Investors are angry at the terms of the £250m sale-and-leaseback of 300 Boots stores that came to market last week.
Confidential documents show that Boots is stipulating that the purchaser will not be allowed to carry out a securitisation or break up the portfolio.
It also retains the right to terminate any lease on six months’ notice, provided it never terminates more than 1.5% of the £30m rent roll in any calendar year.
“These terms are putting people off,” said the agent for one bidder. “They make it look like a terrible deal.
“But the larger pension funds will still fight it out for the properties because it will be a safe investment for them.”
Another adviser criticised the ban on securitisation. “Boots is concerned that a securitisation would preclude it from raising debt in the future but it is going to stop the type of deal that Robert Tchenguiz or Topland would do.”
Potential bidders are also reacting negatively to the Boots sale because private equity firms are reported to be preparing bids of up to £5bn for the entire company.
Around 10 invitations to bid for the estate were sent out last week, with Prudential, REIT Asset Management, Hermes, Insight, William Pears Group, Prestbury, British Land and Structadene among the bidders. First-round offers are expected on 29 April.
A Boots source rejected the criticism: “We are selling a single portfolio. There’s no point in having someone else cut it into pieces. We want a long-term relationship with the landlord.”
Tchenguiz’s R20, which may team up with Barclays Capital, said: “The restrictions on selling parts of the portfolio won’t help with the sale.”
Another source said: “There’s no low profile on this deal, which puts people off. Clarity is needed on this. It’s not like there are not other portfolios available.”
Bryan Laxton, partner at Cushman & Wakefield Healey & Baker, which is advising Boots, refused to comment.
References: EGi News 15/04/05
