Jones Lang LaSalle charts route map for complex real estate asset disposal

According to Jones Lang LaSalle research, companies are now under greater pressure than ever to drive increasing value from their real estate portfolios.

Katie Kopec, Director in Jones Lang LaSalle's Development and Asset Strategy team, said: "For those companies with portfolios containing complex assets such as R&D, manufacturing and industrial facilities, releasing value from real estate can present an array of challenges. Companies are weighing up their disposal options from commercializing just one or two buildings within a site, to the sale of entire R&D and manufacturing sites."

Katie Kopec continued: "Such complex assets or sites are often owned freehold, may have been held for a long period of time and are frequently bespoke facilities. Disparities between land and book value may be significant and there may not be an obvious target market for disposal. In short, disposal of such assets can be problematic and also unpredictable."

Jones Lang LaSalle's research highlights several factors are driving occupiers to analyze their real estate portfolios and explore the potential value from any surplus real estate assets. These drivers can vary enormously by business and economic sector however some are common to all, namely globalization and expansion; corporate restructuring and change; and the need to drive greater value from the real estate, all of which are unlikely to change in the short or medium term. Those who address these issues proactively, partner with industry experts and plan portfolio strategy alongside the wider business are likely to outperform competitors in the years ahead.

Tom Carroll, Associate Director in Jones Lang LaSalle's EMEA Research team, said: "There are a multitude of issues to consider when embarking on a complex disposal process. Achieving the right balance for a specific organization and asset is often challenging yet critical for an optimal outcome."

These issues include the following:

  • Business and Occupational Objectives – a firm's occupational strategy and objectives are the first critical factor in the decision-making process along with the legacy and PR issues which can often be hugely influential to the adopted process.
  • Financial Implications – A clear understanding of the current and future financial implications of a write down or disposal of an asset is also crucial. Often a balance will need to be achieved between maximizing value and minimizing liability.
  • Market and Regulatory Context – market conditions shape the disposal strategy, timing and solutions considered. Thinking creatively about how to meet market demand and requirements is vital when dealing with complex disposals, especially when the market for land is so cyclical.
  • Stakeholder Management – identification and management of stakeholders, both internal and external, is also a key part of the decision-making process. There is often a wide range of individuals and organizations directly or indirectly impacted by large scale disposals of complex assets. A thorough analysis of who these stakeholders are, how best to engage them and a clear strategy to mitigate the external impacts of the agreed course of action are essential to achieving a successful exit.

Katie Kopec concluded; "By being cognizant of all these factors you can create a successful outcome, which can bring significant operational and financial advantages."

Source: Jones Lang LaSalle

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