Cash-Hungry Companies Turn to Leaseback Deals
The New York Times reports: As the economy has worsened, an increasing number of corporations are clamoring to divest themselves of their real estate through
sale-leasebacks, where a firm sells but continues to occupy their offices. But like all forms of real estate investment, the sale-leaseback market
flourished in mid-decade but has all but stalled in recent months as
financing has dried up.
Large corporations are usually loath to say much about the process of
transforming themselves from owners to tenants, and often the
transactions are not even made public. But according to Real Capital Analytics, a New York research firm that tracks sales of $2.5 million or more, sale-leaseback deals of industrial, office and retail properties in the US last year totaled $7.3 billion, compared with $15 billion in 2007. In the last quarter of the year, only $514 million in sale-leasebacks were recorded.
The pool of buyers has diminished as some of the more active
participants, including GE Real Estate, IStar Financial, First
Industrial Realty Trust and Lexington Corporate Properties Trust, have
been sidelined by financial difficulties.
Investors in sale-leasebacks have been especially skittish since HSBC, the British bank, sold its headquarters in London’s Canary Wharf to a
Spanish developer, Metrovacesa, in April, 2007 for £1.09 billion ($1.5
billion) and the buyer was unable to refinance the loan it took out to
close the deal, said Robert M. White Jr., the president of Real Capital
Analytics. The bank repurchased the building for £838 million.
View the full article on The New York Times: Cash-Hungry Companies Turn to Leaseback Deals
Posted by: Nina Turner