CMS Cameron McKenna - Retail Sale - £226 million, sale and leaseback deal

Date: 14 Aug 2000

CMS Cameron McKenna has acted for J Sainsbury Plc in another sale and leaseback deal, worth £226 million. This follows the previous ground-breaking deal in March in which Sainsbury's completed a sale and leaseback of 16 supermarkets in a deal worth £340m.

The new deal concerns the sale and leaseback of 10 UK supermarkets, which have again been purchased by Special Purpose Vehicles formed by Morgan Stanley Dean Witter.

This transaction has taken place as other commercial organisations seek to release the value of their property portfolios. Since capital tied up in property assets generally produces lower rates of return than that employed in a retailer's core business, the sale and leaseback is an effective way for a company to respond to shareholder pressure to draw greater value from fixed assets.

The CMS Cameron McKenna team was led by Banking & Finance partner Ashley Painter and Property partner Nick Brown, assisted by Liz Arden and Sophia Gordon. Paul Severs, Elizabeth Young and Michael Wistow from Clifford Chance advised Morgan Stanley Dean Witter.

Nick Brown commented, "The details of this second deal for Sainsbury's were very similar to the first, which proves that an effective financing technique has been created for the company."

CMS Cameron McKenna has also been instructed to act for Sainsbury's on the possible redevelopment or relocation of their headquarters, currently located in Blackfriars. The company is looking for offices providing in the region of 500,000 square feet of space.

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