Tuesday, October 6, 2009

HSBC Agrees to Sale-Leaseback its Fifth Avenue Headquarters

HSBC has entered into a sale-leaseback with its American headquarters in New York for a deal totally $330 million. HSBC is also considering similar sale-leasebacks for its Canary Warf tower and Paris offices on the Champs- Elysees for $1 billion. HSBC plans on leasing the building for one year, and then lease only the first 11 eleven floors (the building is has 29 stories) for the following 10 years. HSBC has commented that this results not from cutting employees but from better utilization of office space.

This deal is not thought to be connected with HSBC’s recent decision to move its CEO’s office to Hong Kong. The buyer is a subsidiary of IDB group, a holding company owned by prominent Israeli billionaire Nochi Danker.
Sale-Leasebacks have become quite popular lately as more firms require an immediate inflow of capital to maintain operations. Another prominent example is a sale-leaseback with the NY Times building. Recently, even governments have been getting in on the act, as Net Lease Insider reports sale-leasebacks are to be undertaken by many U.S. State governments.

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