LCN Capital Partners agrees sale & leaseback with Mercadona

LCN Capital Partners has signed a pre-agreement with Spanish supermarket leader Mercadona to purchase a portfolio of 36 supermarkets in various locations across Spain.

The portfolio has a GLA of 96,342m² (sales floor area of 59,766m²) with annual rent of €9.2 million and assets in all of Spain’s regions except for the Canaries, Castilla León and Spain’s enclaves in Africa.

Mercadona hired CBRE’s capital markets division to arrange the sale & leaseback transaction at the beginning of 2020 whilst LCN hired Cushman & Wakefield’s valuation & advisory team once its offer was selected to enter exclusivity. LCN’s is said to have outbid other specialist funds like ICG Longbow and the portfolio is expected to trade at c. 180 million (5% net initial yield).

LCN Capital Partners is a recognized leader in the primary sale-leaseback and build-to-suit markets managing over €3 billion in 6 different vehicles. The fund specialises in originating investments and leases directly with corporate users of mission critical real estate.

The potential for sale & leaseback investments in Europe is particularly interesting as there is an estimated €3.5 trillion of corporate-owned real estate in Europe compared to circa €1.8 trillion in the USA. In fact, the USA and the EU have 20.6 vs 18.7 trillion of nominal GDP respectively (IMF, 2018) yet the latter offers double the opportunity with many firms still owning their real estate in their balance sheets.

Sale & leasebacks provide corporations with a non-bank capital resource, efficient monetization of on-balance sheet real estate, continued operational control of key assets, enhanced financial metrics, and potential tax benefits.