Top deals Week 49 (1-5 December 2008)

The largest deal recorded by PropertyEU between 1 - 5 December was the agreement by Spain's debt-strapped property giant Metrovacesa to sell the HSBC headquarters in Canary Wharf, London back to HSBC for a total of £838 mln (EUR 968 mln). HSBC financed the transaction last May and is booking a gain of approximately £250 mln on the unravelled deal.

Top 5 deals* for Week 49 (1-5 December 2008)

1. HSBC agrees to buy back Canary Wharf's HQ for £838m

2. Berenice fund sells assets in Rome for EUR 175m

3. UK house builder sells £109 mln of commercial property assets

4. Casino to realise EUR 100m from asset sales

5. Citicourt makes EUR 81m acquisition in major UK investment drive

* Deals for which the investment volume was given

Scroll down for the news on the deals
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1) HSBC agrees to buy back Canary Wharf's HQ for £838m
Date: 5 December 2008
Category: Offices

HSBC said on Friday it has agreed to buy back its global headquarters in London's Canary Wharf from Spain's troubled property company Metrovacesa for a total of £838 mln (EUR 968 mln). The bank said it is booking a gain of approximately £250 mln in its second-half 2008 income.

The bank sold the 45-storey trophy building at the end of May last year for £1.09 bn and leased it back from Metrovacesa for 20 years at an initial annual rent of £43.5 mln, representing a net initial yield of 3.8%. The purchase was funded by Metrovacesa via a cash equity injection of £280 mln and a bridge loan of £810 mln provided by HSBC. The transaction value today is 25% less than 12 months ago.

'As a result of the significant market disruption that has impacted the availability of term funding, syndication of the bridging loan has not been possible and the parties have come to an agreement that the building will be handed back to HSBC,' the bank said in a statement. It added that the existing bridging loan will be extinguished as a result of this transaction.

The new agreement sees HSBC acquire 100% of Dutch investment vehicle Project Maple II BV, whose main asset is the tower, through wholly-owned subsidiary HSBC Property Holdings BV.

David Hodgkinson, Group's Chief Operating Officer, said: 'Clearly the market has deteriorated significantly since we agreed the sale in spring 2007. It was important to work with our client, Metrovacesa, to resolve the funding issue which had arisen. 8 Canada Square is a landmark building and this transaction is in the best interests of both parties and HSBC shareholders.'

Metrovacesa said it would book a EUR 98 mln loss from the sale of the HSBC building, denting NAV by EUR 1.4 per share.

On Thursday the company also announced that its indebted majority shareholder, the Sanahuja family, has reached a debt-for-equity agreement with creditor banks who will take a 65% stake in the company. The bank syndicate consists of BBVA, Banco Español de Crédito, Banco Popular Español, Banco de Sabadell, and Banco Santander.

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2) Berenice fund sells assets in Rome for EUR 175m
Date: 3 December 2008
Category: Office
Italian closed-end real estate investment fund Berenice has sold two office assets in Rome to Immobiliare Caltagirone, a real estate firm owned by Italian contruction tycoon Francesco G. Caltagirone. The transactoin amount comes to EUR 175 mln.

Berenice, which is managed by property fund manager First Atlantic Real Estate and is listed on Milan's stock exchange, said that the properties are almost fully let and are located in Via Tomacelli and Via Bissolati in the Italian capital. They were sold for EUR 78 mln and EUR 96 mln respectively. The company added that the selling price was about EUR 60 mln higher than the properties' open market value appraised by an independent expert at end-June 2008.

Folowing the deal, the fund is distributing EUR 39 mln to its unit holders, or about EUR 64 per each of the 600,000 units the company has issued.

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3) UK house builder sells £109 mln of commercial property assets
Date: 4 December 2008
Category: Retail

UK house builder Barratt Development is to realise net proceeds of £109 mln (EUR 127.4 mln) on the sales of a shopping centre and commercial land in the UK. The assets are part of the portfolio of developer Wilson Bowden which Barratt acquired in April 2007. Barratt has indicated it intends to dispose of assets from the portfolio with a cash value of around £200 mln.

In an announcement on Wednesday, Barratt said contracts have been exchanged for the sale of Eagles Meadow shopping centre, Wrexham for £79 mln. Eagles Meadow comprises 37,000 m² of retail and leisure accommodation, 48 residential units and a 1,000 space multi-storey car park.

Barratt declined to name the buyer of the shopping center but media reports suggested it was LaSalle Investment Management. The disposal is due to complete prior to the end of the calendar year.

The group has also recently completed the disposal of 9.5 acres of commercial land for a supermarket development in Chesterfield, and the sale of Atlantic Quay 4, a completed office development in Glasgow, for a combined net price of about £30 mln.

Barratt said the net proceeds will be used to reduce group borrowings, and discussions on the sale of further assets are ongoing.

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4) Casino to realise EUR 100m from asset sales
Date: 5 December 2008
Category: Retail

French retail company Casino said it has reached an agreement on the sale of a portfolio of retail properties to its AEW Immocommercial property investment mutual fund vehicle. In addition, four Casino supermarket properties will be sold to an unnamed business partner.

These transactions will provide the group with nearly EUR 100 mln in proceeds this year.

The company said the deals are in line with its strategy to unlock the capital tied up in its food store properties that no longer offer strong development potential.

The portfolio consists of 42 Casino supermarkets, grocery stores, as well as Franprix and Leader Price store properties. The stores will continue to be operated under long-term, variable-rent leases based on a percentage of revenue, Casino said. The transaction is expected to complete by the end of the year.
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5) Citicourt embarks on major UK investment drive
Date: 5 December 2008
Category: Investment
London-based Citicourt Investment Partners has kicked off what it says is a major investment drive in the UK with the acquisition of a 90,000-m² portfolio of retail and commercial properties for £70 mln (EUR 81 mln).

Citicourt is a London-based privately owned real estate investment company combining property veterans Anthony Browne, John English and wealthy co-investors. The firm has recently carried out fresh equity raisings 'from New York through to the Middle East' to fund investment in the UK where real estate prices have tumbled in the last 12-18 months.

The portfolio acquired from UK fund managers Henderson and Threadneedle comprised five retail and 14 commercial properties. The deal was financed with £21 mln of equity, and debt provided by Abbey bank.

Threadneedle is launching a new fund to cash in on the opportunities in the UK. Citicourt says more deals are on the way. Brown, Citicourt's CEO, is said to be finalising terms on a further £140 mln of property deals in two other institutionally owned mixed-use portfolios.

Citicourt now owns £350 mln of property assets but has sufficient equity to grow the portfolio beyond £600 mln in the short to medium term. I've been away from the UK a lot, heading Citicourt's successful run of equity-raising in the US and Middle East.,' said Brown. 'We share this sentiment, which has prompted our return to the UK market, with the essential caveats of detailed acquisition focus, strong bank support, and extremely well considered stock selection.'

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