Tesco agrees sale and leaseback deal

Alistair Dawber@AlistairDawber
Sunday 23 October 2011 05:13

Tesco has raised more than £950m after agreeing a sale-and-leaseback deal for 41 of its stores.

Britain's biggest supermarket chain said the deal was part of its "ongoing programme to release value from its UK property portfolio", with stores averaging a net yield of 4.9 per cent.

In completing the deal, Tesco is following a number of other major companies in realising the value of their property estates by selling to investors and agreeing to lease them back on a long-term basis. Last year, HSBC made several hundred million pounds after financing the buyout of its London headquarters before selling the building again for a higher price when the original buyer ran into difficulties.

Tesco said yesterday that the deal was 50-50 joint venture with the trustees of the group's pension fund. The deal is being financed by bonds issued by Tesco's funding vehicle, Tesco Property Finance 3.

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