Sale-and-leaseback in the Netherlands Aart Hordijk ERES
Conference 27- 06-2009 1 Slide 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 2 Slide 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) 3 Slide 4 Data The
initial number of transactions was 317, but after critically
analyzing the list 42 transactions should be removed SectorNumber
of transactions Office137 Industrial100 Retail15 Unknown23 Total275
4 Slide 5 Data Number of transactions per sector (including total
floor space) YearOfficeIndustrial 20008 (109,500 m2)0 200111
(100,176 m2)0 20024 (53,052 m2)1 (6,610 m2) 20039 (174,341 m2)8
(103,516 m2) 20049 (84,717 m2)20 (291,656 m2) 200525 (363,596 m2)7
(58,383 m2) 200622 (285,585 m2)21 (331,917 m2) 200738 (111,589
m2)25 (304,610 m2) 20088 (32,680 m2)18 (211,614 m2) 5 Slide 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 Floor space Rental price
Purchase price Gross initial yield Landlord and tenant Seller and
buyer 6 Slide 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 7 Slide 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 8 Slide 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 9 Slide 10 Results 10 Slide
11 Results 11 Slide 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 12
Slide 13 Conclusions Much more transparency needed More
transparency would lead to better market conformity Length of the
contract is important but often missing 13 Slide 14 Further
research Further research of sale-and-leaseback transactions is
strongly encouraged Find more information to increase transparency
International research 14 Slide 15 Aart Hordijk University of Delft
ROZ Netherlands [email protected] 15
