Archive for the ‘Sale Leaseback’ category

Weekly Retail Recap July 23rd, 2010

July 23, 2010

WEEKLY RETAIL RECAP

  • Menard wins Wisconsin Supreme Court appeal
    The Wisconsin State Supreme Court has sided with home-improvement retailer John Menard, who sought to overturn an arbitration decision in a wrongful termination case against his former general counsel.
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  • NPD: More digital games purchased in stores than online
    According to the PC Games Digital Downloads: Analyst Report, from The NPD Group, in 2009, 21.3 million PC Game full-game digital downloads were purchased online in the United States compared with 23.5 million physical units purchased at retail during the same period.
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  • Roundy’s to expand in Chicago
    Grocery retailer Roundy’s said it has plans to open between 12 and 18 stores in the Chicago area over the next five years under the Mariano’s Fresh Market banner, according to a report by Supermarket News.
    Read More
  • Sprouts offers high-efficiency HVAC, refrigeration solutions
    A new Sprouts Farmers Market that opened late June in Culver City, Calif., is projected to use 50% less refrigerant than the industry average, thanks to high-performance heating, ventilation, air conditioning and refrigeration solutions that meet the company’s sustainability objectives.
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CVS/Caremark Coming to Market With Sale/Lease-back Deal

December 15, 2009
Another Financial News

2009-12-14

AFP Staff
Based on information received through December 8, 2009, Moody’s Investors Service assigns a provisional (P) Baa2 rating to $744.9 million of CVS/Caremark Lease-Backed Pass-Through Certificates, Series 2009-B, to be issued by a trust that will acquire 166 first-priority lien commercial mortgage, credit-tenant lease loans.

The loans will be secured by mostly newly constructed drug stores and related realty that will be triple-net leased to subsidiaries of CVS/Caremark Corporation (“CVS”). Each of the leases will be bondable and guaranteed by CVS, and bankruptcy-remote, special purpose borrowers will own each of the fee or ground-leased properties. The loans mature in January 2032.

Fixed net rent under the leases will be sufficient to pay in full all interest and principal of the loans. The 166 drugstores are located in 34 states.

In rating this transaction, Moody’s used its credit-tenant lease (“CTL”) financing rating methodology (“CTL approach”). Under Moody’s CTL approach, the rating of a transaction’s certificates is primarily based on the senior unsecured debt rating (or the corporate family rating) of the tenant, usually an investment grade rated company, leasing the real estate collateral supporting the bonds.

This tenant’s credit rating is the key factor in determining the probability of default on the underlying lease. The lease generally is “bondable”, which means it is an absolute net lease, yielding fixed rent paid to the trust through a lock-box, sufficient under all circumstances to pay in full all interest and principal of the loan. The leased property should be owned by a bankruptcy-remote, special purpose borrower, which grants a first lien mortgage and assignment of rents to the securitization trust.

The dark value of the collateral, which assumes the property is vacant or “dark”, is then examined; the dark value must be sufficient, assuming a bankruptcy of the tenant and rejection of the lease, to support the expected loss consistent with the certificates’ rating. Moody’s may make adjustments reflecting the possibility of lease affirmations by the tenant and for the landlord’s claim for lease rejection damages in bankruptcy. Moody’s also may give credit for some amortization of the debt, depending upon the rating of the credit tenant. In addition, Moody’s considers the overall structure and legal integrity of the transaction. The certificates’ rating may change as the senior unsecured debt rating (or the corporate family rating) of the tenant changes.

10 Reasons why Sales / Leaseback is Good

December 13, 2008

By By Donald J. Valachi, CCIM, CPA as printed in CIRE Magazine

While sale-leaseback transactions may be structured in a variety of ways, a basic sale-leaseback can benefit both the seller/lessee and the buyer/lessor. However, all parties must consider the business and tax advantages, disadvantages, and risks involved in this type of arrangement before moving forward.

In the typical sale-leaseback, a property owner sells real estate used in its business to an unrelated private investor or to an institutional investor. Simultaneously with the sale, the property is leased back to the seller for a mutually agreed-upon time period, usually 20 to 30 years. >>>Read More

Home Depot Enters $41 Million Sale Leaseback of Distribution Center in Virginia

November 21, 2008

The Winchester Star – January 12, 2008

The Home Depot Distribution Center at Eastgate Commerce Center has been sold to a private equity firm as part of 10-year lease-back agreement that will keep the massive warehouse operating in Frederick County for at least another decade.

Equity Industrial Winchester LLC and Equity Industrial Winchester LP, both based in Needham, Mass., bought the 842,000-square-foot warehousing facility for $41 million, according to Frederick County’s electronic property records. Read More >>