Liberty is close to inking a deal for the sale-and-leaseback of its mock-Tudor department store in a move which is set to precede a sale of the operating business.
As revealed by Drapers, the sale-and-leaseback deal is a likely precursor to the sale of the operating business to Marco Capello, former head of Merrill Lynch’s private equity division and chief of investment firm BlueGem Capital.
In a statement today, Liberty said that it has exchanged contracts on the sale of the freehold of the 125,000sq ft store on London’s Great Marlborough Street for £41.5m to Sirosa Liberty.
The retailer, which is 68% owned by hotel and property group MWB Group Holdings, is expected to announce the sale of its operating business in the next fortnight to BlueGem.
Liberty started a strategic review six months ago and instructed Cavendish Corporate Finance and Global Leisure Partners to look for new investors. Other people said to have expressed an interest in the business included the former chief executive of Jimmy Choo and founder of Sirius Equity Robert Bensoussan and Hong Kong based supplier Li & Fung.
Under the terms of the sale-and-leaseback deal, Liberty will take a 30-year lease on the building at an initial annual rent of £2.1m, with five yearly rent reviews. The fund will be used to repay Liberty’s bank and other debt and provide additional financial resources.
The freehold of the store was valued at £30.25m at Liberty’s year-end on December 31, based on an annual rental of £2m and an eight year lease term.
In January, Liberty said revenue for the year to December 31 grew by 20% with the flagship store up 16% over the year.
The sale is conditional upon approval by the shareholders of MWB which is expected to be sought during April. MWB is expected to approve the sale.