'Property' has been a bad word in the markets, and 'structured finance' or 'securitisation' are worse. So how on earth do you sell commercial mortgage-backed securities? By building them to look like corporate credits, in the way that Goldman Sachs has been doing for Tesco.
The UK's largest supermarket chain, Tesco has a property portfolio worth some £30bn ($49bn) at current market values. Unlike some of its rivals, it did not securitise most or all of that while market conditions allowed. But it did begin a sale and leaseback programme in 2004, when it securitised 33 supermarkets and two distribution centres to raise £632.5m in three credit tranches of 30-year bonds. The issuer was Delamare Finance, a 50:50 joint venture between Tesco and property developers Topland.
