A Public Service of The Harris Company, Commercial and Forensic Real Estate Appraisers & Consultants. For appraisal or other consulting services we can be reached at 310.337.1973, harris_curtis@sbcglobal.net, http://www.harriscompanyrec.com
istorically, for a corporation, real estate assets have had one primary application: operational necessity. Companies have been regularly leasing, developing, buying and even selling facilities to meet their operational objectives. However, with the rise of an active industrial real estate investment market, another application emerged. Strategic, long-term real estate that remains critical to operations has become an alternate source of capital. It is the sale-leaseback structure that allows the owner-occupier to free up capital without any operational implications. As such, sale-leaseback transactions have become a more popular component of a company's financial management. First Industrial Realty Trust estimates that 15 billion square feet, or more than 60 percent of all industrial space, is owned by corporate users, the highest among commercial property types.
HSBC in April confirmed that it was exploring buyer interest in its trophy properties in New York City, Paris and in London, where this building in Canary Wharf is located. Leaseback would probably be part of the sale agreement, reported The Sunday Times of London.
This translates to a $700-billion to $900-billion investment in non-core assets owned by corporations. For most users, the primary reason for ownership of their industrial real estate is control. The importance of controlling the asset rises proportionately to the additional investment made by the user within the facility to make it operational.