British Land’s anticipated purchase of £450m worth of property from Debenhams has fallen through after Baroness Retail, the department store chain’s new owner, decided to refinance the portfolio instead.
Baroness had originally been considering a sale-and-leaseback of around 26 stores in order to pay off short-term debt acquired in the £1.7bn acquisition of Debenhams last December.
The portfolio included the 350,000 sq ft flagship store on Oxford Street, a 475,000 sq ft Manchester store plus outlets in Canterbury, Hull, Oxford, Sheffield and Winchester.
However, Debenhams has now raised £375m through a refinancing deal with three banks. The money was raised in the form of a 10-year loan secured against 24 freehold and long leasehold properties.
These stores, including the Oxford Street flagship, have been transferred to a Debenhams property company, with the Debenhams operating company taking 25-year leases on the stores with index linked rents. Debenhams will be able to refinance, sell or securitise the stores if it needs to.
The banking syndicate comprises Bayerische Landesbank, Anglo Irish and Bradford & Bingley.
A source close to the negotiations said: “There was no falling out with British Land but the deal with the banks gave Debenhams more control and flexibility”. Debenhams itself declined to comment.
Cushman & Wakefield Healey & Baker advised Debenhams on the refinancing.
Source: Freeman / Estates Gazette