M&S shows how to release property value and keep it too
Marks & Spencer’s innovative deal to use the value of its real estate to fund its pension deficit without relinquishing control of any properties will intrigue many companies. Many are carrying more hidden value in their property than in their core business. And while they all want to cash in on that, most would rather not cede ownership of the buildings that they need to operate from and which are rising in value. Peter Lee reports
Marks & Spencer is the latest company to cash in on its large portfolio of property assets to meet a pressing corporate financing need. Faced in March 2006 with a triennial actuarial valuation of its defined benefit pension scheme that showed a deficit of £704 million (and an IAS19 valuation at the end of September 2006 putting at £1.032 billion), the company urgently needed to agree a plan with its pension trustees to fill the hole.