Jump to content
House Price Crash Forum
Realistbear

Tesco Plan To Release Cash From Their Property Holdings

Recommended Posts

http://business.guardian.co.uk/story/0,,1759730,00.html

Tesco to cash in on land holdings

Julia Finch, City editor

Monday April 24, 2006

The Guardian

Supermarket group
Tesco will tomorrow outline plans to release cash from its multibillion-pound property portfolio,
which could allow a substantial return to shareholders.
The grocer will not provide details of how it intends to restructure its property portfolio, but chief executive Sir Terry Leahy will confirm that he is considering a variety of ways to release value from the Tesco estate.

Do Tesco see some risks to the downside for their property holdings? A very large and looming risk perhaps? And is "releasing cash" a non-panicky way of saying "selling some IR sensitive assets?"

Forewarned is forearmed.

Share this post


Link to post
Share on other sites

They will be wanting to offload the land whilst they can still avoid 2 Fat Jags new land development tax. Also I think they see the gathering storm and want to cash in while they still can. They probably assume that they can get hold of this land again in the future if required at a knock down rate.

Tesco STR's!!!

Share this post


Link to post
Share on other sites

They will be wanting to offload the land whilst they can still avoid 2 Fat Jags new land development tax. Also I think they see the gathering storm and want to cash in while they still can. They probably assume that they can get hold of this land again in the future if required at a knock down rate.

Tesco STR's!!!

Lol! :lol:

Here's what the Independent had to say on the story... Tesco to flesh out plans for property estate

Share this post


Link to post
Share on other sites

Do Tesco's own residential property?

Apparently not. Commercial property is, however, IR sensitive and a depression in land values may be seen as the next step as the economic cycle winds the property boom down.

Share this post


Link to post
Share on other sites

http://business.guardian.co.uk/story/0,,1759730,00.html

Tesco to cash in on land holdings

Julia Finch, City editor

Monday April 24, 2006

The Guardian

Supermarket group
Tesco will tomorrow outline plans to release cash from its multibillion-pound property portfolio,
which could allow a substantial return to shareholders.
The grocer will not provide details of how it intends to restructure its property portfolio, but chief executive Sir Terry Leahy will confirm that he is considering a variety of ways to release value from the Tesco estate.

Do Tesco see some risks to the downside for their property holdings? A very large and looming risk perhaps? And is "releasing cash" a non-panicky way of saying "selling some IR sensitive assets?"

Forewarned is forearmed.

Whatever happened to tesco's plan to sell the general publics property in a rightmove style way ?

That's all gone quiet, they were set to change the way of seliing houses forever!

Share this post


Link to post
Share on other sites

Whatever happened to tesco's plan to sell the general publics property in a rightmove style way ?

That's all gone quiet, they were set to change the way of seliing houses forever!

I heard they've moved on to selling engagement rings instead!

Share this post


Link to post
Share on other sites

Ok

In a stagnant market after a long boom period, this sends out a clear message to SELL, before prices fall.

It is "free money" - why would companies risk being priced out of their assets?? Unless they know they can buy for cheap prices in future. Its not like Tesco is short of a few bob is it? They are still opening new stores in new areas.

Another company who has done this is Boots who has sold some its premises to lease back to them

Sell to Lease

STL

In April we announced plans to sell 300 of our smaller stores and lease them back. This does not mean we are not committed to these stores – quite the reverse. Small local stores will continue to be an essential part of the Boots offer. Sale and leaseback arrangements are common in retail and the money that we raise, expected to be in the region of £250m, will be used to pay down short-term borrowings.

http://www.boots-report2005.com/main.asp?pid=262

actually thinking about it if a lot of companies followed suite, then prices are going to crash in the commercial sector as there are more sellers

Share this post


Link to post
Share on other sites

I am pretty sure that the primary reason for doing this is the sort of short-termism that the UK is legendary for.

Directors are rewarded for short term share performance, shareholders don't care about 2 years time, let alone 20 years time. It all adds up to "selling the family silver" for short term "shareholder value*".

* shareholder value defined as short term boost to share price and fat bonuses for directors.

Share this post


Link to post
Share on other sites

Whatever happened to tesco's plan to sell the general publics property in a rightmove style way ?

That's all gone quiet, they were set to change the way of seliing houses forever!

Give them a chance, they only announced it last year. :rolleyes::rolleyes:

Share this post


Link to post
Share on other sites

http://business.guardian.co.uk/story/0,,1759730,00.html

Tesco to cash in on land holdings

Julia Finch, City editor

Monday April 24, 2006

The Guardian

Supermarket group
Tesco will tomorrow outline plans to release cash from its multibillion-pound property portfolio,
which could allow a substantial return to shareholders.
The grocer will not provide details of how it intends to restructure its property portfolio, but chief executive Sir Terry Leahy will confirm that he is considering a variety of ways to release value from the Tesco estate.

Do Tesco see some risks to the downside for their property holdings? A very large and looming risk perhaps? And is "releasing cash" a non-panicky way of saying "selling some IR sensitive assets?"

Forewarned is forearmed.

surely they are just cashing in on the ludicrous price of building land.

they probably have thousands of acres and could realise a few bob by shifting some of it.

Share this post


Link to post
Share on other sites

Do Tesco see some risks to the downside for their property holdings? A very large and looming risk perhaps? And is "releasing cash" a non-panicky way of saying "selling some IR sensitive assets?"

Turn the question around — why are Tesco so confident of buyers lining up to relieve them of their property portfolio if the market is so overpriced and abou to crash? Would one of Britain's most successful boardrooms bother embarking on such a project if there was no confidence in it?

Again, Realistbear is spinning us right round, baby, right round, like a record baby, right round right round.

This is a very common practice among large companies. It's mainly to do with releasing money tied up in capital assets for operational expenditure or acquisitions. BT were a notable early pioneer, selling most of their massive property portfolio to Telereal (back when property prices were flat). They've leased them back ever since, which in addition to the operation agility leasing gives them, also delivered an additional benefit, allowing a significant reduction in management/maintenance headcount as these were TUPE-ed to a third party. And, of course, the billions in cash released wiped out BT's debt overnight and gave them dosh to invest all over.

So Tesco's move is neither surprising nor unusual, it's not worthy of comment, and it's certainly nothing of any note with regard to residential property prices.

Share this post


Link to post
Share on other sites

Because Tesco is a food retailer not a property developer and I'm guessing that if their shareholders wanted exposure to property development they would invest in a property developer rather than a food retailer?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.