Sainsbury's has confirmed it is in talks with a real estate firm to sell 18 supermarket branches for around £500m on a sale and leaseback basis.
The stores are located in the South of England, although it is not yet clear exactly which sites are included in the deal. The supermarket chain has held the discussions with London-based LXi REIT, it announced on Wednesday (September 21).
Sainsbury's is discussing with investors a possible share issue to part-fund the transaction but there could be "no certainty" the transaction or the associated share issue would take place.
The supermarket has also separately reached agreement to fully buy out 21 stores in the Highbury and Dragon investment vehicles, on which it served notice to buy last year and earlier this year. The deal is due to complete in the first half of the financial year to March 2024, Sainsbury's said.
If the LXi REIT transaction is finalised, Sainsbury's said it would use the cash proceeds to part-fund the purchase of the 21 Highbury and Dragon stores.
Sainsbury's said in a statement: "In combination with some other smaller activities, this would result in a broadly unchanged proportion of leasehold and freehold Sainsbury's supermarkets, with ownership and lease structures better reflecting current market conditions and our priorities."
The grocer said the financial impact had been anticipated in its planning and would not impact guidance. However, the supermarket said there would be a "cash timing effect" as it expects to receive the sales proceeds of the LXi REIT transaction in the current financial year, while the Highbury and Dragon deal will be the following one.
Sainsbury's has held a 49% interest in Highbury and Dragon since it was created in 2000. The vehicles comprise the freeholds of 26 Sainsbury's supermarkets which are leased to Sainsbury's. The remaining 51% is owned by a joint venture between Supermarket Income REIT and British Airways Pension Trustees.
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