PROJECT FINANCE

ome are pressing the escape button. Some are standing pat. Some are looking to acquire. Depending on the portfolio at hand, in some cases they’re doing all three at once.

      Those are the results of a January 2009 Site Selection survey of corporate end users and tenant rep advisors. Asking respondents to “check all that apply,” we posed three questions about how the current economic climate is affecting their companies’ facility plans and financing. (Thus results may add up to more than 100 percent.) The 85 complete or partial responses we received represented a wide range of multinational industry sectors and portfolio geography, drawn from our subscriber and e-mail lists.

      The graphs tell the story: While two-thirds say corporate credit conditions have driven their companies to either place all facility expansion projects on hold or pick and choose favorites among them, more than a quarter say such conditions have not affected their facility expansion plans.

      Such a robust reply may reflect not only optimism, but a solid base of retained earnings from which to finance projects. It also reflects the fact that not all banks have locked up their lending vaults.

      That vitality extends to reactions to the current economy. Yes, nearly half say their corporate real estate teams are focused on asset disposition, with 39 percent involved in negotiating terms for lease terminations and nearly 30 percent dealing with facility issues related to job cuts. But 44 percent are looking for opportunities to acquire assets of struggling companies.

      Many respondents said that current economic conditions are driving their companies to examine costs very closely, focusing on projects with the best return on investment. Some are limiting hours worked, others are being more selective about borrowing. Some are looking to defer or delay projects until more favorable rates and terms come around, while at the same time one respondent’s real estate team is focused on renewing early in order to take advantage of lower rates.

      Few respondents are choosing to travel alternative finance routes. As one respondent wrote, “Low loan-to-value ratios have challenged finance opportunities.”

      But for every “stand pat,” “suspend growth” and “wait and see” response, there were others looking for some action, even if it comes via modest but meaningful steps such as renegotiating leases and service agreements. Others are more adventurous: “Seek opportunities” and “deal hunt.”