LONDON-Britain’s 200 biggest companies, which are sitting on assets of euro 145 billion ($174.59 billion), are increasingly looking to sale and leasebacks to plug massive holes in their pension funds. Supermarket chain J. Sainsbury, defense and engineering group BAE Systems and holiday village operator Center Parcs have already used this to raise capital for pensions or other needs, according to a briefing note from investment firm Close Brothers.

The UK pension industry is facing a deficit crisis caused by an aging population and low bond yields. In January, AON Consulting estimated 200 firms had shortfalls of about euro 53 billion ($64 billion). Sale and leasebacks have become a viable means of plugging this because of strong demand for real estate and low interest rates. The potential in sale-and-leaseback deals is considerable, Close Brothers says. The country’s top 200 listed companies have freehold property assets with a net book value well above euro 145 billion ($174.59 billion).

The potential in property is underscored by new figures out this week from Investment Property Databank (IPD). This showed UK commercial property returns rose by 1.4% in February and by 19.4% over 12 months.

Performance by commercial bricks-and-mortar compared with returns in equities was up 1.2% and up just 0.1% in bonds, IPD says. Returns are based on a mix of capital growth and income. Property delivered capital growth of 1%, compared to 0.9% capital growth for equities and a fall of 1.6% for bonds, the IPD report adds.

Within individual sectors, offices delivered the highest returns, up 1.6%, ahead of retail, at up 1.4%, and industrial properties, up 1.2%.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

 

GlobeSt Net Lease Spring 2024Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information
 

GlobeSt Net Lease Spring 2024Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.