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J Sainsbury, the UK retailer, has closed a 335 million ($530 million) sale-leaseback securitization of 16 supermarkets-the first time in the UK that a property saleleaseback has been funded through a securitization.
Morgan Stanley Dean Witter and property finance specialist Assettrust arranged the deal that is 2 % cheaper than a traditional property financing, due to its tax-driven structure.
Sainsbury sold the property to a special purpose vehicle (SPV) that issues bonds to investors and leases the assets straight back to Sainsbury.
Sainsbury pays lease rentals to the SPV, Highbury Finance BV, which uses the proceeds to repay interest and principal on the bonds.
The bonds partially amortize over the deal's 23-year length. At the end of the lease, Sainsbury...