Corporate real estate asset sales in EMEA last year surpassed 2019 volumes to reach €27 bn, according to new research from JLL, despite the downturn in economic activity throughout 2020.
The increased need for capital preservation and liquidity as well as a need to deliver portfolio flexibility led companies to consider sale and leasebacks as a way to support post-pandemic recovery, says JLL's 'Raising capital from corporate real estate' report.
Last year’s record level of disposals is particularly noteworthy given the context of the global pandemic, according to the research. 2020 was also the third consecutive year in which the total value of corporate disposals exceeded €20 bn, with business sectors adversely impacted by the pandemic seeing increased activity.
Nick Compton, head of corporate capital markets, EMEA, JLL, said: '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.
'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.'
Offices, retail and industrial properties continued to be the most active sectors, accounting for 80% of the total value of asset sales in EMEA. Corporate disposals of office properties grew sharply in 2020, with €9.7bn of transactions taking place, up 10% year-on-year.
The UK, Germany and France accounted for 52% of the total volume of transactions in EMEA. In Germany, sales of corporate properties raised a record €5.6 bn across 122 transactions, up 11.4% yoy.
Fewer large portfolio transactions led to lower volumes in the UK, where the value of corporate disposals was down 45% yoy to €4.4 bn. The Netherlands and Italy saw elevated activity, with €1.8 bn and €1.4 bn raised respectively.
Matthew Richards, capital markets CEO, EMEA, JLL, said: 'The record levels of sale and leasebacks seen in 2020 demonstrate the growing appetite among investors to partner with corporates to monetise a wide range of property assets.
'An increasing number of corporates are also collaborating with investors to forward fund new headquarters and other facilities, which can provide the adaptable and highly sustainable environments that will be crucial as we emerge from the pandemic.'
Mark Caskey, corporate solutions CEO, EMEA, JLL, added: '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.'
