Selling up

6 October 2009 By Nicholas Paisner

Recent weeks have seen a flurry of deals as confidence has started to return to the troubled commercial property sector in Europe. The immediate prospects for property may be mixed. But the real attraction for investors is the promise of longer term inflation protection.

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Tesco said it would sell £514m of property to a joint venture with an unnamed UK pension fund on October 5. The transaction covers 15 of the UK retailer's stores and two distribution centres. Tesco will lease the properties on 30year leases, linked to retail prices and with an initial yield of 5.2% for the stores and 6.3% for the distribution centres.

HSBC announced the $330m sale and leaseback of its New York headquarters on October 3. The Fifth Avenue tower will be sold to an investment vehicle controlled by IDB Group, Israel's largest holding company.

The bank has been marketing its offices in London, Paris and New York. Korea's National Pension Service is interested in acquiring HSBC's Canary Wharf headquarters, the Korea Times reported on September 28.

BBVA announced a E1.15bn sale and leaseback on September 25. The 948 properties, located throughout Spain, will be sold to an investment consortium including Deutsche Bank's RREEF, AREA Property Partners and Europa Capital.

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