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UK leads the way for corporates looking to unlock capital from real estate assets

Corporate and owner-occupier disposals totalled €7bn in the UK in 2019.

Alistair Meadows, Head of UK Capital Markets at JLL

The heightened uncertainty caused by the COVID-19 pandemic is leading corporate owners and occupiers to actively seek new sources of liquidity and greater flexibility across their real estate portfolios. Our latest report Raising capital from corporate real estate shows that demand by corporates to release capital from their real estate assets has been increasing following a record 2019 for corporate and owner-occupier disposals, which reached €23.1bn of real estate sales across more than 460 transactions.

The UK along with Germany and France, was one of the most active markets for corporate disposals in 2019 with €7bn-worth of corporate and owner-occupied disposals. These three markets accounted for 69% of the total value of transactions in EMEA.

Healthcare disposals in the UK raised €2.2bn alone in 2019, more than any other sector. The sale of BMI Healthcare’s portfolio represents the bulk of this figure. Other notable healthcare disposals in the UK included the sale of four retirement villages by Audley Group to Schroders for €440m. Audley has formed a new venture with Schroders and Octopus Real Estate to deliver the sites, with Audley being responsible for the operational delivery of the villages.

As Covid-19 drives unprecedented global market disruption and uncertainty, businesses of every type and size are facing challenges around cash flow and will be looking for new solutions to help them release capital and attain greater liquidity and flexibility. We’ve started to see more corporates re-evaluate their business models and prepare assets for sale and should expect this activity to be more visible in the second half of the year as markets return to normality.

At the same time, many investors have significant dry powder capital to use and are looking for new opportunities to deploy it. Over the months ahead they will be in search of high-quality properties in markets, sectors and locations they want to target. Some will be attracted not just by the main real estate sectors but by specialised corporate properties from research buildings to manufacturing sites. Private equity controlled mid-cap corporate real estate disposals, which were key in 2019 will likely continue to be a feature in the sector this year

Companies have become increasingly comfortable in using their real estate assets as strategic tools to fund their wider business operations. We expect 2020 to be no exception as businesses deal with unprecedented global disruption and uncertainty and seek solutions that will help them release capital and attain greater liquidity.  

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