Asia Pacific sale-leaseback deals to surge in 2020: JLL

A surge in sale-leaseback transactions is expected across Asia Pacific in the second half of 2020, as corporates look to unlock capital during the COVID-19 pandemic, says JLL.

JLL has seen a notable rise in sale-leaseback inquiries from corporate owners since early April, as owners look to boost cash-flow to get through the global economic downturn.

Interested corporates have hailed from a range of sectors, including automotive, electronics, media, retail and technology, as well as a range of markets, such as Australia, greater China, Japan, Korea and Singapore.

“Corporate owners and occupiers are actively seeking new sources of liquidity and greater flexibility across their real estate portfolios,” said Jeremy Sheldon, head of markets, Asia Pacific at JLL.

“As many continue to re-evaluate their business models and look to maximise working capital during this time of uncertainty, real estate is viewed through a different lens, whereby it can provide both a source of immediate cash flow and tenancy flexibility. Hence, corporate sale and leasebacks are likely to play a significant role in the market’s recovery and stability.”

Similarly, investors are eyeing sale-leaseback deals as a way to cautiously re-enter the Asia Pacific real estate investment market.

According to JLL’s Asia Pacific Capital Tracker Q1 2020, there was about US$40bn in dry powder capital ready to be deployed into Asia Pacific real estate.

“Despite broad economic uncertainty, investors have remained both calm and optimistic throughout the current environment,” said Stuart Crow, CEO, capital markets, Asia Pacific at JLL.

“While cautious, our conversations with investors indicate that some are looking to increase their target allocations to take advantage of any dislocation. Increasingly, these market re-entry conversations have pivoted towards corporate sale and leaseback opportunities, a major theme already emerging in the broader global investment and occupier markets.”

There has been an average of US$17bn in Asia Pacific sale-leaseback transactions per annum over the past five years, according to Real Capital Analytics.

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Benn is a freelance journalist and the publisher of APAC Real Estate. He has reported for the Herald Sun, REFI Europe, S&P Global Market Intelligence, Leader Newspapers, and more.