Mapeley

Dennis Lopez, managing director of European real estate at JP Morgan, says traditional industries are not immune to new business models. "You see industry space needs change dramatically. Four or five years ago for banks to not have branches was inconceivable; now the concept of high street branches is questioned."

So the ground is set for corporates to divest their real estate, but it won't be that simple. Even announcing this measure throws up corporate politics. "The move is almost too high profile, too noticeable. It would be better to do it by stealth and slip it into the market," says Kavanagh.

Many corporates are playing their cards close to their chests. There have been few official announcements. Italy has been the most active market while sector-wise the telecoms sectors appear far ahead of their rivals.

The options for these corporates range from straight, single sale and leasebacks, through large portfolios on the same basis, total outsourced solutions or spinning off or flotating the property division. On the investor side, the deals can be done using private money, traditional bank lending or money raised from securitisation. The maturing property market will help corporates come to a measured decision. "The underlying property market has become more transparent and it is easier for people to make the right decision," says Todd Eagle, executive director, investment banking division at Goldman Sachs.

A spanner has been thrown into the works for sale and leasebacks with the new accounting standard proposals which could see leases remaining as liabilities on balance sheets. But the consensus is that this will only provoke a hiccup in the process, especially as all corporates will be coping with the same problem.

A company's choice of route will be very individual. Edmund Craston, exexcutive director and European property sector head at Warburg Dillon Read, says all options were explored when it advised on the UBS sale and leaseback. "Every case is different. There are some common themes but you can't do a blueprint. Some occupiers are driven because they want to reduce costs, some want more flexibility," he says.

An occupier could also take the next step on from sale and leaseback with a services contract such as companies formed from the PFI bidding are offering (see UK slow to catch onto Prime example). This too could have its difficulties with the contract becoming pricey if the companies are asked to take on portfolios with a high level of leasehold to freehold properties. Companies would have to decide how high they rated flexibility over cost.


March 2000 UK: CORPORATES GEAR UP TO SPIN OUT OF CONTROL. Dennis Lopez, managing director of European real estate at JP Morgan, says traditional industries are not immune to new business models. "You see industry space needs change dramatically. Four or five years ago for banks to not have branches was inconceivable; now the concept of high street branches is questioned." So the ground is set for corporates to divest their real estate, but it won't be that simple. Even announcing this measure throws up corporate politics. "The move is almost too high profile, too noticeable. It would be better to do it by stealth and slip it into the market," says Kavanagh. Many corporates are playing their cards close to their chests. There have been few official announcements. Italy has been the most active market while sector-wise the telecoms sectors appear far ahead of their rivals. The options for these corporates range from straight, single sale and leasebacks, through large portfolios on the same basis, total outsourced solutions or spinning off or flotating the property division. On the investor side, the deals can be done using private money, traditional bank lending or money raised from securitisation. The maturing property market will help corporates come to a measured decision. "The underlying property market has become more transparent and it is easier for people to make the right decision," says Todd Eagle, executive director, investment banking division at Goldman Sachs. A spanner has been thrown into the works for sale and leasebacks with the new accounting standard proposals which could see leases remaining as liabilities on balance sheets. But the consensus is that this will only provoke a hiccup in the process, especially as all corporates will be coping with the same problem. A company's choice of route will be very individual. Edmund Craston, exexcutive director and European property sector head at Warburg Dillon Read, says all options were explored when it advised on the UBS sale and leaseback. "Every case is different. There are some common themes but you can't do a blueprint. Some occupiers are driven because they want to reduce costs, some want more flexibility," he says. An occupier could also take the next step on from sale and leaseback with a services contract such as companies formed from the PFI bidding are offering (see UK slow to catch onto Prime example). This too could have its difficulties with the contract becoming pricey if the companies are asked to take on portfolios with a high level of leasehold to freehold properties. Companies would have to decide how high they rated flexibility over cost.