Sale and leaseback programme in Barclays

Abstract

PurposeThe purpose of this paper is to review the context, rationale, execution strategies and results of the biggest property sale and leaseback programme Barclays has yet undertaken.Design/methodology/approachThe paper is a review and analysis of Barclays' project documentation plus report and accounts, interviews with key decisionmakers, analysis of external economic and property market data in order to set the strategy choices and results achieved into context.FindingsThe sale and leaseback programme released capital and supported business objectives at a material level for Barclays; it achieved sales values that were at cyclical highs; flexibility in execution allowed additional value to be delivered across changing market conditions; a mixed skills team was critical for success.Originality/valueThe paper documents why the sale and leaseback programme made sense for the organisation and what elements were key to success both as a strategy and through execution. It provides a case study for how a large organisation approached a recent and large‐scale sale and leaseback opportunity across a portfolio of 900‐1,000 properties.

Disposal strategies in corporate real estate portfolios

“…In line with the cross-disciplinary approach of Barclays (Morris, 2010), in which the expertise of different departments and executive involvement was used for profitability enhancement, the practical implementation of the multi-disciplinary transaction team in the Dutch banking sector had an identical effect. This paper thereby advocates for the use of such a transaction team (particularly) in times of expected real estate activity.…”

“…The larger banking organizations strategically align the functional requirement in their core supply and disposal properties to buyer preferences in order to facilitate the disposal process or enhance financial revenues from disposal. The use of long-term (10-15 years) lease commitments was identified in two of the four cases, establishing investment products that enable them to access fixed-income investors with premium sale revenues (Morris, 2010). In the core supply of one of the cases, diversified expiration dates were applied to achieve flexibility.…”

“…Disposing real estate from a position of financial distress leads to bad deal terms and potential future problems (Louko, 2005). Deploying disposal strategies from a position of strength is considered crucial (Morris, 2010). In order to do so, one should understand the cyclical behaviour of economies, real estate markets, and organizational lifecycles.…”

“…Property value can also serve as a decision-making variable in the positive sense, as it can be used to generate equity. The most valuable assets are generally associated with high marketability, making them subject to low disposal risk (Morris, 2010). The physical perspective originates from technical managers and is aimed at the physical property, its technical conditions and legal requirements (Den Heijer, 2011).…”

“…The disposal of corporate real estate is commonly executed within a retracting real estate market as downturns in occupier's markets that lead to business contraction often occur on a widespread basis (Gibson, 2002). In order to create organizational value, corporations should execute real estate disposal strategies from a position of strength (Morris, 2010). In order to make use of the position of strength that is essential for successful execution of disposal strategies, corporations should proactively align their real estate disposal processes to the cyclical behaviours of economies, real estate markets, and organizational lifecycles (Louko, 2005).…”