MAJOR United Kingdom supermarket chain Tesco has entered into a 20-year, £650 million property joint venture with British Land.
The sale and leaseback deal involves 21 of its superstores.
The U.K’s largest retailer told the FTSE that the deal marks the second phase of a property sale and leaseback program it announced in April last year in a bid to free up nearly £5 billion from its property assets.
The sale and leaseback deal covers stores in a region extending from Ashford, Kent, to Hereford and Dundee in Scotland.
Tesco will return £1.5 billion to shareholders in the form of a share buyback.
Tesco expects that the 50:50 venture will bring in profits worth £142 million on proceeds of £570 million from the sale.
The retailer said it will pay annual rent of £29 million to British Land with increases linked to inflation and capped at 3.5% a year for 20 years.
Tesco said the venture enables the company to release funding for its future growth, whilst maintaining the flexibility to operate and adapt its property assets.
Australian Property Journal
