Marine manufacturers look to “monetise” real estate

A growing trend in industrial real estate could be a path to debt relief or a source of quick capital for expansion plans, and is ideally suited to marine manufacturers who stand to benefit, according to commercial real estate brokers in the US.

Sale/lease back transactions are growing in popularity as investors are looking to scoop up a shrinking number of manufacturing plants for top dollar and in turn, lease them back to the current occupant.

“I think it’s a good time to contemplate a sale-leaseback [transaction] because the demand for that type of investment product is as strong as I’ve ever seen it,” James Barry III, president of real estate brokerage firm The Barry Co, told BizTimes. “That is reflected in a larger number of buyers who are looking for that sort of product and are willing to pay competitive prices and very low capitalisation rates for sale-leasebacks.”

One company that took early advantage of the trend is Harken, maker of marine hardware and accessories. Harkin sold its 170,000sq ft industrial facility a local investor for US$15m. The property has an assessed value of about $9m, according to County records.

When the deal was announced, Harken said the building sale would help accelerate its growth by funding some strategic acquisition opportunities in its marine and industrial markets.

“It certainly is an opportune time in the market for companies to monetise their real estate,” said Trent Poole, first vice president with CBRE’s Milwaukee office. “Industrial and manufacturing are kind of the darlings of the market right now.”

Poole said while counter-intuitive, it is better if companies sell their buildings while their financials are strong. Most companies are looking to monetise when they’re not performing as well and may leave capital on the table, he said.