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

Paris—Large sale-leaseback transactions continue to gain traction in Europe. The latest examples include two deals that will garner about 650 million euros or approximately US$926 million for French grocer Casino Guichard-Perrachon & Cie.

In one part of its capital-unlocking strategy, Casino will sell or otherwise transfer 255 urban and semi-urban superette and supermarket properties throughout France to a new entity, AEW Immocommercial. French securities regulators recently authorized AEW Immocommercial and four other companies to operate as OPCIs, property investment mutual funds. A group of institutional investors–including Caisse des Depots et Consignations, Cardif (a BNP Paribas subsidiary), Predica (a subsidiary of Credit Agricole Group), Fonciere Ecureuil 2 (an affiliate of Groupe Caisse d’Epargne) and the Union Mutualiste Retraite–have committed capital to AEW Immocommercial, which will be managed by AEW Europe. Casino will be among its investors as well, holding a 10% to 18% stake.

The properties total approximately 1.83 million sf and are considered by Casino to be “mature, as they are not intended to be significantly extended,” according to the company’s announcement. Casino is leasing back the properties for an initial term of 12 years, plus four renewal options, and rents paid “will be variable and calculated as a percentage of the stores’ retail sales, without any guaranteed minimum and without any indexation on the French construction cost index,” the company further stated. “Averaging 3% of net retail sales, the total rent for 2008 will be around 25 million euros” or approximately US$35.6 million. AEW Immocommercial will initially have assets valued at 455 million euros or about US$648.15 million, although Casino says “it will subsequently acquire other food and non-food convenience store properties from the Casino Group or other vendors.”

Casino’s second strategic sale will be that of 19 hypermarket, supermarket and warehouse properties on the Indian Ocean island of Reunion and owned by its Vindemia grocery subsidiary. These properties are being sold to Immocio OPCI–also recently authorized by French securities regulators–and Generali Group, which has made a “firm offer” to purchase the capital and underlying properties of Immocio for 266 million euros or about US$378.59 million, a price that includes transfer taxes.

The Vindemia properties will be leased back for nine years plus a renewal option, and initial rents will total approximately 18 million euros a year or about US$25.64 million. These leases will be indexed on the French construction cost index. “Vindemia will continue to own the land and the car parks on the hypermarket sites and will, if appropriate, carry out property development in order to expand the stores or the shopping centers,” Casino stated. “The transaction will provide Vindemia with additional resources to speed up development of its food retailing business and strengthen its market leadership.”

The sale-leaseback is not new to Casino, which used the strategy in 2005 and 2006 with its head office and warehouse properties. The company also owns a 60% stake in Mercialys, a SIIC (France’s REIT-like structure) that owns shopping centers.

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