Some of the top corporate owner-occupiers in Australia and New Zealand could free up over $24 billion in capital by selling their property and leasing it back, according to a new report from CBRE.
The report, which examined the land and buildings held by 40 ASX200 and NZX50 companies in the materials, healthcare, telecommunications, transport and industrial sectors, also found that about $11 billion had been raised from sale and leaseback deals over the past five years.
“Freeing up property assets from corporate balance sheets is an attractive way for organisations to redeploy the capital tied up in a low-yielding property back into their business at higher rates of return,” said Sameer Chopra, CBRE’s Pacific head of research.
“This $24 billion monetisation opportunity could also be understated, given the recent strong performance of the industrial property sector, where owner occupier transactions have been particularly prevalent,” he said.
Across the five sectors that CBRE examined, owner-occupiers had an average capex to sales ratio of 7 per cent and 60 per cent had a return on equity above 10 per cent, which the firm said highlighted the potential for capital to be reinvested into other opportunities.
“Corporate owner occupiers in industries such as healthcare, telecommunications, manufacturing and other industries are achieving a higher return on equity and invested capital within their core business as opposed to having their capital tied up in real estate,” said Tom Fowke, CBRE’s Asia-Pacific director, corporate capital markets.
“We are seeing a trend of corporate occupiers strategically monetising their owned real estate and capitalising on the demand by listed and unlisted property funds for sale and leaseback opportunities. This is allowing occupier groups to raise capital and increase liquidity while not losing occupational control of their property assets,” Mr Fowke added.
Twenty-three per cent of sales by owner-occupiers over the past five years have been for retail properties, followed by petrol stations as well as communication assets, which both made up 18 per cent of sales. While 77 per cent of the sales were valued at less than $50 million, 25 sales of over $100 million had unlocked a collective total of $9.5 billion in capital.
