Demand by corporates to release capital from their real estate assets is increasing according to the new Raising Capital from Corporate Real Estate report published by JLL.
The heightened uncertainty caused by the Covid-19 pandemic is leading corporate owners and occupiers to actively seek new sources of liquidity and greater flexibility across their real estate portfolios, as investor appetite for stable income-generating real estate grows.
The report reveals that interest in sale and leaseback opportunities is set to continue growing this year following a record high in 2019, where disposals of corporate real estate raised €23.1 bn, across more than 460 transactions in Europe, Middle East and Africa (EMEA) alone. Marking a significant 33% increase year-on-year, 2019 was also the fifth consecutive year in which the total value of corporate disposals exceeded €15 bn.
Offices, retail, and industrial & logistics continued to be the most active real estate sectors for corporate disposals in 2019, accounting for 76% of the total value of corporate disposals in EMEA, with assets increasingly being sold as portfolios rather than individually.
‘At a time when debt markets and other sources of capital are significantly constrained, corporate owners and occupiers are re-evaluating their business models and are increasingly comfortable using real estate assets as strategic tools to release cash and maximize working capital. We’ve started to see more corporates prepare assets for sale, and we should expect this activity to be more visible in the second half of the year as markets return to normality,’ said Nick Compton, head of corporate capital markets, EMEA, JLL.
‘At the same time, volatility and uncertainty are impacting real estate investment leaving many investors searching for opportunities to cautiously deploy available dry powder. The growing range of new – and in some cases unique – prospects for long income and net-lease investors to consider across the region will allow many to deploy cash reserves and significantly expand assets under management by tapping into an increasing number of high-quality opportunities in different markets, sectors and locations,’ added Compton.
Private equity controlled mid-cap corporate real estate disposals, which were key in 2019 will likely continue to be a feature in the sector this year. There has also been rising investor interest for specialised corporate properties with characteristics that are critical to operations, such as research buildings and complex manufacturing facilities.
