Market conditions favour sale and leaseback deals: Colliers
Market conditions for sale-and-leaseback transactions are currently favourable, providing corporations with opportunities to unlock asset value to fund debt reduction, M&A, and R&D initiatives according to Colliers’ latest EMEA Corporate Capital Outlook Report (Q3-2024).
Reduced interest rates and stabilising inflation have injected some optimism into real estate markets and positive macro-economic indicators, as well as available capital, “has resulted in renewed momentum and an expanding pipeline as we transition to 2025,” the firm stated.
“We are optimistic about the coming months, as easing inflation and more balanced markets lay the foundation for a stable, growth-oriented cycle,” the firm’s managing director and head of corporate capital solutions EMEA Robert Campkin said.
“The landscape for corporate capital markets remains dynamic, with sale and leasebacks providing a critical avenue for companies to free up capital and optimise their balance sheets.”
The report notes that the European sale-and-leaseback market recorded a modest Q3, with volumes under €900 million of which the €442m sale and lease back of DSV’s 315,000 sq m facility in Denmark, acquired by Catena was a large part.
However, early in Q4 market activity has shown renewed momentum as an expanding pipeline is fostering improved investor confidence, setting a more positive outlook for 2025. “Overall, market conditions for SLB transactions remain favourable, providing corporations with opportunities to unlock asset value to fund debt reduction, M&A, and R&D initiatives.”
The firm also points out that a promising area of growth for Europe’s SLB market is digital infrastructure, in particular data centres. The report highlights the $3.4 billion JV to forward fund a data centre development in Texas between Crusoe and Blue Owl for Oracle. “This represents a prime example of how SLBs can be utilised as an alternative source of funding for these capex intense projects, where there are solid underlying credit qualities and long lease commitments”.
Corporate debt capital markets have sustained growth and investment-grade issuance exceeding €800 billion for the year so far, the firm pointed out. Approximately €275 billion was raised in Q3 alone, reinforcing confidence in credit markets. The evolving risk landscape was reflected by variation in bond yields, with BBB-rated bonds yielding under 4.00% and higher-risk single B-rated bonds at 7.30%.
