As the economy continues to recover, more corporations are selling their real estate to unlock the value that's tied up in the property and then leasing the buildings back.
Sharp Electronics, for example, recently sold its U.S. headquarters building in Mahwah for $38 million and leased the property back for 12 years. Similarly, the owner of HackensackUMC Mountainside Hospital in Montclair recently sold the property for $115 million, then signed a 15-year lease.
The two transactions are part of a national trend that has seen sale-leasebacks roughly triple in recent years, from a low of $3.4 billion in 2009, just after the financial crisis, to more than $10 billion annually in the past two years as real estate values headed back up. Investors increasingly seek out the deals because they offer a predictable stream of income; companies think that an expanding economy means they can earn more profits by moving money out of their real estate and into their core businesses.
"The typical reason that a company would do a sale-leaseback is that they think they have better ways to invest their cash than have it tied up in a building," said Ben Thypin, director of market analysis at Real Capital Analytics in New York, a real estate information company.
Read More: http://www.northjersey.com/news/business/sale-leasebacks-making-a-return-1.1251455
“Why would Stephen Ross be interested? Because a fortune has been put into it already,” said Howard Davidowitz, chairman of Davidowitz and Associates in Manhattan, a national retail consulting and investment firm. “The issue still is that [retail] rents are going down, space is going up, and everyone is going to want a deal. But if anyone can do it, [Ross] can.”
Ben Thypin, a senior market analyst for Real Capital Analytics in New York, echoed the latter point. He added that Related is more likely than Colony to “finish the job” at Xanadu, because Related has more experience in project management and not just real estate ownership.
“[Related] has a lot of experience in mixed-use development,” said Thypin
Read More: http://www.northjersey.com/news/020110_Real_estate_giant_in_talks_to_save_Xanadu.html
Ben Carlos Thypin
I am currently the co-founder of Quantierra, the world's first data driven real estate brokerage and investment manager. In my former life as Director of Market Analysis at Real Capital Analytics, I worked with press outlets large and small to provide them with great data and insightful commentary. Here are some of the results of this collaboration. For the rest, please check out the News Archive.