Jones Lang LaSalle


Need $1 Billion? Check Your Real Estate Portfolio

Unlocking Hidden Value... "There's evidence that Computer Sciences Corp has excess space in its portfolio and, to the extent it can be excised economically, the enterprise value could easily increase by $1 billion."

That's Bob Cook posting to his cool blog about the nexus of corporate real estate, corporate finance and real estate markets (&Can real estate consolidation bridge CSC's $1 billion gap?, Apr 6, 2006). And Cook should know. He leads strategic planning efforts in the corporate real estate group at Sun Microsystems, another leading technology firm.

"In 1998, CSC had 177 square feet per person. Today it has 227 square feet per person and, after the 5,000-person layoff it announced this week, it will have 243 square feet per person. This is a negative trend, but these metrics point to opportunity."

Here's the math: "Using the potential savings of $100 million as a benchmark, and applying CSC's Forward P/E ratio of about 16, the enterprise value would potentially increase by $1.6 billion. Netted against this would be the liabilities of the excess property."

Is this a realistic plan? Search me. But it's fun to read the candid insight of an expert in the field. When Cook posted his article, Goldman Sachs had recently been selected to find a buyer for CSC. Did Goldman reach the same conclusion? Does anybody know?

Spread the Word... Many thanks to Marcus & Millichap, sponsors of this week's Dispatch! Their new book, &How to Build a Real Estate Empire, features the story of four prominent Marcus & Millichap clients.

-- Peter Pike