Transportation Firm Pockets $101M on First Phase of Sale-Leaseback Deal
For real estate-owning businesses seeking a quick cash infusion, selling the property they occupy and then leasing it from the new owner has proven to be a popular move, but the credit crunch has put a damper on such activity, which makes transportation service provider YRC Worldwide Inc.’s closing of the first phase of a…
For real estate-owning businesses seeking a quick cash infusion, selling the property they occupy and then leasing it from the new owner has proven to be a popular move, but the credit crunch has put a damper on such activity, which makes transportation service provider YRC Worldwide Inc.’s closing of the first phase of a $151million sale-leaseback deal quite a coup. According to global commercial real estate research and consulting firm Real Capital Analytics, sale-leaseback transactions decreased 51 percent from 2007 to 2008, and fourth quarter numbers are even more dire; sale-leaseback deals plunged 86 percent from the last three months of 2007 to the last three months of 2008. Apparently, YRC has bucked the trend. The Overland Park, Kans.-based Fortune 500 company signed an agreement last December to sell a group of 32 properties in various locations across the U.S. to NATMI Truck Terminals L.L.C. for approximately $151 million. YRC’s 10-year leases with NATMI call for the company to pay annual leasing fees totaling about $21.1 million; yearly increases are part of the agreement, as are renewal options for up to 30 additional years. Additionally, YRC has the right of first offer should NATMI decide to sell the assets. “This is one of many significant steps in the initiatives to improve our liquidity,” Timothy Wicks (pictured), executive vice president and CFO of YRC, told CPN. “We are pleased with our strong working relationship with NATMI and how quickly we have been able to complete this first step. We remain encouraged by our progress on the next phases. These transactions are a key component of the discussions with our banks, which remain very productive.” The second part of YRC sale-leaseback transaction is on target close later this month. And more is on tap. “We have had very strong interest in our properties, which is remarkable in this current economic environment, and we anticipate further sale of excess properties and sale-leaseback deals during 2009 of our $1 billion in real estate assets,” Wicks said. While sale-leaseback opportunities may appear bright for YRC, such is not the case for many other businesses hoping to follow a similar path–at least for the time being. Jessica Ruderman, senior analyst with Real Capital Analytics, told CPN that, “sale-leaseback transactions will continue to downslide, and maybe pickup at the end of 2009 or the beginning of 2009 when the economy is expected to improve.”