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Sale and Leaseback - attractive options for property owners
Date published 25 March 2009
Two wuestions arising from the current financial crisis affecting business across the globe are the issues of debt availability and its funding costs.
Broll Property Group director Carl von During, says one potential solution is the monetisation of industrial and commercial space.
Adding to the "basket of options". This creative term refers to the "sale and leaseback" of property. Once considered a financing method of last resort, the much-publicised sale and leaseback of HSBC's London headquarters put this type of activity firmly in the basket of options available to business. While this method of financing is relatively new in South Africa, it has been used in Europe for quite some time.
Local enterprises that have owned property for any length of time have, probably, experienced real capital growth and, more often than not, these assets have recognised at a discount on the balance sheet. The sale of owned space can release these funds for use in core activities of the business.
"on the investment front, purchasers view types of transactions favourably. Not only has the "new" tenant already customised the property to suit their requirements, but they are very likely to sign lease periods in excess of local norms. After all, they were occupying space before they sold it," explains Von During.
Von During is a director of Broll Property Group's investment division, one of South Africa's leading retail estate brokers specialising in the core national areas - with a specific international arm. The division concentrates on the strengths of its members and their unique experience. It aims to remain a specialist adviser with focused, personalised client attention at all times.
Sean Berowsky, with 10 years' experience in the UK commercial property market, has joined investment broking at Broll and will concentrate on national investment sales.
"We have been in discussion with Sean for approximately two years prior to his return from the UK and are excited to have him as a member of our investment broking team," says Von During.
While investment sales are currently challenging, with the effect of the global crisis putting pressure on bank funding, the local property market has shown resilience. Good income growth is forecast from the listed property sector.
In addition, the national investment broking, David Adams head the Broll international broking division. On this front, Broll is focussing on the facilitation of clients entering the UK commercial property market.
Current economic conditions in Britain have seen a 40% plus drop in capital valuesin commercial property giving exceptional value for buyers with the equity required. This has created significant demand in the South African property sector for the unique service Broll offers.
Says David Adams, "Typically we will not only search for suitable properties but also will facilitate legal services, property management and, all importantly, sector debt finance."
To find out more about monetisation of space - or anything else about property investment in general - call Carl on 082 881 2488 or email cvonduring@broll.co.za
Author: Cape Times
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