Securitisation of UK Property
Marks & Spencer PLC
3 December 2001
3 December 2001
Marks & Spencer Securitisation of UK Properties
MARKS & SPENCER RAISES £331 MILLION FROM UK REAL ESTATE
Marks and Spencer p.l.c. announces the launch of a £331m bond offering at an
annual interest rate equivalent to 6.32%, securitising the rental income from
a portfolio of its retail properties. The issue is expected to close on 12
December 2001.
The Transaction
The transaction provides non-recourse asset-backed finance secured on
occupational leases that allow Marks & Spencer to retain significant retail
flexibility, including the right to substitute properties, sub-let and make
alterations to existing footage.
Marks & Spencer has the right to release any property from the security
through substitution or the repayment of the bonds at predetermined amounts.
The Properties
Marks & Spencer has selected a portfolio of 59 properties, the majority of
which are in prime locations in high street and regional centres across the
UK. The portfolio on which the bonds are initially secured comprises 45
properties with an aggregate value(1) of £350.5m. The remaining 14 properties,
with an aggregate value(1) of £71.5m, are pre-approved substitutes subject to
satisfying certain tests. Other properties may also be substituted subject to
additional tests.
Robert Colvill, Executive Director, commenting on the transaction, said:
'Following the recent structured sale and leaseback, this transaction releases
further significant value from our assets, and allows us to retain the upside
from the real estate equity interest in these key trading locations.'
Morgan Stanley is the sole lead manager for the issue.
Ends
For more information, please contact:
Louis Hill / Sue Sadler Marks & Spencer corporate press office 020 7268 1919
Jeff Denton, Marks & Spencer corporate finance 020 7268 8878
Tim Drayson, Morgan Stanley 020 7677 7046
Notes
1. Existing use value has been calculated by DTZ Debenham Tie Leung in
accordance with relevant Practice Statements contained within the
Appraisal and Valuation Manual, Third Edition, Amendment 14 issued by the
Royal Institution of Chartered Surveyors, namely that the stores can only
be used for their existing use, either in their existing layout or
sub-divided (whichever has the greater value), and assuming vacant
possession of all parts occupied by Marks & Spencer. These valuations are
in draft final form pending their inclusion in a valuation report that
will form part of the Offering Circular for this transation.
2. £331m of bonds (with an equivalent loan to value ratio of 94.4%) will be
issued by Amethyst Finance plc, a newly established special purpose
vehicle, the proceeds of which will be used to purchase the properties
from Marks & Spencer.
The transaction is structured to include a leaseback to Marks & Spencer of
properties for a 25 year term, with an initial rent at circa 15% below
market value and rental increases of 0.5% per annum. The initial annual
rent has been set at £23.5m.
3. The bonds will be issued in three tranches, £60m Class A1 Floating Rate
Notes due 2015, £131m Class A2 Floating Rate Notes due 2026 and £140m
Class B Fixed Rate Bonds due 2026. The Class A1 and Class A2 Notes will
fully amortise from rental cashflows and are expected to be rated 'A' by
both Standard and Poor's Rating Services and Fitch Ratings Limited. The
Class B Bonds will be repaid by a bullet payment in 2026 and will not be
rated.
The following Marks & Spencer stores are the Core Portfolio.
Aberdeen Crawley Inverness Northampton Stockport
Accrington Doncaster Ipswich Perth Stratford upon Avon
Bromley East Kilbride Leamington Spa Reading Sutton Coldfield
Bury St Edmunds Eastbourne Leeds-Moortown Richmond Taunton
Carlisle Falkirk Leicester Salisbury Telford
Chelmsford Harborne Lincoln Sheffield Tunbridge Wells
Cheltenham Harrogate Llandudno Slough Winchester
Chichester Hereford Middlesbrough Southend Windsor
Colchester Hull Newbury Southport York
The following Marks & Spencer stores are the pre-approved substitute
properties.
Ballymena Foyleside Hemel Hempstead Preston Welwyn Garden City
Derby Gloucester Maidstone Stevenage Worcester
Durham Hackney Newport Stoke-on-Trent
Latest directors dealings
- 6 hours ago ASOS
- 6 hours ago MJ Gleeson
- 6 hours ago Rolls-Royce Holdings
- 7 hours ago Crest Nicholson Holdings
- 7 hours ago Naked Wines