megavideolinks
Joined: 19 Nov 2011
Posts: 273
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 Posted: Wed Nov 23, 2011 3:41 am Post subject: Corporate Real Estate Management (CREM) |
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MOTIVATION
In view of today's globally difficult economic situations more and more groups of companies
realize that their real estate property does not belong among the core business anymore.
Therefore, an ever-growing number of major companies is concentrating on their original
business with which the value-added process is highest.
In order to remain competitive, also German companies must detach themselves from their
real estates in order to reduce their capital investments. After all, they are frequently the
second-biggest cost pool with a share of five to fifteen percent of the total expenditure. As it
appears, that was recognized earlier in other parts of the world. While in German companies
the degree of real estate ownership lies between 50 and 80 percent, the ownership ratio in the
USA equals only ~ 33 percent, in Asia even only ~ 25 percent.
The overall real estate property listed on the German DAX is estimated at 170 billion euro. It
can be assumed that some of this real estate will be offered on the market in the coming years,
all the more so as this process was already initiated a couple of years ago and has been
pursued successfully since. The time is long gone when real estate was regarded as an
inalienable property and inviolable reserve (although this can also result in gross
misjudgements).
The sale of large property holdings, however, can be very problematic for companies, because
in many cases their real estate assets have been dealt with poorly. Often enough, the
management does not even know about the properties’ sizes and/or market values. That can
sometimes lead to disaster, as for example in the case of METRO Group, which is the thirdlargest trading group in the world and the market leader in Germany. In the year 2003 the
METRO wanted to sell 350 items of property as a total package. The sale foundered because
the vendor wanted to impose the risks associated with the real estates on the acquirer. As a
result of this action METRO again had to include in the balance an unexpected debt that
amounted to more than 2 billion euro. The stockholders were not especially amused at this
situation.
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