Focus on Shareholder Value May Mean CMBS for M&S


British retail giant Marks & Spencer (M&S) is considering a securitization deal backed by its non-retail property portfolio, possibly including a lease securitization of its London headquarters.

"Securitization is an option that we are considering; one of the arrows in our quiver," said Jeff Denton, head of corporate finance at M&S. "We've traditionally gone to the capital markets with straight bonds, but we are aware of the different ways to raise finance, and securitization is one of them, especially where property is concerned."

M&S has struggled with flagging sales and a falling share price recently, leading to a greater emphasis on shareholder value. A securitization backed by some of the company's investment property portfolio or its headquarters could certainly improve return on equity and return on assets, analysts agreed.

The company has hired Morgan Stanley Dean Witter whose GBP1.54 billion ($2.49 billion) Broadgate property-backed securitization for British Land is hot favorite for deal of the year to advise on financing options.

Denton noted that M&S has no lack of knowledge about securitization in general, as the company has been pitched regularly by securitization bankers hoping to arrange deals backed by the impressive volume of receivables generated by M&S's in-store credit cards and personal unsecured lending.

"We have yet to find good commercial and economic reasons to do that, but we will keep looking at all the various options," he said, adding that at the end of September, outstandings on credit cards totalled GBP640 million and personal loans stood at GBP1.3 billion.

If a securitization materializes it could take place as soon as the first quarter of next year.