Michelle Napoli is editor of Net Lease forum, from which this article is excerpted.

Plainsboro, NJ—New Jersey ranks as one of the smallest states in the country, but in recent weeks it's been the location of two very sizable sale-leasebacks that add up to more than half a billion dollars.

In a deal announced in January, the real estate investments group of Eaton Vance Management, a subsidiary of Boston-based Eaton Vance Corp., purchased four buildings in a sale-leaseback with Bristol-Myers Squibb Co. The transaction, reportedly priced at approximately $283 million, involved a three-building complex at 777 Scudders Mill Rd. in Plainsboro and another building at 100 Nassau Park Blvd. in West Windsor with a total of 872,551 sf. The former serves as a hub for the company's domestic marketing group and the latter houses back-office, shared services functions.

Robert T. Morford, a principal at Garibaldi, Morford & Dobbs/Corfac International, tells NET LEASE forum that while he can not divulge specific lease terms, with options Bristol-Myers Squibb will have 30 years of control over the buildings. Morford, along with colleagues Gerald A. Bower Jr. and Gerald E. Moore Jr., represented the pharmaceutical company in the transaction.

Morford says his client had been considering a sale-leaseback for several years and recently decided it was the right time to move ahead with the plan. There were nearly 20 bids from REITs, a number of local and regional investors with foreign capital partners and more typical net lease buyers, he adds, but Eaton Vance won out as the highest and best bidder. The company "is a long, long-term holder. Its pricing was strong, but so was its profile," he explains.

Meanwhile, a spokesman for San Antonio-based AT&T Inc. confirms the telecom company closed in December on a $270 million sale-leaseback in New Jersey as well as the sale of three other properties nationwide. In a deal brokered by Cushman & Wakefield Inc., it sold the former AT&T Corp. headquarters property in Bedminster, NJ, to MetLife Inc. and continues to use it for such functions as its global network operations center. New York City-based MetLife purchased the property, which is said to also have excess development potential, as part of a 1031 exchange with some of the proceeds from its sale of the Peter Cooper Village and Stuyvesant Town property in Manhattan in late 2006.

"This is an extremely attractive asset in a great location and it will serve as an important component of MetLife's increasingly diverse $8 billion real estate equity portfolio," a MetLife spokesman states.

AT&T also confirms the sale-leaseback of a 1.4-million-sf office building on Chestnut St. in St. Louis, which it sold for $204.9 million to Oak Brook, IL-based Inland Real Estate Group of Cos. An Inland spokesman says the building--the second tallest in St. Louis and a trophy in the market--was purchased by Inland American Real Estate Trust Inc. and is subject to a long-term lease. It also completed the sale and partial leaseback of Sterling Commerce Plaza, a 308,554-sf office building in Irving, TX with Wells Real Estate Funds of Norcross, GA, which purchased it on behalf of the Wells Real Estate Investment Trust II and the sale of a 430,000-sf vacant office building, the SBC Building in San Francisco, for $58.5 million to a joint venture of McLean, VA-based JER Partners and Lane Partners of San Francisco. These three deals were brokered by CB Richard Ellis Group Inc.

An AT&T spokesperson describes the sale-leasebacks as part of the company's ongoing real estate strategy. "Through the corporate acquisitions over the years, AT&T owns a lot of real estate," he says. "Like a lot of companies, AT&T is looking to manage capital."

Instant Insights /

Bristol-Myers, AT&T Close Large SLBs

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