Corporate Property: Selling the Crown Jewels or did I?
Once again corporate property hits the headlines, in the space of the last seven days three of the UK’s leading plc’s, Marks & Spencer, J Sainsbury and Whitbread, have announced plans to plug substantial pension deficits utilising property assets with a combined asset value of over £1.25 billion.
Whilst this is nothing new–in 2006 BAE Systems injected £480 million of property assets into its pension funds–does the timing of these recent transactions suggest companies strapped for cash turn away for the restrictions associated with bank financing and that once again it will be their “Crown Jewels,” to their bricks and mortar, they turn to save the day.
Marks and Spencer’s deal generates £300 million of value through granting of a further interest in a property-backed partnership established between M&S and its Pension scheme in 2007.
J Sainsbury’s deal involved establishing a property partnership with the Pension Scheme. Properties to a value of £750 million will be transferred. The company benefits from lower annual cash contributions compared to conventional cash recovery plans and avoids locking in higher annual cash payments based on depressed March 2009 asset values. The Pension Scheme benefits from an immediate injection of ring-fenced security comprising substantial property assets that covers just under half the pension deficit. It is a neat solution; the company retains full operational flexibility to extend, develop and substitute properties within the Partnership.
Whitbread meanwhile is injecting a portfolio of properties occupied by its Premier Inn hotel chain with a value of £228 million into a special purpose vehicle. The deal gives Whitbread considerable flexibility in managing its hotels, if it sells or refurbishes a property and is unable to produce cash flow it is allowed to replace it in the portfolio with another asset of similar value.
So, all in all these deals provide a neat solution. Will we see more deals on the way? Watch this space!
-Paul Danks, BSc. FRICS, SIOR
Based in London, Paul Danks is NAI Global’s Senior Vice President of Corporate Services working with clients across Europe, the Middle East and Africa.
About the author
Scope of Service Experience Paul is Senior Vice President,Corporate Services EMEA region. Operating out of London, Paul has responsibility for driving the development and the management of relationships and business with major international corprate clients operating within the region .Additionally he is responsible for extending the reach and capability of the NAI Global European network. To achieve these goals Paul works with the corporate clients and NAI Global member firms and colleagues across the world. Education BSc. Estate Management, University of Reading Background & Experience Paul has over 28 years experience of advising international corporate clients with particular emphasis on developing strategies to minimize operational costs and maximize value. He has considerable expertise in advising corporate clients in the industrial and logistics sectors, particularly in the areas of aerospace and defense and paper and packaging. He has managed multiple projects across the UK, Norway, France, Germany, Turkey, Poland and Abu Dhabi for the Civil Aerospace division of Rolls-Royce, and multiple projects across the UK and, more recently, India, for BAE Systems, two long-time clients. Paul’s recent experience also includes assignments for Bombardier Transportation, Rockwell Collins, Pentland, Sony Pictures Entertainment, Texas Instruments, Tibco Software and Wolseley. Paul’s clients have also included companies such as Chesapeake, Federal Express, Kuehne+Nagel, DHL Exel, UPS & Travis Perkins. Vue Cinemas, Cineworld Prior to joining NAI Global Paul spent 3 years as Senior Director-Corporate Solutions at BNP Paribas Real Estate with responsibility for International Corporate Client development. Whilst at BNP Paribas Real Estate he was also responsible during 2008 for the coordination of BNP Paribas Real Estate’s European Logistics team of over 70 logistics specialists operating from 29 offices. Prior to BNP Paribas Real Estate,Paul was an equity partner at our UK member firm NAI Fuller Peiser where he had worked for 24 years and been Head of the Sheffield, Manchester & London offices and most recently a board member and head of corporate real estate, with particular responsibility for international work and developing the relationship with NAI Global during the period 2003-2006 Paul also served as Vice Chairman of the NAI Global Members’ Leadership Board during 2006 Professional Affiliations & Designations Fellow of Royal Institution of Chartered Surveyors (FRICS) Member of Corenet Global Member of SIOR NAI Global 2005 Member of the Year (NAI Fuller Peiser) NAI Global 2005 Committee Leadership Award (NAI Fuller Peiser) NAI Global 2005 Member of the Year-EMEA Region (NAI Fuller Peiser) NAI Global 2004 Member of the Year -International Region (NAI Fuller Peiser) Significant Transactions Prior to joining NAI Global Paul in his capacity as Senior Director Corporate Solutions at BNP Paribas Real Estate Paul was Senior Relationship Manager for clients such as Rolls-Royce, BAE Systems, Travis Perkins, Federal Express Chesapeake, Rockwell Collins, Vue Cinemas, Cineworld
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