Daily Real Estate News  |  January 4, 2007  |   Survey Finds Sale-Leasebacks Growing
Portfolio sale-leasebacks are becoming more common as companies free up equity by unloading all their property at the same time.

According to a study by CoreNet Global’s Applied Research Center, 6 percent of property will shift from owned to leased property during the next five years. Among the sample surveyed, 52 percent of property is currently owned rather than leased by companies.

“While a 6 percent shift may seem small in percentage terms, in reality it’s a tidal shift,” says Eric Bowles, director of global research for CoreNet Global. “That’s $72 billion out of $1.2 trillion worth of real estate being sold and leased back in the commercial real estate market during the next five years.”

About 37 percent of respondents indicated that business unit executives represent the most critical internal stakeholder groups in sale-leaseback deals — of greater importance than the CEO, the board, or any other stakeholder.

The study also found that nearly 50 percent of companies have experienced the “hostage effect,” of being forced to pay a premium to market when the lease expired on a previously owned property. This finding reinforces the need for sellers to build in the flexibility to extend and shorten leases when structuring a sale-leaseback, Bowles says.

— REALTORŪ Magazine Online