May11
The U.S. mortgage market may be in a decline, but that also means that there are plenty of deals to be had. General Motors announced on Thursday that it has purchased its Detroit Renaissance Center headquarters for $626 million. In the same deal, GM also purchased two other office properties in Pontiac, Michigan for $200 million.
GM had been leasing the Renaissance Center facility, but decided to purchase the building due to the condition of the real estate market.
The Renaissance Center was actually built by Ford’s real estate division in 1977 for $350 million, but became GM’s HQ in 1996, according to Yahoo.com. In 2005, GM spent $500 million improving the Detroit facility.
Although GM is the new owner of the Renaissance Center, it is likely that the auto giant will resell the property as the market improves and enter once again into a lease agreement.
money burning a hole in your pocket GM?
Could be a smart business move if GM truly unloads the properties when the market improves.
Honda buildings are better…
I work for a corporation that even went so far as to sell their high-rise headquarters a few years ago and then lease the same building back. And had they not sold, the same property would have literally tripled in value between then and now. Never did find out if the same bean-counter who recommended that move is still with us.
howsmydriving, my thoughts exactly.
There are many reasons that this makes good sense within its timeline. Very savvy.
GM may be hurting, but they’re not very likely to be going away anytime soon. Buying out properties you’re already leasing and/or buying up properties you’ll eventually need at some point, when they’re available for a song just makes good business sense. Their assets that can be mortgaged to the bank for far less interest than just borrowing the money.
GM gets some nice buildings and a nice asset that can be leveraged for cheap loans.
I don’t think the commercial real estate is doing well in Detroit. It hasn’t been well since the 70s, and there are many vacancies downtown. Instead of gaining companies, we lost Comerica Bank to Dallas. But this just means GM got a good deal on acquiring RenCen. Don’t know if this is good investment yet, only time will tell.
I tend to agree with sharpie. Unless Toyota will move to Detroit who would be a suitor for this space? Perhaps owning it will cost less then leasing it, otherwise there is better real estate to be had in North Korea or in green zone of Baghdad.
johnnycanuck, the bonehead who orchestrated this move is probably got promoted on account that he screwed and learned from it. At least that is how it works in US corporation.
Rumor has it they are goiing to lease the parking garages to Toyota to help them store their extra inventory.
$626 Mil hmmmmmmmmmmm, and buy down workers pay hmmmmmmmm.
“Honda buildings are better…”
Holy hell, now there’s TWO of ‘em!!!!
This makes perfect sense for GM… the market is down and plus, we have no idea how much GM has been paying to lease the whole place, I’m guessing it’s a pretty hefty piece of coin. I think it’s pretty fair to say that if their bean counters said it was more financially prudent to keep renting the place, they’d still be renting the place.