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Flurry Of Corporate Leasebacks Expected

Companies may find selling off their real estate to be more attractive than tapping conventional sources of fundraising. "This is a market that has been far more active than the traditional multi-tenant investment sales market," said Bruce Miller, managing director at Jones Lang LaSalle in Chicago.

There have been a number of corporate sale-leasebacks in recent weeks, including Bank of America's sale of 135 N. LaSalle St. in Chicago. In New York, HSBC is shopping 452 Fifth Avenue (REFI, 9/1) and Verizon, which has been involved in a number of high-profile sales, is shopping 185 Franklin Street. "This is a quick way to monetize some assets, if your core business isn't real estate," said Steven Hermann, executive vice president at CB Richard Ellis in San Francisco.

One broker said such deals can provide a kick to markets. "People have more confidence if there's a leaseback involved and it's a decent corporation," he said. "I think we will see more [corporate deals], especially where these assets are large," added Frank Liantonio, head of the capital transactions services in the capital markets group at Cushman & Wakefield.

Hermann said he thinks San Francisco might see some sale-leasebacks, especially in Silicon Valley. Many corporations have moved out or sold their holdings. "San Francisco doesn't have a lot of corporate owned real estate," he said. "It's no longer a quote-unquote headquarters town...Wells Fargo owns a couple that might be a candidate, but in the overall milieu of banks they're one of the healthier." 

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