Property Week - June 17, 2009
Tesco has sold £458m of its properties, financed by the first property securitisation for two years.
The supermarket giant has carried out a £458m sale-and-leaseback transaction as part of its £5bn programme of property disposals that it began in 2006.
Arranged by Goldman Sachs, the issue represents a ‘true-sale securitisation’ of two loans, secured by 12 supermarkets and two distribution properties let on long-term leases guaranteed by Tesco. Rental uplifts are fixed at 2.5-5% for the first five years and are RPI-linked afterwards.
The sale of £430.65m of commercial mortgaged back securities (CMBS), issued by a special purpose vehicle Tesco Property Finance 1, was three times oversubscribed.
Investors were 85% from the UK and 15% from continental Europe and Asia. 85% of the investors were from the pension, insurance and asset management world and 10% were banks, including private banks.
Tesco had so far completed about £2.2bn of sale and leasebacks.
The bonds are fully credit-linked to Tesco’s corporate rating, which is currently A-. They will amortise fully by their 30-year maturity, leaving no residual risk to investors.
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