Buyout boom drives record European corporate real estate sales

[LONDON] A record wave of mergers and acquisitions helped drive a boom in European corporate real estate sales in 2021 as private equity firms cashed in on property portfolios of companies they acquired.

Businesses sold a record 29 billion euros (S$43 billion) of real estate in 2021, according to data compiled by broker Jones Lang LaSalle. The 670 buildings sold included the warehouse portfolio of UK grocery chain Asda following its acquisition by private equity firm TDR Capital and a hospital portfolio sold by the Priory Group, the mental health group acquired by Waterland Private Equity.

"These high levels of disposals in part reflect frenetic levels of mergers and acquisitions last year," JLL head of UK corporate research Owen King wrote in a report published Thursday (Mar 24). That "tends to lead to greater volumes of corporate disposals as acquiring entities will often seek to release capital tied up in the property portfolios of their acquisitions through direct disposals or sale and leasebacks".

Private equity firms accounted for almost a quarter of the record US$5 trillion-plus of global mergers and acquisitions last year, according to data compiled by Bloomberg. That led to a corresponding boom in private equity firms loading their acquisition targets with leverage. BLOOMBERG