20 July 2017 - A subsidiary of Guernsey-based hotel company PPHE Hotel Group Ltd (LSE: PPH) has closed the sale and leaseback
of Park Plaza London Waterloo, the company said.
Whitbread said in April that it is planning to carry out sale and leaseback
transactions this year with proceeds of GBP 100m to GBP 150m.
From the buyer's perspective, a sale leaseback
can be an attractive investment in the real estate category as it requires less maintenance and administration than many multi-tenant real estate investments.
In 2000, Sainsbury's, which owned 65% of its property on a freehold basis, raised [pounds sterling] 566m from its first two sale and leaseback
So what makes a French Leaseback
property such a solid investment?
Banks will lend around 70% of the vacant possession value whilst a sale and leaseback
structure can realise 100% of the investment value, hence releasing what could be double the amount of cash into the business.
on its stores could raise up to pounds 250m, which would see it selling its stores in return for agreeing to pay rent to the new owner.
If the real property has been in service for many years, a sale and leaseback
could generate a much larger rental expense deduction for the corporation than its current depreciation deduction.
Mullen: Sale-manageback developed partly as a result of REITs, which are forced to do a sale leaseback
because of REIT requirements, pulling out of the market, and partly because public longterm care companies saw sale-manageback as a way of improving their stock values by getting their real estate properties off their books.
In addition, the constant rental accrual method must be utilized for certain section 467 rental agreements, specifically a "disqualified" leaseback
or a long-term agreement.
M2 EQUITYBITES-June 30, 2017-PPHE Hotel Group Enters Sale, Leaseback
Deal for Park Plaza London Waterloo
Unwins has dramatically pulled out of talks to sell its business and is pursuing a sale and leaseback
strategy to raise funds instead.