Sainsbury’s has confirmed it is in talks to sell a portfolio of its prime retail property to real estate investor, LXi REIT, for £500m on a sale and leaseback basis.
In an announcement to London’s stock market this morning, Sainsbury’s also confirmed that it has reached agreement on an acquisition price for the 21 stores in the Highbury and Dragon investment vehicles, which Sainsbury’s announced its plans to purchase earlier this year.
If the LXi transaction were to proceed, the cash received from this transaction would be used to part-fund the purchase of the 21 Highbury and Dragon stores.
The acquisitions will complete in the first half of the financial year to March 2024.
A commercial property investor and part of the FTSE-250 index, LXi REIT is talking to investors regarding a possible share issue to raise the equity and part-fund the purchase of 18 of the retailers’ properties.
Both parties stressed there is no certainty that the transaction or the associated share issue would take place.
If confirmed, the deal would come months after it emerged that Sainsbury’s was exploring the possibility of selling some of its prime retail sites earlier this year.
A property industry source said on Tuesday evening that LXi, which has a market value of about £2.5bn, will be set back with an unspecified amount of debt after raising hundreds of millions to fund the acquisition.
A number of other parties are said to have expressed an interest in acquiring it.
The news comes as Sainsbury’s has announced it will be opening a walk-in freezer store which will be giving away free grocery products in a bid to reduce food waste.
