Bancolombia says it may consider more leasebacks in 2011

Monday, January 3, 2011

Although it has nothing in the works currently, Colombia's largest bank, Bancolombia (NYSE: CIB), could consider additional leaseback transactions in the future if market conditions make them convenient for both the bank and its real estate fund, a Bancolombia spokesperson told BNamericas.

Last week, Bancolombia announced it had sold 13 offices or floors in its 18-story San Martin building in Bogota to a private equity real estate fund managed by its fiduciary unit for 58.6bn pesos (US$30.5mn), which have already been paid to the bank.

Additionally, Bancolombia transferred nine real estate assets in the same building worth 17.1bn pesos to the fund as a payment to increase the bank's ownership in the fund, the spokesperson said.

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Bancolombia will retain occupancy of the offices, although the spokesperson declined calling the transaction a "leaseback," as the bank has no option of repurchasing the assets in the future.

"They did it to gain or free liquidity from the sale so they can use those funds for core activities, such as lending, and they also benefit from the tax deductibility of the lease/rent payment," analyst at Brazil's investment bank BTG Pactual Alonso Aramburu told BNamericas.

Bancolombia's private equity real estate fund is owned by a subsidiary of Canadian pension fund Public Sector Pension Investments, local holding company Grupo de Inversiones Suramericana (OTC: GIVSY) and Bancolombia, both directly and through its investment banking arm.

Bancolombia reported consolidated third quarter net income of 375bn pesos, up 17% on 3Q09, as lower provisions offset weaker revenues.