Nick van Ommen and other market watchers point out that the timing is now good for corporations to offload their real estate assets by making maximum use of buyers’ still bullish sentiment. There is also a growing awareness among corporations that if they don’t do it themselves, private equity companies will do it for them. Dutch retail concern Vendex is a case in point. The company owned department stores throughout the Netherlands and, by spinning off the portfolio, its buyer KRR got the rest of the company for free.
Market watchers believe that within Europe, Germany has the biggest potential for unlocking corporate real estate value. Nick van Ommen claims the figure for this market could be as much as 100 billion Euros. He points out that the country now has a real estate investment trust REIT structure in place, which could stimulate further development. In the run-up to the introduction of the new regime, analysts speculated that companies like Metro, Thyssen Krupp, Munich RE and MAN might in due course spin off their real estate portfolios as IPOs. If ten percent of Germany’s real estate assets were listed on the market, market capitalisation of its real estate sector would increase fivefold to between 120 and 140 billion Euros.
The trophies of investors
Global investors’ growing appetite for trophy assets is fuelling the number of sale-and-leaseback deals in the commercial property sector. In the first six months of 2007, real estate investors acquired 14 single real estate assets worldwide for over one billion US-Dollars each – the same number as for all of 2006, and almost five times the level of 2005. The record is held by Spanish property company Metrovacesa, which acquired the global head office of HSBC bank, at Canary Wharf, for 1.09 billion Britisch Pounds (about 1.59 billion Euros) last April. Runner-up was Irish investor Quinlan Private which in July acquired the Citigroup headquarters in a sale-and-leaseback deal.
In the first six months of 2007, five buildings traded hands in London for more than one billion US-Dollars, including insurer Swiss Re’s Gherkin headquarters which was sold to private investment bank Evans Randall and German fund manager IVG Asticus for 906 million Euros. Elsewhere, seven major trophy asset deals were recorded in New York over the period, one in Paris and one in San Francisco and a significant number of trophy assets in Frankfurt and in major US cities were sold for amounts just below one billion US-Dollars. Other major European cities like Munich and Amsterdam are also expected to get a piece of the action, but experts believe the size of the deals will be smaller.
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