CBRE CORPORATE CAPITAL MARKETS · estate. Corporate Capital Markets’ diverse real estate knowledge is combined with deep expertise in finance, accounting, economics and tax, as

CBRE CORPORATECAPITAL MARKETS

CBRE Corporate Capital Markets 32

CBRE’s Corporate Capital Markets practice provides advice, qualitative

and quantitative analysis, and exceptional execution capabilities for

alternative capital solutions for corporately owned and occupied real

estate. Corporate Capital Markets’ diverse real estate knowledge is

combined with deep expertise in finance, accounting, economics and

tax, as well as underwriting of both real estate based and credit based

transaction structures. By melding these skill sets, we create highly

advanced execution strategies for our corporate clients.

Investors and occupiers of commercial real estate have similar capital

markets needs. However, as real estate is not the core business of

most corporate occupiers, the various capital markets opportunities

available to them often remain unknown or untapped. CBRE’s

Corporate Capital Markets practice is designed to look critically at all

capital markets solutions and ultimately uncover value for commercial

real estate occupiers in the same way CBRE serves its investor clients.

By leveraging collaboration between CBRE’s Capital Markets and

various occupier practices and focusing on the specific needs of our

clients, we ensure corporate occupiers receive the maximum benefit

from the value created by their leasehold and credit.

SALE LEASEBACKSCorporate occupiers are increasingly utilizing the sale/leaseback vehicle to monetize 100% of an owned property’s value while securing long-term occupancy and control of the property. Other companies use sale/leasebacks as a way to manage a future exit from a property under better economics. CBRE is the nation’s leading sale/leaseback advisor, having successfully closed over $29 billion in sale/leaseback transactions since 2006.

SYNTHETIC LEASESOur Corporate Capital Markets professionals work with corporate occupiers to realize the benefits associated with a synthetic lease: operating lease treatment, very low occupancy costs, ownership tax benefits, 100% financing and purchase rights.

CREDIT TENANT LEASE FINANCING Credit tenant lease (CTL) financing has become one of the most liquid and aggressive forms for asset monetization. We help corporations effectively structure and place this valuable source of capital.

SINGLE TENANT NET LEASE SALESSpecializing in the sale, purchase and recapitalization of single tenant net leased properties throughout the United States, CBRE has closed over $74 billion in single tenant sales since 2006 and is consistently ranked #1 in the industry for these transactions. Our goal is to provide unparalleled speed to market and exposure for all of our listings, resulting in the highest pricing and surety of close for our clients’ properties.

OCCUPIER REAL ESTATE FINANCING

SINGLE TENANT NET LEASE

THE CBRE CORPORATE CAPITAL MARKETS DIFFERENCE

CBRE Corporate Capital Markets

CBRE is the undisputed #1 real estate services provider in the world,

leveraging a plethora of resources to successfully complete any

real estate assignment. Our ability to coordinate all business lines,

effectively utilize both international and local expertise, and openly

share relationships and information ensures that even the most

complicated assignment will be executed successfully. The Corporate

Capital Markets platform leverages these resources, allowing our

professionals to effectively bridge the gap between real estate and

finance into a fully integrated global service offering. This highly

efficient network lends itself to unparalleled service delivery and

solidifies CBRE as the global leader in real estate.

WHY CBRE?ACQUISITION SALE LEASEBACKWe advise and assist corporations with purchase/leaseback transactions, where the corporation exercises a right to purchase an asset in order to capture gains created by re-selling it subject to a long term net lease.

SURPLUS ASSET REPOSITIONING AND SALESChanges in the business environment, primarily advances in technology, can result in excess inventory, capital goods or real estate. By focusing on capital strategies and solutions, our professionals assist corporations in maximizing the value associated with under-performing assets.

ACQUISITION FINANCING & PRIVATE EQUITY CAPITAL

BUILD-TO-SUIT FINANCINGCorporate Capital Markets offers a range of services to help corporate or developer clients for build-to-suit projects in today’s capital constrained environment. For corporate clients, we offer advice and expertise to structure and secure a wide range of capital solutions for ownership or lease. Additionally, we help developers win and successfully complete build-to-suit projects under a variety of capital solutions for both investment grade and non-investment grade tenants.

DEVELOPMENT


CORPORATE CAPITAL MARKETS BY THE NUMBERS

Corporate Capital Markets is comprised of

38PROFESSIONALS

2 0 1 8

8MAJOR MARKETS ACROSS THE U.S.

$110BSINGLE TENANT & SALE LEASEBACK

TRANSACTION VOLUME

LOCATED IN

WITH A COMBINED

SINCE 2006

CBRE Corporate Capital Markets Office

AtlantaChris BosworthWill PikeBrian PfohlMatt Mountjoy

ChicagoGuy PonticielloBruce Westwood-BoothRobert BrennanMaury VandenEykelKyle SalsJon Fink

DetroitJeff ShellAnne RahmAmie Sweeney

New YorkJames ScottBrian Scott

Los AngelesSterling ChampRyan Garcia

San FranciscoRobert Bickel

MinneapolisRyan WattsJudson Welliver

DenverVincent Polce

$6.62BTOTAL TRANSACTION VOLUME

44MTOTAL SQUARE FEET

680TOTAL TRANSACTIONS

*Source: Real Capital Analytics

INDUSTRIAL

NET LEASE

34.4%3.0%

33.3%

37.2%

29.0%8.3%2.2%

15.3%

8.1%

28.0%

1.3%OFFICE

SALE LEASEBACK

RETAIL

LAND

MIXED

BUILD-TO-SUITADVISORY

CREDIT TENANT LEASEDISPOSITION

Representative Clients

#1FIRM IN SALE LEASEBACK AND NET LEASE VOLUME*

TRANSACTION VOLUME BY ASSET TYPE

TRANSACTION VOLUME BY PRODUCT TYPE


FEATURED TRANSACTIONS

Location Multiple Across U.STransaction Net LeaseProduct Type RestaurantsTransaction Size $720,000,000# of Assets 170Cap Rate VariousStatus 2016 - Ongoing

OBJECTIVE/CHALLENGES• CBRE was selected to evaluate disposition

scenarios, complete lease accounting impact study, and perform property-level underwriting of company’s owned real estate to determine company’s benefits/risks of sale leaseback program

• Sub-investment grade credit (S&P: “BB”)

• Evaluating transaction risks related to existing debt with a substantial prepayment penalty

• Balancing decision between maximizing proceeds (one-off transactions) and speed of execution (portfolio transactions)

TRANSACTION OUTCOMES• Executed a creative marketing campaign which

produced hundreds of competitive offers and resulted in more than $122M in additional proceeds compared to the disposition strategies presented by the competing firms in the RFP process

• 40% of the NOI located in primary markets was sold on a one-off basis to private investors at a 100 to 125 basis point cap rate premium. The remaining 60% of the NOI was sold to multiple institutional investors in tranches of $75 to $142M

• 10, 15, & 20-year NNN lease structures

BLOOMIN’ BRANDS

Location Dallas, TexasTransaction Build-to-SuitProduct Type Office Build-to-SuitTransaction Size $26,650,000# of Assets 1Rate Credit Tenant Loan 4.39%Status Closed February 2019

OBJECTIVE/CHALLENGES• County required a new 40,000 SF administration

building

• County was not willing to issue bonds

• County had a AA- credit and wanted a 10-year lease

• County nor the Developer were willing to pay out of pocket expenses or provide equity

• County was working with voted upon milestones within a very short time line

TRANSACTION OUTCOMES• CBRE advised a Credit Tenant Loan (CTL) structure

to satisfy the above challenges.

• We carried out a confidential marketing effort to a short-list of CTL lenders.

• A competitive bidding process resulted in a cap rate compression saving the County over $2.5M

• Total proceeds of $26.6M ($665/PSF)

DALLAS COUNTY ADMINISTRATION BUILDING

Location Multiple Across U.STransaction Sale LeasebackProduct Type RetailTransaction Size $164,700,000# of Assets 98Cap Rate 5.88%Status Closed December 2018

OBJECTIVE/CHALLENGES• Sherwin-Williams engaged CBRE to market a

98-asset sale-leaseback portfolio on their behalf.

• Sherwin-Williams had owned this grouping of assets for many years and had limited internal due diligence.

• Internal structure which made setting appropriate rents difficult and finalizing lease structure a challenge

• Requirement to close the transaction by year-end 2018 despite the fact that marketing was not approved until mid-October

TRANSACTION OUTCOMES• Condensed marketing campaign resulted in more

than 20 competitive offers which drove the cap rate toward historic levels

• After a fully vetted selection process, Agree Realty was selected as the ultimate buyer, closing with a speedy 30 day due diligence period

• 12-Year NNN Lease Structure with 8% rent increases every four years

• Total proceeds of $142,241,211 | $243 PSF (5.85% cap rate)

SHERWIN-WILLIAMS

Location Eagan, MinnesotaTransaction Build-to-SuitProduct Type BTS Suburban HQTransaction Size $56,861,652# of Assets 1 Asset – 223,128 RSFCap Rate 6.20%Status Closed November 2018

OBJECTIVE/CHALLENGES• High price tag, and secondary market location will

limit international buyer pool.

• Two-Phase marketing effort twill add potential forward risk that investors must weigh.

• Smaller Net-Lease buyer pool may limit competitive environment.

• Narrowing cap rate spreads may lead institutional investors to become wary of over-allocating to real estate.

TRANSACTION OUTCOMES• 14 target buyer competition resulted in a successful

off-market offering.

• Sale Price: $56,861,651

• Sale Price PSF: $256.84

• Sale Cap Rate: 6.20%

PRIME THERAPEUTICS PHASE I



Location NationwideTransaction Sale LeasebackProduct Type Industrial Distribution CentersTransaction Size $505,000,000# of Assets 8Cap Rate 6.17%Status Closed May 2018

OBJECTIVE/CHALLENGES• Unlock capital for paydown of debt

• Execute in an expedited timeline

• Ensure closing certainty

• Sale needed to be accretive to business value

• Lease needed to be accretive to earnings

• Maintain ability to close unprofitable sites

TRANSACTION OUTCOMES• Services provided: Valuation, Own vs. Lease Analysis,

Tax & Accounting Coordination, Portfolio Selection, Lease Structuring

• Worked with all Stakeholders to operationally and financially optimize portfolio

• Provided Board level analysis and market assessment to value all owned real estate ($1.3B) and recommended a phased disposition approach

• Accelerated bidding process to meet the client’s desire to select buyer by company’s first quarter earning call

• Closed transaction with a single buyer for $505M, which included $20M of BTS capital in 30 days from signing of LOI

SUPERVALU DISTRIBUTION PORTFOLIO

Location Midwest & Arizona USATransaction Sale LeasebackProduct Type Bank BranchesTransaction Size $382,000,000# of Assets 246 (5 Portfolios)Cap Rate 6.1%—6.8%Status Closed 2014—2018

OBJECTIVE/CHALLENGES• Required occupancy flexibility in branch network but

did not want to take sale losses

• Needed to reduce occupancy costs

• Wanted to harvest equity real estate portfolio

• Desired reoccurring annual gains

TRANSACTION OUTCOMES• Fitted all branches into four occupancy buckets: 15

(I), 10 (II), 7 (III), & 5 (IV) years

• Separated a profitable mix of all buckets into five Portfolios, to market over five FYs

• Structured portfolio as all 15 or 10 year terms with termination options after 7th and 5th lease years for sub-portfolios III and IV

• Created a Flexible Bidding Structure to drive best pricing, yet each portfolio was sold to a single buyer

• Executed five separate portfolio, one per FY, all provided gains: ‘14 ($10M), 15’ ($35M), 16’ ($40M), 17’ ($65M), 18’ ($25M)

BMO HARRIS BANK PORTFOLIOS

Location Multiple Sites in IllinoisTransaction Sale LeasebackProduct Type Medical Office BuildingTransaction Size $240,000,000# of Assets 8Cap Rate 5.10%Status Closed April 2018

OBJECTIVE/CHALLENGES• Monetize RE to reinvest into business growth

• Sale needed to be accretive to business


• SLB needed to conform to Bond Indenture

• Needed add’tl. capital for future RE growth

• Company had a B+ Credit Rating

TRANSACTION OUTCOMES• Ran a mult-bid process with a Flexible Bidding

Structure to drive up value

• Transaction traded at a 19.6X multiple, company was valued at a 15.0X multiple

• Sold portfolio to a single buyer, who also provided a $50M build to suit credit line

• Transaction received US GAAP Sale Treatment and Operating Lease classification, which was required under all Credit Agreements and Bond Indentures

• Deal added $56M of Enterprise Value to the company and Book Gain of $80M

DUPAGE MEDICAL GROUP

Location Chippewa Falls, WisconsinTransaction Net LeaseProduct Type BTS Distribution CenterTransaction Size $50,300,000# of Assets 1 Asset – 1,126,268 RSFCap Rate 6.85%Status Closed February 2018

OBJECTIVE/CHALLENGES• Volatile capital markets climate with rising interest

rates.

• Highly leveraged private equity sponsor.

• Outlying location with limited residual value.

• Large building Size – 1,126,368 RSF may leave some investors over exposed to a single tenant and/or industrial product.

TRANSACTION OUTCOMES• 63 signed confidentiality agreements received.

• 10 total offers resulting in a 6.85% cap rate.

• Sale Price: 50,300,000

• Sale Price PSF: $44.66

MILLS FLEET FARM



Location NationwideTransaction Sale LeasebackProduct Type Industrial/RetailTransaction Size $123,500,000# of Assets 27Cap Rate 6.65%Status Closed October 2017

OBJECTIVE/CHALLENGES• Develop occupancy and capitalization plan

• Create occupancy flexibility

• Portfolio optimization under varying occupancy and leaseback strategies

• Enhance financial condition of company


TRANSACTION OUTCOMES• Created Long-Term, Short-Term & Vacant occupancy

plan based on field surveys

• Structured a Residual Sale Lease to get best Balance Sheet Treatment and Profit and Loss impact

• Prepared Board of Directors presentation

• Ran a mult-bid process with a Flexible Bidding Structure to determine market value

• Sold portfolio to a single buyer for $124M, company and Book Gain of $80M

HERC RENTALS PORTFOLIO

Location NationwideTransaction Net LeaseProduct Type Office/Industrial RetailTransaction Size $1,300,000,000# of Assets 100Cap Rate 6.22%Status Closed September 2017

OBJECTIVE/CHALLENGES• Sell Portfolio in expedited timeframe

• Leverage flexible bidding structure to maximize pricing, but execute as one Portfolio

• Mitigate residual value risk due to heavy credit concentration by few tenants

• Access Global Capital

TRANSACTION OUTCOMES• Sold as Portfolio to Single buyer

• Secured 87% Loan-to-Value debt proceeds to facilitate sale – high complex syndicated debt structure

• Produced bids from various domestic and international investors

• Achieved record pricing - 6.22% cap on 11 year average weighted lease term Portfolio

• Largest U.S. Portfolio sale in 2017

OAK STREET FUND II PORTFOLIO

Location NationwideTransaction Net LeaseProduct Type Office Operations CentersTransaction Size $1,500,000,000# of Assets 33Cap Rate 6.0%—7.5%Status Closed 2014 - 2017

OBJECTIVE/CHALLENGES• Acquire entire State Farm-owned portfolio

• Sell stabilized long-term sale leasebacks as one Portfolio

• Execute transaction in an expedited timeline – 4 months

• Maximize proceeds, book gains and operational flexibility

TRANSACTION OUTCOMES• CBRE acted as advisor to LoneStar resulting in

$850M purchase in Q2 2014

• CBRE acted as advisor to LoneStar resulting in $680M post acquisition sales in two portfolio transactions $540M and $140M

• Developed detailed redevelopment valuations on all vacant and short-term leasebacks

• Sold second portfolio of State Farm leased properties for $135M after short-term leases were stabilized

LONESTAR/STATE FARM PORTFOLIO

Location NationwideTransaction Sale LeasebackProduct Type RetailTransaction Size $435,000,000# of Assets 83Cap Rate 6.15%Status Closed December 2016

OBJECTIVE/CHALLENGES• Monetize real estate to create liquidity

• Client attempted to self perform and failed, needed new market strategy

• Parent Company would not guaranty lease

• Lessee did not have audited financial statements or auditors notes

TRANSACTION OUTCOMES• Reviewed entire owned portfolio to develop sellable

portfolio to the market

• Restructured lease terms and got site level health statistics to in lieu of audited financial

• Arranged debt for portfolio before marketing

• Received 6 bids from different buyers

• Split the portfolio into tree pieces and sold each portfolio to any different buyer

• Executed at a Cap Rate below expectations and created 3 new investor relationships for Client

WALGREENS PORTFOLIO

CONTACTS

JAMES SCOTTExecutive Managing [email protected] +1 212 656 0556

CHRIS BOSWORTH Vice [email protected] +1 404 923 1486

ROBERT BICKELExecutive Vice President [email protected] +1 415 772 0184

STERLING CHAMP Executive Vice President [email protected] +1 818 502 6769

WILL PIKEVice Chairman [email protected]+1 404 923 1381

GUY PONTICIELLOExecutive Vice [email protected]+1 312 861 7814

JEFF SHELLExecutive Vice President [email protected]+1 313 417 2100

RYAN WATTSExecutive Vice [email protected]+1 952 924 4657

BRUCE WESTWOOD-BOOTHExecutive Vice [email protected] +1 312 861 7812

ROBERT BRENNANSenior Vice [email protected]+1 312 935 1058

BRIAN SCOTTSenior Vice [email protected] +1 212 984 6607

JUDSON WELLIVERSenior Vice President [email protected] +1 952 924 4818

MAURY VANDEN EYKELSenior [email protected]+1 312 297 7634

RYAN GARCIAVice [email protected]+1 818 502 6735

BRIAN PFOHLVice [email protected]+1 404 504 7893

VINCENT POLCEVice President [email protected]+1 303 628 1723

ANNE RAHMVice President [email protected] +1 248 351 2017

AMIE SWEENEYVice President [email protected] +1 248 351 2097

KYLE [email protected] +1 312 935 1474

THOMAS CARRAssociate [email protected]+1 404 504 7900

Documents

CBRE CORPORATE CAPITAL MARKETS · estate. Corporate Capital Markets’ diverse real estate knowledge is combined with deep expertise in finance, accounting, economics and tax, as