Coupled with the sale of Marks & Spencer's overseas operations including Brooks Brothers in the USA, the property sales will have brought the company close to its target of returning £2 billion ($2.85 billion) to shareholders by the end of the year.

Marks & Spencer is to sell the 45 stores--with a capital value of £351 million--to a special purpose vehicle called Amethyst Finance, leasing them back for 25 years to show a yield of 6.28%. Amethyst will then issue bonds securitising the rental income, and return the proceeds to Marks & Spencer through an inter-company loan.

Rating agency Fitch has analysed the issue. Property analyst Jonathan Pitkanen said that from M&S's point of view the deal has a number of advantages over a conventional sale and leaseback. It has the flexibility to take properties out of the portfolio, and 14 stores have already been identified as potential replacements. And the leaseback rents have been set 15 per cent below market levels but with fixed increases of 0.5 per cent per annum, again below historic growth rates. The portfolio was designed to maintain geographical diversity, and also included a cross-section of M&S stores, ranging from 160,0000-sf city centre stores to 21,500-sf suburban foodstores.

M&S Executive Director Robert Colvill said: 'Following the recent structured sale and leaseback, this transaction releases further significant value from our assets, and allows us to retain the upside from the real estate equity interest in these key trading locations.'

DTZ Debenham Tie Leung was property advisor on the issue and Morgan Stanley is lead manager.