Corporations are increasingly selling their premises to create massive cash flow into their business, but remain as tenants in the property.
According to CBRE’s Victorian managing director Matt Haddon, low interest rates and a rise in consumer sentiment were helping to underpin a shift in business investment strategy.
“We are seeing more and more owner-occupier corporates selling their real estate investments to inject more money back into the company,” Mr Haddon said.
“As the market continues to improve, corporates are stepping away from being property owners, selling their assets to create more capital for business growth.”
A shortage of long-term leased assets for sale nationwide was also driving the trend, Mr Haddon explained, adding that selling properties with a leaseback deal provided a degree of certainty for both parties.
“These organisations see more value in being a tenant, where they can reinvest capital directly into the business and stay in the same premises,” he said.
CBRE senior director of industrial investment properties Angus Klem said the size, frequency and geographic spread of leaseback transactions was a reflection of both confidence and caution in the property market.
“The economy is still in a constrained capital expenditure market, with companies maintaining an aversion to debt,” Mr Klem said.
“Leaseback transactions are an alternative strategy for companies to acquire capital without taking on more debt. This gives corporates the opportunity to unlock the value of their real estate investments and inject funds back into their core business activities.”
Mr Klem said the trend was expected to continue throughout 2013, with more and more businesses changing their financial strategy to take advantage of strong market conditions.