Winnipeg Free Press - August 10, 2010
Casey's General Stores says it has armed itself with more than enough cash to finance its self-tender offer against Alimentation Couche-Tard's hostile takeover bid after completing a US$569 million private placement financing.
The placement with a series of insurance companies involves (5.22%) senior unsecured notes due in 2020.
The Iowa-based convenience store company originally planned to use cash on hand and debt to fund the US$500 million recapitalization plan and buy back its shares in a move to raise its stock price and thwart the Couche-Tard offer.
But demand was so strong for the private placement that it will use only debt to purchase 25 per cent of its shares at between US$38 and US$40 each.
The remaining money will be used for fees and expenses in connection with the offer, along with a US$59 million repayment of other senior notes holding a higher interest rate. Any extra funds will be directed at general corporate expenses.
"We are excited that we are able to move forward with our highly accretive recapitalization plan, while maintaining a strong balance sheet and continuing to execute on our strategic initiatives," the company told its employees.
Casey's (Nasdaq:CASY) shareholders have until midnight on Aug. 25 to tender their shares to the company's modified Dutch auction.
Quebec-based Couche-Tard (TSX:ATD.B) extended its US$36.75 per share offer until Aug. 30.
Ben Brownlow, a Casey's analysts with Morgan, Keegan & Company, said he believes Couche-Tard will walk away from the battle by not extending the offer.
"I would be surprised if Couche-Tard went through with a higher offer because if they did so it would be contradictory to their prior trades," he said in an interview.
Brownlow has a US$44 per share target on Casey's shares. He said the recapitalization is very favourable to all shareholders and will lead to a doubling in the return on equity.
Casey's is holding its annual meeting on Sept. 23.
If it doesn't withdraw, Couche-Tard has indicated it plans to nominate eight directors and says it plans to ask shareholders to repeal any bylaws or amendments adopted by the board after June 10, 2009. The move is designed to remove a further roadblock designed to thwart Couche-Tard's takeover plan.
The U.S.-based convenience store operator has urged shareholders to reject both efforts and not use blue proxies sent by Couche-Tard "even in protest."
"Couche-Tard is attempting to utilize the strong balance sheet and real estate position built by Casey’s to subsidize the Couche-Tard Offer and transfer value to Couche-Tard’s shareholders," Casey's said in a proxy filing with the U.S. Securities and Exchange Commission.
Casey's owns 98 per cent of the land and buildings at its 1,500 stores, headquarters and distribution centre. It said Couche-Tard could use this real estate to subsidize its offer through sale-leaseback transactions, as it has done in prior acquisitions.
Couche-Tard declined to comment Tuesday on progress in obtaining financing for its US$1.9 billion takeover. The company has said it is confident about obtaining the financing when required.
But Casey's told its shareholders that its rival has no committed financing more than three months are submitting its offer.
Couche-Tard runs a network of 5,878 convenience stores, 4,146 of which include motor fuel dispensing, across North America.
On the Toronto Stock Exchange, Couche-Tard's shares fell 31 cents at C$21.00 in afternoon trading. Casey's shares were down 19 cents at $38.11 on Nasdaq.
Sphere: Related Content
Wednesday, August 11, 2010
Knight Capital Forms CTL Lending Team
PRNewswire-FirstCall - August 10, 2010
Knight Capital Group, Inc. (NYSE Euronext: KCG) today announced an expansion of ABS/MBS capabilities in commercial real estate finance with the hiring of Barry M. Funt and Winston G. van Buitenen as Managing Directors.
The Commercial Real Estate (CRE) Finance team will leverage Knight's institutional fixed income platform to originate real estate loans for leased-backed and project financings of all types. The team will provide creative structuring advice on transactions that seek to achieve both the economic and qualitative project goals of participating landlords and tenants.
"Barry and Winston bring considerable experience to Knight in the CRE market," said Ronak Khichadia, Managing Director, Global Head of ABS/MBS at Knight Libertas. "Using Knight's extensive client network of leading buy-side firms, they will be able to execute across the credit spectrum, undertake both large and small transaction sizes, structure taxable and tax-exempt real estate financings, and flexibly tailor structures to meet project objectives. Sphere: Related Content
Knight Capital Group, Inc. (NYSE Euronext: KCG) today announced an expansion of ABS/MBS capabilities in commercial real estate finance with the hiring of Barry M. Funt and Winston G. van Buitenen as Managing Directors.
The Commercial Real Estate (CRE) Finance team will leverage Knight's institutional fixed income platform to originate real estate loans for leased-backed and project financings of all types. The team will provide creative structuring advice on transactions that seek to achieve both the economic and qualitative project goals of participating landlords and tenants.
"Barry and Winston bring considerable experience to Knight in the CRE market," said Ronak Khichadia, Managing Director, Global Head of ABS/MBS at Knight Libertas. "Using Knight's extensive client network of leading buy-side firms, they will be able to execute across the credit spectrum, undertake both large and small transaction sizes, structure taxable and tax-exempt real estate financings, and flexibly tailor structures to meet project objectives. Sphere: Related Content
Tuesday, August 10, 2010
Transport for London HQ Sold for £97 Million
Telegraph - August 10, 2010
Pier Walk, which is located next to The O2, has been purchased by Deka, Germany's largest open-ended property fund manager.
TfL moved into the building last August on a 20-year term at £29 per sq ft. The organisation and its 1,800 employees that occupy the office are unaffected by the deal.
Quintain owns the office building with joint venture partner Lend Lease and said it would seek to reinvest the proceeds from the sale into "alternative opportunities with higher potential for value creation".
The company is leading a regeneration of the Greenwich Peninsula and the area surrounding Wembley Stadium in North London. Over the next three years Quintain, which bolstered its balance sheet with a £183m rights issue last year, aims to double assets under management to £2bn and complete the Western part of Wembley City.
The deal for Pier Walk has been struck at 6pc above the last valuation on March 31, providing evidence that a recovery in the commercial property market over the past year can be maintained, despite fears that economic uncertainty may be dampening investor demand.
Figures from property agent CB Richard Ellis published last week showed growth in UK commercial capital values slowed from 0.6pc to 0.4pc in July.
Deka, which has a UK portfolio worth in excess of £1.5bn, said the deal "confirms Deka's commitment to the UK market".
Adrian Wyatt, chief executive of Quintain, added: "This sale achieves three things for Quintain. It fulfils one of our key milestones for the financial year, which together are designed to move the company substantially closer to the achievement of our 2013 business plan. It demonstrates in a difficult market the strength of the independent valuation of our assets at Greenwich Peninsula, and, finally, it enables us to realise the value we have created within the asset and recycle resources into other opportunities with potential for higher returns."
Harm Meijer, property analyst at JP Morgan, said the sale, agreed at a yield of 5.9pc, was "good news" for the company.
Quintain and Lend Lease will retain control of seven retail assets on the ground floor of the building.
Quintain was advised by Savills. Deka's advisers are CB Richard Ellis and Savills. Sphere: Related Content
Pier Walk, which is located next to The O2, has been purchased by Deka, Germany's largest open-ended property fund manager.
TfL moved into the building last August on a 20-year term at £29 per sq ft. The organisation and its 1,800 employees that occupy the office are unaffected by the deal.
Quintain owns the office building with joint venture partner Lend Lease and said it would seek to reinvest the proceeds from the sale into "alternative opportunities with higher potential for value creation".
The company is leading a regeneration of the Greenwich Peninsula and the area surrounding Wembley Stadium in North London. Over the next three years Quintain, which bolstered its balance sheet with a £183m rights issue last year, aims to double assets under management to £2bn and complete the Western part of Wembley City.
The deal for Pier Walk has been struck at 6pc above the last valuation on March 31, providing evidence that a recovery in the commercial property market over the past year can be maintained, despite fears that economic uncertainty may be dampening investor demand.
Figures from property agent CB Richard Ellis published last week showed growth in UK commercial capital values slowed from 0.6pc to 0.4pc in July.
Deka, which has a UK portfolio worth in excess of £1.5bn, said the deal "confirms Deka's commitment to the UK market".
Adrian Wyatt, chief executive of Quintain, added: "This sale achieves three things for Quintain. It fulfils one of our key milestones for the financial year, which together are designed to move the company substantially closer to the achievement of our 2013 business plan. It demonstrates in a difficult market the strength of the independent valuation of our assets at Greenwich Peninsula, and, finally, it enables us to realise the value we have created within the asset and recycle resources into other opportunities with potential for higher returns."
Harm Meijer, property analyst at JP Morgan, said the sale, agreed at a yield of 5.9pc, was "good news" for the company.
Quintain and Lend Lease will retain control of seven retail assets on the ground floor of the building.
Quintain was advised by Savills. Deka's advisers are CB Richard Ellis and Savills. Sphere: Related Content
Monday, August 09, 2010
Proposed Accounting Changes Could Make Long Term Leases Scarce (and More Valuable)
Real Capital Analytics Website - August 5, 2010
Sweeping changes proposed in the accounting treatment of leases will have steep implications for investors should they take effect in the next few years. Just how great the resulting impact is up for debate, but implementation would compel many tenants to avoid making long term lease arrangements. For real estate investors, the potential implications loom large, and could have a profound impact for those with strategies that include single-tenant properties and sale-leasebacks, both large segments of the property markets.
Over the past 12 months, 23% of all commercial property trades globally, or $46.6 billion in assets, have involved single-tenant properties. By number of properties sold, the proportion of single-tenant properties changing hands is much higher, at close to 40%, up from 25% before the downturn. Investors typically flock to the security of single-tenant properties, particularly those with long-term credit tenants when economic conditions stumble.
The proposed regulations, part of an ongoing effort between US and international accounting bodies to converge global standards and provide greater financial transparency, would essentially require tenants to report all leases as liabilities. The March 2009 discussion paper is available from the Financial Accounting Standards Board (FASB). Instead of reporting rent as an operating expense, occupiers would have to book the value of the lease as a liability using the full term of the lease, including renewal options. The added liability could endanger existing debt covenants or be a hurdle for companies looking to raise credit. And so while some in the market will argue that accounting treatment does not impact underlying economics, practical issues do arise.
The primary concern for real estate owners is that tenants will opt for shorter lease terms – the longer the lease, the greater the liability a company would have to book. In addition, more companies are likely to buy and own their properties outright. Indeed, the proposals are already coming into play. When aerospace contractor Northrop Grumman announced that it will acquire a vacant 334,000-square-foot building for its headquarters just outside of Washington DC, it cited these potential accounting changes as a factor behind the decision.
The most vulnerable part of the property sector may be sale-leaseback transactions, where the seller/occupier is required to execute a long term lease. These have accounted for $24.8 billion, or just over 50%, of all single-tenant deals over $10 million globally over the past year. Over the same period, there have been $4.0 billion of sale-leaseback transactions in the United States, representing just under 40% of all single-tenant deals domestically.
Corporations that found traditional credit routes frozen often turned to sale-leasebacks to raise capital, and top-rated companies often use the sale-leaseback market as a vital component of their corporate finance strategy. The top ten companies engaged in the practice have used it to raise $30.0 billion globally since the start of 2007.
Although the changes have not been finalized by FASB and the International Accounting Standards Boards (IASB), most experts believe that some changes to current standards are inevitable and will take effect as early as 2012. A final draft is expected to be published for comment this fall. As the date for implementation moves nearer, single-tenant properties with long-term leases are sure to gain in desirability and value, since with adoption, long-term leases could become scarce. Sphere: Related Content
Sweeping changes proposed in the accounting treatment of leases will have steep implications for investors should they take effect in the next few years. Just how great the resulting impact is up for debate, but implementation would compel many tenants to avoid making long term lease arrangements. For real estate investors, the potential implications loom large, and could have a profound impact for those with strategies that include single-tenant properties and sale-leasebacks, both large segments of the property markets.
Over the past 12 months, 23% of all commercial property trades globally, or $46.6 billion in assets, have involved single-tenant properties. By number of properties sold, the proportion of single-tenant properties changing hands is much higher, at close to 40%, up from 25% before the downturn. Investors typically flock to the security of single-tenant properties, particularly those with long-term credit tenants when economic conditions stumble.
The proposed regulations, part of an ongoing effort between US and international accounting bodies to converge global standards and provide greater financial transparency, would essentially require tenants to report all leases as liabilities. The March 2009 discussion paper is available from the Financial Accounting Standards Board (FASB). Instead of reporting rent as an operating expense, occupiers would have to book the value of the lease as a liability using the full term of the lease, including renewal options. The added liability could endanger existing debt covenants or be a hurdle for companies looking to raise credit. And so while some in the market will argue that accounting treatment does not impact underlying economics, practical issues do arise.
The primary concern for real estate owners is that tenants will opt for shorter lease terms – the longer the lease, the greater the liability a company would have to book. In addition, more companies are likely to buy and own their properties outright. Indeed, the proposals are already coming into play. When aerospace contractor Northrop Grumman announced that it will acquire a vacant 334,000-square-foot building for its headquarters just outside of Washington DC, it cited these potential accounting changes as a factor behind the decision.
The most vulnerable part of the property sector may be sale-leaseback transactions, where the seller/occupier is required to execute a long term lease. These have accounted for $24.8 billion, or just over 50%, of all single-tenant deals over $10 million globally over the past year. Over the same period, there have been $4.0 billion of sale-leaseback transactions in the United States, representing just under 40% of all single-tenant deals domestically.
Corporations that found traditional credit routes frozen often turned to sale-leasebacks to raise capital, and top-rated companies often use the sale-leaseback market as a vital component of their corporate finance strategy. The top ten companies engaged in the practice have used it to raise $30.0 billion globally since the start of 2007.
Although the changes have not been finalized by FASB and the International Accounting Standards Boards (IASB), most experts believe that some changes to current standards are inevitable and will take effect as early as 2012. A final draft is expected to be published for comment this fall. As the date for implementation moves nearer, single-tenant properties with long-term leases are sure to gain in desirability and value, since with adoption, long-term leases could become scarce. Sphere: Related Content
Sunday, August 08, 2010
Debenhams Mulls Sale Leaseback of UK Store Portfolio
New Statesman - August 5, 2010
In a bid to generate capital, department store group Debenhams has held discussions about unlocking the value in its property portfolio, in a move to reduce its debt which stood at £927m last year.
Debenhams has been speaking to potential investors over deals for nine of its stores. Reports suggest that the group, which owns 165 stores in the UK and Ireland, is contemplating a sale and lease back deal over a period of 25 years.
In April 2010, Debenhams had stated that its net debt had been brought down by 45 per cent to the tune of £512m. In addition, it signed a £650m credit facility last month towards refinancing its debt.
Debenhams is said to have held discussions with property consultants King Sturge about facilitating the process. No comment has been forthcoming yet from either company.
Reports also suggest that the group could direct the capital from the property deals into further investments in business, such as its recent acquisition of footwear chain Faith. Sphere: Related Content
In a bid to generate capital, department store group Debenhams has held discussions about unlocking the value in its property portfolio, in a move to reduce its debt which stood at £927m last year.
Debenhams has been speaking to potential investors over deals for nine of its stores. Reports suggest that the group, which owns 165 stores in the UK and Ireland, is contemplating a sale and lease back deal over a period of 25 years.
In April 2010, Debenhams had stated that its net debt had been brought down by 45 per cent to the tune of £512m. In addition, it signed a £650m credit facility last month towards refinancing its debt.
Debenhams is said to have held discussions with property consultants King Sturge about facilitating the process. No comment has been forthcoming yet from either company.
Reports also suggest that the group could direct the capital from the property deals into further investments in business, such as its recent acquisition of footwear chain Faith. Sphere: Related Content
Monday, August 02, 2010
MGM Resorts Agrees to $80 Million Sale Leaseback of Ground Under Borgata Casino in Atlantic City
Wall Street Journal - July 28, 2010
As part of its exit strategy from Atlantic City, MGM Resorts International is selling about $80 million of land to a partnership led by Vornado Realty Trust, one of the largest commercial real-estate owners in the country, people familiar with the matter said Tuesday.
The four parcels the Vornado group is buying from MGM Resorts are connected to the Borgata Hotel Casino & Spa in Atlantic City, N.J.
New Jersey-based Vornado is buying four pieces of land connected to the Borgata Hotel Casino & Spa, including parcels underneath an 800-room hotel, convention center and parking garage. The owner of the land collects rent from a venture of MGM and Boyd Gaming Corp., which owns the hotel, garage and other buildings on the land.
The Las Vegas-style Borgata, one of Atlantic City, N.J.'s most popular casinos, which also is owned jointly by MGM and Boyd, wasn't part of the purchase. Representatives for Vornado and MGM declined to comment.
The deal marks the first wave of asset sales under an MGM agreement with the state of New Jersey's Division of Gaming Enforcement, approved in March, in which MGM promised to sell most of its Atlantic City assets in 18 months. The division required this because it believes MGM has a business partner in Macau with ties to organized crime. MGM has denied this.
In the wake of the agreement with the state, MGM placed its 50% stake in the casino, the four parcels and other assets in a divestiture trust with the company as the sole beneficiary. The sale to Vornado is the first deal out of that trust.
The deal with Vornado is an unusual step for the real-estate giant, one of the country's largest landlords of retail and office space. Vornado is making its first entrance into the Atlantic City market during one of the gambling town's most brutal downturns. The market has been hurt as cash-strapped gamblers stay away amid the recession, or go to casinos and slot parlors closer to home in Pennsylvania and New York.
Casino revenue plunged to $3.9 billion in 2009, the lowest level since 1997, from a high of $5.2 billion in 2006. Employment dropped from 50,000 to 38,000 jobs. Earlier this month, New Jersey Gov. Chris Christie proposed a state takeover of the Atlantic City casino district to salvage the industry.
Vornado's investment is relatively safe, though, because the Borgata has consistently outperformed the other 10 casinos. But, it has seen its share of revenue declines, including an 11.7% drop in June versus a year earlier. Sphere: Related Content
As part of its exit strategy from Atlantic City, MGM Resorts International is selling about $80 million of land to a partnership led by Vornado Realty Trust, one of the largest commercial real-estate owners in the country, people familiar with the matter said Tuesday.
The four parcels the Vornado group is buying from MGM Resorts are connected to the Borgata Hotel Casino & Spa in Atlantic City, N.J.
New Jersey-based Vornado is buying four pieces of land connected to the Borgata Hotel Casino & Spa, including parcels underneath an 800-room hotel, convention center and parking garage. The owner of the land collects rent from a venture of MGM and Boyd Gaming Corp., which owns the hotel, garage and other buildings on the land.
The Las Vegas-style Borgata, one of Atlantic City, N.J.'s most popular casinos, which also is owned jointly by MGM and Boyd, wasn't part of the purchase. Representatives for Vornado and MGM declined to comment.
The deal marks the first wave of asset sales under an MGM agreement with the state of New Jersey's Division of Gaming Enforcement, approved in March, in which MGM promised to sell most of its Atlantic City assets in 18 months. The division required this because it believes MGM has a business partner in Macau with ties to organized crime. MGM has denied this.
In the wake of the agreement with the state, MGM placed its 50% stake in the casino, the four parcels and other assets in a divestiture trust with the company as the sole beneficiary. The sale to Vornado is the first deal out of that trust.
The deal with Vornado is an unusual step for the real-estate giant, one of the country's largest landlords of retail and office space. Vornado is making its first entrance into the Atlantic City market during one of the gambling town's most brutal downturns. The market has been hurt as cash-strapped gamblers stay away amid the recession, or go to casinos and slot parlors closer to home in Pennsylvania and New York.
Casino revenue plunged to $3.9 billion in 2009, the lowest level since 1997, from a high of $5.2 billion in 2006. Employment dropped from 50,000 to 38,000 jobs. Earlier this month, New Jersey Gov. Chris Christie proposed a state takeover of the Atlantic City casino district to salvage the industry.
Vornado's investment is relatively safe, though, because the Borgata has consistently outperformed the other 10 casinos. But, it has seen its share of revenue declines, including an 11.7% drop in June versus a year earlier. Sphere: Related Content
BlackRock HQ in London Under Agreement for $391 Million
Bloomberg - July 30, 2010
The co-owner of the London tower known as the Gherkin says the time is right to buy more offices in the U.K. capital and is about to make its biggest acquisition since 2007.
Evans Randall Ltd. will pay as much as 250 million pounds ($391 million) in the next few weeks for offices in Drapers Gardens, Michael Evans, the closely held investment bank’s founder and chairman, said in an interview. The building in the City of London, the main financial district, is owned by Morgan Stanley, Canary Wharf Group Plc and Exemplar Properties and leased by BlackRock Inc.
Evans Randall could spend as much as 1.5 billion pounds in a year to buy more central London properties, as it seeks to profit from rising demand for modern space, Evans said. City of London office values have rebounded 19 percent in the past 10 months, following a two-year slump that wiped 45 percent off prices, according to Investment Property Databank Ltd. A shortage of new developments is pushing up rents as companies recruit more staff.
“Now is the time to buy the best quality assets if we can get our hands on them,” said Evans, 57. “The pound is very weak, interest rates are at a record low, rental demand is at an exceptional level -- the best at any time since 2006.”
BlackRock, the world’s biggest asset manager, has a 25-year lease on Drapers Gardens, a 270,000 square-foot (25,100 square- meter) building near the Bank of England. Deka Immobilien, the real estate unit of Frankfurt-based Dekabank Deutsche Girozentrale, pulled out of an agreement to buy the site for about 240 million pounds in June, according to a report last month in Property Week. Sphere: Related Content
The co-owner of the London tower known as the Gherkin says the time is right to buy more offices in the U.K. capital and is about to make its biggest acquisition since 2007.
Evans Randall Ltd. will pay as much as 250 million pounds ($391 million) in the next few weeks for offices in Drapers Gardens, Michael Evans, the closely held investment bank’s founder and chairman, said in an interview. The building in the City of London, the main financial district, is owned by Morgan Stanley, Canary Wharf Group Plc and Exemplar Properties and leased by BlackRock Inc.
Evans Randall could spend as much as 1.5 billion pounds in a year to buy more central London properties, as it seeks to profit from rising demand for modern space, Evans said. City of London office values have rebounded 19 percent in the past 10 months, following a two-year slump that wiped 45 percent off prices, according to Investment Property Databank Ltd. A shortage of new developments is pushing up rents as companies recruit more staff.
“Now is the time to buy the best quality assets if we can get our hands on them,” said Evans, 57. “The pound is very weak, interest rates are at a record low, rental demand is at an exceptional level -- the best at any time since 2006.”
BlackRock, the world’s biggest asset manager, has a 25-year lease on Drapers Gardens, a 270,000 square-foot (25,100 square- meter) building near the Bank of England. Deka Immobilien, the real estate unit of Frankfurt-based Dekabank Deutsche Girozentrale, pulled out of an agreement to buy the site for about 240 million pounds in June, according to a report last month in Property Week. Sphere: Related Content
Stag Capital Readies IPO of Single Tenant Industrial REIT
Citybizlist Baltimore - July 29, 2010
Readying the stage for an IPO launch, Stag Industrial Inc. is sizing up $450 million of potential acquisitions while making plans for an opening play that calls for the purchase of 26 properties for $165 million from an affiliate fund and 75 properties in exchange for partnership units.
By year's end, the Boston-based investment group plans to be operating as a REIT. Through various affiliates, Stag owns 101 properties in 24 states, all single-tenant assets leased to 84 companies with an average weighted in-place lease term of five years, according to an SEC filing. The portfolio is 93.7 percent leased to 84 tenants.
Stag's 10 largest tenants are Bank of America, with five leases; Busche Enterprises, eight; Thyssen Krupp, four; Ohio Wholesale, two; and Verizon New England, American Beverage, Stream International, Woodbridge Venture, Brown Group and Wausau Paper, all with one location apiece. The companies' 25 locations account for 3.46 million square feet of the Stag portfolio and generate $14.35 million of annualized rent, which represents 27.9 percent of the portfolio's total rent revenue.
Stag Industrial will target acquisitions in secondary markets in the U.S. in the $5 million to $20 million range. Of those in its sights, 74 percent of properties are warehouse/distribution; 17 percent are manufacturing; and 9 percent are flex/office. "We believe that a significant portion of the 14 billion square feet of industrial space in the United States falls within our target investment criteria and that there will be ample supply of suitable acquisition opportunities," according to the SEC filing.
Stag Industrial is being formed to acquire the assets and operations of its predecessor business, which has deployed more than $1.2 billion to acquire in excess of 200 properties since 2003. The assets were bought through four private equity funds: SCP Green LLC (Fund I) , Fund II, Fund III and Fund IV.
All Fund I properties were sold in 2006. The following year, Fund II sold 16 properties and still owns 91. Stag Industrial will be seeded by 26 properties from Fund II. Fund II's remaining portfolio will not be transferred and will continue operations as-is, but not make any additional acquisitions going forward.
Funds III and VI will contribute 75 properties in formation transactions in exchange for common units. Also after the IPO launch, Stag Industrial will acquire another 890,891 square feet in three vacant properties, with Fund III retaining ownership. The new REIT will be given five years to exercise a purchase option.
Following the REIT's formation, the funds and affiliate Stag GI will make no additional acquisitions. With the proceeds of its offering, Stag Industrial plans to use about $58.3 million to satisfy principal mortgage debt secured by the properties being transferred. Sphere: Related Content
Readying the stage for an IPO launch, Stag Industrial Inc. is sizing up $450 million of potential acquisitions while making plans for an opening play that calls for the purchase of 26 properties for $165 million from an affiliate fund and 75 properties in exchange for partnership units.
By year's end, the Boston-based investment group plans to be operating as a REIT. Through various affiliates, Stag owns 101 properties in 24 states, all single-tenant assets leased to 84 companies with an average weighted in-place lease term of five years, according to an SEC filing. The portfolio is 93.7 percent leased to 84 tenants.
Stag's 10 largest tenants are Bank of America, with five leases; Busche Enterprises, eight; Thyssen Krupp, four; Ohio Wholesale, two; and Verizon New England, American Beverage, Stream International, Woodbridge Venture, Brown Group and Wausau Paper, all with one location apiece. The companies' 25 locations account for 3.46 million square feet of the Stag portfolio and generate $14.35 million of annualized rent, which represents 27.9 percent of the portfolio's total rent revenue.
Stag Industrial will target acquisitions in secondary markets in the U.S. in the $5 million to $20 million range. Of those in its sights, 74 percent of properties are warehouse/distribution; 17 percent are manufacturing; and 9 percent are flex/office. "We believe that a significant portion of the 14 billion square feet of industrial space in the United States falls within our target investment criteria and that there will be ample supply of suitable acquisition opportunities," according to the SEC filing.
Stag Industrial is being formed to acquire the assets and operations of its predecessor business, which has deployed more than $1.2 billion to acquire in excess of 200 properties since 2003. The assets were bought through four private equity funds: SCP Green LLC (Fund I) , Fund II, Fund III and Fund IV.
All Fund I properties were sold in 2006. The following year, Fund II sold 16 properties and still owns 91. Stag Industrial will be seeded by 26 properties from Fund II. Fund II's remaining portfolio will not be transferred and will continue operations as-is, but not make any additional acquisitions going forward.
Funds III and VI will contribute 75 properties in formation transactions in exchange for common units. Also after the IPO launch, Stag Industrial will acquire another 890,891 square feet in three vacant properties, with Fund III retaining ownership. The new REIT will be given five years to exercise a purchase option.
Following the REIT's formation, the funds and affiliate Stag GI will make no additional acquisitions. With the proceeds of its offering, Stag Industrial plans to use about $58.3 million to satisfy principal mortgage debt secured by the properties being transferred. Sphere: Related Content
Sobeys Agrees to $102 Million Sale Leaseback of Retail Portfolio Across Canada
Daily Commercial News - July 8, 2010
Crombie Real Estate Investment Trust ("Crombie") (TSX:CRR.UN) announced today that it has entered into a non-binding letter of intent for the acquisition of $102 million of Canadian retail properties with Sobeys (a wholly owned subsidiary of Empire Company Limited ("Empire") (TSX:EMP.A)) comprising a portfolio of 11 retail properties (the "Portfolio"). The Portfolio totals approximately 496,630 square feet and consists of eight properties located in Western Canada, two in Ontario and one in Atlantic Canada.
Crombie has also entered into an agreement with a syndicate of underwriters co-led by CIBC World Markets Inc. and TD Securities Inc., to issue, on a bought-deal basis, 2,670,000 units (the "Units") at a price of $11.05 per unit for gross proceeds of approximately $29.5 million. Concurrently, ECL Developments Limited (a wholly owned subsidiary of Empire) in satisfaction of its pre-emptive right with respect to the public Unit offering will subscribe for 1,855,000 Exchangeable LP Units at a price of $11.05 per unit for additional gross proceeds of $20.5 million. The total $50 million offering is subject to regulatory approval.
Crombie intends to use the net proceeds from this offering to fund in part the acquisition of the Portfolio, additional acquisitions to be completed later in 2010 and for general trust purposes. The Sobeys portfolio acquisition is subject to completion of a definitive agreement and normal due diligence.
The Portfolio is 100% leased and comprised of six freestanding Sobeys stores, four freestanding Sobeys stores with retail pads; and one Sobeys anchored plaza. Sobeys, Canada's second largest retail grocer will occupy approximately 95% of the total acquired space on lease terms averaging 20 years. The acquisition price represents a going in capitalization rate of approximately 7.7%. Sphere: Related Content
Crombie Real Estate Investment Trust ("Crombie") (TSX:CRR.UN) announced today that it has entered into a non-binding letter of intent for the acquisition of $102 million of Canadian retail properties with Sobeys (a wholly owned subsidiary of Empire Company Limited ("Empire") (TSX:EMP.A)) comprising a portfolio of 11 retail properties (the "Portfolio"). The Portfolio totals approximately 496,630 square feet and consists of eight properties located in Western Canada, two in Ontario and one in Atlantic Canada.
Crombie has also entered into an agreement with a syndicate of underwriters co-led by CIBC World Markets Inc. and TD Securities Inc., to issue, on a bought-deal basis, 2,670,000 units (the "Units") at a price of $11.05 per unit for gross proceeds of approximately $29.5 million. Concurrently, ECL Developments Limited (a wholly owned subsidiary of Empire) in satisfaction of its pre-emptive right with respect to the public Unit offering will subscribe for 1,855,000 Exchangeable LP Units at a price of $11.05 per unit for additional gross proceeds of $20.5 million. The total $50 million offering is subject to regulatory approval.
Crombie intends to use the net proceeds from this offering to fund in part the acquisition of the Portfolio, additional acquisitions to be completed later in 2010 and for general trust purposes. The Sobeys portfolio acquisition is subject to completion of a definitive agreement and normal due diligence.
The Portfolio is 100% leased and comprised of six freestanding Sobeys stores, four freestanding Sobeys stores with retail pads; and one Sobeys anchored plaza. Sobeys, Canada's second largest retail grocer will occupy approximately 95% of the total acquired space on lease terms averaging 20 years. The acquisition price represents a going in capitalization rate of approximately 7.7%. Sphere: Related Content
Friday, July 30, 2010
BBVA Closes EUR 364 Million Sale Leaseback of Property Portfolio in Spain
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
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
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
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