6 July 2016 – Expansión
Gas Natural Fenosa has engaged the real estate consultancy firms CBRE (formerly Richard Ellis) and Cushman & Wakefield to accelerate the sale of its real estate jewels in Madrid, in an operation that will set a record for the energy group and which may result in the largest operation in the sale & leaseback segment in recent years. The gas company has started to market four corporate office complexes that it owns in the capital, containing 57,000 qm of office space and 1,695 parking spaces.
Specifically, the assets up for sale are: the group of buildings that currenly house the group’s operating headquarters in Madrid, located on Avenida de San Luis 77; another property on Avenida de América, 38; the Acanto complex, also on Avenida de América, at number 11; and the Antonio López complex, on calle Antonio López 193. Sources in the real estate sector indicate that the operation may exceed €250 million and become one of the most high profile sale & leaseback transactions in recent years. (…).
Sources state that the consultancy firms engaged by Gas Natural have already started making contact with real estate companies and investment funds that specialise in sale & leaseback transactions, with a view to closing the operations within the next few months. Specifically, interested parties have until the end of July to submit offers. Then, after selecting the best offers, a final award phase will be conducted, which should be completed before the end of the year. (…).
The sale of those assets at this time not only coincides with the recovery of the real estate sector, it also fits with Gas Natural’s new strategic plan, revealed just a couple of months ago. (…).
Since the end of 2014, Telefónica has also undertaken several operations to sell buildings under the sale & leaseback formula, and Eroski did the same earlier this year. Nevertheless, those operations were smaller than the one currently being entertained by Gas Natural in Madrid.
The new accounting regulation, which puts an end to sales with subsequent lease back as an off-balance financing structure, could mean the end of this option for companies looking to optimise their real estate assets.
Under IFRS 16, companies are obliged to record rental payments as debt, except those due within a term of less than one year or that represent an asset with little value. This standard, which will replace the existing IAS 17, removes the dual accounting model for lessees, which distinguishes between financial lease contracts, recorded on balance sheet, and operating leases, where the future lease payments do not have to be recognised.
Although the law does not come into effect until 2019, companies should analyse their lease contracts in advance and make new estimates, which should be updated regularly.
Original story: Expansión (by R.Arroyo and M.A.Patiño)
Translation: Carmel Drake