Structure Tone Partners with Corporate Lease Properties to Fund Sale-Lease Back Programs for its Clients
(November 5, 2009) – Structure Tone announced today that it has formed a venture with Corporate Lease Properties (CLP) to provide facility financing for clients seeking to finance real property assets off-balance sheet. Transactions can be structured in conjunction with new construction or as part of a sale-lease back on existing property where Structure Tone is providing renovation or tenant improvement services.
“Structure Tone has never had an affiliation with a finance group enabling us to offer our clients the additional service of capital access in conjunction with our basic business of building high quality corporate real estate,” said Brian Donaghy, vice chairman and leader of the company’s Strategic Initiatives Group. “Through this venture with CLP, we would like to offer our clients an alternative to using their own capital and to provide 100% financing for properties we build or purchase. If a company is credit-worthy, we can structure a leasing transaction through which the cost is amortized over 15-20 years, thereby matching our clients’ long-term assets with long-term capital.”
Structure Tone’s partner, Corporate Lease Properties, is an organization with principals who have been providing capital to finance corporate real estate for over 25 years. H. Cabot Lodge III is the managing partner in charge of the new initiative. Mr. Lodge ran the Credit Tenant Leasing business at iStar Financial, Inc. (NYSE: “SFI”) for six years and before that was executive vice president and managing director at W.P. Carey & Co., (NYSE: “WPC”), a large NY-based real estate investment bank specializing in corporate net lease financing. “Companies still need to build or acquire mission critical facilities to remain competitive,” commented Lodge, “and they would rather deploy capital in primary products or services not in an asset outside of the core business. They are also looking for ways to increase liquidity and build-to-suit or sale-lease back financing provides corporations with the longest-term capital available – next to equity – but without the dilutive effect of selling stock.”
On the buy side, Mr. Lodge has spent his career working with investors in credit-tenant leases – insurance companies, pension funds, public and private investors – that have a focus on the nexus between corporate credit and real estate, providing the cash-on-cash yields inherent in fixed income portfolios. For corporations seeking to lease-finance their real property, “it is typically off-balance sheet,” Lodge continued, “where lease obligations are often not capitalized and provide an attractive alternative to bonds, which typically carry stringent covenant provisions. One hundred percent lease financing also provides corporations with “optionality” at the end of the term, either to re-amortize occupancy costs in renewals or purchase the property back with then-available cash.”
With one of the strongest balance sheets in the construction business and with offices throughout the US, UK, Ireland and Asia, Structure Tone is uniquely positioned to provide certainty of execution and hands-on expertise to ensure its clients’ needs are being met. Notes Robert Mullen, chief executive officer at Structure Tone, “We view this association with CLP to be of strategic importance in meeting the challenging needs of our clients. Our basic business is building but we also recognize that offering financing alternatives can make a difference for our customers.”
Corporate Lease Properties (CLP) is a diversified real estate investment firm focused on sourcing and managing corporate real estate and related debt and equity investments on behalf of select institutional and private investors. CLP provides customized capital solutions to industry-leading companies and institutions that occupy high quality real estate properties that are mission-critical to their operations.
Corporate Lease Properties provides long-term capital for new sale-lease backs on existing property, build-to-suit and retrofit projects. CLP also acquires the real property or debt on real estate already held under existing net leases. CLP capitalizes on the history and reputation of its partners in the sale-lease back and lease financing sector dating back over 25 years to deliver expertise, creativity and certainty to its customers.
The Structure Tone organization is a worldwide leader in construction services that includes Structure Tone Inc., Structure Tone International, Constructors & Associates, Pavarini Construction Co., and Pavarini McGovern. These companies collectively employ over 1,100 professionals; have 21 offices in the US, UK, Ireland and Asia; and put in place over $3.0B in annual construction volume.
