions.
Eroski in particular is thought to be keen to raise cash to reduce its debt levels after the purchase of the Caprabo supermarket chain in 2007.
It also wants to raise funds in readiness of future acquisitions as it seeks to increase its market share in Spain. It is already one of the top three hypermarket operators in the country and the number one supermarket operator in the Catalunya region.
Any potential transaction with Eroski would be structured as a straight sale and leaseback rather than a joint venture partnership.
It already has one joint venture partnership with Sol Zakay’s Topland, which in November last year bought a 15-strong retail portfolio from Eroski in Spain’s biggest hypermarket sale-and-leaseback transaction. Eroski signed 25-year leases with fixed rental increases.
Topland paid €361m – a yield of around 6% – for the portfolio, comprising 13 hypermarkets and two shopping centres in the Basque area of Spain. It provided equity for 30% of the first purchase and the remaining 70% comes from a consortium of banks: La Caixa, Banco Bilbao Vizcaya Argentaria, Banco De Sabadell, Banco Espanol De Credito, Banco De Vasconia and Caja Madrid.
The transaction with Topland was structured as the first phase of a potential three-part sale-and-leaseback agreement between the two parties, in which Topland would buy more than 50 Eroski properties.
Spain’s property market, which has been badly hit by the global financial crisis, has experienced a rapid repricing similar to that in the UK and is attracting investors who want to buy at the bottom of the market.
Cushman & Wakefield advised Eroski on its transaction with Topland and it is thought that Cushman has now been instructed to act for Eroski on an exclusive mandate.
All parties declined to comment. Sphere: Related Content
Sunday, May 10, 2009
Carrefour Seeking £1 Billion in Several Retail Store Sale Leaseback Transactions
Property Week - May 8, 2009
French supermarket giant Carrefour is preparing to sell a significant part of its property portfolio as it goes into expansion mode.
Carrefour Property, which controls nearly two-thirds of the retailer’s €14bn property portfolio, is preparing to sell properties in €200m and €500m lot sizes. The retailer said it would aim to sell the properties to investors in a long-term sale-and-leaseback transaction.
Carrefour has historically raised equity from its property portfolio and in 2008 planned to list its property arm on the stock exchange as a separate entity but plans were abandoned because of the downturn.
Sources said Carrefour is looking to raise at least €1bn from the strategy.
It is thought that Carrefour investors Colony Capital and Groupe Arnault are supportive of the plans. Sphere: Related Content
French supermarket giant Carrefour is preparing to sell a significant part of its property portfolio as it goes into expansion mode.
Carrefour Property, which controls nearly two-thirds of the retailer’s €14bn property portfolio, is preparing to sell properties in €200m and €500m lot sizes. The retailer said it would aim to sell the properties to investors in a long-term sale-and-leaseback transaction.
Carrefour has historically raised equity from its property portfolio and in 2008 planned to list its property arm on the stock exchange as a separate entity but plans were abandoned because of the downturn.
Sources said Carrefour is looking to raise at least €1bn from the strategy.
It is thought that Carrefour investors Colony Capital and Groupe Arnault are supportive of the plans. Sphere: Related Content
Friday, May 08, 2009
Credit Suisse Seeking £147 Million Sale Leaseback of Canary Wharf Tower
Property Week - May 6, 2009
Credit Suisse has instructed CB Richard Ellis to market the sale and leaseback of 20 Columbus Courtyard in Canary Wharf with a price tag of around £147m.
This equates to a yield of 6.25%, or around £37.50/sq ft. It will rent the building back for 25 years with an annual Retail Prices Index-linked rent, set with a ‘cap and collar’ of 4% and 1.5%. Sphere: Related Content
Credit Suisse has instructed CB Richard Ellis to market the sale and leaseback of 20 Columbus Courtyard in Canary Wharf with a price tag of around £147m.
This equates to a yield of 6.25%, or around £37.50/sq ft. It will rent the building back for 25 years with an annual Retail Prices Index-linked rent, set with a ‘cap and collar’ of 4% and 1.5%. Sphere: Related Content
Saturday, May 02, 2009
YRC Negotiates $351 Million Sale Leaseback of Trucking Facilities Across US
CoStar Group - April 29, 2009
YRC Inc. and USF Reddaway Inc., subsidiaries of YRC Worldwide Inc., continue to shed their ownership in trucking facilities across the country.
The two trucking transportation groups entered into another real estate sales contract with Estes Express Lines to sell and simultaneously lease back more trucking facilities throughout the United States.
The aggregate purchase price for the subject facilities is $32 million and initial annual lease payments would be $2.9 million in total.
The new Estes contracts are in addition to similar deals struck earlier this year for $122 million.
Separately, YRC, USF Holland Inc. and New Penn Motor Express Inc., also each YRC Worldwide subsidiaries agreed to sell and leaseback additional facilities to unidentified investors. The aggregate purchase price is $70 million and initial annual lease payments to be $6.1 million in total.
Both deals include a few facilities that were originally a part of another transaction with a different buyer.
Previously YRC and USF Reddaway also struck a deal to sell and leaseback facilities with NATMI Truck Terminals LLC. That deal was amended so that deals could be struck with the latest buyers. Originally to total $150.4 million, the amended deal will total $127 million, of which $111 million in deals closed in the first quarter of 2009.
The company expects to close on all of the new and remaining deals this quarter. Sphere: Related Content
YRC Inc. and USF Reddaway Inc., subsidiaries of YRC Worldwide Inc., continue to shed their ownership in trucking facilities across the country.
The two trucking transportation groups entered into another real estate sales contract with Estes Express Lines to sell and simultaneously lease back more trucking facilities throughout the United States.
The aggregate purchase price for the subject facilities is $32 million and initial annual lease payments would be $2.9 million in total.
The new Estes contracts are in addition to similar deals struck earlier this year for $122 million.
Separately, YRC, USF Holland Inc. and New Penn Motor Express Inc., also each YRC Worldwide subsidiaries agreed to sell and leaseback additional facilities to unidentified investors. The aggregate purchase price is $70 million and initial annual lease payments to be $6.1 million in total.
Both deals include a few facilities that were originally a part of another transaction with a different buyer.
Previously YRC and USF Reddaway also struck a deal to sell and leaseback facilities with NATMI Truck Terminals LLC. That deal was amended so that deals could be struck with the latest buyers. Originally to total $150.4 million, the amended deal will total $127 million, of which $111 million in deals closed in the first quarter of 2009.
The company expects to close on all of the new and remaining deals this quarter. Sphere: Related Content
Experian Agrees to $27 Million Sale Leaseback Office Building Near Chicago
Crain's Chicago Real Estate Daily - April 29, 2009
A New York investment firm has a contract to buy a northwest suburban office building from Experian PLC in a roughly $27-million sale/leaseback deal, in a bid by the credit reporting agency to raise cash and cut costs.
Credit reporting agency Experian has a contract to sell and lease back this building in Schaumburg.
The transaction could be one of the few deals to close this year in the suburban office market, which has come to nearly a standstill because of banks' tighter lending standards, sellers' reluctance to cut prices and buyers' concern about rising vacancy rates.
Experian owns a two-building complex totaling 296,000 square feet at 955 American Lane in Schaumburg. The company, which is advised by real estate firm Jones Lang LaSalle Inc., has agreed to sell the larger of the two structures, an 189,000-square-foot building called the East Building, to U.S. Realty Advisors LLC, according to sources familiar with the transaction.
U.S. Realty last month formed a company called XP Property LLC, to hold title to the building, Illinois corporate records show. The price is about $27 million or $28 million, sources say. Experian has agreed to sign a long-term lease for the building, which was built in 1999, sources say.
Experian’s strong financial performance may have made the transaction attractive to U.S. Realty, a low-profile firm that specializes in single-tenant properties. Dublin, Ireland-based Experian’s revenue rose 18.6% to $4.1 billion during the fiscal year ending March 31, 2008, compared to the previous year. North America accounted for about half of the company’s revenue.
Jack Genende, U.S. Realty’s chief financial officer, and Grant Freeman, managing director in Jones Lang’s corporate capital markets group who is based in Southern California, declined to comment. A Schaumburg-based spokesman for Experian also declined to comment.
Meanwhile, the company is looking for tenants to lease space in its West Building, a 107,000-square-foot structure built in 1985, according to real estate data provider CoStar Group Inc. Experian plans to vacate that building. Sphere: Related Content
A New York investment firm has a contract to buy a northwest suburban office building from Experian PLC in a roughly $27-million sale/leaseback deal, in a bid by the credit reporting agency to raise cash and cut costs.
Credit reporting agency Experian has a contract to sell and lease back this building in Schaumburg.
The transaction could be one of the few deals to close this year in the suburban office market, which has come to nearly a standstill because of banks' tighter lending standards, sellers' reluctance to cut prices and buyers' concern about rising vacancy rates.
Experian owns a two-building complex totaling 296,000 square feet at 955 American Lane in Schaumburg. The company, which is advised by real estate firm Jones Lang LaSalle Inc., has agreed to sell the larger of the two structures, an 189,000-square-foot building called the East Building, to U.S. Realty Advisors LLC, according to sources familiar with the transaction.
U.S. Realty last month formed a company called XP Property LLC, to hold title to the building, Illinois corporate records show. The price is about $27 million or $28 million, sources say. Experian has agreed to sign a long-term lease for the building, which was built in 1999, sources say.
Experian’s strong financial performance may have made the transaction attractive to U.S. Realty, a low-profile firm that specializes in single-tenant properties. Dublin, Ireland-based Experian’s revenue rose 18.6% to $4.1 billion during the fiscal year ending March 31, 2008, compared to the previous year. North America accounted for about half of the company’s revenue.
Jack Genende, U.S. Realty’s chief financial officer, and Grant Freeman, managing director in Jones Lang’s corporate capital markets group who is based in Southern California, declined to comment. A Schaumburg-based spokesman for Experian also declined to comment.
Meanwhile, the company is looking for tenants to lease space in its West Building, a 107,000-square-foot structure built in 1985, according to real estate data provider CoStar Group Inc. Experian plans to vacate that building. Sphere: Related Content
Friday, May 01, 2009
Burlington Coat Factory Seeking Sale Leaseback of Nine Stores Across US
Jones Lang LaSalle Web Site - April 28, 2009
Jones Lang LaSalle is currently marketing a 715,000-square-foot portfolio of retail assets for sale and leaseback by Burlington Coat Factory. Burlington Coat Factory will leaseback the nine properties, located in some of the strongest retail markets in the United States, for a minimum of 15 years. The properties are available for purchase either individually or as a portfolio.
Leading the Jones Lang LaSalle team on this assignment is Managing Director Bruce Westwood-Booth and Vice President Ben Herrig.
“These assets are strategically located in the strongest retail real estate markets in the country, and should appeal to a wide scope of national and international investors seeking to purchase well-established, high-quality retail locations providing long-term cash flow,” said Mr. Westwood-Booth.
This portfolio of nine retail assets includes a mix of regional mall anchor locations, power center/neighborhood anchor sites and stand alone stores. They are located in Chicago, Los Angeles, Houston, Broward County, Northern New Jersey, Boston, Orlando and two locations in and around Phoenix. Burlington Coat Factory plans to enter into 15-year, absolute triple-net leases with two percent annual escalations at each location. All of the stores have been updated or renovated within the past few years and are strong performers for the company. Sphere: Related Content
Jones Lang LaSalle is currently marketing a 715,000-square-foot portfolio of retail assets for sale and leaseback by Burlington Coat Factory. Burlington Coat Factory will leaseback the nine properties, located in some of the strongest retail markets in the United States, for a minimum of 15 years. The properties are available for purchase either individually or as a portfolio.
Leading the Jones Lang LaSalle team on this assignment is Managing Director Bruce Westwood-Booth and Vice President Ben Herrig.
“These assets are strategically located in the strongest retail real estate markets in the country, and should appeal to a wide scope of national and international investors seeking to purchase well-established, high-quality retail locations providing long-term cash flow,” said Mr. Westwood-Booth.
This portfolio of nine retail assets includes a mix of regional mall anchor locations, power center/neighborhood anchor sites and stand alone stores. They are located in Chicago, Los Angeles, Houston, Broward County, Northern New Jersey, Boston, Orlando and two locations in and around Phoenix. Burlington Coat Factory plans to enter into 15-year, absolute triple-net leases with two percent annual escalations at each location. All of the stores have been updated or renovated within the past few years and are strong performers for the company. Sphere: Related Content
Friday, April 17, 2009
Macaroni Grill Completes Sale Leaseback of 39 Restaurants
CoStar Group - April 15, 2009
In mid-December 2008, Dallas-based Cardinal Capital Partners, together with New York City-based Fortress Credit Corporation emerged as the buyer of a single-tenant portfolio of 39 Macaroni Grill restaurants, which are net leased for 20 years to Macaroni Grill's new private equity owner, Golden Gate Capital. The Cardinal-Fortress team specializes in corporate sale-leaseback transactions. In July 2008, the duo completed a sale-leaseback transaction with the new owner of Applebee's, acquiring 181 restaurants for $303 million. Sphere: Related Content
In mid-December 2008, Dallas-based Cardinal Capital Partners, together with New York City-based Fortress Credit Corporation emerged as the buyer of a single-tenant portfolio of 39 Macaroni Grill restaurants, which are net leased for 20 years to Macaroni Grill's new private equity owner, Golden Gate Capital. The Cardinal-Fortress team specializes in corporate sale-leaseback transactions. In July 2008, the duo completed a sale-leaseback transaction with the new owner of Applebee's, acquiring 181 restaurants for $303 million. Sphere: Related Content
Wednesday, April 15, 2009
HSBC Mulls $4 Billion Sale Leaseback of Properties in New York, London and Paris
Bloomberg - April 12, 2009
HSBC Holdings Plc, Europe’s biggest bank, may sell three of its landmark office buildings, including the Canary Wharf world headquarters in London, to raise cash as it tries to avoid a bailout from the British government.
HSBC is gauging interest in its 45-story tower at 8 Canada Square in London, its Fifth Avenue skyscraper in New York, and its Paris offices on the Avenue des Champs Elysees, said Ruth Lavelle, a London-based spokeswoman for HSBC. The Sunday Times of London reported the potential sales earlier today at a combined asking price of 2.7 billion pounds ($3.96 billion). The newspaper didn’t include the source of its information and Lavelle, in an e-mail, said she couldn’t confirm a price.
The London-based bank is seeking to sell at a time when financing for commercial real estate is difficult and values are falling. In New York, transactions dropped 40 percent in the first quarter compared with a year earlier, according to broker Cushman & Wakefield Inc., and U.K. values fell 29 percent in the 12 months through February, Investment Property Databank Ltd. said in a March 13 report.
“Despite the challenging environment, the properties can be moved if HSBC is willing to offer attractive lease-back and seller-financing terms to a prospective buyer,” Dan Fasulo, managing director of New York-based research firm Real Capital Analytics Inc., said in an e-mail message.
HSBC would probably lease the offices back from any buyer, the Times reported.
“The sale price will be predicated on the lease terms HSBC is willing to accept” to rent back the space, Fasulo said.
Share Sale
HSBC raised 12.5 billion pounds in the U.K.’s largest rights offer earlier this month. The bank needs cash to help counter the $15.5 billion pretax loss of its North American operation for 2008 and to add to the $53 billion it set aside during the past three years to cover bad loans. It has so far avoided taking U.K. government funding, unlike rivals Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.
“As part of managing a significant global real estate portfolio HSBC is testing the market with three of its landmark property assets,” HSBC said in a statement. “HSBC constantly monitors the commercial property market carefully, making decisions based on what is most appropriate for the business and our stakeholders.”
Two years ago HSBC sold the Canary Wharf headquarters to Spanish developer Metrovacesa SA for 1.09 billion pounds in the first sale of a U.K. office building to top 1 billion pounds.
Bought It Back
HSBC then rented offices there at an annual rate of 43.5 million pounds. In December, it bought the building back from Metrovacesa for 838 million pounds, a profit of 250 million pounds. The bank built the tower in 2002.
The New York Times Co. struck a similar deal last month, agreeing to sell the space it occupies in its Manhattan headquarters for $225 million to W.P. Carey & Co., a New York- based real estate investment bank. The newspaper company will rent the building for 15 years from the new owner with an option to buy back its stake in 2019 for $250 million.
Manhattan office vacancy rates in March rose to their highest in more than five years, according to Los Angeles-based real estate services firm CB Richard Ellis Group Inc.
In London’s financial district, empty office space is also at a five-year high, according to NB Real Estate.
HSBC’s London headquarters accommodates about 8,000 workers and was designed by Norman Foster. The 29-story New York property, built in 1985, is at 452 Fifth Ave. between 39th and 40th streets and has 500,000 square feet, according to the Web site MrOfficeSpace.com. Sphere: Related Content
HSBC Holdings Plc, Europe’s biggest bank, may sell three of its landmark office buildings, including the Canary Wharf world headquarters in London, to raise cash as it tries to avoid a bailout from the British government.
HSBC is gauging interest in its 45-story tower at 8 Canada Square in London, its Fifth Avenue skyscraper in New York, and its Paris offices on the Avenue des Champs Elysees, said Ruth Lavelle, a London-based spokeswoman for HSBC. The Sunday Times of London reported the potential sales earlier today at a combined asking price of 2.7 billion pounds ($3.96 billion). The newspaper didn’t include the source of its information and Lavelle, in an e-mail, said she couldn’t confirm a price.
The London-based bank is seeking to sell at a time when financing for commercial real estate is difficult and values are falling. In New York, transactions dropped 40 percent in the first quarter compared with a year earlier, according to broker Cushman & Wakefield Inc., and U.K. values fell 29 percent in the 12 months through February, Investment Property Databank Ltd. said in a March 13 report.
“Despite the challenging environment, the properties can be moved if HSBC is willing to offer attractive lease-back and seller-financing terms to a prospective buyer,” Dan Fasulo, managing director of New York-based research firm Real Capital Analytics Inc., said in an e-mail message.
HSBC would probably lease the offices back from any buyer, the Times reported.
“The sale price will be predicated on the lease terms HSBC is willing to accept” to rent back the space, Fasulo said.
Share Sale
HSBC raised 12.5 billion pounds in the U.K.’s largest rights offer earlier this month. The bank needs cash to help counter the $15.5 billion pretax loss of its North American operation for 2008 and to add to the $53 billion it set aside during the past three years to cover bad loans. It has so far avoided taking U.K. government funding, unlike rivals Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.
“As part of managing a significant global real estate portfolio HSBC is testing the market with three of its landmark property assets,” HSBC said in a statement. “HSBC constantly monitors the commercial property market carefully, making decisions based on what is most appropriate for the business and our stakeholders.”
Two years ago HSBC sold the Canary Wharf headquarters to Spanish developer Metrovacesa SA for 1.09 billion pounds in the first sale of a U.K. office building to top 1 billion pounds.
Bought It Back
HSBC then rented offices there at an annual rate of 43.5 million pounds. In December, it bought the building back from Metrovacesa for 838 million pounds, a profit of 250 million pounds. The bank built the tower in 2002.
The New York Times Co. struck a similar deal last month, agreeing to sell the space it occupies in its Manhattan headquarters for $225 million to W.P. Carey & Co., a New York- based real estate investment bank. The newspaper company will rent the building for 15 years from the new owner with an option to buy back its stake in 2019 for $250 million.
Manhattan office vacancy rates in March rose to their highest in more than five years, according to Los Angeles-based real estate services firm CB Richard Ellis Group Inc.
In London’s financial district, empty office space is also at a five-year high, according to NB Real Estate.
HSBC’s London headquarters accommodates about 8,000 workers and was designed by Norman Foster. The 29-story New York property, built in 1985, is at 452 Fifth Ave. between 39th and 40th streets and has 500,000 square feet, according to the Web site MrOfficeSpace.com. Sphere: Related Content
Wednesday, April 08, 2009
MPS Bank Seeking EUR 2.2 Billion Sale Leaseback of Bank Offices Across Italy
PropertyEU - April 6, 2009
Italy's Caltagirone Group is said to be the frontrunner in a bid to acquire the real estate assets that Monte Paschi di Siena bank put on the market last year, news agency Radiocor reported. The properties, worth a total of EUR 2.2 bn, are being sold in a sale and leaseback operation managed by Mediobanca. According to media reports, Mediobanca is working on the creation of a consortium of investors including Credit Suisse which would buy the bulk of the properties. Sphere: Related Content
Italy's Caltagirone Group is said to be the frontrunner in a bid to acquire the real estate assets that Monte Paschi di Siena bank put on the market last year, news agency Radiocor reported. The properties, worth a total of EUR 2.2 bn, are being sold in a sale and leaseback operation managed by Mediobanca. According to media reports, Mediobanca is working on the creation of a consortium of investors including Credit Suisse which would buy the bulk of the properties. Sphere: Related Content
Tuesday, April 07, 2009
DHL Agrees to EUR 30 Million Sale Leaseback of Three Benelux Distribution Centers
Property Week - April 2, 2009
Shareholders of closed-end real-estate investment company WDP have approved a proposal for the company to acquire three logistics sites from international courier DHL. The sites located in the axis between Breda in the Netherlands and Brussels have a total construction potential of 85,000 m2.
DHL will lease back the properties, making WDP the largest provider of real estate space to the firm in Belgium. WDP's shareholders also approved the issuance of 807,733 new shares at EUR 27.15 each to pay for the non-cash transaction.
The transaction will take the form of a merger and three partial de-mergers involving the new shares and the transfer of debt. This will result in a total investment value of EUR 29.7 mln for a gross initial return of 8.7%. Sphere: Related Content
Shareholders of closed-end real-estate investment company WDP have approved a proposal for the company to acquire three logistics sites from international courier DHL. The sites located in the axis between Breda in the Netherlands and Brussels have a total construction potential of 85,000 m2.
DHL will lease back the properties, making WDP the largest provider of real estate space to the firm in Belgium. WDP's shareholders also approved the issuance of 807,733 new shares at EUR 27.15 each to pay for the non-cash transaction.
The transaction will take the form of a merger and three partial de-mergers involving the new shares and the transfer of debt. This will result in a total investment value of EUR 29.7 mln for a gross initial return of 8.7%. Sphere: Related Content
Monday, April 06, 2009
Kesko Completes EUR 50 Million Sale Leaseback of Retail Stores in Finland
IPE - April 3, 2009
The Kesko Pension Fund has bought four retail properties for €50m in a sale and leaseback deal with Finnish trading company Kesko Group.
The €400m Finnish pension fund has purchased a total of 26,000 square metres of store space in Finland, including the K-citimarket in Helsinki, K-rauta Lielahti in Tampere, interests in the K-supermarket Nekala and K-citymarket properties in Tampere.
The pension fund currently allocates 40% to real estate and invests mainly in Finnish trading centres.
Velko Savela, the pension fund’s executive vice president, said the real estate portfolio returned around 8% last year but saw very few transactions.
Savela said the fund held off from making new investments in 2008 and sold very few properties, but is currently considering increasing its allocation to real estate slightly.
The latest deal does not involve any changes in the stores’ operations and all properties have been leased back to Kesko’s parent company for a further 10-15 years.
Kesko Group said it gained around €19m from the transaction, once debt had been added, and said the sale was designed to boost the firm’s liquidity and improve its use.
At 31 December 2008, Kesko owned one million square metres of properties and had 2.9 million square metres of properties leased in Finland and neighbouring Nordic countries. Sphere: Related Content
The Kesko Pension Fund has bought four retail properties for €50m in a sale and leaseback deal with Finnish trading company Kesko Group.
The €400m Finnish pension fund has purchased a total of 26,000 square metres of store space in Finland, including the K-citimarket in Helsinki, K-rauta Lielahti in Tampere, interests in the K-supermarket Nekala and K-citymarket properties in Tampere.
The pension fund currently allocates 40% to real estate and invests mainly in Finnish trading centres.
Velko Savela, the pension fund’s executive vice president, said the real estate portfolio returned around 8% last year but saw very few transactions.
Savela said the fund held off from making new investments in 2008 and sold very few properties, but is currently considering increasing its allocation to real estate slightly.
The latest deal does not involve any changes in the stores’ operations and all properties have been leased back to Kesko’s parent company for a further 10-15 years.
Kesko Group said it gained around €19m from the transaction, once debt had been added, and said the sale was designed to boost the firm’s liquidity and improve its use.
At 31 December 2008, Kesko owned one million square metres of properties and had 2.9 million square metres of properties leased in Finland and neighbouring Nordic countries. Sphere: Related Content
Thursday, April 02, 2009
Ford Mulls £100 Million Sale Leaseback of Over 100 Auto Showrooms Across Europe
Property Week - March 30, 2009
Ford, the car giant led by chief executive Alan Mulally, is looking to sell off 100 to 120 showrooms across Europe.
Agents have been invited to pitch to run a sale-and-leaseback of properties in the UK, France and Germany. It is understood that Ford's management hopes to raise around £100m by selling the properties to landlords, which would then rent them back to the car maker. (Independent On Sunday) Sphere: Related Content
Ford, the car giant led by chief executive Alan Mulally, is looking to sell off 100 to 120 showrooms across Europe.
Agents have been invited to pitch to run a sale-and-leaseback of properties in the UK, France and Germany. It is understood that Ford's management hopes to raise around £100m by selling the properties to landlords, which would then rent them back to the car maker. (Independent On Sunday) Sphere: Related Content
Saturday, March 28, 2009
Banco Sabadell Completes EUR 35.7 Million Sale Leaseback of Madrid HQ
Cushman & Wakefield Web Site - March 26, 2009
Banco Sabadell, one of Spain’s main financial institutions, has today announced the sale of its head office in Madrid in a deal brokered by Cushman & Wakefield (C&W), real estate consultants for comprehensive services. The total value of the deal came to €35.7 million.
The deal has been made on a sale and leaseback basis, which comprises the sale of the asset and its subsequent leasing by the seller. This type of deal is extremely common for institutions that wish to gain liquidity from their real estate assets. Cushman & Wakefield has recently been involved in several transactions of this nature, such as the sale of Danone’s head office in Barcelona (more than €50 million) and the sale of 12 hypermarkets owned by the distribution chain Eroski (€361 million), both in 2008.
Oriol Barrachina, Managing Partner of Cushman & Wakefield in Barcelona, commented “This deal demonstrates that although there has been a significant decrease in activity in the investment market, there is still a strong interest in deals that involve a good location, a good tenant and a good contractual term”.
The Sabadell building is located at number 71 Calle Serrano in Madrid’s Barrio de Salamanca, one of the city’s most elite districts, which not only acts as a residential area but also houses the headquarters of various financial institutions and numerous high end fashion boutiques.
With nine floors above ground, two below ground and 76 car parking spaces, the building has a constructed area of 6,800m2 and a GLA (gross leasable area) of 4,616m2. The property, which has excellent public transport links, is in an optimum condition after having undergone comprehensive renovations in 2008.
The purchaser is Metroinvest (Metrópolis and La Caixa-Banca Privada.) Sphere: Related Content
Banco Sabadell, one of Spain’s main financial institutions, has today announced the sale of its head office in Madrid in a deal brokered by Cushman & Wakefield (C&W), real estate consultants for comprehensive services. The total value of the deal came to €35.7 million.
The deal has been made on a sale and leaseback basis, which comprises the sale of the asset and its subsequent leasing by the seller. This type of deal is extremely common for institutions that wish to gain liquidity from their real estate assets. Cushman & Wakefield has recently been involved in several transactions of this nature, such as the sale of Danone’s head office in Barcelona (more than €50 million) and the sale of 12 hypermarkets owned by the distribution chain Eroski (€361 million), both in 2008.
Oriol Barrachina, Managing Partner of Cushman & Wakefield in Barcelona, commented “This deal demonstrates that although there has been a significant decrease in activity in the investment market, there is still a strong interest in deals that involve a good location, a good tenant and a good contractual term”.
The Sabadell building is located at number 71 Calle Serrano in Madrid’s Barrio de Salamanca, one of the city’s most elite districts, which not only acts as a residential area but also houses the headquarters of various financial institutions and numerous high end fashion boutiques.
With nine floors above ground, two below ground and 76 car parking spaces, the building has a constructed area of 6,800m2 and a GLA (gross leasable area) of 4,616m2. The property, which has excellent public transport links, is in an optimum condition after having undergone comprehensive renovations in 2008.
The purchaser is Metroinvest (Metrópolis and La Caixa-Banca Privada.) Sphere: Related Content
Tuesday, March 24, 2009
Standard Chartered Offices in London Offered for £200 Million
Property Week - March 21, 2009
Vincent Tchenguiz is under offer to buy the Standard Chartered building on Basinghall Avenue in the City of London for £200m in his first UK commercial property deal since the middle of last year.
Tchenguiz’s Consensus Group is thought to have agreed to buy the 200,000 sq ft building at 1 Basinghall Avenue from a Middle Eastern consortium. The building is let to Standard Chartered on a 20 year lease that began in 2007 and which pays an annual rent of around £10m a year.
Standard Chartered originally bought the site from The City of London Unit Trust (CLOUT), the unit trust managed by Schroders and advised by Pillar Property, at the end of 2005 for around £120m.
It then soon after carried out a £170m sale and leaseback with Irish group Sloane Capital, the property investment vehicle for horse racing tycoons John Magnier and JP McManus and Limerick property investor Aidan Brooks.
Sloan Capital sold it to the Middle Eastern consortium for £207m. HSH Nordbank provided debt finance to the Middle Eastern consortium. It is thought HSH Nordbank, which has a change of control clause in its debt agreement, could potentially transfer the debt to Tchenguiz under revised terms.
A spokesman for Consensus Business Group declined to comment.
The last UK commercial purchase by Tchenguiz was in May last year when Rainlodge, ultimately owned by the Tchenguiz family trust and advised by Consensus Business Group, bought a student hall in Leeds for £10.6m from Unite, reflecting a net initial yield of 5.7%.
Consensus has also sold a number of major assets in the UK in the past two years, notably selling Shell-Mex House in the West End for £490m to American private equity firm Westbrook. Sphere: Related Content
Vincent Tchenguiz is under offer to buy the Standard Chartered building on Basinghall Avenue in the City of London for £200m in his first UK commercial property deal since the middle of last year.
Tchenguiz’s Consensus Group is thought to have agreed to buy the 200,000 sq ft building at 1 Basinghall Avenue from a Middle Eastern consortium. The building is let to Standard Chartered on a 20 year lease that began in 2007 and which pays an annual rent of around £10m a year.
Standard Chartered originally bought the site from The City of London Unit Trust (CLOUT), the unit trust managed by Schroders and advised by Pillar Property, at the end of 2005 for around £120m.
It then soon after carried out a £170m sale and leaseback with Irish group Sloane Capital, the property investment vehicle for horse racing tycoons John Magnier and JP McManus and Limerick property investor Aidan Brooks.
Sloan Capital sold it to the Middle Eastern consortium for £207m. HSH Nordbank provided debt finance to the Middle Eastern consortium. It is thought HSH Nordbank, which has a change of control clause in its debt agreement, could potentially transfer the debt to Tchenguiz under revised terms.
A spokesman for Consensus Business Group declined to comment.
The last UK commercial purchase by Tchenguiz was in May last year when Rainlodge, ultimately owned by the Tchenguiz family trust and advised by Consensus Business Group, bought a student hall in Leeds for £10.6m from Unite, reflecting a net initial yield of 5.7%.
Consensus has also sold a number of major assets in the UK in the past two years, notably selling Shell-Mex House in the West End for £490m to American private equity firm Westbrook. Sphere: Related Content
Sunday, March 22, 2009
Caixa Catalunya Completes EUR 110 Million Sale Leaseback of 120 Bank Branches in Spain
Spanish News - March 18, 2009
In December, Caixa Catalunya announced that it would sell 824 branches of its 1200 commercial premises in Spain in an effort to raise cash.
On Tuesday, the Spanish savings bank has confirmed that it has sold 120 of the branches through a sale and leaseback agreement raising 110 million euros. The sale has been carried out solely through its private banking customers in an effort to offer them a valuable investment with low risk and guaranteed retrun.
Caixa Catalunya says it is offering a 6 – 6.5 per cent return on investment by paying a rent for the sold premises. The global return is estimated to be at 8.5% if the future increase of rents is considered.
The formula sale and leasback is something that is currently being highly used by Spanish banks. Banco Pastor another Spanish bank announced last week it hopes to raise 230 million euros for the sale and leaseback of 160 of its 650 branches in Spain. Sphere: Related Content
In December, Caixa Catalunya announced that it would sell 824 branches of its 1200 commercial premises in Spain in an effort to raise cash.
On Tuesday, the Spanish savings bank has confirmed that it has sold 120 of the branches through a sale and leaseback agreement raising 110 million euros. The sale has been carried out solely through its private banking customers in an effort to offer them a valuable investment with low risk and guaranteed retrun.
Caixa Catalunya says it is offering a 6 – 6.5 per cent return on investment by paying a rent for the sold premises. The global return is estimated to be at 8.5% if the future increase of rents is considered.
The formula sale and leasback is something that is currently being highly used by Spanish banks. Banco Pastor another Spanish bank announced last week it hopes to raise 230 million euros for the sale and leaseback of 160 of its 650 branches in Spain. Sphere: Related Content
Wednesday, March 18, 2009
RBS to Review Global Property Portfolio
Property Week - March 13, 2009
The Royal Bank of Scotland is embarking on a review of its vast operational property estate.
The beleaguered bank, which is majority owned by the UK government, is reviewing its global property contracts and is seeking consultants to advise on how it can save money and increase efficiency on its global property portfolio.
RBS, which owns global brands such as ABN Amro and NatWest, is likely to look to rationalise its estate as it cuts jobs.
It may even hive off certain elements of its business into a ‘non-core’ function.
In its 2008 results, the bank, which has cut at least 3,000 jobs, made a loss of £24.1bn – the biggest in British corporate history.
Chief executive Stephen Hester, formerly of British Land, is now looking to save costs in all parts of the business.
An RBS spokeswoman said: ‘We are constantly looking at our global property to ensure we have the optimal structure in place and that our property assets remain relevant to the needs of our businesses.
‘We have building blocks in place for a five-year strategy to restore the company to strength and our property assets will be given careful strategic thought by the new board.’
RBS’s latest results show that it spent around £1.7bn on maintaining its own property in 2008, up from £1.5bn in 2007, because it invested in developing its corporate banking branch network.
t is thought that Juliet Filose, who joined the RBS property team under director of group property Barry Varcoe last year, is leading the search and has appointed consultancy Corporate Property Advisers (CPA) to help select the new advisory team.
CPA was unavailable to comment.
The new contract is likely to take the form of an ‘integrated services’ contract, where one firm or a small group of firms cover all the necessary services across global property.
It is likely to begin with transactions management and lease advisory, and move on to other functions such as facilities management at a later date.
RBS has traditionally been ahead of the curve in managing its property costs and realising value. For example, it completed a sale and leaseback on £750m of its UK property to Telereal and Prupim at the end of 2007.
At present, DTZ and Grubb & Ellis advise RBS on a global basis and NB Real Estate, GVA Grimley and Drivers Jonas provide management advice in the UK. Sphere: Related Content
The Royal Bank of Scotland is embarking on a review of its vast operational property estate.
The beleaguered bank, which is majority owned by the UK government, is reviewing its global property contracts and is seeking consultants to advise on how it can save money and increase efficiency on its global property portfolio.
RBS, which owns global brands such as ABN Amro and NatWest, is likely to look to rationalise its estate as it cuts jobs.
It may even hive off certain elements of its business into a ‘non-core’ function.
In its 2008 results, the bank, which has cut at least 3,000 jobs, made a loss of £24.1bn – the biggest in British corporate history.
Chief executive Stephen Hester, formerly of British Land, is now looking to save costs in all parts of the business.
An RBS spokeswoman said: ‘We are constantly looking at our global property to ensure we have the optimal structure in place and that our property assets remain relevant to the needs of our businesses.
‘We have building blocks in place for a five-year strategy to restore the company to strength and our property assets will be given careful strategic thought by the new board.’
RBS’s latest results show that it spent around £1.7bn on maintaining its own property in 2008, up from £1.5bn in 2007, because it invested in developing its corporate banking branch network.
t is thought that Juliet Filose, who joined the RBS property team under director of group property Barry Varcoe last year, is leading the search and has appointed consultancy Corporate Property Advisers (CPA) to help select the new advisory team.
CPA was unavailable to comment.
The new contract is likely to take the form of an ‘integrated services’ contract, where one firm or a small group of firms cover all the necessary services across global property.
It is likely to begin with transactions management and lease advisory, and move on to other functions such as facilities management at a later date.
RBS has traditionally been ahead of the curve in managing its property costs and realising value. For example, it completed a sale and leaseback on £750m of its UK property to Telereal and Prupim at the end of 2007.
At present, DTZ and Grubb & Ellis advise RBS on a global basis and NB Real Estate, GVA Grimley and Drivers Jonas provide management advice in the UK. Sphere: Related Content
Sunday, March 15, 2009
Greek Government Planing EUR 800 Milion Sale Leaseback of Public Properties
PropertyEU - March 13, 2009
The Greek government plans to generate around EUR 800 mln from the sale and leaseback of 33 public properties over the next two years, following approval of the disposal programme by the parliamentary privatisation committee last week. The properties total 272,000 m2 and mainly house government ministries, tax departments and police stations.
Two pilot bids of between EUR 100 mln and EUR 200 mln will be held during 2009, while the rest will be completed by 2010 with parallel bids for packages of properties in the region of EUR 100 mln to EUR 150 mln each.
The government will guarantee the leaseback for a period of around 20 years with an option to extend the lease further or even purchase back the property at an agreed price.
Emporiki Bank, UniCredit and CBRE-Atria advised the government on the disposal programme, which is similar to state sale-and-leaseback schemes under way in Italy, Germany and Belgium. Sphere: Related Content
The Greek government plans to generate around EUR 800 mln from the sale and leaseback of 33 public properties over the next two years, following approval of the disposal programme by the parliamentary privatisation committee last week. The properties total 272,000 m2 and mainly house government ministries, tax departments and police stations.
Two pilot bids of between EUR 100 mln and EUR 200 mln will be held during 2009, while the rest will be completed by 2010 with parallel bids for packages of properties in the region of EUR 100 mln to EUR 150 mln each.
The government will guarantee the leaseback for a period of around 20 years with an option to extend the lease further or even purchase back the property at an agreed price.
Emporiki Bank, UniCredit and CBRE-Atria advised the government on the disposal programme, which is similar to state sale-and-leaseback schemes under way in Italy, Germany and Belgium. Sphere: Related Content
Friday, March 13, 2009
Banco Pastor Seeking EUR 230 Million Sale Leaseback of 160 Bank Branches in Spain
Forexdaily.org.ru / Dow Jones - March 12, 2009
Spain's Banco Pastor SA (PAS.MC) said Thursday it is planning the sale and leaseback of 25% of its branch office network, allowing the regional bank to raise approximately EUR230 million.
In a press release, Pastor said it hired consultancy Aguirre Newman for the sale of 160 of its 650 branch offices.
Many of Spain's top banks have already sold, or are in the process of selling, part or all of their branch networks, in an effort to bolster their capital bases. The sector is facing a sharp increase in loan defaults and slowing loan growth, amid an intensifying economic downturn in Spain.
Pastor said it was planning to sell off the real estate in 52 packages to local investors. Sphere: Related Content
Spain's Banco Pastor SA (PAS.MC) said Thursday it is planning the sale and leaseback of 25% of its branch office network, allowing the regional bank to raise approximately EUR230 million.
In a press release, Pastor said it hired consultancy Aguirre Newman for the sale of 160 of its 650 branch offices.
Many of Spain's top banks have already sold, or are in the process of selling, part or all of their branch networks, in an effort to bolster their capital bases. The sector is facing a sharp increase in loan defaults and slowing loan growth, amid an intensifying economic downturn in Spain.
Pastor said it was planning to sell off the real estate in 52 packages to local investors. Sphere: Related Content
Thursday, March 12, 2009
New York Times Completes $225 Million Sale Leaseback of Manhattan HQ
Wall Street Journal - March 10, 2009
New York Times Co. said it has raised $225 million in a sale-leaseback of most of its share of its 52-story Manhattan headquarters building, gaining much-needed debt relief as it tries to weather the advertising slump imperiling newspaper companies.
The New York Times struck a deal in which it will sell its share of its midtown headquarters, above, and lease it back for up to 15 years.
Under the terms of the transaction, the real-estate investment firm W.P. Carey & Co. LLC will pay the sum for the 21 floors occupied by the Times, which then will lease the space back for up to 15 years, with an option to buy it back in 2019 for $250 million. The company will use the proceeds from the sale-leaseback to retire $250 million in notes due in 2010.
The deal gives the Times the cash infusion it was seeking when it announced its plans for a sale-leaseback in December.
With more than $1 billion in debt maturing in the next couple of years and a gloomy forecast for print advertising revenue, the publisher effectively has been building a bridge to 2011, albeit at a cost. In January, it received a $250 million loan from Mexican billionaire Carlos Slim, and last month the Times Co. board voted to suspend the quarterly dividend.
The loan by Mr. Slim, which came with warrants for a stake in the company, carries a 14% interest rate, and the leaseback agreement calls for the company to pay $24 million in rent in the first year. At about $55 per square foot, including operating costs and taxes, the initial rent is well within the market rate, though rent payments will increase in later years.
Times Co. so far has avoided making another round of job cuts, although some Times staffers say there is mounting fear in the newsroom that cuts may be imminent. A Times Co. spokeswoman declined to comment. Job-cutting has been widespread in the industry. On Monday, McClatchy Co., owner of the Miami Herald, said it would cut 1,600 jobs, or about 15% of its work force, and reduce wages across the company. The debt-burdened company carried out successive rounds of 10% staff cuts last year.
Times Co. owned a 58% stake in the headquarters building, which was completed in 2007. Forest City Ratner, the Times's partner in developing the tower and the owner of the top floors of the building, took out a $640 million mortgage against its portion of the property in 2007.
As falling revenues have coincided with looming debt obligations and tightening credit, some critics say the Renzo Piano-designed building has become a symbol of bad timing for Times Co., which sold its old headquarters building in 2004 for $175 million to Tishman Speyer Properties LP. Tishman Speyer later sold it for three times that amount. Times executives have said they couldn't have foreseen the subsequent explosion of real estate.
Advertising revenue has fallen sharply at the Times, as it has at other newspaper publishers, leading Times Co. to take a number of steps to conserve cash. Besides cutting and later suspending the quarterly dividend, it recently announced it is trying to sell its nearly 18% stake in the company that owns the Boston Red Sox. Sphere: Related Content
New York Times Co. said it has raised $225 million in a sale-leaseback of most of its share of its 52-story Manhattan headquarters building, gaining much-needed debt relief as it tries to weather the advertising slump imperiling newspaper companies.
The New York Times struck a deal in which it will sell its share of its midtown headquarters, above, and lease it back for up to 15 years.
Under the terms of the transaction, the real-estate investment firm W.P. Carey & Co. LLC will pay the sum for the 21 floors occupied by the Times, which then will lease the space back for up to 15 years, with an option to buy it back in 2019 for $250 million. The company will use the proceeds from the sale-leaseback to retire $250 million in notes due in 2010.
The deal gives the Times the cash infusion it was seeking when it announced its plans for a sale-leaseback in December.
With more than $1 billion in debt maturing in the next couple of years and a gloomy forecast for print advertising revenue, the publisher effectively has been building a bridge to 2011, albeit at a cost. In January, it received a $250 million loan from Mexican billionaire Carlos Slim, and last month the Times Co. board voted to suspend the quarterly dividend.
The loan by Mr. Slim, which came with warrants for a stake in the company, carries a 14% interest rate, and the leaseback agreement calls for the company to pay $24 million in rent in the first year. At about $55 per square foot, including operating costs and taxes, the initial rent is well within the market rate, though rent payments will increase in later years.
Times Co. so far has avoided making another round of job cuts, although some Times staffers say there is mounting fear in the newsroom that cuts may be imminent. A Times Co. spokeswoman declined to comment. Job-cutting has been widespread in the industry. On Monday, McClatchy Co., owner of the Miami Herald, said it would cut 1,600 jobs, or about 15% of its work force, and reduce wages across the company. The debt-burdened company carried out successive rounds of 10% staff cuts last year.
Times Co. owned a 58% stake in the headquarters building, which was completed in 2007. Forest City Ratner, the Times's partner in developing the tower and the owner of the top floors of the building, took out a $640 million mortgage against its portion of the property in 2007.
As falling revenues have coincided with looming debt obligations and tightening credit, some critics say the Renzo Piano-designed building has become a symbol of bad timing for Times Co., which sold its old headquarters building in 2004 for $175 million to Tishman Speyer Properties LP. Tishman Speyer later sold it for three times that amount. Times executives have said they couldn't have foreseen the subsequent explosion of real estate.
Advertising revenue has fallen sharply at the Times, as it has at other newspaper publishers, leading Times Co. to take a number of steps to conserve cash. Besides cutting and later suspending the quarterly dividend, it recently announced it is trying to sell its nearly 18% stake in the company that owns the Boston Red Sox. Sphere: Related Content
Wednesday, March 11, 2009
Burlington Coat Factory Seeking Sale Leaseback of Two Distribution Centers in NJ
PhillyBurbs.com - March 9, 2009
The Burlington Coat Factory has put its massive Cooper Street distribution center and its Burlington Township corporate headquarters up for sale but plans to lease back most of the space once the buildings are sold.
The company has hired Jones Lang LaSalle, a Chicago-based financial and professional services firm, to market and sell the combined 1.25 million-square-foot, two-building industrial portfolio, according to a news release posted on JLL's Web site.
The corporation's Burlington facility, located on Route 130 North, will be partially occupied and leased back by Burlington Coat Factory as its corporate headquarters for a term of 10 years with renewal options, according to the release. The release also states about 380,000 square feet of warehouse space at the Burlington facility is expected to become available to another tenant in July.
The release indicated the Edgewater Park facility would be leased back to Burlington Coat Factory if sold.
Brian Smith, a spokesman for JLL, said last week his firm is not prepared to discuss any further details regarding the properties.
Construction on the Edgewater Park distribution center began in 2001 at a cost of $30 million and the facility opened in 2003, shipping merchandise to 427 stores in 44 states and Puerto Rico.
The formerly family-owned Burlington Coat Factory was sold to a private equity firm, Boston-based Bain Capital Partners, for $2.06 billion in 2006.
Edgewater Park entered into a 30-year tax-abatement program or PILOT (payment in lieu of taxes) agreement with Burlington Coat Factory in 2002. Under the agreement, the Coat Factory paid the township $147,500 a year for the first five years. Payments increase 3.3 percent a year (beginning in 2008) until the 31st year, 2034, when the property will be subject to the township's regular tax rate.
Mount said even if the building ultimately ends up being owned by another company, it should not affect the agreement as long as the building still serves the same purpose.
According to the JLL release, the Edgewater Park facility is undergoing $21 million in capital investments including new racking and sprinkler systems, mechanical and electrical upgrades and other site work expected to be completed by the third quarter of this year.
According to CoStar Group, a commercial real estate information company, 2009 has seen a flurry of industrial transactions as national retailers looked to unload corporate headquarters and distribution facilities.
CoStar reports that partial leaseback transactions - in which a company sells an entire building or portfolio but only leases back certain buildings or portions of buildings - are on the rise as shrinking companies work to economize on space and operating costs. Sphere: Related Content
The Burlington Coat Factory has put its massive Cooper Street distribution center and its Burlington Township corporate headquarters up for sale but plans to lease back most of the space once the buildings are sold.
The company has hired Jones Lang LaSalle, a Chicago-based financial and professional services firm, to market and sell the combined 1.25 million-square-foot, two-building industrial portfolio, according to a news release posted on JLL's Web site.
The corporation's Burlington facility, located on Route 130 North, will be partially occupied and leased back by Burlington Coat Factory as its corporate headquarters for a term of 10 years with renewal options, according to the release. The release also states about 380,000 square feet of warehouse space at the Burlington facility is expected to become available to another tenant in July.
The release indicated the Edgewater Park facility would be leased back to Burlington Coat Factory if sold.
Brian Smith, a spokesman for JLL, said last week his firm is not prepared to discuss any further details regarding the properties.
Construction on the Edgewater Park distribution center began in 2001 at a cost of $30 million and the facility opened in 2003, shipping merchandise to 427 stores in 44 states and Puerto Rico.
The formerly family-owned Burlington Coat Factory was sold to a private equity firm, Boston-based Bain Capital Partners, for $2.06 billion in 2006.
Edgewater Park entered into a 30-year tax-abatement program or PILOT (payment in lieu of taxes) agreement with Burlington Coat Factory in 2002. Under the agreement, the Coat Factory paid the township $147,500 a year for the first five years. Payments increase 3.3 percent a year (beginning in 2008) until the 31st year, 2034, when the property will be subject to the township's regular tax rate.
Mount said even if the building ultimately ends up being owned by another company, it should not affect the agreement as long as the building still serves the same purpose.
According to the JLL release, the Edgewater Park facility is undergoing $21 million in capital investments including new racking and sprinkler systems, mechanical and electrical upgrades and other site work expected to be completed by the third quarter of this year.
According to CoStar Group, a commercial real estate information company, 2009 has seen a flurry of industrial transactions as national retailers looked to unload corporate headquarters and distribution facilities.
CoStar reports that partial leaseback transactions - in which a company sells an entire building or portfolio but only leases back certain buildings or portions of buildings - are on the rise as shrinking companies work to economize on space and operating costs. Sphere: Related Content
Monday, March 09, 2009
2009: Year of the Leaseback
Property Week - March 6, 2009
Troubled occupiers are looking to raise funds by selling and leasing back their properties.
Last month it emerged that Banco Bilbao Vizcaya Argentaria (BBVA) was in talks with global fund manager RREEF to sell and leaseback €1bn (£894m) of its property assets. The Spanish banking group, which last month sold its Madrid headquarters to German fund manager Deka in recent weeks, was following in the footsteps of its Italian counterpart, UniCredit. In January, it banked a €280m (£250bn) profit when it placed a domestic portfolio, including its Milan headquarters, into a fund, sold 62% to investors and agreed to lease the properties back for 18 years.
Over the last few weeks more companies have announced they are looking to do the same, now that their access to traditional sources of cash has been closed off. Real estate sales could be the only way to raise capital, as the debt markets look set to remain closed for the rest of the year and bond issues are so expensive that they are no longer cost-effective – assuming the firms issuing bonds can find buyers for them in the first place.
In a bid to refinance its debts, the New York Times Company is set to raise $225m (£157m) from investment firm WP Carey by selling part of its Manhattan headquarters. European manufacturer Infineon Technologies also said last month that it is considering doing the same.
The recent spate of activity began in January 2008 with Banco Santander’s disposal of almost all its properties in Spain. It sold the portfolio for €4.4bn (£3.9bn) and generated a net capital gain of €1.7bn (£1.5bn), €281m (£251m) more than it expected.
Since then, CB Richard Ellis estimates that 600 deals were completed across Europe, which represented 19% of all transactions for the year. John Wilson, head of CBRE’s corporate strategies group for Europe, the Middle East and Africa, believes this trend will continue in 2009, and says the firm is about to put €3bn (£2.7bn) of sale and leaseback property on the market.
Wilson says leasebacks are becoming increasingly popular not only with banks, but with manufacturing and pharmaceutical firms too. ‘The manufacturing industry has probably been the worst hit,’ he says. ‘It was continuing to make things in the hope that the economic downturn would be a short blip, instead of trading down or trying to reduce costs. But when the banks foundered, the drawbridge went up and corporations could not borrow the money they needed. Now they are stuck.’
Wilson says real estate sales can be the most cost-effective option for companies, despite the fall in property prices.
‘The advantage of sale and leasebacks is you don’t have to pay the money back,’ he says. Wilson adds that CBRE is receiving an unprecedented number of enquiries from firms that are looking to sell, even though they realise they may do so at discounts to book values.
In the US, professional services firms are anticipating the same. ‘There is hesitation right now because corporations are unsure of how to price their assets,’ says Peter Capuciati, executive vice-president of tenant representation firm Studley. ‘There is no market to mark to. But I think this will be momentary and companies will come to accept lower valuations because they have to. Real estate is the only game in town.’
Hope over experience
But aspirations alone do not a market make. The lack of finance for any kind of transaction means that sale and leasebacks, like any other type of deal in the present market, will not be easy for investors to complete.
Buyers are still reliant on the debt markets, and are more wary than ever before of the risk of tenants defaulting. This means they are being highly selective.
Tom Quigley, managing director of WP Carey, says the firm is looking globally for sale and leasebacks, but he is sceptical that there is enough cash to meet the demand. ‘We are seeing more deals [on offer], but there isn’t enough capital around to satisfy it,’ he says. ‘The lack of finance makes it hard to get deals done.’
Quigley says the lack of debt will preclude many corporations from being able to offload their property. ‘For many buyers, a deal will only make sense if you can borrow a substantial amount of the purchase price,’ he says.
General Motors is one company that appears to have been frustrated in its attempts to sell and leaseback its assets. In November, the carmaker put $750m (£524m) of properties on the market, including its Renaissance Center headquarters in Detroit. But it has not sold any of these properties to date.
Julian Lyon, manager of European real estate at General Motors, agrees that lack of finance is an obstacle. ‘The sale-and-leaseback market was better two years ago because there were more buyers with cash and substantial debt finance,’ he says. ‘The pool of buyers for these deals is very small because buyers are looking for chunky yields to reflect the absence of debt.’
With €1bn (£894m) of equity to invest in Europe and $2bn (£1.4bn) to invest in Asia, property fund manager MGPA is one would-be buyer. But the economic climate has deterred it from deals that involve a lease to a single tenant.
Alex Jeffrey, CEO of MGPA’s European operations, says: ‘We have looked at a number of portfolios, but we are often concerned about the tenant’s covenant. The companies that need to sell owner-occupied properties today are often those with lower creditworthiness. But even for stable companies, there is a higher risk of default because of the economic downturn. This is the factor that will restrict the markets.’
German open-ended fund manager Union Investment is also on the lookout for opportunities. In December, it bought the Portico building in Madrid and leased it back to tourism firm Grupo Marsans. Union says it is ‘deeply interested’ in deals in good locations for properties that can accommodate various uses, but says it is finding it hard to uncover good deals.
Karl-Joseph Hermanns-Engel, managing director of Union, says: ‘First-class investments are not readily available at the moment. For us, credit assessment is getting more and more important. And because these deals are often for a single tenant, we have to check risk very thoroughly.’
Default danger
For many would-be investors, the collapse of Lehman brought home the risk of tenant default. Quigley says WP Carey is seeking deals with ‘recession-resilient companies’ – such as utilities firms and food retailers, which do not rely on discretionary spending – and that it is avoiding riskier operations such as car retailers. ‘We were always very credit-focused, but in the current climate we are only seeking deals with high-quality companies.’
The chaos surrounding valuations has also made it difficult for owner-occupiers to know what prices they should be asking for. However, Quigley says he is seeing a lot of properties on offer at initial yields of 8% or more.
‘We walked away from deals because pricing was too aggressive, and have since been proven right,’ he says. ‘The debt markets are still as fragile as they were in 2008. But we are seeing some deals with good-quality assets and at prices which make sense.’
Though corporations are turning to the property markets, many are likely to be thwarted in their attempts to dispose of assets and raise the cash they need. Until the banks start lending again, only a few lucky owner-occupiers will find the help they need from real estate. And when the debt market does return, selling assets may not be such a good opportunity. Sphere: Related Content
Troubled occupiers are looking to raise funds by selling and leasing back their properties.
Last month it emerged that Banco Bilbao Vizcaya Argentaria (BBVA) was in talks with global fund manager RREEF to sell and leaseback €1bn (£894m) of its property assets. The Spanish banking group, which last month sold its Madrid headquarters to German fund manager Deka in recent weeks, was following in the footsteps of its Italian counterpart, UniCredit. In January, it banked a €280m (£250bn) profit when it placed a domestic portfolio, including its Milan headquarters, into a fund, sold 62% to investors and agreed to lease the properties back for 18 years.
Over the last few weeks more companies have announced they are looking to do the same, now that their access to traditional sources of cash has been closed off. Real estate sales could be the only way to raise capital, as the debt markets look set to remain closed for the rest of the year and bond issues are so expensive that they are no longer cost-effective – assuming the firms issuing bonds can find buyers for them in the first place.
In a bid to refinance its debts, the New York Times Company is set to raise $225m (£157m) from investment firm WP Carey by selling part of its Manhattan headquarters. European manufacturer Infineon Technologies also said last month that it is considering doing the same.
The recent spate of activity began in January 2008 with Banco Santander’s disposal of almost all its properties in Spain. It sold the portfolio for €4.4bn (£3.9bn) and generated a net capital gain of €1.7bn (£1.5bn), €281m (£251m) more than it expected.
Since then, CB Richard Ellis estimates that 600 deals were completed across Europe, which represented 19% of all transactions for the year. John Wilson, head of CBRE’s corporate strategies group for Europe, the Middle East and Africa, believes this trend will continue in 2009, and says the firm is about to put €3bn (£2.7bn) of sale and leaseback property on the market.
Wilson says leasebacks are becoming increasingly popular not only with banks, but with manufacturing and pharmaceutical firms too. ‘The manufacturing industry has probably been the worst hit,’ he says. ‘It was continuing to make things in the hope that the economic downturn would be a short blip, instead of trading down or trying to reduce costs. But when the banks foundered, the drawbridge went up and corporations could not borrow the money they needed. Now they are stuck.’
Wilson says real estate sales can be the most cost-effective option for companies, despite the fall in property prices.
‘The advantage of sale and leasebacks is you don’t have to pay the money back,’ he says. Wilson adds that CBRE is receiving an unprecedented number of enquiries from firms that are looking to sell, even though they realise they may do so at discounts to book values.
In the US, professional services firms are anticipating the same. ‘There is hesitation right now because corporations are unsure of how to price their assets,’ says Peter Capuciati, executive vice-president of tenant representation firm Studley. ‘There is no market to mark to. But I think this will be momentary and companies will come to accept lower valuations because they have to. Real estate is the only game in town.’
Hope over experience
But aspirations alone do not a market make. The lack of finance for any kind of transaction means that sale and leasebacks, like any other type of deal in the present market, will not be easy for investors to complete.
Buyers are still reliant on the debt markets, and are more wary than ever before of the risk of tenants defaulting. This means they are being highly selective.
Tom Quigley, managing director of WP Carey, says the firm is looking globally for sale and leasebacks, but he is sceptical that there is enough cash to meet the demand. ‘We are seeing more deals [on offer], but there isn’t enough capital around to satisfy it,’ he says. ‘The lack of finance makes it hard to get deals done.’
Quigley says the lack of debt will preclude many corporations from being able to offload their property. ‘For many buyers, a deal will only make sense if you can borrow a substantial amount of the purchase price,’ he says.
General Motors is one company that appears to have been frustrated in its attempts to sell and leaseback its assets. In November, the carmaker put $750m (£524m) of properties on the market, including its Renaissance Center headquarters in Detroit. But it has not sold any of these properties to date.
Julian Lyon, manager of European real estate at General Motors, agrees that lack of finance is an obstacle. ‘The sale-and-leaseback market was better two years ago because there were more buyers with cash and substantial debt finance,’ he says. ‘The pool of buyers for these deals is very small because buyers are looking for chunky yields to reflect the absence of debt.’
With €1bn (£894m) of equity to invest in Europe and $2bn (£1.4bn) to invest in Asia, property fund manager MGPA is one would-be buyer. But the economic climate has deterred it from deals that involve a lease to a single tenant.
Alex Jeffrey, CEO of MGPA’s European operations, says: ‘We have looked at a number of portfolios, but we are often concerned about the tenant’s covenant. The companies that need to sell owner-occupied properties today are often those with lower creditworthiness. But even for stable companies, there is a higher risk of default because of the economic downturn. This is the factor that will restrict the markets.’
German open-ended fund manager Union Investment is also on the lookout for opportunities. In December, it bought the Portico building in Madrid and leased it back to tourism firm Grupo Marsans. Union says it is ‘deeply interested’ in deals in good locations for properties that can accommodate various uses, but says it is finding it hard to uncover good deals.
Karl-Joseph Hermanns-Engel, managing director of Union, says: ‘First-class investments are not readily available at the moment. For us, credit assessment is getting more and more important. And because these deals are often for a single tenant, we have to check risk very thoroughly.’
Default danger
For many would-be investors, the collapse of Lehman brought home the risk of tenant default. Quigley says WP Carey is seeking deals with ‘recession-resilient companies’ – such as utilities firms and food retailers, which do not rely on discretionary spending – and that it is avoiding riskier operations such as car retailers. ‘We were always very credit-focused, but in the current climate we are only seeking deals with high-quality companies.’
The chaos surrounding valuations has also made it difficult for owner-occupiers to know what prices they should be asking for. However, Quigley says he is seeing a lot of properties on offer at initial yields of 8% or more.
‘We walked away from deals because pricing was too aggressive, and have since been proven right,’ he says. ‘The debt markets are still as fragile as they were in 2008. But we are seeing some deals with good-quality assets and at prices which make sense.’
Though corporations are turning to the property markets, many are likely to be thwarted in their attempts to dispose of assets and raise the cash they need. Until the banks start lending again, only a few lucky owner-occupiers will find the help they need from real estate. And when the debt market does return, selling assets may not be such a good opportunity. Sphere: Related Content
Sunday, March 08, 2009
Saks Fifth Avenue Mulling Sale Leaseback of a Portion of its US Store Portfolio?
Bloomberg - March 4, 2009
Saks Inc. Chief Financial Officer Kevin Wills told investors the unprofitable luxury retailer has “very valuable” real estate assets it could tap to raise money if needed.
Easier said than done. Plunging real estate prices and tighter credit markets would make it difficult for New York-based Saks to harness the value of its properties, according to Dan Fasulo, managing director of Real Capital Analytics; Richard Hastings, who tracks the consumer industry for Global Hunter Securities LLC; and retail analyst Patricia Edwards.
Saks, which had $10 million in cash at yearend, would most likely try to use its real estate as collateral for borrowing if it requires additional funding, Hastings said. It alternatively may seek to sell and lease back its most valuable properties, including the Fifth Avenue flagship store, or try to use the real estate to lure a buyer for the company, he said.
Lender agreements allow Saks to pursue the sale and leaseback of some properties, CFO Wills said on a conference call last week. The company has “ample capacity” under a revolving credit facility, he said.
‘Very Valuable’
“We’re going to be free cash flow positive,” he said. “But we also realize that if we needed to do something, we have very valuable real estate that provides us flexibility.”
Saks owns 30 of its 53 Saks Fifth Avenue locations, including stores in Chicago, Beverly Hills, Las Vegas and Atlanta. It listed its property and equipment at $1.06 billion as of Jan. 31, compared with a $301 million market value at today’s close.
A year ago, Saks’s market value was twice its book value. The stock fell 13 cents, or 5.8 percent, to $2.12 at 4 p.m. in New York Stock Exchange composite trading.
In today’s real estate market, lenders will advance a maximum of 50 percent of value, compared with 80 percent before, said Jeff Bloomberg, a principal at financial advisory firm Gordon Brothers Group LLC in Boston.
“While there is still value there, it cannot be as great today as it was two years ago,” Bloomberg said.
Flagship Store
The retailer’s 350,000 square-foot Fifth Avenue store in Manhattan is now worth $550 million to $600 million, down from as much as $800 million a year ago, according to Faith Hope Consolo, chairman of the retail leasing and sales group at Prudential Douglas Elliman in New York.
The drop in values and credit crunch mean the retailer may not be able to negotiate favorable terms for borrowing, said Hastings, based in Charlotte, North Carolina. A sale-leaseback, would be viewed negatively by investors, who don’t like to see assets wiped off a balance sheet, he said, adding that he is “skeptical” that the company can find a buyer.
Saks spokeswoman Julia Bentley declined to comment on the possible scenarios.
Tiffany & Co. sold and leased back its primary locations in London and Tokyo in separate transactions for $477 million in 2007.
Sales of properties in the U.S. retail sector plunged 74 percent in 2008 from a record the previous year, according to Real Capital Analytics, a real estate data provider.
“The luxury segment of commercial real estate got hit exceptionally hard,” New York-based Fasulo said.
Clearing Inventory
Saks is getting slammed as wealthy consumers spend less on designer apparel and handbags. It reported a fourth-quarter loss Feb. 25 that was almost double analysts’ estimates after it took 75 percent markdowns to clear inventory. The retailer, which competes with Nordstrom Inc. and Neiman Marcus Group Inc., forecast a 20 percent sales decline at stores open at least a year for the first half of 2009.
Chief Executive Officer Stephen Sadove dismissed speculation on the call last week that the retailer would file for bankruptcy. He said it would hear out proposals and may choose to not exercise a so-called poison pill that limits holdings to less than 20 percent, which it reinstated in November after Mexican billionaire Carlos Slim disclosed an 18 percent stake.
Saks expects to have enough liquidity through this year under its $500 million revolving credit facility, which matures in September 2011, and on which it had $157 million outstanding as of Jan. 31, Bentley said, reiterating executives’ comments from the call.
“Two years ago, it probably would have worked perfectly” to extract value from the Saks real estate, Edwards said. “But the rose-colored glasses have been removed.” Sphere: Related Content
Saks Inc. Chief Financial Officer Kevin Wills told investors the unprofitable luxury retailer has “very valuable” real estate assets it could tap to raise money if needed.
Easier said than done. Plunging real estate prices and tighter credit markets would make it difficult for New York-based Saks to harness the value of its properties, according to Dan Fasulo, managing director of Real Capital Analytics; Richard Hastings, who tracks the consumer industry for Global Hunter Securities LLC; and retail analyst Patricia Edwards.
Saks, which had $10 million in cash at yearend, would most likely try to use its real estate as collateral for borrowing if it requires additional funding, Hastings said. It alternatively may seek to sell and lease back its most valuable properties, including the Fifth Avenue flagship store, or try to use the real estate to lure a buyer for the company, he said.
Lender agreements allow Saks to pursue the sale and leaseback of some properties, CFO Wills said on a conference call last week. The company has “ample capacity” under a revolving credit facility, he said.
‘Very Valuable’
“We’re going to be free cash flow positive,” he said. “But we also realize that if we needed to do something, we have very valuable real estate that provides us flexibility.”
Saks owns 30 of its 53 Saks Fifth Avenue locations, including stores in Chicago, Beverly Hills, Las Vegas and Atlanta. It listed its property and equipment at $1.06 billion as of Jan. 31, compared with a $301 million market value at today’s close.
A year ago, Saks’s market value was twice its book value. The stock fell 13 cents, or 5.8 percent, to $2.12 at 4 p.m. in New York Stock Exchange composite trading.
In today’s real estate market, lenders will advance a maximum of 50 percent of value, compared with 80 percent before, said Jeff Bloomberg, a principal at financial advisory firm Gordon Brothers Group LLC in Boston.
“While there is still value there, it cannot be as great today as it was two years ago,” Bloomberg said.
Flagship Store
The retailer’s 350,000 square-foot Fifth Avenue store in Manhattan is now worth $550 million to $600 million, down from as much as $800 million a year ago, according to Faith Hope Consolo, chairman of the retail leasing and sales group at Prudential Douglas Elliman in New York.
The drop in values and credit crunch mean the retailer may not be able to negotiate favorable terms for borrowing, said Hastings, based in Charlotte, North Carolina. A sale-leaseback, would be viewed negatively by investors, who don’t like to see assets wiped off a balance sheet, he said, adding that he is “skeptical” that the company can find a buyer.
Saks spokeswoman Julia Bentley declined to comment on the possible scenarios.
Tiffany & Co. sold and leased back its primary locations in London and Tokyo in separate transactions for $477 million in 2007.
Sales of properties in the U.S. retail sector plunged 74 percent in 2008 from a record the previous year, according to Real Capital Analytics, a real estate data provider.
“The luxury segment of commercial real estate got hit exceptionally hard,” New York-based Fasulo said.
Clearing Inventory
Saks is getting slammed as wealthy consumers spend less on designer apparel and handbags. It reported a fourth-quarter loss Feb. 25 that was almost double analysts’ estimates after it took 75 percent markdowns to clear inventory. The retailer, which competes with Nordstrom Inc. and Neiman Marcus Group Inc., forecast a 20 percent sales decline at stores open at least a year for the first half of 2009.
Chief Executive Officer Stephen Sadove dismissed speculation on the call last week that the retailer would file for bankruptcy. He said it would hear out proposals and may choose to not exercise a so-called poison pill that limits holdings to less than 20 percent, which it reinstated in November after Mexican billionaire Carlos Slim disclosed an 18 percent stake.
Saks expects to have enough liquidity through this year under its $500 million revolving credit facility, which matures in September 2011, and on which it had $157 million outstanding as of Jan. 31, Bentley said, reiterating executives’ comments from the call.
“Two years ago, it probably would have worked perfectly” to extract value from the Saks real estate, Edwards said. “But the rose-colored glasses have been removed.” Sphere: Related Content
Wednesday, March 04, 2009
Fletcher Closes $36 Million Sale Leaseback of Head Office in Aukland
Scoop / Bayleys - March 2, 2009
One of the country’s largest privately-owned property development companies has bought Fletcher Building’s head office complex in Auckland in a transaction worth $36 million – the biggest commercial and industrial property sale in New Zealand so far this year.
Fletcher Building has entered into a sale and long-term lease back of the suite of properties located at 810 Great South Rd in Penrose to Tauranga-based Carrus Corporation Ltd.
The sale includes the landmark Fletcher House, Fletcher Building’s head office, as well as a number of other office and industrial buildings located on 2.2 hectares of land.
The sale was negotiated by Chris O’Brien of Fletcher Building, in conjunction with David Bayley, executive director of Bayleys Real Estate, and Ed Donald of Bayleys’ Auckland office.
The property comprises approximately 17,300 square metres of predominantly office accommodation, with the balance being industrial space with a significant area of under utilised land available for future development. Fletcher companies have occupied the site for the last 65 years and a lease back arrangement will see the company remain on site for the long-term.
Fletcher Building and Carrus Corporation have developed a heads of agreement that will enable joint venture site development in the future. Carrus Corporation Ltd, led by managing director Paul Adams, has a 20-year history of land and property development.
It has been the driving force behind a substantial number of residential subdivision projects in Tauranga, Mt Maunganui, Rotorua, Hamilton, Taupo, Palmerston North and Wellington, where the company has also developed an apartment complex on Oriental Parade.
Commercial developments to date include the Porirua Megacentre, and a number of Wellington projects - the Stout Street car park and the refurbishment of the State Insurance Building and Buckle St National Museum, now part of Massey University.
Adams said the Fletcher Building site acquisition was a logical fit for Carrus - enabling the company to secure a prime freehold investment property with further development potential and occupancy by one of New Zealand's blue chip companies.
Fletcher Building property advisor Chris O’Brien said the divestment of 810 Great South Road would enable the company to further focus on its key income producing business activities.
“We look forward to exploring expansion and development options for the site with Carrus in the years to come, as Fletcher Building expands its activities and Carrus identifies best purpose long-term uses for the vacant land adjacent to the existing commercial premises,” O’Brien said.
David Bayley said the Fletcher Building offering attracted interest both nationally and internationally.
“We offered the property for sale by invitation, and in addition to approaching investment and development companies within New Zealand, we also had a number of parties from South East Asia and the United States looking seriously at it,” Bayley said.
“The fall in both the New Zealand dollar and domestic interest rates, combined with the high income returns from New Zealand commercial property, is generating more enquiry from offshore. We expect that offshore interest to gather further momentum in 2009 – particularly from South-East Asian investors who are typically counter-cyclical with their buying patterns.” Sphere: Related Content
One of the country’s largest privately-owned property development companies has bought Fletcher Building’s head office complex in Auckland in a transaction worth $36 million – the biggest commercial and industrial property sale in New Zealand so far this year.
Fletcher Building has entered into a sale and long-term lease back of the suite of properties located at 810 Great South Rd in Penrose to Tauranga-based Carrus Corporation Ltd.
The sale includes the landmark Fletcher House, Fletcher Building’s head office, as well as a number of other office and industrial buildings located on 2.2 hectares of land.
The sale was negotiated by Chris O’Brien of Fletcher Building, in conjunction with David Bayley, executive director of Bayleys Real Estate, and Ed Donald of Bayleys’ Auckland office.
The property comprises approximately 17,300 square metres of predominantly office accommodation, with the balance being industrial space with a significant area of under utilised land available for future development. Fletcher companies have occupied the site for the last 65 years and a lease back arrangement will see the company remain on site for the long-term.
Fletcher Building and Carrus Corporation have developed a heads of agreement that will enable joint venture site development in the future. Carrus Corporation Ltd, led by managing director Paul Adams, has a 20-year history of land and property development.
It has been the driving force behind a substantial number of residential subdivision projects in Tauranga, Mt Maunganui, Rotorua, Hamilton, Taupo, Palmerston North and Wellington, where the company has also developed an apartment complex on Oriental Parade.
Commercial developments to date include the Porirua Megacentre, and a number of Wellington projects - the Stout Street car park and the refurbishment of the State Insurance Building and Buckle St National Museum, now part of Massey University.
Adams said the Fletcher Building site acquisition was a logical fit for Carrus - enabling the company to secure a prime freehold investment property with further development potential and occupancy by one of New Zealand's blue chip companies.
Fletcher Building property advisor Chris O’Brien said the divestment of 810 Great South Road would enable the company to further focus on its key income producing business activities.
“We look forward to exploring expansion and development options for the site with Carrus in the years to come, as Fletcher Building expands its activities and Carrus identifies best purpose long-term uses for the vacant land adjacent to the existing commercial premises,” O’Brien said.
David Bayley said the Fletcher Building offering attracted interest both nationally and internationally.
“We offered the property for sale by invitation, and in addition to approaching investment and development companies within New Zealand, we also had a number of parties from South East Asia and the United States looking seriously at it,” Bayley said.
“The fall in both the New Zealand dollar and domestic interest rates, combined with the high income returns from New Zealand commercial property, is generating more enquiry from offshore. We expect that offshore interest to gather further momentum in 2009 – particularly from South-East Asian investors who are typically counter-cyclical with their buying patterns.” Sphere: Related Content
Wednesday, February 25, 2009
Crisis Unleashes More Sale Leasebacks
PropertyEU - February 23, 2009
Europe's sale-and-leaseback market looks set to reach an historic peak this year as occupiers increasingly look to property sales to fund their core business. With lenders keeping a tight rein on credit, corporates are being forced to look for alternative sources of financing and real estate sales are high on every boardroom agenda, says John Wilson, head of EMEA Corporate Strategies at CBRE.
Wilson: 'We have never seen so much interest from the corporate community as today. The requests we are receiving from big corporations and financial institutions are two or three times the amount we saw last year. We are currently working on about EUR 3 bn worth of deals. But the key question is: how much equity is out there?'
The sale-and-leaseback market has grown strongly in Europe over the past years, reaching EUR 46 bn in 2007 from just EUR 6.7 bn three years earlier. While investment volume slumped by 50% in 2008, occupier sales remained an important source of activity, accounting for EUR 22.2 bn worth of deals. In absolute terms, this is down on 2007's volumes but in line with the drop in transactional activity across Europe. Sphere: Related Content
Europe's sale-and-leaseback market looks set to reach an historic peak this year as occupiers increasingly look to property sales to fund their core business. With lenders keeping a tight rein on credit, corporates are being forced to look for alternative sources of financing and real estate sales are high on every boardroom agenda, says John Wilson, head of EMEA Corporate Strategies at CBRE.
Wilson: 'We have never seen so much interest from the corporate community as today. The requests we are receiving from big corporations and financial institutions are two or three times the amount we saw last year. We are currently working on about EUR 3 bn worth of deals. But the key question is: how much equity is out there?'
The sale-and-leaseback market has grown strongly in Europe over the past years, reaching EUR 46 bn in 2007 from just EUR 6.7 bn three years earlier. While investment volume slumped by 50% in 2008, occupier sales remained an important source of activity, accounting for EUR 22.2 bn worth of deals. In absolute terms, this is down on 2007's volumes but in line with the drop in transactional activity across Europe. Sphere: Related Content
Sunday, February 22, 2009
Emmelunga Enters EUR 50 Million Sale Leaseback of Five Furniture Stores in Italy
PropertyEU - January 9, 2008
Italy's furniture store chain Emmelunga has sold five of its stores in a sale-and-lease back deal with Mercurio Retail Properties for around EUR 50 mln. The stores, which are located in Italy's Tuscany and Lazio regions, represent the first acquisition made by Mercurio Retail Properties, a fund managed by CB Richard Ellis Investors. The fund is dedicated to institutional investors and is invested by Natixis' Captiva Capital Partners III.
Law firm Freshfields advised Natixis; Vichi Salesia Fagiolini & Associates acted for Emmelunga. Sphere: Related Content
Italy's furniture store chain Emmelunga has sold five of its stores in a sale-and-lease back deal with Mercurio Retail Properties for around EUR 50 mln. The stores, which are located in Italy's Tuscany and Lazio regions, represent the first acquisition made by Mercurio Retail Properties, a fund managed by CB Richard Ellis Investors. The fund is dedicated to institutional investors and is invested by Natixis' Captiva Capital Partners III.
Law firm Freshfields advised Natixis; Vichi Salesia Fagiolini & Associates acted for Emmelunga. Sphere: Related Content
Arcandor Enters €4.56 Billion Sale Leaseback of German Highstreet Department Store Portfolio
PropertyEU - March 19, 2008
A consortium of Deutsche Bank's RREEF funds, Milan-based Pirelli Real Estate, Generali and the Borletti Group has signed a binding agreement with Arcandor (former KarstadtQuelle) to acquire a 49% stake in Arcandor's Highstreet portfolio. Goldman Sachs' Whitehall Funds retains its remaining 51% interest in the German department store portfolio.
Italian insurance giant Generali has joined the RREEF-led consortium and has a 22.34% stake in the investment via its SICAV fund, Generali Real Estate Fund (GREF). Pirelli RE has a 24.66% share of the investment, while RREEF has approximately 49% and Borletti around 4%. Market rumours said that the consortium is paying more than €500mln in cash for Highstreet, but the price could be adjusted with the closing of the deal expected by the end of May. The consortium is also assuming €3.5 bn of debt secured against Highstreet’s properties.
The transaction values the entire portfolio, consisting of 164 properties and a total leasable area of 2.1 million m2, at €4.56bn. The consortium has also signed a binding agreement with Whitehall for a joint control and joint management of Highstreet. Pirelli RE will act as asset manager for the portfolio, jointly with Whitehall. The transaction is subject to regulatory and antitrust approval, as well as obtaining consent from existing lenders in connection with the change of control of the borrowers.
In a separate statement, Arcandor said that the total value of the Highstreet deal and a separate contractual agreement with the previous joint venture partner Whitehall comes to about €800mln. The Essen-based company will lease back the properties from the new owners.
Arcandor set up the Highstreet investment company two years ago and sold a majority stake to Goldman Sachs for a cash payment of €3.7bn. In December it announced it had signed a letter of intent with the RREEF-led consortium regarding the sale of the portfolio. The German retail group also said it was working together with joint venture 'to create a unique European department store portfolio'. Arcandor added it was seeking to buy a stake of up to 25% of the Italian department store chains La Rinascente and the French Printemps, in exchange for a 25% interest in its premium segment to be transferred to the consortium. Sphere: Related Content
A consortium of Deutsche Bank's RREEF funds, Milan-based Pirelli Real Estate, Generali and the Borletti Group has signed a binding agreement with Arcandor (former KarstadtQuelle) to acquire a 49% stake in Arcandor's Highstreet portfolio. Goldman Sachs' Whitehall Funds retains its remaining 51% interest in the German department store portfolio.
Italian insurance giant Generali has joined the RREEF-led consortium and has a 22.34% stake in the investment via its SICAV fund, Generali Real Estate Fund (GREF). Pirelli RE has a 24.66% share of the investment, while RREEF has approximately 49% and Borletti around 4%. Market rumours said that the consortium is paying more than €500mln in cash for Highstreet, but the price could be adjusted with the closing of the deal expected by the end of May. The consortium is also assuming €3.5 bn of debt secured against Highstreet’s properties.
The transaction values the entire portfolio, consisting of 164 properties and a total leasable area of 2.1 million m2, at €4.56bn. The consortium has also signed a binding agreement with Whitehall for a joint control and joint management of Highstreet. Pirelli RE will act as asset manager for the portfolio, jointly with Whitehall. The transaction is subject to regulatory and antitrust approval, as well as obtaining consent from existing lenders in connection with the change of control of the borrowers.
In a separate statement, Arcandor said that the total value of the Highstreet deal and a separate contractual agreement with the previous joint venture partner Whitehall comes to about €800mln. The Essen-based company will lease back the properties from the new owners.
Arcandor set up the Highstreet investment company two years ago and sold a majority stake to Goldman Sachs for a cash payment of €3.7bn. In December it announced it had signed a letter of intent with the RREEF-led consortium regarding the sale of the portfolio. The German retail group also said it was working together with joint venture 'to create a unique European department store portfolio'. Arcandor added it was seeking to buy a stake of up to 25% of the Italian department store chains La Rinascente and the French Printemps, in exchange for a 25% interest in its premium segment to be transferred to the consortium. Sphere: Related Content
Fletcher Seeks Sale Leasback of 23 Hotels in the Netherlands
PropertyEU - February 29, 2008
Fletcher Hotel Group, a subsidiary of the Hotel Management Group, said on Friday it has hired UK broker HVS Hodges Ward Elliot for the sale of its two and three-star hotel portfolio in the Netherlands. Fletcher, based in Vianen, said it plans to sell 23 of the 28 hotels it owns in the country through a sale-and-lease-back deal.
The group said that the move is aimed at funding its expansion strategy. Over the last four years, Fletcher has boosted its turnover by 40% thanks to 'autonomous growth and M&A activities'. The hotel chain is targeting a portfolio of 50 hotels in the Netherlands.
The portfolio comprises well-known assets such as Hotel Duinoord in Wassenaaar, De Malle Jan in Vierhouten, Hotel Erica in Berg en Dal and the largest hotel in Waddeneilanden, d’Amelander Kaap. Fletcher plans to lease back the hotels for a total EUR 7 mln per year.
London-based services firm HVS Hodges Ward Elliot has acted in several transactions in the Netherlands such as the sale of the SAS Radisson Hotel at Schiphol, and the Holiday Inn in Eindhoven. Sphere: Related Content
Fletcher Hotel Group, a subsidiary of the Hotel Management Group, said on Friday it has hired UK broker HVS Hodges Ward Elliot for the sale of its two and three-star hotel portfolio in the Netherlands. Fletcher, based in Vianen, said it plans to sell 23 of the 28 hotels it owns in the country through a sale-and-lease-back deal.
The group said that the move is aimed at funding its expansion strategy. Over the last four years, Fletcher has boosted its turnover by 40% thanks to 'autonomous growth and M&A activities'. The hotel chain is targeting a portfolio of 50 hotels in the Netherlands.
The portfolio comprises well-known assets such as Hotel Duinoord in Wassenaaar, De Malle Jan in Vierhouten, Hotel Erica in Berg en Dal and the largest hotel in Waddeneilanden, d’Amelander Kaap. Fletcher plans to lease back the hotels for a total EUR 7 mln per year.
London-based services firm HVS Hodges Ward Elliot has acted in several transactions in the Netherlands such as the sale of the SAS Radisson Hotel at Schiphol, and the Holiday Inn in Eindhoven. Sphere: Related Content
German State of Hesse Resumes EUR 400 Million Sale Leaseback of 35 Public Buildings
PropertyEU - July 7, 2008
The German state of Hesse is putting the Leo III property portfolio back on the market, Minister of Finance Karlheinz Weimar (CDU) told newspaper Financial Times Deutschland (FTD). Weimar said that the sale process has been resumed and that a deal is expected by the end of 2008. The German state aims to fetch about EUR 400mln for the portfolio, which consists of 35 public buildings. According to the FTD, the assets generate a net rent of about EUR 25mln. HSH Real Estate and Atisreal have been appointed to market the portfolio.
The German state initially put the assets on the market last year, but eventually halted attempts to arrange a sale and leaseback of the portfolio because the ongoing turbulence in the financial markets had left potential buyers unwilling or unable to meet the asking price of around EUR 400mln.
In November 2006, Austrian real estate company CA Immo acquired the Leo II portfolio from Hesse for about EUR 770mln in a sale-and-leaseback operation. The portfolio comprised 36 state-owned properties and 170 homes. Sphere: Related Content
The German state of Hesse is putting the Leo III property portfolio back on the market, Minister of Finance Karlheinz Weimar (CDU) told newspaper Financial Times Deutschland (FTD). Weimar said that the sale process has been resumed and that a deal is expected by the end of 2008. The German state aims to fetch about EUR 400mln for the portfolio, which consists of 35 public buildings. According to the FTD, the assets generate a net rent of about EUR 25mln. HSH Real Estate and Atisreal have been appointed to market the portfolio.
The German state initially put the assets on the market last year, but eventually halted attempts to arrange a sale and leaseback of the portfolio because the ongoing turbulence in the financial markets had left potential buyers unwilling or unable to meet the asking price of around EUR 400mln.
In November 2006, Austrian real estate company CA Immo acquired the Leo II portfolio from Hesse for about EUR 770mln in a sale-and-leaseback operation. The portfolio comprised 36 state-owned properties and 170 homes. Sphere: Related Content
Net Leased Travelodge Hotel In London Trades at 6% Yield
Property Week - February 20, 2008
A consortium of private investors this week bought a Travelodge hotel in the City of London with 70% leverage.
The consortium of around 10 wealthy investors – seven of which are east African and three of which are UK based – was led by investment manager Aprirose Real Estate. It paid around £25m to Lenta Properties for the 45,000 sq ft, 190-bedroom hotel near Tower Hill at Lloyds Court in the City, which is let to Travelodge on a 35-year lease with upward-only rental increases lined to the Retail Prices Index.
Aprirose managed to secure 69.3% senior debt funding at an undisclosed rate for the purchase from a bank, thought to be Abbey, for the former office building on the back of the strength of Travelodge as a long-term covenant.
Manish Gudka, head of Aprirose, said: ‘We are led by what our investors want, and right now capital protection is the name of the game, so we are very much covenant-driven. ‘Our investors like long leases, guaranteed uplifts and strong covenants – and that is the model that this Travelodge fits. The fundamentals of the property, in terms of customer demand and the location, are strong,’ he said.
Mark Bruce-Lockhart, director at Phillips Lockhart, the agent acting for Aprirose, attributed the low 6% yield to the perceived resilience of the budget hotel sector in the downturn: ‘There are not many 35-year unbroken streams in central London, which pushed the yield down. The banks really liked this deal because it was long dated.
‘It shows that there is demand for the secure, long-dated income, purely because people are growing fed up with not earning any interest in the bank. ‘We are finding surprisingly good demand for small recession-resilient covenants like Tesco Express, Aldi and Lidl2, which Travelodge falls into.’
Contracts were exchanged before Christmas, but the deal did not complete until last week.
Lenta Properties was represented by Storeys:ssp. Sphere: Related Content
A consortium of private investors this week bought a Travelodge hotel in the City of London with 70% leverage.
The consortium of around 10 wealthy investors – seven of which are east African and three of which are UK based – was led by investment manager Aprirose Real Estate. It paid around £25m to Lenta Properties for the 45,000 sq ft, 190-bedroom hotel near Tower Hill at Lloyds Court in the City, which is let to Travelodge on a 35-year lease with upward-only rental increases lined to the Retail Prices Index.
Aprirose managed to secure 69.3% senior debt funding at an undisclosed rate for the purchase from a bank, thought to be Abbey, for the former office building on the back of the strength of Travelodge as a long-term covenant.
Manish Gudka, head of Aprirose, said: ‘We are led by what our investors want, and right now capital protection is the name of the game, so we are very much covenant-driven. ‘Our investors like long leases, guaranteed uplifts and strong covenants – and that is the model that this Travelodge fits. The fundamentals of the property, in terms of customer demand and the location, are strong,’ he said.
Mark Bruce-Lockhart, director at Phillips Lockhart, the agent acting for Aprirose, attributed the low 6% yield to the perceived resilience of the budget hotel sector in the downturn: ‘There are not many 35-year unbroken streams in central London, which pushed the yield down. The banks really liked this deal because it was long dated.
‘It shows that there is demand for the secure, long-dated income, purely because people are growing fed up with not earning any interest in the bank. ‘We are finding surprisingly good demand for small recession-resilient covenants like Tesco Express, Aldi and Lidl2, which Travelodge falls into.’
Contracts were exchanged before Christmas, but the deal did not complete until last week.
Lenta Properties was represented by Storeys:ssp. Sphere: Related Content
BBVA Nearing EUR 1 Billion Sale Leaseback of Properties Across Spain
Property Week - February 20, 2009
RREEF is close to sealing a €1bn purchase and leaseback of some of Spanish bank Banco Bilbao Vizcaya Argentaria’s (BBVA) property assets
It is thought the global fund manager is in advanced talks with BBVA to buy a portfolio of retail bank branches and offices across Spain. The bank would lease the properties back on a range of leases of more than 15 years.
BBVA instructed CB Richard Ellis last year to market its property assets to raise around €2bn.
Around 1,288 retail branches and 30 office buildings are among the property assets. BBVA has split the portfolio to attract a wider range of investors and has agreed to lease the properties on a range of terms between 25 years and 40 years.
It is thought that RREEF has cherry picked several assets in which it is interested and is discussing the possible structure for the deal. Sphere: Related Content
RREEF is close to sealing a €1bn purchase and leaseback of some of Spanish bank Banco Bilbao Vizcaya Argentaria’s (BBVA) property assets
It is thought the global fund manager is in advanced talks with BBVA to buy a portfolio of retail bank branches and offices across Spain. The bank would lease the properties back on a range of leases of more than 15 years.
BBVA instructed CB Richard Ellis last year to market its property assets to raise around €2bn.
Around 1,288 retail branches and 30 office buildings are among the property assets. BBVA has split the portfolio to attract a wider range of investors and has agreed to lease the properties on a range of terms between 25 years and 40 years.
It is thought that RREEF has cherry picked several assets in which it is interested and is discussing the possible structure for the deal. Sphere: Related Content
Sunday, February 15, 2009
Adidas AG Completes Sale Leaseback of Reebok-CCM’s HQ in Montréal
Jones Lang Lasalle Web Site - January, 2009
Jones Lang LaSalle Real Estate Services, on behalf of adidas AG, is pleased to announce the successful completion of a 15 year sale leaseback of the 475,000 s.f. worldwide headquarters and global distribution center of Reebok-CCM Hockey. This state of the art distribution facility located in Ville St. Laurent, Montréal, Québec, Canada was constructed in 2006 as a mixed industrial and office space building. The property sits on over 885,000 s.f. of land and boasts 71,512 s.f. of office and showroom space, and an impressive 402,951 s.f. of warehousing area at a clear height of 33.5 ft.
The property is 100% leased to Reebok-CCM for 15 years, on an absolute net lease basis.
Adidas AG, the world’s second largest sporting goods company, whose global portfolio encompasses distribution, office and retail space, has already appointed Jones Lang LaSalle on over 50 projects worldwide involving transaction management, property development, capital markets and lease administration.
John Faratro, Senior Vice President, Jones Lang LaSalle says, “our strong track record in Industrial Services and ability to deliver key expertise through our established network of local markets was integral to a successful disposition.” Sphere: Related Content
Jones Lang LaSalle Real Estate Services, on behalf of adidas AG, is pleased to announce the successful completion of a 15 year sale leaseback of the 475,000 s.f. worldwide headquarters and global distribution center of Reebok-CCM Hockey. This state of the art distribution facility located in Ville St. Laurent, Montréal, Québec, Canada was constructed in 2006 as a mixed industrial and office space building. The property sits on over 885,000 s.f. of land and boasts 71,512 s.f. of office and showroom space, and an impressive 402,951 s.f. of warehousing area at a clear height of 33.5 ft.
The property is 100% leased to Reebok-CCM for 15 years, on an absolute net lease basis.
Adidas AG, the world’s second largest sporting goods company, whose global portfolio encompasses distribution, office and retail space, has already appointed Jones Lang LaSalle on over 50 projects worldwide involving transaction management, property development, capital markets and lease administration.
John Faratro, Senior Vice President, Jones Lang LaSalle says, “our strong track record in Industrial Services and ability to deliver key expertise through our established network of local markets was integral to a successful disposition.” Sphere: Related Content
BBVA Completes €82 Million Sale Leaseback of Madrid HQ
Property Week - February 13, 2009
Deka has bought the Madrid headquarters of Spanish bank Banco Bilbao Vizcaya Argentaria (BBVA) for around €82m in a purchase and leaseback. The German open-ended fund manager is thought to have agreed to lease the building back to the bank for 15 years. The rent has not been disclosed.
The sale is part of a wider disposal of assets by BBVA. Last year it instructed CB Richard Ellis to advise on raising around €2bn through sale and leasebacks. It is thought to have assembled two main portfolios comprising around 1,288 retail branches and 30 office buildings respectively. It split the portfolio to attract a wider range of investors and has agreed to lease the properties on a range of terms between 25 years and 40 years.
In the last six months of 2008, nearly €4bn of Spanish bank properties were put up for sale and leasebacks.
Colliers International advised Deka. All parties declined to comment. Sphere: Related Content
Deka has bought the Madrid headquarters of Spanish bank Banco Bilbao Vizcaya Argentaria (BBVA) for around €82m in a purchase and leaseback. The German open-ended fund manager is thought to have agreed to lease the building back to the bank for 15 years. The rent has not been disclosed.
The sale is part of a wider disposal of assets by BBVA. Last year it instructed CB Richard Ellis to advise on raising around €2bn through sale and leasebacks. It is thought to have assembled two main portfolios comprising around 1,288 retail branches and 30 office buildings respectively. It split the portfolio to attract a wider range of investors and has agreed to lease the properties on a range of terms between 25 years and 40 years.
In the last six months of 2008, nearly €4bn of Spanish bank properties were put up for sale and leasebacks.
Colliers International advised Deka. All parties declined to comment. Sphere: Related Content
Coates Seeking $15 Million Sale Leaseback of Seven Shops in West Australia
The West Australian - February 13,2009
The owners of Australia’s biggest equipment hire group, Coates Hire, are auctioning seven WA sites next month in the hope of reaping more than $15 million.
The Carlyle Group and Kerry Stokes’ National Hire Group, which bought out Coates Hire a year ago, are selling land in regional and metropolitan WA with properties in Kwinana, Port Hedland, Kalgoorlie, Newman, Tom Price, Kambalda and Collie.
Each of the properties will be leased back by Coates Hire on a 12-year lease, for rents ranging from $35,000 to $580,000 a year.
Colliers International industrial and commercial sales and leasing executive Greg O’Meara, who is handling the portfolio, said the sale was an opportunity for smaller investors to buy an industrial investment, in some cases for $300,000 to $400,000, with a blue-chip national tenant.
The three biggest properties, in Kwinana, Port Hedland and Kalgoorlie, would appeal to investors in the $5 million to $7 million range.
“The strength of the offering is the strong tenant,” Mr O’Meara said. “The properties by and large are in good industrial locations, in mining towns for the most part, and provide good cash flows. People are buying an income stream but they are also buying a piece of real estate. Self-funded retirees who have been hit by market uncertainty in recent months can look at getting an excellent return on their money.”
The seven properties will be auctioned on March 11. Sphere: Related Content
The owners of Australia’s biggest equipment hire group, Coates Hire, are auctioning seven WA sites next month in the hope of reaping more than $15 million.
The Carlyle Group and Kerry Stokes’ National Hire Group, which bought out Coates Hire a year ago, are selling land in regional and metropolitan WA with properties in Kwinana, Port Hedland, Kalgoorlie, Newman, Tom Price, Kambalda and Collie.
Each of the properties will be leased back by Coates Hire on a 12-year lease, for rents ranging from $35,000 to $580,000 a year.
Colliers International industrial and commercial sales and leasing executive Greg O’Meara, who is handling the portfolio, said the sale was an opportunity for smaller investors to buy an industrial investment, in some cases for $300,000 to $400,000, with a blue-chip national tenant.
The three biggest properties, in Kwinana, Port Hedland and Kalgoorlie, would appeal to investors in the $5 million to $7 million range.
“The strength of the offering is the strong tenant,” Mr O’Meara said. “The properties by and large are in good industrial locations, in mining towns for the most part, and provide good cash flows. People are buying an income stream but they are also buying a piece of real estate. Self-funded retirees who have been hit by market uncertainty in recent months can look at getting an excellent return on their money.”
The seven properties will be auctioned on March 11. Sphere: Related Content
Thursday, February 12, 2009
Mitchells & Butlers Completes £30 Million Sale Leaseback of HQ & Hotel in Birmingham
PropertyEU - February 9, 2009
London-based fund manager Moorfield Group has concluded a £30 mln (EUR 33.5 mln) sale-and-leaseback with leisure group Mitchells & Butlers for its 95,000 sq ft (8,826 m2) head office and adjoining 120-room hotel in Birmingham.
Moorfield has purchased the buildings for its Moorfield Real Estate Fund II which raised £400 mln of private equity on closing at the end of 2007. MREF II is backed principally by US endowment and foundation funds and European pension funds.
The hotel and office are on Fleet Street in Birmingham and the hotel is an Express by Holiday Inn. Both have been leased back to Mitchells & Butlers.
Colliers CRE acted for Mitchells & Butlers and Savills acted for Moorfield. Sphere: Related Content
London-based fund manager Moorfield Group has concluded a £30 mln (EUR 33.5 mln) sale-and-leaseback with leisure group Mitchells & Butlers for its 95,000 sq ft (8,826 m2) head office and adjoining 120-room hotel in Birmingham.
Moorfield has purchased the buildings for its Moorfield Real Estate Fund II which raised £400 mln of private equity on closing at the end of 2007. MREF II is backed principally by US endowment and foundation funds and European pension funds.
The hotel and office are on Fleet Street in Birmingham and the hotel is an Express by Holiday Inn. Both have been leased back to Mitchells & Butlers.
Colliers CRE acted for Mitchells & Butlers and Savills acted for Moorfield. Sphere: Related Content
Monday, February 02, 2009
DHL Enters EUR 30 Million Sale Leaseback of Three Logistics Properties in Belgium
PropertyEU - January 30, 2009
Warehousing group WDP has expanded its Belgian portfolio with the acquisition of three logistics sites from DHL's parent company Deutsche Post for a total of nearly EUR 30 mln. The all-share transaction reflects a gross yield of 8.7%. The sites, with a total area of 85,000 m2, will be leased back by DHL, WDP said on Thursday.
The transaction will take the form of a merger and three partial de-mergers whereby WDP will issue shares for an amount of nearly EUR 22 mln and will be transferred debt of EUR 8 mln. The deal is due for completion in the first quarter of 2009.
The assets consist of the Belgian 33,000 m2 head office of DHL Exel Supply Chain in Mechelen, a site of 33,923 m2 leased with a five- to nine-year contract and a 19,000 m2 site in Meer. The total rent amounts to EUR 2.7 mln per year. Sphere: Related Content
Warehousing group WDP has expanded its Belgian portfolio with the acquisition of three logistics sites from DHL's parent company Deutsche Post for a total of nearly EUR 30 mln. The all-share transaction reflects a gross yield of 8.7%. The sites, with a total area of 85,000 m2, will be leased back by DHL, WDP said on Thursday.
The transaction will take the form of a merger and three partial de-mergers whereby WDP will issue shares for an amount of nearly EUR 22 mln and will be transferred debt of EUR 8 mln. The deal is due for completion in the first quarter of 2009.
The assets consist of the Belgian 33,000 m2 head office of DHL Exel Supply Chain in Mechelen, a site of 33,923 m2 leased with a five- to nine-year contract and a 19,000 m2 site in Meer. The total rent amounts to EUR 2.7 mln per year. Sphere: Related Content
Sunday, February 01, 2009
Home Depot Completes $59.2 Million Sale Leaseback of Two Distribution Centers
CoStar Group - January 27, 2009
Home Depot sold two distribution centers in Alabama and Georgia to The Inland Real Estate Group of Cos. Inc. for $59.2 million, or approximately $45 per square foot. The Atlanta-based home improvement retailer also leased back the nearly 1.32 million square feet in industrial space for 18 years.
Inland said the buildings, known as rapid deployment centers, are key hubs in Home Depot’s supply chain.
The one-year-old facilities each measure 657,600 square feet. The first is at 6400 Jefferson Metropolitan Parkway in McCalla, AL, about 20 miles southwest of Birmingham. The second one is just outside of Valdosta, GA, at 6201 Peterson Road in Lake Park. It’s nearly five miles from the Florida state line and about two hours northeast of Tallahassee.
CB Richard Ellis represented Home Depot. Inland used in-house representation. Sphere: Related Content
Home Depot sold two distribution centers in Alabama and Georgia to The Inland Real Estate Group of Cos. Inc. for $59.2 million, or approximately $45 per square foot. The Atlanta-based home improvement retailer also leased back the nearly 1.32 million square feet in industrial space for 18 years.
Inland said the buildings, known as rapid deployment centers, are key hubs in Home Depot’s supply chain.
The one-year-old facilities each measure 657,600 square feet. The first is at 6400 Jefferson Metropolitan Parkway in McCalla, AL, about 20 miles southwest of Birmingham. The second one is just outside of Valdosta, GA, at 6201 Peterson Road in Lake Park. It’s nearly five miles from the Florida state line and about two hours northeast of Tallahassee.
CB Richard Ellis represented Home Depot. Inland used in-house representation. Sphere: Related Content
Saturday, January 24, 2009
Sale Leasebacks Revived as Companies Look for Cash
Property Week - January 22, 2009
Big-name owner-occupiers attempt to raise capital from property portfolios
A host of the world’s biggest companies are turning to their property portfolios in an attempt to raise cash to shore up their declining balance sheets.
Property Week understands that builders’ merchant Travis Perkins and communications company Cable & Wireless are investigating ways to raise capital from their properties.
The potential is huge, predicts GVA Grimley, which estimated in spring 2008 that the value of freehold properties held on the FTSE 200 companies’ balance sheets totalled £163bn.
Julian Lyon, chairman of the Confederation of British Industry’s property group and manager of European real estate at General Motors, said: ‘All companies must keep under constant review how they raise working capital. ‘Several options for raising capital have disappeared, so companies have to look at alternatives.’
Rumours have swept the market that other corporate occupiers such as Credit Suisse, builders’ supplier Wolseley and Honda may be considering sale and leasebacks. They would follow General Motors, which, advised by Jones Lang LaSalle, put $750m (£536m) of sale-and-leasebacks properties on the market at the end of last year, including its Detroit headquarters, the Renaissance Center.
Matthew Richards, director of corporate capital markets at JLL, said enquiries of this type had doubled over the last six months.
However, most companies are at early stages in their investigations. Cable & Wireless, which is advised by Doherty Baines, has a small portfolio of technical sale-and-leaseback properties on the market.
Credit Suisse reviews its freehold property every six months and is thought to be considering the sale-and-leaseback option for the future.
Wolseley was unavailable for comment.
Honda’s property manager, Gordon Hunt, said it was not yet the right time.
‘We are not looking at sale and leasebacks as it doesn’t appeal to us because of a simple commercial reason: the yields are not where they need to be.’
Hunt’s comments demonstrate a crucial point: that some owner-occupiers only consider them when they are desperate for cash, but others, such as Tesco and Travis Perkins, have long pursued them as a sensible business initiative.
Property director of Travis Perkins, Martin Meech, who has a sale and leaseback portfolio on the market, said: ‘Sale and leasebacks are part of an ongoing portfolio strategy for us.’
Tom Betts, finance director at Topland, which has invested in several sale-and-leaseback transactions in the past, agreed and said: ‘We are seeing a few things in their infancy at the moment. But it should not just be cash-raising to sort a problem.
We are a long-term investor and we want someone who is going to be there for the long term. Sphere: Related Content
Big-name owner-occupiers attempt to raise capital from property portfolios
A host of the world’s biggest companies are turning to their property portfolios in an attempt to raise cash to shore up their declining balance sheets.
Property Week understands that builders’ merchant Travis Perkins and communications company Cable & Wireless are investigating ways to raise capital from their properties.
The potential is huge, predicts GVA Grimley, which estimated in spring 2008 that the value of freehold properties held on the FTSE 200 companies’ balance sheets totalled £163bn.
Julian Lyon, chairman of the Confederation of British Industry’s property group and manager of European real estate at General Motors, said: ‘All companies must keep under constant review how they raise working capital. ‘Several options for raising capital have disappeared, so companies have to look at alternatives.’
Rumours have swept the market that other corporate occupiers such as Credit Suisse, builders’ supplier Wolseley and Honda may be considering sale and leasebacks. They would follow General Motors, which, advised by Jones Lang LaSalle, put $750m (£536m) of sale-and-leasebacks properties on the market at the end of last year, including its Detroit headquarters, the Renaissance Center.
Matthew Richards, director of corporate capital markets at JLL, said enquiries of this type had doubled over the last six months.
However, most companies are at early stages in their investigations. Cable & Wireless, which is advised by Doherty Baines, has a small portfolio of technical sale-and-leaseback properties on the market.
Credit Suisse reviews its freehold property every six months and is thought to be considering the sale-and-leaseback option for the future.
Wolseley was unavailable for comment.
Honda’s property manager, Gordon Hunt, said it was not yet the right time.
‘We are not looking at sale and leasebacks as it doesn’t appeal to us because of a simple commercial reason: the yields are not where they need to be.’
Hunt’s comments demonstrate a crucial point: that some owner-occupiers only consider them when they are desperate for cash, but others, such as Tesco and Travis Perkins, have long pursued them as a sensible business initiative.
Property director of Travis Perkins, Martin Meech, who has a sale and leaseback portfolio on the market, said: ‘Sale and leasebacks are part of an ongoing portfolio strategy for us.’
Tom Betts, finance director at Topland, which has invested in several sale-and-leaseback transactions in the past, agreed and said: ‘We are seeing a few things in their infancy at the moment. But it should not just be cash-raising to sort a problem.
We are a long-term investor and we want someone who is going to be there for the long term. Sphere: Related Content
Sunday, January 18, 2009
Atos Origin Completes EUR 28 Million Sale Leaseback of Offices in Madrid
PropertyEU - January 16, 2009
Germany's Real I.S. said it has acquired a property in the Julian Camarillo office district of Madrid in a EUR 28 mln sale and leaseback with IT company Firma Atos Origin. The asset is earmarked for the institutional investment fund BGV Bayerische Grundvermögen III SICAV FIS. The four-storey building has a rentable surface of 8,000 m2, and an underground parking garage with 92 spaces. The property is fully leased.
Real I.S. is the Munich-based subsidiary of Bayern LB. This is the fifth investment made by the company on behalf of its institutional fund. Sphere: Related Content
Germany's Real I.S. said it has acquired a property in the Julian Camarillo office district of Madrid in a EUR 28 mln sale and leaseback with IT company Firma Atos Origin. The asset is earmarked for the institutional investment fund BGV Bayerische Grundvermögen III SICAV FIS. The four-storey building has a rentable surface of 8,000 m2, and an underground parking garage with 92 spaces. The property is fully leased.
Real I.S. is the Munich-based subsidiary of Bayern LB. This is the fifth investment made by the company on behalf of its institutional fund. Sphere: Related Content
Monday, January 12, 2009
Tesco Completes £308 Million Sale Leaseback of Seven Stores
Property Week - January 9, 2009
Tesco has completed another two sale and leasebacks totalling £308m. It has sold three Tesco stores into a £199m joint venture with the separately run Tesco Pension Scheme. The pension scheme will take a 50% stake. A further four stores will be sold to a Prupim annuity fund client in a £109m sale and leaseback. The initial yields on all the transactions are 5.25%-5.3%. Prupim and GL Hearn advised the Prupim fund; Morgan Williams advised Tesco on both transactions; Cushman & Wakefield advised the Tesco Pension Fund. Sphere: Related Content
Tesco has completed another two sale and leasebacks totalling £308m. It has sold three Tesco stores into a £199m joint venture with the separately run Tesco Pension Scheme. The pension scheme will take a 50% stake. A further four stores will be sold to a Prupim annuity fund client in a £109m sale and leaseback. The initial yields on all the transactions are 5.25%-5.3%. Prupim and GL Hearn advised the Prupim fund; Morgan Williams advised Tesco on both transactions; Cushman & Wakefield advised the Tesco Pension Fund. Sphere: Related Content
Telereal to Buy Trillium for £750 Million
PropertyEU - January 9, 2009
London-based property investment and services firm Telereal has agreed to acquire Land Securities' outsourcing business Trillium for £750 mln (about EUR 831 mln).
The investment volume is considerably lower than the £1 bn-plus valuations of Trillium in 2007-2008. But the deal does not include Trillium's Accor hotel portfolio which will remain within Land Securities.
In a statement, Land Securities said the headline enterprise value of £750 mln was based on Trillium's balance sheet - excluding the Accor hotels - at end-March 2008. The gross assets of Trillium (excluding Accor) were £1.57 bn end-March 2008 and £1.3 bn at end-September 2008. The sale of Trillium is expected to complete on 12 January.
Land Securities, the largest real estate investment trust in the UK, unveiled plans back in November 2007 to demerge into two separate listed companies for retail property and the London office portfolio. The group planned either to sell Trillium, or failing that list it as a separate entity. However, the worsening of the global financial crisis stymied the re-organisation, with the sales process for Trillium taking much longer than expected. Land Securities suspended the demerger plans for its retail and office divisions in November last year.
The UK REIT said on Thursday that the sale of Trillium will generate cash proceeds of £444 mln which will be used to reduce the group's net debt.
Francis Salway, CEO of Land Securities, said: 'We are pleased to have concluded this sale in a challenging economic environment. We will now focus on our core property investment and development activities. The cash proceeds will strengthen our balance she" Sphere: Related Content
London-based property investment and services firm Telereal has agreed to acquire Land Securities' outsourcing business Trillium for £750 mln (about EUR 831 mln).
The investment volume is considerably lower than the £1 bn-plus valuations of Trillium in 2007-2008. But the deal does not include Trillium's Accor hotel portfolio which will remain within Land Securities.
In a statement, Land Securities said the headline enterprise value of £750 mln was based on Trillium's balance sheet - excluding the Accor hotels - at end-March 2008. The gross assets of Trillium (excluding Accor) were £1.57 bn end-March 2008 and £1.3 bn at end-September 2008. The sale of Trillium is expected to complete on 12 January.
Land Securities, the largest real estate investment trust in the UK, unveiled plans back in November 2007 to demerge into two separate listed companies for retail property and the London office portfolio. The group planned either to sell Trillium, or failing that list it as a separate entity. However, the worsening of the global financial crisis stymied the re-organisation, with the sales process for Trillium taking much longer than expected. Land Securities suspended the demerger plans for its retail and office divisions in November last year.
The UK REIT said on Thursday that the sale of Trillium will generate cash proceeds of £444 mln which will be used to reduce the group's net debt.
Francis Salway, CEO of Land Securities, said: 'We are pleased to have concluded this sale in a challenging economic environment. We will now focus on our core property investment and development activities. The cash proceeds will strengthen our balance she" Sphere: Related Content
Thursday, January 08, 2009
UniCredit Completes €800 Million Sale Leaseback of Milan HQ and 70 Bank Branches Across Italy
Property Week - January 6, 2009
Italian bank UniCredit has packaged a portfolio of domestic real estate, including its Milan headquarters, into a fund and sold 62% of the units to institutional investors.
The fifteen year investment fund, managed by Italian real estate manager Fimit, comprises a portfolio of the bank’s historic Palazzo Broggi building in the heart of Milan (pictured) and Livio Cambi in the city, as well as 70 banking branches and has an overall value of €800m.
UniCredit, which will lease the properties back for 18 years, will keep a 33% stake in the remaining fund units and sell a further 5% by February.
Italy’s second largest bank is under to pressure to boost its core tier one capital ratio – a key measure of balance sheet strength – to 6.7% before the end of the year.
The deal is expected to yield UniCredit a €280m profit for the fourth quarter of 2008. In the three months to September, net profit at the bank fell 54% to €551m compared with the same period last year, but beat market forecasts of €425m.
The sale is one of three disposals worth just over €2bn for the bank. It has also raised €1bn from the sale of profit sharing rights by UniCredit’s Bank Austria for €1.1bn and a stake in Atlantia, an Italian highway tolls operator, for €248m.
In October UniCredit said it needed to raise €6.6bn in additional capital through scrapping its cash dividend and tapping shareholders for extra cash. Sphere: Related Content
Italian bank UniCredit has packaged a portfolio of domestic real estate, including its Milan headquarters, into a fund and sold 62% of the units to institutional investors.
The fifteen year investment fund, managed by Italian real estate manager Fimit, comprises a portfolio of the bank’s historic Palazzo Broggi building in the heart of Milan (pictured) and Livio Cambi in the city, as well as 70 banking branches and has an overall value of €800m.
UniCredit, which will lease the properties back for 18 years, will keep a 33% stake in the remaining fund units and sell a further 5% by February.
Italy’s second largest bank is under to pressure to boost its core tier one capital ratio – a key measure of balance sheet strength – to 6.7% before the end of the year.
The deal is expected to yield UniCredit a €280m profit for the fourth quarter of 2008. In the three months to September, net profit at the bank fell 54% to €551m compared with the same period last year, but beat market forecasts of €425m.
The sale is one of three disposals worth just over €2bn for the bank. It has also raised €1bn from the sale of profit sharing rights by UniCredit’s Bank Austria for €1.1bn and a stake in Atlantia, an Italian highway tolls operator, for €248m.
In October UniCredit said it needed to raise €6.6bn in additional capital through scrapping its cash dividend and tapping shareholders for extra cash. Sphere: Related Content
Marsans Completes €115 Million Sale Leaseback of Madrid HQ
Iberian Lawyer - January 6, 2009
Uría Menéndez has advised Grupo Marsans in the sale and leaseback of its headquarters in the emblematic "Edificio Pórtico" in Campo de las Naciones in Madrid.
The transaction consisted of the sale of the property for approximately €115 million to the German investment fund Union Investment Real Estate (UIRE), and the subrogation of the purchaser to the mortgage loan granted by Eurohypo for the building’s original acquisition.
A lease agreement for the entire premises was entered into simultaneously to the formalising of the sale and purchase deed, with the vendor thus becoming the lessee. The initial term of the lease is eight years, the lessee being entitled to extend this term for two additional successive periods of three years each.
Uría Menéndez’s team included Diego Armero, Maria Luisa Vara, Pablo Garrote and Francisco Bengoetxea (real estate); Carlos López Quiroga (transport); and Guillermo Canalejo and Francisco de la Puente (tax).
UIRE was advised by Gómez-Acebo & Pombo and Eurohypo by its own in-house lawyers. Sphere: Related Content
Uría Menéndez has advised Grupo Marsans in the sale and leaseback of its headquarters in the emblematic "Edificio Pórtico" in Campo de las Naciones in Madrid.
The transaction consisted of the sale of the property for approximately €115 million to the German investment fund Union Investment Real Estate (UIRE), and the subrogation of the purchaser to the mortgage loan granted by Eurohypo for the building’s original acquisition.
A lease agreement for the entire premises was entered into simultaneously to the formalising of the sale and purchase deed, with the vendor thus becoming the lessee. The initial term of the lease is eight years, the lessee being entitled to extend this term for two additional successive periods of three years each.
Uría Menéndez’s team included Diego Armero, Maria Luisa Vara, Pablo Garrote and Francisco Bengoetxea (real estate); Carlos López Quiroga (transport); and Guillermo Canalejo and Francisco de la Puente (tax).
UIRE was advised by Gómez-Acebo & Pombo and Eurohypo by its own in-house lawyers. Sphere: Related Content
Monday, December 22, 2008
Spanish Savings Bank CAM Enters EUR 63 Million Sale Leaseback of Three Office Buildings in Spain
PropertyEU - December 18, 2008
The employee pension fund of Spain's savings bank Caja de Ahorros del Mediterraneo (CAM) has acquired three office buildings from the bank for EUR 63 mln. The assets are located in Alicante, Valencia and Barcelona, and have been leased back to CAM for a period of 20 years with an option to extend for a further 10 years.
The fund said this sale-and-leaseback transaction is expected to 'give more stability to its real estate portfolio, as it provides a stable income stream which is less subject to market volatility. Sphere: Related Content
The employee pension fund of Spain's savings bank Caja de Ahorros del Mediterraneo (CAM) has acquired three office buildings from the bank for EUR 63 mln. The assets are located in Alicante, Valencia and Barcelona, and have been leased back to CAM for a period of 20 years with an option to extend for a further 10 years.
The fund said this sale-and-leaseback transaction is expected to 'give more stability to its real estate portfolio, as it provides a stable income stream which is less subject to market volatility. Sphere: Related Content
Tuesday, December 16, 2008
Caixa Catalunya Seeking EUR 500 Million Sale Leaseback of 824 Bank Branches Across Spain
Reuters - December 14, 2008
Spanish savings bank Caixa Catalunya is seeking to sell 824 of its 1,200 buildings in Spain in a bid to raise 500 million euros ($663.4 million), La Vanguardia reported on Sunday, citing sources at the bank.The bank wants to strike a deal with potential buyers to continue to rent the branches, with a buy-back option for 10, 15 and 20 years, and wants to sell them in lots of 5 million euros, which would include 10 to 15 premises, the paper said.
The bank is in particular targeting its private banking clients as potential buyers, it added.
Its head office in Barcelona is not up for sale, added the report. No one was immediately available at the bank on Sunday to comment.
Other Spanish banks have also closed leaseback deals on their property, notably Spain's largest bank Santander (SAN.MC), which has sold more than 1,150 of its branches and other buildings and its headquarters complex at Boadilla del Monte on the outskirts of Madrid. Sphere: Related Content
Spanish savings bank Caixa Catalunya is seeking to sell 824 of its 1,200 buildings in Spain in a bid to raise 500 million euros ($663.4 million), La Vanguardia reported on Sunday, citing sources at the bank.The bank wants to strike a deal with potential buyers to continue to rent the branches, with a buy-back option for 10, 15 and 20 years, and wants to sell them in lots of 5 million euros, which would include 10 to 15 premises, the paper said.
The bank is in particular targeting its private banking clients as potential buyers, it added.
Its head office in Barcelona is not up for sale, added the report. No one was immediately available at the bank on Sunday to comment.
Other Spanish banks have also closed leaseback deals on their property, notably Spain's largest bank Santander (SAN.MC), which has sold more than 1,150 of its branches and other buildings and its headquarters complex at Boadilla del Monte on the outskirts of Madrid. Sphere: Related Content
Sunday, December 14, 2008
Tesco Pursuing €212 Million Sale Leaseback of Six Properties in Ireland
Property Week - December 12, 2008
Tesco plans to sell properties in the Republic of Ireland worth €212m (£184m), including shopping centres Golden Island in Athlone and Artane Castle, Artane, north Dublin.
It is looking for €60m (£52m) for Golden Island, which would reflect a net initial yield of 6.15%, and €35m (£30m) for Artane Castle – a yield of more than 6%.
DTZ Sherry FitzGerald is quoting €116.9m (£101m) for a sale and leaseback of four other stores. Sphere: Related Content
Tesco plans to sell properties in the Republic of Ireland worth €212m (£184m), including shopping centres Golden Island in Athlone and Artane Castle, Artane, north Dublin.
It is looking for €60m (£52m) for Golden Island, which would reflect a net initial yield of 6.15%, and €35m (£30m) for Artane Castle – a yield of more than 6%.
DTZ Sherry FitzGerald is quoting €116.9m (£101m) for a sale and leaseback of four other stores. Sphere: Related Content
Sunday, December 07, 2008
European Banks Look to Sale Leasebacks for Liquidity Amid Tight Capital Markets
Property Week - December 5, 2008
European banks have embarked on a slew of sale and leasebacks in an attempt to raise cash amid the global economic turmoil.
Collapsed Belgian bank Fortis, BBVA and Banco Sabadell have all put portfolios on the market.
Almost every other top European bank, from Italy’s UniCredito to Royal Bank of Scotland in the UK, is also scrutinising its property holdings to see where money can be made.
A report by Merrill Lynch found that Europe’s leading banks need to raise a further €73bn (£61bn) to keep their finances steady.
Cushman & Wakefield found that the top 43 European banks have €63bn (£52bn) of property assets on their balance sheets (see table).
Matthew Stone, head of occupier strategy at Cushman & Wakefield, said: ‘One increasingly popular method for banks to raise capital is through sale and leasebacks. The Spanish banks, BBVA and Banco Sabadell, and Fortis of Belgium, have all recently announced plans for billions of euros of sale and leaseback transactions, and many other European banks are actively considering them as a cost-efficient method of raising finance.
‘Leading European banks have over €63bn of land and buildings on their balance sheets which, if fully monetised, would meet almost all the €73bn of additional capital needs estimated by Merrill Lynch.’
There are investors willing to buy this kind of property. The fact that some banks have been bailed out by governments provides reassurance that they are safe from insolvency and are good covenants. Sphere: Related Content
European banks have embarked on a slew of sale and leasebacks in an attempt to raise cash amid the global economic turmoil.
Collapsed Belgian bank Fortis, BBVA and Banco Sabadell have all put portfolios on the market.
Almost every other top European bank, from Italy’s UniCredito to Royal Bank of Scotland in the UK, is also scrutinising its property holdings to see where money can be made.
A report by Merrill Lynch found that Europe’s leading banks need to raise a further €73bn (£61bn) to keep their finances steady.
Cushman & Wakefield found that the top 43 European banks have €63bn (£52bn) of property assets on their balance sheets (see table).
Matthew Stone, head of occupier strategy at Cushman & Wakefield, said: ‘One increasingly popular method for banks to raise capital is through sale and leasebacks. The Spanish banks, BBVA and Banco Sabadell, and Fortis of Belgium, have all recently announced plans for billions of euros of sale and leaseback transactions, and many other European banks are actively considering them as a cost-efficient method of raising finance.
‘Leading European banks have over €63bn of land and buildings on their balance sheets which, if fully monetised, would meet almost all the €73bn of additional capital needs estimated by Merrill Lynch.’
There are investors willing to buy this kind of property. The fact that some banks have been bailed out by governments provides reassurance that they are safe from insolvency and are good covenants. Sphere: Related Content
Wednesday, December 03, 2008
Renown Agrees to $89.3 Million Sale Leaseback of Two Properties in Japan
Trading Markets.com - December 1, 2008
Japan's Renown Inc. (TSE:3606) said Friday that it will sell its headquarters building in Tokyo and an office building in Osaka for a total of 8.5 billion yen (US$89.3 million). The apparel company, which is undergoing rehabilitation, plans to use the proceeds to reduce interest-bearing debt and renovate stores.
Renown will sell the Tokyo property to building-leasing firm TOC CO. (8841) for 6 billion yen and the Osaka property to condominium builder Haseko Corp. (TSE:1808) for 2.5 billion yen.
It will sign lease contracts with the buyers and continue using the buildings. Sphere: Related Content
Japan's Renown Inc. (TSE:3606) said Friday that it will sell its headquarters building in Tokyo and an office building in Osaka for a total of 8.5 billion yen (US$89.3 million). The apparel company, which is undergoing rehabilitation, plans to use the proceeds to reduce interest-bearing debt and renovate stores.
Renown will sell the Tokyo property to building-leasing firm TOC CO. (8841) for 6 billion yen and the Osaka property to condominium builder Haseko Corp. (TSE:1808) for 2.5 billion yen.
It will sign lease contracts with the buyers and continue using the buildings. Sphere: Related Content
Tuesday, December 02, 2008
Dearth of Financing Slows Sale Leasebacks
Financial Week - November 30, 2008
The credit crunch is killing the trend of using sale-leasebacks to raise capital, because frozen conditions have made it nearly impossible to get deals done.
Through Nov. 1, sale-leasebacks totaled $6.2 billion, less than half of the $14.2 billion in such transactions seen during 2007, according to Real Capital Analytics. Most of the deals that do close are one-off, single-tenant transactions amounting to less than $100 million each, experts say, a change from the large portfolio deals that dominated the market in years past.
From 2002 through 2007, sale-leasebacks gained popularity with private equity firms, which sold real estate assets from acquisitions to pay off the loans used to bankroll their leveraged buyouts. Having less invested capital increased PE firms’ net returns on assets and equity.
But few other corporations saw the need for them because the liberal lending atmosphere made capital promptly and cheaply obtainable. As that lending has dried up, sale-leasebacks, like most other forms of financing, have become both more desirable and less available.
Sale-leasebacks have slowed dramatically,” said Dan Fasulo, managing director of Real Capital Analytics. “It’s counterintuitive, because you’d think that they would be thriving in this type of environment. But it doesn’t matter how good the tenants are, the lenders just are not there.”
One reason is that lenders can no longer package loans for sale-leasebacks into securities as they did during the real estate boom.
“If the debt is available, it’s available in smaller denominations, because you are working directly with a lender, not from a securitization anymore,” said Mindy Berman, the managing director of corporate capital markets at Jones Lang LaSalle.
In addition to providing another source of capital, sale-leasebacks offer a way to reap gains on property that has been on the balance sheet. Companies have been depreciating their real estate assets for years, so the book value of those assets is low and companies should realize hefty profits on sales. But commercial real estate prices have come down considerably from their 2007 highs, and some executives harbor unrealistic expectations regarding the value of their properties, experts said.
“There is still a real spread between sellers’ expectations and what buyers are willing to pay,” said Arthur Greenberg, an executive vice president in the Washington office of real estate broker Studley. “There is a lot of money sitting on the sidelines, but it is primarily private equity money, and [private equity] has higher yield expectations than the current market is offering.”
Potential investors will only consider deals for top-notch properties whose tenants have stellar credit, and they’re looking for long-term leases that stretch to 15 years instead of 10. Medical office building sale-leasebacks represent a bright spot in the industry, while deals have dried up in sectors that have suffered more from the financial slowdown, such as retail or automotive.
“Underwriting has changed significantly in the sale-leaseback realm,” said Ms. Berman of Jones Lang LaSalle. “We’re back to basics. You need to underwrite the credit of the tenant and the property fundamentals.”
Still, Ms. Berman said her office fields calls every day from companies interested in determining the value of their property and the feasibility of a sale-leaseback.
“In today’s market, everyone is desperate,” said Bill Pollert, president of CapLease, a real estate investment trust that specializes in single-tenant properties. “They’re looking for every possible way to generate capital. It’s hard for companies that are not in real estate to justify owning property.”
Experts expect the sector to lead the rebound in commercial real estate once credit conditions relax.
“Fundamentally, the economics that justify sale-leasebacks are strong and viable,” Mr. Pollert said. “It’s a segment that will come back and will be strong once the debt markets come back. There is a lot of pent-up demand out there.” Sphere: Related Content
The credit crunch is killing the trend of using sale-leasebacks to raise capital, because frozen conditions have made it nearly impossible to get deals done.
Through Nov. 1, sale-leasebacks totaled $6.2 billion, less than half of the $14.2 billion in such transactions seen during 2007, according to Real Capital Analytics. Most of the deals that do close are one-off, single-tenant transactions amounting to less than $100 million each, experts say, a change from the large portfolio deals that dominated the market in years past.
From 2002 through 2007, sale-leasebacks gained popularity with private equity firms, which sold real estate assets from acquisitions to pay off the loans used to bankroll their leveraged buyouts. Having less invested capital increased PE firms’ net returns on assets and equity.
But few other corporations saw the need for them because the liberal lending atmosphere made capital promptly and cheaply obtainable. As that lending has dried up, sale-leasebacks, like most other forms of financing, have become both more desirable and less available.
Sale-leasebacks have slowed dramatically,” said Dan Fasulo, managing director of Real Capital Analytics. “It’s counterintuitive, because you’d think that they would be thriving in this type of environment. But it doesn’t matter how good the tenants are, the lenders just are not there.”
One reason is that lenders can no longer package loans for sale-leasebacks into securities as they did during the real estate boom.
“If the debt is available, it’s available in smaller denominations, because you are working directly with a lender, not from a securitization anymore,” said Mindy Berman, the managing director of corporate capital markets at Jones Lang LaSalle.
In addition to providing another source of capital, sale-leasebacks offer a way to reap gains on property that has been on the balance sheet. Companies have been depreciating their real estate assets for years, so the book value of those assets is low and companies should realize hefty profits on sales. But commercial real estate prices have come down considerably from their 2007 highs, and some executives harbor unrealistic expectations regarding the value of their properties, experts said.
“There is still a real spread between sellers’ expectations and what buyers are willing to pay,” said Arthur Greenberg, an executive vice president in the Washington office of real estate broker Studley. “There is a lot of money sitting on the sidelines, but it is primarily private equity money, and [private equity] has higher yield expectations than the current market is offering.”
Potential investors will only consider deals for top-notch properties whose tenants have stellar credit, and they’re looking for long-term leases that stretch to 15 years instead of 10. Medical office building sale-leasebacks represent a bright spot in the industry, while deals have dried up in sectors that have suffered more from the financial slowdown, such as retail or automotive.
“Underwriting has changed significantly in the sale-leaseback realm,” said Ms. Berman of Jones Lang LaSalle. “We’re back to basics. You need to underwrite the credit of the tenant and the property fundamentals.”
Still, Ms. Berman said her office fields calls every day from companies interested in determining the value of their property and the feasibility of a sale-leaseback.
“In today’s market, everyone is desperate,” said Bill Pollert, president of CapLease, a real estate investment trust that specializes in single-tenant properties. “They’re looking for every possible way to generate capital. It’s hard for companies that are not in real estate to justify owning property.”
Experts expect the sector to lead the rebound in commercial real estate once credit conditions relax.
“Fundamentally, the economics that justify sale-leasebacks are strong and viable,” Mr. Pollert said. “It’s a segment that will come back and will be strong once the debt markets come back. There is a lot of pent-up demand out there.” Sphere: Related Content
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