Sainsbury’s in talks to sell 18 stores in £500m sale and leaseback deal

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upermarket Sainsbury’s has confirmed talks with a London-listed real estate investor to sell and leaseback 18 stores in a deal worth around £500 million.

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In the proposed agreement, Sainsbury’s stores located in the south of England would be sold to real estate investment trust LXI REIT and then rented back.

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LXi is in discussions with investors on a potential share sale to raise some funding for the deal.

Sainsbury’s also said that it has entered into a separate agreement on the price it will pay to purchase the entirety of 21 stores from Highbury and Dragon investment vehicles.

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Grocer said the cash from the proposed sale and leaseback deal with LXI REIT will be used to partially fund the Highbury and Dragon deal.

Sainsbury’s has a 49% stake in the Highbury and Dragon sites since its founding in 2000.

The retailer said that both deals “will result in a broadly unchanged ratio of leasehold and freehold Sainsbury’s supermarkets, with ownership and lease structures better reflecting current market conditions and our preferences”.

But the move comes even as retailers are trying to bolster their balance sheets, especially as they struggle to keep a lid on price hikes in the face of rising inflation while protecting their profit margins. Huh.

The sale and leaseback deal with LXI came a few months after it first emerged that Sainsbury was looking to sell the sites and several other suitors were interested.

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