Kingfisher has eased the pressure on its dividend with its first major property deal, raising £198m cash from the sale of seven B&Q stores to the property group British Land.
The do-it-yourself retailer, which is battling against torrid trading conditions in the UK, unveiled the deal on the day that Sir John Ritblat told shareholders he was stepping down as chairman of the property giant.
Sir John, 70, who built up British Land from a £20m company into a £7bn giant, will hand over at the end of the year to Chris Gibson-Smith, who was promoted yesterday from senior independent director to deputy chairman. Sir John will become British Land's honorary president on his retirement.
"We have come a long way," Sir John said at the company's annual meeting. "I am sure that the future prospects of the portfolio will continue to shine."
The B&Q stores, which represent 7 per cent of Kingfisher's total £3bn freehold and long leasehold property estates, will continue to trade as B&Q in return for a monthly rental fee. The terms shield Kingfisher from the vagaries of the rental market because all increases are capped at annual inflation.
Terry Hartwell, Kingfisher's property director, said the deal would allow the group to "finance its operational business at attractive rates going forward" thanks to the UK's buoyant property investment market. The cash raised will be used to cut debt and pay for its ambitious overseas expansion programme.
A 63 per cent fall in group profits before tax to £232m and a near doubling in net debt to £1.5bn meant Kingfisher's dividend cover fell to 1.2 times from 1.9 times. It held its dividend at 10.65p.Reuse content