Tuesday, October 6, 2009

Are 'Sale-Leasebacks' The New Black?

Sale-leasebacks seem to be dominating commercial/investment real estate news these days.

Consider the following:

- HSBC Holdings -- the parent of mortgage giant HSBC -- is selling its New York City office tower for $330 million and leasing back space there.

- Retailer Tesco, the UK behemoth that owns stores around the globe, including the U.S., is conducting sale-leasebacks of a number of its stores.

Even government is getting into the act: The state of Arizona has approved a plan to auction its “State Capitol Executive Tower” in a 20 year sale-leaseback. The tower houses the offices of the secretary of state, state treasurer and governor and has an estimated value of $40 million. Why? The state's current budget shortfall, approximately $3.2 billion. Further, California has announced it plans to sell $2 billion (or 62% of Arizona’s budget deficit) worth of government real estate in a similar sale-leaseback. GlobeStreet.com reports that the City of Alexandria, VA, is contemplating a simliar plan with a large portfolio of its properties. In the Midwest, the city of Chicago has already made some moves. Several sale-leasebacks with the Skyway toll road, downtown parking garages and downtown parking meter system for $3 billion.

For investors, sale-leasebacks can be lucrative for both sides. They make sense for governments because they allow them to get cash now to pay off their debts while retaining the option to buy back the property in 20 years or so. Buyers like them (I have investors looking for buildings that house U.S. post offices) because the renters are the government (i.e. taxpayers), a tenant with a strong credit rating. In some cases, the return can be twice what the investor pays, say Globe Street analysts.

Interestingly, news reports also say international investors are "heavily intrigued" by these sale-leasebacks. This creates a bit of an irony, says Globe Street, because in theory, "you could have a U.S. State Capitol building owned by China."


Thursday, October 1, 2009

Shameless Self Promotion Follow Up

So here is the announcement that went out from the powers-that-be about my inclusion in a newly created Executive Advisory Council in the Prudential Commercial Columbus office.



(9/23/2009) COLUMBUS, Ohio – Prudential Commercial Real Estate today announced it has established a three-person Executive Advisory Council to oversee the activities of its Columbus, Ohio office.

“The Columbus office, with 21 agents, is one of the largest in our regional network,” says owner and managing broker David Mussari. “Agents Jack Turner, Tim Mehan and Brent Greer have emerged as office leaders, have proven track records, and provided wise counsel for the business on operations and personnel. These individuals will provide additional leadership to help guide our enterprise to the next level. I am extremely pleased with their selection and know they will provide outstanding counsel as we continue to grow our business.”

Turner, Mehan and Greer are charged with executing corporate directives within the office, working as a liaison with Blue Rock Midwest’s headquarters office in Cincinnati, helping manage and grow the office, allocating resources, helping resolve conflicts, and ensuring that Prudential Commercial remains compliant with real estate laws and company policy

Jack Turner is an investment and development specialist who chairs the Columbus office’s Investment Marketing Group. He has more than 35 years experience that runs the gamut: corporate real estate services: office, multi-family, retail and industrial properties, sale/leasebacks, buyer/tenant representations, market/feasibility analysis, and development services. Jack joined Prudential Commercial in 2008.

Tim Mehan has more than 30 years of comprehensive, in-depth experience in the real estate and development industry. His expertise covers site selection and acquisition, sales, leasing, contract negotiation and administration, budgets, cost containment, value engineering, contractor selection, compliance, zoning, and quality assurance. Tim is a Certified BOCA Inspector and an expert in energy efficient (green) buildings and energy efficient techniques. The chair of the Columbus office’s Industrial Marketing Group, Tim joined Prudential Commercial in 2008.

Brent Greer is a commercial/investment specialist with experience in multiple disciplines, but with particular emphasis on multifamily, office/retail and land. He is the immediate past president of Columbus Real Estate Exchangors (CREE), an organization of brokers and agents specializing in IRS 1031 tax-deferred exchanges, and sits on the City of Columbus Property Maintenance Appeals Board. Brent joined Prudential Commercial in 2006.

Prudential Commercial Real Estate is the fastest growing commercial network in the U.S., and a leading provider of commercial real estate services. Blue Rock Midwest has offices and agents in Columbus, Lancaster, Cincinnati, Dayton and Cleveland, Ohio, and in Lexington, Ky.

Visit the Prudential Columbus website at:


And so there it is. I'm honored to be one of three chosen by my peers to guide the office, and our continued growth.