Got an ugly building you can't sell? How about some run-down office space you can't lease?

Don't fret. A new joint venture between Western Trading LLC, an affiliate of Western Initiative Media Worldwide, and Cushman & Wakefield gives hard-up property owners an alternative to burning down their buildings for the insurance money.

Companies with underperforming real estate assets may turn them in for Asset Trade Credits, which then may be used for media costs like broadcast, cable, print and outdoor advertising.

"Corporate trade finance has grown into an $11 billion per year business since it originated in the early 1970s," said Robert Ingram, chairman and CEO of Western Trading. "WT/CW enables corporations throughout the world to use this financing vehicle to realize full value for real estate assets through powerful media and trading leverage."

Clients meeting the WT/CW screening profile (hmmm, I wonder what that could be) can dispose of their owned real estate, lease obligations or other real estate interests, with Cushman & Wakefield handling all aspects of the real estate transaction and Western Trading managing the trade portion.

Sounds eerily similar to folks who buy receivables from small and struggling businesses. While this may not be the most attractive strategy out there for raising cash, it is definitely attractive to those with stagnant or negative cash flow.

"Companies with surplus or underutilized real estate often have few options," said Timothy Welch, executive managing director for financial services at Cushman & Wakefield. "Over the past four years we have developed a proven program that assures clients they will get the maximum value for their asset.

"The partnership with Western Trading eliminates uncertainty in disposing of corporate real estate assets and at the same time provides tremendous leverage," Welch added. "The valuable ATCs can restore advertising budgets that most likely would have been severely reduced had the client been forced to sell at distress prices."

Make no mistake - services like these are not without their costs. However, to real estate companies that are cash-management challenged (or just plain management challenged) may benefit from the experience of Cushman's finance folks.

"Beyond the benefits for a client's cash flow and ongoing advertising program, this service is an important financial management tool providing maximum flexibility to corporations in controlling their advertising, real estate and other capital costs in this new technology-oriented global economy," said Timothy Hart, senior director for financial services at Cushman.

You know, kind of like hiring an accountant. We don't like to pay them, but they sure can make life easier - especially for those companies that can't afford to hire KMPG-style talent.

The consolidation bug bit again Monday, when American Real Estate Investment Corporation (Amex: REA) bought Reckson Morris Industrial Trust, making American New Jersey's largest public industrial landlord.

The acquisition, from Reckson Associates Realty Corp. (NYSE: RA) and the Morris Companies, cost $300 million and included 28 big-box industrial facilities totaling 6.1 million square feet.

Why the big purchase? In a word, logistics.

"The acquisition of the RMIT portfolio of large, institutional-quality distribution facilities will provide us with immediate market penetration and unparalleled development capabilities in one of the most desirable, logistics-driven distribution markets in the United States," said Jeffrey Kelter, president and CEO of American.

The RMIT acquisition will close in three stages. The first stage, which includes 22 buildings representing approximately 3.9 million square feet, is scheduled to close by mid-September. The second and third stages, each comprised of three buildings containing approximately 1.1 million square feet, are scheduled to close by April 30, 2000.

Published: August 10, 1999

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