The collapse of NCP, the UK's largest car park operator, serves as a stark warning to retailers increasingly turning to sale-and-leaseback deals. The company, which sold and leased back £600mn of car parks in 2002, ultimately found itself trapped by escalating rent obligations that ballooned from £45mn to £1.3bn over two decades.

UK supermarkets are now following a similar path, with £400mn worth of sale-and-leaseback transactions completed in the first quarter alone. Major chains like Asda and Morrisons, both taken private in recent years, are leading this trend as they seek to reduce debt burdens. The strategy allows companies to raise capital by selling property while maintaining operational control through long-term leases.

However, NCP's experience demonstrates the potential pitfalls. Despite revenues remaining flat at £187mn since 2002, its minimum future rent commitments grew exponentially, creating what analysts describe as a financial straitjacket. Credit ratings agency S&P recently downgraded Asda's credit rating, citing leasebacks as a risk to future operating flexibility. The cautionary tale highlights how seemingly prudent financial engineering can backfire when market conditions shift, as evidenced by changing urban mobility patterns that undermined NCP's business model.