Offices offloaded as sale and leaseback deals hit record high

Sale and leaseback deals look set to continue rising in Europe after hitting a new high in 2020. Analysts at JLL tracked €27bn (£23bn) of transactions across Europe, the Middle East and Africa last year, a record total and the third consecutive year in which deal flow was above €20bn. “Asset monetisation strategies are proving an integral part of the shift that corporate owner-occupiers are making to preserve capital and release liquidity, as well as to reshape their portfolios to support post-pandemic business plans,” said Nick Compton, JLL’s head of corporate capital markets for EMEA. “The need for liquidity, operational flexibility and portfolio optimisation will continue to drive sale and leaseback transactions throughout 2021. We can expect that the increasing focus on building ESG performance, as well as the improving economic sentiment across the region, will also unlock more deals.” The busiest sectors for deals last year were offices, retail and industrial, accounting for 80% of EMEA corporate asset sales by value. Office disposals were up by 10% year-on-year to €9.7bn. The UK, Germany and France accounted for about half of the total volume of regional transactions. Notable deals in the UK included BP’s sale of its London headquarters to Hong Kong’s Lifestyle International Holdings for £250m. Mark Caskey, chief executive of corporate solutions in EMEA at JLL, said: “Beyond using sale and leasebacks to raise capital and build liquidity, what we are witnessing is a wholesale rethink from many enterprises on their relationship to real estate and how it relates to operational flexibility as we come out of the pandemic. Corporate asset sales offer an attractive and viable way for businesses to unlock value from their real estate portfolios and accelerate growth, and we can expect continued activity into 2021.” To send feedback, e-mail tim.burke@egi.co.uk or tweet @_tim_burke or @estatesgazette