1 / 15

Sale-and-leaseback in the Netherlands Aart Hordijk ERES Conference 27- 06-2009

Sale-and-leaseback in the Netherlands Aart Hordijk ERES Conference 27- 06-2009. Introduction. Sale-and-leaseback: Arrangement in which one party sells a property to a buyer and the buyer immediately leases the property back to the seller Goal:

silver
Download Presentation

Sale-and-leaseback in the Netherlands Aart Hordijk ERES Conference 27- 06-2009

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Sale-and-leaseback in the NetherlandsAart Hordijk ERES Conference 27- 06-2009

  2. Introduction Sale-and-leaseback: Arrangement in which one party sells a property to a buyer and the buyer immediately leases the property back to the seller Goal: Find out how market conform rents are in sale-and-leaseback transactions in The Netherlands

  3. Introduction Motivations sale-and-leaseback transactions: • Liquidize the capital value of the property • Business plan / management consideration • Potential high book profits (timing decision) • The liability for fluctuations in the value of the property can fall due (since 2005 on the Profit-and-Loss account according to the IAS)

  4. Data The initial number of transactions was 317, but after critically analyzing the list 42 transactions should be removed

  5. Data Number of transactions per sector (including total floor space)

  6. Data When known, per sector is given: Where the floor space is known for almost all transactions, there is much less transparency about the rental and purchase prices and the yields

  7. Data The yield can be calculated (when not known) given the following formula: (floor space x rent) / purchase price When three of the four variables are known, the other can be calculated

  8. Data Rents from the data are checked by comparing them with market rents from: • ROZ/IPD Key Centers Report 1995 – 2008 • DTZ publications (Figures in Perspective) • Dynamis office publication

  9. Results • Determining the purchase price based on the formula is in theory possible, but due to the large spread in time, rental price, and yield that is too rough. • 3 – 3,5 billion euro total investment value estimated

  10. Results

  11. Results

  12. Results • 66% of the transactions include a higher rent than the market rent • Difference bigger for the industrial sector than for the office sector • For big offices the contract rent is on average 20% higher than the market rent • Yield differences are much smaller than the difference in the rents

  13. Conclusions • Much more transparency needed • More transparency would lead to better market conformity • Length of the contract is important but often missing

  14. Further research Further research of sale-and-leaseback transactions is strongly encouraged • Find more information to increase transparency • International research

  15. Aart Hordijk • University of Delft • ROZ Netherlands • aart.hordijk@roz.nl

More Related