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Tesco completes CMBS issue | 21 February 2012

Supermarket giant Tesco plc has completed a new £450 million Commercial Mortgage Back Security (CMBS) issue, Semple Fraser reports.

The transaction – which involved the firm selling a 50 per cent stake in an 11-strong portfolio of UK supermarkets “financed by a 30-year dated £450 million credit-linked CMBS” – comprised of over 700,000 square feet of UK retail space.

The portfolio includes ten trading stores – four of which are in Scotland – plus a store currently under development. The five largest assets in the portfolio reflect a massive 61.1 per cent of the portfolio’s total market value, while the single largest asset – the building currently under construction in Woolwich – represents 16.3 per cent.

The store under development will comprise a 179,000-square-feet Tesco Extra store, as well as 259 residential apartments with 78 car spaces.

Overall the portfolio will be “credit linked to Tesco PLC which also acts as a guarantor to Tesco Stores Limited”.

According to costar.co.uk, HSBC, Goldman Sachs, The Royal Bank of Scotland and Lloyds Banking Group were joint arrangers on the deal.

This is Tesco’s fifth foray into the world of CMBS which, in aggregate, amount to £3.05 billion since 2009. Three of the previous deals were sold to Tesco’s own pensions fund; the fourth was sold to USS’ pension fund.

Written by Ashley Curtis on behalf of Qube Global Software

While posted by Qube Global Software all views expressed are not necessarily those of the company. All facts are verified where possible directly by the author.

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