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Similar terms, with almost opposite meanings.
Built = build
to suit = to suit
Real estate Built to suit are built by investors who have already agreed to be rented by a retail chain.
The network anticipates its availability in terms of rent and describes the ideal format for the property.
If investors consider it feasible, the property is built well the way the network wishes, which in turn rents it out under long-term contracts.
An excellent stock division, given that the chains prefer to operate in third-party properties and can use the purchase price of land and construction to open even more stores.
A typical win-win.
#Só that's not it!
Built = build
to last = to last
In times of crisis, such as the current one with low margins and high interest rates, the chains present shareholders with alternatives to raise money.
At these times, we see expressions such as “divestment”, “non-strategic assets” appear.
These are comprehensive concepts, difficult to define, but they include everything you need to sell to get out of the squeeze.
Owning the property is not mandatory for retail chains, which can secure its possession through long-term contracts.
Even so, when they own the asset, they can integrate it into their cost chain, with direct benefits to profitability.
Therefore, if ownership of the property is not mandatory, it is very interesting.
Were it not advantageous, the networks would never own such “non-strategic” properties for “divestment”.
The sale of these assets is an immediate cash-generating event, but with an impact on long-term costs.
The term Sale and Lease Back He is a close cousin of Built to Suit.
In this operation, the network sells a property and those who buy it rent it back to the network.
Something like selling dinner to pay for lunch.
The GPA group, owner of the Sugarloaf brand, set out to sell two assets for a high amount of 250 million each:
- The headquarters building of its offices, very well located in the heart of Jardim Paulista, on Av. Brigadeiro Luís Antônio
- A non-operational store in Barra da Tijuca, an area with very high consumer potential, but outside the logistics focus
While Carrefour announced the sale of stores and distribution centers in such strategic locations that buyers They agreed to pay an amount above the market average:
The Anhanguera distribution center is Carrefour's main CD and is in an excellent location.
The stores they are selling are also very good, with strong movement and sales.
The question that remains is:
If the assets can be considered non-strategic, why did the networks invest in them after all?
The answer involves the dichotomy between the To Suit And the To Last.
When a network has ownership of the properties it uses to sell or operate, it reduces its dependence on third parties and ensures more controllable costs over time.
This makes it more solid, or long-lasting, since essential aspects for its performance, such as control over locations, are guaranteed.
So that would be a case of Built to last.
In the opposite scenario, the network disposes of some assets that are not essential to its operation, such as locations, and continues normally for a while, but will see its costs be pressured in the future
Built to suit it is a property adjustment and also a financial one.
Which of the options is the best?
Between 2012 and 2013, businessman Abílio Diniz and his family sold control of the GPA operation to the Cassino da França group.
The news was very shocking at the time, given the strong association between the Diniz and the business they grew.
Also because, in 2009, shortly before selling the GPA, The Diniz family acquired the Casas Bahia chain, making up Via Varejo.
Over the years, the family further reduced what little participation they had left in the GPA.
Both the Diniz family from GPA and the Klein family from Casas Bahia sold their chains, but not the locations.
On the sale of Casas Bahia to the GPA hundreds of properties rented to the network were left with the Klein family.
On the sale of the GPA to Cassino, The ownership of 60 properties rented to the network was left by the Diniz family.
Even removed from Cyrela's daily life, All land purchase decisions go through Doctor Elie Horn.
The rings are gone
Whoever owns the location has enormous power over who depends on it to do their business.
So much so that both families, years later, found themselves with the means to retake their networks, and the Kleins actually did so.
This is the central message of the movie Hunger for Power, which tells the story of how businessman Ray Kroc gained control of the McDonald's chain.
