Sale-and-leaseback deals accounted for a fifth of European investment deals in the first half of 2008, the highest percentage ever recorded.
According to research by CB Richard Ellis, between 2004 and 2007 the amount of corporate sale and leasebacks increased by 585% from E6.7bn (£5.3bn) to E46bn (£36.2bn).
The transactions are being used for a variety of reasons, said CBRE, including the increased pressure to raise capital, the high cost of debt and the need for more flexible lease structures.
‘The wave of sale and leasebacks in the banking sector in recent years eradicated the ‘last resort’ stigma previously attached to this type of transaction, transforming it into another viable choice for corporates looking to raise capital,’ said John Wilson, head of corporate strategies at CBRE’s global corporate services business.
‘Moreover, their robust investment characteristics – longer leases, strong covenants and operational flexibility – make sale and leasebacks attractive to the type of long-term, equity-based investors that are most active in today’s more challenging market.
‘As a result, sale and leaseback transactions remain increasingly popular in today’s market.’
The UK and Germany dominate the European sale-and-leaseback market with the UK accounting for 21% and Germany 34%.