Tesco pockets £96m in property exchange

TESCO will net £96m in cash after agreeing a £733m exchange of joint venture properties with British Land.

The supermarket group, which has been reviewing its property portfolio, has taken sole ownership of 21 stores across the country.

In exchange, British Land has acquired Tesco’s half-share in two portfolios which are dominated by Tesco-anchored shopping centres and retail parks. The portfolios are made up of three shopping centres, three retail parks and three standalone stores.

It includes 150,000 sq ft Woodfields Retail Park, Bury, which has an 85,000 sq ft Tesco alongside Next and Boots.

Tesco will continue to lease the stores at the sites being transferred to British Land at market rents, and they are not subject to RPI-indexed increases.

Dave Lewis, chief executive of Tesco, said: “Last year we identified the opportunity to increase the proportion of our stores we own as freehold. This transaction with British Land allows us to increase our ownership and thereby insulate more of our businesses from indexed rent reviews.

“We have a long way to go but it’s a transaction which takes us in the right direction. This agreement makes our business simpler and stronger.”

Charles Maudsley, Head of Retail & Leisure, British Land, hailed the agreement as “mutually beneficial”.

He said: ” It plays to our strengths of managing multi-let assets and gives Tesco more control of their stand-alone portfolio. We see significant opportunity to add value and drive returns through asset management and development.”