PropertyEU - July 30, 2010
A consortium of Deutsche Bank's RREEF Europe, Area Property Partners and Europa Capital has announced that it has completed the EUR 364 mln acquisition of a second portfolio of Spanish property assets owned by Banco Bilbao Vizcaya Argentaria (BBVA). The investment volume reflects an initial yield of 6.5%.
The assets, comprising five office assets and 153 bank branches located throughout Spain, will be leased back to BBVA on a long-term basis. REEF Spezialfonds acquired three of the office properties.
In September last year the consortium led by RREEF completed the sale-and-leaseback of the majority of the bank's Spanish assets for EUR 1.15 bn. That sale, which reflected a yield of about 7%, covered three office buildings and 944 bank branches.
The second deal completes the disposal of BBVA's Spanish assets.
Carlos Portocarrero de las Heras, partner at Clifford Chance Madrid who represented BBVA, said the second tranche was 'slightly easier' to close then the first, given the improving market conditions and the ability to use the largest disposal as a model. BBVA still owns about 500 properties in Spain in order to retain the option of swapping assets for ones covered under the sale-and-leaseback agreements when necessary, he added.
Ismael Clemente, head of RREEF Spain, told PropertyEU that the terms and conditions underlying both deals are similar. The office properties are being leased by BBVA for 20-year terms and the bank branches for 30 years.
In a statement on the transaction, Clemente added: 'We are extremely satisfied of the successful closing of this second tranche. We would like to thank our partners AREA, Europa and March for their continued support and confidence in our management capacity up to now. We would also thank our colleagues of RREEF Spezialfonds in Germany for having made their first acquisition in Spain in the framework of this transaction. It is an excellent opportunity for our investors, since we acquire on their behalf very good quality assets in prime locations with a proven and solid tenant'.
A full report on the deal will be published in the September edition of PropertyEU Magazine.
Sphere: Related Content
Friday, July 30, 2010
Monday, July 26, 2010
Study Released on Real Estate Sale Leaseback Transactions in the U.S.
The Journal of Real Estate Research (via Zicklin School of Business at Baruch College
C.F. Sirmans of Florida State University and Barrett A. Slade of Brigham Young University have just published a research paper in the current issue of The Journal of Real Estate Research on the pricing of sale leaseback transactions in the United States. The report is entitled "Sale-Leaseback Transactions: Price Premiums and Market Efficiency." An abstract of the paper is provided below. The entire paper can be downloaded here.
Sale-leaseback transactions are ubiquitous in real estate markets in the United States with annual volume estimated to be greater than $7 billion. However, there is no evidence concerning the price impact of such transactional arrangements. Using a data set of sale-leaseback transactions, this study examines the price impact on commercial property transactions across seven markets. The findings reveal that transactions structured as sale-leasebacks occur at significantly higher prices than market transactions. In addition, after accounting for income differentials, buyers and sellers are appropriately pricing the transactions resulting in no undue advantage to either party, that is, the expected price premium is accounted for in the sale-leaseback prices. Sphere: Related Content
C.F. Sirmans of Florida State University and Barrett A. Slade of Brigham Young University have just published a research paper in the current issue of The Journal of Real Estate Research on the pricing of sale leaseback transactions in the United States. The report is entitled "Sale-Leaseback Transactions: Price Premiums and Market Efficiency." An abstract of the paper is provided below. The entire paper can be downloaded here.
Sale-leaseback transactions are ubiquitous in real estate markets in the United States with annual volume estimated to be greater than $7 billion. However, there is no evidence concerning the price impact of such transactional arrangements. Using a data set of sale-leaseback transactions, this study examines the price impact on commercial property transactions across seven markets. The findings reveal that transactions structured as sale-leasebacks occur at significantly higher prices than market transactions. In addition, after accounting for income differentials, buyers and sellers are appropriately pricing the transactions resulting in no undue advantage to either party, that is, the expected price premium is accounted for in the sale-leaseback prices. Sphere: Related Content
Mesirow Forms CTL Lending Group
Private Placement Letter (via StructuredFinanceNews.com) - July 15, 2010
Mesirow Financial has hired industry veteran Stephen Jacobson to build and lead its credit tenant lease (CTL) team, the company said.
Jacobson serves as a senior managing director in the global markets group for the CTL product. He joins from William Blair, where he spent 15 years and established that firm's CTL group. Prior to his 20-year career at William Blair, Jacobson was involved in public finance, focused on the New England area.
Mesirow is in the process of building its own team and plans to have a minimum of four originators, Jacobson told ASR sister publication Private Placement Letter. These individuals will compliment the fixed-income sales and trading group, which is made up of 120 representatives. Mesirow is actively soliciting and attempting to gain CTL placement mandates, he said.
CTLs provide financing to owners of single tenant commercial properties located in the U.S. The loan is secured based on the underlying lease and the financed property. Furthermore, the tenants are investment-grade credits. The CTL market follows the schedule of the NAIC and does not extend credit to tenants rated less than 'BBB-', Jacobson said.
"The investment market for CTL placements is ripe due to lenders seeking higher yielding investment grade products," Jacobson said, which is one of the reasons Mesirow has started a CTL group. During 2007 and 2008, the CTL market lost business to CMBS.
After the decline of CMBS products, CTLs are once again gaining favor and are experiencing an increase in institutional demand, he said. Additionally, since CTL transactions are done via private placements, investors typically see higher yields than they do for public offerings of the same credits.
Chicago-based Mesirow Financial is a diversified financial services firm. It has in excess of $40 billion in assets under management and specializes in investment management, global markets, insurance services and consulting. Sphere: Related Content
Mesirow Financial has hired industry veteran Stephen Jacobson to build and lead its credit tenant lease (CTL) team, the company said.
Jacobson serves as a senior managing director in the global markets group for the CTL product. He joins from William Blair, where he spent 15 years and established that firm's CTL group. Prior to his 20-year career at William Blair, Jacobson was involved in public finance, focused on the New England area.
Mesirow is in the process of building its own team and plans to have a minimum of four originators, Jacobson told ASR sister publication Private Placement Letter. These individuals will compliment the fixed-income sales and trading group, which is made up of 120 representatives. Mesirow is actively soliciting and attempting to gain CTL placement mandates, he said.
CTLs provide financing to owners of single tenant commercial properties located in the U.S. The loan is secured based on the underlying lease and the financed property. Furthermore, the tenants are investment-grade credits. The CTL market follows the schedule of the NAIC and does not extend credit to tenants rated less than 'BBB-', Jacobson said.
"The investment market for CTL placements is ripe due to lenders seeking higher yielding investment grade products," Jacobson said, which is one of the reasons Mesirow has started a CTL group. During 2007 and 2008, the CTL market lost business to CMBS.
After the decline of CMBS products, CTLs are once again gaining favor and are experiencing an increase in institutional demand, he said. Additionally, since CTL transactions are done via private placements, investors typically see higher yields than they do for public offerings of the same credits.
Chicago-based Mesirow Financial is a diversified financial services firm. It has in excess of $40 billion in assets under management and specializes in investment management, global markets, insurance services and consulting. Sphere: Related Content
Credit Tenant Leases: The Phoenix Rises
Private Placement Letter (via StructuredFinanceNews.com) - July 23, 2010
CMBS' loss seems to be the credit tenant lease (CTL) market’s gain. The latter has shown robust growth in the face of the financial crisis and in its aftermath, mainly owing to the shutdown of the CMBS and conduit markets.
“The stars have been in alignment, and we did noticed that the CTL market was picking up steam in 2009,” said Michael Kalt, managing director and head of William Blair’s CTL group. The CTL market provides financing for investment-grade, single-tenant commercial real estate, where the loan is secured based on the underlying lease and the financed property.
These issuers, which normally would have turned to the CMBS and conduit markets, were left with limited options when the real estate bubble burst. The CTL market has also started to offer relatively attractive spreads and has become a more common form of funding than MBS, said Benjamin Harris, managing director and head of domestic investments at C.P. Carey.
Retail credit/tenants such as Walgreens, Home Depot, Lowes and CVS have participated in CTL deals. In June, alcoholic beverage company Diageo was involved in a $269 million deal, wherein a public REIT purchased a portfolio of vineyards from Diageo in a sale and leaseback and financed this with proceeds from a CTL transaction, Harris said. Federal, state and local governments, and not-for-profit health-care organizations have been getting more active in this market as well, Kalt added.
And the CTL market continues to flourish, because the other forms of financing it would normally compete against have yet to fully bounce back from the financial crisis. In addition to the CMBS market, banks and life insurance companies used to lend to these credit/tenants, but those forms of lending have yet to return to peak levels. Mortgage REITs also continue to suffer. Additionally, some specialty companies that were players in the CTL space have exited. GE Capital is one such example.
Holders of CTL paper also have some benefits over other securities, some say. “It is my argument that CTLs can be better than senior secured notes. Two years ago when liquidity evaporated it didn’t matter what you owned,” said Thomas Sargent, managing partner at Bostonia Global Securities. Furthermore, in the case of a bankruptcy, CTL paper often holds up better compared with senior unsecured notes, he added.
Kalt agreed, saying from an investor’s perspective a CTL investment allows for exposure to credit but still gives a secured interest in real estate. However, they also offer a lower debt service coverage ratios and from a liquidity perspective, CTL paper and plain vanilla private placements are about the same.
Furthermore, spreads on CTL deals are also attractive, sources agree. Yet, pricing one such transaction is not as simple as applying a constant spread over a comparable public bond issue, Kalt notes. In the CTL market, price boils down to industry, sector and credit, in addition to credit exposure on the buy side and the overall transaction structure. For instance, a healthcare 'AA' credit will be viewed differently from a government AA credit, or a corporate AA credit, he said. In the CTL market an NIAC-1 will not be price comparable across the spectrum of sectors.
Additionally, Harris said, pricing is driven by where the corporate bonds of a particular company are trading. These prices will also include an illiquidity premium of about 25 basis points or 50 basis points.
It is difficult to estimate the total volume of the CTL market because the deals are done through private placements, sources say. But they agree that issuance so far in 2010 has been higher than it was the year before. Sargent estimated issuance so far this year to be close to $3 billion. This market is always going to be small, primarily because the leases that get financed are long and “there is not a lot of long money out there,” he said. The transactions have maturities of about 15 years or more.
Since the market is small, there is a glut of certain names, which widens the spreads for these credits. Walgreens and CVS are two retailers that have a lot of CTL paper in the market, sources agreed.
Despite challenges like market saturation faced by some names, sources concur that the CTL market will continue to grow in the near term. Despite its credit sensitivity, this market is a good option for investment-grade issuers, especially while the conduit markets are still shaky. The signs of life in the CMBS market are visible, “But it’s not going to be like the go-go days of 2006-2007,” Kalt said. Sphere: Related Content
CMBS' loss seems to be the credit tenant lease (CTL) market’s gain. The latter has shown robust growth in the face of the financial crisis and in its aftermath, mainly owing to the shutdown of the CMBS and conduit markets.
“The stars have been in alignment, and we did noticed that the CTL market was picking up steam in 2009,” said Michael Kalt, managing director and head of William Blair’s CTL group. The CTL market provides financing for investment-grade, single-tenant commercial real estate, where the loan is secured based on the underlying lease and the financed property.
These issuers, which normally would have turned to the CMBS and conduit markets, were left with limited options when the real estate bubble burst. The CTL market has also started to offer relatively attractive spreads and has become a more common form of funding than MBS, said Benjamin Harris, managing director and head of domestic investments at C.P. Carey.
Retail credit/tenants such as Walgreens, Home Depot, Lowes and CVS have participated in CTL deals. In June, alcoholic beverage company Diageo was involved in a $269 million deal, wherein a public REIT purchased a portfolio of vineyards from Diageo in a sale and leaseback and financed this with proceeds from a CTL transaction, Harris said. Federal, state and local governments, and not-for-profit health-care organizations have been getting more active in this market as well, Kalt added.
And the CTL market continues to flourish, because the other forms of financing it would normally compete against have yet to fully bounce back from the financial crisis. In addition to the CMBS market, banks and life insurance companies used to lend to these credit/tenants, but those forms of lending have yet to return to peak levels. Mortgage REITs also continue to suffer. Additionally, some specialty companies that were players in the CTL space have exited. GE Capital is one such example.
Holders of CTL paper also have some benefits over other securities, some say. “It is my argument that CTLs can be better than senior secured notes. Two years ago when liquidity evaporated it didn’t matter what you owned,” said Thomas Sargent, managing partner at Bostonia Global Securities. Furthermore, in the case of a bankruptcy, CTL paper often holds up better compared with senior unsecured notes, he added.
Kalt agreed, saying from an investor’s perspective a CTL investment allows for exposure to credit but still gives a secured interest in real estate. However, they also offer a lower debt service coverage ratios and from a liquidity perspective, CTL paper and plain vanilla private placements are about the same.
Furthermore, spreads on CTL deals are also attractive, sources agree. Yet, pricing one such transaction is not as simple as applying a constant spread over a comparable public bond issue, Kalt notes. In the CTL market, price boils down to industry, sector and credit, in addition to credit exposure on the buy side and the overall transaction structure. For instance, a healthcare 'AA' credit will be viewed differently from a government AA credit, or a corporate AA credit, he said. In the CTL market an NIAC-1 will not be price comparable across the spectrum of sectors.
Additionally, Harris said, pricing is driven by where the corporate bonds of a particular company are trading. These prices will also include an illiquidity premium of about 25 basis points or 50 basis points.
It is difficult to estimate the total volume of the CTL market because the deals are done through private placements, sources say. But they agree that issuance so far in 2010 has been higher than it was the year before. Sargent estimated issuance so far this year to be close to $3 billion. This market is always going to be small, primarily because the leases that get financed are long and “there is not a lot of long money out there,” he said. The transactions have maturities of about 15 years or more.
Since the market is small, there is a glut of certain names, which widens the spreads for these credits. Walgreens and CVS are two retailers that have a lot of CTL paper in the market, sources agreed.
Despite challenges like market saturation faced by some names, sources concur that the CTL market will continue to grow in the near term. Despite its credit sensitivity, this market is a good option for investment-grade issuers, especially while the conduit markets are still shaky. The signs of life in the CMBS market are visible, “But it’s not going to be like the go-go days of 2006-2007,” Kalt said. Sphere: Related Content
Tuesday, July 20, 2010
W.P. Carey Seeks $3 Billion in Sale-Leaseback Deals in Europe
Bloomberg BusinessWeek - July 16, 2010
W.P. Carey & Co., owner of the New York Times Co.’s headquarters, plans to spend about $3 billion buying European properties and leasing them back to the sellers as more businesses divest real estate to raise money.
The company, which specializes in sale-and-leaseback deals, has about $1.5 billion of cash to invest in the region during the next three to five years, H. Cabot Lodge, head of Europe, said in an interview at the company’s London offices. It plans to borrow a similar amount over that period to help finance acquisitions, he said.
European companies are increasingly turning to sale- leaseback arrangements to raise cash as bank lending remains restricted, according to broker CB Richard Ellis Group Inc. By selling their shops, offices or warehouses, companies can use the proceeds to expand and stay in the buildings as tenants.
“Capital is still tight,” said Lodge, 54. “A lot of chief executives who said they would never sell their real estate are now being pushed into it.”
Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, raised 1.15 billion euros ($1.5 billion) in September by selling 948 of its branches. HSBC Holdings Plc sold its headquarters in London’s Canary Wharf financial district for 1.09 billion pounds ($1.7 billion) in April 2007.
W.P. Carey’s funds already own about $3 billion of properties in Europe and about $7 billion in the U.S. There is far more potential for sale-and-leasebacks in Europe than there is in America, Lodge said. Two-thirds of European businesses own their properties, compared with a third of U.S. companies, according to W.P. Carey.
CB Richard Ellis is advising about three times as many European landlords about raising money from their real estate as it was a year ago, said John Wilson, the broker’s London-based head of corporate strategies.
“They’re effectively short of working capital to restructure themselves for the upturn,” Wilson said in a telephone interview.
The value of European sale-and-leasebacks surged to 46 billion euros in 2007 from 6.9 billion euros in 2004, according to CB Richard Ellis. Such deals have made up about 20 percent of European real estate transactions since 2007, Wilson said.
W.P. Carey purchased two warehouses from Eroski, a Spanish supermarket chain, for $52 million last month, according to its website. The company’s biggest European deal was in 2007, when it bought a real estate unit and some debt from Hellweg, a German home-improvement company, for 335 million euros.
In March 2009, W.P. Carey bought the space occupied by the New York Times in its Manhattan headquarters for $225 million and leased it back to the newspaper group for 15 years. Sphere: Related Content
W.P. Carey & Co., owner of the New York Times Co.’s headquarters, plans to spend about $3 billion buying European properties and leasing them back to the sellers as more businesses divest real estate to raise money.
The company, which specializes in sale-and-leaseback deals, has about $1.5 billion of cash to invest in the region during the next three to five years, H. Cabot Lodge, head of Europe, said in an interview at the company’s London offices. It plans to borrow a similar amount over that period to help finance acquisitions, he said.
European companies are increasingly turning to sale- leaseback arrangements to raise cash as bank lending remains restricted, according to broker CB Richard Ellis Group Inc. By selling their shops, offices or warehouses, companies can use the proceeds to expand and stay in the buildings as tenants.
“Capital is still tight,” said Lodge, 54. “A lot of chief executives who said they would never sell their real estate are now being pushed into it.”
Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, raised 1.15 billion euros ($1.5 billion) in September by selling 948 of its branches. HSBC Holdings Plc sold its headquarters in London’s Canary Wharf financial district for 1.09 billion pounds ($1.7 billion) in April 2007.
W.P. Carey’s funds already own about $3 billion of properties in Europe and about $7 billion in the U.S. There is far more potential for sale-and-leasebacks in Europe than there is in America, Lodge said. Two-thirds of European businesses own their properties, compared with a third of U.S. companies, according to W.P. Carey.
CB Richard Ellis is advising about three times as many European landlords about raising money from their real estate as it was a year ago, said John Wilson, the broker’s London-based head of corporate strategies.
“They’re effectively short of working capital to restructure themselves for the upturn,” Wilson said in a telephone interview.
The value of European sale-and-leasebacks surged to 46 billion euros in 2007 from 6.9 billion euros in 2004, according to CB Richard Ellis. Such deals have made up about 20 percent of European real estate transactions since 2007, Wilson said.
W.P. Carey purchased two warehouses from Eroski, a Spanish supermarket chain, for $52 million last month, according to its website. The company’s biggest European deal was in 2007, when it bought a real estate unit and some debt from Hellweg, a German home-improvement company, for 335 million euros.
In March 2009, W.P. Carey bought the space occupied by the New York Times in its Manhattan headquarters for $225 million and leased it back to the newspaper group for 15 years. Sphere: Related Content
Mitchells & Butlers Agrees to £91 Million Sale Leaseback of 52 Budget Hotels in the UK
Morning Advertiser - July 15, 2010
Mitchells & Butlers, Britain's biggest managed pub group, has announced the sale of 52 budget hotels for £91m.
The deal, to Prupim includes the sale-and-leaseback of eight pubs that are inseparable from the adjacent accomodation properties, which are all branded as Innkeeper's Lodges.
Travelodge is expected to sign 25-year leases on the lodges from PRUPIM, a property investor, adding to 2,000 rooms to its business.
M&B has exchanged contracts with Prupim on 44 properties so far, with heads of terms in place for the remaining eight sites.
The 52 lodges generated earnings before interest and tax (EBIT) of £9.5m, equating to an EBIT multiple of 7.9 times. The value attached to the pubs that M&B is leasing back is £16m.
The sale of the lodges at £75m comes against a book value of £93m.
The eight pubs have been sold at an initial yield of 6.0%, meaning that M&B will pay annual rents totalling £960,000 — or £120,000 per pub.
The transactions with Travelodge and PRUPIM are expected to complete on 10 August 2010.
Adam Fowle, M&B's chief executive, said: "This transaction is in line with our strategy of disposing of the non-core assets and focusing the business on expanding the number of sites of our market leading restaurant and pub brands, which have significant growth potential." Sphere: Related Content
Mitchells & Butlers, Britain's biggest managed pub group, has announced the sale of 52 budget hotels for £91m.
The deal, to Prupim includes the sale-and-leaseback of eight pubs that are inseparable from the adjacent accomodation properties, which are all branded as Innkeeper's Lodges.
Travelodge is expected to sign 25-year leases on the lodges from PRUPIM, a property investor, adding to 2,000 rooms to its business.
M&B has exchanged contracts with Prupim on 44 properties so far, with heads of terms in place for the remaining eight sites.
The 52 lodges generated earnings before interest and tax (EBIT) of £9.5m, equating to an EBIT multiple of 7.9 times. The value attached to the pubs that M&B is leasing back is £16m.
The sale of the lodges at £75m comes against a book value of £93m.
The eight pubs have been sold at an initial yield of 6.0%, meaning that M&B will pay annual rents totalling £960,000 — or £120,000 per pub.
The transactions with Travelodge and PRUPIM are expected to complete on 10 August 2010.
Adam Fowle, M&B's chief executive, said: "This transaction is in line with our strategy of disposing of the non-core assets and focusing the business on expanding the number of sites of our market leading restaurant and pub brands, which have significant growth potential." Sphere: Related Content
NNSA Closes $687 Lease Financing of Manufacturing Facility in Kansas City
citybizlist.com - July 15, 2010
CGA Capital Corp. and affiliates have closed a $687 million structured lease-back financing that opens the door for the construction of a 1.5 million-square-foot manufacturing facility to serve as the National Security Campus for the National Nuclear Security Administration (NNSA). The $4.76 billion campus will be developed in Kansas City, Mo.
Baltimore-based CGA Capital was assisted by a team of attorneys from Ballard Spahr LLP, serving as exclusive financial adviser and structuring agent for the complex public-private venture, and was the sole arranger of the private placement of bonds through a venture with a privately held securities firm. CGA's efforts covered every aspect of devising and structuring the financing needed for the project, which will break ground in August.
The CGA team was led by managing directors and principals W. Kyle Gore and Richard A. Jacobs, and included Duncan Swanston and various principals at Bostonia Global Securities LLC. The Ballard Spahr team was led by Fred Wolf III and included Thomas A. Hauser, Charles R. Moran, Alan S. Ritterband, Benjamin A. Kelley, Michael T. Kersten, and Anna Mahaney.
The five-building campus will be the primary producer of nonnuclear mechanical, electronic, and engineered materials for the U.S. nuclear weapons arsenal and other national security missions. The transaction is secured with a 20-year credit-tenant lease with the U.S. General Services Administration. The near $5 billion cost includes design, construction, equipment and the lease. CenterPoint Zimmer LLC, an affiliate of Chicago-based CenterPoint Properties Trust, is the developer of the campus.
The NNSA currently operates in a World War II-era plant in Kansas City. The new campus, which will include a research facility, represents one of the largest commercial projects in the U.S.
The development site is a farm near the existing NNSA facilty. The acreage is owned by the Planned Industrial Expansion Authority of Kansas City. NNSA's operations at the project will be managed by Honeywell Federal Manufacturing & Technologies LLC, which operates the current facility.
The campus is slated for completion in 2014. It is one of the largest public-private GSA projects in its history, with estimates that 2,500 jobs will be created with the completion. Sphere: Related Content
CGA Capital Corp. and affiliates have closed a $687 million structured lease-back financing that opens the door for the construction of a 1.5 million-square-foot manufacturing facility to serve as the National Security Campus for the National Nuclear Security Administration (NNSA). The $4.76 billion campus will be developed in Kansas City, Mo.
Baltimore-based CGA Capital was assisted by a team of attorneys from Ballard Spahr LLP, serving as exclusive financial adviser and structuring agent for the complex public-private venture, and was the sole arranger of the private placement of bonds through a venture with a privately held securities firm. CGA's efforts covered every aspect of devising and structuring the financing needed for the project, which will break ground in August.
The CGA team was led by managing directors and principals W. Kyle Gore and Richard A. Jacobs, and included Duncan Swanston and various principals at Bostonia Global Securities LLC. The Ballard Spahr team was led by Fred Wolf III and included Thomas A. Hauser, Charles R. Moran, Alan S. Ritterband, Benjamin A. Kelley, Michael T. Kersten, and Anna Mahaney.
The five-building campus will be the primary producer of nonnuclear mechanical, electronic, and engineered materials for the U.S. nuclear weapons arsenal and other national security missions. The transaction is secured with a 20-year credit-tenant lease with the U.S. General Services Administration. The near $5 billion cost includes design, construction, equipment and the lease. CenterPoint Zimmer LLC, an affiliate of Chicago-based CenterPoint Properties Trust, is the developer of the campus.
The NNSA currently operates in a World War II-era plant in Kansas City. The new campus, which will include a research facility, represents one of the largest commercial projects in the U.S.
The development site is a farm near the existing NNSA facilty. The acreage is owned by the Planned Industrial Expansion Authority of Kansas City. NNSA's operations at the project will be managed by Honeywell Federal Manufacturing & Technologies LLC, which operates the current facility.
The campus is slated for completion in 2014. It is one of the largest public-private GSA projects in its history, with estimates that 2,500 jobs will be created with the completion. Sphere: Related Content
Kesko Agrees to EUR 107.5 Million Sale Leaseback of Ten Properties
Kesko Website - July 1, 2010
Kesko has today made an agreement on the sale of ten properties with Ilmarinen Mutual Pension Insurance Company and Kruunuvuoren Satama Oy, a joint venture established by Ilmarinen, the Kesko Pension Fund and Kesko Corporation. The debt-free selling price of the properties totalled €107.5 million and Kesko will recognise the total gain of €47.4 million on their sale. In the same connection, the Kesko Pension Fund sold seven retail store properties owned by it to Kruunuvuoren Satama Oy.
According to the agreements made today, Kesko sold eight retail store properties used by the Kesko Group to Kruunuvuoren Satama Oy. In addition, Kesko sold two other properties to Ilmarinen today. The €47.4 million gain on the sale of the properties will be treated as a non-recurring item in Kesko's operating profit for the third quarter of the year, with the exception of a non-recurring €2.3 million gain on the sale, which will be recognised for the fourth quarter.
Kesko Group companies leased the properties sold by Kesko to the joint venture and Ilmarinen for the Kesko Group companies' use mainly on 15-year leases with extension options. Kesko Group's lease liabilities for the real estate covered by these leases amount to some €63 million. At the same time, Kesko Group companies also leased from Kruunuvuoren Satama Oy the retail store properties it had bought from the Kesko Pension Fund under similar terms. The total lease liabilities of the Kesko Group on properties used by it increase by some €120 million. Lease liabilities are not classified as finance leases.
A separate stock exchange release has been published today on the establishment of the joint venture, Kruunuvuoren Satama Oy. Sphere: Related Content
Kesko has today made an agreement on the sale of ten properties with Ilmarinen Mutual Pension Insurance Company and Kruunuvuoren Satama Oy, a joint venture established by Ilmarinen, the Kesko Pension Fund and Kesko Corporation. The debt-free selling price of the properties totalled €107.5 million and Kesko will recognise the total gain of €47.4 million on their sale. In the same connection, the Kesko Pension Fund sold seven retail store properties owned by it to Kruunuvuoren Satama Oy.
According to the agreements made today, Kesko sold eight retail store properties used by the Kesko Group to Kruunuvuoren Satama Oy. In addition, Kesko sold two other properties to Ilmarinen today. The €47.4 million gain on the sale of the properties will be treated as a non-recurring item in Kesko's operating profit for the third quarter of the year, with the exception of a non-recurring €2.3 million gain on the sale, which will be recognised for the fourth quarter.
Kesko Group companies leased the properties sold by Kesko to the joint venture and Ilmarinen for the Kesko Group companies' use mainly on 15-year leases with extension options. Kesko Group's lease liabilities for the real estate covered by these leases amount to some €63 million. At the same time, Kesko Group companies also leased from Kruunuvuoren Satama Oy the retail store properties it had bought from the Kesko Pension Fund under similar terms. The total lease liabilities of the Kesko Group on properties used by it increase by some €120 million. Lease liabilities are not classified as finance leases.
A separate stock exchange release has been published today on the establishment of the joint venture, Kruunuvuoren Satama Oy. Sphere: Related Content
Tuesday, July 13, 2010
Stag Capital & GI Partners Form $200 Million Net Lease Investment JV
The Business Journal of the Greater Triad Area - July 12, 2010
Stag Capital Partners and GI Partners said Monday they plan to invest up to $200 million to acquire individual single-tenant net leased industrial properties throughout the United States.
Menlo Park-based GI concentrates on investments in asset-intensive middle-market businesses and properties in North America and Western Europe.
Boston-based Stag said the new venture will continue strategy to acquire and manage assets predominately located in secondary markets with purchase prices ranging from $5 million to $20 million.
Property types sought include warehouse, flex, and manufacturing buildings. STAG has used more than $1.2 billion of capital to acquire more than 200 properties since 2003.
GI Partners said it will invest in the venture through GI Partners Fund III L.P., which has $1.9 billion of capital commitments from leading institutional private equity and real estate investors. Sphere: Related Content
Stag Capital Partners and GI Partners said Monday they plan to invest up to $200 million to acquire individual single-tenant net leased industrial properties throughout the United States.
Menlo Park-based GI concentrates on investments in asset-intensive middle-market businesses and properties in North America and Western Europe.
Boston-based Stag said the new venture will continue strategy to acquire and manage assets predominately located in secondary markets with purchase prices ranging from $5 million to $20 million.
Property types sought include warehouse, flex, and manufacturing buildings. STAG has used more than $1.2 billion of capital to acquire more than 200 properties since 2003.
GI Partners said it will invest in the venture through GI Partners Fund III L.P., which has $1.9 billion of capital commitments from leading institutional private equity and real estate investors. Sphere: Related Content
Monday, July 12, 2010
Qantas Agrees to $169 Million Sale Leaseback of Global HQ in Sydney
The Australian - July 13, 2010
The Brisbane-based REIT has agreed to pay $143m for the 50,000 sq m building and an extra $26m to fund an office fit-out in a trade-off for a 10-year Qantas office leaseback.
The purchase, less than a week after the $600m Cromwell Group dropped out of the bidding for Melbourne's troubled Orchard Funds Management business, involves both the freehold and leasehold of the Mascot complex.
Qantas owns the freehold of the 203 Coward Street property while the leasehold -- bought by an Allco syndicate for around $150m a decade ago -- is controlled by the Trafalgar-managed Sydney Airport Centre Joint Venture.
Cromwell, which yesterday announced a placement and rights issue to raise up to $120m, will use $85m from the capital raising and an $84m debt facility to fund the Qantas acquisition. Its equity raising involves an institutional placement to raise between $52m and $80m at 75c, with the balance coming from a 72c rights issue. Sphere: Related Content
The Brisbane-based REIT has agreed to pay $143m for the 50,000 sq m building and an extra $26m to fund an office fit-out in a trade-off for a 10-year Qantas office leaseback.
The purchase, less than a week after the $600m Cromwell Group dropped out of the bidding for Melbourne's troubled Orchard Funds Management business, involves both the freehold and leasehold of the Mascot complex.
Qantas owns the freehold of the 203 Coward Street property while the leasehold -- bought by an Allco syndicate for around $150m a decade ago -- is controlled by the Trafalgar-managed Sydney Airport Centre Joint Venture.
Cromwell, which yesterday announced a placement and rights issue to raise up to $120m, will use $85m from the capital raising and an $84m debt facility to fund the Qantas acquisition. Its equity raising involves an institutional placement to raise between $52m and $80m at 75c, with the balance coming from a 72c rights issue. Sphere: Related Content
Thursday, July 08, 2010
AIB Agrees to EUR 28 Million Sale Leaseback of Bank Branch in Dublin
The Irish Times - July 7, 2010
The German fund manager GLL Real Estate has emerged as the new owner of the AIB bank branch on Grafton Street, Dublin 2, which is to be leased back to the bank for a period of 20 years. The investment, costing almost €28 million, will show a net yield of 6 per cent.
GLL’s first incursion into the Irish market will be welcomed by the investment sector where activity has been at a virtual standstill for two years because of the banking crisis and the collapse in property values. There have been relatively few overseas buyers in the Dublin market over the years because of the widely held perception that investment properties were for a long time seriously overvalued.
That view has changed with the recent fall in values by up to 50 per cent. GLL’s high profile in the European and US property markets is expected to trigger further European interest in the Dublin market once the sale of a range of distressed property investments gets under way later this year.
Colm Luddy of CB Richard Ellis, who handled the sale for AIB, said yesterday that the dramatic fall in prices may well be at an end as illustrated by the 6 per cent yield in this case.
Earlier this year, Boodles store on Grafton Street was sold at a yield of 6.35 per cent and a year earlier another German fund, DekaBank, settled for a return of 6.4 per cent when buying the Tommy Hilfiger store.
Luddy said the higher yields were atttacting a lot of international interest but “deal flow” was proving slow. He expected more assets to come on the market as capital would be required to complete developments going into Nama.
John Moran, managing director of Jones Lang LaSalle, said that with the bedding down of the Nama process, they were starting to notice a loosening up in the investment market.
While this had not translated into significant transactional activity yet, there was sufficient evidence around to support a view that liquidity levels should improve from September onwards. It was particularly noticeable that there were a number of new foreign entities that were trying to acquire trophy assets or, alternatively, looking to take advantage of some distressed situations.
Jonathan Hillier of Dublin agency HWBC advised GLL Real Estate. Sphere: Related Content
The German fund manager GLL Real Estate has emerged as the new owner of the AIB bank branch on Grafton Street, Dublin 2, which is to be leased back to the bank for a period of 20 years. The investment, costing almost €28 million, will show a net yield of 6 per cent.
GLL’s first incursion into the Irish market will be welcomed by the investment sector where activity has been at a virtual standstill for two years because of the banking crisis and the collapse in property values. There have been relatively few overseas buyers in the Dublin market over the years because of the widely held perception that investment properties were for a long time seriously overvalued.
That view has changed with the recent fall in values by up to 50 per cent. GLL’s high profile in the European and US property markets is expected to trigger further European interest in the Dublin market once the sale of a range of distressed property investments gets under way later this year.
Colm Luddy of CB Richard Ellis, who handled the sale for AIB, said yesterday that the dramatic fall in prices may well be at an end as illustrated by the 6 per cent yield in this case.
Earlier this year, Boodles store on Grafton Street was sold at a yield of 6.35 per cent and a year earlier another German fund, DekaBank, settled for a return of 6.4 per cent when buying the Tommy Hilfiger store.
Luddy said the higher yields were atttacting a lot of international interest but “deal flow” was proving slow. He expected more assets to come on the market as capital would be required to complete developments going into Nama.
John Moran, managing director of Jones Lang LaSalle, said that with the bedding down of the Nama process, they were starting to notice a loosening up in the investment market.
While this had not translated into significant transactional activity yet, there was sufficient evidence around to support a view that liquidity levels should improve from September onwards. It was particularly noticeable that there were a number of new foreign entities that were trying to acquire trophy assets or, alternatively, looking to take advantage of some distressed situations.
Jonathan Hillier of Dublin agency HWBC advised GLL Real Estate. Sphere: Related Content
Tuesday, July 06, 2010
DuGan Departs WP Carey
Wall Street Journal - July 6, 2010
Real-estate investment firm W.P. Carey & Co. LLC (WPC) said Chief Executive Gordon DuGan has resigned after clashing with Chairman Wm. Polk Carey about the direction of the company and Carey's "authority and control" of it.
Board member Trevor Bond was named interim CEO while the company also announced the acting tag was taken off of Chief Financial Officer Mark DeCesaris after nearly five years. Since November 2005, he was acting CFO as well as chief administrative officer.
The changes come as W.P. Carey has seen generally lower results in recent quarters as some investors in the real-estate space are looking to take advantage of a perceived undervaluation of some assets in the wake of tumbling property prices. The company provides long-term sale- leaseback and build-to-suit financing for companies worldwide and manages a global investment portfolio approaching $10 billion.
"Though Gordon and I have not been strategically aligned in the recent years, I remain an admirer of his abundant investment management and general business talent," said Carey.
DuGan added, "I am gratified that I leave the company as it is performing well and in a solid financial position. I wish the company well in the future." He became co-CEO in 2002 after joining the company in 1988 as an assistant to Carey and became ole CEO in 2005.
Bond joined W.P. Carey's board in 2007 and has spent a quarter-century in the real-estate business, including stints at Maidstone Investment Co. LLC, Credit Suisse Group (CS) and Goldman Sachs Group Inc. (GS). Sphere: Related Content
Real-estate investment firm W.P. Carey & Co. LLC (WPC) said Chief Executive Gordon DuGan has resigned after clashing with Chairman Wm. Polk Carey about the direction of the company and Carey's "authority and control" of it.
Board member Trevor Bond was named interim CEO while the company also announced the acting tag was taken off of Chief Financial Officer Mark DeCesaris after nearly five years. Since November 2005, he was acting CFO as well as chief administrative officer.
The changes come as W.P. Carey has seen generally lower results in recent quarters as some investors in the real-estate space are looking to take advantage of a perceived undervaluation of some assets in the wake of tumbling property prices. The company provides long-term sale- leaseback and build-to-suit financing for companies worldwide and manages a global investment portfolio approaching $10 billion.
"Though Gordon and I have not been strategically aligned in the recent years, I remain an admirer of his abundant investment management and general business talent," said Carey.
DuGan added, "I am gratified that I leave the company as it is performing well and in a solid financial position. I wish the company well in the future." He became co-CEO in 2002 after joining the company in 1988 as an assistant to Carey and became ole CEO in 2005.
Bond joined W.P. Carey's board in 2007 and has spent a quarter-century in the real-estate business, including stints at Maidstone Investment Co. LLC, Credit Suisse Group (CS) and Goldman Sachs Group Inc. (GS). Sphere: Related Content
Friday, July 02, 2010
Land Securities London HQ Listed for Sale
Mellersh & Harding Website - June 25, 2010
A London commercial property has been placed on the market by a private investor just months after it was purchased in a bid to capitalise on the improving conditions.
Number 5 Strand, close to Trafalgar Square, bought last summer for £44 million, is up for sale for £53 million, according to Property Week, which states the vendor is 'flipping' it.
The building is fully let to Land Securities, which is using it as its headquarters, as well as Boots, which recently signed a new lease for a current retail outlet.
Foreign investors have been moving in on the capital in recent months thanks to the exchange rate and potential returns promised by the West End office and City of London prime assets. Sphere: Related Content
A London commercial property has been placed on the market by a private investor just months after it was purchased in a bid to capitalise on the improving conditions.
Number 5 Strand, close to Trafalgar Square, bought last summer for £44 million, is up for sale for £53 million, according to Property Week, which states the vendor is 'flipping' it.
The building is fully let to Land Securities, which is using it as its headquarters, as well as Boots, which recently signed a new lease for a current retail outlet.
Foreign investors have been moving in on the capital in recent months thanks to the exchange rate and potential returns promised by the West End office and City of London prime assets. Sphere: Related Content
Macy's Ponders Sale Leaseback of Landmark Store in Pittsburgh
Pittsburgh Post-Gazette - July 1, 2010
The Macy's building, the Downtown landmark that has hosted generations of shoppers and numerous meetings under its famous clock, is up for sale.
But the store itself isn't going anywhere.
Jim Sluzewski, Macy's spokesman, confirmed Wednesday that the retailer has put the 13-story building at the intersection of Fifth Avenue and Smithfield Street on the market.
"Right now, we're exploring and seeing what interest there might be," he said.
The building, which for decades housed the Kaufmann's department store, joins the growing number of Downtown properties on the sales block, including the Gateway Center complex, the Henry W. Oliver Building and the Regional Enterprise Tower, formerly known as the Alcoa Building.
Even with a sale, Macy's department store would remain inside the building under a lease-back arrangement, Mr. Sluzewski said. The structure also would continue to house the retailer's Midwest region headquarters and district offices. "Our intention is to keep both there," he said.
However, he added that depending on the needs of the buyer, Macy's could end up consolidating the store's retail space within the building. Mr. Sluzewski said the building has about three times the amount of retail space of a typical suburban store. Macy's uses 10 floors for retail sales and part of the 11th for office space. The two highest floors are vacant.
"The store currently has probably more space than current traffic patterns require," he said. "We could reduce the number of floors the store is on. It all depends on what the need is and the interest is."
Mr. Sluzewski said a sale would have no impact on traditions like the department store's Christmas window display.
Macy's gained control of the building in the 2005 acquisition of May Department Stores, the former Kaufmann's owner. May paid $2.8 million for the real estate in 1986, according to the Allegheny County website. The property currently is assessed at $14 million.
In putting the building on the market, Mr. Sluzewski said, Macy's is seeking to capitalize on the redevelopment and stable real estate market Downtown.
"It really is a function of the tremendous energy and activity in Downtown Pittsburgh," he said. "We thought this would be a good time to see what expressions of interest there are."
Macy's is interested in one of two alternatives: Selling the building outright and leasing back portions of it or finding a tenant with an interest in leasing space while Macy's would maintain ownership.
The building has a long and rich history Downtown dating to the latter 1800s when the Kaufmann family opened a store at Smithfield and Diamond Alley (now Forbes Avenue). The store expanded rapidly, eventually occupying Smithfield between Forbes and Fifth. By 1913, the building in its current form existed.
Herky Pollock, an executive vice president for real estate brokerage CB Richard Ellis/Pittsburgh, said he sees the sale of the building as a way for Macy's to put its money to better use in operations or merchandising rather than having it tied up in real estate.
"It would also give them the opportunity at some point to downsize as they currently do not utilize their full building," he said.
Mr. Pollock sees potential interest in the building from local investors and developers as well as national public or private real estate investment trusts. He estimated the worth of the building at $25 to $30 a square foot, which would put a sale at $30 million to $35 million.
Mr. Sluzewski said no asking price for the building has been set. The Pittsburgh building, he said, is the only one Macy's is putting up for sale right now.
Tom Sullivan, a commercial broker for Pennsylvania Commercial Real Estate, said a possible sale of the building had been rumored for a while. He thinks Macy's is trying to cut operating costs.
"They use way too much space in the building. The operation costs have to be a killer. I would guess the building operates at a loss," he said.
While Mr. Pollock sees the numerous buildings for sale Downtown as the sign of a robust real estate market, Mr. Sullivan has a different view. He believes the owners see occupancy and lease rates declining in the future because of a prolonged recession and are trying to capitalize while they can.
"These people are getting out while the getting's good, in my opinion," he said. Sphere: Related Content
The Macy's building, the Downtown landmark that has hosted generations of shoppers and numerous meetings under its famous clock, is up for sale.
But the store itself isn't going anywhere.
Jim Sluzewski, Macy's spokesman, confirmed Wednesday that the retailer has put the 13-story building at the intersection of Fifth Avenue and Smithfield Street on the market.
"Right now, we're exploring and seeing what interest there might be," he said.
The building, which for decades housed the Kaufmann's department store, joins the growing number of Downtown properties on the sales block, including the Gateway Center complex, the Henry W. Oliver Building and the Regional Enterprise Tower, formerly known as the Alcoa Building.
Even with a sale, Macy's department store would remain inside the building under a lease-back arrangement, Mr. Sluzewski said. The structure also would continue to house the retailer's Midwest region headquarters and district offices. "Our intention is to keep both there," he said.
However, he added that depending on the needs of the buyer, Macy's could end up consolidating the store's retail space within the building. Mr. Sluzewski said the building has about three times the amount of retail space of a typical suburban store. Macy's uses 10 floors for retail sales and part of the 11th for office space. The two highest floors are vacant.
"The store currently has probably more space than current traffic patterns require," he said. "We could reduce the number of floors the store is on. It all depends on what the need is and the interest is."
Mr. Sluzewski said a sale would have no impact on traditions like the department store's Christmas window display.
Macy's gained control of the building in the 2005 acquisition of May Department Stores, the former Kaufmann's owner. May paid $2.8 million for the real estate in 1986, according to the Allegheny County website. The property currently is assessed at $14 million.
In putting the building on the market, Mr. Sluzewski said, Macy's is seeking to capitalize on the redevelopment and stable real estate market Downtown.
"It really is a function of the tremendous energy and activity in Downtown Pittsburgh," he said. "We thought this would be a good time to see what expressions of interest there are."
Macy's is interested in one of two alternatives: Selling the building outright and leasing back portions of it or finding a tenant with an interest in leasing space while Macy's would maintain ownership.
The building has a long and rich history Downtown dating to the latter 1800s when the Kaufmann family opened a store at Smithfield and Diamond Alley (now Forbes Avenue). The store expanded rapidly, eventually occupying Smithfield between Forbes and Fifth. By 1913, the building in its current form existed.
Herky Pollock, an executive vice president for real estate brokerage CB Richard Ellis/Pittsburgh, said he sees the sale of the building as a way for Macy's to put its money to better use in operations or merchandising rather than having it tied up in real estate.
"It would also give them the opportunity at some point to downsize as they currently do not utilize their full building," he said.
Mr. Pollock sees potential interest in the building from local investors and developers as well as national public or private real estate investment trusts. He estimated the worth of the building at $25 to $30 a square foot, which would put a sale at $30 million to $35 million.
Mr. Sluzewski said no asking price for the building has been set. The Pittsburgh building, he said, is the only one Macy's is putting up for sale right now.
Tom Sullivan, a commercial broker for Pennsylvania Commercial Real Estate, said a possible sale of the building had been rumored for a while. He thinks Macy's is trying to cut operating costs.
"They use way too much space in the building. The operation costs have to be a killer. I would guess the building operates at a loss," he said.
While Mr. Pollock sees the numerous buildings for sale Downtown as the sign of a robust real estate market, Mr. Sullivan has a different view. He believes the owners see occupancy and lease rates declining in the future because of a prolonged recession and are trying to capitalize while they can.
"These people are getting out while the getting's good, in my opinion," he said. Sphere: Related Content
Goldman Sachs London HQ Listed for Sale
Irish Independent - June 11, 2010
Several prominent businessmen are set to get a cash injection following news that the consortium that bought the Goldman Sachs headquarters in London for €370m 10 years ago have put the building up for sale again.
The consortium is believed to be looking to recoup the amount they paid for the Fleet Street building when they bought it in 2000 in a landmark deal which heralded the arrival of the Irish as a force in the London property market.
The former 'Daily Express' building was bought by Green Property and a group of Irish investors put together by Kevin Warren.
Those who backed the original investment through the Isle of Man-based River Court include beef baron Larry Goodman, former DCC boss Jim Flavin, Kingspan founder Eugene Murtagh, Fexco's Brian McCarthy, former 'Kilkenny People' owner John Kerry Keane, Galway businessman Donogh O'Donoghue and builder Sean McKeon. Sphere: Related Content
Several prominent businessmen are set to get a cash injection following news that the consortium that bought the Goldman Sachs headquarters in London for €370m 10 years ago have put the building up for sale again.
The consortium is believed to be looking to recoup the amount they paid for the Fleet Street building when they bought it in 2000 in a landmark deal which heralded the arrival of the Irish as a force in the London property market.
The former 'Daily Express' building was bought by Green Property and a group of Irish investors put together by Kevin Warren.
Those who backed the original investment through the Isle of Man-based River Court include beef baron Larry Goodman, former DCC boss Jim Flavin, Kingspan founder Eugene Murtagh, Fexco's Brian McCarthy, former 'Kilkenny People' owner John Kerry Keane, Galway businessman Donogh O'Donoghue and builder Sean McKeon. Sphere: Related Content
Thursday, July 01, 2010
Altarea Cogedim Enters $140 Million Sale Leaseback of Paris Hotel
Reuters - July 1, 2010
Germany's Deka open-ended mutual property fund said on Thursday it has acquired a hotel in Paris for 114 million euros ($140 million) in a sale-and-leaseback agreement with French developer Altarea Cogedim (IMAF.PA).
The 118-room Hotel Renaissance Arc de Triomphe, near the Paris landmark, will be leased long term to Altarea, and managed by hotels operator Marriott International (MAR.N), Deka said in a statement.
Deka's parent, DekaBank, Germany's largest manager of open-ended property funds, said last month it plans 2 billion euros worth of property buys globally this year, focused on safer, more liquid markets. Sphere: Related Content
Germany's Deka open-ended mutual property fund said on Thursday it has acquired a hotel in Paris for 114 million euros ($140 million) in a sale-and-leaseback agreement with French developer Altarea Cogedim (IMAF.PA).
The 118-room Hotel Renaissance Arc de Triomphe, near the Paris landmark, will be leased long term to Altarea, and managed by hotels operator Marriott International (MAR.N), Deka said in a statement.
Deka's parent, DekaBank, Germany's largest manager of open-ended property funds, said last month it plans 2 billion euros worth of property buys globally this year, focused on safer, more liquid markets. Sphere: Related Content
Wednesday, June 30, 2010
Tesco Nearing $1.4 Billion Sale Leaseback of 41 Supermarkets Across UK
Reuters - June 29, 2010
Supermarket group Tesco Plc (TSCO.L) plans to sell a 30-year benchmark sterling bond backed by rents generated by a portfolio of its supermarkets, an official at one of the banks managing the deal said on Tuesday.
HSBC and Goldman Sachs are managing the (30-year) sale and leaseback deal, which will be issued via Tesco Property Finance 3, the official said.
News of the proposed deal comes less than a year after the blue chip retailer tapped 565 million pounds from the sale of a similar batch of property-backed bonds in September.
That sale followed a similar deal in June 2009, which raised 431 million pounds.
Moody's Investors Service assigned a provisional A3 rating to the bonds, which it expects to total 950.15 million pounds, although the official said the final size had yet to be determined.
The bonds are due to mature in April 2040 and would be supported by a portfolio of 41 supermarkets across the UK, Moody's said.
The proposed issue would have a slightly lower total leverage based on the expected issuance amount compared with its previous deals, it added.
"In addition, in this transaction, the tenant has an option to terminate the occupational leases in September 2020 subject to certain conditions in the lease agreements being fulfilled," said Moody's.
Standard & Poor's and Fitch are expected to rate the bond at A-, the official said.
Moody's has estimated the market value of the portfolio at 853.1 million pounds, taking into account the break option of the leases in September 2020.
(NOTE: Sources indicate the 10-year lease break clause is all or none, the initial unlevered yield on the sale leaseback is 5.0%, and the 30-year fully-amortizing bonds sold for around 170 basis points over 30-year gilts (+/- 4.20% + 1.70% = 5.90%.) Sphere: Related Content
Supermarket group Tesco Plc (TSCO.L) plans to sell a 30-year benchmark sterling bond backed by rents generated by a portfolio of its supermarkets, an official at one of the banks managing the deal said on Tuesday.
HSBC and Goldman Sachs are managing the (30-year) sale and leaseback deal, which will be issued via Tesco Property Finance 3, the official said.
News of the proposed deal comes less than a year after the blue chip retailer tapped 565 million pounds from the sale of a similar batch of property-backed bonds in September.
That sale followed a similar deal in June 2009, which raised 431 million pounds.
Moody's Investors Service assigned a provisional A3 rating to the bonds, which it expects to total 950.15 million pounds, although the official said the final size had yet to be determined.
The bonds are due to mature in April 2040 and would be supported by a portfolio of 41 supermarkets across the UK, Moody's said.
The proposed issue would have a slightly lower total leverage based on the expected issuance amount compared with its previous deals, it added.
"In addition, in this transaction, the tenant has an option to terminate the occupational leases in September 2020 subject to certain conditions in the lease agreements being fulfilled," said Moody's.
Standard & Poor's and Fitch are expected to rate the bond at A-, the official said.
Moody's has estimated the market value of the portfolio at 853.1 million pounds, taking into account the break option of the leases in September 2020.
(NOTE: Sources indicate the 10-year lease break clause is all or none, the initial unlevered yield on the sale leaseback is 5.0%, and the 30-year fully-amortizing bonds sold for around 170 basis points over 30-year gilts (+/- 4.20% + 1.70% = 5.90%.) Sphere: Related Content
Saturday, June 26, 2010
Diagio Completes $269 Million Sale Leaseback of Napa Valley Wineries
The Press Democrat - June 24, 2010
One of the largest California wine deals in years was announced Thursday, not that wine drinkers will ever taste the difference.
Diageo, the London-based alcohol conglomerate, revealed that it is selling most of its Napa Valley wineries and vineyards to an investment firm for $269 million, and then turning around and leasing them back for 20 years.
The sale-leaseback arrangement between Diageo and Realty Income Corp., an Escondido-based real estate investment trust, is the largest such transaction in the U.S. wine business, one that will help Diageo raise cash without impacting its wine operations, said industry analyst Robert Nicholson.
“It's a very meaningful development and it's a very smart move by Diageo,” said Nicholson, a principal at International Wine Associates, a Healdsburg consulting firm
The deal involves two of the best known Napa wineries. The historic Beaulieu Vineyards was founded in 1900 in Rutherford and, under the guidance of the famed viticulturalist André Tchelistcheff, helped spawn the valley's fine-wine renaissance.
Sterling Vineyards, the white stucco winery on a bluff south of Calistoga, was founded in 1964 by British international paper broker Peter Newton and has become one of Napa Valley's most popular tourist destinations.
Diageo Chateau & Estate Wines will continue to manage and operate the properties and will retain ownership and marketing of the wine brands. In return, it will enter into 20-leases for the buildings and 2,000 acres of vineyards. When completed, Diageo will become Realty Income's second-biggest tenant.
The transaction allows Diageo, which has struggled during the recession, to raise cash and increase returns for shareholders.
“We know that to remain competitive in this environment we need to rethink our whole wine business to be more nimble and entrepreneurial,” said Zsoka McDonald, a company spokeswoman. “This is about ensuring the long-term strength of our North America wine business and the health of our core wine brands.”
Diageo's wine and spirits portfolios tend toward the high-end, and it has been hit hard as the alcohol business has proven to be less recession-proof than many thought. It owns such powerhouse brands as Johnnie Walker whiskey, Smirnoff vodka and Guinness stout.
Its wine sales fell 7 percent in 2009. The company announced in May it was restructuring U.S. wine operations, laying off about 14 percent of its workforce and would focus on core wine brands, including Beaulieu Vineyard, Sterling Vineyards, Chalone, Acacia, Rosenblum Cellars and Provenance.
The chief benefit for Diageo is that is can raise cash while paying reasonable leases on the properties, said Joe Ciatti, of Zepponi & Company of Santa Rosa.
“Diageo's saying ‘We've got these wine assets that really don't produce a lot of return for us, and it's better for us to sell those off,' ” Ciatti said.
He said he understood the leases would generate a 6 percent return for Realty Income Corp., a conservative return, he said.
Ciatti ran his own wine industry focused REIT, Vintage Wine Trust, from 2005 to 2008, when he was forced to liquidate it because the returns weren't what investors had hoped.
VinREIT in St. Helena is facing challenges, as well, with several of its properties facing foreclosure.
Nicholson, however, said this deal should work well for Realty Income Corp because it got great properties with a tenant that isn't going anywhere.
“This REIT is smart. They know what they are doing and got some blue-chip assets,” he said.
And wine consumers, whether visiting the Napa tasting rooms or buying the wines in supermarkets, won't notice a difference, Nicholson said.
“This is the same as the way Marriott doesn't own their hotels,” Nicholson said. Sphere: Related Content
One of the largest California wine deals in years was announced Thursday, not that wine drinkers will ever taste the difference.
Diageo, the London-based alcohol conglomerate, revealed that it is selling most of its Napa Valley wineries and vineyards to an investment firm for $269 million, and then turning around and leasing them back for 20 years.
The sale-leaseback arrangement between Diageo and Realty Income Corp., an Escondido-based real estate investment trust, is the largest such transaction in the U.S. wine business, one that will help Diageo raise cash without impacting its wine operations, said industry analyst Robert Nicholson.
“It's a very meaningful development and it's a very smart move by Diageo,” said Nicholson, a principal at International Wine Associates, a Healdsburg consulting firm
The deal involves two of the best known Napa wineries. The historic Beaulieu Vineyards was founded in 1900 in Rutherford and, under the guidance of the famed viticulturalist André Tchelistcheff, helped spawn the valley's fine-wine renaissance.
Sterling Vineyards, the white stucco winery on a bluff south of Calistoga, was founded in 1964 by British international paper broker Peter Newton and has become one of Napa Valley's most popular tourist destinations.
Diageo Chateau & Estate Wines will continue to manage and operate the properties and will retain ownership and marketing of the wine brands. In return, it will enter into 20-leases for the buildings and 2,000 acres of vineyards. When completed, Diageo will become Realty Income's second-biggest tenant.
The transaction allows Diageo, which has struggled during the recession, to raise cash and increase returns for shareholders.
“We know that to remain competitive in this environment we need to rethink our whole wine business to be more nimble and entrepreneurial,” said Zsoka McDonald, a company spokeswoman. “This is about ensuring the long-term strength of our North America wine business and the health of our core wine brands.”
Diageo's wine and spirits portfolios tend toward the high-end, and it has been hit hard as the alcohol business has proven to be less recession-proof than many thought. It owns such powerhouse brands as Johnnie Walker whiskey, Smirnoff vodka and Guinness stout.
Its wine sales fell 7 percent in 2009. The company announced in May it was restructuring U.S. wine operations, laying off about 14 percent of its workforce and would focus on core wine brands, including Beaulieu Vineyard, Sterling Vineyards, Chalone, Acacia, Rosenblum Cellars and Provenance.
The chief benefit for Diageo is that is can raise cash while paying reasonable leases on the properties, said Joe Ciatti, of Zepponi & Company of Santa Rosa.
“Diageo's saying ‘We've got these wine assets that really don't produce a lot of return for us, and it's better for us to sell those off,' ” Ciatti said.
He said he understood the leases would generate a 6 percent return for Realty Income Corp., a conservative return, he said.
Ciatti ran his own wine industry focused REIT, Vintage Wine Trust, from 2005 to 2008, when he was forced to liquidate it because the returns weren't what investors had hoped.
VinREIT in St. Helena is facing challenges, as well, with several of its properties facing foreclosure.
Nicholson, however, said this deal should work well for Realty Income Corp because it got great properties with a tenant that isn't going anywhere.
“This REIT is smart. They know what they are doing and got some blue-chip assets,” he said.
And wine consumers, whether visiting the Napa tasting rooms or buying the wines in supermarkets, won't notice a difference, Nicholson said.
“This is the same as the way Marriott doesn't own their hotels,” Nicholson said. Sphere: Related Content
US Dept of Justice HQ Sold for $305 Million
Washington Business Journal - June 24, 2010
The Northwestern Mutual Life Insurance Co. has closed on a deal to buy StonebridgeCarras LLC and Walton Street Capital LLC's Two Constitution Square for $305 million.
The 589,000-square-foot project, 145 N St. NE in the NoMa neighborhood behind Union Station, rises to 12 stories and is fully leased to the Department of Justice.
The Department of Justice will fill the building under a 15-year lease and complete its transition into the project in the fourth quarter of the year.
The development team decided to put the project on the market in January because of its long-term lease to the federal government, arguably the most stable tenant in the market.
“It was perfect for what people were looking for in the market. We wanted to find a buyer for a long-term flat deal and in today's world, it became a valuable asset,” said Doug Firstenberg, principal of StonebridgeCarras. “The market is not that deep for someone who can buy a single asset for $300 million.”
Bethesda-based StonebridgeCarras and Chicago-based Walton Street Capital have delivered four of eight floors of Two Constitution Square, part of a larger 2.5-million-square-foot project.
Firstenberg said the price the team netted — about $518 per square foot — was close to what he imagined for the project at its conception, but said he did not expect to sell the project before it delivered.
“This was not in the business plan,” Firstenberg said, laughing.
The first phase of the entire Constitution Square project will deliver a 440-unit apartment building that will open in September, as well as a 50,000-square-foot Harris Teeter that will open in December.
TD Bank, Potbellys Sandwich Works, Georgetown Valet dry cleaner, Constitution Cafe and Tynan Coffee & Tea will fill part of the project's 30,000 square feet of retail and a 204-room Hilton Garden Inn will deliver in the first quarter of 2011.
One Constitution Square, the project's sister building, includes 329,251 square feet and is entirely leased to the U.S. General Services Administration for its headquarters. The development team will sell that project eventually, but opted to put Two Constitution Square on the market first because it had a longer lease than the GSA's, Firstenberg said. The GSA lease is for seven years and gives the federal government the ability to cancel it after five years.
StonebridgeCarras Management will continue to manage the Two Constitution Square building, which is shooting for Leadership in Energy and Environmental Design Platinum certification.
Bill Collins of Cassidy Turley represented the seller in the deal. Cambridge Property Group represented Northwestern Mutual. Sphere: Related Content
The Northwestern Mutual Life Insurance Co. has closed on a deal to buy StonebridgeCarras LLC and Walton Street Capital LLC's Two Constitution Square for $305 million.
The 589,000-square-foot project, 145 N St. NE in the NoMa neighborhood behind Union Station, rises to 12 stories and is fully leased to the Department of Justice.
The Department of Justice will fill the building under a 15-year lease and complete its transition into the project in the fourth quarter of the year.
The development team decided to put the project on the market in January because of its long-term lease to the federal government, arguably the most stable tenant in the market.
“It was perfect for what people were looking for in the market. We wanted to find a buyer for a long-term flat deal and in today's world, it became a valuable asset,” said Doug Firstenberg, principal of StonebridgeCarras. “The market is not that deep for someone who can buy a single asset for $300 million.”
Bethesda-based StonebridgeCarras and Chicago-based Walton Street Capital have delivered four of eight floors of Two Constitution Square, part of a larger 2.5-million-square-foot project.
Firstenberg said the price the team netted — about $518 per square foot — was close to what he imagined for the project at its conception, but said he did not expect to sell the project before it delivered.
“This was not in the business plan,” Firstenberg said, laughing.
The first phase of the entire Constitution Square project will deliver a 440-unit apartment building that will open in September, as well as a 50,000-square-foot Harris Teeter that will open in December.
TD Bank, Potbellys Sandwich Works, Georgetown Valet dry cleaner, Constitution Cafe and Tynan Coffee & Tea will fill part of the project's 30,000 square feet of retail and a 204-room Hilton Garden Inn will deliver in the first quarter of 2011.
One Constitution Square, the project's sister building, includes 329,251 square feet and is entirely leased to the U.S. General Services Administration for its headquarters. The development team will sell that project eventually, but opted to put Two Constitution Square on the market first because it had a longer lease than the GSA's, Firstenberg said. The GSA lease is for seven years and gives the federal government the ability to cancel it after five years.
StonebridgeCarras Management will continue to manage the Two Constitution Square building, which is shooting for Leadership in Energy and Environmental Design Platinum certification.
Bill Collins of Cassidy Turley represented the seller in the deal. Cambridge Property Group represented Northwestern Mutual. Sphere: Related Content
Friday, June 18, 2010
Los Angeles Agency Considers $300 Million Sale Leaseback of HQ
Los Angeles Times - June 14, 2010
The top executive at the Los Angeles Department of Water and Power, the nation's largest municipal utility, is laying the groundwork for a sale of some of the agency's biggest assets — including the utility's iconic downtown Los Angeles headquarters — as it seeks to cover rising costs without raising electricity rates.
DWP Interim General Manager Austin Beutner said Monday that he would not pursue any additional power rate increases for the remainder of the calendar year. But that decision would come with a series of tradeoffs, he said.
Beutner, a former investment banker, is hoping to generate $150 million by selling city-owned natural gas reserves in Wyoming. He is looking at unloading the city's stake in an Arizona coal-fired power plant years ahead of schedule. And he said he is "serious" about trying to sell the utility's 17-story office building on Hope Street to a private buyer, who would lease offices back to the agency on a long-term basis.
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"It's real simple. If you can't raise rates, what are you going to do?" Beutner said.
"Do you want to own a building, or do you want to have renewable energy?" he said. "You pick. I don't care. If you like the building better, that's fine. You can't have both. So policy is about making an informed choice."
The various proposals are part of Beutner's new strategic plan for the nation's largest municipal utility, which will be presented to Mayor Antonio Villaraigosa's five-member DWP board Tuesday. Beutner said the proceeds of the cost-cutting efforts would help pay for upgrading the DWP's aging infrastructure, comply with new government regulations and push ahead with Villaraigosa's directive to get more energy from wind, solar and geothermal sources.
The DWP headquarters, across from the Music Center in downtown, opened in 1965 and was designed by A.C. Martin and Associates. Beutner said the sale of the headquarters could generate $300 million.
Councilman Tom LaBonge voiced strong doubts about selling off critical assets, particularly the DWP headquarters, which is named after former City Council President John Ferraro — LaBonge's boss for 16 years.
"Mr. Beutner is obviously a much better businessman than I," said LaBonge, who voted against electricity rate increases earlier this year. "But as a public official, I wouldn't want to see us sell assets that we might have to buy back again."
Villaraigosa got into a major standoff with the City Council in March over a series of proposed increases that would have boosted residential rates from 9% to 28%, depending on the household. So far, the council has approved a 4.8% increase effective July 1.
In the wake of that dispute, Beutner decided to hold the line on future increases for at least nine months, partly by cutting expenses and partly by tapping DWP assets. Beutner hopes to cancel plans for a new billing office in Van Nuys — a move that could save $20 million — and is weighing a possible sale of 100 acres of property that the DWP owns in Malibu.
The DWP is already scheduled to divest itself of a 21% stake in the Navajo Generating Station, a coal-fired power facility in Arizona, by 2019. But Beutner said he would act far more swiftly to sell that stake, a move that could generate up to $500 million.
One possibility would be to sell the stake within two years while gradually scaling back the city's use of coal from that facility, he said.
That strategy drew strong praise from Rhonda Mills, Southern California program director of the Clean Power Campaign, an environmental advocacy group. Mills said the Navajo plant would lose value as new environmental regulations are put into effect across the nation.
"It will cost us more in the future than if we get out of it now," she said.
Beutner's long-term strategic plan represents the latest shift in direction for a utility that has had five general managers in three years. During much of that time, Villaraigosa has promised to ensure that the DWP gets 20% of its power from renewable energy by Dec. 31 and 40% of its power from those sources by 2020.
By contrast, Beutner said he would focus less on Villaraigosa's numerical target for renewable energy and more on an overall goal: cutting the utility's carbon emissions in half.
Former DWP General Manager H. David Nahai said he retained Goldman Sachs to study the possibility of selling the city's stake in Navajo and purchasing back its power. Still, he voiced dismay at the notion of a lease-back of DWP headquarters.
"We're going to sell a gem of a piece of real estate, an iconic building, in the lowest real estate market since the Great Depression? That does not make sense," he said.
As part of his DWP strategic plan, Beutner said he wants a "ratepayer advocate" to serve as a watchdog on behalf of the utility's customers. That advocate should be housed in the office of City Administrative Officer Miguel Santana, the budget advisor to Villaraigosa and the council, Beutner said.
That marked a change from two weeks ago, when Beutner said he wanted the ratepayer advocate to serve in the office of City Controller Wendy Greuel. Asked about that earlier statement, Beutner said he "may have misspoken."
A June 7 DWP news release also said the utility was working with Greuel to create the ratepayer watchdog. Days later, Greuel released a report sharply criticizing the DWP for threatening to withhold $73 million from the city's budget unless it received its planned rate increase.
Beutner said that having a ratepayer advocate in the controller's office would "politicize" the position. Greuel, in turn, said Beutner's statement on the ratepayer advocate is "the exact opposite" of what he told her two weeks ago.
"It's really obvious that his position changed after I released a critical review of the Department of Water and Power," Greuel said. "That's why this position needs to be independent." Sphere: Related Content
The top executive at the Los Angeles Department of Water and Power, the nation's largest municipal utility, is laying the groundwork for a sale of some of the agency's biggest assets — including the utility's iconic downtown Los Angeles headquarters — as it seeks to cover rising costs without raising electricity rates.
DWP Interim General Manager Austin Beutner said Monday that he would not pursue any additional power rate increases for the remainder of the calendar year. But that decision would come with a series of tradeoffs, he said.
Beutner, a former investment banker, is hoping to generate $150 million by selling city-owned natural gas reserves in Wyoming. He is looking at unloading the city's stake in an Arizona coal-fired power plant years ahead of schedule. And he said he is "serious" about trying to sell the utility's 17-story office building on Hope Street to a private buyer, who would lease offices back to the agency on a long-term basis.
» Don't miss a thing. Get breaking news alerts delivered to your inbox.
"It's real simple. If you can't raise rates, what are you going to do?" Beutner said.
"Do you want to own a building, or do you want to have renewable energy?" he said. "You pick. I don't care. If you like the building better, that's fine. You can't have both. So policy is about making an informed choice."
The various proposals are part of Beutner's new strategic plan for the nation's largest municipal utility, which will be presented to Mayor Antonio Villaraigosa's five-member DWP board Tuesday. Beutner said the proceeds of the cost-cutting efforts would help pay for upgrading the DWP's aging infrastructure, comply with new government regulations and push ahead with Villaraigosa's directive to get more energy from wind, solar and geothermal sources.
The DWP headquarters, across from the Music Center in downtown, opened in 1965 and was designed by A.C. Martin and Associates. Beutner said the sale of the headquarters could generate $300 million.
Councilman Tom LaBonge voiced strong doubts about selling off critical assets, particularly the DWP headquarters, which is named after former City Council President John Ferraro — LaBonge's boss for 16 years.
"Mr. Beutner is obviously a much better businessman than I," said LaBonge, who voted against electricity rate increases earlier this year. "But as a public official, I wouldn't want to see us sell assets that we might have to buy back again."
Villaraigosa got into a major standoff with the City Council in March over a series of proposed increases that would have boosted residential rates from 9% to 28%, depending on the household. So far, the council has approved a 4.8% increase effective July 1.
In the wake of that dispute, Beutner decided to hold the line on future increases for at least nine months, partly by cutting expenses and partly by tapping DWP assets. Beutner hopes to cancel plans for a new billing office in Van Nuys — a move that could save $20 million — and is weighing a possible sale of 100 acres of property that the DWP owns in Malibu.
The DWP is already scheduled to divest itself of a 21% stake in the Navajo Generating Station, a coal-fired power facility in Arizona, by 2019. But Beutner said he would act far more swiftly to sell that stake, a move that could generate up to $500 million.
One possibility would be to sell the stake within two years while gradually scaling back the city's use of coal from that facility, he said.
That strategy drew strong praise from Rhonda Mills, Southern California program director of the Clean Power Campaign, an environmental advocacy group. Mills said the Navajo plant would lose value as new environmental regulations are put into effect across the nation.
"It will cost us more in the future than if we get out of it now," she said.
Beutner's long-term strategic plan represents the latest shift in direction for a utility that has had five general managers in three years. During much of that time, Villaraigosa has promised to ensure that the DWP gets 20% of its power from renewable energy by Dec. 31 and 40% of its power from those sources by 2020.
By contrast, Beutner said he would focus less on Villaraigosa's numerical target for renewable energy and more on an overall goal: cutting the utility's carbon emissions in half.
Former DWP General Manager H. David Nahai said he retained Goldman Sachs to study the possibility of selling the city's stake in Navajo and purchasing back its power. Still, he voiced dismay at the notion of a lease-back of DWP headquarters.
"We're going to sell a gem of a piece of real estate, an iconic building, in the lowest real estate market since the Great Depression? That does not make sense," he said.
As part of his DWP strategic plan, Beutner said he wants a "ratepayer advocate" to serve as a watchdog on behalf of the utility's customers. That advocate should be housed in the office of City Administrative Officer Miguel Santana, the budget advisor to Villaraigosa and the council, Beutner said.
That marked a change from two weeks ago, when Beutner said he wanted the ratepayer advocate to serve in the office of City Controller Wendy Greuel. Asked about that earlier statement, Beutner said he "may have misspoken."
A June 7 DWP news release also said the utility was working with Greuel to create the ratepayer watchdog. Days later, Greuel released a report sharply criticizing the DWP for threatening to withhold $73 million from the city's budget unless it received its planned rate increase.
Beutner said that having a ratepayer advocate in the controller's office would "politicize" the position. Greuel, in turn, said Beutner's statement on the ratepayer advocate is "the exact opposite" of what he told her two weeks ago.
"It's really obvious that his position changed after I released a critical review of the Department of Water and Power," Greuel said. "That's why this position needs to be independent." Sphere: Related Content
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