News

Debenhams gamble pays off for BL

News

Estates Gazette

06 December 2003

Ritblat pulls off coup as consortium that won race to buy department store group set to sell to BL

British Land’s battle to buy Debenhams’ flagship London store on Oxford Street and 25 of its other department stores is close to fruition.

In another coup for chairman John Ritblat, the £500m sale-and-leaseback deal is expected to be completed within a month. The deal follows the £1.7bn sale of the retailer to Baroness Retail on Thursday and its delisting on Friday. Baroness is a consortium of venture capital firms CVC Capital and Texas Pacific, and investment bank Merrill Lynch.

Baroness, which beat rival bidder Laragrove, backed by venture capitalist Permira, is believed to be ready to sell all 26 freehold and long leasehold stores in its 104-strong chain to British Land. Baroness would then leaseback the stores and work with British Land on major redevelopments of several of the department stores. Their plans include expanding the 350,000 sq ft Oxford Street flagship by adding at least one extra trading floor and redeveloping two floors of surplus space in the 500,000 sq ft Manchester store.

The portfolio BL wants includes 13 stores that Laragrove had previously agreed to sell to Legal & General for £144m (see box), plus the Oxford Street and Manchester stores and Cardiff, which Land Securities had hoped to buy. In addition, Ritblat wants to buy up to 10 more freeholds or long leaseholds.

Rob Templeman, Debenhams new chief executive, is said to have decided that property is key to paying down part of the debt and equity raised for the buyout, and for improving Debenhams’ trading space. A source said: “Debenhams has a new owner and there is a new focus on things. If there are some easy wins, it will pursue them.”

A 15-strong team at Cushman & Wakefield Healey & Baker is advising Baroness. Dalgleish is thought to be acting for BL.A further store in Cardiff which Land Securities had hoped to pick up for £22.5m( ??).The Debenham’s portfolio would produce £9.8m in rent pa,which Laragrove had planned to mortgage for £160m at around 85% loan to value with Royal Bank of Scotland

British Land’s deal

British Land is buying 16 Debenhams stores in: Canterbury, Cardiff, Chelmsford, Eastbourne, Hull, King’s Lynn, Luton, Manchester, Oxford, Salisbury, Sheffield, Southampton, Southport, Stratford-upon-Avon, Winchester and London’s Oxford Street.

In addition, it is negotiating to buy up to 10 more.

British Land already owns 14 House of Fraser department stores in a joint venture company with the retailer, valued at £230m and leased back on 40-year leases.

The portfolio is valued at £230m and leased back on 40-year leases.

Ritblat pulls off coup as consortium that won race to buy department store group set to sell to BL British Land’s battle to buy Debenhams’ flagship London store on Oxford Street and 25 of its other department stores is close to fruition. In another coup for chairman John Ritblat, the £500m sale-and-leaseback deal is expected to be completed within a month. The deal follows the £1.7bn sale of the retailer to Baroness Retail on Thursday and its delisting on Friday. Baroness is a consortium of venture capital firms CVC Capital and Texas Pacific, and investment bank Merrill Lynch. Baroness, which beat rival bidder Laragrove, backed by venture capitalist Permira, is believed to be ready to sell all 26 freehold and long leasehold stores in its 104-strong chain to British Land. Baroness would then leaseback the stores and work with British Land on major redevelopments of several of the department stores. Their plans include expanding the 350,000 sq ft Oxford Street flagship by adding at least one extra trading floor and redeveloping two floors of surplus space in the 500,000 sq ft Manchester store. The portfolio BL wants includes 13 stores that Laragrove had previously agreed to sell to Legal & General for £144m (see box), plus the Oxford Street and Manchester stores and Cardiff, which Land Securities had hoped to buy. In addition, Ritblat wants to buy up to 10 more freeholds or long leaseholds. Rob Templeman, Debenhams new chief executive, is said to have decided that property is key to paying down part of the debt and equity raised for the buyout, and for improving Debenhams’ trading space. A source said: “Debenhams has a new owner and there is a new focus on things. If there are some easy wins, it will pursue them.” A 15-strong team at Cushman & Wakefield Healey & Baker is advising Baroness. Dalgleish is thought to be acting for BL.A further store in Cardiff which Land Securities had hoped to pick up for £22.5m( ??).The Debenham’s portfolio would produce £9.8m in rent pa,which Laragrove had planned to mortgage for £160m at around 85% loan to value with Royal Bank of Scotland British Land’s deal British Land is buying 16 Debenhams stores in: Canterbury, Cardiff, Chelmsford, Eastbourne, Hull, King’s Lynn, Luton, Manchester, Oxford, Salisbury, Sheffield, Southampton, Southport, Stratford-upon-Avon, Winchester and London’s Oxford Street. In addition, it is negotiating to buy up to 10 more. British Land already owns 14 House of Fraser department stores in a joint venture company with the retailer, valued at £230m and leased back on 40-year leases. The portfolio is valued at £230m and leased back on 40-year leases.