Retailer sells and leases back two former Beatties sites
House of Fraser has sold and leased back two stores in Wolverhampton and in Birkenhead for a total of£56.0 million. The two freehold properties were acquired on August 31 2005 as part of the acquisition of James Beattie.

House of Fraser has entered into a 35-year lease on the Wolverhampton store and a 20-year lease on the Birkenhead store; both are on normal commercial terms. The Group has received£47.0 million on the completion of the Wolverhampton transaction and expects to receive a further£9.0 million for Birkenhead in the week commencing January 30 2006.

Analysts received the news positively and pointed out that the deal roughly halves House of Fraser's ongoing debt.

However, the company also faces a£2.6 million exceptional charge following its acquisition in June of WGP 1 for£1.8 million. The Group made the acquisition as part of its financial planning strategy and expected to derive tax benefits in future years.

Following changes announced in the Pre-Budget Report, it is now unlikely that these tax benefits will arise and the total costs of the transaction of£2.6 million is likely to be included in the accounts for the period ending January 28 2006.

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