Banks Consider Sale-Leaseback Deals

Banks Consider Sale-Leaseback Deals
Although the current financial troubles of many banks are in part attributable to their real estate-related transgressions, they are looking to their corporate real estate holdings to help bail them out.

For example, HSBC is considering sale and leaseback deals for its headquarters buildings in New York, London, and Paris. The sales are expected to raise more than $4 billion.

Also, Credit Suisse is considering a similar deal involving two London office buildings for about $600 million.

The logic behind these moves is simple: Sale-leaseback deals generate cash. Then, the operating leases are little more than a footnote on the balance sheet.

While the value of commercial real estate worldwide has fallen in the last 12 months and financing can be hard to find, analysts say it is still a good strategy for cash-strapped banks.

Source: Dow Jones, Molly Neal (04/16/2009)